Malek Fahd Islamic School loses court bid to continue taxpayer funding

Australia’s largest Islamic school has lost a Federal Court bid to maintain $19 million a year in Commonwealth funding.

Students leaving Malek Fahd Islamic School in Greenacre, Sydney.

Australia’s largest Islamic school, which has been at the centre of a long-running furore over the handling of millions of dollars in its finances, is considering its legal options after losing a Federal Court appeal to continue its Commonwealth funding.

The Malek Fahd Islamic School, which has several thousand students and staff at three campuses in Sydney’s southwest, lost a crucial bid to maintain its roughly $19 million a year in federal funding after appealing a decision by the Administrative Appeals Tribunal that held the school was being operated for-profit and against education funding laws.

The school properties had been owned by the Australian Federation of Islamic Councils, which, it was found, had used vastly inflated rents and other charges to strip money from the school. A new school board was installed, which “did its best” to stop paying rent to AFIC.

In a hearing last May, lawyers for Malek Fahd had laid out three grounds for appeal: that the AAT had misinterpreted the word “applied” in its decision, that the AAT had made an error of law in concluding the school was being run for-profit, and that the AAT had made an error of law in how it managed conditions imposed on the school.

“The appeal must be dismissed with costs,” Justice Nye Perram found.

Malek Fahd Islamic School in Greenacre.

“I have found there to be no error of law discernible in the Tribunal’s reasons and making a finding that future rent owed by the Applicant to AFIC in relation to Greenacre will be at market rate would be inconsistent with findings made by the Tribunal… the appropriate course is for the Applicant to make a fresh application to the Minister.”

Justice Michael Wigney agreed with Judge Perram, with Justice Debra Mortimer upholding the appeal saying there had been “errors of law” in how the AAT interpreted a section of the Australian Education Act.

The chairman of the school’s board, John Bennett, this morning said the judgment would be read thoroughly before the school decided on its next move.

“One is to make application to the High Court — that’s certainly on the cards — the others are to perhaps contact the Department (of Education) and appeal to the Minister and to try and have a meeting,” Dr Bennett said. “This is not the same school as two years ago. Things have moved on a great deal.”

He said it was unclear whether the school would remain open, but that the board would be “looking into all avenues to make sure the pupils go about their education”.

The Minister for Education, Simon Birmingham, said in a statement this afternoon he had contacted his NSW counterpart.

“I have contacted the NSW Minister for Education Rob Stokes and our departments will work together to support the school’s students, families and staff,” he said.

“I urge Malek Fahd’s management to clearly outline their plans to give their school community certainty for the future.”