FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Unique International College Pty Ltd (Imposition of Penalty) [2019] FCA 1773

ORDERS

THE COURT ORDERS THAT:

1.    The Respondent pay the Commonwealth of Australia, within 28 days, pecuniary penalties of $4,165,000.

2.    The matter be listed for a case management hearing on 10 December 2019 at 9.30 am.

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

REASONS FOR JUDGMENT

PERRAM J:

1.     Introduction

1    On 30 June 2017 the Court published its reasons on the liability issues: Australian Competition and Consumer Commission v Unique International College [2017] FCA 727 (‘the Liability Judgment’). In those reasons I concluded that the Respondent (‘Unique’) had engaged in various contraventions of the Australian Consumer Law (‘ACL’), being Sch 2 to the Competition and Consumer Act 2010 (Cth) (‘CCA’), including unconscionable conduct contrary to s 21. The unconscionable conduct fell into two categories: unconscionable conduct by Unique towards identified individuals, and a more general conclusion that Unique had also operated a system of enrolment which was itself unconscionable. This latter case did not turn on any particular individuals. Unique was also found to have engaged in misleading and deceptive conduct (contrary to s 29) and to have contravened various provisions of the ACL dealing with unsolicited consumer agreements (ss 76, 78 and 79). These reasons assume a thorough familiarity with the Liability Judgment. The Liability Judgment did not deal with the issue of penalty which was left for another day.

2    On 8 November 2017 I made declarations to give effect to my conclusions in the Liability Judgment. This was done over the objection of the First Applicant (‘the ACCC’) so as to facilitate the bringing of an appeal by Unique. On 19 September 2018, the Full Court set aside the findings and declarations relating to the system case but left the remaining declarations in place: Unique International College Pty Ltd v Australian Competition and Consumer Commission [2018] FCAFC 155; 362 ALR 66. The Full Court also remitted to me the question of the costs of the trial and of the appropriate penalty to be imposed upon Unique for its conduct.

3    These reasons deal only with the question of penalty. The question of costs has been reserved including the costs of the penalty hearing itself. If the parties are unable to reach agreement on that issue the matter will be relisted in order to permit the question to be ventilated.

4    The ACCC sought the imposition of pecuniary penalties totalling $6.7 million on Unique. Unique submitted that penalties totalling $2.8-$3.0 million would be more appropriate. For the reasons which follow I have decided that civil penalties of $4,165,000 should be imposed on Unique. The reasons are divided as follows:

(1)    Introduction

(2)    Evidence

(3)    Principles relevant to pecuniary penalties

(4)    The contraventions

(5)    Application of penalty principles to Unique’s conduct

(6)    Determining the maximum penalty

(7)    Courses of conduct

(8)    Deterrence

(9)    Formulation of penalty

(10)    Totality

(11)    Conclusion

2.    Evidence

5    The evidence before the Court was comprised in a two volume joint bundle. The ACCC’s material was contained in Volume 1. It read the affidavit of Holly Aisatullin Ritson affirmed on 25 January 2019. Her evidence related to a notice to produce issued by the ACCC to Unique on 23 January 2019. Although an affidavit of Geoffrey Koochew affirmed on 24 January 2019 was included in the joint bundle, it was not read. Volume 1 of the joint bundle also contained material which was in evidence at trial and some trial transcript. I treated these as already being part of the record.

6    Unique’s material was contained in Volume 2. It read the affidavit of Cara Marie Durnell affirmed on 11 April 2019. Ms Durnell is an insurance broker. She gave evidence that it was not possible for Unique to obtain professional indemnity insurance following media coverage of Unique’s conduct the subject of these proceedings. Unique also tendered the affidavit of Katrina Mary Groshinski sworn on 8 April 2016 which had been read at trial. Ms Groshinski is Unique’s solicitor. She gave evidence that Unique had not been able to enrol any more students after 4 December 2015 by orders of the Administrative Appeals Tribunal and had not received any VET FEE-HELP (‘VFH’) payments since 15 October 2015. The balance of Volume 2 I treated as being in evidence.

3.    Principles relevant to pecuniary penalties

7    I return to the detail of the contraventions below. However, for present purposes it may be noted that the contraventions ultimately found against Unique were contraventions of s 21 (unconscionable conduct in connection with goods or services), s 29 (false or misleading representations about goods or services), s 76 (failure to inform a person of a termination period), s 78 (requirement to give a document to a consumer) and s 79 (requirements for all unsolicited consumer agreements). Where any of these provisions is contravened, s 224(1) authorises the Court to impose a pecuniary penalty.

Penalty factors

8    Section 224(2) requires the Court in determining the appropriate penalty to have regard to ‘all relevant matters’ which are expressly said to include the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission, the circumstance in which the act or omission took place, and whether the contravener has previously been found by a court to have engaged in any similar conduct.

9    In Trade Practices Commission v CSR Ltd [1990] FCA 762; (1991) ATPR 41-076 (‘CSR’), French J summarised a number of additional factors which are relevant to the assessment of an appropriate penalty. Those factors were expanded upon by the Full Court in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 (‘NW Frozen Foods’) at 290.

10    However, these factors do not exhaust potentially relevant considerations or otherwise confine the Court’s discretion: see Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330; 327 ALR 540 (‘Coles’) at 544 [9] per Allsop CJ. I consider the specified matters in s 224(2) and other relevant matters mentioned in these decisions below.

Maximum penalties and courses of conduct

11    The maximum penalties are prescribed in ss 224(3) and (3A). Different penalties are fixed depending on whether the person is a body corporate or not. Unique is a corporation and hence is a body corporate. The maximum penalties for it are therefore as follows:

12    A person is not liable to more than one penalty under s 224 in respect of the same conduct: s 224(4)(b). It is also necessary to have regard to the course of conduct principle. Where more than one contravention arises out of the same course of conduct or the one transaction it is necessary to consider whether a concurrent or single penalty should be imposed for the contraventions. This is to ensure that the offender is not punished twice for what is essentially the same conduct. The principle will come into view where there is a sufficient interrelationship between the legal and factual elements of two offences: Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; 269 ALR 1 at 13 [41]. That decision also establishes that even if the contraventions are properly characterised as arising from one or more courses of conduct the Court is not obliged to apply the principle if the resulting penalty fails to reflect the seriousness of the contraventions: at 13 [42]. Nor is it appropriate to use the principle so as to treat multiple contraventions as a single contravention for the purpose of determining the maximum available penalty.

Primacy of deterrence

13    The formulation of the relevant penalty must reflect its principal object which is deterrence both of the contravener (that is, specific deterrence) and of others who might be tempted to engage in similar contraventions (general deterrence). In light of these considerations, the object of imposing a penalty is to put a price on contravention which is sufficient to deter in these two ways: CSR at [40] per French J. A corollary is that the price of contravention should be high enough to outweigh any potential gain to the contravener accruing from having engaged in the impugned conduct. As the Full Court explained in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; 287 ALR 249 at 265 [62] the penalty should not be such that it is regarded by the contravener or others ‘as an acceptable cost of doing business’, a statement endorsed by the High Court in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640 at 659 [66].

‘Parity’

14    Whilst recourse to the penalties imposed in other cases is not forbidden there are many statements to the effect that doing so may not be particularly useful. They may provide a guide but it is likely to be very limited: cf NW Frozen Foods at 295; see also Australian Competition and Consumer Commission v Universal Musical Australia Pty Ltd (No 2) [2002] FCA 192; 201 ALR 618 at 626 [34].

15    The parties traded blows about the penalties imposed by this Court in Australian Competition and Consumer Commission v Acquire Learning & Careers Pty Ltd [2017] FCA 602 and Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liquidation) (No 2) [2017] FCA 709. However, I do not think those cases are sufficiently similar to this case to be of any use. Nor do I feel that much assistance is obtained from Australian Competition and Consumer Commission v Lux Distributors Pty Ltd (No 2) [2015] FCA 903 which concerned door to door vacuum cleaner salespersons.

16    The ‘parity’ principle, which is more aptly described as being concerned with co-offenders, has no application in the present case: see Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; 356 ALR 389 at 406 [70]-[71].

17    The appropriate penalties are then to be determined using the process of instinctive synthesis described by the High Court in Markarian v The Queen [2005] HCA 25; 228 CLR 357 at 373-375 [37]; Coles at 543 [6]. Where there are related contraventions there must next be applied the totality principle so as to ensure that the total penalty imposed in respect of them does not exceed what is considered appropriate for the entire contravening conduct: Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41-375 at 40,169. This operates as a final check.

4.    The contraventions

18    Following Unique’s successful appeal to the Full Court, the ACCC succeeded against it in respect of six named consumers, five of whom were called at trial. These were Natasha Paudel, Tre Simpson, Kylie Simpson, Fiona Smith, June Smith and Jaycee Edwards. Before dealing with their individual positions it is convenient to note some general matters. First, the penalties to be imposed do not relate to the ACCC’s more general unconscionable system case. They relate only to the ACCC’s narrower case about the six individuals. Secondly, Unique is not being penalised for receiving large payments from the Commonwealth in relation to the conduct of its College. The amounts of money it received flavoured much of the coverage of the case but it is important to be clear that has not been the case that Unique has been required to meet and the penalties to be imposed have nothing to do with such a contention. Thirdly, I accept that each of the six consumers voluntarily engaged with Unique and always in the presence of other people. Some of them, however, were no doubt seduced by the concept of the free laptop. Fourthly, four of the six consumers did understand that they were signing up for a course. Finally, I would accept that the six consumers never used any of their own money to pay Unique tuition fees but I would reject Unique’s contention that they had not paid Unique. They paid by incurring a debt to the Commonwealth. The difference between these positions is probably semantic to an extent. The critical feature is that the six consumers assumed a debt to the Commonwealth which was not then payable as the price of obtaining access to the courses.

Natasha Paudel

19    The first individual consumer was Ms Natasha Paudel. She was signed up to the Diploma of Management at a meeting held at Alan Tighe’s house in Walgett on 10 October 2014. I explained the facts about this meeting and Ms Paudel’s role in the Liability Judgment at [655]-[672]. At [758] I concluded that Unique’s conduct towards Ms Paudel involved a breach of s 76 (because she was not told of her right to terminate the agreement within the termination period) and s 79 (because the front page of the signed agreement did not contain a notice of her right to terminate during the termination period and the agreement did not provide a form for doing so). I also found a breach of s 78 because Ms Paudel was not given a copy of the agreement she signed.

Tre Simpson

20    The second set of contraventions concern Mr Tre Simpson. He was signed up at a meeting which took place in Tolland on 30 March 2015 at Auntie Vennie’s house. The circumstances of this meeting are set out in the Liability Judgment at [673]-[689]. I concluded at [762]-[765] that as far as Tre was concerned Unique had misled him about the cost of the course contrary to s 29(1)(i), had engaged in unconscionable conduct in connection with the provision of services contrary to s 21, had failed to inform him of the termination period contrary to s 76, had failed to give him a copy of the agreement contrary to s 78 and had failed to include in the agreement a notice of his right to terminate it or a form by which he could do so contrary to s 79.

Kylie Simpson

21    The third set of contraventions concerned Ms Kylie Simpson. She was signed up at the same meeting as Tre at Auntie Vennie’s house. The circumstances of that meeting are set out at [673]-[689]. At [766]-[768] I concluded that Unique had engaged in unconscionable conduct in signing her up in view of her obvious impairments contrary to s 21. I concluded that Unique had failed to tell her of the termination period, to give her a copy of the agreement or to include in the agreement a notice of her right to terminate or a form for doing so in breach of ss 76, 78 and 79.

June Smith

22    The fourth set of contraventions concerned Ms June Smith who was signed up in her own home at the Alice Edwards Village near Bourke on 10 June 2015. The circumstances of this meeting appear in the Liability Judgment at [692]-[709]. At [772] (by a series of cross-references) I concluded that Unique had contravened s 29(1)(i) by misleading June about two matters, viz, by not telling her that she would be left with a debt to the Commonwealth and by not telling her that she would have to pay for the course or its cost. I also concluded that Unique had behaved exploitatively towards her and had therefore engaged in unconscionable conduct contrary to s 21. Finally, I found that Unique had breached ss 76, 78 and 79 by failing to tell her of the termination period, give her a copy of the agreement or include in the agreement a notice of her right to terminate or a form for doing so.

Jaycee Edwards

23    The fifth set of contraventions concerned Ms Jaycee Edwards who was signed up at the same sign up meeting at June Smith’s house on 10 June 2015. The circumstances of that meeting are set out at [692]-[709]. At [769] I concluded that Unique had contravened s 29(2)(i) by not informing her that she would have to pay for the course and by not telling her the cost of the course. I also concluded at [770] that Unique’s conduct towards Jaycee was exploitative and accordingly unconscionable contrary to s 21.

Fiona Smith

24    The sixth set of contraventions concerned Ms Fiona Smith who was signed up at the same meeting at June Smith’s house on 10 June 2015. The circumstances of that meeting are set out at [692]-[709]. At [771] I concluded that Unique had contravened s 29(1)(i) by not informing her that she would have to pay for the course and by not telling her the cost of the course. I also concluded that Unique’s conduct towards her was exploitative and hence unconscionable contrary to s 21. I found that Unique had breached ss 76, 78 and 79 by failing to tell her of the termination period, give her a copy of the agreement or include in the agreement a notice of her right to terminate or a form for doing so.

5.    Application of penalty principles to Unique’s conduct

Nature and extent of the act or omission and of any loss or damage suffered as a result of the conduct

25    I have dealt with the nature and extent of the contraventions and the circumstances in which they took place under ss 224(2)(a) and (b) in the previous section. However, an issue of principle divided the ACCC and Unique in relation to the question of loss or damage. The ACCC submitted that each of the six individual consumers had been left with a VFH debt of $26,400. Unique on the other hand submitted that it had repaid to the Commonwealth the sum of $132,000 which it had received in relation to the six individual consumers and that the Commonwealth had undertaken to re-credit the consumers’ VFH debt. It followed that the consumers either did not owe, or shortly would not owe, any debt to the Commonwealth. Consequently, their full life time cap would be restored. Unique submitted that the six consumers had never been literally out of pocket at worst accruing a contingent liability which would now be discharged. In that regard, Unique submitted that there was no evidence that any of the consumers had ever reached a level of income such that they were required to make any payments towards their VFH debt through the tax system.

26    There is an inconsistency between the amount referred to by the ACCC (which in aggregate would appear to be $158,400) and the size of the debt that Unique submits exists. The affidavit of Mr Koochew showed that the VFH debts for the six consumers were as the ACCC submitted. Unique submitted that it had repaid the tuition fees which it had received. There did not appear to be any evidence to support that submission although in its submissions in reply at [11] the ACCC did not appear to take issue with Unique’s contention. At the hearing senior counsel for the ACCC accepted that Unique had discharged the debts. For that reason, I accept that Unique has repaid all of the debts and that the Commonwealth had undertaken to reduce the debts of the consumers accordingly.

27    The ACCC submitted that the fact that Unique had taken steps to extinguish the debts ought not to assist Unique because the correct question concerned the harm that the consumers would have suffered if the ACCC had not taken action against Unique. No authority was cited for this proposition which I do not accept and which does not reflect the statutory language of s 224(1)(a) (‘… any loss or damage suffered as a result of the act or omission’). But I do accept that the fact that the individual consumers were exposed, for a period, to a form of loss is relevant just as is the fact that the loss has now been reversed.

28    The position then is that the consumers did suffer a loss when they were signed up for the courses. They incurred an actual debt to the Commonwealth. That debt was never payable by them however since they did not reach the threshold at which they were required to make payments through the tax system. Unique has subsequently caused the debts to be extinguished. Unique did not submit that the consumers had been enriched to the extent that they were not required to return the laptops. The correct characterisation of this is that a loss was suffered which was unlikely to have been perceived by the consumers and that loss has now been extinguished.

Previous contraventions

29    It was not in dispute that Unique had not been found to have engaged in similar conduct or other contraventions of the ACL in the past.

Size of the contravening company and its financial position

30    Unique is a proprietary company operated by a family group and whose shares were owned by two discretionary family trusts. The ACCC placed emphasis on the financial position of Unique when it committed the contraventions. In the 2013 year it made a net after tax profit of $40,301, in 2014 a net after tax profit of $8,214,031 and in 2015 a net after tax profit of $33,779,726.

31    Unique submitted that the relevant inquiry was not how profitable it had been whilst the conduct was being committed, but rather what the current size of the company was. It submitted that its financial statements showed that in the years between 2016 and 2018 its asset position had declined from $9.9 million to negative net assets of $11.8 million. It also submitted it had made further losses in the 2017 year (of $2.9 million) and in the 2018 year (of $1.6 million). It claimed to have less than $10,000 in its bank account and the sum of $540,494.54 currently held in its solicitors’ trust account.

32    The financial statements were in evidence. The financial statements for the year ended 30 June 2016 show that Unique had net assets of $34,222,839.92 as at 30 June 2015, and as at 30 June 2016 net assets of -$7,425,271.13. The financial statements for the financial year 2017 are inconsistent with this. They suggest that Unique had net assets of $9,471,860.63 as at 30 June 2016 (not -$7,425,271.13) and net assets of $6,478,589.14 as at 30 June 2017. These statements have not been audited and it appears to me that they are not reliable since they are inconsistent. I am unable to say what the size of Unique presently is. The best that can be done is to say that a great deal of money has passed through its books much of which has been paid away in dividends. Since Unique is no longer trading, the question of how big it is may not be as meaningful as it is in the case of a company which is still conducting a business. In any event, I am unable to determine its financial position. Later in these reasons, I conclude that the principal purpose in the present case of the penalties is general deterrence. In that circumstance, even if I had been able to determine the financial position of Unique, it is unlikely to have had a dramatic impact on the penalty.

Deliberateness of the conduct

33    The ACCC submitted that Unique’s conduct had been deliberate which Unique accepted. The conduct took place on three separate occasions in three separate locations: Walgett on 9 or 10 October 2014, Tolland on 30 March 2015 and Bourke on 10 June 2015. Although Unique intended its actions, however, it did not knowingly contravene the ACL. I am satisfied that in its contraventions, it was ignorant.

Involvement of senior management

34    Unique and the ACCC agreed that at the sign-up meeting at Tolland on 30 March 2015 Mandeep Kang and Jasmeen Kaur were involved and that they were properly to be understood as part of Unique’s senior management. They were also involved in the conduct at the meeting at Walgett on 9 or 10 October 2014. The persons involved in the sign up meeting at Bourke were not members of Unique’s senior management. If the system case had been upheld on appeal, it might have been possible to conclude that what occurred at Bourke was part of what Ms Kang had intended to occur so that senior management might be implicated in those events as well. However, I do not think it would be safe to proceed in that fashion given that the system case failed.

35    Unique submitted that it was not demonstrated that any of Unique’s senior managers knew that the conduct was unlawful or potentially unlawful. I accept the ACCC’s submission that whilst it would be an aggravating factor if senior management had known that the conduct was unlawful, the fact that they did not know is neutral. The absence of an aggravating factor is not itself a mitigating factor.

36    The ACCC also submitted that the involvement of senior management demonstrated a higher level of culpability on Unique’s part and increased the need for deterrence. I will deal with this submission separately when I examine the needs of deterrence.

Culture of compliance

37    The ACCC and Unique agreed that Unique did not have a corporate culture that promoted compliance with the ACL. It did not train its staff about compliance with the ACL, its code of conduct did not refer to the ACL or the CCA, and one of Unique’s employee witnesses stated in cross-examination that he had not in fact heard of the ACL.

Co-operation and contrition

38    The ACCC submitted that Unique had displayed no relevant cooperation, and had defended the proceedings on the basis that no aspect of the conduct was admitted. It also submitted that its compliance with a notice issued under s 155 of the CCA was not itself proof of a disposition to cooperate, given that it would have been an offence not to comply with it.

39    Unique accepted that its cooperation and contrition were not mitigating factors. I agree with Unique’s submission that it was entitled to persist in a legitimate defence of the proceedings, but correspondingly it will receive no discount for cooperation.

6.    Determining the maximum penalty

40    The issue of whether s 224(4)(b) operates to limit the number of penalties which can be imposed arises only in the case of the consumers towards whom Unique was found to have engaged in unconscionable conduct. These are for the meeting held at Bourke, concerning Fiona Smith, June Smith and Jaycee Edwards. For the meeting held at Tolland they are Tre Simpson and Kylie Simpson. In relation to the meeting at Walgett I did not make a finding of unconscionable conduct in respect of Natasha Paudel. The manner in which the unconscionability finding was made was, to an extent which is now controversial, bound up in the conduct on which the contraventions of ss 29(1)(i), 74, 76 and 79 were founded. The case of Tre Simpson will illustrate the problem. My conclusions at trial were:

762.    First, I conclude that:

(a)    Unique did not inform Tre or Mrs Simpson that he was enrolling in a course beyond what was written in the forms. What was written on the forms had no informative effect on Tre or Mrs Simpson (nor was it intended to);

(b)    Unique did not inform Mrs Simpson or Tre of the cost of the course; and

(c)    Unique did not inform Tre or Mrs Simpson that he would incur a debt unless he cancelled before the census date or even that he could cancel by the census date.

763.    In the context of a meeting at which it is plain that Unique was exploiting the people present for its own pecuniary purposes, this was misleading. Breaches of s 18 are established in each case. In relation to (b) a breach of s 29(1)(i) is established.

764.    Secondly, this conduct was unconscionable. It involved the exploitation of an uneducated indigenous person with no understanding of what he was agreeing to in return for a laptop which was worth substantially less than the debt which was being incurred.

765.    Thirdly, in relation to the issues relating to unsolicited consumer agreements, I am satisfied that Tre was ‘called on’ within the meaning of s 74. Although I have not found that Unique did comply with the requirements of s 74, I conclude for the same reasons I have given in relation to Ms Paudel that I should not make a finding that it did not comply with it. The subject matter of s 74 is fairly technical and the absence of clear evidence about these matters does not persuade me that the steps required by s 74 were not, in fact, carried out. On the other hand, because Tre did not receive a copy of the agreement a breach of 78 is established. And, for the reasons I have given in relation to Ms Paudel, breaches of ss 76 and 79 are also established.

41    It will be seen that [764] implies that the same conduct which was misleading was also unconscionable because in using the word ‘this’ I was referring to the conduct in [762]-[763]. Further, as [762] shows the fact that Unique was ‘exploiting’ the people at the meeting formed part of the reasoning towards the conclusion that the same conduct was misleading. However, these were not the only findings about Tre or Unique’s conduct towards him. In fact, there were many such findings throughout the judgment. At the time I delivered judgment I left it to the parties to formulate an appropriate form of orders to give effect to the reasons. A debate then took place as to whether the Court should grant any declaratory relief before embarking upon the hearing of the penalty phase (it having been decided that they should be tried separately). In order to facilitate an appeal, I thought it appropriate to grant declaratory relief at that stage. There was then a subsequent debate about the form that the declaratory relief should take. The ACCC submitted that the declarations should be very detailed and set out the intricacies of the contraventions whilst Unique submitted that they should be couched in very general terms. I accepted the ACCC’s submission that the longer form should be used: Australian Competition and Consumer Commission v Unique International College (No 7) [2017] FCA 1289. The declarations then drew together all the factual findings which had been made. So the declarations in relation to Tre were as follows:

3.    On or around 30 March 2015, at a Sign-up Meeting in Tolland, New South Wales (Tolland Sign-up Meeting), Unique:

3.1.    failed to inform Tre Simpson, or his guardian Margaret Simpson that Tre Simpson was enrolling in a course:

and thereby engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 18 of the ACL;

3.2.    failed to inform Tre Simpson or Margaret Simpson of the cost of the course, and thereby engaged in conduct that was:

3.2.1.    misleading or deceptive or likely to mislead or deceive, in contravention of s 18 of the ACL; and

3.2.2.    false or misleading with respect to the price of the course, in contravention of s 29(1)(i) of the ACL; and

3.3.    failed to inform Tre Simpson or Margaret Simpson that Tre Simpson would incur substantial debt unless he cancelled his enrolment in the course before the census date, and thereby engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 18 of the ACL.

4.    At the at the Tolland Sign-up Meeting, Unique:

4.1.    did not properly inform Tre Simpson, in writing and before he agreed to sign up to Unique’s course:

4.1.1.    that he was entitled to terminate the enrolment agreement prior to the end of the termination period; and

     4.1.2.    the way in which that termination right could be exercised,

in contravention of s 76 of the ACL;

4.2.    did not give Tre Simpson a copy of the enrolment agreement which he had signed, in contravention of s 78 of the ACL, in circumstances where parts of his enrolment agreement were completed by Unique’s employees; and

4.3.    failed to include in the enrolment agreement:

4.3.1.    a notice that conspicuously and prominently informed Tre Simpson of his right to terminate the enrolment agreement; and

4.3.2.    a notice which he could use to terminate the enrolment agreement,

in contravention of s 79 of the ACL.

5.    Unique’s conduct towards Tre Simpson at the Tolland Sign-up Meeting:

5.1.    involved the exploitation of Tre Simpson, an Indigenous person who, at the time of the conduct:

     5.1.1.    was 19 years old;

5.1.2.    suffered from a number of health conditions that significantly limited his intellectual capacities;

     5.1.3.    had no formal education beyond year 10;

     5.1.4.    had never had a job;

5.1.5.    was cared for by his grandmother (Margaret Simpson) because he was unable to look after himself; and

5.1.6.    did not understand the nature of the agreement he was making;

5.2.    involved the contraventions of the ACL referred to in the declarations at paragraphs 3 and 4 above;

5.3.    was carried out in circumstances where the Unique employees present:

5.3.1.    did not explain to Tre Simpson or Margaret Simpson:

5.3.1.1.    any aspects of the course or the VET FEE-HELP system;

      5.3.1.2.    the obligations arising from the enrolment forms;

5.3.1.3.    that Tre Simpson could cancel or terminate his enrolment in the course by the census date;

5.3.2.    were:

5.3.2.1.    entirely indifferent as to Tre Simpson’s suitability for the course; and

5.3.2.2.    interested only in making sure he was enrolled, was unconscionable,

in contravention of s 21 of the ACL.

42    It will be seen that para 3 of the orders dealt with the issue of misleading and deceptive conduct, para 4 with the unsolicited consumer agreement contraventions and para 5 with the unconscionable conduct contraventions. Paragraph 5.2 then links the misleading conduct case in para 3 and the unsolicited consumer agreements case in para 4 to the unconscionability case in para 5 using the word ‘involved’.

43    Unique submitted that this had the consequence that the conduct which constituted the contraventions of ss 29(1)(i), 76, 78 and 79 was the same conduct which constituted the contravention of s 21. As a consequence s 224(4)(b) applies and it is not liable for more than one penalty in respect of the same conduct. The ACCC, on the other hand, submitted that the conduct constituting the contravention of s 21 was all of the conduct in para 5, not just the conduct referred to in para 5.2. Consequently, the conduct in paras 3 and 4 could not be the same conduct as that which constituted the conduct in para 5.

44    The ACCC’s submissions are to be preferred. The matter is governed by the language of s 224(4). It requires the conduct under consideration to ‘constitute’ a contravention of two or more provisions. The conduct in para 3.2 ‘constituted’ a contravention of s 29(1)(i) but it did not constitute a contravention of s 21 merely because of para 5.2. The conduct which constituted the contravention of s 21 was all of the conduct described in para 5. Consequently, s 224(4)(b) does not apply.

45    I have utilised the example of Tre Simpson however the same reasoning also applies to all of the other consumers apart from Natasha Paudel.

7.    Courses of conduct

46    The ACCC submitted that Unique’s conduct in relation to the six consumers should be treated as six separate courses of conduct. Unique agreed with this except in the cases of Fiona Smith and Jaycee Edwards where it submitted that its contraventions should be treated as a single course of conduct. Fiona and Jaycee attended the meeting at Bourke. I reached identical ultimate conclusions in relation to them at [769]-[771] of the Liability Judgment. The findings at [700]-[705] show that Fiona and Jaycee spoke with Johanne Richardson, who was a Unique employee. The question now is whether they spoke to her at the same time so that the conduct described at [704] was the same conduct in relation to both of them or whether they spoke with her separately.

47    The unconscionability case against Unique in the case of Fiona and Jaycee was not identical, but it differed only as to the particular disadvantages of Fiona and Jaycee. The ACCC submitted, first, that a fair reading of [700]-[705] showed that Johanne must have interacted separately with Fiona and Jaycee thereby giving rise to separate conduct. Secondly, this was reflected in the terms of the declarations which were not the same. Thirdly, the conduct which was constituted by omissions were necessarily specific to each customer.

48    I do not accept the ACCC’s submission about the meaning of [700]-[705]. To my mind, it is tolerably clear that Fiona and Jaycee interacted with Johanne simultaneously and that Johanne was speaking to both. I do not therefore accept the first submission.

49    As to the second submission, it is true as the ACCC submits that the declarations which were made in relation to Fiona and Jaycee were not the same. Although it was declared that Unique had contravened the unsolicited consumer agreement provisions (ss 76, 78 and 79) in relation to Fiona no such declaration was made in the case of Jaycee. However, the findings on those matters were at [704] were identical as were the conclusions a [769]-[771]. There is no basis for those declarations to be absent in the case of Jaycee and I can only conclude that the declarations, through a slip, do not reflect the reasons of the Court. Were it thought necessary, I would amend the declarations under the slip rule to remedy this.

50    As to the third submission, the question is this: if one fails to tell two people something in the same interaction does one fail to tell each of them that something in two different ways? I do not think so.

51    Accordingly, I will treat the conduct in the case of Fiona and Jaycee as a single course of conduct.

52    For completeness, as noted above, it does not follow from the fact that multiple contraventions are to be treated as a course of conduct that one then proceeds as if there was only one contravention. The point of the principle is to ensure that in fixing the penalty, given the interrelationship or overlap between the contraventions, the contravener does not suffer multiple punishment for the same offending: Transport Workers Union of Australia v Registered Organisations Commissioner (No 2) [2018] FCAFC 203; 363 ALR 464 at 481 [91].

8.    Deterrence

53    I have outlined the general principles in relation to deterrence above. As a particular matter, Unique submitted that the requirements of specific and general deterrence were low. As to specific deterrence it pointed out that its registration had been cancelled, that it was no longer conducting the College, it had no employees and that it was unable to conduct the College even if it wished to do so since it could not obtain professional indemnity insurance. Consequently, it could not engage in further contravening conduct and the requirements of specific deterrence ‘had no role to play in the determination of the appropriate penalty’. The ACCC submitted that this was not so because it had not been shown that those standing behind Unique had no intention of dealing with consumers again. However, those standing behind Unique are not the same person as Unique and the need to deter them cannot be seen as part of the requirements of specific deterrence referrable to Unique itself (although that aspect of the matter will be germane under general deterrence). I therefore accept Unique’s submission that specific deterrence is of little moment in this matter.

54    As to general deterrence, Unique submitted that this should be given minimal weight because the VFH scheme had been abolished and because the regulator, the Australian Skills Quality Authority (‘AQSA’), had been engaged in extensive enforcement activity. AQSA had cancelled the registration of 1,151 Registered Training Organisations (‘RTOs’) which was about half the RTOs there were previously. As I understood this submission, its point was to show that the purpose of general deterrence could be seen as being provided by AQSA. Further, it was submitted that the media coverage of Unique’s case also served the purpose of general deterrence. I do not accept either of these submissions. The fact that another regulator has been engaged in other enforcement activity says nothing about the present topic. Neither do I accept that the media coverage of the case provides a meaningful substitute for the general deterrent constituted by the imposition of a civil penalty. In fact, in this case it is the requirements of general deterrence which are most important. In that regard, the fact that senior management were involved in some of Unique’s contraventions is relevant to general deterrence.

9.    Formulation of penalty

Walgett: Natasha Paudel

55    The only contraventions found in relation to Ms Paudel were contraventions of ss 76, 78 and 79, that is to say, the unsolicited consumer agreements provisions. It was accepted by both parties that the conduct in relation to Ms Paudel formed a single course of conduct. The maximum penalty available is therefore $150,000. The ACCC submitted that an appropriate penalty would be $150,000. Unique submitted that the appropriate penalty would be $120,000. I do not think that the conduct involved is in the worst category however it is serious. I will impose a penalty of $130,000 for the three contraventions.

Tolland: Tre and Kylie Simpson

Tre Simpson

56    The maximum penalty for the misleading and deceptive conduct contravention (s 29(1)(i)) and the unconscionable conduct contravention (s 21) is in each case $1.1 million and for the breaches of ss 76, 78 and 79 it is $50,000 each. I have rejected Unique’s submission that the breaches of ss 21, 29(1)(i), 76, 78 and 79 are subject to s 224(4). The theoretical maximum penalty which may be imposed is therefore $2.35 million.

57    The ACCC submitted that the Court should impose penalties of $1.1 million for the breaches of s 21, $150,000 for the breach of s 29(1)(i) and $40,000 for each of the contraventions of ss 76, 78 and 79, giving a total penalty of $1.37 million.

58    Unique, by contrast, submitted that a total penalty for these contraventions of $650,000 should be imposed. However, this was on the basis that s 224(4) applied so that the matter was to be approached as a single contravention.

59    The conduct in relation to Tre was objectively very serious. Although the conduct which constituted the breaches of ss 29(1)(i), 76, 78 and 79 was not the same conduct which constituted the contravention of s 21, the latter plainly includes the former. It would not be appropriate to impose no penalty in relation to those matters since they represent separate norms of conduct on different facts. However, it is important to recognise the significant risk of double punishment arising from the interrelationship between the unconscionability contraventions and the other contraventions. Whilst I propose to impose a penalty in relation to the misleading and deceptive conduct contraventions and the unsolicited consumer agreements contraventions, there should be an allowance for that in relation the penalty for the contravention of s 21. The objective seriousness of the contravention of the unsolicited consumer agreements provisions appears to be the same as in the case of Ms Paudel and the interests of consistency suggest that it should be fixed at $130,000 as in Ms Paudel’s case. I propose to impose a penalty of $150,000 in relation to the single contravention of s 29(1)(i).

60    The more difficult issue is the contravention of s 21. The ACCC submitted that the maximum penalty should be imposed. As I have said there is no doubt the conduct was serious. However, Unique submitted that it had not been found that Unique was aware of Tre’s disabilities or that its employees used scripts which contained misleading information. I accept this. It also submitted that there had been no finding that the conduct had been engaged in for the purpose of rorting the VFH scheme. I accept this, too. On the other hand, I did find that incentive structures were used for a period but ceased after 31 March 2015. I accept Unique’s submission that it did not receive separate remuneration apart from the payments from the Commonwealth however I regard this as a neutral matter.

61    I have decided to impose a penalty of $800,000 in relation to the contravention of s 21 taking into account the interrelationship to which I have referred. The penalty for all contraventions will therefore be $1,080,000.

Kylie Simpson

62    The parties agreed that these contraventions should be treated as part of a single course of conduct. The maximum penalty which may be imposed is $1.1 million for the contraventions of s 21 and $150,000 for the contraventions of ss 76, 78 and 79. The ACCC submitted that the Court should impose a penalty of $1.1 million for the unconscionable conduct and $40,000 for each of the three contraventions of ss 76, 78 and 79 for a total penalty of $1.22 million. This was less than the penalty it suggested in the case of Tre. The reason for this is that I found no contravention of s 29(1)(i) in Kylie’s case because the evidence was in an unsatisfactory state. So far as the unconscionability case is concerned, in my view, the maximum penalty of $1.1 million should be imposed. Her deficits were, as I found, ‘obvious to anyone talking with her even for a short period of time’: at [137]. This was the exploitation of an obviously very vulnerable person for financial gain. It is difficult to imagine unconscionable conduct which could be worse. For reasons of consistency, I would also impose a penalty of $130,000 for the contraventions of ss 76, 78 and 79. These total $1.23 million. Because a course of conduct is involved I would reduce the penalty to $925,000.

Bourke: Fiona Smith, Jaycee Edwards and June Smith

Fiona Smith and Jaycee Edwards

63    I have already concluded that Unique’s conduct towards Fiona and Jaycee should be treated as a single course of conduct. Whilst this is true, the fact remains that the conduct affected two people. It would not be appropriate to proceed as if the course of conduct reflected a single contravention. Two distinct wrongs were done even though they arose out of very closely related facts. Both the interrelationship of the facts and the fact that they constituted two distinct wrongs must be acknowledged.

64    Although I have concluded that Unique did engage in contraventions of ss 76, 78 and 79 in relation to Fiona, the ACCC did not submit that it was liable to a penalty for those contraventions.

65    In the case of Jaycee, Unique contravened s 29(1)(i) twice and s 21 once. The theoretical maximum penalty is $3.3 million. In the case of Tre there was only one contravention of s 29(1)(i) but in the case of Fiona and Jaycee there were two. For Tre I imposed a penalty in respect of s 29(1)(i) of $150,000. Since the misleading conduct is very similar a similar approach should be applied but noting that there are now two contraventions. In principle, it would be appropriate to impose a penalty of $300,000 for the contraventions of s 29(1)(i) in the case of Jaycee. I would rate the contravention of s 21 as being less serious than in the case of Tre and Kylie. In principle, I would impose a penalty of $500,000 for the contravention of s 21. The total in principle penalty would be $800,000.

66    In the case of Fiona, Unique contravened s 29(1)(i) twice, s 21 once and each of ss 76, 78 and 79 once. The theoretical maximum penalty is $3.45 million. The contravention of s 21 was less serious than in the case of Tre and Kylie, although it remains serious. The contraventions of s 29(1)(i) were of the same seriousness as in the case of Kylie and Tre. In principle, I would impose a penalty of $500,000 for the contravention of s 21, $300,000 for the two contraventions of s 29(1)(i) and, for consistency, $130,000 for the contraventions of ss 76,78 and 79. The total in principle penalty would be $930,000.

67    However, it is necessary to observe the interrelationship between the facts pertaining to Fiona and Kylie. The total of the in principle penalties for Fiona and Kylie would be $1.73 million. Given that Johanne was speaking to both women at the same time, there is a significant risk that the imposition of this penalty may involve the same conduct being double punished. On the other hand, it remains the fact that two people were subject to the conduct and not one. Further, there was in both cases an overlap between the breaches of s 21, on the one hand, and ss 29(1)(i), 76, 78 and 79 on the other.

68    In the case of Fiona and Jaycee I will impose a penalty for all contraventions of $1,225,000.

June Smith

69    The conduct towards June Smith consisted of two contraventions of s 29(1)(i), one contravention of s 21 and contraventions of each of ss 76, 78 and 79. The parties agree that the contraventions should be treated as a single course of conduct. The theoretical maximum penalty is $3.45 million. So far as unconscionability is concerned, the conduct towards June seems to me to have been slightly more serious than in relation to Jaycee and Fiona but less serious than in the case of Tre and Kylie. I propose to impose a penalty of $600,000. So far as the two contraventions of s 29(1)(i) are concerned, I will impose a penalty of $300,000 and for the contraventions of ss 76, 78 and 79 a penalty of $130,000. These total $1.03 million. However, these arose from a single course of conduct; further, the contraventions of ss 76, 78 and 79 do overlap with the contravention of s 21. I will therefore impose a penalty of $805,000.

10.    Totality

70    The penalties I have formulated are as follows:

71    I pause as a final check to ensure that the penalty of $4,165,000 adequately reflects the wrong-doing and is proportionate overall. The maximum penalties which could be imposed is $13,950,000 so this represents a significant discount. I am satisfied that the penalty is reasonably proportionate to the wrongdoing in question.

11.    Conclusion

72    I will order Unique to pay a civil penalty of $4,165,000 to the ACCC within 28 days herein. I will also list the matter for a case management hearing on 10 December 2019 to address the issue of costs.

Associate:

Dated:    31 October 2019