A recent Supreme Court Decision highlights the risk to schools of using enrolment documents which don’t provide sufficient protection, after finding a school was unable to recover unpaid tuition fees from parents.
It’s an issue we see frequently: simply rolling out new terms and conditions does not mean all parents are bound. Many schools are – or have just advised of – fee increases. Do these notifications actually form part of the binding enrolment agreement?
The case: Whitworth v Christian Brothers College Adelaide
In the case of Whitworth v Christian Brothers College Adelaide,[1] the Supreme Court found that the College was unable to recover unpaid fees of close to $15,000. The student’s mother had entered into an enrolment contract with the College in 2009. In 2017 and 2018 updated School Fee Agreement Forms were sent to the mother along with a request to pay the applicable fees. The mother did not sign the forms or pay the applicable fees.
In finding that the College was unable to recover the unpaid fees, the Court found that the enrolment documents were deficient for the following reasons:
- the contract did not expressly state that the terms and conditions contained therein would continue beyond the first year of enrolment;
- in the absence of express terms, the contract was not clear that the relationship between the College and the mother was ongoing; and
- the contract specifically stated that fees would be reviewed each year, which the Court held, could be taken to mean contracts would be renewed each year.
Having regard to the specific facts of the case, the Court held that:
- the enrolment documents were not entirely clear;
- it was at least arguable that on proper construction of the contract, the relationship between the College and the mother was one of a series of enrolment contracts rather than a continuation of the original contract; and
- the original enrolment contract had been superseded.
Key takeaways for School’s Enrolment Documents
Following this Decision, we recommend that schools review their enrolment documents to ensure they are up to date and offer adequate protection.
A few key points:
- it’s extremely problematic to have parents sign any form of terms and conditions upon enrolment application, then seek to bind parents to those terms many years later upon actual enrolment; and
- rolling out new terms and conditions needs to be done properly, to ensure parents are bound, noting that many schools find this out the hard way when seeking to enforce a version of terms and conditions the parents have never seen.
Consider:
- what terms need to be contained within the contract and what terms should sit within a policy external to the contract – then, how are these brought into the contract;
- what terms are implied or incorporated into the contract by reference or by statements made within communications to parents/guardians, potentially over many years;
- whether the contract deals with the requirement to pay fees, whether fees are refundable or non-refundable, and whether the contract enables the school to increase fees, noting that non-refundable fees must actually be a reasonable pre-estimate of the school’s cost arising from parent breach (e.g. one term’s forfeiture for late withdrawal);
- whether the contract actually provides for consequence of breaching the agreement;
- whether the contract deals with the collection, storage and use of information;
- whether there is an ability to vary the terms of the contract embedded into it; and
- what the relationship is between fee update notices and the enrolment contract.
How we can help
If you would like to discuss any of the above, please do not hesitate to contact us.
[1] [2019] it’s SASC 154