ELLIPSE INSTITUTE LIMITED V NEW ZEALAND QUALIFICATIONS AUTHORITY HC WN CIV-2012-404-3514

ELLIPSE INSTITUTE LIMITED V NEW ZEALAND QUALIFICATIONS AUTHORITY HC WN CIV-2012- 404-3514 [16 August 2012]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2012-404-3514[2012] NZHC 2083UNDER the Judicature Amendment Act 1972BETWEEN ELLIPSE INSTITUTE LIMITEDPlaintiffAND NEW ZEALAND QUALIFICATIONSAUTHORITYDefendantHearing: 30 July 2012Counsel: E Orlov and M Kim for PlaintiffL Taylor and J Orpin for RespondentJudgment: 16 August 2012JUDGMENT OF POTTER JIn accordance with r 11.5 High Court RulesI direct the Registrar to endorse this judgmentwith a delivery time of 3 p.m. on 16 August 2012.Solicitors: New Zealand Qualifications Authority, Wellington – grant.adam@nzqa.govt.nzStewart & Associates, Alexandra - greg@stewartlaw.co.nzCopy to: L J Taylor/J B Orpin, Wellington – les.taylor@stoutstreet.co.nz andjonathan.orpin@stoutstreet.co.nzE Orlov, Auckland – e.o@equitylaw.co.nzTable of ContentsIntroduction [1]Procedural background [3]Evidence [5]Statutory framework: Education Act 1989 [7]Student Fee Protection Policy [21]Compliance notices [31]Relationship between s 233D and s 255 [37]Factual background [43]Did the defect in the compliance notice invalidate thecancellation decision? [45]Section 13 of the Interpretation Act 1999 [52]Mistake of fact [71]Conclusions [74]Was Ellipse in breach of the Student Fee Protection Policy? [76]Causes of actionFirst cause of action – breach of natural justice [88]Second cause of action – failure to take intoaccount relevant considerations [109]Third cause of action – ultra vires/unreasonableness [119]Result [122]Costs [123]Introduction[1] The plaintiff, Ellipse Institute Limited (Ellipse) is a private training establishment (PTE) registered under the Education Act 1989 (Act). By its statement of claim it seeks judicial review of a decision of the defendant, New Zealand Qualifications Authority (the Authority and NZQA), on 18 June 2012, to cancelEllipse's registration (the cancellation decision). Ellipse pleads breach of natural justice and failure to take into account relevant considerations or in the alternative, that the decision was ultra vires and was unreasonable and unfair. It seeks, by way of relief, an order that its registration be reinstated and a declaration that the Authority has breached its rights.[2] The authority denies the plaintiff's allegations. At the start of the hearing Mr Taylor, senior counsel for the Authority, noted there was no formal challenge in theplaintiff's pleadings to the cancellation decision issued by the Authority on 29 June 2012 confirming the cancellation of registration on 18 June 2012 (the confirming decision). Mr Taylor advised that the Authority took no point concerning the omission to formally challenge the confirming decision and I heard submissions from both parties on this aspect.Procedural background[3] On 16 March 2012 the plaintiff filed judicial review proceedings challenging the imposition of conditions on it by a compliance notice issued by the Authority on 27 January 2012. Those proceedings were struck out on 14 June 2012 when theplaintiff failed to comply with "unless" orders. Two affidavits filed in thatproceeding were annexed to affidavits filed in this proceeding. The Authority objected to their being admitted as evidence in this proceeding. Mr Orlov, senior counsel for the plaintiff, said they were filed by way of background. I explained to counsel that because these two affidavits were not filed in this proceeding I had not read them. However, I invited the plaintiff's counsel to identify during the course ofsubmissions any particular aspect of these affidavits that might be relevant in this proceeding, and that having received submissions, I would rule on any issue of admissibility that arose. No such matters were raised in the course of submissions.[4] Ellipse sought interim relief by interlocutory application filed on 21 June 2012. The Authority proposed that an expedited substantive hearing was to be preferred. As an early hearing date was able to be made available, the matter proceeded before me as a substantive fixture on 30 July 2012 in accordance with a minute of Dobson J on 25 June 2012.Evidence[5] Two affidavits were filed by Mr Bhashkara Prasad, the managing director of Ellipse, dated 21 June 2012 and 17 July 2012.[6] For the Authority, affidavits were filed by Dr Karen Poutasi chief executive and Ms Pamela Neale, a senior quality assurance advisor in the Risk and Compliance team.Statutory framework: Education Act 1989[7] Ellipse is a "private training establishment", defined in s 159(1) of the Act as: an establishment, other than an institution, that provides post-school education or vocational training.[8] References to the Authority in the Act are to the New Zealand Qualifications Authority which is established by Part 20 of the Act.[9] Part 18 of the Act relates to private training establishments. Under s 232D(1) a PTE that is a body corporate may apply to the Authority for registration as a private training establishment for the purposes of the Act. Registration is required by s 232A(1) before any international student is enrolled or undertakes any part of a programme with the PTE.[10] The power to grant or decline an application for registration is vested in the Authority by s 233, which sets out a number of criteria. Registration may only be granted if the Authority is satisfied that all those criteria are met.[11] Section 233B makes it a condition of registration of a PTE that it will at all times comply with the requirements in the rules made under s 253 except to the extent that the Authority exempts it from compliance.1[12] Section 233D authorises the Authority to cancel the registration of a PTE –(a) if it is satisfied on reasonable grounds that—(i) the establishment no longer meets one or more of the criteria set out in s 233(1); or(ii) the establishment is not complying, or has not complied, with 1 or more of the conditions applying to it; [13] Section 233D(3) provides that before cancelling a registration the Authority must—(a) notify the establishment that it is considering cancelling theestablishment's registration and give reasons; and(b) give the establishment a reasonable opportunity to respond to the notice; and(c) consider any submissions made by the establishment in response to the notice.[14] Section 233D(5) provides:Nothing in this section limits the Authority's powers under s 255(7)(a) tocancel an establishment's registration.[15] Section 255(7)(a) provides that if the "institution", which includes a PTE, does not comply with a compliance notice issued under s 255 that related to its registration, the Authority may immediately cancel the registration.21 No exemptions from compliance were granted by NZQA in respect of Ellipse under s 233B.2 And see at [31] to [36] below.[16] Section 233A provides that cancellation of registration takes effect on the date specified by the Authority in the notice of cancellation required to be given under s 233D(4).[17] Sections 234C to 235D provide for the protection of student fees. Section 234E requires a PTE that receives funds paid by or on behalf of a student to deposit those funds as soon as practicable with an independent trustee approved by the Authority. The funds must be held on trust for the student by the PTE until so deposited. The independent trustee must hold the funds on trust for the refund period. Section 235A provides that every international student enrolled for a programme or training scheme is entitled to withdraw at any time within the refund period and to receive a pro-rata refund of fees paid. By a Gazette notice of 2011 the refund period for international students is 10 working days.[18] When the refund period has expired, under s 235A(3) the fees paid must continue to be held in trust by the independent trustee and the PTE must be paid from the trust in the manner prescribed by rules made under s 253. Alternatively, the PTE may, if the Authority approves, make alternative arrangements in relation to the fees paid.[19] The rules made under s 253 in accordance with which the independent trustee may pay the fees to the PTE are the Student Fee Protection Policy.3[20] Thus there are two periods and methods for and by which student fees are separately protected: during the refund period by deposit with an approved independent trustee (in this judgment referred to as "withdrawal trusts"); and following the refund period (if the student has not withdrawn) by the Student Fee Protection Policy. By these dual mechanisms, students' fees are protected for the duration of the period for which each student is enrolled with a PTE.3 Prior to the passing of the Education Amendment Act 2011, s 253(1)(ca) of the Act gave theAuthority the power to make "policies and criteria" for the registration of private trainingestablishments. The policies and criteria made under s 253 are deemed, by s 44(1)(a) of the2011 Amendment Act, to be rules made under the amended s 253.Student Fee Protection Policy[21] The Student Fee Protection Policy4 (the Policy) has the stated purpose of protecting the interests of students in all circumstances that result in a PTE ceasing to offer a course in which a student is enrolled.[22] The Policy states that the Authority has established under s 253(1) of the Act a specific policy that requires all PTEs to put in place acceptable arrangements for the protection of student fees in the event that the course or the provider ceases to operate. The Policy records that the requirements of the Policy are in addition to the student withdrawal provisions required under the Act.5[23] Under Principles the Policy states that student fee protection is a requirement of PTE registration and as such: 6 it is the PTE's responsibility to ensure a compliant student fee protection arrangement is in place at all times.[24] Dr Poutasi states in her affidavitThe failure to put in place appropriate student fee protection arrangements exposes students to financial risks. This is of particular concern because students as a class are vulnerable to even small financial risks, and international students, whose payment of student fees is a major investmentin their and their families' future, are particularly vulnerable.[25] Under Criteria all student fee protection arrangements made by PTEs must meet a number of criteria including that: 7(a) Arrangements must cover every fee-paying student on every course, except where an exemption approved in writing by the Authority applies. A PTE may have more than one arrangement in order to cover all students.4 Version 2 dated 1 February 2005, effective from 31 May 2004.5 These provisions are now in s 234E, s 235 and s 235A by virtue of the 2011 Amendment Act.6 Paragraph 11a of the Policy.7 Paragraph 12 of the Policy.(b) All situations where the PTE ceases to offer a course in which the student is enrolled must be covered.(c) The un-expired portion of fees determined on a pro rata basis relating to the time elapsed in the course must be covered unless an alternative is approved in writing by the Authority.[26] In part two, the Policy sets out seven specific options for student fee protection arrangements that would meet the Policy requirements. Of the available options two are relevant in this case: the standard trust option and the student-based insurance option. The standard trust option is relevant because Ellipse elected to comply with the Policy under this option until September 2011 when it elected the student-based insurance option. On 11 May 2012 Ellipse advised NZQA that it would revert to the standard trust option by depositing fees with the Public Trust (the independent trustee).[27] Under the standard trust option student fees must be held on trust for the individual students by an independent trustee following the end of the refund period. The funds must be held pursuant to a standard trust deed approved by the Authority. Under the terms of the approved trust deed the independent trustee pays out fees to the PTE in arrears over the duration of the student's course.[28] Under the student-based insurance option all events that could lead to the withdrawal of a course must be covered and the insurance policy must cover the full amount of tuition fees. An insurance policy must be issued to cover each of the students enrolled in a course with the PTE. Student fee reimbursement insurance policies are offered by a company called StudentCare.8[29] The Policy provides at paragraph 43:PTEs should note that although the options described in the first schedule of this policy may continue as options, individual fee protection suppliers may at any time make business decisions to exit the fee protection market. Should a student fee protection supplier withdraw its product from the8 Evidence of Ms Neale. Ellipse had arranged insurance with StudentCare under this option inSeptember 2011, as an alternative to the standard trust option.market, or cease to provide the service to the PTE, PTEs will need to move immediately to put in place an alternative arrangement that complies with this policy. If they are unable to do so they should contact the Qualifications Authority to discuss a possible transitional arrangement.[30] Under the heading Sanctions the Policy states that the Authority's preferenceis to work with the PTE to put in place an arrangement that meets the Policy. However, if that approach fails then one or more approaches could be taken by the Authority including the issue of a compliance notice under s 255A of the Act, requiring the PTE to carry out a particular action in relation to its registration. If the PTE does not comply with such a notice within the time period specified in thenotice, the Authority " could immediately cancel the registration of that PTE".Compliance notices[31] Section 255 of the Act is headed Compliance Notices. Subsection (2)(a) authorises the Authority to issue a compliance notice to an institution (which by definition in s 255 includes a PTE) requiring the institution to do, or refrain from doing a particular thing in relation to its registration as a registered establishment.[32] Subsection 3 requires that a compliance notice be in writing and must—(a) state the date on which it is issued; and(b) state a time on or before which, or a period within which, the institution must comply with the notice; and(c) state the consequences or possible consequences of non-compliance with the notice.[33] Subsection (5) provides that an institution that receives a compliance notice must comply with it within the time or during the period stated in the notice.[34] Subsection (7) provides that if the institution does not comply with the compliance notice:the Authority may immediately—(a) If the notice related to the registration of a registered establishment, cancel the registration, or impose new conditions or amend or revoke any conditions on the registration.[35] Under subsection (8) the Authority may not so act until the later of 10 days from the date of issue of the notice or the expiry of the time or period specified under subsection (3)(b).[36] I have referred above9 to s 255(7)(a) in the context of s 233D which relates to cancellation of registration. Section 233D(5) provides that nothing in s 233D limitsthe Authority's powers under s 255(7)(a) to cancel an establishment's registration.Thus, when the Authority proceeds under s 255 by issuing a compliance notice to a PTE that meets the requirements of s 255(3), if the PTE fails to comply with the compliance notice within the time or during the period stated in the notice, the Authority is authorised by s 255(7)(a) immediately to cancel the registration of the PTE, subject to expiration of the periods specified in subs (8).Relationship between s 233D and s 255[37] While there is an overlap to the extent that certain factual scenarios could conceivably fall within both s 255 and s 233D, they also operate as standalone provisions. Section 255 allows NZQA to issue a compliance notice to require abroadly defined "institution" to do a particular act. Immediate cancellation ofregistration is one of the mechanisms available under s 255(7)(a) to enforce that requirement within the stated timeframe. In contrast, s 233D is narrowly drafted to allow the Authority to cancel the registration of a private training establishment that is, relevantly, not complying with criteria or conditions of registration. NZQA must notify the establishment and give it an opportunity to respond before cancelling itsregistration under s 233D. Unlike s 255, NZQA must be "satisfied on reasonable grounds" of the non-compliance before cancelling the registration under s 233D.[38] In short, s 255 is a section with wide effect that provides NZQA with multiple avenues to enforce compliance by institutions with a range of requirements. Section 233D makes specific provision for the cancellation of registration of private training establishments that have failed to comply with conditions imposed under the Act. The distinction is supported by s 233D(5), which states that nothing in s 233D limitsNZQA's s 255(7) cancellation powers.9 See at [14] and [15] above.[39] These different mechanisms are reflected in NZQA's application of theprovisions. Initially, by notice dated 27 January 2012, NZQA imposed conditions under s 233D that Ellipse was not to enrol further students until an external review had been conducted. It later became aware that Ellipse was not complying with the requirements of the Policy and issued a second notice, this time under s 255, requiring Ellipse to do so.[40] Mr Orlov submitted that the compliance notice dated 28 May 2012 issued under s 255 was ultra vires because "the alleged non-compliance with s 234D10 of theEducation Act rules does not relate to Ellipse's registration", in that "registrationdoes not include all of the rules that NZQA has established under its statutory powers".11[41] On examination, it is clear that the alleged non-compliance does relate toEllipse's registration, though the legislative route is convoluted. Under s 255(2)(a),NZQA may issue a compliance notice requiring Ellipse to do, or refrain from doing, a particular thing in relation to Ellipse's registration as a registered establishment.Under s 233B, it is a condition of registration that a private training establishment will comply with the requirements in rules made under s 253. Section 253(1)(e) authorises NZQA to make rules prescribing mandatory requirements for the protection of student fees. NZQA put in place the student fee protection policy which are rules made under s 253, pursuant to s 44(1)(a) of the Education Amendment Act 2011.12[42] Mr Orlov's submission that the compliance notice was ultra vires on the ground that it did not relate to Ellipse's registration is not soundly based and must be rejected.10 The compliance notice dated 28 May 2012 does not refer to s 234D but alleges non-complianceby Ellipse with the student fee protection policy, being rules made under s 253. However,s 234D(2) requires a PTE to comply with rules made under s 253 that relate to student feeprotection.11 I note that the compliance notice is not the subject of this judicial review. The cancellationdecision is the subject of the plaintiff's pleading.12 Because s 233B makes it a condition of registration of a PTE that it will at all times comply withthe requirements in the rules made under s 253, except to the extent it may be exempted by theAuthority, when non-compliance by a PTE with rules made under s 253 is involved, both s 233Dand s 255 provide processes by which the Authority may cancel registration in appropriatecircumstances.Factual background[43] It is convenient to relate the relevant factual background by way of a chronology. This is set out in the schedule attached.[44] I reach the following conclusions and findings of fact on the basis of the facts set out in the chronology:(a) Whether or not Ellipse received the notice of suspension from StudentCare dated 20 February 2012 (which Mr Prasad says was not received), it was advised of StudentCare's decision to suspend the issuance of insurance cover on three subsequent occasions in the following weeks:(i) On 2 March 2012 Ellipse requested StudentCare to provide student reimbursement insurance for one of its students Dilesh Krishnan. StudentCare replied on 2 March 2012 that student enrolments for Ellipse had been suspended and they would not have expected to receive any insurance requests until this was lifted.(ii) On 5 March 2012 StudentCare clarified to Ellipse: "It is anunderwriting requirement that no policies are issued to a PTE which is under any sanctions by regulators, so although this sounds a temporary setback our contract prohibits us fromissuing these at the moment".(iii) Following Ellipse's receipt of NZQA's email of 15 Marchquerying whether student fee protection arrangements were in place for 18 students and Ellipse's request of StudentCare that it insure the students, StudentCare advised Ellipse in an emailon 15 March 2012: "We cannot process any applications until firstly we receive confirmation from NZQA that any restrictions have been lifted. This is a strict underwritingrequirement this situation becomes more difficult becauseEllipse did not notify us of the circumstance whilst it was occurring".On the same day StudentCare advised Ellipse by email: "regardless of how you administer the enrolments at your end we need to receive applications in advance of course start date in order for them to be processed. We will not be able to process these applications under the current circumstances".(iv) On 5 April 2012 StudentCare forwarded NZQA's email askingabout student fee protection cover for 18 students and said to Ellipse: "As previously advised to you we do not have thesestudents covered and will not be able to do so until the sanctions from NZQA have been lifted. Did you make prior arrangements for these students as suggested, like leaving the funds in the trust account and/or discussing your options further with NZQA. I would appreciate your response on the situation before I reply to Pam as I believe NZQA is considering cancelling Ellipse".All these communications were put in evidence by Ellipse. It is beyond any reasonable doubt that from at least 5 March 2012, Ellipse and Mr Prasad could have been in no doubt that StudentCare was not prepared to issue student fee protection cover while NZQA'srestrictions on Ellipse remained in place, and that consequently the 18 students in question were not protected for the fees they had paid as students of Ellipse.(b) Ellipse replied on 12 April 2012 to NZQA's request that it urgently confirm if StudentCare issued any notification that it was suspending the issuance of new policies as follows: "No there is no notificationthat they will be cancelling or suspending of new policies". In light of the advice previously received by Ellipse from StudentCare, that replyto NZQA was not correct, even allowing that Ellipse had not received the 20 February 2012 suspension letter from StudentCare as it claims.(c) Until 10 April 2012 when StudentCare advised NZQA that it has "hadvarious discussions with Ellipse that until the NZQA sanctions were lifted the fees should remain in trust ", NZQA was unaware that StudentCare was not issuing policies to Ellipse while the conditions on it registration remained in place. NZQA was, as Ms Neale says in her affidavit,13 "operating on the assumption that student feereimbursement cover had not been issued to Ellipse's students onaccount of some delay or administrative failure at StudentCare and that it was still prepared to issue student fee reimbursement insurancepolicies for Ellipse's students".(d) The conditions imposed by the 27 January 2012 notice by NZQA to Ellipse were never lifted and remained in place when the cancellation notice was issued on 18 June 2012, despite assertions to the contrary from Ellipse. For example, on 11 May 2012 Ellipse responded toStudentCare's advice that it was terminating its administration agreement with Ellipse, that it had "started enrolments" and will "be back to normal soon". There was no basis for this statement giventhat the conditions imposed in the 27 January 2012 notice had not been lifted. StudentCare immediately confirmed to Ellipse inresponse to its protestation that it would be "back to normal soon" that its "offer to supply SFP insurance to Ellipse has been terminated".In its written submissions Ellipse says "The unchallenged evidence isthat restrictions to student enrolment had already been lifted on 9 May2012". On 9 May 2012 John Boal of NZQA sent an email to Mr Prasad at Ellipse in relation to ANZIIS, another PTE proposed by Ellipse as one of the independent institutions to assess and moderate certain courses offered by Ellipse. At the time ANZIIS was proposed by Ellipse it did not have the EER competence rating required by13 At paragraph 40.NZQA. In his 9 May 2012 email Mr Boal refers to the EER rating having been confirmed and that Ellipse may enter into an agreement with ANZIIS to conduct assessment and moderation in respect of five particular programmes up to specified levels. According to Ms Neale NZQA received a signed memorandum of understanding between ANZIIS and Ellipse but she says the 27 January 2012 conditions were not lifted and remained in place up to and including 18 June 2012when NZQA decided to cancel Ellipse's registration. Contrary to Ellipse's submission, there is no evidence before the Court that the restrictions on student enrolment imposed by NZQA on 27 January 2012 were lifted at any time up to and including the 18 June 2012 cancellation notice.(e) On 28 May 2012, NZQA issued a compliance notice to Ellipse requiring payment of $43,827.98 to the Public Trust. Ellipse then had the opportunity to respond and indeed did communicate with NZQA in response to this notice. The notice was sent against the background of Ellipse's advise to NZQA on 11 May 2012 that "As from today we will go back to standard Public Trust Fee Protection". When nothingwas paid to Public Trust by Ellipse, NZQA issued the compliance notice under s 255(2)(a).On 28 May 2012 Ellipse said in response that it was "going through every file and will report soon".NZQA then sent an email on 1 June 2012 reminding Ellipse that, in accordance with the compliance notice, it was required to immediately arrange alternative cover now that StudentCare had withdrawn cover and that NZQA required the 28 May compliance notice to be complied with. Ellipse responded on 1 June 2012, statingthat it was "sorting this out including insurance etc".In reply to an email from NZQA on 6 June 2012 stating that the date for compliance had expired on 5 June 2012 and seeking confirmationthat the funds had been deposited in accordance with the notice, Ellipse replied: " just back today to clear everything."In a further email on 6 June 2012 Ellipse said " going through all the files". And in yet another email stated that "Ellipse is not atfault".NZQA emailed again on 8 June 2012, noting that the 5 June deadline had passed, but that an extension would be given until 5 p.m. on Monday 11 June 2012 for the requisite funds to be deposited into a trust account of an independent trustee approved by NZQA. It warned that if this was not complied with, "NZQA [would] begin considering the immediate action available to it (which includes the option of cancellation of Ellipse's registration)". Mr Prasad replied that he was arranging refinance with his bank which would take at least two to three weeks.A further 10 days elapsed before the cancellation notice of 18 June 2012 was issued. Thus, from at the latest 5 March 2012 when Ellipse was notified by StudentCare that it would not issue further student fee protection insurance policies, until 18 June 2012 when the cancellation notice was issued by NZQA, Ellipse was clearly aware that it was non-compliant in relation to the Policy. It acknowledged this in notifying NZQA on 11 May 2012 that it would revert to the standard trust option with Public Trust; and following receipt of the cancellation notice dated 28 May 2012, although it communicated with NZQA about the notice, it did not contest responsibility or liability to make the payment to Public Trust required by NZQA to protect the fees of the students named by NZQA, but was "sorting it out" and "arranging with my bank for refinance ". However, at no point during that period of over three months did Ellipse comply with its obligation to provide the student fee protection either by insurance, depositing with the Public Trust or pursuant to any of the other available options under the student fee protection policy.(f) Mr Orlov suggested in submissions that when Ellipse told NZQA on 11 May 2012 it would go back to the standard Public Trust fee protection, it intended that arrangement only in respect of future enrolments because it considered that StudentCare should provide insurance cover for previously enrolled students.14 That stance is inconsistent with the replies to NZQA referred to above. It is also completely inconsistent with the clear advice Ellipse had received from StudentCare that it would not provide student fee protection insurance while the NZQA conditions or restrictions were in place.The evidence does not support Mr Orlov's suggestion and I reject it.Did the defect in the compliance notice invalidate the cancellation decision?[45] Before turning to consider submissions under the pleaded causes of action, I propose to address two submissions that were primary planks in Mr Orlov's oralsubmissions.[46] The Authority issued a compliance notice to Ellipse under s 255(2)(a) of the Act on 28 May 2012, requiring it to transfer $43,827.98 to a student fee protection standard trust account with Public Trust. By notice of 29 June 2012, the Authority corrected the amount to $37,124.12.15[47] Mr Orlov submitted that the compliance notice issued to Ellipse by the Authority on 28 May 2012 was defective because it stated the incorrect amount required to be paid to a standard trust account operated by Public Trust, namely $43,827.98, and that Ellipse could not reasonably be expected to comply with a defective notice. He submitted that the subsequent exercise by the Authority of itsstatutory power to cancel Ellipse's registration based on the notice was invalidbecause it was –based on a defective notice; and14 In submissions in reply for NZQA, Mr Taylor said this was the first indication from Ellipse thatit intended that the advice of 11 May 2012 related only to future enrolments.15 See entries in attached chronology for 28 May and 29 June 2012.therefore ultra vires the Authority's powers; andtherefore unreasonable and irrational.[48] Mr Orlov submitted that the Authority could not rely on s 13 of the Interpretation Act 1999 to change the incorrect amount by the decision of 29 June2012 confirming the cancellation of Ellipse's registration, because by that time the Authority had already purported to cancel the registration by the cancellation notice of 18 June 2012, which had taken away the fundamental right of Ellipse to operate its business.[49] Mr Orlov's submission may be formulated in a question: is there a basis for the proposition that an error in the compliance notice issued on 28 May 2012 couldinvalidate the procedure followed by the Authority in cancelling Ellipse'sregistration? I will consider this in light of s 13 and the judicial review ground of mistake of fact, though the inquiries overlap.Section 13 of the Interpretation Act 1999[50] This section provides:13 Power to correct errorsThe power to make an appointment or do any other act or thing may be exercised to correct an error or omission in a previous exercise of the power even though the power is not generally capable of being exercised more than once.[51] The Authority overlooked Ellipse's letter of 5 June 2012. Consequently it over-assessed by $6,703.85 the sum Ellipse was required to pay to a standard trust account operated by Public Trust as stated in the compliance notice of 28 May 2012 issued under s 255(2)(a) of the Act. The Authority then amended the incorrect amount by letter dated 29 June 2012, relying on the power under s 13 of the Interpretation Act. Dr Poutasi, who wrote the letter addressed to Mr Prasad of Ellipse, stated that, in doing so, she was satisfied "that nothing in the 5 June 2012letter made a material difference to [her] earlier conclusions that Ellipse had failed tocomply with the compliance notice, that the failure was significant, and that theappropriate response was to cancel Ellipse's registration".[52] NZQA submitted that the use of s 13 to correct decisions made without full knowledge of the facts is consistent with Goulding v Chief Executive Ministry of Fisheries,16 Lopas v Commissioner of Inland Revenue17 and Lloyd v Registrar of Ships.18Law Commission Report19[53] This Report reviewed the interpretation and intended scope of s 25(j), the predecessor to s 13, and made recommendations for the drafting of s 13. Essentially, the Report states that though the flexibility granted by the provision is helpful, its scope should be strictly confined to preventing decisions being revoked on purely technical bases, i.e. restricted to the correction of clerical or administrative errors.[54] The Report states that despite the apparently broad scope of s 13 and its predecessor, it is unlikely that it was intended to cover a situation where decision-makers "changed their minds". Rather, the Commission considered that "thepurpose of the provision must be to allow minor corrections in order to prevent anexercise of power being technically invalid."20 It notes that this was consistent with the narrow manner in which s 25(j) had been applied.21[55] Most of the submissions that the Commission received supported the view that this type of power is useful: "mistakes can occur even in supposedly finalactions, dates may be omitted, typographical and numerical errors occur and so on. But such a power should be drafted to restrict the mistakes which may be corrected to those which are of a merely clerical or technical nature. Any potential for the16 Goulding v Chief Executive Ministry of Fisheries [2004] 3 NZLR 173.17 Lopas v Commissioner of Inland Revenue (2006) 22 NZTC 19,726.18 Lloyd v Registrar of Ships (Whangarei) [1989] 1 NZLR 586 (decided under the predecessor of s 13) an entry was made on the register under the erroneous belief that the ship was entitled to beregistered. Section 25(j), the predecessor of s 13, was held to authorise correction of the register.19 Law Commission A New Interpretation Act to Avoid "Prolixity and Tautology" (NZLC PP17, 1990) at [336]-[339]. This Report is cited by the parties and in Goulding at [48].20 At [337].21 Ibid. See also Goulding at [49].broader application of the present provision should be excluded."22 Accordingly, it recommended that "the new provision should indicate that any exercise of the powermust be subject to the same restraints as it was originally (as well as those stated in the proposed provision). And indeed the action will usually be less than a 're-exercise' – it will be merely a correction."23Case law[56] Goulding v Chief Executive Ministry of Fisheries provides the most comprehensive summary of the operation of s 13. Briefly, a delegate of the chief executive of the Ministry of Fisheries granted an application for a marine farming permit to the appellants. However, before the decision was communicated to the appellants, new information came to the attention of the decision-maker, who altered the decision and declined the application. The Court of Appeal dismissed the appeal on the basis that as the decision had not been communicated to the appellant, it was open to the decision-maker to change its mind.[57] This decision may be distinguished from the present case on the basis that it involves a different statutory context; the decision had not been communicated to the appellants; the revocation related to the entire decision, not to an aspect (albeit the primary aspect) of the decision; and the change in decision put the appellants into a worse position. However, the following broadly helpful comment provides guidance as to the competing considerations in an exercise of the power of correction in s 13:[1] ... Those who make decisions under statutory powers generally see a need for sufficient flexibility to allow revisiting of decisions from time to time. On the other hand revocation of decisions taken can create legal uncertainty, cause serious inconvenience to affected citizens, and on one view remove rights already conferred.[58] The Court also identified the policy considerations that were specific to the situation as the desirability for latitude during internal processes against financial loss, unfairness, and inconvenience.2422 At [338].23 At [339].24 At [40]-[41].[59] The Court reviewed the interpretation of s 25(j), concluding that the power had generally been treated as of a limited scope. It then cited the following commentary:25The section is clearly intended to allow for revision of administrative decisions which, under the general law, would not be open to revision. But the power of revision is a limited power and one the exercise of which is judicially reviewable. The power could not, for example, be exercised simply because the decision maker had changed his/her mind. ...[60] The Court continued that s 25(j) requires there to be an error or omission in the previous exercise of the power which the section is applied to correct.26[61] In Lopas v Commissioner of Inland Revenue, the issue was whether the Commissioner was entitled to amend the date of cancellation of Mr Lopas and MsMcHerron's GST registration, which would impose a GST obligation on the taxpayers.[62] The Court focused its discussion on the specific statutory provisions, then stated the following conclusion regarding s 13:[53] In his initial cancellation decision, the Commissioner was operating under the erroneous impression that taxable supplies would be under the threshold. It was thus appropriate, in terms of s 13 of the Interpretation Act, that he re-exercise his discretion and set a new GST registration cancellation date once he was in possession of the full facts.Application of s 13[63] There is very little authority to provide guidance to assist in the application of s 13. The rest of the Interpretation Act, including the purpose provisions, relates to the interpretation of statutes and does not assist the interpretation of s 13. The Education Act does not provide any relevant guidance. However, it is clear that s 13 was intended to have a narrow scope and should not be applied in situations where it would result in a change of decision would cause significant hardship to the plaintiff or applicant. The decisions of the courts are heavily dependent on the factual and25 At [50], citing Enid Campbell "Revocation and Variation of Administrative Decisions" (1996)22(1) Monash U Law Rev 2 30 at 64.26 At [51]. That was not the situation in Goulding but is the situation in this case.statutory context. The situation here sits somewhere between the straightforward clerical error scenario envisaged in the Law Commission Report27 and the material change of decision dealt with in the case law.[64] The relevant contextual factors in this case are as follows:(a) The cancellation notice was issued in the context of ongoing discussion between the parties.(b) Though the error was not a clerical error in the sense that the author incorrectly entered the quantum owing, the quantum was statedincorrectly because, due to clerical error, Ellipse's letter of 5 June 2012 was overlooked.(c) The error was resolved in Ellipse's favour, as the quantum owing was adjusted to a lesser sum ($37,124.13). It cannot be contended that Ellipse had acted to its detriment in reliance on the incorrect amount ($43,827.98) in the cancellation notice.(d) The error related to the amount owing, but did not confuse the overall context. Ellipse was aware that it must pay to the Public Trust the amount of student fees which was uninsured, that it was under investigation, and that the status of its registration was in jeopardy due to its failure to maintain student fee insurance or alternative protection.(e) Ellipse was misinformed in the notice of the cancellation decision of the amount owing, and was not given an opportunity to respond when the amount was corrected in the notice of the confirming decision.[65] Adopting the description in Lopas it may be said that due to a clerical error, NZQA was operating under an erroneous impression as to the quantum owing. Once in full possession of the facts, it would be appropriate for NZQA to amend the27 See the definition in D'Ath v Director of Civil Aviation [2011] NZAR 738 at [20]-[21].quantum, provided that this amendment did not unjustifiably compromise Ellipse'sposition.[66] If the exercise of s 13 to correct the quantum was valid, it cannot simultaneously be said that the incorrect quantum invalidated the cancellation. I consider that whether the plaintiff suffered a detriment as a result of the exercise of the s 13 power of correction may determine this issue.[67] It would be unfair and inappropriate to allow an exercise of the power under s 13 that would detrimentally affect Ellipse. In this case, NZQA's cancellation decision was based on Ellipse's failure to pay the higher quantum. It also had regard to Ellipse's actions over the entire dealings leading up to the cancellation as set out in the cancellation notice. That same background informed the confirming decision and involved an assumption that Ellipse would have failed to pay the correct lesser quantum, had it been demanded.[68] I consider the error correction made in the confirming decision to be at the extremity of the power to correct errors intended by s 13, being directed to the specific amount of money Ellipse was required by the compliance notice to pay.[69] However, the following factors are relevant:(a) The error arose because NZQA lacked full information;(b) The reason for this was an error in its IT system. There was no intentional unfairness;(c) Upon receipt of the further information in the 5 June 2012 letter from Mr Prasad, Dr Poutasi promptly and comprehensively reviewed the cancellation decision and then issued the confirming decision to Ellipse;(d) The outcome of the review was not a "change of mind" by thedecision-maker, but confirmation of the decision previously made;(e) The cancellation decision did not turn on the quantum unpaid; rather, it was based on the fact that because the payment had not been made, students were enrolled but not protected for the fees they had paid;(f) Ellipse suffered no detriment. The error correction resulted in Ellipse being required to pay a lesser sum (by $6,703.85) and Ellipse had made no payment at all in response to the compliance notice issued on 28 May 2012; and(g) Ellipse was not given the opportunity to respond before the confirming decision was issued, but Mr Prasad did respond to the compliance notice dated 28 May 2012 and it was on the basis of his submissions that the error correction was made. The Authority accepted after consideration of Ellipse's 5 June 2012 letter and enclosure, that the sum of $37,124.13 needed to be transferred to the Public Trust in respect of eight students who did not have appropriate student fee protection arrangements in place rather than the previously notified sum of $43,827.98 in respect of 10 such students.[70] In summary, I consider that while this was an unusual situation, s 13 was used to correct a comparatively minor error and Ellipse suffered no detriment.Mistake of fact[71] In Daganayasi v Minister of Immigration28 Cooke J was prepared to recognise that the decision of the Minister of Immigration based on a mistake of fact could be invalid on that ground as well as on the ground of procedural unfairness. He said:29It is indeed possible to combine the two grounds and put one's conclusion ona somewhat broader basis. This I would do as an alternative. Fairness neednot be treated as confined to procedural matters Standing back andlooking at the whole case in perspective — the merits of the appellant'srequest under s 20A [of the Immigration Act 1964 against a deportationorder], the procedure adopted for dealing with it, the referee's memorandum28 Daganayasi v Minister of Immigration [1980] 2 NZLR 130 (CA).29 At 149.and report, the grounds of the Minister's decision as appearing from his letter — one may ask whether she has been treated fairly. I think the answer has to be no. This does not mean, of course, that there has been any intentional unfairness; it is merely that what has been done in good faith has produced an injustice.[72] Richardson J preferred to rely on the administrative law principles of fairness in reaching the same decision and expressed no views on the other ground of mistake of fact on the part of the Minister relied on by Cooke J, saying that the law bearing on this question was not in a settled state.[73] The approach taken in Daganayasi is still treated as authoritative.30 SinceDaganayasi, mistake of fact has been recognised as a ground of judicial review, though the Courts are careful to maintain the purpose of administrative law as being"a system regulating how decisions are to be made", confining this ground tosituations where it is clear that the decision-maker has erred as to a matter of fact, and that this error was influential in its decision. In this way, mistake of fact may overlap with the traditional grounds of unreasonableness, taking into account irrelevant considerations, failing to take into account relevant considerations, or unfairness.31Conclusions[74] When I stand back and address the question posed by Cooke J inDaganayasi32 – has Ellipse been treated fairly in all the circumstances of this case –the answer is yes. While there was an error in the sum stated in the compliance notice of 28 May 2012, no injustice has resulted.[75] Thus, even if I am wrong about the availability of s 13 for error correction in the circumstances of this case, I do not consider that any unfairness arose from the inadvertent error in the compliance notice that would require the Court to exercise its30 See, for example, the comments made in New Zealand Fisheries Industries Association v TheMinister of Agriculture & Fisheries [1988] 1 NZLR 544 at 552 and Glaxo Group Ltd vCommissioner of Patents [1991] 3 NZLR 179 at 184.31 New Zealand Fishing Industry Association v Moyle HC Wellington CP649/87, 11 August 1988.See also Discount Brands Ltd v Northcote Mainstreet Inc [2004] 3 NZLR 619 at [58]-[62]; andRotorua Geothermal Users Association Inc v Minister of Energy HC Wellington CP543/86, 13May 1987.32 At 149.discretion to grant relief. The non-compliance by Ellipse had been significant and ongoing and there has been no prejudice or detriment to Ellipse resulting from the error. I therefore conclude that the error as to quantum in the compliance notice did not invalidate the cancellation decision.Was Ellipse in breach of the Student Fee Protection Policy?[76] The second plank in Mr Orlov's oral submissions was that Ellipse was not in breach of the student fee protection policy. The thrust of his submissions on this point was that:Ellipse had a master policy in place with StudentCare.33StudentCare failed to comply with the provisions of that master policy by declining to issue cover for individual students on application by Ellipse.Ellipse cannot be held in breach of the Policy because of StudentCare's non- compliance.[77] This submission may be shortly answered by reference to the terms and conditions of the Policy set out above.34 In particular:(a) The purpose of the Policy is stated in paragraph 2 as " to protect the interests of students in all circumstances that result in a [PTE] ceasing to offer a course in which the student is enrolled. This protection covers all payments made to a PTE by or on behalf of astudent "(b) Paragraph 11a. provides: "Student fee protection is a requirement ofPTE registration. As such, it is the PTEs responsibility to ensure acompliant student fee protection arrangement is in place at all times".33 Dual Australia Combined Student Fee Reimbursement and Management Liability InsurancePolicy.34 Refer at [21] to [30].(c) Paragraph 12a. provides: "Arrangements must cover every fee-paying student (domestic or international) on every course, except where an exemption approved in writing by the qualifications authorityapplies".35(d) Paragraph 43 provides that if a student fee protection supplier withdraws its product from the market, or ceases to provide theservice to the PTE " PTEs will need to move immediately to put inplace an alternative arrangement that complies with this Policy".[78] Thus, the purpose of the Policy is clear: to protect the interests of students in respect of fees paid. The responsibility for ensuring that student fee protection insurance cover is in place at all times in respect of all students enrolled with a PTE rests squarely with the PTE. In the event that a student fee protection supplier (in this case StudentCare) ceases to provide the service then the obligation is on the PTE immediately to put in place an alternative arrangement that complies with the Policy.[79] Ellipse may have been "confused", as Mr Orlov submitted, about its arrangements with StudentCare. It seems clear that NZQA was confused about StudentCare's stance on the issue at least until StudentCare confirmed to NZQA its decision to suspend issuance of new policies to Ellipse on 10 April 2012. However, on the basis of StudentCare's letter to Ellipse of 20 February 2012, and allowing forMr Prasad's evidence that Ellipse did not receive that notice, StudentCare had made clearly known to Ellipse that it would not issue policies for new students from, at the latest, 5 March 2012. In terms of the Policy, this immediately placed the obligation and responsibility on Ellipse to make alternative arrangements to protect the fees of those students, either by an alternative StudentCare policy (if available), or pursuant to one of the other options in the Policy. It was not until 11 May 2012 that Ellipse advised NZQA that it would revert to the standard trust option and then it did not do what was necessary to put into effect protection for student fees under this option.[80] Whether Ellipse has any legitimate complaint in respect of the actions of StudentCare is not in issue in this proceeding. That is an issue between Ellipse and35 No exemption was in place in respect of Ellipse.StudentCare. That factor cannot and does not have any effect on the clear obligations placed on Ellipse under the terms and conditions of the Policy.[81] Mr Orlov also submitted that the "confusion" regarding the situation withStudentCare was a factor that should have been taken into account by the Authorityin relation to its cancellation decision, particularly having regard to the Authority'sinquiries of StudentCare and its involvement with the issue. He submitted that failure to take appropriate account of this factor rendered the decision to cancel"profoundly unfair and unreasonable" and "draconian".[82] In her affidavit dated 10 July 2012, Dr Poutasi, the chief executive of the Authority, who took the decisions under delegated authority from the Authority'sboard to issue the relevant compliance notice and to subsequently cancel the registration of Ellipse under s 255(7)(a), describes the process under which the compliance notice of 28 May 2012 was issued to Ellipse and the cancellation decision and the confirming decision were made by her. She says in relation to the cancellation decision:After the compliance notice was sent to Ellipse, I was aware that NZQA had received a series of emails from Ellipse in response, some of which I was copied into. I was aware from those emails that Ellipse had still not transferred funds into its student fee protection standard trust accountoperated by the Public Trust in order to comply with NZQA's Student Fee Protection Policy and the Act.On 18 June 2012 I received a recommendation from QAD36 that I exercise my delegated authority to cancel the registration of Ellipse as a registered training establishment under s 255(7)(a) of the Act. That recommendation was contained in a memorandum from Tim Fowler and a draft notice of cancellation and draft covering letter. On receiving the recommendation, I read the memorandum from Tim Fowler and the draft notice of cancellation and draft covering letter. I carefully reviewed those documents and came to the conclusion that Ellipse had not complied with the 28 May 2012 compliance notice and that the appropriateresponse was to cancel Ellipse's registration for the reasons set out in thememorandum from Tim Fowler and explained in the notice of cancellation.NZQA had issued Ellipse with a compliance notice requiring it to take steps to comply with the Student Fee Protection Policy and warned it of the possible consequences of not doing so, including cancelling its registration.36 Quality Assurance Division of NZQA.Despite that notice and warning, Ellipse had not taken steps to comply with the Student Fee Protection Policy.I was aware from the emails received from Ellipse that it disputed receiving a 20 February 2012 letter from StudentCare advising that it had suspended issuing student fee reimbursement insurance policies and that it disputed the legality of this decision. I took this into account when making the decisionto cancel Ellipse's registration but I did not consider that this excused Ellipsefrom complying with the Student Fee Protection Policy. As the cancellation notice records, on 11 May 2012 Ellipse had indicated to NZQA that it would meet its student fee protection obligations by reactivating the standard trust arrangement it previously had with the Public Trust. Despite that advice, Ellipse had not done so.I was aware that Ellipse had said in its 8 June 2012 email (which was copied to me and is quoted on pages 2-3 of the notice of cancellation) that its managing director Mr Prasad was arranging finance with his bank and thatthis would take "at least 2 to 3 weeks". I took this email into account when deciding to cancel Ellipse's registration but decided that it was notappropriate to allow Ellipse further time to comply with its obligations under the Student Fee Protection Policy.Ellipse had indicated on 11 May 2012 that it was moving to implement a standard trust arrangement with the Public Trust. On 28 May 2012, NZQA had given it until 5 June to transfer the necessary funds into trust. When Ellipse failed to meet that deadline, NZQA had sent Ellipse a further letter on 8 June 2012 reminding it of its obligation to comply with the Student Fee Protection Policy and giving Ellipse a final opportunity to do so by 11 June before NZQA moved to consider the options available to it (including theimmediate cancellation of Ellipse's registration). In these circumstances Iconcluded that Ellipse had been given more than adequate time to comply with its obligations.In the circumstances, I concluded that it was appropriate to cancel Ellipse'sregistration. I considered that it would not be an appropriate response toplace a condition on Ellipse's registration under s 255(7)(a) of the Actrequiring it to comply with the Student Fee Protection Policy. Compliancewith the Student Fee Protection Policy was already a condition of Ellipse'sregistration by virtue of s 233B(1) of the Act. Imposing such a condition would only duplicate that requirement. I also concluded that the issue could not be managed by placing a condition on Ellipse limiting its ability to enrol new students. For quite separate reasons, NZQA had already imposedconditions on Ellipse's registration limiting the circumstances in which itcould enrol new students and the student fee protection issue had arisen since those conditions were in place.In my view the failure to comply with the Student Fee Protection Policy was a serious breach which should have been rectified as soon as Ellipse became aware of it. Given the continual failure to comply with the policy I decidedthat cancellation of Ellipse's registration was the appropriate course to take.[83] On the evidence of Dr Poutasi she, as the decision-maker, was aware of the issue between Ellipse and StudentCare and took this into account when making thedecision to cancel Ellipse's registration. She was also aware of Mr Prasad's email of8 June 2012 seeking further time, at least two to three weeks, to arrange refinancing with his bank. Importantly, she was aware that on 11 May 2012 Ellipse had advised that it was moving to implement a standard trust arrangement with the Public Trust and that this had not been done, notwithstanding an extension of time from the deadline of 5 June 2012 specified in the compliance notice of 28 May 2012 to 11 June 2012. While Dr Poutasi took into account the background of the communications between Ellipse and StudentCare and that Ellipse disputed thelegality of StudentCare's decision to suspend issuing student fee reimbursementinsurance policies, by the time she was called upon to consider the cancellation decision on 18 June 2012, that situation had been superseded by Ellipse's own decision to meet the problem presented by StudentCare's decision to suspend issuingstudent fee reimbursement insurance policies for students of Ellipse by reverting tothe standard trust option. Ellipse's failure to implement the standard trust option was ultimately the driving factor in Dr Poutasi's decision to issue a cancellation noticeunder s 255(7)(a) of the Act.[84] Dr Poutasi took into account, as she was required to do, the statutory requirement to provide protection for students in respect of their fees and that despite the compliance notice and warnings that cancellation of registration was a possible consequence of non-compliance, Ellipse had failed to comply both with the Policy and the standard trust option which Ellipse had elected on 11 May 2012, such that the amount of unprotected fees was significant and had remained unprotected for a considerable period of time.[85] Ellipse's contractual relationship with StudentCare was not a relevant consideration for Dr Poutasi, the decision-maker, as the delegate of NZQA. But she was duly informed of, and took into account, the relevant background and Ellipse'sposition in relation to StudentCare's performance. Her decision cannot be regardedas unfair or unreasonable on this basis.[86] This is a convenient point to refer briefly to an allegation in the plaintiff'ssubmissions which is not pleaded – that the decision-maker "abdicated" her decisionmaking power. There is no evidence to support this allegation. Dr Poutasi carefullyexplains in her affidavit the process by which she exercises her delegated authority in taking decisions under the Act. In particular, she says that having received a recommendation from the Quality Assurance Division of the Authority, she considers it along with the supporting material, and then either approve or disagree with the recommendation. The passage from her affidavit set out above37 explains how she applied this process in independently concluding that it was appropriate to cancel Ellipse's registration. I therefore reject this submission.[87] Having dealt with the matters which were the principal focus of Mr Orlov'soral submissions for Ellipse, I turn to consider the pleaded causes of action.Causes of actionFirst cause of action – breach of natural justice[88] Ellipse pleads that the decision to cancel its registration was an error of lawin that it breached Ellipse's rights to natural justice.[89] It is well established that natural justice is a concept that is based on broad, flexible principles, which must be tailored to the facts.38 The principles have beenheld to apply where a person's livelihood is at stake39 and in other contexts where the consequences of the decision are grave.40[90] There is nothing in s 255 that strongly indicates that considerations of natural justice apply,41 besides the requirement that NZQA give notice to the institution. However, it may be assumed that NZQA should exercise its powers in a fair37 At [82].38 See, for example, Webster v Auckland Harbour Board [1987] 2 NALR 129 at 132, Drew vAttorney-General [2002] 1 NZLR 58 at [67] and E H Cochrane Ltd v Ministry of Transport[1987] 1 NZLR 146 at 138.39 Murdoch v New Zealand Milk Board [1982] 2 NZLR 108 at 114 and Diagnostic Medlab Ltd vAuckland District Health Board [2007] 2 NZLR 832 at [47].40 Re Erebus Royal Commission [1983] 1 NZALR 662 at 671 and Daganayasi v Minister ofImmigration [1980] 2 NZLR 130 at 144-145.41 Cf. the use of the phrase "on reasonable grounds" in s 233D.manner.42[91] Apart from the issues I have previously addressed, the plaintiff alleges that the Authority failed to provide an opportunity for it to make proper written submissions on the action it intended to take and that the cancellation occurred without consultation and without due process being followed.[92] Ellipse's registration was cancelled under s 255 of the Act. The provisions ofthat section are set out above.43[93] The compliance notice issued by the Authority on 28 May 2012 met the requirements of s 255(3) in that:(a) It was in writing;(b) It provided that it "must be complied with by 5 p.m. 5 June 2012";(c) It stated the consequences or possible consequences of non- compliance: "Should Ellipse not comply with this notice within theperiod of time specified in the notice, s 255(7)(a) of the Act allowsNZQA to immediately cancel Ellipse's registration or impose newconditions or amend or revoke any existing conditions on thatregistration".[94] In addition, a copy of s 255 was attached to the notice.[95] The notice followed extensive communications since 15 March 2012 between Ellipse and the Authority about its compliance with the Policy. On 11 May 2012 Ellipse had advised the Authority that it would revert to using the standard trust student fee protection option with the Public Trust acting as the independent trustee.42 See, for example, Furnell v Whangarei High Schools Board [1973] 2 NZLR 705 and SaxmereCo Ltd v Wool Board Disestablishment Co Ltd [2009] NZSC 72; [2010] 1 NZLR 35 at [91] andStininato v Auckland Boxing Association (Inc) [1978] 1 NZLR 1 at 13.43 See at [31] to [36].[96] Ellipse responded to the compliance notice by effectively claiming that StudentCare was responsible for the student fee protection issues that had arisen. In response, NZQA advised Ellipse that it was: 44 required to immediately arrange alternative cover if your student feeprotection fails, as is the case now StudentCare has withdrawn cover. NZQA requires the compliance notice issued 28 May 2012 to be complied with.[97] Ellipse can have been left in no doubt that regardless of how it viewed the respective responsibilities of itself and StudentCare in relation to student fee protection issues, it was Ellipse's responsibility to put in place alternative student feeprotection arrangements.[98] When the time for compliance with the notice had expired, NZQA sought confirmation from Ellipse that the funds had been deposited with the Public Trust in accordance with Ellipse's advice of 11 May 2012 that this was the option it wouldnow pursue.[99] On 8 June 2012 after the period for compliance with the notice had expired and Ellipse had not complied, NZQA granted an extension of time for compliance until 11 June 2012 and also advised that:NZQA will begin considering the immediate action available to it (whichincludes the option of cancellation of Ellipse's registration), if the requisitefunds are not deposited into a trust account of an independent trustee approved by NZQA, by 5 p.m. Monday 11 June 2012.[100] When Ellipse still failed to comply NZQA made the cancellation decision on 18 June 2012.[101] Ellipse's registration was cancelled 21 days after the compliance notice wasissued. During that period there were numerous communications between Ellipse and NZQA, as there had been prior to the issue of the compliance notice. These can have left Ellipse in no doubt as to its obligations in respect of student fee protection and the consequences of non-compliance.44 NZQA's email to Ellipse of 1 June 2012.[102] Ellipse sought to place significance on the requirements of s 233D of the Act which requires, among other things, that before cancelling a registration the establishment must be given a reasonable opportunity to respond and consider any submissions in response to the cancellation notice.[103] However, in this case, the Authority did not proceed under s 233D but under s 255. Section 233D(5) expressly provides that the Authority's powers under s 255(7)(a) to cancel an establishment's registration are not limited by the provisionsof s 233D.[104] In giving the Authority discretion to cancel in terms of s 255, the legislaturerecognised the potential need for the Authority to cancel a registration "immediately"if there is non-compliance with a compliance notice duly issued. That, of course, does not exclude the overarching requirement that the Authority act fairly and in accordance with the principles of natural justice, as Mr Taylor readily and properly accepted on behalf of the Authority.[105] However, it is well established that natural justice rights must be consistent with the governing legislation and must not frustrate it. In Daganayasi Cooke J said:45The requirements of natural justice vary with the power which is exercised in the circumstances in their broadest sense though not limited to occasions which might be labelled judicial or quasi judicial. Their applicability and extent depend either on what is inferred or presumed in interpreting theparticular Act or on judicial supplementation of the Act without frustrating the apparent purpose of the legislation. [106] I agree with the submission for the Authority that it would be inconsistent with the statutory scheme and language of the Act to read into it an obligation on the Authority to provide an institution with an opportunity to make written submissionson the Authority's response to a failure to comply with a compliance notice, after the time for compliance has expired. This is particularly so when prior to the compliance notice being issued, the institution (PTE in this case) has had an opportunity to make written submissions to the Authority, including as to the45 Daganayasi v Minister of Immigration at 141.appropriate response by the Authority in the event that the PTE does not intend to comply with the compliance notice.[107] In this case Ellipse had the opportunity to make whatever submissions it wanted, including as to whether its registration should be cancelled in the event of non-compliance, it having been given clear advice that this was a possible consequence of non-compliance. Indeed, Ellipse engaged in continuing communications with the Authority before and after issue of the compliance notice. It simply did not comply.[108] I conclude that the process undertaken by the Authority leading up to the cancellation notice and in relation to cancellation on 18 June 2012 was fair to Ellipse and consistent with its right to natural justice.Second cause of action – failure to take into account relevant considerations[109] The statement of claim alleges that the decision to cancel Ellipse'sregistration was an error of law in that it took into account irrelevant considerations and failed to take into account relevant considerations. The particulars relating to this pleading include reference to Ellipse's claim that as the master insurance policy was issued by StudentCare prior to any restrictions imposed on Ellipse by the Authority (by notice of 27 January 2012), the insurer was legally bound to issue insurance certificates in accordance with the insurance policy and Ellipse could not be held at fault for the failure to issue the certificates.[110] I have previously dealt with this point. In short, any claimed default by StudentCare does not relieve Ellipse from its obligations under the Policy to ensure that student fee protection is in place under one of the seven available options, nor provide it with a just excuse for non-compliance.46[111] The particulars also refer to the amount of $43,827.98 being incorrect in the cancellation notice, which is also a matter I have dealt with above. I have concluded that the amount stated in the cancellation notice was based on a mistake of fact46 See at [76] to [87] above.which was subsequently corrected, and in all the circumstances of this case was not material to the extent that it invalidated the notice.47[112] The particulars also allege the Authority failed to take into account that Ellipse was complying with s 234E(1) of the Act by depositing funds with the Public Trust. That section relates to the funds that must be deposited with an independent trustee by or on behalf of students as soon as possible after receipt. The independent trustee is then obliged to hold the funds on a withdrawal trust for the refund period.[113] These obligations are separate and additional to the obligation of the PTE to comply with the Policy. This requirement is clearly stated at paragraph 5 of the Policy:Please note that the requirements of the Policy are in addition to the student withdrawal provisions under [now s 234E] of the Education Act, that is, all PTEs must have a trust account operated by an independent person in line with [now s 234E] of the Education Act regardless of the type of fee protection mechanism they use.[114] The particulars also refer to the plaintiff having been "specifically exempted" from the requirement of holding funds with the Public Trust "due to the existence of a valid insurance policy issued by the second defendant" (presumably a reference toStudentCare which is not a party to the proceedings). There is no specific exemption, and this claim fails to recognise the distinction between the deposits required in respect of the withdrawal trusts and the separate requirement to put in place student fee protection arrangements under the Policy.[115] Ellipse further alleges that the Authority failed or refused to follow its own policy by failing to give Ellipse an opportunity to arrange alternative insurance todeal with the "unlawful cancellation".[116] There was no refusal or unwillingness by the Authority to discuss possible transitional arrangements. Ellipse never proposed any such arrangements. Instead Ellipse, of its own volition on 11 May 2012, advised the Authority that it would47 See at [45] to [75] above.move to the standard trust option. Despite that advice, it did not transfer funds to the Public Trust to be held on trust to cover the fees of the uninsured students.[117] Seventeen days elapsed between Ellipse's advice to the Authority that it wasgoing to use the standard trust option and the issue by the Authority of the compliance notice on 28 May 2012 requiring Ellipse to do so. In the meantime Ellipse had not notified the Authority that it was unable to obtain student fee reimbursement insurance from StudentCare despite advice from StudentCare (leaving aside the letter of 20 February 2012 which Ellipse said it did not receive) on 5 March, 15 March and 5 April 2012. Indeed on 12 April 2012 Ellipse replied to theAuthority that: "There is no notification that they [StudentCare] will be cancelling orsuspending of new policies".[118] This cause of action fails.Third cause of action – ultra vires/unreasonableness[119] No particulars are provided in the statement of claim. Ellipse pleads that in the alternative to the above causes of action the defendant has acted contrary to its own policies and statutory duties as pleaded and has therefore acted ultra vires itspowers and authority in cancelling the plaintiff's registration and/or acted unreasonably and or unfairly.[120] I have previously considered and dismissed a submission by Ellipse that the compliance notice of 28 May 2012 (which is not the subject of judicial review) wasultra vires because it did not relate to a condition of Ellipse's registration as a PTE.I have also considered and dismissed Ellipse's submission that because the amount stated in the cancellation notice was incorrect the notice was ultra vires.[121] For the reasons set out above under several headings I have concluded that the Authority did not act unreasonably or unfairly in the processes it followed incancelling Ellipse's registration. This cause of action also fails.Result[122] The plaintiff's application for review is dismissed.Costs[123] Ellipse has failed in all its causes of action. As the successful party, the Authority is entitled to costs, which I award on a 2B basis.SCHEDULE : Chronology of relevant events27 January 2012 NZQA notifies Ellipse that it has imposed conditions on the registration of Ellipse under s 233B(5)(a) of the Act. The notice states that these conditions have been imposed with the agreement of Ellipse. The effect of the conditions is stated to be that from 27 January 2012 Ellipse will not enrol any further students, until one or more independent accredited institutions with external valuation and review (EER) ratings, i.e. an institution placed in either provider category 1 or 2 on the basis of their EER results, have been appointed to carryassessment and moderation of the work of Ellipse's students.The notice stipulates the importance of Ellipse adhering to theconditions " because NZQA may take steps to cancel theregistration of Ellipse under s 233D(1)(a)(ii) of the Act" if it does not comply with the conditions applying to it, including the conditions referred to in the notice.20 February 2012 StudentCare writes to Mr Prasad of Ellipse that "Further toprevious discussions it is with regret that I advise that due to the sanctions placed on Ellipse by NZQA for the enrolment of any new students, StudentCare will be suspending any further SFP [student fee protection] application requests". The letteradvises that the suspension is in place immediately and that StudentCare sees the suspension as temporary and dependent on a satisfactory NZQA result. Ellipse is advised to make arrangements where necessary to retain any additional fees within the Ellipse trust facility and to discuss this further with NZQA.4829 February 2012 StudentCare sends NZQA its quarterly report listing all of the Ellipse students covered by student fee reimbursement policies.2 March 2012 Ellipse emails StudentCare and requests that it provide student fee reimbursement insurance for one of its students, Dilesh Krishnan.2 March 2012 StudentCare responds to Ellipse's request by asking whether this is a "newly enrolled student or a transfer out of PublicTrust?"2 March 2012 Ellipse responds by email: "They are all new students, including those I sent yesterday".48 Mr Prasad's evidence is that he did not receive this letter.2 March 2012 StudentCare replies and says that it had been advised that international student enrolments have been suspended. It says that it had not expected to receive any insurance requests until the suspension was lifted.2 March 2012 Ellipse replies to StudentCare as follows: "These are studentswho have already enrolled before 25 January 2012 and visa was granted later. We have another 50 or more students enrolled and some are still pending visa. We have not enrolled students after that but this will be cleared by next week as weare having some other PTE working with us".5 March 2012 StudentCare replies to Ellipse and says that it has suspendedissuing policies: "It is an underwriting requirement that nopolicies are issued to a PTE which is under any sanctions by regulators, so although this sounds a temporary setback our contract prohibits us from issuing these at the moment". The email concludes: "From what you've indicated this soundslike it will hopefully be resolved quite soon, but we will need to review the NZQA's final decision before we can recommence issuing SFP policies".15 March 2012 NZQA emails Ellipse a list of 18 students for whom it could not locate student fee reimbursement insurance policies. The email asks Ellipse to "urgently review the list and confirm thepolicy number, or clarify why no insurance has beencompleted".4915 March 2012 Ellipse replies to NZQA that it would "look into" NZQA'squery regarding student fee reimbursement insurance policiesand "advise you accordingly".15 March 2012 Ellipse emails StudentCare. The email says that "there is a list of students who enrolled before 25/1/2012 who's Fee Protection seems not completed. This closure is temporary and we will start enrolling student by end of next week as we have found another partner to assist in assessment andmoderation". The email goes on to ask StudentCare to "sortthe students prior to 25/1 as these students were enrolled well before NZQA asked us not to enrol students".15 March 2012 StudentCare responds: "We cannot process any applicationsuntil firstly we receive confirmation from NZQA that any restrictions have been lifted. This is a strict underwriting requirement. Once we receive this confirmation we will thenneed to seek Underwriter approval for continuation".49 NZQA has not at this stage been notified that StudentCare has suspended student fee protectioninsurance for Ellipse.StudentCare also says: "For your records all policy requestsreceived by us before the 25/01/2012 were processed so I am unsure as to why you believe there are still outstandingpolicies from this time period".15 March 2012 Ellipse replies to StudentCare: "These students applicationwere in process and started later but were enrolled before 25/1. I will check this with Casy and send you a copy ofenrolment form if you want".15 March 2012 StudentCare responds and advises Ellipse that "regardless ofhow you administer the enrolments at your end we need to receive applications in advance of course start date in order for them to be processed. We will not be able to process theseapplications under the current circumstances".16 March 2012 Ellipse files judicial review proceedings relating to the decision of NZQA on 27 January 2012 to impose conditions. This proceeding is struck out on 14 June 2012.16 March 2012 Dr Poutasi of NZQA writes to Ellipse advising that NZQA is considering cancelling the registration of Ellipse as a registered establishment under s 233D(1)(a)(ii) of the Act and giving Ellipse until 11 April 2012 to make submissions as to why it believes the cancellation should not occur. The notice attaches a document detailing the grounds upon which NZQA is satisfied that Ellipse no longer complies with the condition of registration set out in s 233B(1) of the Act. The notice details non-compliance with criteria relating to staff, courses, learners, assessment and quality assurance. NZQA states that non-compliance with these essential matters raises significant concerns and that individually and collectively they mean that NZQA is of the opinion that Ellipse is not complying with the registration requirements.5026 March 2012 NZQA emails StudentCare the list of the 18 students for whom it could not locate student fee reimbursement insurance policies in StudentCare's February quarterly report and askedit to confirm whether they were covered.27 March 2012 StudentCare replies to NZQA and confirms that if students are not listed in the February report they are not covered.50 NZQA objected to admission of this document on the grounds that it is not relevant to thedecision of NZQA subject to the judicial review, namely the cancellation decision on 18 June2012 as confirmed on 29 June 2012. That is so, but I consider it provides helpful factualbackground.27 March 2012 StudentCare confirms that a policy for one of the students on the list had been extended and that another student appeared to be covered under a different name, i.e. that two of the 18 students are covered.27 March 2012 NZQA emails Ellipse and asks for a response to its 15 March query regarding the list of 18 students for whom it could not find student fee reimbursement insurance policies. NZQA says that it needs "to confirm the students have insurance, or if not, the reason for this".27 March 2012 Ellipse replies that it will let NZQA know by tomorrow.29 March 2012 Ellipse emails NZQA regarding the list of 18 students with explanations concerning their varying positions in relation to enrolment and insurance.29 March 2012 StudentCare inquires of Ellipse whether it has an update on the current NZQA situation "Has NZQA lifted therestrictions?"29 March 2012 Ellipse responds "I should have up and running by next week.I will email the response from NZQA".5 April 2012 NZQA emails StudentCare and says that it had been advised by Ellipse that it was waiting for certificates of insurance to be issued to four students, that three students needed their policies extended, and that two students should have been issued cover by now. NZQA asks StudentCare to confirm that cover is in place. It says that it needs "to ensure all students have the required SFP cover".5 April 2012 StudentCare forwards NZQA's email to Ellipse. Theforwarding email says: "As previously advised to you we donot have these students covered and will not be able to do so until the sanctions from NZQA have been lifted. Did you make prior arrangements for these students as suggested like leaving the funds in the trust account and/or discussing your options further with NZQA. I would appreciate your response on this situation before I reply to Pam51 as I believe NZQA is considering cancelling Ellipse".StudentCare responds to NZQA saying simply that it does not"appear to have any of the students [listed in NZQA's email]currently covered by StudentCare".51 Pamela Neale at NZQA.10 April 2012 NZQA responds to StudentCare (copying Ellipse) and says:"Given that Bhashkar52 has already confirmed these students require cover, and that their fees have been released from the withdrawal trust, we require StudentCare to immediately provide cover for these students and charge Ellipse Institute accordingly. We cannot allow these students to remain without Student Fee protection cover".5310 April 2012 StudentCare replies (copying Ellipse) and advises NZQA thatit has "had various discussions with Ellipse that until the NZQA sanctions were lifted the fees should remain in trust (ordiscuss this further with NZQA)".10 April 2012 NZQA replies to StudentCare (copying Ellipse) saying that the"funds released from the trust relate to students who enrolledbefore the condition on enrolments was imposed, and therefore are now required to have insurance as their SFP cover as that is the cover selected by Ellipse Institute. Bhashkar has previously indicated that he had requested cover. NZQA urgently needs to know these students are protected".10 April 2012 Ellipse emails NZQA in response to StudentCare's email: "Ihad mentioned to Karyn54 that these students were enrolled well before the 25/1/2012 but started late. I will be sending you a copy of the request to StudentCare. I have explainedthis to Karyn on various occasions through emails".10 April 2012 StudentCare responds to NZQA's email: "The students are notcovered by StudentCare therefore should not have been released by the trust. My understanding was that our insurance certificates are used as confirmation before the feesare released".11 April 2012 NZQA replies to StudentCare (copying Ellipse) and advises it that its understanding is incorrect. It explains that insurance certificates are only needed in order to release funds from a withdrawal trust when a PTE is transitioning from using another student fee protection option to the insurance option.This email continues: "I have now asked twice for cover to beprovided, and Bhashkar has also asked for cover, and to date it has not been confirmed. Obviously this is a major concern toNZQA".52 Mr Prasad of Ellipse.53 The evidence of Ms Neale is that NZQA was proceeding on the assumption that there was some kind of delay or administrative failure by StudentCare in the issue of policies, having not received notice of the advice from StudentCare to Ellipse on 15 March 2012 that they would not process any applications until receipt of confirmation from NZQA that restrictions had been lifted.54 Karyn Parle, General Manager, StudentCare.11 April 2012 StudentCare replies to NZQA's email (copying Ellipse). In thecourse of that email StudentCare refers to its "decision tosuspend issuance of new policies to Ellipse" and said that this "reflected the NZQA's suspension of enrolments". It goes on to say that: "Given the NZQA sanctions we obviously weren'texpecting new applications but we instructed Ellipse to discuss the matter with the NZQA and that any uninsuredfunds must remain in trust". Later in the email StudentCare says: "Ellipse has been told several times of our suspensionand is aware that we expect a complete explanation of thismatter before we reconsider issuing cover".11 April 2012 Ellipse emails NZQA and says that the students in questionwere enrolled prior to 27 January 2012 but arrived "late". It says that it is "therefore the responsibility of StudentCareto provide the cover". Ellipse suggests that NZQA "have adiscussion with Karyn [from StudentCare] to this issue asap". Ellipse closes the email by saying that it has "followed therules of NZQA and I believe that the third party is not doingtheir part of responsibility".11 April 2012 Ellipse's lawyers write to NZQA in response to NZQA's letter of 16 March 2012 advising of NZQA's intent to cancel theregistration of Ellipse based on concerns arising from the 2011 EER report.5512 April 2012 NZQA emails Ellipse and asks it to "urgently confirm ifStudentCare issued any notification to you that they weresuspending the issuance of new policies".12 April 2012 Ellipse replies and says: "NO there is no notification that they will be cancelling or suspending of new policies".12 April 2012 Ellipse emails NZQA saying: "Both myself [Bhashkar Prasad] and Casey were sending the Fee protection and also whenCasey was on leave I was sending that". Attached to thatemail are various documents apparently sent to StudentCare requesting cover.12 April 2012 NZQA replies to StudentCare's email of 11 April (copyingEllipse). NZQA says that "with regard to your confirmationon the 27/03/12 that the students listed were not covered, I note you did not disclose that they were not covered becauseyou had suspended insurance of policies". The emailconcludes by saying: "At no stage has NZQA been formallynotified that StudentCare has suspended issuance of new55 Ellipse does not rely on the contents of this letter. It relates to a notice by NZQA which is notthe subject of the judicial review.policies to Ellipse. Bhashkar has also advised he has not been informed the issuance of policies was/is suspended. Please advise the clause in the student fee protection insurance policy that allows you to suspend issuance of policies without notice, and provide a copy of the written notification that was issued confirming the suspension. Had NZQA been properly informed of the suspension of policies, Ellipse would have been requested to make alternative provision for students, as it is a requirement that all students have student fee protection cover for the duration of their study. Currently, these students do not have the protection they are entitled to".13 April 2012 StudentCare responds to NZQA's email and says that it did notreceive any applications for insurance cover for the students in question before it suspended issuing further policies. The email then details the history of StudentCare's dealings withEllipse. It also states that StudentCare did not receive any formal notification of the sanctions placed on Ellipse and onlyreceived the advice dated 16/03/2012 "considering cancellation of registration" on 28/03/2012.13 April 2012 NZQA replies to StudentCare and, among other things, asks for a copy of the notice of suspension sent to Ellipse.13 April 2012 StudentCare replies to NZQA's email and attaches a copy of aletter dated 20 February 2012 which it says it sent to Ellipse advising it that it had suspended issuing any further insurance policies. The email also states that StudentCare continues to protect the interests of the students StudentCare has received requests and premiums for and for which documentation has been issued. These policies remain unaltered and are not affected by the current temporary suspension.16 April 2012 Ellipse forwards NZQA earlier correspondence it has had with StudentCare between 2-5 March. Ellipse disputes receiving the 20 February notice of suspension from StudentCare.16 April 2012 Ellipse emails StudentCare (and copies NZQA). In the email Ellipse disputes ever receiving the 20 February 2012 letter of suspension from StudentCare.17 April 2012 NZQA emails Ellipse and asks it to forward a copy of its contract with StudentCare so that it can review it.20 April 2012 Ellipse forwards NZQA a copy of its contract with StudentCare.5656 "Combined Student Fee Reimbursement and Management Liability" policy issued by Dual10 May 2012 StudentCare emails and advises Ellipse that it is terminatingits administration agreement with it: "Due to several requests of outstanding premiums owed to StudentCare I believe you have already received a cancellation advice from my colleague Jonathan Goodchild. Effective immediately StudentCare is terminating the current administration agreement and as a result will not be issuing any further insurance policies to Ellipse Institute. I suggest you make immediate arrangements with Public Trust and discuss your options with NZQA toensure you comply with the compulsory SFP requirements".11 May 2012 Ellipse responds saying that it has "started enrolments" and will "be back to normal soon".11 May 2012 StudentCare replies repeating its earlier advice that its "offerto supply SFP insurance to Ellipse has been terminated".11 May 2012 Ellipse emails NZQA and advises that "As from today we willgo back to Standard Public Trust Fee Protection".28 May 2012 NZQA sends Ellipse a compliance notice under s 255(2)(a) of the Act requiring it to transfer sufficient funds, stated to be $43,827.98, to a student fee protection standard trust account operated by Public Trust to cover 10 students NZQA believed were not covered by student fee protection arrangements. The compliance notice was to be complied with by 5 p.m. on 5 June 2012.28 May 2012 In response to the compliance notice, Ellipse emails NZQAand says that it had "requested for fee protection insurance well before the sanction and StudentCare were just holding it".Ellipse again denies receiving the 20 February 2012 letter andsays that it is "going through every file and will report soon".31 May 2012 StudentCare sends NZQA its quarterly report listing all of the Ellipse students covered by student fee reimbursement insurance policies.1 June 2012 NZQA replies to Ellipse's email of 28 May and says: "Asnoted in the compliance notice, you are required to immediately arrange alternative cover if your student fee protection fails, as is the case now StudentCare has withdrawn cover. NZQA requires the compliance notice issued 28 May2012 to be complied with".Australia Pty Ltd.1 June 2012 Ellipse replies and says that it is "sorting this out includinginsurance etc. Just give me a few days and we will be back inbusiness".6 June 2012 NZQA emails Ellipse noting that the due date for compliance with the compliance notice was 5 June 2012 at 5 p.m. It asks for confirmation that the necessary funds had been deposited in accordance with the notice.6 June 2012 Ellipse replies saying: "Sorry once again, Monday was aholiday and I had been very sick with asthma and just back today to clear everything".6 June 2012 Ellipse sends a further email saying: "I had replied on 28 May2012 and this was acknowledged by Karen and I did say that Iam going through all the files".6 June 2012 Ellipse sends another email saying: "I am sorry in replyinglate as I had been sick. However I did send an email to the CEO stating that Ellipse is not at fault. The system approved by NZQA for StudentCare have not been followed. All correspondence from StudentCare is being sent through emailand isn't it surprising that this letter went straight to NZQA and not Ellipse. They should have notified NZQA first with acopy to Ellipse. "I am sorry Ellipse has breached any condition". Attached to the email is a letter dated 5 June 2012and various attachments.578 June 2012 Letter from NZQA to Ellipse notes that the compliance notice was to be complied with by 5 June 2012 at 5 p.m. but as of the date of the letter Ellipse was yet to lodge the necessary money in a student fee protection account. The letter advised that"NZQA will begin considering the immediate action available to it (which includes the option of cancellation of Ellipse'sregistration), if the requisite funds are not deposited into a trust account of an independent trustee approved by NZQA, by 5 p.m. Monday 11 June 2012".8 June 2012 Ellipse sends a further email disputing that it received the 20February 2012 letter. Mr Prasad states "This is a fake letter and I can prove this". Mr Prasad says that he is "arranging with my bank for refinance as it will take at least 2 to 357 The evidence of Dr Poutasi is that NZQA received Ellipse's 6 June 2012 email but when theemail was forwarded for consideration by other NZQA staff the 5 June 2012 letter andsupporting documents attached to the email were inadvertently removed. This oversight did notcome to light until Ellipse filed these proceedings and the letter of 5 June 2012 was attached asan exhibit to Mr Prasad's affidavit.weeks. I have assets over 1.5m but documentation will taketime".18 June 2012 NZQA sends Ellipse a notice notifying its decision to cancel Ellipse's registration on account of its failure to comply with the compliance notice requiring Ellipse to deposit in its student fee protection standard trust a total of $43,827.98 in respect of ten named students. The cancellation notice refers to the requirement of the 28 May 2012 compliance notice that the deposit was to be made by 5 p.m. on 5 June 2012 and to the further communication on 8 June 2012 extending the time for compliance to 5 p.m. on 11 June 2012. The notice states that NZQA has decided to cancel Ellipse's registration unders 255(7)(a) of the Act with effect from 18 June 2012 on the basis that Ellipse's actions are a serious and sustained breachof the Act and the SFP policy and that none of the other options available to NZQA are appropriate as they would duplicate Ellipse's existing obligations.22 June 2012 NZQA sends Ellipse a letter reminding it of its obligation to keep enrolment and academic records for each student and upon its closure to supply the records to each student or thestudent's new education provider.29 June 2012 NZQA sends Ellipse a letter advising it that NZQA has exercised the power to correct an error or omission in its earlier decision cancelling Ellipse's registration and that it hasreissued the cancellation decision. The letter from Dr Poutasi refers to the cancellation notice of 18 June 2012 and states"Ellipse has since issued judicial review proceedings challenging the decision to cancel its registration. One of the grounds for its challenge is that NZQA did not take into account information contained in a letter, dated 5 June 2012, that Ellipse emailed to NZQA on 6 June 2012. The information in that letter related to the students identified in the 28 May 2012 compliance notice (Notice) and whether Ellipse had put in place student fee protection for the named students.The 6 June 2012 email was received by NZQA but because of an IT error, the attachments to it (namely the letter dated 5 June 2012) was inadvertently overlooked when placed before me as the delegated decision-maker. The information relatingto Ellipse's compliance with the Notice.Under s 13 of the Interpretation Act 1999, I have exercised mypower to correct the omission to consider Ellipse's 5 June2012 letter in the context of deciding whether Ellipse has complied with the Notice and if not, what action if any, NZQA may take under s 255(7)(a) of the Education Act 1989 (the Act)".The Notice attached to the letter of 29 June 2012 analyses the information contained in Ellipse's 5 June 2012 letter and states that NZQA has concluded that the appropriate student fee protection arrangements are not in place in respect of 8 of the 10 students listed in the 18 June 2012 Notice which required the transfer into trusts under the standard trust option of a total of $37,124.13, a difference of $6,703.85 from the amount stated in the 18 June 2012 cancellation notice. Dr Poutasi states that under s 13 of the Interpretation Act 1999 she has exercised her power to correct the omission to considerEllipse's 5 June 2012 letter, that Ellipse has failed to complywith the compliance notice in respect of the total amount of$37,124.13, that Ellipse's failure to comply is significant and that the decision to cancel Ellipse's registration unders 255(7)(a) of the Act was justified and therefore remains unchanged.