FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (trading as Captain Cook College) (No 3) [2021] FCA 737

ORDERS

THE COURT ORDERS THAT:

1.    Within 14 days of these orders the parties bring in agreed or competing orders reflecting the Court’s findings, and on costs and the further conduct of the proceeding.

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

REASONS FOR JUDGMENT

A.     INTRODUCTION

1    This case principally concerns the statutory proscription of unconscionable conduct in s 21 of the Australian Consumer Law (ACL) in the context of the Commonwealth’s VET FEE-HELP scheme. That is a scheme to assist students fund their enrolment in vocational education and training (VET) courses.

2    The ACCC alleges that the first respondent, Productivity Partners Pty Ltd trading as Captain Cook College (also referred to as the college), engaged in a system of conduct, or a pattern of behaviour, that was, in all the circumstances, unconscionable in contravention of the statutory prohibition. It alleges that the second respondent, Site Group International Ltd, and the fourth respondent, Blake Wills, were directly or indirectly knowingly concerned in, or a party to, the college’s contravention. I will generally refer to Blake Wills as Mr Wills unless the context requires otherwise.

3    Productivity Partners was a wholly owned subsidiary of Site. Mr Wills was, relevantly, Site’s Chief Operating Officer. He was also the acting Chief Executive Officer of the college in November 2015 to January 2016. The ACCC also alleges the knowing concern of the third respondent, Ian Cook, in the college’s alleged contravention but Mr Cook settled the case against him with the ACCC. Mr Cook was the CEO of the college.

4    In addition to its case of systemic unconscionable conduct contrary to s 21 of the ACL, the ACCC asserts a case specifically in reliance on the evidence of five consumer witnesses who are referred to as consumer A through to consumer E. The ACCC alleges that the conduct of course advisors (referred to as CAs or agents) in recruiting each of the individual consumers, which conduct is admitted by the college to be unconscionable in contravention of s 21 of the ACL and misleading or deceptive, or likely to mislead or deceive, in contravention of s 18(1) of the ACL, and/or included false or misleading representations in contravention of s 29(1)(i) or (m) of the ACL, is to be attributed to the college such that the college is taken to have contravened ss 18, 21 and 29 of the ACL.

5    The ACCC also alleges that the agreements by which the individual consumers were enrolled in the college constituted unsolicited consumer agreements within the meaning of s 69(1) of the ACL and as such contravened s 79 of the ACL on the basis that each agreement did not contain a notice that conspicuously and prominently informed the consumer of their right to terminate the agreement or a notice which they could use to terminate the agreement. There are also allegations that the unsolicited consumer agreements were negotiated by telephone and, in contravention of s 78(2) of the ACL, they were provided to the consumers electronically without consumer consent.

6    The conduct of which the ACCC complains occurred in the second half of 2015 and in early 2016. That is accordingly the applicable period for the purposes of identifying the relevant statutory and regulatory context.

7    There are a number of other cases that have adjudicated allegations of unconscionable conduct by colleges or their sales agents in enrolling students under the scheme. These include Unique International College Pty Ltd v ACCC [2018] FCAFC 155; 266 FCR 631 (an appeal from ACCC v Unique International College Pty Ltd [2017] FCA 727), ACCC v Cornerstone Investment Aust Pty Ltd (in liq) (No 4) [2018] FCA 1408 (Empower) and ACCC v Australian Institute of Professional Education Pty Ltd (in liq) (No 3) [2019] FCA 1982 (AIPE), to which further reference will be made. The other cases are ACCC v Get Qualified Australia Pty Ltd (in liq) (No 2) [2017] FCA 709; [2017] ATPR 42-548 and ACCC v Acquire Learning & Careers Pty Ltd [2017] FCA 602.

8    Given the volume of evidence in this case, and contrary to my usual practice, I have decided to include in these reasons for judgment references to the evidence, both documentary (court book volumes A to G) and oral (transcript references – T). Those references are intended as an aide memoire to assist anyone who might find that they need to refer to the evidence. The references do not purport to be complete or exhaustive; they should not be taken as a complete record of everything that I have had regard to in stating the findings in respect of which the references are given. In that sense, they do not form part of my reasons for judgment.

B.    THE VET FEE-HELP SCHEME

9    The nature of the VET FEE-HELP (VFH) scheme – the Vocational Education and Training Fee Higher Education Loan Program – is helpfully summarised by the Full Court in Unique (at [5]-[9]). Drawing heavily on that summary, the following key aspects of the scheme can be identified.

10    The Higher Education Support Act 2003 (Cth) (HES Act) established the Higher Education Loan Program (HELP), which consisted of five income contingent loan schemes through which the Commonwealth provided financial assistance to students by providing loans so that the students did not have to meet the cost of study upfront.

11    The Commonwealth introduced the VFH scheme in 2007. The scheme has been amended from time to time. From 2009, the scheme provided for the Commonwealth to pay, in full, tuition fees for any approved course, on the basis that the amounts paid would be treated as a loan to the student, such loan to be repayable through the taxation system once a student earned above a specified income threshold. In the applicable period, that threshold was approximately $54,000. Approved course providers needed to have arrangements with an institution that offered a “higher education award” (such as a degree). The scheme was designed at that time to be a pathway into further higher education.

12    In early 2012, the Commonwealth foreshadowed substantial reforms to the scheme. Those reforms were then implemented through legislation enacted in the second half of 2012. The Explanatory Memorandum to the HES Amendment (Streamlining and other measures) Bill 2012 (Cth) explained that the intention was to broaden the demographic of students who qualified for assistance through the scheme. The liberalisation of the scheme was for the express purpose of addressing low participation rates from identified demographic groups including Indigenous Australians, people from non-English speaking backgrounds, with disability, from regional and remote areas, from low socio-economic backgrounds, and people not currently engaged in employment.

13    One of the changes made by the 2012 legislation was to remove the need for a course to count towards a course at a higher education institution. This was consistent with the rationale for the changes expressed in the Explanatory Memorandum. Participation in vocational training was seen as an end in itself, and not only a pathway to higher education.

14    The conditions for a student’s entitlement to VFH assistance were set out in cl 43 of Sch 1A to the HES Act. Generally speaking, the eligibility criteria for a person to be entitled to VFH assistance were that the person:

(1)    was an Australian citizen or the holder of a permanent humanitarian visa;

(2)    had not exhausted their lifetime FEE-HELP loan limit;

(3)    was enrolled in a VET unit of study, and remained enrolled at the end of the relevant census date;

(4)    met the tax file number (TFN) requirements in cl 80 (which required the person to have notified the VET provider of their TFN, or to have certified that they had applied to the Commissioner of Taxation for a TFN); and

(5)    on or before the census date, had completed a request for Commonwealth assistance form.

15    Section 104-20 of the Act provided that the FEE-HELP life-time limit for a student (other than for medicine, dentistry and veterinary science in respect of which a higher limit applied) was $80,000 in total. That limit was indexed with the result that in the 2015 financial year it was $97,728.

16    Clause 55 of Sch 1A relevantly provided that the Commonwealth must lend to the student the amount of the VFH assistance and pay the amount lent to the provider in discharge of the student’s liability to pay their VET tuition fee for the unit of study. Under s 137-18 of the HES Act, if the Commonwealth made a payment pursuant to cl 55 of Sch 1A, the amount of the student’s VFH debt was 120% of the loan, i.e., there was a 20% “loan fee”. The VFH debt was incurred immediately after the census date for the unit.

17    The “census date” for a VET unit of study means the date determined under cl 67 of Sch 1A: Sch 1, cl 1. Clause 67 of Sch 1A provided that a VET provider must for each VET unit of study it provides or proposes to provide, determine a particular date to be the census date for the unit. That date was to be determined in accordance with the VET Guidelines. By cl 99 of Sch 1A, the Minister could by legislative instrument make VET Guidelines.

18    Clause 7.4.1 of the VET Guidelines that applied from time to time provided that the date determined to be the census date must not occur less than 20% of the way between the VET unit of study commencement date and the completion date. For a 28-week unit of study, the first census date could therefore be less than six weeks after the commencement date, and for a 52-week unit of study it could be less than 11 weeks after the commencement date.

19    A VET provider was required to repay any VET tuition fees paid by a student in respect of a VET unit of study if the student withdrew on or before the census date: cl 8.4 of the VET Guidelines. It follows that a consumer could withdraw from a VET unit of study on or before the census date without incurring any financial liability to the VET provider or to the Commonwealth.

20    Clause 64 of Sch 1A to the HES Act provided that a VET provider must give such notices as are required by the VET Guidelines to a person who is enrolled with the provider for a VET unit of study and who is seeking Commonwealth assistance. Such a notice was referred to in the Guidelines from time to time as a Commonwealth Assistance Notice, or CAN. By chapter 9 of the Guidelines, a CAN was required to include, amongst other things, the census date(s) of the VET unit(s) of study, the VET tuition fee amount(s) of the units(s) of study and the amount(s) of the VFH loan fee. It was required to be given within 28 days of the census date indicated in the notice.

21    Typically, the college would send a student a Confirmation of Enrolment (COE) letter at the same time that it sent the CAN, which was after the first census date to confirm that the student was enrolled with the college and had incurred the first part of their VFH debt. [D15, D79] Thus, COE and CAN are at times used interchangeably and are often expressed in the documents as “COE/CAN” or “COECAN”.

22    The scheme gave rise to an obvious risk, being the risk of unsuitable or otherwise insufficiently interested or committed consumers being too easily or casually, or unconscionably or deceptively, signed up as students, progressing through their census dates thereby incurring debts to the Commonwealth and the VET provider being paid its tuition fees, and the students not otherwise engaging with the course in any meaningful way or receiving any meaningful benefit. As Bromwich J explained in AIPE:

[72] … If a person who had been approved for a VET FEE-HELP debt was enrolled as a student with a VET provider as at the census date, but did not in fact ever partake in the course, that provider would get the revenue benefit of the course fees from the Commonwealth, but would not have to incur the variable costs of providing the course to that person, including any related support. That would happen irrespective of whether the person who was enrolled was a bona fide or genuine student or not. 

[73] To the extent that the outcome of enrolling consumers who were not bona fide or genuine students was able to be maximised across a large enough pool of individuals, the VET provider would obtain revenue for those consumers without needing to employ staff to provide the services that were needed for bona fide or genuine students who did partake of study. This feature therefore created a significant, and reasonably obvious, windfall profit opportunity to a VET provider who wished to exploit it, or was even prepared to let it occur without correction. 

[74] There was nothing in the express terms of the VET FEE-HELP scheme that prohibited a VET provider from engineering such a windfall profit outcome, and a corresponding debt being incurred by someone who was never a bona fide or genuine student.

23    Schedule 1A of the HES Act also governed the re-crediting of a student’s VFH balance. Clause 51 provided for the re-crediting of a student’s VFH balance for a unit of study if the VET provider ceased to provide the course of which the unit formed a part. That clause has no present relevance, save that cl 46(1) provided that save where cl 51 applied, cl 46 would apply. It then provided as follows:

(2)     A *VET provider must, on the *Secretary’s behalf, re‑credit a person’s *FEE-HELP balance with an amount equal to the amounts of *VET FEE‑HELP assistance that the person received for a *VET unit of study if:

(a)     the person has been enrolled in the unit with the provider; and

(b)     the person has not completed the requirements for the unit during the period during which the person undertook, or was to undertake, the unit; and

(c)     the provider is satisfied that special circumstances apply to the person (see clause 48); and

(d)     the person applies in writing to the provider for re‑crediting of the HELP balance; and

(e)     either:

(i)     the application is made before the end of the application period under clause 49; or

(ii)     the provider waives the requirement that the application be made before the end of that period, on the ground that it would not be, or was not, possible for the application to be made before the end of that period.

Note:    A VET FEE-HELP debt relating to a VET unit of study will be remitted if the HELP balance in relation to the unit is re-credited: see section 137-18.

24    That provision has some bearing on the question of campus driven withdrawals which is dealt with in detail later in these reasons. For present purposes the following observations can be made. First, the provision sets out when a VET provider “must” withdraw a student and re-credit them; that is to say, it sets minimum standards for withdrawal and re-crediting and does not prevent a VET provider from having a withdrawal policy that is more protective of or generous to students. Secondly, it applies only to withdrawals after census. That follows from it being with respect to re-crediting a student; no re-crediting of a student can arise if they have not yet progressed through census and incurred the debt.

25    Clause 4.3.1 of the VET Guidelines made a VET provider subject to the Standards for NVR Registered Training Organisations. The relevant such standards were the Standards for Registered Training Organisations (RTOs) 2015 (Cth) dated 20 October 2014 made as a legislative instrument under ss 185(1) and 186(1) of the National Vocational Education and Training Regulator Act 2011 (Cth).

26    Clause 4.8 of the VET Guidelines set out quality and accountability requirements with regard to barriers to withdrawal. Clause 4.8.1 provided that the purpose of those requirements was to allow students to withdraw from a VET unit of study on or before the census date. Clause 4.8.2 provided that a VET provider “must not have financial, administrative or other barriers that would result in a student not being able to withdraw from a VET unit of study on or before the census date” (emphasis added). One such barrier might be considered to be if the student did not know that they were to incur a VFH debt and the VET provider was unable to contact them to tell them, and to confirm that they really did want to pursue the course and incur the debt.

C.    THE ACCC’S SYSTEMIC UNCONSCIONABILITY CASE

27    The ACCC’s case is that the college changed its enrolment and withdrawal processes when it knew, or ought to have known, that the changes would significantly reduce protections for consumers and would lead to a materially increased risk of both unsuitable consumers being enrolled in its online courses and of misconduct by its sales agents (the CAs) and would materially diminish the prospect of this being identified. It says that the changes were calculated to increase the college’s profits by increasing the number and proportion of consumers enrolled by the college and who passed a census date. It says that as a consequence of the changes, the college claimed and retained very significant increased revenue from the Commonwealth, and that the vast majority of consumers did not receive any vocational benefit despite incurring a substantial debt.

28    The ACCC’s case is that the changes to the enrolment and withdrawal processes amounted to a system of conduct or pattern of behaviour as referred to in s 21(4)(b) of the ACL, and was thus systemic unconscionable conduct proscribed by s 21(1).

29    Since the ACCC’s case relies on the effects brought about by changes to enrolment and withdrawal processes, and the college’s knowledge of the likelihood of those effects, it is necessary to identify what those processes were prior to the changes in question. The period in respect of which the prior processes operated was the period 1 November 2014 to 6 September 2015, which is referred to as the earlier period.

30    The case concerning the systemic conduct relates to consumers who became enrolled in an online course at the college in the period 7 September to 18 December 2015, which is described as the relevant period. This is the period from when the college commenced the implementation of the process changes to when the college ceased taking new enrolments because of a cap imposed on it by the Commonwealth Government as to the VFH fees it could charge in the 2016 calendar year.

31    During both the earlier period and the relevant period, the college contracted third parties, referred to as course advisors (CAs), to undertake marketing of its courses (including online courses) to consumers, and to recruit consumers for enrolment into its courses as students. The CAs were remunerated by way of a commission in respect of each consumer recruited if that consumer passed a census date in respect of a unit of study in a course for which the consumer was enrolled.

32    During the relevant period the college offered the following qualifications: Diploma of Business, Diploma of Project Management, Diploma of Information Technology and Diploma of Human Resources Management. The last-mentioned diploma, namely the Diploma of Human Resources Management, was new in the relevant period having not been offered in the earlier period. There were two diplomas offered in the earlier period that were not offered in the relevant period, namely the Diploma of Management and the Advanced Diploma of Management.

33    There are three different elements to the conduct of the college that the ACCC says were unconscionable, namely changes to the enrolment process, changes to the withdrawal process (in particular, abolishing something referred to as campus driven withdrawals, to which I will return), and the college claiming and/or retaining the vastly increased VFH revenue which was generated by the college’s implementation of the process changes.

34    The ACCC’s case is that the changes to the enrolment process increased the risk of enrolling unsuitable consumers and also the risk of misconduct by course advisors towards the consumers that they were enrolling, and the risk that this would not be identified prior to enrolment. It is said that this was or ought to have been known to the college, or it was reasonably foreseeable.

35    The ACCC’s case with regard to abolishing the campus driven withdrawals is that it increased the risk of unsuitable consumers, or consumers who had been subjected to CA misconduct in the enrolment process, remaining enrolled in a course. It is said that this was or ought to have been known to the college, or it was reasonably foreseeable.

36    The ACCC’s case with regard to claiming and/or retaining the increased revenue which was generated by the process changes is that the process changes were motivated by the college’s desire to increase the number of consumer enrolments, and therefore its revenue and profit, and that those consequences occurred. It is said that thousands of consumers were enrolled, many of whom were not engaged at all with their courses and who should never have been enrolled in the first place. It is said that it was improper for the college to have claimed revenue for those consumers, or to have retained revenue paid by the Commonwealth for them. It is said that one of the most egregious aspects of the college’s conduct, given its developing knowledge over time of the results of the process changes and what it knew about the low level of engagement by consumers with their courses in the first unit of study, was that the college claimed additional revenue as consumers who became enrolled during the relevant period progressed through their second and any applicable subsequent census dates.

37    It is necessary to identify in more detail certain aspects of the pleaded case.

38    The second further amended statement of claim, which for ease of reference I will refer to simply as the statement of claim or SOC, (at [112]) identifies the college’s profit maximising purpose of the process changes. In that regard, it is pleaded that the college’s substantial purpose in implementing the process changes was to increase the number of CAs that referred consumers to the college for enrolment, and the number of consumers that those CAs referred to the college; to increase the number of consumers who became enrolled in online courses and remained enrolled past their census dates; and thereby to increase the revenue the college earned from tuition fees paid by the Commonwealth, which in turn made VFH loans to such consumers.

39    The statement of claim (at [114]) identifies CA misconduct in the course of engaging with consumers while conducting marketing and recruitment activities as including the following kinds of conduct:

(1)    making false and misleading statements to consumers to the effect that the online courses were free;

(2)    failing to properly inform consumers that they would incur VFH debts if they enrolled in online courses and/or the circumstances in which the debts would have to be repaid;

(3)    pressuring consumers to enrol in an online course;

(4)    offering consumers inducements, such as free laptops, to enrol in an online course;

(5)    completing consumers’ enrolment documents, including the pre-enrolment questionnaire, for them; and

(6)    coaching consumers during the course of the inbound quality assurance call, i.e., a telephone call between a college employee and the consumer immediately after the consumer’s enrolment documents were electronically submitted to the college by the CA for the purpose of checking whether the consumer was “genuine” and understood the commitment they were making.

40    The statement of claim (at [114]) then pleads that if the college did not have in place processes by which it could detect CA misconduct there was a risk that consumers who had been subjected to CA misconduct would become enrolled in an online course and remain enrolled past the census date or dates in the course, and thereby incur a VFH debt. That risk is referred to as CA misconduct risk.

41    The statement of claim (at [116]) pleads that there was a real risk that course advisors would recruit for enrolment in the online courses consumers who would not be contactable by the college, and/or who would have no or minimal engagement with their online course, and/or who did not in fact wish to enrol in an online course, and/or who are otherwise not suitable for enrolment including by reason of lacking sufficient language, literacy and numeracy (LLN) skills. That risk is referred to as unsuitable enrolment risk. It is pleaded that if the college did not have in place processes to ensure consumers of the kinds referred to were either not enrolled in an online course, or were withdrawn prior to passing a census date, such consumers would become enrolled in an online course and remain enrolled past the census date or dates in the course, and thereby incur a significant VFH debt.

42    The statement of claim (at [118]-[119]) pleads that elements of the enrolment and withdrawal processes in the earlier period, namely an outbound quality assurance call and campus driven withdrawals, provided means by which the college could mitigate the CA misconduct risk and the unsuitable enrolment risk and thereby protect unsuitable consumers from incurring VFH debts. It was then pleaded (at [120]) that the process changes materially reduced the college’s ability to mitigate the CA misconduct risk and the unsuitable enrolment risk.

43    The statement of claim (at [122]) pleads that primarily as a result of the process changes, when compared to the earlier period, as regards consumers who became enrolled in the relevant period there were the following process changes results:

(1)    a substantial increase in the number of consumers who became enrolled in an online course;

(2)    a substantial increase in the number and proportion of consumers who passed at least one census date in their online course;

(3)    a substantial increase in the number and proportion of consumers who incurred a VFH debt but who did not complete any unit of competency or the online course as a whole;

(4)    a substantial increase in the number and proportion of consumers who incurred a VFH debt but who did not engage in their online course or were not contactable;

(5)    a substantial increase in the VFH revenue claimed by the college; and

(6)    an increase in the proportion of consumers who made a complaint to the college, or on whose behalf complaints were made to the college, in respect of the conduct of course advisors.

44    The above elements were brought together in the pleading (at [124]) of the college’s unconscionable conduct as follows (the quotation being in certain respects paraphrased or the terminology made consistent with terminology otherwise employed in these reasons for judgment):

By its conduct in (i) implementing the process changes in respect of consumers who became enrolled in courses during the relevant period (which implementation, for some consumers extended beyond the relevant period), and (ii) in the period up to and including September 2016 (when the last census date for a consumer who became enrolled during the relevant period was processed by the college) claiming (which for the avoidance of doubt includes making an ongoing claim to entitlement to) the VFH revenue in respect over 90% of the consumers who became enrolled in an online course during the relevant period and passed one or more census dates and/or retaining such VFH revenue as was paid by the Commonwealth, in circumstances where:

(a)    the college had the profit maximising purpose;

(b)    the college was aware, or ought to have been aware, of:

(i)    the CA misconduct risk;

(ii)    the unsuitable enrolment risk; and

(iii)    the fact that the process changes would reduce its ability to mitigate the CA misconduct risk and the unsuitable enrolment risk, when compared to its prior processes being the outbound QA call and the campus driven withdrawals,

and/or each of those matters was reasonably foreseeable at the commencement of, and/or during, the period when the process changes were implemented;

(c)    the implementation of the process changes resulted in the process changes results;

(d)    the college knew, or alternatively ought to have known, of the process changes results;

(e)    further or alternatively, at the commencement of and/or during the period when the process changes were implemented, the college knew or ought to have known that the process changes would likely lead to the process changes results or results of the type of the process changes results and/or the process changes results were reasonably foreseeable,

the college engaged in a system of conduct, or a pattern of behaviour that was, in all the circumstances, unconscionable in contravention of s 21 of the ACL.

45    Before turning to the evidence, it is convenient to identify the relevant legal principles.

D.    APPLICABLE LEGAL PRINCIPLES

D.1    Statutory unconscionability: s 21 of the ACL

46    Relevant provisions of the ACL are the following:

21     Unconscionable conduct in connection with goods or services

(1)    A person must not, in trade or commerce, in connection with:

(a)    the supply or possible supply of goods or services to a person (other than a listed public company); or

(b)    the acquisition or possible acquisition of goods or services from a person (other than a listed public company);

engage in conduct that is, in all the circumstances, unconscionable.

(2)    This section does not apply to conduct that is engaged in only because the person engaging in the conduct:

(a)    institutes legal proceedings in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition; or

(b)    refers to arbitration a dispute or claim in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition.

(3)    For the purpose of determining whether a person has contravened subsection (1):

(a)    the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and

(b)    the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.

(4)    It is the intention of the Parliament that:

(a)    this section is not limited by the unwritten law relating to unconscionable conduct; and

(b)    this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and

(c)    in considering whether conduct to which a contract relates is unconscionable, a court’s consideration of the contract may include consideration of:

(i)    the terms of the contract; and

(ii)    the manner in which and the extent to which the contract is carried out;

and is not limited to consideration of the circumstances relating to formation of the contract.

22     Matters the court may have regard to for the purposes of section 21

(1)    Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the supplier) has contravened section 21 in connection with the supply or possible supply of goods or services to a person (the customer), the court may have regard to:

(a)    the relative strengths of the bargaining positions of the supplier and the customer; and

(b)    whether, as a result of conduct engaged in by the supplier, the customer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and

(c)    whether the customer was able to understand any documents relating to the supply or possible supply of the goods or services; and

(d)    whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the customer or a person acting on behalf of the customer by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the goods or services; and

(e)    the amount for which, and the circumstances under which, the customer could have acquired identical or equivalent goods or services from a person other than the supplier; and

(f)    the extent to which the supplier’s conduct towards the customer was consistent with the supplier’s conduct in similar transactions between the supplier and other like customers; and

(g)    the requirements of any applicable industry code; and

(h)    the requirements of any other industry code, if the customer acted on the reasonable belief that the supplier would comply with that code; and

(i)    the extent to which the supplier unreasonably failed to disclose to the customer:

(i)    any intended conduct of the supplier that might affect the interests of the customer; and

(ii)    any risks to the customer arising from the supplier’s intended conduct (being risks that the supplier should have foreseen would not be apparent to the customer); and

(j)    if there is a contract between the supplier and the customer for the supply of the goods or services:

(i)    the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the customer; and

(ii)    the terms and conditions of the contract; and

(iii)    the conduct of the supplier and the customer in complying with the terms and conditions of the contract; and

(iv)    any conduct that the supplier or the customer engaged in, in connection with their commercial relationship, after they entered into the contract; and

(k)    without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the customer for the supply of the goods or services; and

(l)    the extent to which the supplier and the customer acted in good faith.

D.1(a) Statutory unconscionability per se

47    It is to be noted that s 21(4)(a) draws a distinction between the notion of unconscionable conduct proscribed by the section and that which is proscribed by “the unwritten law”. The latter is clearly enough a reference to the notion of unconscionability in equity which is proscribed by s 20 of the ACL. It is because of this distinction that when referring to the statutory proscription in s 21, I will refer to statutory unconscionability.

48    The ACCC’s case draws particular attention to s 21(4)(b), i.e., that the prohibition against unconscionable conduct in s 21 “is capable of applying to a system of conduct or pattern of behaviour”. This is what the ACCC refers to as systemic unconscionability. As will be seen, the ACCC alleges that the college applied a particular system of enrolment of consumers as students which was unconscionable contrary to the statutory proscription.

49    In ASIC v Kobelt [2019] HCA 18; 267 CLR 1 the High Court considered statutory unconscionability in the context of s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act). Sections 12CB and 12CC of the ASIC Act are materially the same as ss 21 and 22 of the ACL. It was accepted that the High Court’s treatment of statutory unconscionability in the context of the ASIC Act is equally applicable to the ACL. See also Kobelt at [87] per Gageler J in that regard.

50    The result in Kobelt was that the appeal from the Full Court was dismissed. Kiefel CJ and Bell, Gageler and Keane JJ joined in that result in a joint judgment by Kiefel CJ and Bell J and separate judgments by Gageler J and Keane J. Nettle, Gordon and Edelman JJ were in dissent.

51    Kiefel CJ and Bell J said (at [14]) that “unconscionable” in s 12CB(1) is to be understood as bearing its ordinary meaning. It was said that the proscription is of conduct that objectively answers the description of being against conscience. It was said that the values that inform the relevant standard of conscience “include” those identified by Allsop CJ in Paciacco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50; 236 FCR 199 at [296], namely: certainty in commercial transactions, honesty, the absence of trickery or sharp practice, fairness when dealing with customers, the faithful performance of bargains and promises freely made, and the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage. Their Honours identified (at [15]) that the appeal was concerned with the application of the last mentioned value, namely the protection of those in a vulnerable position from predation by others.

52    Kiefel CJ and Bell J (at [15]) and Keane J (at [118]), in both instances with reference to Kakavas v Crown Melbourne Ltd [2013] HCA 25; 250 CLR 392 at [124] and [161] respectively and Thorne v Kennedy [2017] HCA 49; 263 CLR 85 at [38], identified that a conclusion of unconscionable conduct requires not only that the innocent party be subject to special disadvantage, but that the other party must also unconscientiously take advantage of that special disadvantage. This has variously been described as requiring “victimisation”, “unconscientious conduct”, or “exploitation”: Thorne v Kennedy at [38]. Kiefel CJ and Bell J also explained (at [47]) that the conclusion that someone has engaged in conduct that contravenes the statutory norm of conscience is an evaluative judgment.

53    Kiefel CJ and Bell J (at [48]) said that the appeal in that case “does not provide the occasion to consider any suggestion that statutory unconscionability no longer requires consideration of (i) special disadvantage, or (ii) any taking advantage of that special disadvantage” (emphasis added).

54    It was a necessary part of Kiefel CJ and Bell J’s process of reasoning (at [79]) to the conclusion that the appeal should be dismissed that no feature of Mr Kobelt’s conduct in the supply of book-up credit (being the system of conduct in question) to his Anangu customers exploited or otherwise took advantage of the customers’ lack of education and financial acumen, i.e., their vulnerability or special disadvantage.

55    Gageler J (at [82]-[83]) explained that s 12CB of the ASIC Act does something more than s 12CA, i.e., also s 21 of the ACL does something more than s 20. The section’s prohibition against engaging in conduct “that is, in all the circumstances unconscionable” is expressed to be “not limited by the unwritten law … relating to unconscionable conduct”. His Honour reasoned that those words make it clear that the statutory conception of unconscionable conduct is unconfined to conduct that is remediable on that basis by a court exercising jurisdiction in equity.

56    Endorsing the view adopted by the Full Court in ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90; ATPR 42-447 at [23] and [41], Gageler J (at [87]) reasoned that the correct perspective is that s 12CB (i.e., also s 21 of the ACL) operates to prescribe a normative standard of conduct. The function of a court is to recognise and administer that normative standard of conduct. That must be done in the totality of the circumstances taking account of each of the considerations identified in s 12CC (i.e., also s 22 of the ACL) if and to the extent that those considerations are applicable in the circumstances.

57    With regard to the content of the normative standard, Gageler J (at [88]) reasoned that the appropriation in statutory unconscionability of the terminology of courts administering equity serves to signify the gravity of the conduct necessary to be found by a court in order to be satisfied of a breach of that standard. In that regard, unconscionability “is not a slight matter, and behaviour is only unconscionable where there is some real and substantial ground based on conscience for preventing a person from relying on what are, in terms of the general law, that person’s legal rights” (quoting from Burt v Australia & New Zealand Banking Group Ltd (1994) ATPR (Digest) 46‑123 at 53,598 per Bryson J in the Supreme Court of NSW).

58    Gageler J (at [89]) reasoned that Parliament’s appropriation of the terminology of “unconscionable conduct” from equity but shorn of the constraints of the unwritten law is indicative of an intention that conduct of the requisite gravity need not be found only in a fact-pattern which fits within the equitable paradigm of a stronger party to a transaction exploiting some special disadvantage which operates to impair the ability of a weaker party to form a judgement as to his or her best interests. Nevertheless, his Honour reasoned (at [90]) that the normative standard of statutory unconscionability does not dilute the gravity of the equitable conception of unconscionable conduct so as to produce a form of “equity-lite”. Further, “[t]he appropriation of the terminology of equity does not allow a court to adopt a process of reasoning which starts with the equitable conception of unconscionable conduct, involving exploitation of a special advantage, and then uses considerations identified in s 12CC [i.e., also s 22 of the ACL] to water down the court’s assessment of what amounts to a special disadvantage or to allow the court to arrive more easily at an assessment that conduct amounts to exploitation.”

59    Gageler J (at [92]) went on to say that conduct proscribed by the section as unconscionable is conduct that is so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience. Also (at [93]), the notion of offensive to conscience is informed by a sense of what is right and proper according to values which can be recognised by the court to prevail within the contemporary Australian society. Those values are not entirely confined to, or entirely removed from, values which historically informed courts administering equity in the development of the unwritten law of unconscionable conduct. Those values include respect for the dignity and autonomy and equality of individuals.

60    It was a central component of Gageler J’s reasoning (at [111]) to the conclusion that the appeal should be dismissed that Mr Kobelt’s provision of his book-up system to his Anangu customers could not be characterised as involving exploitation of those customers’ vulnerability.

61    Similarly, Keane J (at [115]) concluded that the appeal should be dismissed for the reason that it had not been established that Mr Kobelt exploited his customers’ socio-economic vulnerability in order to extract financial advantage from them.

62    Keane J (at [117]) made the important point that the purpose of the proscription against statutory unconscionability is to regulate commerce, and that the pursuit by those engaged in commerce for their own advantage is an omnipresent feature of legitimate commerce. Thus, to say that Mr Kobelt was pursuing his own commercial interests with a view to profit is to state the obvious, but also to say very little as to whether he engaged in unconscionable conduct.

63    As already indicated, Keane J (at [118]) held that a finding of unconscionable conduct requires the unconscientious taking advantage of a special disadvantage, which was also described as victimisation or exploitation. His Honour (at [119]) reasoned that exploitation or victimisation is a characteristic of statutory unconscionability. This is consistent with his Honour’s reasoning (at [115]) that the appeal should be dismissed because it had not been established that Mr Kobelt exploited his customers’ socio-economic vulnerability in order to extract financial advantage from them.

64    Keane J (at [121]) reasoned that the statement in s 12CB(4)(b) (i.e., also s 21(4)(b) of the ACL) that it is the intention of the Parliament that the section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour. This does not mean that it is not an essential characteristic of statutory unconscionability within the meaning of the statute that it involve a calculated taking of advantage of a weakness or vulnerability. Subsection (4)(b), in dispensing with the need for proof of disadvantage to any particular individual, allows a system of conduct or pattern of behaviour to be found to be unconscionable within the meaning of the statute even though the extent of the disadvantage cannot be quantified in the case of any individual.

65    Like Gageler J’s reference to a normative standard, Keane J (at [122]) held that the purpose of s 12CB (i.e., also s 21 of the ACL) is to establish a statutory norm of conduct.

66    From the above analysis it is apparent that all the judges in the majority regarded statutory unconscionability as setting a normative standard of conduct and that conduct in breach of that standard must be well outside the bounds of what is generally seen to be moral, right or acceptable commercial behaviour; it is not “equity-lite”; it is conduct that on some real and substantial ground is offensive to conscience.

67    It is not clear, to me at least, whether by “no longer” (at [48], quoted at [53] above), Kiefel CJ and Bell J meant that it was not necessary to decide whether, in contrast to non-statutory unconscionability, statutory unconscionability requires both special disadvantage and the taking advantage of that special disadvantage, or whether, in contrast to what the position was with regard to statutory unconscionability up until then, statutory unconscionability requires both those elements. The question thus remained whether it was only Keane J, or also Kiefel CJ and Bell J and hence a majority, who at least until then regarded the two identified elements as being requirements of statutory unconscionability.

68    That question has since been answered by the Full Court of this Court in ACCC v Quantum Housing Group Pty Ltd [2021] FCAFC 40; 388 ALR 577 at [93] per Allsop CJ, Besanko and McKerracher JJ: neither general disadvantage in the equitable sense, nor taking advantage or exploitation of some vulnerability, disability or disadvantage of the person or persons to whom the conduct was directed is a necessary aspect of unconscionability within s 21 of the ACL.

69    In Quantum, the Full Court (at [55]-[56]) agreed with Gageler J (at [87]) that the correct perspective is that s 12CB (and s 21 of the ACL) operates to prescribe a normative standard of conduct which a court exercising jurisdiction in a matter arising under the section is to recognise and administer; the court needs to administer that standard in the totality of the circumstances taking account of each of the considerations identified in s 12CC (i.e., also s 22 of the ACL) if and to the extent that those considerations are applicable in the circumstances. Also, an allegation of unconscionability is a serious allegation; it is sufficient to warrant censure for the purposes of deterrence by the imposition of a civil penalty; and, being penal in character, tends against too loose or diffuse a construction: Quantum at [88].

70    Assessing statutory unconscionability, like unconscionability in equity, “calls for a precise examination of the particular facts, a scrutiny of the exact relations established between the parties … Such cases do not depend upon legal categories susceptible of clear definition and giving rise to definite issues of fact readily formulated which, when found, automatically determine [the outcome]”: Jenyns v Public Curator (Qld) [1953] HCA 2; 90 CLR 113 at 118-119. As it was said by Lord Stowell in The Juliana (1822) 2 Dods 504 at 522: “A court of law works its way to short issues, and confines its views to them. A court of equity takes a more comprehensive view, and looks to every connected circumstance that ought to influence its determination upon the real justice of the case.” See ASIC v Australia and New Zealand Banking Group Ltd [2019] FCA 1284; 139 ACSR 52 at [2] per Allsop CJ; Ali v ACCC [2021] FCAFC 109 at [10)-[11] per Allsop CJ, Besanko and Perram JJ.

D.1(b) Systemic unconscionability

71    In Unique, the ACCC sought to establish systemic unconscionability by the Registered Training Organisation (RTO) in question by extrapolating from the experience of six individual consumers, or students, to conclusions with regard to the “system” or “pattern of behaviour” adopted by the RTO. The Full Court (at [84]) characterised the primary judge as having drawn from his Honour’s factual findings in relation to the six individual consumers four features of the ACCC’s factual case that his Honour accepted could constitute a system of conduct or pattern of behaviour, namely:

(a)    the strategy of targeting disadvantaged people by reference to indigeneity, remoteness and social disadvantage (whether deliberate in its original conception or not);

(b)    the use of gifts of laptops or iPads to students signing (or loan computers after 31 March 2015);

(c)    the use of incentives to staff to encourage them to sign up students; and

(d)    the holding of sign-up meetings.

72    His Honour concluded that the system was unconscionable as follows (as quoted by the Full Court at [88]):

The next question is whether this system was unconscionable. I do not think that (b) to (d) by themselves would necessarily be unconscionable. With the correct student cohort and management practices this style of operation may well have been permissible. However, when the practices in (b) to (d) are deployed against a targeted group of disadvantaged persons very different issues arise. In terms of s 22(1), it seems to me relevant to note in an assessment of the system that the targeted cohort consisted of people who were unlikely to understand the documentation involved (s 22(1)(c)) and that the use of the gift of a free (or ‘lent’) computer was apt to confuse this particular cohort into thinking a very bad deal was a good one – in my opinion an unfair tactic within the meaning of s 22(1)(d). The effect of the system in (b) to (d) was to supercharge the exploitation of the disadvantaged group which was being targeted (and also Unique’s remarkable profits). The system was unconscionable within the meaning of s 21.

73    The appeal against the primary judge’s finding of systemic unconscionability was successful on the basis that there was an error in extrapolating from the experience of six consumers to conclusions with regard to there being a system or pattern of behaviour in the absence of persuasive evidence about how six consumers could be said to be representative of the experience of 3,600 consumers enrolled in the relevant period at 428 different locations: Unique at [111], [161]-[162].

74    In Unique (at [103]-[104]) the Full Court referred to the extension of s 21 by para (4)(b) to a “system of conduct or pattern of behaviour” which is unconscionable as removing the necessity for revealed disadvantage “to any particular individual”. Although that was said prior to the judgment in Kobelt, there is nothing in the latter that is inconsistent with that statement. The Full Court also explained that a “system” connotes an internal method of working and that a “pattern” connotes the external observation of events. The Court observed as follows (at [104]):

The notion of unconscionability is a fact-specific and context-driven application of relevant values by reference to the concept of conscience …. It is an assessment of human conduct. A system of conduct requires, to a degree, an abstraction of a generalisation as to method or structure of working or of approaching something. If s 21(4)(b) is to be engaged, it is the system that is to be unconscionable. Nevertheless, the concept of unconscionability (even of a system) is a characterisation related to human conduct by reference to conscience, informed by values taken from the statute. 

75    Later (at [150]), after an exhaustive analysis of previous system cases the Full Court explained that whether or not someone has engaged in conduct that reveals a “system” or “pattern of behaviour” will be highly fact-specific, and will rely to a significant extent on the forensic exercise the regulator chooses to undertake to prove the existence of the system, as well as any forensic exercise the respondent undertakes by way of answer. The same is true of the characterisation of conduct as unconscionable.

76    The present case is materially different from Unique in that the ACCC has expressly not sought to rely on the evidence of consumers A to E as being representative of the experience of consumers more broadly and from that to draw conclusions about the college’s system or pattern of behaviour. Rather, the ACCC relies on direct evidence of the college’s generalised policies and practices as constituting a system or pattern of behaviour which, in the particular circumstances, was, so the ACCC submits, unconscionable.

77    An assessment or conclusion whether conduct is “unconscionable” with reference to the statutory norm is a conclusion founded upon “all the circumstances”. The result is that it is wrong to approach a system case by seeking to isolate each integer of the system and reach a conclusion whether each is unconscionable in isolation. Clearly, it is the system as a whole as constituted by, potentially, many inter-related integers that is to be assessed. See NRM Corporation Pty Ltd v ACCC [2016] FCAFC 98 at [180]-[185] per Flick, Murphy and Griffiths JJ.

D.2    False, misleading or deceptive conduct and representations: ss 18 & 29 of the ACL

78    Section 18 of the ACL, as is well-known, provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

79    Section 29(1) of the ACL relevantly provides that a person must not, in trade or commerce, in connection with the supply or possible supply of goods or services, make a “false or misleading representation” that goods or services have benefits (s 29(1)(g)) or with respect to the price of goods or services (s 29(1)(i)).

80    I recently had cause to identify relevant framework principles in Allergan Australia Pty Ltd v Self Care IP Holdings Pty Ltd [2020] FCA 1530 at [417]-[425] from where the following summary is drawn.

81    Although s 18 takes a different form to s 29, the prohibitions are similar in nature. Section 18 uses the phrase “misleading or deceptive” whereas s 29 uses the phrase “false or misleading”, but there is no material difference between the two expressions: ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 634; 317 ALR 73 at [40] per Allsop CJ; ACCC v TPG Internet Pty Ltd [2020] FCAFC 130; 381 ALR 507 (TPG FCAFC) at [21] per Wigney, O’Bryan and Jackson JJ.

82    For the inquiry under s 18, it is necessary to identify the impugned conduct and then to consider whether that conduct, considered as a whole and in context, is misleading or deceptive or likely to mislead or deceive: Coles at [38], citing Google Inc v ACCC [2013] HCA 1; 249 CLR 435 at [89], [102] and [118] and Campomar Sociedad Limitada v Nike International [2000] HCA 12; 202 CLR 45 at [100]-[101]. The inquiry then shifts to whether that conduct, considered as a whole and in context, is misleading or deceptive or likely to mislead or deceive.

83    Conduct is misleading or deceptive or likely to mislead or deceive if it has the tendency to lead into error, i.e., that there is a sufficient causal link between the conduct and the likely error on the part of persons exposed to the conduct: Coles at [39], citing ACCC v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640 (TPG HCA) at [39]. Conduct causing confusion and wonderment is not necessarily coextensive with misleading or deceptive conduct: Google at [8]; Campomar at [106].

84    Conduct is likely to mislead or deceive if there is a real and not remote chance or possibility that a person is likely to be misled or deceived: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] FCA 167; 2 FCR 82 at 87 per Bowen CJ, Lockhart and Fitzgerald JJ; Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592 at [112] per McHugh J; TPG FCAFC at [22(a)].

85    It is not necessary to prove an intention to mislead or deceive: Yorke v Lucas [1985] HCA 65; 158 CLR 661 at 666 per Mason ACJ, Wilson, Deane and Dawson JJ; Google at [9]. However, where there is an intention to deceive, the court may more readily infer that the intention has been or in all probability will be effective: Campomar at [33].

86    It is necessary to view the conduct as a whole and in its proper context. This will or may include consideration of the type of market, the manner in which the goods are sold, and the habits and characteristics of purchasers in such a market: Coles at [41]; see generally TPG HCA at [52]; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; 149 CLR 191 at 199 per Gibbs CJ.

87    The court must consider the likely characteristics of the persons who comprise the relevant class of persons to whom the conduct is directed and consider the likely effect of the conduct on ordinary or reasonable members of the class, disregarding reactions that might be regarded as extreme or fanciful: Campomar at [101]-[105]; Kraft Foods Group Brands LLC v Bega Cheese Ltd [2020] FCAFC 65; 377 ALR 387 at [236] per Foster, Moshinsky and O’Bryan JJ. In assessing the effect of conduct on a class of persons such as consumers who may range from the gullible to the astute, the court must consider whether the “ordinary” or “reasonable” members of that class would be misled or deceived: Coles at [43], citing Campomar at [105]. See also Google at [7]; Kraft at [236].

88    The presence or absence of evidence that someone was actually misled or deceived is relevant to an evaluation of all the circumstances relating to the impugned conduct: Coles at [45]. However, it is unnecessary to prove that the conduct in question actually deceived or misled anyone: Google at [6].

D.3    Unsolicited consumer agreements: ss 69, 78-79 of the ACL

89    Part 3-2 of the ACL governs the “consumer transactions”. Division 2 of that part then deals with “unsolicited consumer agreements” as a subset of consumer transactions and imposes obligations on “dealers” in relation to “unsolicited consumer agreements”.

90    Section 71 defines a dealer as follows:

A dealer is a person who, in trade or commerce:

(a)    enters into negotiations with a consumer with a view to making an agreement for the supply of goods or services to the consumer; or

(b)    calls on, or telephones, a consumer for the purpose of entering into such negotiations;

whether or not that person is, or is to be, the supplier of the goods or services.

91    Under paragraph (a) of that definition the college was a dealer. It was also a supplier of services. The CAs were also dealers but they were not suppliers of the services for which the consumers contracted. I do not understand those matters to be controversial.

92    Section 69 relevantly defines an unsolicited consumer agreement as follows:

(1)     An agreement is an unsolicited consumer agreement if:

(a)     it is for the supply, in trade or commerce, of goods or services to a consumer; and

(b)     it is made as a result of negotiations between a dealer and the consumer:

(i)     in each other’s presence at a place other than the business or trade premises of the supplier of the goods or services; or

(ii)     by telephone;

whether or not they are the only negotiations that precede the making of the agreement; and

(c)     the consumer did not invite the dealer to come to that place, or to make a telephone call, for the purposes of entering into negotiations relating to the supply of those goods or services (whether or not the consumer made such an invitation in relation to a different supply); and

(d)     the total price paid or payable by the consumer under the agreement:

(i)     is not ascertainable at the time the agreement is made; or

(ii)     if it is ascertainable at that time—is more than $100 or such other amount prescribed by the regulations.

93    Section 70(1) provides that in a proceeding relating to a contravention or possible contravention of Div 2 of Pt 3-2 of the ACL, an agreement is presumed to be an unsolicited consumer agreement if a party to the proceeding alleges that the agreement is such an agreement and no other party to the proceeding proves that the agreement is not such an agreement. That is to say, because the ACCC alleges that the enrolment agreements struck with the individual consumers A to E are unsolicited consumer agreements, the onus is on the respondents to prove that they are not unsolicited consumer agreements.

94    Section 77 deals with the liability of suppliers for contraventions by dealers, i.e., the possible liability of the college for the conduct of the CAs, as follows:

If:

(a)     a dealer contravenes a provision of this Subdivision in relation to an unsolicited consumer agreement; and

(b)     the dealer is not, or is not to be, the supplier of the goods or services to which the agreement relates;

the supplier of the goods or services is also taken to have contravened that provision in relation to the agreement.

95    The particular contraventions that the ACCC alleges against the college are of the prohibitions in ss 78(2) and 79(1)(b) and (c) of the ACL. Those provisions are relevantly as follows:

78     Requirement to give document to the consumer

(1)     …

(2)     If an unsolicited consumer agreement was negotiated by telephone, the dealer who negotiated the agreement must, within 5 business days after the agreement was made or such longer period agreed by the parties, give to the consumer under the agreement:

(a)     personally; or

(b)     by post; or

(c)     with the consumer’s consent—by electronic communication;

a document (the agreement document) evidencing the agreement.

Note: A pecuniary penalty may be imposed for a contravention of this subsection.

(3)     An unsolicited consumer agreement was negotiated by telephone if the negotiations that resulted in the making of the agreement took place by telephone (whether or not other negotiations preceded the making of the agreement).

79     Requirements for all unsolicited consumer agreements etc.

The supplier under an unsolicited consumer agreement must ensure that the agreement, or (if the agreement was negotiated by telephone) the agreement document, complies with the following requirements:

(a)     …

(b)     its front page must include a notice that:

(i)     conspicuously and prominently informs the consumer of the consumer’s right to terminate the agreement; and

(ii)     conspicuously and prominently sets out any other information prescribed by the regulations; and

(iii)     complies with any other requirements prescribed by the regulations;

(c)     it must be accompanied by a notice that:

(i)     may be used by the consumer to terminate the agreement; and

(ii)     complies with any requirements prescribed by the regulations; …

D.4    Knowingly concerned: s 224 of the ACL

96    Section 224 of the ACL deals with pecuniary penalties. Section 224(1)(e) provides that if a court is satisfied that a person has been “in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person” of a provision of, relevantly, Pt 2-2 (which is about unconscionable conduct and includes s 21), the court may impose a pecuniary penalty in respect of each act or omission by the person to which the section applies, as the court determines to be appropriate. The ACCC relies on this provision in contending that Mr Wills is liable with the college for any contraventions by it of the proscription against statutory unconscionability in s 21.

97    The ACCC also refers to para (c) of the definition of “involved” in s 2 of the ACL which provides that a person is involved in a contravention of a provision of the ACL or in conduct that constitutes such a contravention if the person “has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention”. That wording is the same as the wording in s 224(1)(e) and does not appear to take the matter any further.

98    There are two requirements that must be established before it can be concluded that a person was knowingly concerned in, or party to, a contravention.

99    First, the person must have had actual knowledge of all the essential facts constituting the contravention: Yorke v Lucas at 669-670. That is not imputed or constructive knowledge but, rather, actual knowledge: Young Investments Group Pty Ltd v Mann [2012] FCAFC 107; 293 ALR 537 at [11] per Emmett, Bennett and McKerracher JJ. However, it is not necessary that the person knew that those matters constituted a contravention: Rafferty v Madgwicks [2012] FCAFC 37; 203 FCR 1 at [254] per Kenny, Stone and Logan JJ. The requisite actual knowledge must be present at the time of the contravention; a later acquisition of knowledge of the essential matters is not sufficient: ASIC v Australian Investors Forum Pty Ltd (No 2) [2005] NSWSC 267; 53 ACSR 305 at [113]-[118] per Palmer J; ASIC v ActiveSuper Pty Ltd (in liq) [2015] FCA 342; 235 FCR 181 at [405] per White J.

100    Actual knowledge may be inferred from “a combination of suspicious circumstances and a failure to make an inquiry” – which is sometimes referred to as “wilful blindness”, but “knowledge must be the only rational inference available”: Pereira v Director of Public Prosecutions [1988] HCA 57; 82 ALR 217 at 220 per Mason CJ, Dean, Dawson, Toohey and Gaudron JJ. It has also been said that “actual knowledge may be inferred from ignorance dishonestly and deliberately maintained or wilful blindness”: Lloyd v Belconnen Lakeview Pty Ltd [2019] FCA 2177; 377 ALR 234 at [321] per Lee J.

101    In a case such as the present which, relevantly, involves a case asserting knowing concern in unconscionable conduct, it is necessary to show that the person said to be knowingly concerned knew of all the circumstances by which the conduct is ultimately found to have been unconscionable in contravention of the statutory norm: Stefanovski v Digital Central Australia (Assets) Pty Ltd [2018] FCAFC 31; 368 ALR 607 at [71] per McKerracher, Robertson and Derrington JJ.

102    Secondly, the person must have engaged in conduct (by act or omission) which can properly be said to “implicate” them in the contravention or which shows a “practical connection” between them and the contravention: ActiveSuper at [407]-[410]; Ashbury v Reid [1961] WAR 49 at 51; Trade Practices Commission v Australia Meat Holdings Pty Ltd [1988] FCA 338; 83 ALR 299 at 357 per Wilcox J. It is not necessary that the person physically do anything to further the contravention; it is sufficient if the person, by what they said and agreed to do, in fact became associated with and thus involved, in the relevant sense, in the conduct constituting the contravention: R v Tannous (1988) 10 NSWLR 303 at 308 per Lee J, Street CJ and Finlay J agreeing; Leighton Contractors Pty Ltd v CFMEU [2006] WASC 144; 154 IR 228 at [29] per Le Miere J; Qantas Airways Ltd v TWUA [2011] FCA 470; 280 ALR 503 at [324]-[325] per Moore J; Fair Work Ombudsman v Priority Matters Pty Ltd [2017] FCA 833 at [118]-[119] per Flick J; Termite Resources NL (in liq) v Meadows [2019] FCA 354; 370 ALR 191 at [717] per White J.

103    It is submitted on behalf of Mr Wills that it is necessary for the ACCC to establish that he “participated” in the essential elements constituting the contravention. That is to say, it is not only the requirement of knowledge that must go to the essential elements of the contravention but also the requirement of participation. The submission was based on the following statement in ACCC v Geowash Pty Ltd (subject to a deed of company arrangement) (No 3) [2019] FCA 72; 368 ALR 441 at [766]:

The person must have knowledge of the essential matters which constitute the contravening conduct and have been an intentional participant in the essential elements constituting the contravention: Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 at 667. These matters are related because intentional participation is based upon knowledge of the essential elements: Australian Competition and Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 at [133].

(Emphasis added.)

104    It is noted that the decision in Geowash was recently upheld on appeal, although the findings on “knowingly concerned” were not the subject of appeal. That may be because the critical finding that is relevant to the present discussion, namely that one of the individuals in that case, Mr Cameron, was not knowingly concerned in certain conduct because he did not participate in it, was in the appellants’ favour so they had no interest in challenging it (Geowash at [772]-[777]). The result is that the issues raised here were not addressed by the Full Court: Ali v ACCC [2021] FCAFC 109.

105    It is not clear to me that the proposition that it is a requirement of establishing knowing concern in a contravention that the person participated in each element of the contravention is correct or consistent with the authorities. Such a proposition is not borne out by the authorities cited. In Yorke v Lucas, the Court identified (at 666) that there were two bases on which it was contended that the relevant person, Mr Lucas, was liable for the contravention of s 52 of the Trade Practices Act 1974 (Cth) (i.e., the old misleading and deceptive conduct provision) by the company. The first one was that he had “aided, abetted, counselled or procured” the contravention within the meaning of para (a) of s 75B, and the other was that he was “directly or indirectly, knowingly concerned in, or party to” the contravention within the meaning of para (c) of that section. The latter paragraph has its modern equivalence in s 224(1)(e), being the provision on which the ACCC relies in this case.

106    From the foot of page 666 to the foot of page 669 the Court discussed para (a), i.e., the aiding and abetting provision. The reference in Geowash to page 667 is accordingly a reference to a discussion about aiding and abetting and not about “knowingly concerned”. It does not support the proposition contended for by Mr Wills. In any event, at 670 the Court in Yorke v Lucas concluded that the proper construction of para (c) “requires a party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention.” That construction does not require that the person be an intentional participant in each essential element.

107    The other authority cited in Geowash is ACCC v IMB Group [2003] FCAFC 17 at [133]. There it was said that “a person must be an intentional participant in the contravention, the necessary intent being based upon knowledge of the essential elements of the contravention”. That statement is exactly the same as the statement in Yorke v Lucas just referred to and does not support the proposition contended for.

108    In the circumstances, I reject the submission on behalf of Mr Wills that for a person to be knowingly concerned in the contravention of another it must be shown that they participated in the essential elements constituting the contravention.

D.5    Conduct on behalf of a body corporate: s 139B, Competition and Consumer Act

109    The ACCC relies on s 139B of the Competition and Consumer Act 2010 (Cth) (C&C Act) as regards the attribution of the state of mind of each of Mr Cook, Ms Edwards and Mohammed Akbery (also referred to as Mr Akbery) to the college (i.e. Productivity Partners), and the attribution of the state of mind of Mr Wills to Site. That is on the basis that each of Mr Cook, Ms Edwards and Mr Akbery was an employee of the college and Mr Wills was an employee of Site. The ACCC also relies on this section in respect of each CA who signed up consumers A to E and to say that each of their conduct was on behalf of the college as an agent.

110    The section relevantly provides as follows:

139B     Conduct of directors, employees or agents of bodies corporate

(1)     If, in a proceeding under this Part or the Australian Consumer Law in respect of conduct that is engaged in by a body corporate and to which this Part or the Australian Consumer Law applies, it is necessary to establish the state of mind of the body corporate, it is sufficient to show:

(a)     that a director, employee or agent of the body corporate engaged in that conduct within the scope of the actual or apparent authority of the director, employee or agent; and

(b)     that the director, employee or agent had that state of mind.

(2)     Any conduct engaged in on behalf of a body corporate:

(a)     by a director, employee or agent of the body corporate within the scope of the actual or apparent authority of the director, employee or agent; or

(b)     …

is taken, for the purposes of this Part or the Australian Consumer Law, to have been engaged in also by the body corporate.

111    Section 139B is materially the same as ss 84(1) and (2) of the Act. When s 139B was inserted into the Act as part of the ACL reforms (by the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth)), the Explanatory Memorandum accompanying the Bill stated (at [18.35]) that s 139B “reflects section 84” of the Act. It follows that authorities as to the meaning and scope of ss 84(1) and (2) therefore provide guidance as to the meaning and scope of s 139B. See Empower at [280].

112    The short point for present purposes is that the state of mind (s-s (1)) and the conduct (s-s (2)) of a director, employee or agent of a company will be attributed to the company if the person engaged in the impugned conduct on behalf of the corporation within the scope of their actual or apparent authority. Thus, contrary to the position in the general law that the conduct and state of mind of a person will not be attributed to the company unless the person was the “directing mind and will” of the company (as explained in, for example, Tesco Supermarkets Ltd v Nattrass [1972] AC 153 and Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500), for the purposes of contraventions of the ACL, it is sufficient if the person was the agent of the company acting within the scope of their actual or apparent authority: Walplan Pty Ltd v Wallace [1985] FCA 479; 8 FCR 27 at 36-37 per Lockhart J, Sweeney and Neaves JJ agreeing.

113    The phrase “on behalf of” in s 139B(2) suggests some involvement by the person concerned with the activities of the corporation; it conveys a meaning similar to the phrase “in the course of the body corporate’s affairs or activities” and encompass acts done by a corporation’s employees in the course of their employment, but it is not confined to the employment relationship: Walplan at 37. The phrase conveys that something is done “for” the company: Lisciandro v Official Trustee In Bankruptcy [1995] FCA 1527; ATPR ¶41-436 at 40,903-40,904 per Kiefel J; NMFM v Property Pty Ltd v Citibank Ltd (No 10) [2000] FCA 1558; 107 FCR 270 at [1244] per Lindgren J; Pioneer Mortgage Services Pty Ltd v Columbus Capital Pty Ltd [2016] FCAFC 78; 250 FCR 136 at [78]-[80] per Davies, Gleeson and Edelman JJ.

114    In Empower, Gleeson J said the following with regard to the scope of an agent’s actual or ostensible authority which I gratefully adopt:

[302]    In the law of agency, the liability of the principal for an agent’s defaults can be explained by the principal’s ability to stipulate an agent’s authority: Dal Pont, Law of Agency [22.15].

[303]    The expressions “actual authority” and “apparent authority” are not defined in the Act or ACL. It is therefore useful to have regard to the general law in determining their meaning.

[304]    At common law, the principal is civilly liable for an agent’s torts committed by the agent while acting within the scope of his or her actual or apparent (also called “ostensible”) authority: Ex parte Colonial Petroleum Oil Pty Ltd (1944) 44 SR (NSW) 306 at 308. As to the latter, Jordan CJ repeated the following statement from his decision in Bonette v Woolworths Ltd (1937) 37 SR (NSW) 142 at 151:

If an agent is authorised to do a particular class of acts, the principal is liable if the agent does an act of the class authorised notwithstanding that it is done mistakenly, negligently or wrongfully; and a principal cannot escape liability by expressly prohibiting his agent from making mistakes or being careless in carrying out his duties …

Concluding:

A principal is not, of course, responsible, either civilly or criminally, for anything done by a person who is in fact his agent, if it is done by that person on his own behalf and not in the course of the performance of his duties as agent or within the scope of his general authority as agent.

[305]    As a matter of interpretation, these principles apply under s 139B so that the conduct of Empower’s agents in selling and promoting Empower’s courses (being conduct of the authorised class) is taken, for the purposes of the ACL, to also have been engaged in by Empower.

115    The difference between actual and apparent, or ostensible, authority is important. The actual authority of an agent can be express or implied. It is a question of the terms of a contract of agency between principal and agent, recognising that the conclusion as to the relationship of agency and its terms may be based on express terms and their construction or conduct and circumstances, or a combination. Ostensible authority, however, may exist where there is no actual authority, or it may co-exist with actual authority but not be co-extensive with it. This is described by Dal Pont in The Law of Agency (3rd ed., LexisNexis, 2013) as follows (omitting references):

[20.2]    The doctrine of ostensible authority dictates that a principal may be liable under a contract effected by a person who lacks actual authority from the principal to effect the contract, but on whom the principal has, by his or her words or actions, conferred ‘apparent’ or ‘ostensible’ authority to do so. This liability may arise whether or not there is a pre-existing agency relationship; it is conceivable, although perhaps not common, that a person ‘holds out’ another person as having authority as agent even though no agency relationship exists between them. Were it not for such a doctrine, persons who bona fide deal with agents, or persons who profess to be agents, would ‘always be at peril if they were confined to having to discover and observe the actual authority of the agent and not be entitled to rely upon the agent’s ostensible authority’.

…

[20.5]    There need not be any pre-existing agency relationship between A and B in order for A to confer ostensible authority on B to act on A’s behalf; there can be ostensible but no actual authority. The agency itself can be created by the principal’s ‘holding out’. Yet it is more common for there to be a pre-existing principal–agent relationship between A and B, the ostensible authority of B exceeding the actual authority conferred by A pursuant to the terms of the agency agreement. This is more common because it is easier to identify a representation or ‘holding out’ of a person’s authority if he or she is already an agent, albeit with a limited actual authority, of the representor than in the absence of such a pre-existing relationship.

E.    THE KEY PEOPLE

116    There are a number of individuals who are significant in what follows. It is useful to identify who they are at the outset.

117    Vernon Wills was the CEO and Managing Director of Site from 12 October 2010 through the period relevant to the present case. [D5113]

118    As already identified, Blake Wills was employed by Site as its Chief Operating Officer from around November 2010 to October 2017. In that role he had oversight of each of Site’s business units, one of which was the college and he reported to Vernon Wills. Also, Blake Wills was the acting CEO of the college from 20 November 2015 to 18 January 2016. Blake Wills did not give evidence. [D5113]

119    Craig Dawson was Site’s Chief Financial Officer. [D1248, D5113] He reported to Vernon Wills. Mr Dawson did not give evidence.

120    Ian Cook was a director of Productivity Partners from April 2013 to March 2017. He was the CEO of the college from 1 May 2014 to February 2017 and as such had overall responsibility for the management and operations of the college. [A29 [5] /A96 [5] D865, D5113] Mr Cook reported to Blake Wills. Mr Cook did not give evidence.

121    The executive group of Site included Vernon Wills, Craig Dawson, Blake Wills and Ian Cook. [D5113]

122    Alex Makar was the Head of Group Services for the Site Group. He reported to Blake Wills. [D5113]

123    There were a number of executives of Productivity Partners who reported to Ian Cook. They included Jon Carson, Khaled Akbery, Mohammed Akbery, Phil Beachley and Elizabeth (Liby) Edwards. [D5113]

124    Jon Carson was employed as the college’s National Sales Manager from 1 July 2014 on an incentive basis and he was tasked to build a commission-based internal sales team. [D939, 975] That sales team was known as Learn2Earn, or L2E, of which Mr Carson was the manager. [T401:32] Mr Carson did not give evidence.

125    Khaled Akbery was the college’s Partnership Manager from 1 July 2014. He had responsibility for the relationship with partner organisations such as the contracted student recruiters. [T484:9-23; T683:43, D5113] Khaled Akbery did not give evidence.

126    Mohammed Akbery was employed by the college from January 2013 to June 2017 in a number of different roles. Between March 2013 and March 2014 he was the Campus Manager for the Chermside campus and from March 2014 to June 2017 he was the Operations Manager of Productivity Partners. The campus managers reported to him in his capacity as Operations Manager. [D5113] Since leaving the college Mohammed Akbery worked as a consultant to registered training organisations, including providing assistance to Site, including in relation to the present proceeding. [C85-86] As indicated, Mohammed Akbery reported to Mr Cook. [C95/43]

127    Mohammed Akbery was called as a witness by the college. His evidence in chief was given by way of affidavit.

128    Elizabeth (Liby) Edwards was employed by the college from March 2013 to March 2017. From late 2013 her job title was Corporate Services Manager. [C147] Ms Edwards’s job description included “improving processes and systems to ensure a smooth and easy flow for the student from pre-enrolment through to graduation”. Her key responsibilities included writing and implementing process updates and training staff, managing marketing agent reporting and enquiries, overseeing all operational and student services processes and overseeing the issuing of results, certificates, graduations and “completion initiative”. Ms Edwards reported to the Operations Manager, who in the relevant period was Mohammed Akbery. [D625-626, C86]

129    Ms Edwards was called as a witness by the college. Her evidence in chief was given by way of an affidavit affirmed on 19 August 2019. Ms Edwards explained that the college leadership team, at least in August 2015, comprised Mr Cook, Mohammed Akbery, Mr Carson, Mr Beachley and herself. [T542:1-3]

130    Phil Beachley was employed as being responsible for Facilities & IT from March 2013 to January 2016. [D5113]

131    In March 2016, the Productivity Partners Advisory Board, which is elsewhere reflected as the Captain Cook College & Site Institute Advisory Board, was reflected as comprising, and having comprised since July 2014, Blake Wills, Mr Makar, Mr Dawson, Mr Cook, Daryl Somerville (the chair of Site), Judi Cook, Daryl Cook and Helen Milton. [D5113, D895]

132    Daniel Buonora was employed by Productivity Partners as Business Improvement Manager in August 2015. He took up the position of Campus Manager of the distance campus from 26 October 2015. His role as distance Campus Manager involved managing three teams: the admissions team, the student support team and the teachers or trainers team. He reported to Mohammed Akbery. [T351:28-43, T352:1-2] Mr Buonora was called as a witness by the ACCC. His evidence in chief was adduced orally.

133    Candice Stevens was employed by the college as a Student Support Officer (SSO) from October 2015 until January 2016. Ms Stevens was called as a witness by the ACCC. Her evidence in chief was adduced orally. She explained that her role as SSO required that she support students when they initially enrolled with the college and throughout their course, including providing them with guidance and support and use of training materials, and connecting them with a trainer if required. [T320:5-11] She is sometimes referred to in the documents as Candice Dent.

134    Jo Solly was employed by the college as a Training and Development Officer in the period November 2015 to May 2016. Ms Solly was called as a witness by the ACCC. Her evidence in chief was adduced orally. Her role was to deliver online training. She explained that her role was to contact students online once they had enrolled and deliver support while they were doing distance education, and then also to assess the students. Giving support to students could involve going through training materials with them, answering their questions, and guiding them to training materials and how to use the learning management system. [T338:11-41]

135    Lynda Bundock worked for the college from February 2013 to April 2014. Ms Bundock then returned to work for the college in October 2014 as a classroom trainer. Then, in February 2015 she became a distance learning trainer teaching primarily the Diploma of Human Resources. Between September and December 2015, Ms Bundock worked on a project to develop and improve resources and then in January 2016 she returned to distance training in the Diploma of Human Resources. The evidence did not reveal when Ms Bundock left her employment by the college. Ms Bundock was called as a witness by the ACCC. Her evidence in chief was adduced orally. [T411:13-412:19]

136    Havinah Jokhoo was the college’s distance campus manager from April 2014 until October 2015.

F.    THE WITNESSES

137    The ACCC relies on the evidence of the following witnesses:

(1)    Each of the consumers A to E who gave evidence by way of affidavit and were not required for cross-examination;

(2)    Candice Stevens, Jo Solly, Daniel Buonora and Linda Bundock, each of whose evidence was foreshadowed by an outline of evidence and who then gave evidence in chief orally and was cross-examined;

(3)    Matt O’Donnell, a forensic investigator, who gave evidence by way of reports that were admitted under s 50 of the Evidence Act 1995 (Cth). Mr O’Donnell was cross-examined; and

(4)    Janine Thompson, a Chartered Accountant, who gave expert evidence by way of reports that were tendered. Ms Thompson was cross-examined.

138    The corporate respondents rely on the evidence of Mohammed Akbery and Libby Edwards. Their evidence in chief was given by way of affidavit. They were each cross-examined.

139    Mr Wills called no witnesses. Notably, he did not give evidence himself. Much of the evidence on which the ACCC relies in establishing Mr Wills’s knowledge of various matters at different times and, to a lesser extent, his participation or “concern” in elements of the college’s conduct, is in the form of emails and documents sent to Mr Wills either as addressee or as a copy-party. It also relies on his presence at meetings, as recorded in the minutes, but which do not necessarily record the extent of his participation in any particular discussion.

140    Mr Wills submits that there was no evidence led by the ACCC from anyone with knowledge of Mr Wills’s practice of reading emails sent to him, including those copied to him rather than being sent to him as a named principal addressee. In this regard, Mr Wills relies on comments in ASIC v Geary [2016] VSC 779; 342 ALR 1 at [2529] per Robson J to the effect that his Honour would more readily find to the required degree of satisfaction that the recipient of emails knew of a particular fact or matter if it was referred to in several emails, but that if the fact or matter was only contained in one email or attachment to an email it is less open to draw the conclusion that the recipient became aware of the fact or matter. That is particularly where there is no other evidence that tends to suggest that they otherwise became aware of it.

141    Mr Wills also refers to the comments in APRA v Kelaher [2019] FCA 1521; 138 ACSR 459 at [4] per Jagot J regarding taking documents as they are found. While not clearly explained, I take the submission to be that the documents in evidence show only that Mr Wills was sent or received the relevant emails, not that he read them.

142    An unexplained failure by a party to give evidence may lead to an inference that the uncalled evidence would not have assisted the party’s case: Jones v Dunkel [1959] HCA 8; 101 CLR 298. In Adler v ASIC; Williams v ASIC [2003] NSWCA 131; 46 ACSR 504 at [661] per Giles JA, Mason P and Beazley JA agreeing, it was held that a Jones v Dunkel inference may be drawn in civil penalty proceedings – a party facing the possibility of a civil penalty is not protected by the civil penalty privilege from such an inference. The same conclusion was reached in Adams v Director of the Fair Work Building Industry Inspectorate [2017] FCAFC 228; 258 FCR 257 at [147] per North, Dowsett and Rares JJ.

143    In circumstances where Mr Wills could have given evidence and elected not to do so without explanation, and any evidence by him could have explained the extent of his knowledge and involvement, which emails and documents he read and which he did not and what understanding he gained from them, and the extent of his participation in crucial discussions at different meetings, and indeed the position taken by him in those discussions, I draw the inference against him that his evidence would not have assisted his case. It is most reasonably and probably for that reason that he elected not to give evidence, particularly where there is no other competing explanation.

144    The result is that in what follows, and to the extent indicated, I infer that Mr Wills read and understood the emails and documents that were sent to him, and that he participated in and understood the discussions that took place at meetings at which he was present.

G.    BACKGROUND TO THE COLLEGE

145    The college is a registered training organisation (RTO) that offered vocational education and training (VET) to students. Founded in 1998, the college was owned and operated by the Cook family. It had four on-site campuses and also provided courses online for distance learning through what was referred to as its distance campus. [D778] The college obtained approval to offer courses through the VFH scheme on 30 March 2012. [D843] The shares in Productivity Partners were acquired in their entirety from the Cook family by Site in mid-2014. Thereafter, Productivity Partners ran the college under the names Captain Cook College and Site Institute.

146    A Captain Cook College and Site Institute Advisory Board was established in May 2014 with the stated intention that it would meet monthly. [D895, 897] A charter was adopted to govern its operation. The charter specified that the Advisory Board “delegated carriage of the operation and management of [the college] to the Chief Executive Officer”. [D899]

147    References in these reasons for judgment to “the college” are references to Productivity Partners conducting business through each of its five campuses, four on site and one distance. That said, it is the distance campus, in particular, that is at the centre of the case.

H.    RECRUITMENT BY COURSE ADVISORS

148    Prior to Site acquiring the shares of Productivity Partners, it undertook a series of due diligence investigations. At that time, the college’s primary method of recruiting students was through National Training and Development Pty Ltd (NTD), a company which had an exclusive arrangement with the college for the provision of such services. [D858, 5798] Approximately 80% of students were recruited in this way. [D840] NTD was entitled to a 20% commission of total course fees. The entitlement to the payment of commission arose on the consumer passing census dates, with 62.5% of the commission paid at the first census date and the remainder at the second census date. [D5810] It was identified by Site in April 2014 that the exclusive provision of such services by NTD, and hence the college’s dependence on NTD, was a business risk that needed to be mitigated by building internal capability. [D858]

149    In July 2014, the college reviewed its relationship with NTD. [D967] The review noted that after September 2013 the number of NTD referrals started to decline and struggled to recover. External factors affecting all VFH marketing were noted to include the changes in Centrelink reporting, which had moved online. The reduced foot-traffic reduced NTD’s effectiveness, as it had relied on street sales outside Centrelink offices. It was also being affected by market saturation with an increased number of training providers available for students. [D970-971] The primary internal factor was noted as a conflict of interest arising out of NTD related entities owning their own VET providers, as well as NTD servicing other competing VET providers. [D971-972] The recommendations of the review were to continue to build an internal sales capability (that is, Learn2Earn or L2E), and to execute agreements with other potential agents in the event that the college could successfully negotiate removal of the exclusivity arrangement with NTD. [D984]

150    As indicated, Mr Carson was employed as National Sales Manager in early July 2014 and he was tasked with building a “commission-based internal sales team”. [D975]

151    On 31 July 2014, the college concluded a new agreement with NTD which removed the provisions conferring exclusivity to NTD as a recruitment supplier. [D5812] This opened the door to the college subsequently entering into agreements with a number of other external marketing agencies. In each case, remuneration was by commission upon the recruited consumer remaining enrolled past a census date. The commission structures were such as to strongly incentivise the agents to recruit consumers and ensure that they passed at least their first census date and incurred VFH debts.

I.    THE EARLIER PERIOD: ENROLMENT AND WITHDRAWAL PROCESSES

I.1    Enrolment process

152    The college’s enrolment processes were not static; they were changed and developed in different ways over time. Some changes were significant, and others less so. The ACCC’s case as pleaded and put at trial directs attention to the whole of the earlier period, i.e., 1 November 2014 to 6 September 2015, however, it is really the features of the process at the end of that period that are significant. That is because assessment of the ACCC’s case requires a comparison of the processes immediately before and after the process changes that were introduced with effect from 7 September 2015.

153    The evidence upon which conclusions can be drawn as to the essential features of the enrolment processes in the earlier period has four principal sources.

154    First, by email dated 6 November 2014, Mohammed Akbery circulated to relevant staff “the completed process map for agent led enrolments for both campus and distance”. Attached to the email were flowcharts setting out the relevant processes. [D1042] Secondly, by email dated 19 May 2015, Mohammed Akbery sent to Ms Edwards “the pre-enrolment flowchart for the audit tomorrow”. [D2274-7] Thirdly, a notice from the ACCC under s 155 of the C&C Act dated 10 March 2016 required the college to “outline the process for enrolling students that are referred to [the college] from [the college’s sales representatives]”. [D6241, D6250] Mohammed Akbery responded to the notice on behalf of the college by preparing and providing a flowchart of the enrolment processes in different periods with various annexed supporting documents that give further detail. [D79ff] Fourthly, there is the evidence at trial of Mohammed Akbery and Ms Edwards.

155    The first step of the enrolment process was that the CA would give the potential student access to an “enrolment kit” which was made up of enrolment information, a pre-enrolment quiz (PEQ) and an enrolment application form. Such access was either in the form of hard copy documents or online through the agent’s portal. [D2-10; D343-365] The college’s training documents for CAs show that the CAs were given training about the college and the VFH scheme as well as their role in recruiting students. [D366-369; D382-396] The latter included ensuring that students were aware of key information. [D394] The CAs promised to “ensure that the client is provided with clear and unambiguous information in relation to the course, VFH Loan and Loan Fees, RTO Tuition Fees, Census dates, withdrawal (including before each Census Date) and other required Pre-Enrolment information is provided by the RTO”. [D397] It appears that the CAs’ obligations to provide clear information were regarded as being fulfilled by giving prospective students access to the enrolment information contained in the enrolment kits.

156    The second step of the enrolment process was that the prospective student completed the enrolment form and the PEQ, either in hard copy or online through the portal. Completion of those documents could be done by the prospective student themselves, or by the CA on their instruction. The CA would scan the relevant documents that were required to show the prospective student’s eligibility for VFH assistance (e.g., proof of citizenship, photo ID, parental consent if required), and upload the documents to the portal. If the enrolment form and PEQ had been completed in hard copy, then they would also be uploaded. If the PEQ was completed online, it would be marked automatically by the system and the results shown in a form ready for assessment at the next stage.

157    The third step of the enrolment process was undertaken by an admissions officer at the college who completed a checklist which required reviewing the documents that had been submitted, ensuring that the correct information had been provided and reviewing the PEQ results. [D27] The college’s quality control process for the enrolment process indicated that the officer was required to consider whether there were any factors that may affect the student’s ability to study. [D85, D149] These might include any disabilities, their employment status, any issues with using or accessing a computer, and whether the student indicated that they will require lots of help with reading, writing or speaking. [D86-87] As Ms Edwards confirmed, the application form and PEQ would be reviewed as a way of the college identifying whether or not the student was suitable for enrolment. [T580:16-22]

158    The fourth step of the enrolment process was an outbound quality assurance (QA) call (also referred to as a phone call to validate enrolment) by the admissions officer to the prospective student. It would generally take approximately 48 hours after the submission of the documents in the previous step before this occurred. [T663.43] The implication of that is that the CA would not be present with the student when the student received the admissions officer’s call. The QA call was guided by a short call script. [D28] The script included the following features:

(1)    checking personal details and contact information;

(2)    discussing the PEQ and ensuring that the student understands VFH and the loan fees;

(3)    enquiring whether the student has disabilities that could affect their studies and, if they do, escalating the application to the Admissions Team Leader for assessment to ensure that they are capable of completing the course;

(4)    asking a number of questions to test their understanding of the VFH scheme and their liability to the Commonwealth; and

(5)    explaining the course cost and duration of study.

159    The college’s quality control process for the enrolment process indicated that the QA call was to enable the admissions officer to answer the following questions: [D85, D149]

(1)    Is the student genuine?

(2)    Does the student understand the commitment they are making?

(3)    Are there any flags during the phone call that suggest the student may struggle with the course? (Emphasis in the original.)

(4)    What actions should be taken if there are any concerns?

(5)    Is it possible for the student to study on campus?

160    In a presentation to the college’s leadership team in August 2014, Mohammed Akbery recorded that students would be quizzed as part of the outgoing QA call and that it was critical that students understand the VFH scheme. [C102 [82], D316] This demonstrates that the enrolment process was not a box ticking exercise, but included steps that were genuinely intended as a quality assurance mechanism to ensure that students who are enrolled were genuine and that they understood their obligations. Ms Edwards agreed that the QA call enabled the admissions officer to test whether the answers given in the PEQ were the prospective student’s own answers rather than answers given by the CA. [T555:25-556:13] Documents were tendered which demonstrated that there were real instances of problems being identified during the QA call, such as the CA having completed the PEQ or the student being ill-suited for enrolment.

161    The final step of the enrolment process was the acceptance of the prospective student for enrolment after which an SSO would contact the student to provide them with orientation, provide them with access to the online learning portal and send them a training plan and offer letter. [C104/87, D16-17, D82]

162    The process also had a post-enrolment step by which the student was assigned to a trainer who then monitored their progress and flagged if any LLN issues were identified prior to census. If such issues were flagged then the enrolment offer would be withdrawn with a pathway program recommended or other appropriate actions taken. [D2275] The effect is that the student would be withdrawn from enrolment prior to first census and thus prior to incurring a VFH debt.

163    Once the student had progressed through census they would be sent a COE and CAN. [D79]

I.2    Campus driven withdrawals

164    Ms Edwards explained that following an audit process she was involved in in November 2014, a campus driven withdrawal process was implemented whereby students who were not contactable after enrolment but prior to census were not passed through census. [C150/15(b), C151/18(b)] The college’s relevant policy document identified three forms of withdrawal prior to the first census date. The first was if the student submitted a withdrawal form. The second was if the student verbally indicated an intention to withdraw but then failed to submit the form. It is the third that is presently relevant – where no notice of intent to withdraw was provided by the student. Its documented features include the following: [D283-284, D1190]

(1)    The student’s lack of (online) attendance in the first week of study would be brought to the attention of the campus administration. The SSO or Campus Administrator would attempt to contact the student at least three times in the first week and at the end of the week send an email to the CA who had recruited the student to seek assistance from the CA to re-engage the student.

(2)    In the second week, the SSO or Campus Administrator would continue to attempt to contact the student at least three times and thereafter place a note on the weekly census reports saying “HOLD – may withdraw”.

(3)    In the third week, the SSO or Campus Administrator or CA would continue to attempt to contact the student at least three times, failing which they would complete a campus driven withdrawals email template to withdraw the student.

(4)    If the student was re-engaged in week 2 or week 3, they would be moved into the next available intake date which would have the effect of enabling them to re-engage in the course with a later first census date.

165    On 27 March 2015, Kellie Goodwin, Team Leader Corporate Services, in an email to Ms Edwards, drew attention to a distinction between campus driven withdrawals before the first census and campus driven withdrawals thereafter. Ms Goodwin expressed the view that the latter were contrary to VFH rules. From this it would appear that the college was at that time effecting campus driven withdrawals even after the first census, and that at least on one view that was contrary to the VFH rules as stated in the FEE-HELP Information for 2015 booklet for students which stated that a student could withdraw from a unit of study by the census date but they could not withdraw from a unit of study after the census date and have their fee re-credited unless they were seriously ill or it was due to “other special circumstances”. [D1832, D1857-8]

166    With effect from 16 June 2015, the college’s policy and procedure was changed. [D2519] The withdrawal procedure relevantly provided as follows: [D294]

There is only one scenario where the Campus is permitted to withdraw a student who has enrolled and commenced in a unit of study.

Prior to the 1st Census ONLY i.e. student attends intake but dropped out before Census 1

…

If the student becomes uncontactable the SSO/CA will make every effort to have the Request to ‘Withdraw – on or before Census’ form completed by the student using a variety of mediums (e.g. post/email/SMS) over a two week duration.

If the Campus is unable to receive the request form back from the student in the two week timeframe the Campus Administrator forwards all documentation to HO and changes the Census status to withdrawn.

167    The effect of that procedure is that campus driven withdrawals was still effective up to the first census, but not thereafter.

168    The college’s revised withdraw policy did nothing about campus driven withdrawals up to the first census but stated the following with respect to withdrawals after census: [D289]

Students who withdraw from their studies after the Census Date who do not complete the requirements for their VET unit/s of study and do not meet the special circumstance criteria will incur a [VFH] debt with the Australian government.

Students who withdraw from their studies after the Census Date who do not complete the requirements for their VET unit/s of study can apply in special circumstances to have their [VFH] balance re-credited, or upfront payments refunded.

169    That policy reflected what was stated in the Department of Education’s information booklet for students at that time. Special circumstances justifying reversal of the debts were listed as requiring to be beyond the student’s control, the impact of which was not made on the student until on or after the census date, and it was impracticable for the student to complete the requirements of their unit(s) of study. [D1857-1858]

170    Mohammed Akbery’s evidence was that from at least May 2015 he was aware that a significant proportion of students (at that stage, approximately 50%) were withdrawn before first census by campus driven withdrawals because they were uncontactable. [T660:28-33] He also knew that if the campus driven withdrawal procedure prior to first census was abolished, those non-contactable students would progress through their census dates and incur debt and additional debt. [T660:42-43]

171    The Department never required RTOs to have a campus driven withdrawal mechanism. This is apparent from a number of sources of information.

172    First, the Department’s VET Administrative Information for Providers booklets dated April 2014, April 2015 and September 2015 provided that “a student must be able to withdraw from a VET unit of study on or before the census date”, “administrative processes must be in place to allow students to be able to withdraw from units of study on or before the census date”, “VET providers should also ensure students are made aware of withdrawal requirements” and “where a student withdraws from a unit of study on or before the census date for that unit, the VET provider must repay the student any tuition fee payment made on or before that date.” [D684-5, D1883-4, D3421-2] The booklets also set out the “special circumstances” in which a student might be entitled to a refund of their VFH fee after the first census date, which circumstances did not include that the student was not engaged in the course or uncontactable by the VET provider. [D719-722, D1918-1921, D3456-9]

173    Secondly, the addendum to the VET Administrative Information for Providers incorporating the VFH reforms in 2015/2016 did not say anything about campus driven withdrawals. It drew attention to the reforms with regard to barriers to withdrawal which came into effect on 1 July 2015 which prohibited a VET provider from having any financial, administrative or other barriers that would result in a student not being able to withdraw from a unit of study on or before the census date. [D2677, D2900-1, D2923-4]

174    Thirdly, the August 2015 update to the addendum to the VET Administrative Information for Providers incorporating the VFH reforms in 2015/2016 repeated the same principal text with regard to the new measures against barriers to withdraw. However, in the “Frequently asked questions” section following the principal text on the subject there was an additional question and answer that dealt with campus driven withdrawals. The answer expressed an expectation of the Department but did not purport to state any mandatory requirement: [D3037, D3069]

Q     Can we cancel students’ enrolments in VET courses or VET units of study if we cannot contact the student?

A     Yes. There are no barriers in HESA to VET providers cancelling enrolments. VET providers should advise students of the circumstances that will lead to cancellations. It would be expected that if students could not be contacted and/or they had not participated in the unit before the census date, a provider would cancel the enrolment to avoid the student incurring the debt.

(Emphasis added.)

175    The October 2015 update to the addendum to the VET Administrative Information for Providers incorporating the VFH reforms in 2015/2016 included the same additional question and answer. [D3899] Unlike the August 2015 update, it included on the back of the cover page a “Change Control” table which indicated the changes that the update included, including “barriers to withdrawal FAQs updated”. It thus drew specific attention to the new question and answer in the FAQ section. [D3875]

176    Fourthly, Mr Cook attended a VFH training session that was delivered by or on behalf of the Department on 4 March 2015 in Canberra. [D1513] With regard to withdrawals, the training presentation stated that if a student withdraws from a unit of study on or before the census date, the provider must refund any tuition fees paid, and that withdrawal processes must not prevent students from being able to withdraw from units of study on or before the census date. [D1552] The presentation said nothing about VET providers being required to initiate withdrawals themselves.

177    Fifthly, the Department’s FEE-HELP Information for 2015 and FEE-HELP Information for 2016 booklets, which were directed to students rather than to VET providers, relevantly stated that if the student withdraws from a unit by the census date they will not be liable to pay the cost or incur the debt of that unit, and if they withdraw from a unit after the census date “because [they] become seriously ill or due to other special circumstances” they can apply to their institution to have their VFH balance re-credited and their debt removed. [D188, D1114, D1857-8, D2755-6] The booklet said nothing about withdrawals being initiated by VET providers.

J.    THE EARLIER PERIOD: RELEVANT EVENTS

J.1    Sero campus health check

178    The college had an agreement with Sero Learning Pty Ltd in terms of which Sero was appointed as a “co-provider” to deliver the college’s online courses. Sero therefore operated a distance campus, enrolled students and delivered the college’s courses to them. Successful students would receive a qualification issued by the college.

179    By November 2014, Ms Edwards had noticed a number of anomalies in the data and records from Sero that she and her team were reviewing. These included that there was a sudden increase in the number of enrolments due to external marketing by Sero yet there were not many entries in the communications logs to show contact between Sero and the students. [C149/9]

180    The Sero campus was accordingly audited using a tool developed by the college for auditing the college’s campuses referred to as a Campus Health Check (CHC). Ms Edwards stated that the purpose of the audits were to identify areas of improvement and training opportunities. [C149/10] She also accepted that the audits could identify risks to the interests of consumers. [T538:32-44]

181    The Sero CHC report, which Ms Edwards said was prepared on or immediately after 27 November 2014, identified a number of issues. [C150/14] Relevantly, they included the following: [D999-1001]

(1)    Sero needed to monitor its marketing agents in relation to the information related by them to potential students, such as in relation to the cost of courses.

(2)    Although language, literacy and numeracy (LLN) testing of prospective students was mandatory, the marketing agents were conducting the testing at enrolment with it thus being questioned whether the students completed the LLN tests themselves.

(3)    In contrast to the college’s own campus driven withdrawal policy, Sero was progressing students past their first census date “without proper contact”. Even where three unsuccessful attempts to contact a student had been made, they were not put on “hold” and no campus driven withdrawal process was implemented.

(4)    Data indicated that consumers enrolled in Sero’s distance campus had very poor progress rates and engagements rates compared to consumers enrolled in the college’s own distance campus. These low rates resulted in the assessment area of “student progress” being given a risk rating of “extreme”.

182    The data indicated that 260 out of Sero’s 307 students (i.e., 84.7%) who had passed their first census date and therefore incurred a VFH debt had never accessed their learning management system (LMS). [D1056] In contrast, only 52 of the college’s 245 students (i.e., 21.2%) had passed their first census date but never accessed their LMS. [D1060] Also, only 2.3% of Sero’s students were reported as having completed at least one unit of competency in the course, whereas 12.6% of the college’s consumers had done so. [Same references]

183    Follow-up by the college following the Sero CHC, on 5 December 2014 identified post-audit action that included that students should not be processed through the first census unless their LLN tests had been completed and marked, all 260 students who had passed the first census date but never accessed the LMS should be contacted and that the “campus withdrawal process must be acted on”. [D1062]

184    On 15 December 2014, a meeting was held between senior college staff, including Mr Cook and Ms Edwards, and senior executives of Site, including Blake Wills and Mr Dawson. The minutes record that Mr Cook reported on the Sero CHC including Sero “not doing campus driven withdrawals and just processing through census regardless” and identifying that with the college’s own “rigorous QA process” with its “centralised QA point with the Admissions Team”, the students would never have been put through. [D1105]

185    On 17 December 2014, a meeting of the Advisory Board of Captain Cook College & Site Institute was held. It was attended by, amongst others, Mr Cook, Mr Dawson and Blake Wills. The minutes record that Mr Cook reported on the Sero CHC including by tabling a draft report. [D1163] Ms Edwards joined the meeting for this item. There was a “thorough discussion” following which it was resolved that Mr Cook would further investigate potential breaches by Sero and report findings to the Advisory Board at subsequent meetings.

186    It is submitted on behalf of Blake Wills that it was not established in evidence which document was the draft report referred to in the minutes and that it cannot therefore be concluded that Mr Wills was sufficiently informed to know what was meant by campus driven withdrawals. Although the document was not specifically identified, as a matter of logic it can only be the CHC report discussed at [181] or the post-audit action report discussed at [183] above. Both those reports make the position quite clear. But in any event, if Mr Wills was paying any attention to the substance of the “thorough discussion” which is minuted as having taken place, which in the absence of any evidence from him to the contrary must be inferred, there could have been no relevant confusion with regard to what a campus driven withdrawal is – it is unilateral action taken by the college to withdraw a student who should not be enrolled.

187    Mr Cook’s report to the meeting of the Advisory Board on 18 February 2015 included further follow-up in relation to the Sero CHC. It was minuted that Mr Makar identified that the college faced a long-term risk if students who had not accessed any online resources nevertheless incurred a debt, with which Mr Cook agreed. [D1986]

188    The relevance of the above events in relation to Sero is that they demonstrate the awareness of not only the college but also the Advisory Board (including Mr Wills for Site) of the importance of a rigorous QA process with respect to enrolments to ensure that unsuitable students are not enrolled and a campus driven withdrawal process to ensure that if unsuitable students are enrolled they are withdrawn prior to incurring a VFH debt. It was apparent from the Sero experience that there was a risk of substantial numbers (or proportion) of students being enrolled who would be uncontactable by the college, who would get no benefit from their enrolment and who would incur a VFH debt unless there was a campus driven withdrawal process. The events also demonstrate that, at least at that time, the college implemented a process of campus health checks, or audits, in respect of its various campuses which identified weaknesses and how they were to be addressed.

J.2    Course advisor misconduct

189    Ms Edwards explained that between 2014 and 2016 her Corporate Services team was responsible for maintaining a Complaints Register. The register was intended to record every complaint that was made to the college that was initiated by a student. The staff member who received the complaint was responsible for reporting on the complaint and the outcome of the complaint to Ms Edwards’s team, who would update the register. [C158/48] There was also an Agent Issues and Complaints Register (AICR) which Ms Edwards was responsible for maintaining. [T497:45-498:1] Ms Edwards acknowledged that there may have been other complaints relating to the college or the CAs that were not recorded in the registers. [T498:28]

190    The complaints registers will be considered in more detail below in considering steps that the college took to investigate and act on complaints about CAs. They are relevant for present purposes because of what they reveal about the knowledge of the relevant college staff about the misconduct of CAs, and hence about the risk of CA misconduct.

191    The Complaints Register included complaints, during the earlier period that raised issues concerning misleading conduct by a CA regarding the provision of laptops, a CA telling a consumer she would pay nothing because she was on Centrelink and not earning $53,000 per annum, and a CA assisting a consumer to complete the PEQ. The AICR included complaints, during the earlier period, that raised issues concerning the potential completion by CAs of PEQs, a CA being “pushy” throughout the enrolment process, a CA claiming that the online courses were all funded by the NSW Government including provision of a free laptop and iPad upon completion of the course, a CA recruiting customers outside a Centrelink office promising an increase in the student’s Centrelink payments and a free laptop and failing to disclose the cost of the course or that a VFH debt would be incurred. Details of the latter complaint were circulated by email in February 2015 to Mr Cook, Mohammed Akbery, Blake Wills and other senior college employees. [D1355-1357]

192    The risk of CAs completing prospective students’ PEQs for them was identified during the distance campus CHC in March 2015 as “Agents still doing the quiz – quiz needs to be scored differently”. [D1404] The CHC report also recorded that “Admissions have identified ‘blatant’ incidents of Agents completing pre-enrolment quiz”. [D1412] The notes identifying these problems were sent to Mr Cook and Ms Edwards. [D1403] Mohammed Akbery accepted that the notes would also have been sent to him. [T662:4-11]

193    On 19 March 2015, Mr Cook received a pro-forma circular email from the Assistant Minister for Education and Training with the subject line “VET VEE-HELP Update”. The purpose of the circular was to advise VFH providers of changes that the government was making to the VFH scheme over the course of 2015. It was stated that the “changes have proven necessary as a result of unethical behaviour by a small group of approved registered training providers, along with agents and brokers who have been engaged to recruit potential students under the scheme”. It was also said that the “new arrangements will be critical in protecting students and taxpayers as well as the reputation of the entire national vocational education and training sector”. [D1511]

194    The email would certainly have brought to Mr Cook’s attention that there was a risk that unscrupulous agents and brokers might engage in unethical behaviour in recruiting students. However, Mr Cook might also reasonably have concluded that the changes that the government was introducing to the scheme would alleviate that risk, at least to a significant extent.

195    The ACCC drew attention to the minutes of a meeting of the Distant Campus Management and Leadership Team on 13 May 2015 where, in relation to the college, a discussion of conversion, or attrition, rates is minuted. [D2316] The conversion rate reflects the proportion of students who, having enrolled, proceed through first census. [T660:22] In the context of identifying the reason why the conversion rate was only 50%, the following was recorded in the minutes of the meeting: “Misleading info – most thought course was 12 months.” [D2316] Mohammed Akbery accepted that he knew at that time that there was a real risk that CAs would give misleading information to students about the courses and about the VFH scheme. [T661:18-25]

196    On 20 October 2014, a training and quality manager at the college, June Dunleavy, circulated an email to, amongst others, Ms Edwards, Mohammed Akbery, Mr Cook and Mr Carson. [D1035] The email references an article from an ABC News 24 television program which, according to the email, drew attention to poor practices in RTOs with regard to the VFH scheme – the name of the attached file was “Training colleges securing thousands in government funds by targeting people with disabilities”. Ms Dunleavy said in her email that she was sure that the addressees were “across the simmering issues associated with Vet FEE HELP”, that “anecdotal evidence suggests that we are not immune to some of these practices occurring in our network based on staff feedback at different campuses”, and that she would like to ensure that the college had mechanisms in place “to ensure all of our agents comply with the required standards” which would “involve tightening up the on boarding process”. Ms Dunleavy noted that “the risk factor for us is extreme”. This is another instance of the relevant personnel at the college being aware of the risk of CA misconduct.

197    Similarly, on 26 February 2015, Jamie Wills, an employee of Site, sent an email to Blake Wills, Mr Cook, Vernon Wills and Mr Carson, attaching a link to a transcript of a report about a VET provider referred to as “CAG” on the 7.30 Report, a regular ABC television program. [D1346] Blake Wills replied to all the addressees saying that the report “emphasises the requirement to follow up any misdemeanours or indiscretions of CAs with rigour and haste”. He also referenced a particular report of CA “indiscretion”.

198    On 16 June 2015, Blake Wills circulated a set of board papers for a meeting of the Advisory Board the following day. [D2364] The list of attachments to the email indicates that amongst the circulated papers was the second interim report, dated June 2015, of the Senate Education and Employment References Committee inquiry into “Operation, regulation and funding of private vocational education and training (VET) providers in Australia”. [D2497] That report documented “aggressive marketing techniques” used by VET providers and their brokers, including “promises of free equipment such as laptops and tablets upon signing up for courses, and a failure to disclose costs”. [D2505] There were suggestions that some providers had indicated that courses were free, and had not disclosed the VFH debt that would be incurred. This indicates that the attention of the Advisory Board, including Mr Cook and Mr Wills, was being drawn to the problems and risks of CA misconduct.

199    The Senate inquiry had been a topic of discussion at Advisory Board meetings prior to circulation of the second interim report. For example, on 12 May 2015 board papers were circulated for a meeting of the Advisory Board the following day. [D2163] Amongst the papers it was reported that “one of our staff members” had made a submission to the Senate inquiry but that the college was not mentioned or referred to in the submission. [D2251] The minutes of the meeting reflect that that issue was then discussed at the meeting. [D2369/3.3] Attendees at the meeting included Mr Cook and Mr Wills. [D2367]

200    In a report by Mr Cook that he sent to Mr Wills, Mr Dawson and Mr Makar on 20 August 2015, Mr Cook recounted that in late 2014 and early 2015 there had been “intense media scrutiny of the sector” and that “unscrupulous behaviour” by co-providers and sales agents had required a focus on “consumer protection, quality control and identity verification”. He also acknowledged that there was a need to ensure that “the appropriate measures are in place to ensure the quality of our services, and the protection of our customers”. [D3239, D3242]

201    During the course of 2015, the government had announced and implemented reforms to the VFH scheme, as discussed at [193] above. Some of the reforms were directly and expressly addressed to the problem of CA misconduct, such as the banning of the provision of inducements and the requirement imposed on VET providers to have written agreements with their sales agents, and for those agreements to include particular terms concerning agents’ conduct and the monitoring of agents by VET providers. The government published explanations of and guidance regarding those reforms through the HELP newsletter published in July 2015 and in the addendum to VET Administrative Information for Providers that was first published in July 2015. [D2651, D2882] These publications were received by Mr Cook, Mohammed Akbery and Ms Edwards, among other college staff, and Mr Cook also sent the July version of the Addendum to Mr Wills and Mr Dawson saying that it “has some significant implications for our business, our marketing partners, and the business of our competitors” and that he thought it appropriate to bring it to their attention “ASAP”. [D2881, D2932, D2978]

202    On 20 September 2015, Vernon Wills sent an email to Mr Cook which referenced growing media intensity around a VET provider referred to as Phoenix because of a police investigation into some of its agents. Vernon Wills said that “it is very clear we need to take all steps necessary to prevent hiring of poor quality or dishonest agents” and that “the Minister is making it very clear he will strike out mischievous, and dishonest agents and those who have or do use unethical practices”. [D3662] Mr Cook, in replying to that email, copied it to Mr Dawson, Blake Wills, Mr Makar, Mohammed Akbery, Khaled Akbery and Ms Edwards. [D3661] Vernon Wills replied to Mr Cook, copying all the other addressees, in which he stated that there was “significant commercial risk” from “unethical agents”. [D3661]

203    Ms Edwards accepted in evidence that she was aware, throughout 2015, that there was a risk that CAs would not act in a compliant manner in their interactions with consumers, in the sense of failing to explain course costs and that a VFH debt was involved, or telling consumers they would get a free laptop. [T486:23-T487:15] She was also aware that there was a risk that CAs would prefer their own immediate financial interest ahead of complying with their obligations to the college. [T487:36-38] Mohammed Akbery’s evidence was that one of the problems that the college identified from time to time was that agents would “unduly pressurise” consumers to become enrolled, or promise them some form of inducement which was prohibited such as that they would be given a free laptop. [T654:11-35] He was also aware that that risk was more likely if the agent was present during the QA call, and that it was less likely that agent pressure would be picked up by the admissions staff if the agent was present during the QA call. [T655:18-25]

204    The evidence identified above establishes that all the key personnel at the college, and Blake Wills at Site, were well aware that there was an ongoing risk of CA misconduct and that that misconduct could significantly harm the interests of substantial numbers of consumers. The harm included that consumers might be enrolled as students even though they were unsuitable or not genuinely interested in doing the course for which they were enrolled, or had in some way been tricked, deceived or confused into enrolling.

J.3    Unsuitable enrolment risk

205    In August 2014, Mohammed Akbery gave a PowerPoint presentation to the college’s leadership team. [C102 [82]; D312] In his presentation, Mr Akbery identified that it is “critical students understand VET FEE-HELP and enrolment process” and that during the outbound QA calls checks are undertaken as to whether the students understand the pre-enrolment information and whether they recall the answers that they gave in the PEQ. [D316, 321]

206    In November 2014, in an email from Mr Cook to Ms Edwards prior to the Sero CHC Mr Cook identified the importance of monitoring the engagement of students with the college and their courses between intake and the first census. [D1040] Ms Edwards confirmed that this was an indicator of whether the student had been suitable for enrolment in the first place. [T605:41-43] The email noted the importance of students’ understanding of the financial implications of enrolment and communication with students.

207    As dealt with above in the discussion of the enrolment process in the earlier period (see [152]ff), amongst the reasons for requiring the submission of the enrolment form and PEQ to the admissions office, and the outbound QA call from the admissions office, was to check that the college was not making unsuitable enrolments. This also serves to demonstrate an awareness on the part of the college of the risk of unsuitable enrolments.

208    In that regard, Mohammed Akbery’s evidence is that he was aware, throughout his time at the college, of the risk that consumers who were unsuitable for an online course because, for example, they had poor LLN skills or an intellectual disability, would seek enrolment. [T655:27-41; T657:30-35] Such students, who were unsuitable for enrolment, might seek enrolment either because they were confused or ill-informed, or because of CA misconduct.

209    The Senate inquiry second interim report referred to above (see [198]-[199]) and circulated to the Advisory Board meeting in June 2015 reported that a number of issues had been repeatedly raised which showed the risk of unsuitable enrolments. These included insufficient information being provided to students to allow students to make fully informed decisions prior to signing up for courses, language and/or literacy barriers that led to students either signing up for courses without properly understanding the terms and conditions and/or courses not being appropriate for their language/literacy level, and inadequate screening processes for students. [D2506]

210    An illustration of how the risk of unsuitable enrolment was tested during the enrolment process, and which accordingly demonstrates the awareness of the college of that risk, was in relation to a particular problem in March 2015. In an email from Ms Jokhoo to Mr Cook, Ms Edwards and Mohammed Akbery, attention was drawn to a case of a potential new distance student who had not passed the PEQ, which was described as “the LLN indicator at the admissions QA point”. The student could not tell the admissions staff – apparently during the outbound QA call process – the course costs and duration or VFH information, which was identified as a “RED FLAG”. Although the student said that she had completed the PEQ, when admissions staff re-questioned her she answered all the questions incorrectly. [D1829]

211    The minutes of the meeting of the Distance Campus Management and Leadership Team on 13 May 2015 record that there was discussion about whether the college was “enrolling the wrong students to start with” and that it was necessary “to make LLN quiz ‘agent proof’ so they are not doing them for the student”. [D2261] The meeting was attended by, amongst others, Ms Edwards and Mohammed Akbery. [D2259]

212    An internal audit of the college was undertaken on 20 and 21 May 2015. The auditor identified as an opportunity for improvement that the college “consider formally introducing a step in the enrolment process that undertakes a review of the learner’s pre-existing skills and knowledge, work experience, RPL potential, credit transfer potential and mode of delivery that best suits their individual needs”. [D2383, D2384]

213    In August 2015, Neville Coward, the quality and compliance manager at Site, sent an email to Khaled Akbery which was copied to Mr Makar and Blake Wills. The subject matter of the email was “Information developed for Internal Audit rectification”. By the email, Mr Coward circulated certain documents that he had developed, including instructions for the admissions team. Those instructions included: [D3270, D3277]

The LLN Test must be used in conjunction with the Pre-Enrolment Evaluation for the relevant course. It is the combination of both tools that will guide advice to the applicants as to their suitability or capacity and capability to undertake the relevant Diploma.

214    In August 2015, the Department further updated the VET Administrative Information for Providers booklet. [D3048] The update was emailed to Mr Cook, Ms Edwards and Mohammed Akbery on 3 August 2015. [D3047] Ms Edwards sent it on to Mr Dawson at Site on 4 September 2015. [D3516] The update, in the section dealing with barriers to withdrawal, set out a relevant extract from the VET Guidelines, being paras 4.8.1 to 4.8.6. [D3068] Those paragraphs detail the obligations on a VET provider to allow a student to withdraw before a census date. Thereafter, there is a “frequently asked questions” section which includes the FAQ and answer referred to above (at [174]) which states the Department’s expectation that if students could not be contacted and/or they had not participated in the unit before the census date, a provider would cancel the enrolment to avoid the student incurring the debt. [D3069]

215    Ms Edwards’s evidence was that it was highly likely that she would have read the document shortly after receiving it, and that it was highly likely that before she implemented any change to the withdrawal policy and the enrolment procedure at the college she would have read the most up-to-date administrative information for providers. [T510:19-30] She also said that she regarded it as her obligation to seek to comply with the expectations of the DET as regards the operation of the VFH scheme. [T507:13-24] Mohammed Akbery’s evidence was that given that his role included compliance, it was likely that he would have read the document carefully. [T635:32-42] In relation to the specific question and answer referred to above, Mr Akbery accepted that he would have read it at the time but that he did not remember reading it. [T636:26-40; T639:41-T640:2]

216    Ms Edwards accepted in evidence that if a student was not in contact with the college, they would not be getting any support from the college or any benefit from their course. [T483:14 – T484:6]

217    Both in relation to Sero and the distance campus, the college was able to retrieve data from its student management system and its LMS system to check the degree of engagement of students by reference to how many students were accessing the LMS. This was done for the Sero CHC and the distance campus CHC where the percentage of enrolled students who had never accessed their course content in different time periods from when they were enrolled was specifically calculated. [D1056, D1060, D1402, D1404-9] This demonstrates that the college recognised that whether or not consumers were actually engaging in their online courses was an important indicator of their suitability to be enrolled and to be incurring VFH debts.

218    Senior counsel for the ACCC got Ms Edwards in cross-examination to agree that there was an “overrepresentation”, compared to “what one would expect in a community more broadly”, of students from disadvantaged backgrounds at the distance campus and amongst the enrolments referred by CAs at the distance campus. [T480:29-T481:15] The ACCC submits that I should make such a finding. However, there is no standard against which I can conclude that there was an “overrepresentation” of disadvantaged students. Even if there was some way of comparing that representation to the community more broadly, which I am doubtful of because of the difficulty in defining or identifying the relevant community for the comparison, that would not justify the conclusion that that representation was “overrepresentation”.

219    As identified above (at [12]), the liberalisation of the VFH scheme was for the express purpose of addressing low participation rates from identified demographic groups which might broadly be characterised as “disadvantaged” – a higher proportion of students from such backgrounds could be said to indicate only that the college was enrolling students whom the government had intended would be offered access to such opportunities: see Unique at [234]. Thus, any “overrepresentation” of that demographic is an unhelpful point of analysis and is not an indicator of unsuitable enrolment.

220    The evidence identified above demonstrates that during the earlier period the college was well aware of the risk of unsuitable students being enrolled in their courses, and the need to take steps to mitigate that risk. Blake Wills was also aware of this risk from, at least, the discussion of the report in the Advisory Board on 12 May 2015, circulation of the Senate inquiry report by him on 16 June 2015, or Mr Coward emailing Mr Wills about the internal audit in August 2015.

J.4    Low conversion rates due to uncontactable students

221    There is reference above (at [195]) to a meeting of the Distance Campus and Leadership Team on 13 May 2015, whose attendees included Mr Cook, Ms Edwards and Mohammed Akbery, at which there was discussion of conversion and attrition rates. [D2315-6] It was recorded that the current conversion rates to first census was 50%, but that the college was aiming for 70%. In his evidence, Mohammed Akbery accepted that a significant reason for the relatively poor conversion rate was campus driven withdrawals, in particular because a significant proportion of the students at the college were not contactable. [T660:32-37] It will be recalled that the trigger for a campus driven withdrawal was if the student was not contactable. Mohammed Akbery accepted that he knew that if campus driven withdrawals were abolished, the non-contactable students would simply pass through census dates and incur debt and additional debt. [T660:42-43]

222    It is obvious, and it was accepted by Ms Edwards, that if a student was not engaged with their course by not logging in to the LMS and they were not contactable by the college they could receive no assistance from the college and no benefit from their enrolment. [T483:36-39] Also, if there was no campus driven withdrawal they would pass through the first census and incur a VFH debt, in return for which they would have received nothing. Moreover, the figures show that a significant number of students were not engaged in the courses and were uncontactable and were consequently withdrawn through the campus driven withdrawal process, which is what led to the poor conversion rate. These factors demonstrate that the college was aware that if the campus driven withdrawal process was abolished that was likely to lead to a significant increase in the number of unengaged and uncontactable students passing through first census and incurring VFH debt.

223    It is not established on the evidence that Mr Wills was necessarily aware that the poor conversion rate was because of the high proportion of students who were uncontactable and who were therefore subject to campus driven withdrawal.

J.5    Concern about the college’s poor financial performance and its causes

224    Mr Cook’s CEO report for the Advisory Board meeting on 15 April 2015 drew attention to the first and second census conversion rates having reduced in recent months and that early indications were that new enrolments for April 2015 were lower than previous months. [D1991, D2165] His report for the Advisory Board meeting on 13 May 2015 also drew attention to a general drop in numbers and to “a significant decrease in numbers” for the distance campus. [D2172, D2179] The figures for the distance campus showed a significant increase in the number of students passing the first census month to month in the period August to November 2014, then some stability in the period December 2014 to March 2015 and a significant drop thereafter.

225    On 22 June 2015, Mr Dawson, Site’s CFO, sent an email to Site’s directors and to Blake Wills attaching board papers for a Site board meeting the following day. [D2563] The papers included a budget report for the 2016 financial year, which recorded that it had been prepared “at a business unit level”, each of Site’s different colleges being treated as separate business units with the college being one of them. The college’s budgeted revenue for the 2016 financial year was reflected as $18,100,000 and its budgeted EBITDA (that is, earnings before interest, taxes, depreciation and amortization which is a proxy for profit) as $4,144,000. Those figures reflected 39% and 61% of the overall figures for the consolidated group and were substantially more than any other business unit. Indeed, the EBITDA for the college was nearly two and a half times higher than that for the next highest earning business unit. [D2604]

226    Specifically in relation to the college, in the 2015 financial year revenue had decreased by 8% and EBITDA by 2%. [D2608] It was recorded that in “recent months trading” there had been “some head winds to the business growth that was forecast throughout FY15”.

227    On 23 June 2015, Mr Wills sent the budget report to Mr Cook with the comment, “as discussed we have some big targets to make for August”. [D2623]

228    It is clear that the performance of the college was very significant to the performance of Site overall, and that the performance of the college would have been of key concern to Mr Wills. The documents indicate that Mr Wills called for monthly financial reports from each of the business units, including the college, within 48 hours of receipt of the monthly financial results. [D2341]

229    On 26 June 2015, Mr Wills sent an email to, amongst others, Vernon Wills, Mr Dawson and Mr Cook, attaching business unit reports for May 2015. [D2643] The business unit report for the college recorded the following: [D2645-6]

Revenue Commentary

Revenue continues below expectations due to lack of volume from agent channels. L2E is maintaining volume but external agents are not performing to expectations.

EBITDA Commentary

Revenue generated is below expectations. Business expenses are currently geared to accommodate greater revenue, but lower than expected volume means we are not achieving EBITDA targets. This is the third month in a row like this.

…

Expected Performance Next Month

I think June should be better than the last three months in that we should return to profitability, but I am not convinced we will hit our budgeted revenue or EBITDA number, given the changes in market conditions and referral channels since our budgets were set. We have implemented some strategies around retention which should lift our C2 revenue which should help, and our enrolment numbers have lifted throughout the numbers at our CCC and Co-Provider Campus, however our Site Institute branded facilities continue to underperform.

230    At the college’s Management Meeting on 15 July 2015, Mr Cook was minuted as reporting that although June had been a much better month the “main concern” was the next month because “L2E are going well but other agents have not been performing.” It was also minuted in respect of the CEO report, “All across Government changes”, which I infer is a reference to the changes to the VFH scheme introduced by the government in July 2015. I take the entry in the minutes to mean that Mr Cook reported that he, or the college, was abreast of the changes to the scheme and was making any necessary changes to its own practices. [D2817-8]

231    The minutes of the meeting also record the following: [D2819]

[Mr Cook] discussed automating census 2, 3, 4. During the Sero investigation we tightened our withdrawal policy and there were too many campus withdrawals so now we have tweaked that to allow for automated census processing within compliance.

232    Blake Wills was minuted as being present and as having discussed the FY16 budget and saying “each business unit has their budget they need to work to”. [D2819]

233    Mr Wills’s COO’s written report to the Site board meeting dated 20 July 2015 reported, in relation to the college, that the Assistant Minister had continued “to introduce a number of changes to the operation of the VFH industry including improved student disclosure and capability to withdraw prior to census (which some providers hinder).” [D2834] This indicates Mr Wills’s familiarity with the VFH reforms that the government was introducing during 2015, and the reasons for them.

234    On 14 August 2015, Mr Carson sent an email to Khaled Akbery and Ms Jokhoo complaining about the number of CAs he was losing “due to this convoluted online enrolment procedure that we have had” which the CAs say “is THE most difficult out of all the RTO’s they have worked for.” He said that he would not be able to achieve his targets “if this keeps up” and that Ms Jokhoo had mentioned that work is being done on “a simpler, more straightforward method of my guys enrolling and I have to say it couldn’t come sooner.” He asked that that be expedited and given top priority. He ended by saying that they had had their worst week in sales for months and cannot afford to lose one more CA. [D3140]

235    Khaled Akbery then forwarded the email to Mr Cook. [D3140]

K.    THE CATALYSTS FOR CHANGES TO THE ENROLMENT PROCESS

K.1    Papers for the Management Meeting on 19 August 2015

236    Early on 18 August 2015, an agenda and papers were circulated for a Management Meeting for the college to be held at 8.00 am the next day. [D3145] The papers were sent to, and the agenda indicated that the attendees were expected to be, amongst others, Mr Cook, Mr Carson, Mohammed Akbery, Ms Edwards, Mr Makar and Blake Wills. [D3146] The papers included Mr Cook’s CEO’s report. [D3148] The report stated: [D3149]

Please note we have been receiving feedback from our agents regarding our enrolment process. Khaled and I met with marketing to finalise a new enrolment process, see attached flowchart. Rollout of the new enrolment process will commence 4th September.

237    In respect of the college, Mr Cook recorded: “Numbers are slow, conversion rate is low due to the enrolment process.” [D3149]

238    The “attached flowchart” that Mr Cook referred to in his report was an attachment to the email along with the other papers for the meeting – it had the filename “Enrolment Process Flowchart.pdf”. It is submitted on behalf of Mr Wills that he did not receive it, but I reject that submission. He was an addressee of the email and an attendee at the meeting. If he had not received it one would have expected him to call for it at the time, of which there is no evidence that he did not, and for him to have gone into evidence to say as much, which he did not.

239    The flowchart indicated changes to the enrolment process including the following. First, the QA call would be initiated by the CA to the college’s admissions office rather than being initiated by the admissions office to the student as had previously been the position. Secondly, once the QA call had been completed, “the student is to pass through Census unless there is a student driven withdrawal”. That is to say, campus driven withdrawals would be abolished. [D3147]

240    In the early afternoon on 18 August 2015, Mr Dawson circulated his CFO report to the same people to whom the other papers for the Management Meeting the following day had been circulated. [D3192] The report recorded that for the month of July 2015, and hence also for the financial year to date, the college’s income was only 65% of the budgeted income and its EBITDA was only 14% of its budgeted EBITDA. [D3194]

241    In the late afternoon on 18 August 2015, Mr Cook sent the college’s monthly report for July to Mr Wills. [D3200] The report recorded that revenue continued to be below expectations due to lack of enrolments from CAs, that CAs had provided feedback regarding the college’s current enrolment process, and that the feedback was being fed into a revised enrolment process scheduled to be implemented from 4 September 2015. [D3201] The report identified that one of the strategies to increase revenue was the “revised enrolment process scheduled for release on Sept 4”, and that one of the ways to mitigate the risk to revenue was the “revised enrolment process”. [D3203]

242    By that point it was apparent to the key officers of the college that declining enrolments, which was negatively affecting revenue and EBITDA, and feedback from CAs that the enrolment process was too cumbersome – and from which I infer it was also less lucrative to the CAs – were key drivers for the revised enrolment process that was being developed. In short, the idea was to enable consumers to be enrolled as students more quickly and easily at the time that they were recruited by CAs, and to ensure that they passed through census in greater numbers by abolishing a significant contribution to attrition, namely campus driven withdrawals.

243    Mr Wills also had knowledge of those matter through the delivery of reports to him which he must be taken to have read and understood due to his key interest in the performance of the college, his responsibility on behalf of Site to oversee the college and his membership of and participation in the Advisory Board. These are not matters of detail that might be thought to have escaped Mr Will’s attention or to have been beneath his level of interest. They are important strategic issues which I infer that he would have been well alive to.

K.2    Emails between Mr Cook and Ms Edwards on 18 August 2015

244    Later on 18 August 2015, there was an important email exchange between Mr Cook and Ms Edwards. [D3205-6] The first email was from Mr Cook. The email relevantly included the following:

Our current enrolment procedure is not competitive in the industry.

Our attrition from Lead to Start date and Start date to C1 has increased significantly over time, and this has resulted in many of our contracted agents (including some L2E) ceasing to refer students to the college. This is not sustainable.

All of our agents are calling for a more streamlined enrolment process to match that of our competitors to restore our required volume.

Khaled has been conducting a thorough investigation of our competitors [sic] enrolment process, and during this exercise he has identified a number of opportunities that could be introduced to our current enrolment process to reduce our attrition rates and bring our agents back to the table.

…

Just so you know where I stand:

I need to have a compliant enrolment process that is competitive with others in my industry so I can regain market share.

I do not have this at the moment.

…

(Emphasis in the original.)

245    Ms Edwards’s reply relevantly included the following:

I also want a compliant enrolment process that is profitable and also agree that we don’t have this at the moment. To date there has been no mention of not having an option to withdraw a student if we don’t hear from them after they enrol in a course.

I agree with the VFH changes that a cooling off period is essential for students from the enrolment date to ensure they are protected and going through full charges of the course if they never contact us from day 1. …

Khaled informed me this morning that it is your decision to see the withdrawal process changed and when I spoke to Moh [i.e., Mohammed Akbery] he reiterated that your [sic] were astounded that if we can’t contact students now before the census 1 date that the campus does a campus driven withdrawal. Although this has always been our policy and is most critical for distance because the campus can’t build a relationship with the student to determine they are suitable for the course.

I understand things have to be streamlined and am all for that but the QA process needs to be rigorous to support the onboarding of students who are ABLE and WILLING to do the course. The ABLE bit is the area that I am worried about when in the past I have been the only one between an LLN tool getting cut completely. They are responsible for the willing I agree. But we are responsible for the able.

… when I spoke to Khaled there was no mention of the change to the withdrawal policy until I asked the right question to which he wanted to move on quickly. …

246    Ms Edwards accepted in evidence that at that time she fully understood that the then current enrolment procedure’s lack of competitiveness in the industry, which resulted in many of the CAs ceasing to refer students to the college, was the primary reason for introducing the changes to the enrolment and withdrawal process. [T588:36-42] She also accepted that at that time she knew that the campus driven withdrawal process had been a critical safeguard to ensure that unsuitable students did not pass the first census date and thereby incur VFH debt. [T589:39-41] It is also apparent that Ms Edwards thought that the campus driven withdrawal process was a very important element of the enrolment process and that it should not be abolished.

247    Ms Edwards drew particular attention to the importance of the campus driven withdrawal process for the distance campus because “the campus can’t build a relationship with the student to determine they are suitable for the course”. Her email acknowledged that they were getting substantial numbers, or at least a substantial proportion, of students enrolling in the distance campus who were unsuitable and who should not be enrolled. The campus driven withdrawal process was critical in filtering those students out prior to first census, and thus prior to them incurring a debt, but Mr Cook and Mr Akbery’s commitments to driving up enrolments weighed against that protective filter being maintained.

248    Ms Edwards’s email also acknowledged the importance of the QA call process in ensuring that only willing and able consumers were recruited. There is an underlying concern to her email that by the process being “streamlined” through the proposed changes, the QA process would be less “rigorous”, i.e., the protections it provided would be weakened.

K.3    Management Meeting, 19 August 2015 at 8.00 am

249    A Management Meeting was held at 8.00 am on 19 August 2015. The attendees included Mr Cook, Mohammed Akbery, Mr Carson, Ms Edwards (by phone), Mr Dawson and Blake Wills. Mr Wills chaired the meeting and was its “facilitator”. [D3601] The minutes record that Mr Cook’s CEO’s report was tabled and “confirmed as read”. In respect of discussion on the report, it was recorded that Mr Cook: [D3602]

advised we are getting feedback from agents that our enrolment process is too complex and slowing down conversions significantly. Currently in the process to streamline the process with a rollout date of 4th September.

250    In respect of Mr Carson’s L2E report, it was minuted that the campus targets were discussed and that Mr Carson was confident “once this new enrolment process is streamlined numbers will grow and previous CA’s will re-join the team.” [D3602]

251    In respect of Mr Wills’s COO’s report, it was minuted that Mr Wills discussed that the college’s competitors had, amongst other listed advantages, “better admissions process” and advised that “we are in a declining state, what [scil., that] needs to be changed.” Various other matters were minuted, including that Mr Wills “acknowledged we have projects in place and we are actively attempting to lift our product.” [D3604]

252    Also under Mr Wills’s COO report, after the minute of the discussion, the following was recorded: “Action: Project Plan in place by end of the week.” (Emphasis in original.) [D3604]

253    Despite the flowchart reflecting the proposed enrolment process changes having been circulated to the attendees the previous day, there is no indication in the minutes that the flowchart, or the particular details of the enrolment changes, were discussed. The minutes are quite detailed, which suggests that the omission of those topics from the minutes means that they were not discussed.

254    The ACCC submits that at the Management Meeting a decision was made in principle to proceed with the changes to the college’s enrolment and withdrawal processes. In support of that submission Ms Edwards’s evidence is relied on, to which I will return, and it is submitted that such a conclusion is consistent with the nature and function of the Management Meetings, namely to oversee the operation of the college and to make high-level or strategic decisions about its operations.

255    Ms Edwards’s evidence was relevantly as follows. First, it was suggested to Ms Edwards that it is likely that at that meeting the decision was made to proceed with the changes to the enrolment and withdrawal process as set out in the flowchart, to which Ms Edwards twice replied “I don’t remember”. [T582:12-20] Secondly, Ms Edwards’s attention was drawn to the invitation to the Enrolment/Admissions process meeting which was scheduled for 10.00 am on the same day, dealt with further below. The invitation stated that it was “to finalise revised enrolment/admissions process”. On the basis of that, it was suggested to Ms Edwards that “it’s likely that at the 8:00am management meeting the decision was taken to implement revised enrolment admissions processes, the details of which were to be finalised at the later meeting that day”. [T582:43-46] Objection was taken to that question on behalf of Mr Wills whereafter a discussion ensued in the absence of the witness. When the witness returned, her attention was again drawn to the invitation to the Enrolment/Admissions process meeting and this exchange then took place whereafter no further questions were addressed on the topic: [T585:10-17]

Now, all I’m putting to you is that there was – on this record, there appears to have been one meeting at 8 o’clock and the second meeting at 10 o’clock. Having looked at that, does that jog your memory as to whether or not a decision in principle to proceed with the enrolment and withdrawal process changes was taken at the management meeting at 8 am?---Yes.

256    The ACCC’s reliance on that exchange as evidence of the decision having been taken at the Management Meeting is misplaced. The evidence establishes that Ms Edwards’s memory was jogged by the documentary record, but it does not establish what that memory was; it does not establish that Ms Edwards recalled that the decision in principle to proceed with the enrolment and withdrawal process changes was made at the Management Meeting.

257    It is noteworthy that the agenda for the meeting, which was circulated with the papers for the meeting the previous day, indicated in respect of each of the circulated documents whether they were for approval, for discussion or for noting. [D3146] Mr Cook’s report, to which the enrolment process flowchart was annexed and which referred most clearly to the changes to the enrolment process, was reflected as being for discussion and not for approval. Also, the minutes do not record any decision in relation to the enrolment process other than that there was to be a “Project Plan by the end of the week”. That clearly referred to a broader project than just enrolment and withdrawal process changes, although from the preceding discussion it would appear to certainly include such changes. The word choice of a “Project Plan” by the end of the week does not suggest that a plan was adopted which was to be implemented by the end of the week, but rather that further planning for later implementation was required.