HOOSH Inc (Haberfield out of School Hours) v State of New South Wales

1. [1]

   By a Deed of Licence dated 11 March 2004, the Minister for Education and Training granted the plaintiff, HOOSH Inc (Haberfield out of School Hours) a licence for 10 years from 1 January 2004 to use a designated part of the Haberfield Public School site for the purposes of “organising and operating before and after school childcare and vacation care for children”. The annual licence fee was $1. Evidently, the reason the licence fee was this nominal figure was because HOOSH had funded the construction of the premises, located in the school grounds, from which HOOSH conducts the centre.

2. [2]

   Clause 29 of the Licence was entitled “Option to Renew” and was in the following terms:

3. [3]

   On 3 June 2016 I made an order pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 28.2 that the following two questions be determined separately from, and apart from any other issues in the proceedings:

   1. (1)

      whether Ms Lucille Scaltrito, a director of HOOSH, handed a document (being a notice purporting to exercise the option in cl 29 of the Licence) to the principal of Haberfield Public School, Ms Karlynne Jacobsen; and

   2. (2)

      whether, if so, that constituted the exercise by HOOSH of the option contained in cl 29 of the Licence.

4. [4]

   The second question gives rise to two further questions, namely:

Decision

1. [5]

   In my opinion, the answers to the separate questions at [3] are:

   1. (1)

      yes;

   2. (2)

      no.

2. [6]

   The answers to the subsidiary questions at [4] are both “no”.

Did Ms Scaltrito give the Notice to Ms Jacobsen?

1. [7]

   On 30 August 2013, Ms Scaltrito prepared and signed a document (“the Notice”), addressed to Ms Jacobsen, in these terms:

2. [8]

   The “next P&C meeting” took place on 17 September 2013.

3. [9]

   Ms Scaltrito said, in an affidavit, that she handed the Notice to Ms Jacobsen at that meeting and that Ms Jacobsen took the document and said “I will pass this on to the Asset Management Unit”.

4. [10]

   The Asset Management Unit is a unit within the Department of Education.

5. [11]

   Ms Scaltrito was cross-examined about this evidence, but was unshaken. She said “this letter was definitely given to the principal, and in a very large envelope”.

6. [12]

   Ms Jacobsen, in her affidavit, said:

7. [13]

   In cross-examination Ms Jacobsen gave this evidence:

8. [14]

   Ms Jacobsen said that she has undertaken a search of her records and files and has not found any copy of the Notice or any document referring to the Notice. A search conducted of the Department’s document management system has also found no record of the Notice.

9. [15]

   The secretary of HOOSH, Ms Melissa Kemp, was present at the 17 September 2013 meeting. Ms Kemp gave this evidence:

10. [16]

    Ms Kemp was cross-examined about this evidence but was very clear that her recollection was accurate.

11. [17]

    Ms Kemp was taken to the minutes of the P&C meeting for 17 September 2013. Those minutes contain no reference to Ms Scaltrito handing the Notice to Ms Jacobsen. The last entry in the minutes (immediately before a note that the meeting closed at 9.25pm) states:

12. [18]

    In cross-examination Ms Kemp said that Ms Scaltrito handed the Notice “to the Principal” “at the beginning of the meeting” and that, very near the end of the meeting:

13. [19]

    Ms Natasha Pollock swore an affidavit stating that between 2007 and 2014, she had children attending Haberfield Public School. She said:

14. [20]

    Mr Knowles, who appeared for the Minister, did not cross-examine Ms Pollock. Mr Knowles informed me that this was because of an arrangement he had with Mr Evatt, who appeared with Mr Kirgiz for HOOSH, that neither would take any “Brown v Dunne points”. Such arrangements can often promote efficiency in the conduct of litigation, but do not obviate the need to challenge the evidence of a witness if a submission is to be made that such evidence not be accepted.

15. [21]

    Ms Pollock’s evidence was not challenged. It would be most unfair to her, and thus to HOOSH, were I to reject her evidence in the absence of such challenge unless I was satisfied that her evidence was so glaringly improbable as to warrant its rejection. I do not find Ms Pollock’s account improbable. Indeed, it is very similar to that of Ms Kemp, namely that Ms Jacobsen placed the envelope in her lap and did not open it. There is no suggestion that Ms Pollock and Ms Kemp knew what evidence the other was to give. Although Ms Pollock was not able to recall the date on which she said she saw Ms Scaltrito hand an envelope to Ms Jacobsen, it must have been at the meeting of 17 September 2013.

16. [22]

    Ms Vera Paterson was the chairperson of HOOSH in 2013. She was not able to attend the 17 September 2013 P&C meeting but stated that, the following day, 18 September 2013:

17. [23]

    There is thus a conflict between the evidence given by Ms Scaltrito, Ms Kemp and Ms Pollock on the one hand and that given by Ms Jacobsen on the other.

18. [24]

    It is curious that no record of the Notice can be found in the records of the school or the Department.

19. [25]

    It is also true, as Mr Knowles pointed out, that there is no reference in the correspondence between the parties since September 2013 to any purported exercise by HOOSH of the option nor to any suggestion that the rent review process referred to in cl 29 be engaged.

20. [26]

    The documentary and oral evidence before me suggests that, following termination of the Licence on 31 December 2013, the Department stated that, from its point of view, any further licence would have to be on different terms to those contained in the Licence and that negotiations took place about what those terms might be. Those negotiations took place between July 2014 and immediately before the commencement of these proceedings (on 19 May 2016). It was only when those negotiations broke down, and the Department, through its solicitor, stated that it would proceed with a tender process for the provision of out of school care for pupils of Haberfield Public School that HOOSH made the assertion that it had exercised the option under cl 29 of the Licence.

21. [27]

    I accept that these are factors to be taken into account in assessing the evidence given by Ms Scaltrito, Ms Kemp, Ms Pollock and Ms Paterson.

22. [28]

    There is also a tension, as Mr Knowles pointed out, between Ms Scaltrito’s recollection that she gave Ms Jacobsen the Notice in a “large” envelope (see [11] above) and Ms Pollock’s statement that the envelope was “DL sized” (see [19] above). However, this was not explored in cross-examination as Mr Knowles asked no questions of Ms Pollock.

23. [29]

    Having seen the manner in which Ms Scaltrito, Ms Kemp and Ms Paterson gave evidence, and bearing in mind Ms Pollock’s unchallenged evidence, I am satisfied that their recollection as to what happened in September 2013 is accurate and is to be preferred to that of Ms Jacobsen.

24. [30]

    Each of Ms Scaltrito and Ms Kemp impressed me as calm, confident witnesses who had a clear recollection of what had occurred at the 17 September 2013 meeting. And as I have said, Ms Pollock’s evidence was remarkably congruent with that of Ms Kemp.

25. [31]

    The impression I had from Ms Jacobsen’s evidence is that because she did not recall receiving the Notice from Ms Scaltrito, and because she could not find any trace of it in the school records, she had concluded that Ms Scaltrito had not handed the Notice to her.

26. [32]

    Overall, I think it probable that the recollection of Ms Scaltrito (corroborated to some extent by her conversation with Ms Paterson) and that of Ms Kemp and Ms Pollock is correct and that Ms Scaltrito did hand the Notice to Ms Jacobsen.

Did service of the Notice constitute the exercise by HOOSH of the option in cl 29?

1. [33]

   Clause 25 of the Licence provided that “any notice given by a party under this Licence shall” be delivered or sent to:

2. [34]

   The Properties Directorate of the Department has been renamed Asset Management Directorate and is no longer located at that locked bag address.

3. [35]

   Mr Nikola Stevanovic, a Senior Group Leader in the Department, gave evidence that he had located no document from the Department notifying HOOSH of the change of name of the “Properties Directorate” to “Asset Management Directorate” or of the change of address for that directorate but that:

4. [36]

   The question of possible renewal of the Licence arose at a meeting of the Haberfield Public School P&C Association of 16 July 2013. The minutes of that meeting record that Ms Jacobsen stated:

5. [37]

   Ms Kemp said, of this incident:

6. [38]

   There is thus no contest that, at this meeting, Ms Jacobsen made clear that HOOSH would have to deal directly with the Department (and not with her) about any renewal of the Licence.

7. [39]

   As I have mentioned, Ms Scaltrito’s evidence was that at the 17 September 2013 meeting, after she handed the Notice to Ms Jacobsen, Ms Jacobsen said “I will pass this on to the Asset Management unit”.

8. [40]

   I accept Ms Scaltrito’s evidence that this is what Ms Jacobsen said on that occasion. However, Ms Jacobsen’s unchallenged evidence was that, consistently with what she said at the 16 July 2013 P&C meeting, no one from the Department had ever said to her that she “should or could take responsibility for sending and receiving communications in relation to the Licence”.

9. [41]

   Mr Evatt drew Ms Jacobsen’s attention to a document published by the Department on 31 August 2009 entitled “Community Use of School Facilities” which stated that part of the “responsibilities and delegations” of school principals was to:

10. [42]

    However, I do not read that document as conferring on a principal such as Ms Jacobsen authority to receive notices under a document such as the Licence.

11. [43]

    Ms Jacobsen agreed that she had been asked by Asset Management to inform HOOSH that it would need to communicate with Asset Management about renewal of the Licence and was asked by Asset Management to gather information from HOOSH (which she described as “certain logistical things”). For that purpose, Ms Jacobsen met with Ms Scaltrito and Ms Paterson on 7 November 2013 and, on 19 November 2013, forwarded a departmental pro forma document (engrossed on Haberfield Public School letterhead) seeking information about “HOOSH Lease Renewal”. Ms Jacobsen passed the completed form on to Asset Management on or about 20 December 2013.

12. [44]

    There is, however, no suggestion that the Department held Ms Jacobsen out as a person able to accept service of documents on its behalf. The Department told Ms Jacobsen that she should tell HOOSH that HOOSH would need to deal with Asset Management. That is what Ms Jacobsen said at the 16 July 2013 meeting. There is no suggestion the Department said something different to HOOSH.

13. [45]

    Although I accept that on 17 September 2013, Ms Jacobsen told Ms Scaltrito that she would pass on the Notice to Asset Management, and although she evidently did not do so, I cannot see how it follows that the handing of the Notice to Ms Jacobsen somehow amounted to service on the Department, and thus on the Minister as required by cl 29 of the Licence.

14. [46]

    In these circumstances, although it might be understandable that HOOSH representatives understood that delivery of the Notice to Ms Jacobsen on 17 September 2013 was, in effect, delivery to Asset Management, and thus the Department, that does not appear to me to be the correct legal position.

15. [47]

    And no case of breach of warranty of authority is brought against Ms Jacobsen.

What would have been the effect of proper service of a notice under cl 29?

1. [48]

   In any event, I see a more fundamental problem facing HOOSH, and that arises from the wording of cl 29 itself.

2. [49]

   Although cl 29 is headed “Option to Renew” it is not, in substance, any such thing.

3. [50]

   Clause 29 provides that if HOOSH gave timely notice:

4. [51]

   It appears to me that these words were intractable. They do not confer on HOOSH an option of the kind commonly found in a lease or a licence. They do not confer a right on HOOSH to obtain a renewed licence. All they do is confer on HOOSH an option to give the Minister a notice so as to enliven the Minister’s “absolute discretion” to decide whether a further licence should be given.

5. [52]

   The course of dealings between the Department and HOOSH after 31 December 2013 makes clear that the Minister had exercised his discretion not to grant HOOSH a licence of the kind referred to at cl 29 (namely one for 10 years and on the same terms and conditions as the Licence, apart from cl 29 itself), but only to grant HOOSH a licence in, or to the effect of, the terms proffered by it in the course of those negotiations.

6. [53]

   Had HOOSH served the Notice in the manner required by the Licence it would have exercised the “option” available to it under cl 29. But the exercise of that option would not have given it any right to any further licence.

The next steps

1. [54]

   I will now hear the parties as to what further steps are necessary to finalise the proceedings.