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‘A refund for faulty service’: Private school repays school fees following sexual abuse of student

7/10/15
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Following letters to several church leaders, an elderly woman has been refunded all tuition fees paid for her son’s education at an elite church-run Queensland private school where he was sexually abused. The woman, who requested anonymity for the sake of her son, is quoted as saying that the money paid was ‘a ­refund for a faulty product or ­service, not a dollar more or less’.

The faulty service in question was the quality of pastoral care provided by the school to its student, her son.

The facts

The woman sent her son to the school for five years from 1989, and as a single mother, had the sole responsibility of paying the school fees. Her son was sexually abused at the school and has since attempted suicide. She initially sent letters to church leaders in 2010 and was rejected, but her claim was recently reviewed and the school has now decided to reimburse her for the cost of all tuition fees, adjusted for inflation.

The Australian reports that the church’s initial offer of $38,569 was rejected by the woman as they had mistakenly included six years of tuition fees (that is, she honestly corrected the church’s mistaken over-payment).

The woman instead requested $30,988, which has now been paid. She stated that she was ‘not asking for ‘compensation’ or any financial settlement to address the pain and suffering my family have endured’, but was rather requesting a refund for the faulty product or service offered by the school.

The woman’s criticisms of the school included its ‘failure to provide the product or service you advertised’ – being the provision of pastoral care to its students.

Different approach to seeking redress

This case is an interesting example of the different avenues that can be used by those affected by child sexual abuse to seek redress from those involved or responsible for the abuse.

In this case, the church has privately agreed to refund the cost of tuition to a parent, as opposed to a cost agreement mandated by a court or other relevant body following a court case. Although the money refunded in this case is not the same as compensation for the harm suffered, which could be awarded in an amount much larger than the agreed tuition fees, it is a good example of how two parties can come to a mutually satisfactory arrangement without the need for lawyers and the court.  It is unclear if the woman’s son has pursued a claim for damages against the school.

The woman’s decision to speak publicaly about the agreement could lead to an increase in parents pursuing a similar path with other institutions.

This story comes soon after the Royal Commission into Institutional Responses to Child Sexual Abuse released its report on redress and civil litigation. Our earlier article detailing the proposed framework for compensation can be found here.

Importantly, in this case the woman argued that this was not a question of compensation between the institution and her son, but rather a matter between herself as a purchaser and the institution as the provider of a service. This changes the question from one of child protection to one of contractual obligations.

The role of contracts in non-government schools

It is easy to forget that underlying a child’s attendance at a non-government school is a contractual agreement between its parents and the school.  That agreement is for the school to provide certain services to the child in exchange for fees from the parents – like any form of ‘purchaser and seller’ arrangement.

We have previously written about how such contracts can be enforced against parents who have not paid the contracted school fees. The cases discussed in that article focus on a relatively straightforward breach of the parent’s key obligation to the school: to pay for the services that it provides.

This case shows how the parents can also rely on contract to enforce the school’s obligations under the agreement: to deliver pastoral care and educational services.

Other circumstances may exist in which a parent could argue that the service provided by the school is “faulty”. If parents believe, for example, that their child’s education lacked academic rigour or that their child was denied the opportunity to fully reach their potential through the actions of the school, they may attempt to argue that the school has breached their contractual obligations. As the refund in this circumstance was a private decision, there is no judicial guidance as to what constitutes a “faulty education”.

Misleading and deceptive conduct

The woman in question argued that her right to a refund was based on the school’s failure “to provide the product or service you advertised”. While there is no evidence to suggest that the case turned on the principles of consumer law, it does act as a reminder that schools can be liable for misleading and deceptive conduct, which is prohibited under the Australian Consumer Law (ACL), if services aren’t delivered as advertised.

If schools provide assurances through their website, in person or in advertising materials that they have certain qualities or will act in a certain way, they may have to pay damages if they fail to provide services which meet those representations.

For example, if a school claims in an advertisement that it ensures the safety and wellbeing of all students and fails to take necessary, reasonable steps to protect its students from harm, it could be held liable under the ACL.

Such a claim would be based on the same legal principles which have resulted in companies paying large fines to customers for their misleading and deceptive conduct. For example, the $2.5 million paid by Coles in response to its false ‘freshly baked bread’ claims.

Are schools bound by consumer guarantees?

In Australia, the ACL ensures that consumer rights are protected. This includes guarantees that a business will exercise due care and skill and that the service it provides is fit for a particular purpose. The ACL can apply to non-government schools, as they are, in some circumstances, a business which operates in ‘trade or commerce’ by providing a commercially competitive service.

Schools are also subject to the unfair contract terms provisions of the ACL which ensure that an unacceptable discrepancy in bargaining power between the two contracting parties does not occur. The unfair contract terms regime applies to schools’ enrolment contracts with parents if the school’s annual fees are less than $40,000.

Schools should ensure that their enrolment contracts and policies comply with the ACL as there have been cases where parents have taken a school to court for an alleged unfair contract under the ACL. For example a parent in Victoria sued their child’s school after only part of the fees were refunded after enrolment was terminated, as per the refund policy in the enrolment contract. The parent contended that under the the ACL this was an unfair contract term. The Tribunal held that the refund policy was not unfair in that case, but schools should be aware that enrolment contracts are often ‘consumer contracts’ for the purposes of consumer law.

Conclusion

The decision to refund the school fees of an abuse victim could be considered as a private act of compassion or apology by the church or the fulfilment of a legal obligation. In either circumstance, the refund raises several significant issues regarding the provision of education and pastoral care services by schools. Although it is clear that a contractual relationship is in place and that the school must abide by the terms of this contract, there is a real possibility that parents have further rights as consumers under the consumer law regime in Australia. If this is the case, parents may have the capacity to claim money if the services are defective although little guidance exists as to what constitutes a defect in education services.

This uncertainty is compounded by the fact that the situation reported was resolved privately, without any evidence that the refund was made on legal, instead of moral, grounds.

Time will tell if the school’s refund in this case results in more parents requesting refunds for serious failings of the school, or relying on their rights as consumers when looking at the quality of the service provided by the school.

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CompliSpace

CompliSpace is Ideagen’s SaaS-enabled solution that helps organisations in highly-regulated industries meet their governance, risk, compliance and policy management obligations.

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