THE INTERNATIONAL ACADEMY OF NEW ZEALAND LIMITED v THE NEW ZEALAND QUALIFICATION AUTHORITY [2016] NZHC 640

THE INTERNATIONAL ACADEMY OF NEW ZEALAND LIMITED v THE NEW ZEALAND QUALIFICATION AUTHORITY [2016] NZHC 640 [12 April 2016]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2015-404-2366[2016] NZHC 640BETWEEN THE INTERNATIONAL ACADEMY OFNEW ZEALAND LIMITEDPlaintiffAND THE NEW ZEALANDQUALIFICATION AUTHORITYDefendantHearing: 5 April 2016Appearances: B O'Callahan and M Chen for plaintiffR Scott and M Cavanaugh for defendantJudgment: 12 April 2016JUDGMENT OF LANG J[on application for judicial review]This judgment was delivered by me on 12 April 2016 at 11.30 am,pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate[1] The International Academy of New Zealand Limited (the Academy) is a private training establishment (PTE) registered under s 233 and Part 19 of the Education Act 1989 (the Act). It provides tertiary education to students predominantly from India and the Philippines. It offers diploma courses at several levels in business, computing and healthcare management.[2] The New Zealand Qualifications Authority (the Authority) is a Crown entity created and empowered under s 246A of the Act. It has statutory obligations to oversee, monitor and review performance and accreditation standards in respect of tertiary education providers including PTE's such as the Academy.[3] In November 2014 the Authority commenced a review process designed to enable it to express the level of its confidence in the Academy's organisationaleducational performance and capability in relation to self-assessment. At the end of that process the Authority produced a final report on 2 October 2015. This stated that the Authority was not confident about either aspect of the Academy'sperformance.[4] In the ordinary course of events the Authority would publish that report on its website. On 15 October 2015, however, the Academy commenced the present proceeding, in which it seeks judicial review of the process that the Authority adopted in relation to the preparation of the final report. The Authority has undertaken not to publish the report on its website or to take any further steps in relation to the report pending determination of the proceeding.[5] The Authority now accepts there were significant shortcomings in the final stages of the process used to produce the report. As a result, it acknowledges that the report must be set aside. The Court is now required to determine whether it should permit the Authority to produce a further report and, if so, upon what terms.The statutory framework[6] In order to understand the issues the present proceeding raises, it is necessary to have some understanding of the relevant statutory framework. I am indebted to counsel for their succinct summaries of this, which I largely adopt.[7] The Authority was required to undertake the review process in accordance with the External Evaluation Review Rules 2013 (EER Rules). These were promulgated under s 253 of the Act, and create a framework within which the Authority carries out periodic External Evaluation Reviews (EER's) of PTE's on aregular basis. EER's involve a sampling process that enables the Authority to issue reports containing "Statements of Confidence" in respect of the PTE's performanceand capability in self-assessment. The latter refers to how well the PTE understands its own performance, and how it uses this understanding to improve the educational services and facilities that it provides.[8] In order to achieve certainty and consistency in the review process the Authority issued a detailed "Policy and Guidelines" document on 1 September 2009. This prescribes in detail the procedure to be followed when an EER is undertaken. The Policy and Guidelines document identifies key evaluative questions that need to be considered in relation to each area that is the focus of the review. When answers to these have been obtained, the review team must synthesise them into organisational level judgments regarding the educational performance and capability in self-assessment of the PTE that is the subject of the review. Once the review team has produced a draft report, the PTE is given an opportunity to make submissions in respect of it.[9] The review process results in a categorisation of the PTE from 1 (highest) to 4 (lowest). The category assigned to a PTE as a result of the EER produces several consequences, one of the most important of which is the frequency of future EERs. Category 4 institutions are reviewed every six to 12 months, Category 3 institutions every 12 to 24 months, and Category 1 and Category 2 every four years. Thecategorisation of a PTE is published on the Authority's website along with final reports.[10] The Authority publishes the final report and categorisation on its website so that it is accessible to the public. Prior to publication, a PTE may apply on specified grounds for the appointment of an independent reviewer to reconsider the Statements of Confidence expressed in the report. Should that occur, publication of the reportwill not occur until such time as the Authority has received the recommendations of the independent reviewer.[11] The statutory scheme has several purposes. First, it ensures that accreditation standards are maintained consistently on a nationwide basis. Secondly, it provides the public with access to the categorisation and history of the institution through the EER reports. This enables staff and students to make an informed choice as to their place of employment or study. Thirdly, it provides a yardstick against which the institutions can measure their performance against objective standards.Background to the present proceeding[12] The first EER that the Authority conducted in respect of the Academy resulted in a report published on 7 November 2012. This report classified the Academy as a Category 2 institution. As a result, it was not due to be the subject of a further EER until November 2016.[13] As matters transpired, the Authority undertook a second EER during 2014, two years earlier than the four year cycle provided for in the EER Rules. It did so after it received a complaint on 7 April 2014 from a Dr Murray Heasley. This resulted in the Authority sending the Academy a letter on 8 July 2014 outlining the result of its investigation of the complaint. The letter also advised the Academy that the Authority would be conducting an EER of the Academy later the same year. The Authority advised the Academy that the review would provide "further opportunityfor quality assurance of IANZ's education delivery".[14] The Authority subsequently appointed a team of experienced reviewers to carry out the EER. In accordance with the process prescribed by the EER Rules, the Academy provided the review team with a large amount of documentary material about the current state of its operations. This had changed significantly since 2012, because the Academy had grown in size during that period from having just twelve students to having more than 1200.[15] The review team then visited the Academy's premises on 26 to 28 Novemberand 5 December 2014. During these visits the review team spoke to staff and examined records held on the premises.[16] On 8 January 2015 the Authority issued a draft report, and asked the Academy to provide a response within ten working days. The Academy duly complied with this requirement.[17] On 23 April 2015, the Authority issued its draft final report in respect of the EER (the first EER report). This contained statements that the Authority did nothave confidence in the Academy's educational performance and its capability in self- assessment. As a result, the draft report categorised the Academy as a Category 4 organisation.[18] On 9 June 2015, the Academy exercised its right under Rules 9.1 and 9.2 of the EER Rules to apply for a reconsideration of the statements of confidence contained in the draft final report. Two weeks later the Authority appointed an experienced reviewer, Mr William Workman, to reconsider the report. On 2 September 2015, Mr Workman produced a draft reconsideration report andprovided it to the Academy's solicitors for their client's comments. The Academyprovided its comments through its solicitors on 11 September 2015. Having considered these, Mr Workman finalised his reconsideration report and advised the Academy on 25 September 2015 that he had submitted it to the Authority for consideration.[19] Mr Workman's final report identified some significant shortcomings in the draft EER report. He recommended that the Authority should reopen the EER report finalisation process, and appoint an independent lead evaluator to progress the report to completion. Mr Workman recommended that the new evaluator be directed to prepare a new version of the report taking into account Mr Workman's findings, together with other material identified in his report that had not been taken into account in preparing the first report.[20] Within the next seven days the Authority issued the final report without making any material changes to it. The Authority's statement of defence states that itappointed a new evaluator, Mr Ferdi Lutter, to consider Mr Workman'srecommendations. It appears, however that Mr Lutter did not prepare any written material recording the process he undertook. The Academy immediately filed the present proceeding and sought interim relief.Mr Workman's report[21] Mr Workman found that the review team had committed errors of process in both the administration of the EER and report finalisation. He identified inadequacy of evaluative content, inadequacy in considering feedback from the Academy in relation to the draft report and inappropriate tone and language used in the draft report as being issues.[22] Dealing with the first of these, inadequacy of evaluative content, MrWorkman's report stated:22. In this area I have considered the textual comments to the Key Evaluative Questions, and the linkage of comments to evaluative findings and conclusions. (Note I have not considered the merits of findings, which is a role for the evaluation team; only whether the process of developing findings and conclusions has been sufficient.)23. In my view sections of this report do not sufficiently relate to Key Evaluative Questions, nor to the summary of self-assessment submitted by IANZ. An example is the discussion within Key Evaluative Question 2: 'What is the value of the outcomes for keystakeholders, including learners?' My expectation is that within this section the evaluation and review report would respond to this question by discussing matters such as how knowledge is created, the level of community support and engagement, how the provider identifies relevant stakeholder groupings, and how effective their engagement is with such stakeholders, and so forth. However rather than doing so, the text focuses narrowly on the single issue of the validity of student destination data. In my view this text does not sufficiently respond to the Key Evaluative Question, and views of stakeholders remain unreported within this report. I consider this type of structural issue – an incompleteness in considerations – which is present throughout the evaluative finding areas within the report. That is, sections 1.1 to 1.6 are insufficiently linked to the published Tertiary Evaluation Indicators.24. A second related matter is how conclusions are drawn and whether these are supported by robust findings. An example is found underKey Evaluative Question One. In this discussion the report notes that the provider was unable to replicate graduate outcomes when asked to do so, and therefore concludes that "achievement evidence (is)invalid". However the report also finds that the provider is transitioning to a new student management system. In my view NZQA must be open to the possibility that the failure of the student management system to demonstrate outcomes claimed within the IANZ summary of self-assessment, or requested by the evaluators,does not necessarily mean graduate data is 'invalid' – that may be the case, but it is not proven. In my view, the only type of finding that could reasonably be made from the evidence I have reviewed is that the provider had a data management issue (which appears agreed on by both parties), and could not validate its self-assessment learner outcome statements at the time of the on-site visit. NZQA ought then to determine its evaluative findings and conclusions based on that situation (and other relevant variables), rather than on an assumption of invalid data.25. Overall my finding is that NZQA ought not to have released a report that does not adequately address Key Evaluative Questions and does not provide convincing evaluative findings and conclusions.[23] Mr Workman then went on to observe that the review team had failed to properly address the issues raised by the Academy when it provided its response to the draft report on 30 January 2015. Mr Workman considered that in doing so it had"depreciated the normal right of reply process [the Academy] should have enjoyed within the EER process".[24] The issues that Mr Workman identified in relation to the use of inappropriate reporting tone and parlance are summarised in the following section of his report:35. Public sector evaluations and reviews must be beyond reproach, and also be perceived to be beyond reproach. In all EERs the resulting report must necessarily present as a set of impartial findings, leading to justifiable statements of confidence. I have carefully read and reviewed the report. In this case the report body fails to present as impartial and in my opinion falls well short of acceptable public sector reporting standards. This arises through inappropriate use of idiomatic phrases (inappropriate parlance), and the use of emotive language rather than neutral statements of fact or observational findings from the EER team.[25] Finally, Mr Workman accepted the Academy's submission that the draftreport contained at least one significant error of fact. Mr Workman then made the following recommendations:58. I recommend that NZQA reopens the EER report finalisation process. This would involve accepting that the report cannot be finalised andpublished in its current state and therefore remains a draft (a second draft in this instance).59. I recommend the NZQA Evaluation and Review Business Unit be directed to prepare a new version of the report, taking into consideration the following: the findings of this reconsideration process – including the necessity to improve the tone and parlance of the report and adhere directly to the published Tertiary Education Indicators, and improve the quality of evaluative findings and conclusions; the full submission of IANZ [the Academy] from the first draft (this should include a table demonstrating how all information submitted has been appropriately considered); any new information submitted by IANZ for consideration for a renewed version – this might include for example, informationsubmitted for this reconsideration process that has been setaside as outside of the reconsideration process. However aswith all information gather[ed] after a site visit, any new datathat was not previously tabled during the site visit wouldrequire explanation as to why that was the case, and the NZQAevaluator/s would need to determine the use of that data (or not)based on the merits of the explanation. (That is, the evaluationand review is a point-in-time exercise; in this case an evaluationand review of IANZ in November / December 2014 andtherefore based on data that existed at that time.60. I also consider that NZQA and IANZ should negotiate a timeframeand process steps for the above tasks, as a first action.61. I recommend that NZQA would benefit from a new lead evaluator progressing the report to completion. This person should be independent of the original onsite evaluation team, but able to draw upon information from that team to complete the report. My rationale for this recommendation is provided below.62. I see no reason why the above process rectifications steps are not possible, as the difficulties with this EER appear to have arisen at the point of considering the IANZ submission on the first draft. Accordingly the situation presents as remedial from that point onwards. However, an alternative option would be for the entire EER to be set aside. I consider that, on balance, such an approach underserves the general public interest, provider and its student body –and therefore do not recommend such an action at this time.The argumentsThe Academy[26] Mr O'Callahan advances several arguments in support of the Academy'ssubmission that the 2014 EER should be halted at this point and not completed.First, he points out that the 2014 EER was prompted by concerns raised in the Heasley complaint. All of these had been resolved or were in the course of being addressed before the 2014 EER began. For that reason the Authority would have been justified in deciding not to conduct an EER prior to November 2016.[27] Secondly, Mr O'Callahan points out that any report that may now be produced in respect of the 2014 position will not be current. For that reason he suggests it will be of academic or historical interest only. The report to be prepared following the EER later this year will have far greater relevance and value.[28] Mr O'Callahan also points out that those who conduct the 2016 EER will not be precluded from considering issues that arose in 2014. They will be free to use the material gathered in relation to the 2014 report as background material that isrelevant to the Academy's performance in 2016.[29] In this context Mr O'Callahan emphasises that the Academy cannot be blamed for the delay that has occurred to date. Its stance has been vindicated by the fact that the Authority now acknowledges the deficiencies in the 2014 report.[30] Thirdly, Mr O'Callahan submits that there are significant risks inherent in trying to gather together factual material in 2016 to support the conclusions that will need to be reached in a report that relates to 2014. Several of the staff members who were employed at the Academy in 2014 have now moved on, and it is likely to be difficult for those who remain to provide accurate information about events that occurred two years ago. He contends that these issues will inevitably compromise the factual accuracy of any new report.[31] This submission leads to the next, which is that it will be very difficult for a new evaluator to make retrospective judgments in relation to an institution that remains in operation and may be very different in nature today. For the reasons just given the Academy will also be compromised in its ability to respond to matters raised in any new report.[32] Finally, Mr O'Callahan suggests that it will be very difficult for the Authority to produce a new report that does not in some way suffer from the appearance of prejudice or bias that has afflicted the EER to date. In this context Mr O'Callahan points to the fact that the Authority has already demonstrated that it is unwilling to accept and address criticism of the type contained in Mr Workman's report. He alsorelies upon the following passages from Mr Workman's report:69. My primary concern with the NZQA evaluation team submission is whether it demonstrates a prejudicial view, or even a perception of a prejudicial view. That is, an inability to address the matters arising,which is one of IANZ's concern should the EER be continued.70. In my assessment, given the reply contains statements such as "the evaluation team sees no need to change this statement " and"factual inaccuracies put forward by International Academy of New Zealand are indeed factually accurate" – without evidence of further analysis being undertaken as yet by the team, I consider there aresome grounds for IANZ's concerns around fixed viewpoints, or atleast the perception of fixed viewpoints. To mitigate this and any other possible perceptions of partiality going forward, I have therefore adjusted my recommendations from my draft, to now advise that NZQA should appoint a new, independent lead evaluator to conclude this EER.[33] Mr O'Callahan submits that, viewed collectively, these factors tell conclusively against the continuation of the 2014 EER. Instead, the interests of all parties will be better served by the EER to be undertaken in or about November 2016.The Authority[34] For the Authority, Ms Scott accepts that Mr Workman's recommendationswere reasonable, and that the procedure he recommended should have been followed. She submits also that the statutory framework created by the EER Rules does not permit an EER to stop once it has begun. For that reason she contends that the Court should not prohibit the Authority from completing the 2014 review process.[35] Secondly, Ms Scott submits there is significant utility in producing a report relating to the Academy's position in 2014 notwithstanding the fact that a new and far more current report will be produced in the near future. She argues that the pastperformance of the Academy is not merely of academic or historical interest. Rather, it enables interested parties to learn about the development of the Academy. If the 2014 report reveals that the performance of the Academy raises issues of concern, interested parties will then look to the 2016 report to see how the Academy has dealt with these over the last two years. Ms Scott submits that it is important for the performance of the Academy to be reviewed on an ongoing basis, and that significant information will be lost if no report is produced in respect of the 2014 year.[36] Thirdly, Ms Scott submits that most of the factual material that will form the basis of the 2014 report is readily available. The new evaluator will have access to all of the material gathered together by the original review team, as well as theadditional material referred to in Mr Workman's report. For that reason theAuthority does not accept that completion of the report will create significant practical difficulties.[37] Taking these factors into account, Ms Scott submits that the Court should direct the Authority to complete the 2014 report in accordance with the recommendations contained in Mr Workman's report. She suggests that the firstfinal report should be treated as a second draft, and that the new evaluator should amend this having considered the additional material that will now be available to it.DecisionShould the 2014 EER continue to a conclusion?[38] Although it is not strictly necessary for me to do so, I begin by consideringthe Authority's submission that the EER Rules do not permit an EER to be stoppedonce it has commenced. The starting point in this context is r 12, which prescribesthe frequency with which EER's must be conducted. It relevantly provides:12. Frequency of EERs following first EER12.1 Following an institution's first EER, further EERs will be scheduledfor:(a) Category 1 and Category 2 institutions within four years following publication of the report for their previous EER:(b) Category 3 institutions within 12 to 24 months following publication of the report for their previous EER;(c) Category 4 institutions within 6 to 12 months following publication of the report for their previous EER.12.2 NZQA may schedule an EER earlier than the frequency set out in Rule 12.1 where there are outstanding concerns over the quality of its provision of education or over non-compliance issues relating to the Act or Rules.[39] The use of the word "may" in r 12.2 makes it clear that the power tocommence an EER under that rule is discretionary. Ms Scott accepts this, but submits that the language used in the remaining rules demonstrates that an EER cannot be halted once it has commenced. The EER Rules contain a series of steps that are all couched in mandatory terms. These prevent the Authority from halting an EER once it has commenced.[40] Ms Scott also relies upon the fact that there is no express provision in the rules permitting the Authority to halt an EER once it has begun. The short answer to this submission, however, is that the rules do not contain an express provision that either permits or prevents the Authority to halt an EER after it has begun. This factor is therefore neutral.[41] I consider that the Authority's argument may well be correct in relation to the mandatory EER's prescribed by r 12.1. There is no element of discretion as to when those EER's are to be undertaken, and logic suggests that they must be taken through to completion. The Rules contemplate that EER's will be undertaken in respect ofall accredited institutions within the specified timeframes.[42] The same considerations may not apply, however, in respect of discretionaryEER's commenced under r 12.2. These are commenced because the Authority hasoutstanding concerns regarding the quality of an institution's performance or the extent to which it is complying with the Act and EER Rules. Such EER's aretherefore commenced for cause rather than by way of mandatory periodic review.[43] In some cases, however, the concern that has prompted the decision to commence an EER may quickly be found to be baseless or to have been remedied.Common sense suggests that in such cases the Authority must have the ability to terminate the EER at that point. Were that not the case, the Authority and the institution would both be committed to a time consuming and lengthy review process even though the concerns that prompted that process are no longer in existence. Obviously, however the Authority would only terminate a discretionary EER if it had not unearthed any other issues that might require investigation.[44] It is not necessary for me to formally determine this particular issue because I uphold the submissions for the Authority regarding the utility and desirability of the 2014 review continuing to a conclusion. I do not consider that this would be a barren exercise because I accept that the past performance of an institution may be of significance to those who are considering whether to deal with it in the future. It is also important for the institution itself to know and understand the level of itsperformance at the points where EER's are conducted. It can only take steps toimprove its performance when it knows and accepts its shortcomings at those points.[45] I am therefore satisfied that the 2014 EER should continue to a conclusion. The next issue is how that should be done.How should the 2014 EER continue?[46] The Authority clearly contemplates that an independent evaluator would be appointed to complete the 2014 EER. I did not take the Academy to take issue with this proposal, and it would obviously make sense in the context of the present case.[47] In addition, however, I consider that the remainder of the new review team should be drawn from personnel who were not part of the original review team. The issues that Mr Workman has identified mean that the new review team should be entirely independent of the original review team.[48] I do not favour Ms Scott's submission that the first final report should be treated as a second draft. This would require the new evaluator to begin with a document created by another person, and that contains the flaws Mr Workman has identified. Instead, the new evaluator should produce his or her own version of a first report taking into account the material gathered by the original review teamtogether with the additional material to which Mr Workman has referred in his report.[49] In addition, the evaluator must be permitted to speak to staff members who were working at the Academy in 2014, and he or she must also be permitted to seek further information from the Academy. If necessary the evaluator should meet withthe Academy's staff on site, and engage in evaluative discussions with them there. The evaluator should also be permitted to seek information from members of the original review team in respect of factual issues, but not in respect of matters of judgment or opinion.[50] I would hope that these directions are sufficient to enable the 2014 review to be completed without further delay.Result: orders and directions[51] I grant the application for judicial review and make an order by consent setting aside the EER report issued on 2 October 2015.[52] I direct that the Authority is to continue the 2014 EER to completion.[53] I direct that the review is to be completed in accordance with the procedure set out at [46] to [49] of this judgment, and otherwise in accordance with the procedure set out in the "Policy and Guidelines" document issued by the Authority on 1 September 2009.[54] I reserve leave to both parties to return to the Court on 48 hours notice should any further directions be required to ensure that the 2014 report is completed in a timely manner.Costs[55] The Academy is the successful party in this proceeding, although it has not succeeded in relation to the issue of relief. If the parties are unable to reach agreement on costs I will receive succinct memoranda dealing with that issue (iememoranda of no more than three pages in length). Counsel for the Academy should file and serve his memorandum no later than 29 April 2016, and a memorandum for the Academy should be filed and served within 14 days thereafter. I will then determine the issue of costs on the papers.Lang JSolicitors:Kirkland Morrison O'Callahan & Ho, AucklandMcElroys, Auckland