Another term has flown by and the holidays are upon us. While the break is well deserved and I trust you are able to put your laptop and report writing aside for a while, there are always things to learn about as the law intersects with education.

In these Notes, we remind you of the need to comply carefully with the rules of your DGR funds to ensure the ATO stays off your back. Another area of compliance to watch to satisfy the ACNC and your state or territory education department is financial management. This is not just a "Tick the box" area. Getting it right could save you losing millions of dollars to fraudulent employees.

COVID-19 has caused extra stress to many families. Among other things, this has increased the impact on schools of couples separating. We have provided a timely reminder that it is not for schools to enforce Family Court Orders!

Enjoy the read!



Correct use of scholarship funds

The Australian Taxation Office has reported that many independent schools have asked if they can use their DGR-endorsed scholarship funds to provide fee relief to current students during COVID-19.

The answer is that DGR-endorsed scholarship funds must only be used to award scholarships for reasons of merit or equity and must be open to individuals within a region of at least 200,000 people. Therefore, schools must not use a scholarship fund to provide fee relief to families who are unable to pay their school fees, even if only for a limited period.

Scholarships may only be awarded in a way that is consistent with Australian taxation law and the scholarship fund's rules.

Please contact David Ford or Josephine Heesh if you have any questions about your school's DGR funds.

Governance: Responsible Financial Management

ACNC Governance Standard 5 includes among the duties of board members a requirement to ensure that the financial affairs of the charity are managed responsibly. Far too many board members are content to leave the finances to the Treasurer or the Board Finance Committee. Such a laissez-faire attitude constitutes a failure of duty. Board members must hone in on financial information but, at the same time, interpret that information and monitor the general direction and objects of their school by adopting a broad perspective.

Not all board members have to have financial qualifications but all must have an understanding of the school's financial affairs. In one notable case, a board member of a not-for-profit organisation denied on oath that he had ever learned how to read a balance sheet or a profit and loss statement. This remarkable confession did not absolve him from liability for the debts of the organisation following fraud by the CEO.

There are many resources available for board members who do not have a professional financial background. For example, the Commonwealth Bank of Australia and the University of Western Australia have recently produced The Not-for-Profit Balance Sheet: A resource for Directors and CEOs by David Gilchrist and Dane Etheridge. Requiring non-financially literate board members to read this 30 page booklet would be a sensible first step to ensuring that board members had at least a minimum degree of understanding of the school's financial affairs.

In the case mentioned above, the judge observed that the board member did not have to be professionally qualified in financial affairs to suspect that something was amiss. Sadly, we are seeing far too often cases where something is amiss. Fortunately, we have been able to assist schools to recover money that has been fraudulently taken by non-teaching employees. In the recent Supreme Court of New South Wales case of Moriah War Memorial College Association v Nosti, the judgment began ominously: "Augustine (Gus) Robert Nosti, the first defendant, is a thief." For 15 years, he was employed by the College as financial controller and financial manager. During that period, undetected, he stole over $7 million from the school and judgment was entered against him for that amount. While there is no suggestion that the College Board had failed in its duties, the case is a sad example of what can happen in independent schools.

If you know of or suspect fraudulent conduct by an employee, please contact David Ford or Daniel O'Brien as soon as possible.

Must schools enforce Family Court Orders?

Dr Hudson and his wife had separated before their child began attending a South Australian state school. It was not a happy family, having been before the Federal Magistrates Court and the Family Court 44 times before Dr Hudson brought a claim of sex discrimination against the school!

One of the Family Court orders said that the mother had to enter the father's name and contact details as the second person to be contacted in case of emergency on any school enrolment form. The school knew of the orders. Dr Hudson complained that his telephone number was incorrectly noted on the enrolment form. The Tribunal said that the order was directed to the mother and did not impose an obligation on the school to ensure that the mother complied with the order. Schools are not enforcement agencies for the Family Court. Yet, in our experience, parents commonly expect the school both to take a side in their family dispute and to act like a policeman toward their partner.

Family Court orders often refer to information that should be provided to a child's school and to information that both parents have a right to be given by the child's school. Such orders are binding on the parties to the dispute. It is important that others persons, particularly a child's school, be made aware of the court orders. Schools should not put obstacles in the way of compliance by the parties with the orders. Indeed, schools should wherever possible facilitate a parent's access to information and material concerning the child.

However, even though schools ought to facilitate the rights of parents under Family Court orders, it is not a school's role to oversee compliance with such orders by the parents concerned. A school principal has no authority from the Court either to oversee a parent's compliance with the orders or to enforce the orders.

When family law issues arise, there is rarely time for leisurely research. One parent has arrived early to collect a child and is in your school reception area. The Court Orders say that the other parent is to collect the child that day. We can provide quick telephone advice to help you deal with such matters. Just call David Ford (9291 7134) or Stephanie McLuckie (02 9291 7180).

COVID-19 and Estate Planning

This year has brought enormous challenges to those working in schools: providing additional pastoral care to staff and students; mastering the technology to allow students to learn from home; dealing with parents seeking discounts for good and not so good reasons; trying to recover deposits following cancellation of camps and other events ... the list goes on!

In such uncertain times, it would be nice to know that you have your legal affairs in order. The reality is that your personal affairs have taken second-place to your professional responsibilities. Nevertheless, as the situation throughout the country has been improving, we encourage you to take the opportunity to check that your estate planning is in order. Feel free to contact us to discuss any amendments you might like to make to bring your Will up to date or, if you do not have a Will, we can take your instructions and prepare one for you.

You might also like to consider having us prepare a Power of Attorney. This is a document which appoints a person or people to manage your financial affairs if you became incapable or unable to deal with those affairs temporarily or permanently. You might also like to have a document appointing a person or people to make lifestyle and end-of-life treatment decisions for you if you are unable to make those decisions for yourself.

Use the holiday period to do an estate planning health check! Ask Lyndall Smart to check your current arrangements and, if necessary, prepare new documents for you and your family.

The recent Carroll & O'Dea Wills and Estates Newsletter is also worth a read.

Recent and Upcoming Event

Law of Religious Institutions Conference

David Ford presented on Employment and Religious Freedom at this conference on 15 September 2020. A copy of his paper is available here.

Legalwise Seminar: Religious Based Institutions - The Legal Issues

Wednesday, 11 November 2020
The Grace Hotel, 77 York Street, Sydney

David Ford will be speaking with Gregory Burton SC on Child Safe Policies and Ensuring Board Compliance.

Howard Harrison will be speaking on Canon Law and Civil Courts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.