FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (In Liquidation) (No 4) [2016] FCA 286

ORDERS

THE COURT DECLARES THAT

1.    The first respondent (Clinica), in trade or commerce, represented to members of the public, between about August 2012 and July 2013 (Relevant Period), that:

(a)    by engaging Clinica as a recruitment consultant pursuant to the Clinica Program (as defined in the Fast Track Statement filed in this proceeding (Clinica Program)), a person who did not have permanent residence status could obtain a job that would, or alternatively could, qualify him or her for permanent residence in Australia, or alternatively qualify him or her for permanent residence in Australia within 9 months, under the Subclass 187 visa – Regional Sponsorship Migration Scheme (187 Visa);

(b)    by completing a 4-week course in ‘Certificate III Asset Maintenance (Cleaning Operations)’ at the Complex Training Academy arranged through Clinica (Cleaning Course), a person who did not have permanent residence status could obtain a job that would, or alternatively could, qualify him or her for permanent residence in Australia, under the 187 Visa;

(c)    by working in a cleaning job pursuant to the Clinica Program, or alternatively by working in a cleaning job, a person who did not have permanent residence status would, or alternatively could, qualify for permanent residence in Australia, or alternatively qualify for permanent residence in Australia within nine months, under the 187 Visa;

(d)    Clinica had cleaning jobs, with sponsoring employers in regional areas, available for the clients that participated in the Clinica Program;

(e)    at the conclusion of the Cleaning Course, Clinica would have cleaning jobs, with sponsoring employers in regional areas, available for the clients that participated in the Clinica Program and Clinica would place the clients in cleaning jobs;

in circumstances where:

(f)    by engaging Clinica as a recruitment consultant pursuant to the Clinica Program, a client could not obtain a job that would or could qualify the client for permanent residence in Australia within nine months or at all, under the 187 Visa;

(g)    by completing a Cleaning Course, a client could not and would not obtain a job that would, or alternatively could, qualify him or her for permanent residence in Australia, under the 187 Visa;

(h)    by working in a cleaning job pursuant to the Clinica Program, or alternatively by working in a cleaning job, a client would not and could not qualify for permanent residence in Australia within nine months or at all, under the 187 Visa;

(i)    clients did not qualify for, or obtain, permanent residence in Australia through the Clinica Program;

(j)    Clinica did not have any cleaning jobs, with sponsoring employers in regional areas, available for the clients who participated in the Clinica Program;

(k)    it was unlikely that Clinica would have cleaning jobs, with sponsoring employers in regional areas, available for the clients that participated in the Clinica Program, at the conclusion of a Cleaning Course by the clients;

(l)    Clinica provided few, if any, cleaning jobs to clients who participated in the Clinica Program;

and Clinica thereby:

(m)    engaged in conduct, in trade or commerce, that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law;

(n)    made a representation, in trade or commerce, in connection with the supply or possible supply or promotion of the supply of services, that was false or misleading as to the existence of approval, performance characteristics, uses or benefits of the services, in contravention of s 29(1)(g) of the Australian Consumer Law; and

(o)    engaged in conduct, in relation to employment, that was liable to mislead persons seeking the employment as to the availability of the employment and whether it would, or alternatively could, qualify the person for permanent residence in Australia, in contravention of s 31 of the Australian Consumer Law.

2.    Clinica, in trade or commerce, during the Relevant Period, engaged in conduct that was in all the circumstances unconscionable in contravention of s 21 of the Australian Consumer Law by:

(a)    placing advertisements for the Clinica Program;

(b)    making oral (and in some cases also written) statements to clients about the Clinica Program;

(c)    entering into Regional Sponsorship Agreements with the clients;

(d)    presenting the Regional Sponsorship Agreements to clients as standard form contracts, without any opportunity for clients to negotiate the standard terms;

(e)    charging clients, and receiving, fees in respect of recruitment consultancy services;

(f)    issuing receipts to clients;

(g)    imposing a condition on clients that Clinica would not continue to offer its services under the Regional Sponsorship Agreement (and would not provide a refund) if payments were not made when due;

(h)    imposing a condition on clients that, if the client cancelled his or her application, the client would have to pay a $5,000 cancellation fee;

(i)    arranging for clients who participated in the Clinica Program to undertake a Cleaning Course in circumstances where the occupation of cleaner would not and could not fulfil the criteria for the Direct Entry stream of the 187 Visa;

(j)    not finding qualifying employers to sponsor the clients under the 187 Visa;

(k)    not having any cleaning jobs, with sponsoring employers in regional areas, available for the clients that participated in the Clinica Program;

(l)    being unlikely to have cleaning jobs, with sponsoring employers in regional areas, available for the clients that participated in the Clinica Program, at the conclusion of a Cleaning Course by the clients;

(m)    not providing cleaning jobs to clients who participated in the Clinica Program;

(n)    where clients defaulted on payment of fees, making demands for payment of fees in respect of recruitment consultancy services; and

(o)    where clients defaulted on payment of fees, commencing, or threatening to commence, enforcement proceedings in the Magistrates’ Court of Victoria,

in circumstances where, as Clinica knew, a substantial number of Clinica’s clients:

(p)    were at all times foreign nationals;

(q)    were in Australia on a temporary visa;

(r)    needed to obtain permanent residency within a relatively short period of time to stay permanently in Australia, prior to the expiry of their temporary visa;

(s)    had at all times little, if any, commercial experience and a limited ability to understand legal documents, facts which ought to have been obvious to Clinica;

(t)    as Clinica knew, had not received independent advice in relation to the Regional Sponsorship Agreement;

(u)    by reason of the matters set out in paragraphs (p) – (t) above, had significantly weaker bargaining power than Clinica and were vulnerable in relation to Clinica.

3.    The second respondent Mr Radovan Montague Laski was involved in the contraventions by Clinica of ss 18, 21, 29(1)(g) and 31 of the Australian Consumer Law referred to in paragraphs 1 and 2 above in that he:

(a)    was directly or indirectly knowingly concerned in, and a party to; or

(b)    aided and abetted, counselled or procured,

those contraventions by:

(c)    writing and/or authorising the content and publication of the advertisements by Clinica;

(d)    making and/or authorising the oral (and in some cases also written) statements by Clinica to clients;

(e)    writing and/or authorising the content of the Regional Sponsorship Agreements;

(f)    presenting and/or arranging the presentation of the Regional Sponsorship Agreements to clients;

(g)    issuing and/or authorising the issue of receipts to clients;

(h)    arranging and/or authorising the arranging for the clients to attend the Cleaning Course;

(i)    charging and receiving, and/or authorising the charging and receipt of, fees from clients in respect of recruitment consultancy services;

(j)    making and/or authorising the demands on clients for payment of fees;

(k)    threatening to commence, and instructing Clinica’s lawyers in relation to, the enforcement proceedings against clients; and

(l)    knowing of Clinica’s impugned conduct and the circumstances that give the conduct a false, misleading and unconscionable character.

4.    Each Regional Sponsorship Agreement between Clinica and its clients is void ab initio.

THE COURT ORDERS THAT:

5.    Clinica, whether by itself, its officers, servants, agents or howsoever otherwise, be permanently restrained, in trade or commerce, from carrying on a business or supplying services in connection with recruitment consulting or employee placement, or otherwise being involved in any capacity with any such business activities on its own behalf or on behalf of any other person.

6.    Clinica, whether by itself, its officers, servants, agents or howsoever otherwise, be permanently restrained, in trade or commerce, from carrying on a business or supplying services in connection with migration into Australia, or otherwise being involved in any capacity with any such business activities on its own behalf or on behalf of any other person.

7.    Mr Radovan Montague Laski, whether by himself, his servants, agents or howsoever otherwise, be permanently restrained, in trade or commerce, from being in any way directly or indirectly knowingly concerned in, or a party to, or aiding and abetting, counselling or procuring, conduct of any person or corporation of the kind restrained in paragraphs 5 and 6 above.

8.    Mr Radovan Montague Laski be disqualified from managing corporations for a period of five years, such disqualification to commence immediately from after the making of the direction in paragraph 10.

9.    Clinica and Mr Radovan Montague Laski, jointly and severally, refund to clients of Clinica any moneys paid by the clients which were paid under, referrable to or which were otherwise used in relation to the Regional Sponsorship Agreements and/or the Clinica Program and/or the Cleaning Course, together with interest, calculated from the time when the clients made the payments until the refunds are provided, at the rate set out in s 2 of the Penalty Interest Rates Act 1983 (Vic).

10.    For the purposes of complying with paragraph 9 of these orders, on or before 5:00pm on the day after the making of these Orders, Mr Radovan Montague Laski must execute and submit to the applicant a written direction in the form of Annexure A to these Orders, on behalf of his companies Swishette Pty Ltd ACN 094 286 085 and Letore Pty Ltd ACN 005 733 013.

11.    On or before 4:00pm on 6 April 2016, Ms Tania Laski has leave to file and serve any submissions and supporting evidence as to why she ought be paid $215,000 out of the funds held in the applicant’s solicitors’ trust account. If Ms Tania Laski serves submissions in accordance with this paragraph, the parties each have leave to file and serve any short submissions and supporting evidence in reply on or before 4:00pm on 20 April 2016.

12.    The sum of $85,000 must be preserved in the applicant’s solicitors’ trust account pending the final determination of the Supreme Court of Victoria in proceeding SCI 2015 04467. If there is a final determination in Ms Fahey’s favour in respect of a charge of $85,000, the applicant is to pay to Ms Fahey, as soon as reasonably practicable after that final determination, the sum she has been found entitled to by the Supreme Court of Victoria. If there is a final determination against Ms Fahey, the applicant may apply the $85,000 in further repayment of refunds to persons who have made claims.

13.    Within 14 days of the date of these orders, the applicant send a notice to each of the Clinica clients for which it has a last known mail address and/or email address, or otherwise use its best endeavours to contact those clients within 45 days of the date of these Orders so as to provide them with a notice, stating:

(a)    the fact that there are funds in the applicant’s solicitors’ trust account for the purpose of refunding moneys to clients of Clinica under these orders;

(b)    the fact that it is possible the funds available may not be sufficient to provide a full refund, and if so that refunds will be made between clients in proportion to the amount of their claims;

(c)    a person may claim a refund in respect of fees which were paid under, referrable to or which were otherwise used in relation to the Regional Sponsorship Agreements and/or the Clinica Program and/or the Cleaning Course, plus interest under these orders, if the person can provide sufficient proof of her or his identity and evidence to satisfy the applicant’s solicitors that she or he was a Clinica client and is eligible for a refund;

(d)    each claim for a refund, including interest, must be made within 60 days of the date of these orders;

(e)    the fact that clients are not bound to accept the refund ultimately offered pursuant to these orders and may choose instead to bring a separate action against the respondents;

(f)    the fact that if the client accepts the refund offered pursuant to these orders, he or she may not be able to bring any separate legal action against the respondents.

14.    The applicant shall within 135 days of the date of these orders:

(a)    assess each claim for a refund, that is made by a person pursuant to paragraph 13 above (and may, if necessary or desirable, seek further supporting evidence from the person);

(b)    determine whether the person is eligible for a refund, and the quantum of the refund amount plus interest for that person;

(c)    if there are insufficient funds to pay full refunds to all eligible clients, determine a refund offer on a proportionate basis;

and the applicant will document its reasons for decision and write to the person:

(d)    providing the applicant’s reasons for decision and offering a refund amount plus interest (either on a full refund basis or if there are insufficient funds on a proportionate basis);

(e)    stating a person is not bound to accept the refund offered pursuant to these orders and may choose instead to bring a separate action against the respondents;

(f)    stating that if a person accepts the refund offered pursuant to these orders, he or she may not be able to bring any separate legal action against the respondents;

(g)    stating that the refund offer must be accepted within 21 days.

15.    Following the expiry of the 21 days in which eligible persons must accept a refund pursuant to paragraph 14(g) above, the applicable refund amount including interest to each person that has accepted a refund must be withdrawn from the trust funds and paid to that person.

16.    If, after the expiry of the 21 days referred to in paragraph 14(g) above, it appears to the applicant that additional funds may be available for refunds because not all refund offers have been accepted, the applicant is authorised to recalculate the refunds due to each person who has accepted refunds and make any additional payments accordingly.

17.    For the purposes of paragraphs 20 and 21:

(a)    the applicant is to notify each of Clinica and Mr Radovan Montague Laski when the refund process is completed from the trust account and notify them of any outstanding refund claims that have been proved but not satisfied from the trust funds; and

(b)    Clinica and Mr Radovan Montague Laski must pay any outstanding refund claims that have been proved but not satisfied from the trust funds within 14 days of the notification by the applicant referred to in paragraph 17(a).

18.    Within 14 days from the date of these orders, Clinica and Mr Radovan Montague Laski must ensure the discontinuance of all proceedings on foot against Clinica clients for the recovery of moneys under the Regional Sponsorship Agreements and/or in relation to the Clinica Program and/or the Cleaning Course.

19.    Clinica and Mr Radovan Montague Laski, whether by themselves, their officers, servants, agents or howsoever otherwise, be permanently restrained, from commencing or continuing any proceedings against Clinica clients for the recovery of moneys under the Regional Sponsorship Agreements and/or in relation to the Clinica Program and/or the Cleaning Course.

20.    Clinica pay a pecuniary penalty to the Commonwealth in respect of the contraventions referred to in paragraphs 1 and 2 above in the total amount of $700,000, such penalty to become payable only after completion of the refund process set out in paragraphs 9 to 17 of the orders.

21.    Mr Radovan Montague Laski pay a pecuniary penalty to the Commonwealth in respect of the contraventions referred to in paragraph 3 above in the total amount of $325,000, such penalty to become payable only after completion of the refund process set out in paragraphs 9 to 17 of the orders.

22.    A copy of the reasons for judgment in this proceeding, with the seal of the Court thereon, be retained in the Court for the purposes of s 137H of the Competition and Consumer Act 2010 (Cth).

23.    The orders of the Court made on 4 August 2015 (as extended or varied on 12 August 2015, 10 September 2015, 14 October 2015, 22 October 2015 and as consolidated on 9 March 2016) continue until 5:00pm on the day after the date of the written direction made by Mr Radovan Montague Laski referred to in paragraph 10, and are thereafter discharged.

24.    Upon the notification by the applicant referred to in paragraph 17(a), Mr Radovan Montague Laski, Swishette and Letore have leave to apply to the Court to discharge paragraph 2 of the orders of the Court made on 23 October 2015 restraining Mr Radovan Montague Laski, Swishette and Letore.

25.    Upon the notification by the applicant referred to in paragraph 17(a), Mr Radovan Montague Laski have leave to apply to the Court to discharge paragraph 5 of the further orders of the Court made on 23 October 2015 restraining Mr Radovan Montague Laski.

26.    Paragraphs 6 and 7 of the further orders of the Court made on 23 October 2015 restraining Ms Tanya Marie Hatch be discharged.

27.    The applicant cause a copy of these orders and the reasons for judgment in this proceeding to be served on Ms Hatch and Ms Laski as soon as reasonably practicable.

28.    Clinica and Mr Radovan Montague Laski pay the applicant’s costs of and incidental to the proceeding, including reserved costs, to be taxed in default of agreement.

29.    Liberty to apply.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ANNEXURE A

DIRECTION TO BE GIVEN BY RADOVAN MONTAGUE LASKI IN FEDERAL COURT OF AUSTRALIA PROCEEDING VID 252 OF 2015

I, Radovan Montague Laski, hereby direct on behalf of Swishette Pty Ltd ACN 094 286 085 (Swishette) and Letore Pty Ltd ACN 005 733 013 (Letore), that the whole of the funds held in the applicant’s solicitors’ trust account (being the proceeds of sale of the property of Swishette situated at 5 Maroona Road, Brighton, better described in certificate of title Volume 4249 Folio 755) pursuant to the freezing order made on 4 August 2015 (as extended or varied on 12 August 2015, 10 September 2015, 14 October 2015, 22 October 2015 and as consolidated on 9 March 2016) be:

(a)    maintained in the applicant’s solicitors’ trust account; and

(b)    subject to any further orders of the Court, withdrawn and applied only to effect the refunds referred to in paragraph 9 of the orders of the Court made on 23 March 2016.

REASONS FOR JUDGMENT

MORTIMER J:

1    On 9 February 2016 I gave judgment in this proceeding in favour of the applicant: see Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (No 2) [2016] FCA 62. The applicant had, prior to trial, filed and served copies of the orders it proposed the Court should make if its application was successful. Those proposed orders formed the basis of argument at trial on matters which remained in contest by the respondents. As liability was admitted, many of the orders were not opposed, but there was a substantial contest over some of them and that is what occupied most of the two days of trial.

2    Given the complexity of the orders sought, on publication of judgment the Court distributed to the parties a set of proposed final orders. Directions were made that any submissions the parties wished to file about the Court’s proposed orders, including the form of any proposed amendments to them, should be filed and served by 23 February 2016.

3    The ACCC filed submissions and a form of proposed amendments. The respondents did not file any submissions, nor any proposed amendments. Instead, Swishette Pty Ltd and Letore Pty Ltd, two companies of which the second respondent is the sole director and which are affected by the freezing orders which are in force in this proceeding and, as to Swishette, by the proposed final orders, made an interlocutory application. I have given a separate judgment on that interlocutory application today. By reason of that judgment, Swishette has been joined as a respondent to this proceeding. In that judgment I have also dealt with a further interlocutory application by the ACCC to vary the freezing orders so as to remove what can be described as “carve outs” from those orders in favour of Mr Laski, Swishette and Letore.

4    I have not accepted all of the amendments proposed by the ACCC to the final orders, and the purpose of these reasons is to explain why.

5    By paragraph 11 of its Fast Track Statement, the ACCC pleaded that the Clinica program comprised conduct engaged in between “about August 2012 and about July 2013”. The proceeding was conducted on the basis that this was the period during which the contravening conduct occurred.

6    That understanding is reflected in [24] of the principal judgment in this matter. In that paragraph I noted there was, in the evidence adduced on behalf of the ACCC, a small number of payments totalling $74,000 which appeared to have been made by clients of the Clinica program prior to August 2012. In that paragraph I drew an inference from a concession made by Mr Laski that the Clinica program may have been running for at least a short period prior to August 2012. I noted that the Court had not been requested to make any findings in respect of that earlier period. I noted that whether the period identified by the ACCC in its application had the effect of shutting out these earlier clients was a matter on which submissions could be made.

7    The ACCC has taken up that invitation.

8    The ACCC now submits that a number of persons had dealings with the first respondent (Clinica) between February and August 2012 that were “relatively similar” to the conduct comprising the Clinica program, but which did not necessarily include representations made by Clinica with respect to the completion of a cleaning course or placement in a cleaning job. In an annexure to its submissions, the ACCC refers to certain material that is in evidence regarding those persons and dealings.

9    I have looked at that evidence and considered the matter, and have concluded that it would not be appropriate to grant declarations and make orders extending to payments made by clients of Clinica during this earlier period, even if it is contended such payments were referable to the same scheme. In my view, those matters fall outside the scope of the case pleaded by the ACCC against Clinica and Mr Laski.

10    The conduct in question may bear some similarity to the conduct comprising the Clinica program, but the proceeding has not been conducted on the basis of allegations that any of the necessary elements of ss 18, 29(1)(g) and 31 of the Australian Consumer Law were made out. To extend the orders to this earlier period would require findings on each of those elements to be made. Not only has that not occurred, but the respondents were not on notice that such findings would be made and have not met that case.

11    The submissions of the ACCC concede as much by contending that the relevant persons would not “strictly speaking” fall within the proposed non-party redress orders and that losses sustained by those persons arose in circumstances “like” those of clients of the Clinica program. These matters are outside the scope of the Clinica program as pleaded, and I have not amended the proposed orders to take account of them.

12    On some other matters, I have accepted the submissions made by the ACCC and have made amendments to the orders as proposed to reflect that acceptance.

13    The text of paragraph 10 has been amended to reflect the proposal of the ACCC that the written direction which the orders require Mr Laski to give in his capacity as a director of Swishette and Letore be made an annexure to the orders. Thus, the text of paragraph 10 has been simplified and a cross reference to that annexure inserted. The annexure will be in the form proposed by the ACCC.

14    In paragraph 11, Ms Tanya Laski will have a period of 14 days in which to make submissions and file any supporting evidence as to why she ought be paid $215,000 out of the funds held in the trust account of ACCC’s solicitors. I accept the submissions that 14 days is sufficient given Ms Laski has already given evidence in this proceeding about her claims, in her affidavit of 18 August 2015, which I note was prepared and filed by Franzese & Associates, who are the solicitors on the record for the respondents and who have a detailed knowledge of this proceeding.

15    The time period specified in paragraph 13 of the order for the ACCC to make inquiries to contact as many former Clinica clients as possible will be extended to 45 days, as the ACCC has submitted. I recognise that there may be real practical difficulties in contacting such individuals and methods such as advertising may be required.

16    Altering this time period should result in my opinion in a small extension of the time period in paragraph 14 for the assessment by the ACCC of each claim.

17    The final change of substance is to paragraph 17. A new sub-paragraph has been inserted to crystallise the obligations of each of Clinica and Mr Laski to pay any outstanding refund claims not satisfied by the trust funds: that is, in the case of a shortfall between the claims and available funds. Each of those respondents will be required to make such payments within 14 days of notification to them by the ACCC that the refund process through the trust funds is complete. This time period will also ensure, as the ACCC submits, that this obligation takes priority over the payments of penalty pursuant to paragraphs 20 and 21 of the orders.

18    There are some typographical corrections which have also been made which do not alter the substance of the orders.

Associate:

Dated:    23 March 2016