Queensland Judgments
Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment

Sisters Inside Inc v State of Queensland[2022] QSC 130

Sisters Inside Inc v State of Queensland[2022] QSC 130

SUPREME COURT OF QUEENSLAND

CITATION:

Sisters Inside Inc v State of Queensland [2022] QSC 130

PARTIES:

SISTERS INSIDE INC

(applicant)

v

STATE OF QUEENSLAND

(respondent)

FILE NO/S:

BS 5649 of 2022

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

20 June 2022

DELIVERED AT:

Brisbane

HEARING DATE:

27 May 2022

JUDGE:

Brown J

ORDER:

The order of the Court is that:

  1. 1.The parties are to confer and provide the Court with a proposed order within fourteen days.
  2. 2.The parties will have liberty to apply on two business days’ notice.
  3. 3.The State should pay Sisters Inside’s costs of the application.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where the applicant is a non-profit association that receives funding from the respondent which is governed by both standard terms and various service agreements – where the respondent proposed conducting a financial and compliance audit or performance review and provided a schedule of documents that it required to be produced – where the respondent provided a revised schedule seeking documents referable to particular issues but excluding information outside contractual term – whether or not the respondent has issued a valid notice to the applicant for the production of documents under provisions contained in funding agreements – whether valid request made under the contracts with respect to funding

Re Permanent Trustee Australia Ltd & Another (1997) 137 FLR 190, cited

Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596, cited

Victoria International Container Terminal Ltd v Lunt (2021) 271 CLR 132, cited

Community Services Act 2007 (Qld) ss 10, 12, 13, 16, 19

COUNSEL:

J M Horton QC with E L Hoiberg for the applicant

D de Jersey QC for the respondent

SOLICITORS:

Neumann & Turnour Lawyers for the applicant

Crown Law for the respondent

  1. [1]
    The present application is to determine whether or not the respondent State of Queensland (the “State”) has issued a valid notice or request to the applicant, Sisters Inside Inc (“Sisters Inside”) for the production of documents under provisions contained in funding agreements between State Agencies and Sisters Inside.
  2. [2]
    Sisters Inside is a non-profit association, which amongst other things provides programs to women and girls to address factors leading to criminalisation and to offer opportunities to break the cycle of recriminalisation.  It receives funding from the State Government, Commonwealth Government and community fundraising to enable it to carry out its programs.  It has charitable status.[1]
  3. [3]
    The funding arrangements received by Sisters Inside from the State are governed by a number of agreements. Several grants are provided pursuant to funding schedules and the Department of Justice and Attorney-General’s Service Agreement – Standard Terms (“Standard Terms”).[2] Some grants are provided under a different form of service agreement.[3] The State funded three projects run by Sisters Inside through the Department of Employment, Small Business and Training and Sisters Inside (Schedules MT03604, MT044356 and MT05028) (the “Service Agreements”); Although the terms for making requests for the production of documents are different, neither party contend that the difference is material. The parties focussed their argument on the Standard Terms in this application. The real issue in relation to the Service Agreements is whether the power to carry out an audit was extant as the Service Agreements had expired. If I find the power is extant, I will assume that the same outcome for the request for documents will follow as is determined in relation to the Standard Terms given the parties’ position.
  4. [4]
    In 2021, the State informed Sisters Inside that it proposed conducting a financial and compliance audit and provided a schedule of documents that it required to be produced. A number of iterations of the request were provided after various exchanges between the parties. After the present application was made, the State provided a revised schedule outlining the documents requested (“Revised Annexure 1”) on 25 May 2022, which it contends meets the concerns of Sisters Inside and is a valid exercise of its contractual power such that the application for declarations should be dismissed.
  5. [5]
    Sisters Inside contend that the proposed audit is outside the scope of the purpose for which an audit may be conducted under the Standard Terms and resists an “unbounded audit” on the basis it threatens its independence. It contends that the Revised Annexure 1 still does not focus the request to the touchstone of the Standard Terms or inform Sisters Inside of proper detail about specific issues so they can identify what the State is seeking.

Background

  1. [6]
    On 8 October 2021, a representative of the Department of Justice and Attorney-General (“DJAG”) wrote to Sisters Inside proposing to conduct a “financial and compliance audit” with regard to current funding provided to the applicant by DJAG and the Department of Children.[4]
  2. [7]
    Subsequently DJAG wrote to the Sisters Inside advising that it had appointed PKF (Australia) Pty Ltd (“PKF”) to conduct the financial review on behalf of DJAG and that following a preliminary assessment by PKF, various documents were requested.[5]  The documents requested included “how charitable funds are being banked, managed and accounted for” and “will include a review of how financial management and governance is conducted … including compliance with ACNC requirements” without connecting that to the funding provided by the State or the State funded services provided by Sisters Inside.
  3. [8]
    Sisters Inside responded that while it did not dispute the fact that it was to provide access to information relevant to the question of funding, the scope sought documents beyond those which related to the funding.
  4. [9]
    On 20 December 2021, DJAG stated that it relied on the contractual powers to make the request.  The letter clarified that DJAG was seeking to carry out an audit, not Performance Review.  It further stated:[6]

“We do not accept that the effect of the Service Agreement is that your client has agreed to give the department access to any information that is relevant to the question of whether the Funding it provides pursuant to the Agreement is being used properly for the delivery of Services in accordance with the terms of the Agreement.”

  1. [10]
    The State continued to rely on cl 12.2 and cl 12.3 and contended that the documents relating to ACNC requirements were within the scope of the audit. 
  2. [11]
    After a further exchange of correspondence, including from Sisters Inside’s solicitors, the State on 11 February 2022 provided Sisters Inside with a revised list of documents, stating that:[7]

“The Departments are aware that a number of management committee members have resigned in recent times, and concerns have been raised regarding potential governance failings and financial mismanagement at Sisters Inside.”

  1. [12]
    Some categories of documents originally requested were removed.
  2. [13]
    Following a request for a review by Sisters Inside pursuant to cl 27.2(d) of the Standard Terms, Mr Peter Cook on 18 March 2022 identified information that may be redacted by Sisters Inside from governance policies and management committee meetings and position descriptions, CVs, skills and qualifications for all management committee and finance committee members.[8] 
  3. [14]
    On 8 April 2022, DJAG wrote to Sisters Inside through their solicitors identifying matters said to be serious matters of concern and made reference to potential breaches of the Community Services Act 2007 (Qld) (the “Act”), as well as of the Standard Terms[9] (the “Specific Issues”) to further clarify the scope of the documents requested to be produced.
  4. [15]
    On 13 May 2022, Sisters Inside filed an originating application seeking declarations that the scope of audits proposed in the State’s correspondence up to 18 March 2022 were not authorised by the Standard Terms or the terms of the Service Agreements relating to the funding.[10]
  5. [16]
    On 25 May 2022, the State provided a revised request for documents, referred to as “Revised Annexure 1”.[11]  That revised request, requested documents relating to the specific issues that had previously been notified to Sisters Inside by correspondence on 11 February 2022 and excluded from the request:

“Information that does not relate directly or indirectly to the receipt, expenditure or payment of the “Funding” as defined in the Queensland Government – Service Agreement … (the Excluded Information).”

  1. [17]
    Documents which were originally requested on 2 December 2021 and were subsequently removed in the annexure identifying the requested documents in correspondence of 11 February 2022, were reinserted in Revised Annexure 1. 
  2. [18]
    Ms Olsson has sworn an affidavit on behalf of Sisters Inside supporting the application.[12]

Relevant contractual provisions

  1. [19]
    Clause 12.1 of the Standard Terms provides that: [13]
  1. “12.1 Performance Review
  1. (a)
    Where We consider it appropriate, we will involve You in any Performance Review.
  2. (b)
    A Performance Review may include gathering and analysing information about the Services or Your use of the Funding, for the purpose of Us:
  1. (i)
    assessing the extent to which terms of the Service Agreement can be, or are being, met by You; and
  2. (ii)
    considering or recommending a course of action to ensure compliance or to seek a remedy of any non-compliance.
  1. (c)
    We will give You notice prior to conducting a Performance Review, which need not be in any particular form but will specify the Funding and Services that We wish to review and any premises to which We require access.”
  1. [20]
    Clause 12.2 of the Standard Terms states:[14]
  1. “12.2Auditors

We can, by notice to You, nominate auditors to conduct a Performance Review for Us or to conduct any financial and compliance audit of You.”

  1. [21]
    Clause 12.3 of the Standard Terms, provides[15] as follows:
  1. “12.3Compliance with Audit

If We give You a notice under clauses 12.1(c) or 12.2, You must:

  1. (a)
    comply with the notice;
  2. (b)
    give Our officers or employees of Our Auditors full and free access to:
  1. (i)
    your employees;
  2. (ii)
    any premises where the Services are delivered or from which You conduct Your business; and
  3. (iii)
    your accounts, records, documents and papers that relate directly or indirectly to the receipt, expenditure, or payment of the Funding or the conduct of the Services; and
  1. (c)
    cooperate with Our offices or employees of Our Auditors, including by giving any assistance required to:
  1. (i)
    meet with Your employees;
  2. (ii)
    inspect the performance of the Services; and
  3. (iii)
    locate and make copies of any of Your accounts, records, documents and papers that relate directly or indirectly to the receipt, expenditure, or payment of the Funding or the conduct of the Services.”
  1. [22]
    Clause 12.4 of the Standard Terms provides that:[16]
  1. “12.4Minimum Interference

When conducting a Performance Review or audit under this clause 12, We will, and will procure our Auditors to, use best endeavours to minimise interference to Your employees and the conduct of the services.”

  1. [23]
    Clause 12.5 provides that:

“You must provide any information or documents that We or Our Auditors may request in relation to a Performance Review or audit and You warrant that such information and documents are true and correct to the best of Your knowledge.”

  1. [24]
    “Funding” is defined in clause 31.1 of the Standard Terms to mean:[17]

“… an amount of funding assistance that We will provide to You under the Service Agreement, as specified or included in a Funding Schedule. In an appropriate context, it also means all of the funding assistance payable under the Service Agreement”.

  1. [25]
    “Services” are defined in clause 31.1 of the Standard Terms to mean:[18]

“… services that You must deliver, as specified in a Funding Schedule and for which Funding is provided under the Funding Schedule. In an appropriate context, it also means all of the Services to be delivered under the Service Agreement”

  1. [26]
    Clauses 3.1 (a), 3.4(a) and 7.1(a) of the Standard Terms provide as follows:[19]
  1. “3.1General
  1. (a)
    You must:
  1. (i)
    use the Funding and deliver the Services strictly in accordance with the Service Agreement;
  2. (ii)
    comply with any policies notified to You by Us;

  1. (iv)
    comply with any legislation and requirements of any Commonwealth, State, Territory or local authority in relation to the Funding, the Services and the Service Agreement, including a Governing Act;
  2. (v)
    obtain and maintain all permits, registrations and licences required to be taken out in connection with Your performance of the Services.

  1. 3.4Your conduct
  1. (a)
    You must conduct all activities that comprise the Services diligently, effectively and in a professional manner, including by:
  1. (i)
    delivering the Services without coercion and in a manner that promotes the privacy, dignity, self esteem and independence of Service Users; and
  2. (ii)
    providing Service Users with access to and assistance with the Services on the basis of need, but otherwise on a non-discriminatory basis, ex

  1. 7.1Your use of Funding
  1. (a)
    You must use the Funding only:
  1. (i)
    to deliver the Services Specified in the Funding Schedule, unless otherwise approved by Us in writing;
  2. (ii)
    in accordance with the Funding Schedule and the requirements of a Governing Act; and
  3. (iii)
    within any time period stipulated in the Funding Schedule, or elsewhere in the Service Agreement, for expenditure of the Funding.”
  1. [27]
    “Performance Review” is defined as: [20]

“… a review under clause 12 of any aspect of Your delivery of the Services or Your use of the Funding”.

  1. [28]
    Clause 21.1 requires Sisters Inside to keep and implement a policy about conflicts of interest of its executive officers, employees and volunteers.[21] It would appear any audit or performance review is limited to reviewing for conflicts, or possible conflicts of interest, that arise with respect to the delivery of the Services or performing obligations under the Service Agreements, including “as a result of employment, procurement or service delivery arrangements that may exist or be put in place”. [22]
  2. [29]
    The Act provides its own mechanism for raising concerns with a body that is the subject of a funding declaration.[23]  Some of the funding received by Sisters Inside has been declared, but not all.[24]  The Act has its own mechanisms with respect to raising serious concerns.  A serious concern includes a serious risk that the funding received by the funded entity is improperly used as well as a serious risk that the funded entity significantly fails to deliver a funded product or service.[25]  Section 19 of the Act provides for the Chief Executive to give a funded entity a notice requiring the funded entity to remedy the serious concerns or comply with the requirement notice.  Other remedies are also provided for in the Act.

Consideration

  1. [30]
    Given the State revised its request for documents to be produced in Revised Annexure 1, I will only address that matter for determination by reference to it and the covering letter dated 25 May 2022.
  2. [31]
    Sisters Inside complains that the Revised Annexure 1 still does not comply with the contractual provision in that[26]:
  1. (a)
    it does not explain the “information of concern/potential breaches” alleged in the letter of 8 April 2022 from the State’s solicitors;
  2. (b)
    much of what is requested is for a period of more than four and a half years, and the State does not say how the categories are relevant to which funding schedule or services;
  3. (c)
    it is internally inconsistent in that it asks for documents concerning the “Specific Issues” (being those issues raised in the State’s letter of 8 April 2022) but excludes information that does not relate directly or indirectly to the Funding or Services.  It fails to recognise that at least some of the “Specific Issues” (i.e., those that have been particularised with enough specificity for Ms Olsson to respond) do not relate directly or indirectly to the Funding or Services;
  4. (d)
    it is issued under cl 12.1(c) of the Standard Terms, which concerns Performance Reviews, not financial and compliance audits; and
  5. (e)
    it contains categories of information which were removed from the State’s revised request by its letter of 11 February 2022.
  1. [32]
    According to Mr Horton QC and Ms Hoiberg, the State has to focus on the purpose for which it is seeking documents so that it asks the right questions in identifying the documents sought. It contends that by the identification of the Specific Issues it is seeking to carry out an investigation not an audit or a performance review. It further contends that the Act has its own mechanism for review separate from that which is provided under the contractual funding arrangements.
  2. [33]
    In brief, Mr De Jersey QC on behalf of the State submitted that:
    1. (a)
      clause 12.3 does not require the identification of the motivation for the request and the State identified the Specific Issues to assist Sisters Inside in response to their requests and in any event the request was limited by the excluded information such that it was within the contractual power;
    2. (b)
      the fact that there may no documents in the category that relate directly or indirectly to the Funding or Services does not mean the request was unauthorised;
    3. (c)
      there is no material difference between a performance review and an audit or alternatively an audit follows on from a performance review and thus in terms of the request for documents made, it does not matter what the purpose of the request is that is described. It contends the scope of the documents is authorised and the solution to the complaint of Sisters Inside is to remove the reference to the Specific Issues; and
    4. (d)
      the fact that categories of documents had been removed and were now reinserted in the Revised Annexure 1 did not mean the request was unauthorised.
  3. [34]
    Clause 12.3 confines the subject matter of what can be requested for either an audit or for a Performance Review. Thus, cl 12.3 identifies the purpose for obtaining the documents as opposed to the motivation for seeking them.[27] The motivation for making the request is generally irrelevant and does not need to be identified.
  4. [35]
    There is no suggestion in the present case that the exercise of the contractual power by the State was capricious, arbitrary or not done in good faith. 
  5. [36]
    The scope of documents that can be requested for either consists of “accounts, records, documents and papers that relate directly or indirectly to the receipt, expenditure, or payment of the Funding or the conduct of the Services[28] (emphasis added).   While “directly or indirectly” broadens the scope of what can be requested, the documents requested must be linked to the Funding and Services provided under the Standard Terms which may be requested. Clause 17.1(b) and (c) of the Standard Terms provides the State with a broad power to disclose information provided to it.[29]
  6. [37]
    However, while the scope of documents which may be requested are the same for an audit or Performance Review, the submission made on behalf of the State is that it does not matter whether the State identifies the process to be undertaken as an audit or a Performance Review. That is not quite accurate given a Performance Review is defined and cl 12.1(c) requires a notice to be given of what is to be reviewed.[30]
  7. [38]
    A Performance Review is specifically defined in the Standard Terms to mean “a review under clause 12 of any aspect of Your delivery of the Services or Your use of the Funding[31] (emphasis added).  Under cl 12.1(c) the State is required to give a notice prior to conducting a performance review “which need not be in any particular form but will specify the Funding and Services that We wish to review and any premises to which We require access” (emphasis added). [32] Similarly, cl 12.2 relied upon by the State refers to a performance review or an audit, thus drawing a distinction between the two.
  8. [39]
    Audit is undefined but it has an ordinary meaning, which is “an official examination of financial statements, and “a searching examination or solemn rendering of accounts.”[33]
  9. [40]
    Ms Olsson in her affidavit expressed concern that the State was not delineating between the Services provided by Sisters Inside which are funded by the State, and other activities.[34] That concern is not without foundation. The early requests made on behalf of the State did arguably appear to go outside the scope of cl 12 in requesting documents that had no apparent relevance to the use of funding or services provided under any of the Service Agreements.
  10. [41]
    By the request in Revised Annexure 1, the State appears seeks to identify documents which are relevant to the Funding or Services that may be affected by the Specific Issues of concern While it is prima facie difficult to see how some of the categories of documents could relate “directly or indirectly to the receipt, expenditure of the Funding or conduct of the Services” given the breadth of the request, by the State now not requesting documents which fall within“ excluded information” they have sufficiently confined the request to documents prima facie authorised to be produced under cll 12.3( c) and 12.5. Ms Olsson has identified that there are at least two of the Specific Issues of concern which do not use Funding provided by the State.[35]  No documents would be required to be produced under Revised Annexure 1 given the excluded information.
  11. [42]
    Sisters Inside also complain that Revised Annexure I is too broad insofar as it does not explain the “information of concern/potential breaches”, and that the information sought is for a period of more than four and a half years with no identification of how the categories are relevant to which Funding Schedule or Services. In oral submissions, the State clarified that where no time was specified, documents were being requested from 2017, which was the commencement of the current Services Agreement governed by the Standard Terms. Upon that clarification, Sisters Inside did not continue to take issue with the lack of specification of time.
  12. [43]
    In identifying some of the “Specific Issues” which had been raised and prompted the State to instigate the audit or Performance Review, the State identified potential breaches of the Act. The Act contains its own provision for investigation of any potential breach.[36] Arguably, if that is the purpose for seeking documents under the Standard Terms, there is a question of whether the request can be for the purpose of a financial and compliance audit or Performance Review under the funding agreements within the meaning of cl 12, given the availability of an alternative power under the relevant legislation.  That does not, however, negate the fact that it may be that a potential outcome of an audit under the Standard Terms is that it could identify breaches of legislation, including the Act, given the Service Agreements require compliance with any Queensland legislation in relation to the Funding. 
  13. [44]
    Normally, such a question would not be expected to arise since a notice will be given requesting documents which will be either within or outside of the scope of the documents that can be requested. However, in the present case, in seeking to respond to questions raised by Sisters Inside as to what was being sought and why, the State raised the purpose of their inquiries. If the investigation of the breaches under the Act are the starting point, the request arguably falls outside of cl 12 if the documents are sought to identify whether such breaches have occurred as opposed to being for the purpose of carrying out a Performance Review or audit.  The question really is whether in seeking to define the issues giving rise to its decision to act under cl 12 of the Standard Terms, the State has impermissibly sought documents for another purpose.
  14. [45]
    The pivotal point for an audit or a Performance Review is the nexus to the Funding by the State, and the Services provided on the basis of that Funding. As was submitted on behalf of Sisters Inside, in the context of the Standard Terms, the financial and compliance audit referred to in cl 12 must refer to an audit to confirm whether or not the Funding has been used for the purpose for which it was provided, and the Services provided in compliance with the terms and conditions provided for in the Standard Terms. [37] Similarly, the Performance Review is confined to the use of Funding and delivery of services for which the Funding was provided which are generally set out in the in the Funding Schedule attached to the Standard Terms.
  15. [46]
    The Specific Issues do not only identify potential breaches under the Act, but potential breaches under the Standard Terms, specifically cll 7.1 and 21.[38]  Clause 7 of the Standard Terms sets out the limitations on the use of the funding.  Clause 21.2 provides in relation to conflicts of interest that the provider undertakes to notify the State immediately and to take such steps to resolve or otherwise deal with the conflict to the State’s satisfaction.  Clause 21.3 provides for the maintenance of a policy in that regard, while cl 21.4 requires records be maintained of any conflict.  Only one of the Specific Issues is identified as relating only to a potential breach of the Act.  The other Specific Issues are said to relate to both a breach of the Standard Terms as well as potentially a breach of the Act. 
  16. [47]
    Clause 3.1 of the Standard Terms requires that Sisters Inside comply with any legislation of the State in relation to the Funding, the Services and the Service Agreements. Clause 7.1(a)(ii) refers to compliance with a Governing Act. According to Sisters Inside the Act is not one to which cl 3.1 applies. I accept that argument.
  17. [48]
    The Act only applies to declared funding.[39] The State has not identified the funding provided to Sisters Inside which is declared funding. Doing the best that they can, Sisters Inside’s legal representatives have identified sources of funding of Sisters Inside which appear to have been declared.[40] The Act does not specify any requirements for funding per se but does provide provisions to supervise the use of compliance or concerns arising out of the use of the funding. What is identified as source of potential breaches of the Act in the Specific Issues is s 16 of the Act. It provides for the raising of matters of serious concern with a recipient of funding. The Act enables the Chief Executive to take further action and issue a compliance notice if the Chief Executive has followed the prescribed process under the Act, requiring the funded entity to remedy the concern or non-compliance. There is no evidence such a notice has been issued by the Chief Executive, or that Sisters Inside has not complied with the notice. Thus, it does not appear that there is presently any matter under the Act with which Sisters Inside must comply within cl 3.1(a)(iv) or cl 7.1(a)(ii) of the Standard Terms. Seeking documents on the basis that there may have been a potential breach of s 16 of the Act only, therefore falls outside the scope of any audit or Performance Review that can be conducted under cl 12 for which documents may be requested. As there is presently no link between the requirements of the Act and legislation that is required to be complied with under cl 3.1(a)(iv) or cl 7.1(a)(ii) of the Standard Terms the request is not authorised by cl 12. Notwithstanding the reference to “excluded Information” in Revised Annexure 1, the seeking of documents by reference to the Specific Issue of the “Use of credit cards for travel or person expenditure” is not authorised by cl 12, although those records would otherwise be relevant to be produced if they “relate directly or indirectly to the receipt, expenditure or payment of the Funding or conduct of Services.”  Given the other issues identify potential non-compliance with the Standard Terms, requesting documents by reference to those issues is not outside of the request authorised by cl 12.
  18. [49]
    In relation to the Specific Issues which are said to relate to the “misuse of SIS credit cards for travel and personal expenditure” and “conflict of interest between the CEO and legal firm Kilroy and Callaghan lawyers not being managed”, Ms Olsson contends that it is impossible to identify what is the “misuse” and “conflict of interest” to which the issues refer.[41] I have addressed the former issue above. They are ambiguous in their description and the criticism is well made insofar as it is not apparent from the description what Sisters Inside must produce. The requirement to sufficiently describe what documents are to be produced in order for Sisters Inside to comply with the request in accordance with cl 12.5 of the Standard Terms would appear to be required consistently with cl 12.4 or an implied duty of co-operation.[42] It would appear in relation to the latter that it arguably should be construed to refer to those conflicts of interest to which cl 21 applies. That was not raised by either party in argument. The appropriate course would be for Sisters Inside to seek clarification of what is being requested. I am presently not satisfied that the request alone justifies the making of a declaration in the terms sought by Sisters Inside.
  19. [50]
    As matter of construction, the seeking to confine the production of records that “relate directly or indirectly to the receipt, expenditure or payment of the Funding or conduct of Services” by reference to the issues per se is not precluded by the terms of cl 12.
  20. [51]
    While it is difficult to see how some of the categories of information previously requested relate to the Funding or Services provided pursuant to the Funding under the Service Agreements, the Revised Annexure 1 has addressed that by excluding information that does not fall within the scope of cl 12.3(c), notwithstanding it is a cumbersome way to confine the request.
  21. [52]
    However, Sisters Inside identify a broader issue in relation to the request made.
  22. [53]
    Sisters Inside further complains that the Revised Annexure 1 is now said to be issued under cl 12.1(c) by the letter of 25 May 2022, which applies to a “Performance Review” rather than being a financial and compliance audit, although paragraph 3 makes reference to “the PKF audit”.[43] The revised request is said to “relate to the funding referred to in the letters from the Director-General dated 8 October and 3 December 2021”. [44]  The letter of 8 October identifies the “financial and compliance audit” to relate to “current funding” provided by DJAG and the Department of Children, Youth Justice and Multicultural Affairs (“DCYJMA”) to Sisters Inside.[45]  The letter of 3 December 2021 extends the audit to “grants and/or donations relating to the following agencies” and identifies the Department of Employment, Small Business and Training.[46] 
  23. [54]
    While as the State submits the scope of documents that can be requested under cl 12.3(c) of the Standard Terms is the same whether it be a Performance Review or a financial and compliance audit, contrary to the State’s submission there is a difference between whether a Performance Review is being carried out or a financial and compliance audit. “Performance Review” is separately defined and the two are recognised as alternatives in clause 12.2. Moreover, the former requires a notice to be issued under cl 12.1(c).  The funding identified in the letter of 3 December 2021 refers to “current funding”, whereas Revised Annexure 1 seeks documents going back to the commencement of the funding in 2017. That has relevance since some of the funding under certain Service Agreements however only operates for a year, such as Funding Schedule con_11169 and Funding Schedule con_11098.[47]
  24. [55]
    In addition, the Service Agreements with the Department of Employment, Small Business and Training expired on 30 September 2019, 2 October 2020 and 29 October 2021. The right to carry out an audit or review in cl 15 was not a clause specified as surviving termination in cl 30.
  25. [56]
    The purported letter refining the request of 25 May 2022 does not therefore comply with cl 12.1(c), as it has not identified the Funding and Services they wish to review, given the inconsistency between the terms of Revised Annexure 1 and the Funding identified in the letter. Further is seeks to review matters for which the State has no power to review or audit in relation to the Service Agreements. On its proper construction the scope of documents that can be requested under cl 12.3(c) is referable to the scope of the Performance review that must be identified under cl 12.1(c).
  26. [57]
    While the fact that the State has reinserted categories of documents removed by its revised request letter of 11 February 2022 is surprising,[48] there is nothing stopping the State from doing so as long as the documents fall within the scope of the Performance Review being carried out.
  27. [58]
    In summary, I therefore do not consider the request for documents in Revised Annexure 1 for a “Performance Review” identified in the letter of 25 May 2022 to be a valid request authorised by cll 12.1(c), 12.2 and 12.3 (c) given that:
    1. (a)
      the issue of concern which is only said to relate to a potential breach of the Act is not relevant to the use of funding under cll 3.1 and 7.1 of the Standard Terms and is not properly the subject of a Performance Review or audit under cl 12;
    2. (b)
      it has not requested documents within the terms of cl 12.3 of the Standard Terms in Revised Annexure 1 consistently with the Funding it identified it wished to review, given Revised Annexure 1 seeks documents dating back to 2017; and
    3. (c)
      the power to audit the grants and/or donations under the Service Agreements with the Department of Employment, Small Business and Training (Schedules MT03604, MT044356 and MT05028) was not preserved after termination.
  28. [59]
    It is presently unclear whether the request for the documents relating to the conflict of interest is outside the scope of a Performance Review or audit under cl 12, however in the context of the Standard Terms as a whole I consider it is confined by cl 21 and not outside the scope of a Performance Review or audit under cl 12.
  29. [60]
    The power in cl 12 of the Standard Terms is a broad power, however the State must direct its request to Funding and Services provided under the Funding Schedules of the Standard Terms. The State is not required to identify why it seeks to carry out a Performance Review or an audit.  However, it is confined to an audit or Performance Review that can be carried out under cl 12 which are distinct processes albeit the scope of documents potentially that can be requested under cl 12.3(c) is the same.
  30. [61]
    It is not appropriate to make the declarations otherwise sought in the application given the State’s indication that the revised notice of 25 May 2022 was the current operative notice.  The declarations sought in the application therefore lack utility. However, given Sisters Inside contended that the Revised Annexure 1 was also not authorised by the Standard Terms, which was responded to by the State, and that I have found the request is not valid in some respects, there is some utility in making that declaration. I do not however consider the form of declaration provided by Sisters Inside at the end of the hearing reflects my reasons above.
  31. [62]
    I consider the appropriate course is to allow the parties fourteen days to consider these reasons and be given the opportunity to confer to refine the scope of what is requested and provide me with an appropriate order for my consideration reflecting the above reasons or dismissing the application on the basis the parties have otherwise reached agreement. Costs should follow the event and the State should pay the costs of Sisters Inside in respect of the application, as Sisters Inside have generally been successful.

Orders

  1. [63]
    The parties are to confer and provide the Court with a proposed order within fourteen days.
  2. [64]
    The parties will have liberty to apply on two business days’ notice.
  3. [65]
    The State should pay Sisters Inside’s costs of the application.

Footnotes

[1]  Affidavit of Kristine Olsson (“CFI 3”), Exhibit KO-2 at pp. 34-36.

[2]  CFI 3, Exhibit KO-10 at pp. 98-131.

[3]  see CFI 3 at [29].

[4]  CFI 3, Exhibit KO-14 at p. 225.

[5]  CFI 3. Exhibit KO-15 at pp. 226-229 and Exhibit KO-16 at pp. 230-233.

[6] CFI 3, Exhibit KO-19 at p. 239-240.

[7]  CFI 3, Exhibit KO-22 at pp. 246-247B,

[8]  CFI 3, Exhibit KO-25 at pp. 253-257.

[9]  CFI 3, Exhibit KO-25 at pp. 260-262.

[10]  CFI 1.

[11]  Affidavit of Paul Lack sworn 26 May 2022 (“Affidavit of P Lack”), Exhibit PAL-1 at pp. 1-6.

[12]  CFI 3.

[13]  CFI 3, Exhibit KO-10 at p. 112, where “We” and “Us” refers to the State, and “You” refers to Sisters Inside.

[14]  CFI 3, Exhibit KO-10 at p. 112.

[15]  CFI 3, Exhibit KO-10 at p. 112.

[16]  CFI 3, Exhibit KO-10 at p. 113.

[17]  CFI 3, Exhibit KO-10 at p. 128.

[18]  CFI 3, Exhibit KO-10 at p. 130.

[19]  CFI 3, Exhibit KO-10 at pp. 102, 103, 107.

[20]  CFI 3, Exhibit KO-10 at p. 130.

[21]  CFI 3, Exhibit KO-10 at p. 121.

[22]  See cl 21.4 and the definition of “Conflict of Interest” in cl 31.3. 

[23] Sections 10, 12 and 13 of the Act.

[24]  Affidavit of Christopher Mills affirmed 13 May 2022 (“CFI 2”) at [15].

[25]  Section 16 (a)-(b) of the Act.

[26]  Outlined in [38] of its submissions.

[27]  The distinction was recently discussed by the High Court in Victoria International Container Terminal Ltd v Lunt (2021) 271 CLR 132 at [23].

[28]  CFI 3, Exhibit KO-10 at p. 112.

[29]  CFI 3, Exhibit KO-10 at p. 118.

[30]  CFI 3, Exhibit KO-10 at p. 112.

[31]  CFI 3, Exhibit KO-10 at p. 130.

[32]  CFI 3, Exhibit KO-10 at p. 112.

[33] Re Permanent Trustee Australia Ltd & Another (1997) 137 FLR 190 at 199 where the court discussed the distinction between an audit and review.

[34]  CFI 3 at [59]-[60].

[35]  CFI 3 at [58 (a)], [58(d)].

[36]  Part 3 of the Act.

[37]  See, for example, cll 3.1, 3.2, 3.3 and 7 of the Standard Terms.

[38]  See CFI 3, Exhibit KO-10 at pp. 107-108, 120-121.

[39]  Section 12 of the Act.

[40]  CFI 2 at [14]-[17].

[41]  CFI 3 at [58].

[42]  See, for example, Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607, c.f. cl 29(a) of the Standard Terms.

[43]  Affidavit of P Lack, Exhibit PAL-1 at p. 2.

[44]  Affidavit of P Lack, Exhibit PAL-1 at p. 2.

[45]  CFI 3, Exhibit KO-14 at p. 225

[46]  CFI 3, Exhibit KO-16 at p. 230.

[47]  CFI 3, Exhibits KO-3 and KO-4 at pp. 37-53.

[48]  CFI 3, Exhibit KO-22 at pp.246-247.

Close

Editorial Notes

  • Published Case Name:

    Sisters Inside Inc v State of Queensland

  • Shortened Case Name:

    Sisters Inside Inc v State of Queensland

  • MNC:

    [2022] QSC 130

  • Court:

    QSC

  • Judge(s):

    Brown J

  • Date:

    20 Jun 2022

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.