FEDERAL COURT OF AUSTRALIA
NSD 2059 of 2018
Date of judgment:
2 July 2021
CONSUMER LAW – unconscionable conduct – statutory unconscionability under s 21 of the Australian Consumer Law – systemic unconscionability – meaning of unconscionability – unconscionable in all the circumstances – where a system weakened safeguards to consumers in order to increase enrolments at a vocational education and training (VET) college – where the system was compared to the system that existed prior to its implementation – where the college did not cancel the enrolment of consumers in online VET courses it had not had any contact with before the census date which triggered the payment of fees by the Commonwealth and a debt by the consumer to the Commonwealth – where numbers and revenue increased dramatically – where significant numbers and proportion of students had no contact with the college and gained no value from enrolment but incurred substantial debts
CONSUMER LAW – misleading and deceptive conduct and representations under s 18 and 28 of the Australian Consumer Law – misleading or deceptive conduct in trade or commerce – false or misleading representations about goods or services – where college provided online VET courses and engaged recruiters to market its courses direct to consumers – whether recruiters made misleading or deceptive representations to specific consumers – where free laptops offered as inducement to enrol – where true cost of enrolling misrepresented
CONSUMER LAW – unsolicited consumer agreements under ss 69, 78-79 of the Australian Consumer Law – whether enrolment of consumers in online VET courses was by way of “unsolicited consumer agreements” – whether consent was given by consumers – threshold for consent to receive documentation – unsolicited consumer agreements and certain requirements regarding the agreement and its contents – formation of unsolicited consumer agreement
CONSUMER LAW – “knowingly concerned” under s 224 of the Australian Consumer Law – requirements with regard to knowledge and participation – where the fourth respondent was COO of the second respondent, which owned all the shares in the first respondent, was also acting CEO of the first respondent – whether the fourth respondent was knowingly concerned in the conduct of the first respondent
CONSUMER LAW – conduct “on behalf of” a body corporate under s 139B of the Competition and Consumer Act 2010 (Cth) – whether knowledge and conduct of the fourth respondent to do with the first respondent, the college, including as its acting CEO is attributed to the second respondent of which he was COO – attribution of conduct of an officer or employee of a subsidiary to a parent company – whether conduct of external recruiters is attributed to the VET college – conduct of an authorised class
Competition and Consumer Act 2010 (Cth) ss 84(1), 84(2), 139B, Sch 2 (Australian Consumer Law) ss 18(1), 21, 29, 69, 78, 79, 224
Evidence Act 1995 (Cth) s 50
Higher Education Support Act 2003 (Cth) ss 104-20, 137-18, Sch 1 cl 1, Sch 1A cll 43, 46, 51, 55, 64, 67, 91, 99 National Vocational Education and Training Regulator Act 2011 (Cth) ss 185(1), 186(1)
Competition and Consumer Regulations 2010 (Cth) reg 85
Explanatory Memorandum, HES Amendment (Streamlining and other measures) Bill 2012 (Cth)
Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth)
ACCC v Australian Institute of Professional Education Pty Ltd (in liq) (No 3)  FCA 1982
ACCC v Cornerstone Investment Aust Pty Ltd (in liq) (No 4)  FCA 1408
ACCC v Geowash Pty Ltd (subject to a deed of company arrangement) (No 3)  FCA 72; 368 ALR 441
ACCC v Get Qualified Australia Pty Ltd (in liq) (No 2)  FCA 709;  ATPR 42-548
ACCC v Quantum Housing Group Pty Ltd  FCAFC 40; 388 ALR 577
ACCC v TPG Internet Pty Ltd  HCA 54; 250 CLR 640
ACCC v Unique International College Pty Ltd  FCA 727
Adams v Director of the Fair Work Building Industry Inspectorate  FCAFC 228; 258 FCR 257
Adler v ASIC; Williams v ASIC  NSWCA 131; 46 ACSR
Ali v ACCC  FCAFC 109
Allergan Australia Pty Ltd v Self Care IP Holdings Pty Ltd  FCA 1530
APRA v Kelaher  FCA 1521; 138 ACSR 459
Ashbury v Reid  WAR 49
ASIC v ActiveSuper Pty Ltd (in liq)  FCA 342; 235 FCR 181
ASIC v Australia and New Zealand Banking Group Ltd  FCA 1284; 139 ACSR 52
ASIC v Australian Investors Forum Pty Ltd (No 2)  NSWSC 267; 53 ACSR 305
ASIC v Geary  VSC 779; 342 ALR 1
ACCC v Coles Supermarkets Australia Pty Ltd  FCA 634; 317 ALR 73
ACCC v IMB Group Pty Ltd  FCAFC 17
ACCC v Lux Distributors Pty Ltd  FCAFC 90; ATPR 42-447
ACCC v TPG Internet Pty Ltd  FCAFC 130; 381 ALR 507
ASIC v Kobelt  HCA 18; 267 CLR 1
Blomley v Ryan  HCA 81; 99 CLR 362
Burt v Australia & New Zealand Banking Group Ltd (1994) ATPR (Digest) 46‑123
Butcher v Lachlan Elder Realty Pty Ltd  HCA 60; 218 CLR 592
Campomar Sociedad Limitada v Nike International  HCA 12; 202 CLR 45
Commercial Bank of Australia Ltd v Amadio  HCA 14; 151 CLR 447
Consolo Ltd v Bennett  FCAFC 120; 207 FCR 127
Director of Consumer Affairs Victoria v Scully  VSCA 292; 303 ALR 168
Fair Work Ombudsman v Priority Matters Pty Ltd  FCA 833
Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd  FCA 167; 2 FCR 82
Google Inc v ACCC  HCA 1; 249 CLR 435
Jenyns v Public Curator (Qld)  HCA 2; 90 CLR 113
Jones v Dunkel  HCA 8; 101 CLR 298
The Juliana (1822) 2 Dods 504
Kakavas v Crown Melbourne Ltd  HCA 25; 250 CLR 392
Kraft Foods Group Brands LLC v Bega Cheese Ltd  FCAFC 65; 377 ALR 387
Leighton Contractors Pty Ltd v CFMEU  WASC 144; 154 IR 228
Lisciandro v Official Trustee In Bankruptcy  FCA 1527; ATPR ¶41-436
Lloyd v Belconnen Lakeview Pty Ltd  FCA 2177; 377 ALR 234
Louth v Diprose  HCA 61; 175 CLR 621
Meridian Global Funds Management Asia Ltd v Securities Commission  2 AC 500
NMFM v Property Pty Ltd v Citibank Ltd (No 10)  FCA 1558; 107 FCR 270
NRM Corporation Pty Ltd v ACCC  FCAFC 98
Paciacco v Australia & New Zealand Banking Group Ltd  FCAFC 50; 236 FCR 199
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd  HCA 44; 149 CLR 191
Pereira v Director of Public Prosecutions  HCA 57; 82 ALR 217
Perre v Apand Pty Ltd  HCA 36; 198 CLR 180
Pioneer Mortgage Services Pty Ltd v Columbus Capital Pty Ltd  FCAFC 78; 250 FCR 136
Pittmore Pty Ltd v Chan  NSWCA 344
Qantas Airways Ltd v TWUA  FCA 470; 280 ALR 503
R v Tannous (1988) 10 NSWLR 303
Rafferty v Madgwicks  FCAFC 37; 203 FCR 1
Stefanovski v Digital Central Australia (Assets) Pty Ltd  FCAFC 31; 368 ALR 607
Termite Resources NL (in liq) v Meadows  FCA 354; 370 ALR 191
Tesco Supermarkets Ltd v Nattrass  AC 153
Thorne v Kennedy  HCA 49; 263 CLR 85
Trade Practices Commission v Australia Meat Holdings Pty Ltd  FCA 338; 83 ALR 299
Trade Practices Commission v Tubemakers of Australia Ltd  FCA 99; 47 ALR 719
Unique International College Pty Ltd v ACCC  FCAFC 155; 266 FCR 631
Walplan Pty Ltd v Wallace  FCA 479; 8 FCR 27
Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd  HCA 6; 54 CLR 361
Yorke v Lucas  HCA 65; 158 CLR 661
Young Investments Group Pty Ltd v Mann  FCAFC 107; 293 ALR 537
Dal Pont G, The Law of Agency (3rd ed., LexisNexis, 2013)
New South Wales
National Practice Area:
Commercial and Corporations
Regulator and Consumer Protection
Number of paragraphs:
Solicitor for the Applicant:
Johnson Winter & Slattery
Counsel for the First and Second Respondents:
J Giles SC and R Davies
Solicitor for the First and Second Respondents:
Counsel for the Fourth Respondent:
M Hodge QC and C Schneider
Solicitor for the Fourth Respondent:
HWL Ebsworth Lawyers
SITE GROUP INTERNATIONAL LTD ACN 003 201 910
DATE OF ORDER:
2 july 2021
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.
B. THE VET FEE-HELP SCHEME
C. THE ACCC’S SYSTEMIC UNCONSCIONABILITY CASE
D. APPLICABLE LEGAL PRINCIPLES
D.1 Statutory unconscionability: s 21 of the ACL
D.1(a) Statutory unconscionability per se
D.1(b) Systemic unconscionability
D.2 False, misleading or deceptive conduct and representations: ss 18 and 29 of the ACL
D.3 Unsolicited consumer agreements: ss 69, 78-79 of the ACL
D.4 Knowingly concerned: s 224 of the ACL
D.5 Conduct on behalf of a body corporate: s 139B, of the Competition and Consumer Act
E. THE KEY PEOPLE
F. THE WITNESSES
G. BACKGROUND TO THE COLLEGE
H. RECRUITMENT BY COURSE ADVISORS
I. THE EARLIER PERIOD: ENROLMENT AND WITHDRAWAL PROCESSES
I.1 Enrolment process
I.2 Campus driven withdrawals
J. THE EARLIER PERIOD: RELEVANT EVENTS
J.1 Sero campus health check
J.2 Course advisor misconduct
J.3 Unsuitable enrolment risk
J.4 Low conversion rates due to uncontactable students
J.5 Concern about the college’s poor financial performance and its causes
K. THE CATALYSTS FOR CHANGES TO THE ENROLMENT PROCESS
K.1 Papers for the Management Meeting on 19 August 2015
K.2 Emails between Mr Cook and Ms Edwards on 18 August 2015
K.3 Management Meeting, 19 August 2015 at 8.00 am
K.4 Enrolment/Admissions process meeting, 19 August 2015 at 10.00 am
K.5 Distance Campus Management & Leadership Team Meeting, 19 August 2015 at 1.00 pm
K.6 Mr Cook’s report of 20 August 2015
L. SUMMARY OF POSITION AT THE END OF THE EARLIER PERIOD
M. THE RELEVANT PERIOD: ENROLMENT AND WITHDRAWAL PROCESSES
M.1 Inbound QA call
M.2 Abolition of the campus driven withdrawal process
N. THE RELEVANT PERIOD: CONSEQUENCES OF THE PROCESS CHANGES
N.1 September 2015
N.2 October 2015
N.3 November 2015
N.4 Candice Stevens
N.5 Jo Solly
N.6 December 2015
N.7 Summary of increased income and EBITDA, July – December 2015
N.8 January – March 2016
N.9 April 2016 and thereafter
O. COMPLAINTS HANDLING AND CA MONITORING
O.1 Looma investigation
O.2 Umair Butt investigation
O.3 Adil Ganchi investigation
O.4 Ramesh Gaire investigation
O.5 Walgett investigation
O.6 Harpreet Kaur (or ‘puppet art’) investigation
P. LOGIN AND COMMUNICATION DATA
P.1 Mr O’Donnell’s analysis of communication with students
P.2 Ms Thompson’s analysis of enrolments, fees and engagement
P.3 Summary of findings on login and communication data
Q. CONCLUSIONS ON THE SYSTEM CASE AGAINST THE COLLEGE
R. WAS MR WILLS ‘KNOWINGLY CONCERNED’ IN THE IMPUGNED CONDUCT?
R.1 The case against Mr Wills
R.2 Mr Wills’s overall role
R.3 Mr Wills’s knowledge and involvement
R.4 Conclusion on Mr Wills being knowingly concerned
S. SITE’S KNOWING INVOLVEMENT
T. INDIVIDUAL CONSUMER COMPLAINTS
T.1 Consumer A
T.2 Consumer B
T.3 Consumer C
T.4 Consumer D
T.5 Consumer E
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  FCAFC 155; 266 FCR 631 (an appeal from ACCC v Unique International College Pty Ltd  FCA 727), ACCC v Cornerstone Investment Aust Pty Ltd (in liq) (No 4)  FCA 1408 (Empower) and ACCC v Australian Institute of Professional Education Pty Ltd (in liq) (No 3)  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)  FCA 709;  ATPR 42-548 and ACCC v Acquire Learning & Careers Pty Ltd  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 -). 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:
 … 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.
 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.
 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
(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 ) 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 ) 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 ) 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 ) 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 -) 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 ) 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 ) 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 ) 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  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  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 ) 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  FCAFC 50; 236 FCR 199 at , 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 ) 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 ) and Keane J (at ), in both instances with reference to Kakavas v Crown Melbourne Ltd  HCA 25; 250 CLR 392 at  and  respectively and Thorne v Kennedy  HCA 49; 263 CLR 85 at , 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 . Kiefel CJ and Bell J also explained (at ) 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 ) 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 ) 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 -) 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  FCAFC 90; ATPR 42-447 at  and , Gageler J (at ) 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 ) 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 ) 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 ) 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 ) 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 ), 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 ) 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 ) 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 ) 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 ) 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 ) reasoned that exploitation or victimisation is a characteristic of statutory unconscionability. This is consistent with his Honour’s reasoning (at ) 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 ) 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 ) 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 , quoted at  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  FCAFC 40; 388 ALR 577 at  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 -) agreed with Gageler J (at ) 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 .
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)  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  FCA 1284; 139 ACSR 52 at  per Allsop CJ; Ali v ACCC  FCAFC 109 at [10)- 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 ) 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 ):
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 , -.
74 In Unique (at -) 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 ):
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 ), 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  FCAFC 98 at - per Flick, Murphy and Griffiths JJ.
D.2 False, misleading or deceptive conduct and representations: ss 18 & 29 of the ACL
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  FCA 1530 at - 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  FCA 634; 317 ALR 73 at  per Allsop CJ; ACCC v TPG Internet Pty Ltd  FCAFC 130; 381 ALR 507 (TPG FCAFC) at  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 , citing Google Inc v ACCC  HCA 1; 249 CLR 435 at ,  and  and Campomar Sociedad Limitada v Nike International  HCA 12; 202 CLR 45 at -. 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 , citing ACCC v TPG Internet Pty Ltd  HCA 54; 250 CLR 640 (TPG HCA) at . Conduct causing confusion and wonderment is not necessarily coextensive with misleading or deceptive conduct: Google at ; Campomar at .
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  FCA 167; 2 FCR 82 at 87 per Bowen CJ, Lockhart and Fitzgerald JJ; Butcher v Lachlan Elder Realty Pty Ltd  HCA 60; 218 CLR 592 at  per McHugh J; TPG FCAFC at [22(a)].
85 It is not necessary to prove an intention to mislead or deceive: Yorke v Lucas  HCA 65; 158 CLR 661 at 666 per Mason ACJ, Wilson, Deane and Dawson JJ; Google at . 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 .
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 ; see generally TPG HCA at ; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd  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 -; Kraft Foods Group Brands LLC v Bega Cheese Ltd  FCAFC 65; 377 ALR 387 at  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 , citing Campomar at . See also Google at ; Kraft at .
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 . However, it is unnecessary to prove that the conduct in question actually deceived or misled anyone: Google at .
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:
(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.
78 Requirement to give document to the consumer
(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:
(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  FCAFC 107; 293 ALR 537 at  per Emmett, Bennett and McKerracher JJ. However, it is not necessary that the person knew that those matters constituted a contravention: Rafferty v Madgwicks  FCAFC 37; 203 FCR 1 at  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)  NSWSC 267; 53 ACSR 305 at - per Palmer J; ASIC v ActiveSuper Pty Ltd (in liq)  FCA 342; 235 FCR 181 at  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  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  FCA 2177; 377 ALR 234 at  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  FCAFC 31; 368 ALR 607 at  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 -; Ashbury v Reid  WAR 49 at 51; Trade Practices Commission v Australia Meat Holdings Pty Ltd  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  WASC 144; 154 IR 228 at  per Le Miere J; Qantas Airways Ltd v TWUA  FCA 470; 280 ALR 503 at - per Moore J; Fair Work Ombudsman v Priority Matters Pty Ltd  FCA 833 at - per Flick J; Termite Resources NL (in liq) v Meadows  FCA 354; 370 ALR 191 at  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)  FCA 72; 368 ALR 441 at :
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  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  FCAFC 17 at .
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 -). The result is that the issues raised here were not addressed by the Full Court: Ali v ACCC  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  FCAFC 17 at . 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.
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
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 .
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  AC 153 and Meridian Global Funds Management Asia Ltd v Securities Commission  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  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  FCA 1527; ATPR ¶41-436 at 40,903-40,904 per Kiefel J; NMFM v Property Pty Ltd v Citibank Ltd (No 10)  FCA 1558; 107 FCR 270 at  per Lindgren J; Pioneer Mortgage Services Pty Ltd v Columbus Capital Pty Ltd  FCAFC 78; 250 FCR 136 at - 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:
 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].
 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.
 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 …
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.
 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
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  /A96  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  VSC 779; 342 ALR 1 at  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  FCA 1521; 138 ACSR 459 at  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  HCA 8; 101 CLR 298. In Adler v ASIC; Williams v ASIC  NSWCA 131; 46 ACSR 504 at  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  FCAFC 228; 258 FCR 257 at  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 , 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.
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]
(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  or the post-audit action report discussed at  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  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 ; 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 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 -) 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 ) 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 ), 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 . 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 ) 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 continues below expectations due to lack of volume from agent channels. L2E is maintaining volume but external agents are not performing to expectations.
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
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.
258 It is also to be noted that Mohammed Akbery said in his affidavit that the redesign of the college’s enrolment process was called “Project TBA”. At 1.00 pm on 24 August 2015, there was a meeting of the leadership of the college (i.e., not including Site officers such as Mr Wills and Mr Dawson) about “Project TBA” for the “breakdown and allocation of tasks to be completed for the launch of the new enrolment process on 4th September.” [D3244] Shortly before 3.00 pm, i.e., apparently after the meeting, Khaled Akbery circulated a “Project TBA – Project Plan” to the attendees as well as Mr Makar, Mr Bassett, Mr Guy and Mr Coward of Site. The attached plan listed a number of different principal elements including the enrolment portal, LLN, QA call, admissions process, withdrawal policy, external agents, and so on, with each then having a number of sub-elements. Adjacent to each sub-element it was identified who was responsible for it, who it had to be approved by and what the due date was. [D3267-8] These events on 24 August 2015 suggest that there was no adoption of the details of the enrolment process changes on 19 August 2015.
259 In the circumstances, I do not consider that there was a decision at the Management Meeting to adopt the details of the enrolment process changes. In broad terms, the proposed changes were reported to the meeting and some discussion took place as reflected in the minutes. In particular, it was reported, and presumably accepted, that the process changes were expected to play an important role in alleviating the straitened financial position of the college. There is also no reason to suppose that attendees at the meeting did not expect that the proposed enrolment changes would be implemented as that was the implication of Mr Cook’s report. I find that there was a common understanding, or expectation, of the attendees at the meeting that subject to further details still to be worked on the enrolment changes would be implemented, but not that they consciously decided or resolved to implement those changes.
260 The minutes record that the meeting was closed at 10.36 am. [D3604]
K.4 Enrolment/Admissions process meeting, 19 August 2015 at 10.00 am
261 There was another meeting on 19 August 2015 which was scheduled for 10.00 am. Presumably it started late given that the Management Meeting did not end until 10.36 am, there is considerable overlap in the attendees of the two meetings, and the Management Meeting minutes do not record anyone to have left it early. The electronically generated meeting invitation for the 10.00 am meeting reflects the organiser as being Khaled Akbery, the subject to be “Enrolment/Admissions process”, the purpose to be “Discussion to finalise revised enrolment/admissions process”, and the attendees to include Mr Cook, Mohammed Akbery, Ms Edwards, Mr Carson and Ms Jokhoo. [D3144] Mr Wills and Mr Makar were not invitees. The metadata to the calendar invitation shows that it was generated at 9.02 am on 18 August 2015, i.e., well before the Management Meeting that immediately preceded the Enrolment/Admissions process meeting. [Ex C1]
263 The presentation opened with the headline question, “Why do we need changes?”. [D3219] In seeking to answer that question, the presentation noted that RTOs rely on a steady supply of students and that at the college 90% of students are sourced by CAs. [D3220] It was noted that CAs have a choice in a saturated market, and that the college needs quality CAs because the quality of CAs also reflects the quality of students. [D3222] Of the three factors that were identified as affecting CAs’ choice of RTO, the enrolment process was one which was also identified as a reason why third-party agencies were “directing volume towards other RTO’s”. [D3223]
264 The next headline question was, “What is required?”. [D3224] The answer to that question was given as: “A streamlined enrolment process that is competitive enough to regain market share.” Then followed a review of the current enrolment process, identifying that it has two stages, namely application (from lead to offer) and post-application (from offer to census). [D3225] In the application stage, problems that were identified included that too much pre-enrolment information was given to agents and students such that it became overbearing. [D3226] In the post-application stage the identified problems included the delay between the application and the QA call because at the time of the application the student generally has free time whereas it is difficult to find further free time for the QA call thereafter. [D3228]
265 Problems were then identified with the QA call itself including that it involves the “quizzing of pre-enrolment information rather than provision of pre-enrolment information” because of which “students are flagged and are therefore required to complete the LLN prior to census” and “when students have computer/access issues it makes it difficult to complete the LLN prior to census”. [D3229] This indicates that although the QA call was being used as a quality assurance mechanism, as its name implies, this was regarded as a problem because if the call revealed that for one reason or another the student was not (yet) appropriate for enrolment that might result in them not passing through census. That in turn would mean that the college would not earn the student’s tuition fees, the student would not incur a VFH debt, and the CA would not be rewarded for their work.
266 The presentation then identified that there were at that time “a number of unnecessary barriers to pass through census”. [D3230] The barriers were identified as causing significant attrition between application to CAN which was causing dissatisfaction amongst CAs.
267 The following were then identified as being required: that the pre-enrolment information and quiz are merged, that the agent is able to call the admissions office as soon as the application is complete to give the agent the ability to “close out the sale before walking out the door”, and that there be “a policy update to remove the number of barriers to CAN”. [D3231] It was identified that the revised “instant” QA call (i.e., inbound rather than outbound) with a “simpler pre-enrolment information/quiz format … will cause less [sic] students to be unduly mandated an LLN before census”. [D3237]
268 The principal “barrier to CAN” that had at that time been identified was the campus driven withdrawal process. That is apparent from the email exchange between Mr Cook and Ms Edwards the previous evening. On that basis I infer that the reference to “a policy update to remove the number of barriers to CAN” was a reference to the abolition of the campus driven withdrawal process.
269 There is a point of contention with regard to whether Mr Wills attended the Enrolment/Admissions process meeting. As indicated, Mr Wills was not an invitee to the meeting on the calendar invitation. However, Mohammed Akbery’s affidavit evidence put Mr Wills at the meeting as follows:
(1) Mr Akbery said that on 19 August 2015, he attended a Management Meeting with Mr Cook, Mr Carson, Ms Edwards, Mr Beachley, Mr Dawson and Mr Wills. That was clearly the meeting at 8.00 am. [C114/134]
(2) Mr Akbery said that “later that day” he attended the Distance Campus Management and Leadership Team Meeting with Mr Cook, Mr Beachley, Ms Jokhoo and Brenda McCaskill. I will return to that meeting. It occurred in the afternoon. [C114/136]
Around this time, I attended a meeting with [Mr Cook, Khaled Akbery, Ms Edwards, Mr Beachley, Mr Wills and Mr Makar]. Khaled presented to the meeting on proposed changes to [the college’s] enrolment process. A copy of the presentation is at pages 459-479 of the Exhibit.
270 The presentation referred to is the PowerPoint presentation that I have discussed above (at -). That was presented at the Enrolment/Admissions process meeting that had been scheduled for 10.00 am.
271 When Mohammed Akbery was called to give evidence at the trial in June 2020 he was asked, in chief, whether he wanted to make corrections to his affidavit that he had signed in August 2019, to which he said “yes”. [T610:21] After making a few other corrections, this exchange then took place: [T610:42 – T611:3]
Now, what – what is the correction that you wish to make to that paragraph?---I don’t have any recollection of that meeting.
I take it you recall the presentation there referred to?---Yes.
Yes. But not the meeting sitting there today?---Yes.
272 Mr Akbery was cross-examined about his paragraph 138 and the further evidence that he had given about not remembering the meeting. Relevantly, the following exchanges took place:
DR STERN: But – and sorry to push you on this, but sitting here now you don’t know, do you, clearly what you did or didn’t recall in August 2019 when you signed up to this?---Well, the difficulty in the affidavit process is I don’t remember the genesis of this paragraph. Now, whether this came about because it was referenced in an email or a meeting, I’m not sure. When I was reading my affidavit last week this paragraph in particular, I couldn’t remember this happening. I don’t remember the genesis of this paragraph when the affidavit was executed on 9 September or whenever it was, sorry. So I had a conversation with Mr Giles and he said we can make an amendment. [T612:19-27]
So surely you accept that the likelihood is or that the most likely explanation for your including paragraph 138 in your affidavit in the first place was because it was your actual recollection?---I disagree.
Well, you haven’t referenced any document as supporting that paragraph. So surely you accept that the genesis of that paragraph is no particular document?---Yes.
So isn’t the only other explanation for why you would have included that in your affidavit that it was something that you actually recalled at the time that you were preparing and finalising your affidavit?---I disagree.
Well, what other possibility is there as to the genesis of that paragraph, Mr Akbery? --- I’ve thought about it and I would be speculating. I’m not sure is the honest answer.
HIS HONOUR: But the point, Mr Akbery, you can’t now in June 2020 remember that meeting that’s referenced in that paragraph. Is that right?---No.
And surely you can’t now remember what you could remember at the time that you signed your affidavit?---No. [T613:22-41]
273 There are three possibilities to the source of information as to who attended the meeting: Mr Akbery’s recollection, a particular document, or the person who drafted the affidavit for Mr Akbery. Mr Akbery was only able to positively discount a document as being the source, and he was unable to either confirm or deny the other two possible sources. Such documentary evidence as there is, being the calendar invitation, suggests that neither Mr Wills nor Mr Makar were at the meeting although it is, of course, inconclusive in as much as it only indicates who was invited to the meeting by that particular invitation, and not who might have been separately invited or who attended it. It is certainly not beyond the bounds of realistic possibility that when Mr Cook, Mohammed Akbery and Mr Carson transitioned from the Management Meeting to the Enrolment/Admissions process meeting, Mr Wills and Mr Makar transitioned with them.
274 Mr Akbery’s affidavit evidence is too infirm a basis to conclude that Mr Wills and Mr Makar were at the Enrolment/Admissions process meeting. There is no documentary evidence to suggest that they were there, and Mr Akbery’s recollection of the meeting in 2015 and who was at it, both in 2019 when he signed the affidavit and in 2020 when he gave evidence, is obviously unreliable.
275 Ms Edwards is the other witness in the case who was at the meeting. She did not deal with it in her evidence in chief (adduced by way of affidavit). In cross-examination she was asked at some length about Mr Akbery’s PowerPoint presentation, but she was not asked who was at the meeting or to whom the presentation was made. [T585:19-T587:41] That may be because at that stage Mr Akbery’s evidence of who was at the meeting had not yet been corrected, but after it was corrected no application was made to recall Ms Edwards to ask her what she remembered about who was at the meeting. That may be because her memory of the presentation was poor. [T585:31-2, T587:12-14] In any event, her evidence is of no assistance on whether Mr Wills was at the meeting.
K.5 Distance Campus Management & Leadership Team Meeting, 19 August 2015 at 1.00 pm
276 There was a meeting of the Management and Leadership Team on 19 August at 1.00 pm. The agenda for the meeting recorded that it was to be attended by, amongst others, Mr Cook, Mohammed Akbery, Mr Beachley and Ms Jokhoo. Ms Edwards was an apology. [D3212] The minutes do not record who was present. Mohammed Akbery’s affidavit gives a list of attendees which is the same as the list in the agenda. [C114/136] Ms Edwards’s evidence does not deal with the meeting. That may be because on the face of it she did not attend it.
277 The minutes of the meeting, under the finance agenda item, record the following: [D3213]
Conversion rate for C1’s is low, 30/67. Too many WD statuses, we need to remove the barriers to pass through COECAN. HO is in the process of streamlining our enrolment process and this will include one QA call to get the student enrolled in one step.
K.6 Mr Cook’s report of 20 August 2015
278 Although it does not appear in the minutes of the meetings on 19 August 2015, Mr Cook apparently regarded there to have been an “action item from yesterday’s leadership meeting” to circulate a report “outlining the actions underway to address the underperformance of [the college] in July 15.” This much appears from an email that he sent to Mr Wills, Mr Dawson and Mr Makar on 20 August 2015 under cover of which he circulated the report and said that he would circulate it to his leadership team in a separate email. Given whom he circulated the report to with a reference to “yesterday’s meeting”, implying that the addressees were at the meeting or otherwise expected him to circulate the report, it is most probable that the “action item” arose out of the 8.00 am Management Meeting. [D3239]
279 The report circulated by Mr Cook commences by identifying that in July 2015 the college recorded an EBITDA result of only 14% of the budgeted amount. The report then records that “the situation has prompted Productivity Partners Management to undertake an urgent review of our operations in an attempt to turn around the developing trend of underperformance.” The report references a review of the college’s competitors that had been undertaken by the COO, i.e., Mr Wills, that had highlighted a number of common themes within those organisations that had been identified as currently outperforming the college. Amongst seven identified themes were “Excellent Sales/Admission Process” and “Strong Sales Culture”. [D3240]
280 Each of the seven themes was then discussed in relation to the college, with the sections on “Excellent Sales/Admission Process” and “Strong Sales Culture” including the following points, relevantly: [D3242]
Excellent Sales/Admission Process (Live Chat, Enquiry/Enrolment Forms etc.)
Current State: Underperforming. Feedback from referral partners is current process is not competitive in the marketplace, and referral partners are sending volume to alternative providers as a result. Current review of enrolment process underway to ensure we are competitive in marketplace yet remain compliant. Revised enrolment process scheduled for go live on 4th September in conjunction with new website.
Strong Sales Culture
Current State: Underperforming. While a strong sales culture exists within our Internal Sales Team, 3rd Party Agents, and our most profitable campuses, there remains some sections of the business where a strong sales culture is lacking. This can be attributed in part to the events of 2014/early 2015 where additional controls where mandated by the regulator, intense media scrutiny of the sector was occurring, and unscrupulous behaviour by 3rd party co-providers and sales agents required a focus on consumer protection, quality control and identity verification. While management is aware of the need to ensure that the appropriate measures are in place to ensure the quality of our services, and the protection of our customers, we do need to encourage a strong sales culture at the same time.
L. SUMMARY OF POSITION AT THE END OF THE EARLIER PERIOD
281 In summary, by September 2015 senior staff at the college, namely at least Mr Cook, Ms Edwards and Mohammed Akbery, were aware, within the course and scope of their work for the college, of the CA misconduct risk and the unsuitable enrolment risk as pleaded by the ACCC. They were aware that the prospect of identifying CA misconduct on a QA call which entailed the CA being present with the consumer at the time was lessened. The college’s officers knew, in addition, that the abolition of campus driven withdrawals would remove an important safeguard against both CA misconduct risk and unsuitable enrolment risk with the result that increased numbers and proportion of consumers would be enrolled and incur a VFH debt who would get no benefit from their enrolment. All that knowledge can be ascribed to the college.
282 Mr Wills also had knowledge of all those matters. See ,  and  above. It is not established on the evidence that Mr Wills, unlike the college’s officers, 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 (see  above). The evidence also establishes that Mr Wills was a key driver of change to the college’s enrolment and withdrawal processes because of the college’s worsening financial position. He was certainly aware that the enrolment and withdrawal processes were going to be changed, and I infer that he was aware of the essential elements of those changes, namely the change from an outbound QA call to an inbound call in the presence of the CA and the abolition of campus driven withdrawals before first census. That is the most probable inference to be drawn from the reports to the Management Meeting on 19 August 2015, the discussions at that meeting and Mr Wills’s responsibility for, and proven involvement in, oversight of the college as a business unit including for planning and accountability. It is also consistent with what he himself on more than one occasion described as reduction of the college’s autonomy from Site and its increased integration since June 2015. See  and  below.
283 The documentary evidence also shows Mr Wills’s involvement in the details of some of the process changes. For example, he was copied in on discussion about the details of changes to the enrolment portal and the PEQ in the period 20-24 August 2015 which was when the changes were being finalised after the meetings on 19 August. [D3248-3265]
284 The enrolment and withdrawal process changes were clearly driven by an analysis on the part of the college and Mr Wills. The college’s enrolment and withdrawal processes were seen as uncompetitive in the market in the sense that CAs were insufficiently motivated to recruit for the college as opposed to for its competitors. That in turn meant that the college’s levels of enrolment were far lower than had been expected and on which the college’s budget had been prepared. There was a strong financial driver to the changes as Site had the expectation that the college should meet its budgeted revenue and EBITDA. Although a number of changes were investigated and adopted other than the enrolment and withdrawal process changes that this case focuses on, the evidence shows that there was a dominant concern to “streamline” the enrolment processes and increase the conversion rate so as to better incentivise CAs. It is those concerns that lead, respectively, to the enrolment and withdrawal process changes.
M. THE RELEVANT PERIOD: ENROLMENT AND WITHDRAWAL PROCESSES
285 The revised enrolment and withdrawal processes were “live” and effective from Monday 7 September 2015. [D3510, D3551, D3556] The material changes are apparent from Mr Cook’s report to the Management Meeting on 19 August 2015 referred to above (at ), the flowchart prepared by Mohammed Akbery in response to a s 155 notice from the ACCC, and the 1 September 2015 version of the college’s distance campus admissions manual for 2015. [D3147, D79 and D3667]
286 There were two principal changes to the procedures. First, the outbound QA call procedure was abolished and replaced with an inbound QA call. Secondly, the campus driven withdrawal procedure was abolished.
M.1 Inbound QA call
287 The new enrolment process was operated through a new online enrolment portal, thus doing away with hardcopy enrolment applications. The portal contained enrolment documents, which, once completed, were uploaded to the college by the portal. The documents comprised an enrolment form, a request for VFH assistance and a PEQ.
288 Once the documents were uploaded, the CA who had recruited the student and either overseen or assisted them completing and uploading the forms, would call the admissions office in order that the inbound QA call could be conducted.
289 In a memorandum from Mr Buonora to Khaled Akbery on 10 September 2015, it was said that it was expected that at the completion of the inbound call, 90% of students would pass through census. Resourcing needs were based on an assumption that each call would last five minutes and that there would be a maximum waiting time of five minutes. It was recorded that the admissions office had received formal notification and training of the new process on 4 September 2015, and that the L2E team had received formal notification and training on the new process on 7 September 2015. [D3560, D3704]
290 The inbound QA call was conducted according to a script set out in an “Admissions Checklist” and the admissions manual. [D3553, D3669] There was a small variation, or “fine tuning”, of the script by Mr Buonora on 16 September 2015. [D3647-3651] What follows is a description of the process as it was after that refinement.
291 If the CA was present with the student, the first part of the call would be with the CA who was required to give the name of the student. This would enable the admissions office team member to locate the relevant enrolment documents online and then confirm to the CA that the application for enrolment had been received. Thereafter, the CA would be asked to put the student on the call.
292 Once the student was on the line, the admissions office team member would confirm the student’s name, date of birth and contact details. The student would then be asked whether they had completed the PEQ on their own. If the answer reflected what was characterised as a “major issue”, for example that the agent had completed questions 1 to 7 or “PEQ result negative”, then a particular process was required. However if only a “minor issue” was identified, the next steps of the process towards enrolment would be followed. The script identified, as examples of minor issues, answers from the prospective student such as “I don’t remember” and “agent helped me understand a word/question”. The implication is that if a student’s answer to the question “Did you complete the Pre-Enrolment Quiz on your own?” was “I don’t remember” they would be progressed further towards enrolment. That is self-evidently a very low standard, or no standard at all, for testing whether the PEQ answers were genuinely the answers of the prospective student.
293 It is not apparent what “PEQ result negative”, as one of the examples of a “major issue”, meant. Presumably questions 1 to 7 were marked or scored by the admissions team member, although it may have been an automated process as the available answers were provided in drop-down menus for the student to choose, and if too low a score was obtained then the result was considered “negative”, but what score was too low is not apparent on the evidence. [D6143] The corporate respondents submit that the admissions team member “reviewed” the PEQ, but it is not apparent how that was done or that there was any review of the PEQ beyond scoring it in the way I have suggested.
294 The “major issue” process involved advising the student that before their enrolment could be completed they would need to complete a new PEQ without assistance which would be forwarded to them within the next 48 hours. The student would be asked to contact the admissions office once they had completed the new PEQ and their enrolment could then be completed. The “minor issue” process involved a short explanation to the student of the duration and cost of the course as well as the government loan fee that would be added to that cost. The student would then be asked whether they understood and agreed to be enrolled in the course as just described. If their answer was “no”, then the information would be explained again. Otherwise the process would move to the next step.
295 The next steps, which applied to both “major issue” and “minor issue” processes, involved confirming the student’s selected start date for the course and giving the student “Important VET-FEE HELP information”. That information was conveyed in six sentences followed by a statement that it is important for the student to keep up-to-date with the way VFH works and to read the VFH booklet in their orientation pack.
296 The next step was to convey withdrawal information. The script required it to be said to the student that the first census date is the last day that they can withdraw from enrolment without incurring the tuition fees or a VFH debt for the first unit of study. There was then a question whether they understood the withdrawal procedure. A negative answer would presumably lead to further clarification being given.
297 The next step entailed informing the student that an “orientation pack” would be received by them by email which would include their login details to the Learning Management System, and that they should log in and complete their online orientation as per the instructions provided. They would be told that an SSO would be in touch with them on a weekly basis to provide personalised assistance, and they would then be congratulated on their enrolment.
298 The admissions checklist included places to record whether the student had a disability or if they requested extra support, and also to record the assignment of an SSO and a trainer to them. [D3555, D3671]
299 Several recordings of inbound QA calls were tendered. It was apparent on listening to one of the recordings that such a call was principally aimed at confirming the student’s identification and contact information and conveying information to the student about their course and the VFH scheme. The latter information is very limited and replete with acronyms such as VET FEE-HELP and VET which were not explained on the call and assumed prior knowledge. The question “Did you complete the Pre-Enrolment Quiz on your own” was asked, but when the answer “Yes, I supplied the answers” was given there was no follow-up to check that that was correct. [D3655]
300 Another recording was of the inbound QA call for consumer D. [D6190] In respect of that call, consumer D said that she did not understand everything the admissions office woman said because she spoke quite quickly. She said that the officer kept referring to “VET FEE HELP” but she had not heard those terms before and they had not been explained to her. She said “yes” to the question whether she had filled out a loan equipment form but she had not filled that out. She said “yes” because the CA was standing next to her and nodding, prompting her to say “yes” to everything. She was asked if she had filled out a pre-enrolment quiz on her own, to which she answered “yes” even though she had not completed any quiz. [C26/31] Having listened to the call, consumer D was correct in saying that the admissions officer spoke quickly and was difficult to follow.
301 Mr O’Donnell, a forensic investigator called by the ACCC, gave evidence that he was furnished with 45,534 inbound and outbound phone call recordings of which he randomly selected a sample of 50. Of those, all were calls made by an agent to the college and the agent then handed the telephone to the student. In all 50 calls the student confirmed their personal and course details, that they had completed the PEQ themselves, that they agreed to be enrolled in the course and that they understood the withdrawal procedure. [C201-2] This evidence is of limited assistance in assessing the value of the calls, although it does tend to show that the inbound QA calls followed the prepared script.
302 Returning now to the PEQ itself, it contained 14 questions whereas the admissions office team member was required to identify the application as having a “major issue” only if they were told that the agent had completed questions 1 to 7. The first five questions were directed at the student’s understanding of the duration of the course that they had selected and its units of competency, as well as the costs including the VFH loan fee. Questions 6 and 7 were directed at testing comprehension by asking about information in a few paragraphs about recognition of prior learning, credit transfers and academic expectations.
303 There are a number of features of this process that make it materially different from the previous process.
304 First, the QA call was done with the CA present with the student. This means that the admissions team member conducting the QA was not able to be confident that the answers given were indeed the student’s answers and were not influenced or prompted by the CA. Of course, because of the commission structure the CA was heavily invested in the student getting through the QA call successfully.
305 Ms Edwards agreed that the new procedure introduced the risk that the students would not be completing the PEQ themselves. [T554:45] That meant there was greater risk of agent misconduct and of enrolling students who had insufficient LLN skills for the courses for which they were enrolling. [T555:1-7, T590:18-20] There was also the risk that under the influence of the presence of the agent the student would reply “yes” to the question whether they had completed the PEQ themselves [T556:32-34], or that the CA would otherwise dictate what the student would say on the call. [T591:20-21]
306 Mohammed Akbery also accepted that if the CA was present during the call, the risk of the agent pressurising the student was more likely and that the inbound QA call with the CA present meant that it was less likely that the admissions office would be able to pick up that the student had been under pressure from the agent. [T655:11-25]
307 Secondly, the admissions team member would see the enrolment documents for the first time while on the call with the agent and/or the student. They would thus not have the opportunity to examine the enrolment documents in advance and identify any problems or any indicators of unsuitable enrolment. Ms Edwards agreed that the new process meant that the college would no longer have the opportunity to conduct a review of the application form and quiz before the QA call took place. [T590:13-15]
308 Thirdly, the call was not itself designed to be a means of assessing the student’s suitability, but was rather a means of giving limited information and, in a limited way, checking that the relevant part of the PEQ had been completed by the student. For example, it was not part of the script for the admissions team member to test if the consumer knew and understood what they were signing up for. Ms Edwards agreed that there was no part of the process that involved the admissions team member testing the student’s answers to the PEQ. [T556:11-13] That meant that there was an increased risk that the college would not identify if the agent had completed the PEQ. [T556:42-44]
309 It will be recalled (from  above) that one of the problems that had been identified with the previous QA call process was that there had been “further quizzing of pre-enrolment information rather than provision of pre-enrolment information”. It would thus appear to be the case that the new QA call procedure was designed so that it would not be a suitability testing step, but rather only a step to check whether a different suitability testing step, namely the PEQ, had been done by the student. Mr Buonora, who was involved in developing the new script, explained that the questions were deliberately framed to make it easier for the students to answer, with mostly yes/no questions and short answers in relation to the information that was required. [T353:35-37]
310 Mr Buonora agreed to a series of propositions that were put to him by senior counsel for the corporate respondents with regard to what the admissions officer did during the inbound QA call. These included that the admissions officer was required to flag any concern they had about the call or the student by marking the admissions sheet with a pink highlighter and placing it in a particular tray. The admissions sheet would then be given to Sharon Sinclair (Partnership Assistant reporting to the Partnerships Manager, Khaled Akbery) and “the enrolment didn’t happen until whatever the concern was resolved”. [T393:29 – T394:7, D5113] It was not explored what kind of “concern” would trigger that process. With reference to the documented QA call script, this would seem most likely to be a reference to the “major issue” process.
311 Fourthly, the new process meant that a student could become enrolled while never being contactable by the college because the QA call point of contact was initiated by the CA. This is in contrast to the outgoing QA call procedure which had the result that a person could not become enrolled as a student unless they had been contacted at least once by the college, being the admissions call itself. Thus, under the new procedure, and leaving campus driven withdrawals aside, there was a greater risk that uncontactable people would be enrolled as students.
312 Fifthly, unlike the earlier process there was no post-enrolment assessment of LLN capability which, if negative, would lead to withdrawal of the student prior to first census.
313 At the time that the enrolment process changes were introduced, Ms Edwards presumed that they would increase the risk of the college enrolling unsuitable students. [T556:15-19]
M.2 Abolition of the campus driven withdrawal process
314 The abolition of campus withdrawals was announced in the August 2015 Edition 7 of the college’s staff newsletter, Inter Comm: [D3008]
Important Withdrawal Policy and Procedure update!!!
As of Monday 7 September the updated Withdrawal procedures will be live. A major change to the policy is that there will no longer be campus driven withdrawals. It will be the students [sic] responsibility to withdraw before their census date. Please read the release carefully.
315 The abolition was also conveyed by Ms Edwards in an email on 2 September 2015 to all staff at the college as being one of three major changes starting on Monday 7 September. The email stated: [D3513]
No more campus driven withdrawal. It will be the students [sic] responsibility to withdraw after their intake date to not incur VFH assistance. This policy/procedure will be released by the end of this week into the Knowledge Centre. Please read the details carefully.
316 The college’s withdrawal policy was revised as reflected in version 2.2 with a recorded release date of “08/2015”. [D309] The policy set out the only basis for withdrawing a student on or before the census date, and them not incurring a VFH debt, being if the student has withdrawn from the course and not completed the unit of study. The only basis upon which a debt would be re-credited was if the student withdrew from the course, had not completed the unit of study, provided evidence that special circumstances applied, applied in writing to have their VFH balance re-credited, and the college was satisfied that the legislated special circumstances applied. [D311]
317 The new withdrawal procedure only provided for student driven withdrawals on or before first census and stated: “There are no campus driven withdrawals. All withdrawals need to be initiated by the student.” [D303-304] The procedure did however provide that the Campus Manager had the discretion to “cancel” a student’s enrolment status prior to or after a census if they were deemed unsuitable from LLN, academic misconduct or behaviour reasons for the applied course level. [D304] The student not being contactable, or not engaging with the course, were not stated grounds to enliven that discretion.
318 The agendas for the “CCC Campus Management & Leadership Team” and “Distance Campus Management & Leadership Team” meetings on 16 September 2015 recorded under “Head Office Updates” that “Withdrawals Policy/Procedures has been updated – All students will be automatically processed through C1 now as well as C2.” [D3637, D3642] The minutes of the CCC Campus Management & Leadership Team meeting then recorded “FYI – all students will be processed through the Census dates automatically.” [D3638]
319 It is quite clear that the abolition of campus driven withdrawals meant that the Campus Manager, or other relevant staff member, could not initiate the withdrawal of a student on the basis that they were disengaged and/or not contactable. This is illustrated in a particular case where in December 2015 a student raised with someone at the college that she had no idea that she had incurred a VFH debt, did not know what it was, was confused, had no idea what she had signed up for, and was not interested in studying. She had never logged in to the LMS and had remained uncontactable despite several attempts over nearly three weeks. Mr Buonora, the Campus Manager, responded to the case when it was escalated to him in February 2016 saying that he could not approve a campus driven withdrawal due to the college’s policy, that he did not have the “facility to withdraw a student”, and could only cancel an enrolment “once the circumstances are clear”. [D4924-5]
320 In another case in February 2016, an SSO reported that she had been unable to contact a student through email, telephone calls and a letter and asked how the student could be processed other than a withdrawal. Mr Buonora replied saying that “there is no campus driven withdrawal under the rules” and that they needed to keep trying to contact the student. [D4963]
321 Mr Buonora said that the most difficult part of the process changes for him “to comprehend was the withdrawal policy … because it required an active participation from students to say that they wanted to withdraw, and we had a number of students that were not responding to our contacts, and therefore would not be able to withdraw themselves.” [T365:36-40] Mr Buonora explained that there were three criteria for the cancellation of an enrolment, namely medical condition, “moving” and “something to do with work-related”. [T396:46 – T397:4] None of these had to do with being uncontactable or not engaged in the course.
322 Notwithstanding the clear wording of the withdrawal policy and withdrawal procedure which limited the grounds on which a student’s enrolment could be cancelled, in practice there were a variety of circumstances in which enrolments were cancelled. All of those cases, however, depended on the initiative of the student in raising the complaint, and the complaint then having some basis for a conclusion of “special circumstances”, however variably that might have been applied. The point about the abolition of the campus driven withdrawal process was that students were not withdrawn from enrolment, and thereby saved from VFH debt, on the initiative of the college.
323 Mr Akbery accepted that he knew that if campus driven withdrawals were abolished, students who could not be contactable would nevertheless pass through census dates and incur debt and additional debt. [T660:42-43]
N. THE RELEVANT PERIOD: CONSEQUENCES OF THE PROCESS CHANGES
N.1 September 2015
324 It is apparent from the report prepared by Mr Buonora that he sent to Khaled Akbery on 10 September 2015, referred to above (at ), that the new enrolment and withdrawal processes would bring increased enrolments and that the college was paying attention to its resource needs in order to be able to deal with them. [D3560]
325 On 13 September 2015, Blake Wills sent an email to Mr Cook that he copied to Vernon Wills and Mr Dawson in which he referred to a year to date loss of $255,000 against a budget of $681,000 profit, being an outcome of nearly $1 million below budget in only two months. In that context, Mr Wills said to Mr Cook “we need to understand what has been achieved in the past four weeks in the following areas which were discussed in the July Management meeting with significant emphasis and urgency”, and then listed seven facets of the business including “Excellent Sales/Admission Process (Live Chat, Inquiry/Enrolment Forms etc.)” and “Strong Sales Culture”. He said that “substantial change and progress is required in all these areas, month on month” and that at “Wednesday’s meeting” (i.e., the Management Meeting on 16 September) each of the areas would need to be put “under the microscope” to identify “any areas where we are not succeeding”. [D3575] This email suggests that at that stage Mr Wills may not have been aware of the details of the changes to the enrolment and withdrawal processes that had commenced one week earlier, but he was signalling an intention to get into that detail to ensure that the financial position of the college turned around.
326 On 14 September 2015, Mr Cook sent to Mr Dawson and Blake Wills the college’s “Business Unit Monthly Report” for August 2015. [D3592] Mr Cook’s report noted that “implementation of the revised enrolment process on September 4, 2015 has increased sales volume, but the full positive effect of the revised enrolment process for all channels will not be realised in the accounts until Oct/Nov due to delay from sales activity to revenue recognition, as well as the staged rollout of the revised process to L2E followed by the other agent channels. Increased volume from L2E into distance will also increase CA headcount and positively influence campus enrolments also.” [D3594]
327 The following day, 15 September 2015, Mr Cook sent an email to Mr Dawson and Mr Wills showing that applications for enrolment in the week 7-13 September 2015 had increased dramatically which he characterised as “showing early signs of recovery”. [D3629]
328 Mr Cook’s CEO report for the Management Meeting on 16 September 2015, which was circulated the previous day, reported that rollout of the new enrolment process had commenced on 7 September, that “feedback has been positive” and that “the new enrolment process along with the update to the withdrawal policy should see CA numbers and student numbers increase.” [D3606]
329 The minutes of the Management Meeting on 16 September 2015 record that Mr Cook “advised the new enrolment system is working well, it presents well, increased headcount and have re-recruited old CAs” and that Mr Carson said “the new enrolment process has really made a huge improvement to [the L2E] team.” Mr Cook also reported that Khaled Akbery “is on the road meeting with agents in Adelaide, Sydney and Melbourne to run through the new enrolment process.” [D3633] Mohammed Akbery’s operations report included that “a lot of work has been done in the distance operations, with new enrolment process and rejigging the admissions team.” [D3634] Under the CFO report it was minuted that Mr Cook discussed that he believed that the financial position was “about to pick up, with Khaled talking with our agents and [Mr Carson] holding his team up again.” [D3635] The point is that the minutes reflect that the changes to the enrolment and withdrawal processes was seen as significant and as likely to lead to increased enrolments and increased income.
330 The minutes record that Blake Wills was present at the Management Meeting, albeit by Skype. In the light of Mr Wills’s email a few days earlier (13 September 2015) in which he said that at the forthcoming meeting each facet of the business must be put “under the microscope”, I infer that Mr Wills closely followed the details of the matters that were discussed including the enrolment and withdrawal process changes. He would have wanted to be satisfied that the changes that had been introduced would have the promised results measurable in increased revenue and profit.
331 The minutes of the CCC Management and Leadership Team meeting on 16 September 2015 record “FYI – all students will be processed through the Census dates automatically.” [D3637-8] The minutes of the Distance Campus Management and Leadership Team meeting on the same day record that it was reported that there was a hope that in the following month there would be an increase in applications from agents “once we release the new enrolment process to all agents” and that “HO is expecting some real volume soon”. [D3643] It was also recorded that Ms Jokhoo “advised that they can handle another 200 students before they will need more FTE’s”, the latter being full-time equivalent SSOs. [D3643]
332 On 20 September 2015, Vernon Wills, the Managing Director and CEO of Site, wrote an email to Mr Cook which he copied to Mr Dawson, Blake Wills and Phil Costelloe. The email referred to a discussion between Vernon Wills and Mr Cook about the likelihood of media interest growing more intense “around Phoenix and the knowledge there is a police investigation into some of the agents.” The reference to Phoenix is to a different VET provider that was subject to bad publicity because of agent misconduct (see  above). Vernon Wills wrote that “we need to take all steps necessary to prevent hiring of poor quality or dishonest agents” and that it is necessary for there to be “a formal review process”. [D3662]
333 Mr Cook replied on the same day, copying the other addressees and adding Mr Makar, Mohammed Akbery, Khaled Akbery and Ms Edwards. Mr Cook stated that Ms Edwards “leads our continuous improvement process” which is the appropriate “formal review process”. He stated that there is “already a very robust and rigorous agent selection, onboarding and monitoring process in place”, that Khaled Akbery is doing a great job monitoring the existing agents and negotiating with new potential partners, and that Khaled Akbery, Mohammed Akbery and Mr Cook “are aware of the potential risks involved given the environment at this time and taking what we believe are the necessary precautions.” [D3662]
334 Vernon Wills replied on the same day, copying all the other addressees, stating that “there is clearly information in the public arena surrounding some unethical agents who work for organisations such as Phoenix” and that whilst he was “willing to accept they may not all be unscrupulous there remains significant commercial risk if we get it wrong.” He then wrote as follows: [D3661]
Understandably our Risk and Audit Committee will expect that management has undertaken an absolutely rigorous investigation, analysis and all pre-requisite measures to ensure the purity of process to the best of our ability. This needs to be clearly articulated in writing with contribution from all areas including group services and compliance. It cannot be a simple facet of continuous improvement.
By its very nature it requires the checks and balances to be fully dealt with.
I look forward to us investigating the possible engagement of agents under the above process with sign off from all involved.
335 On 23 September 2015, Mr Cook wrote to Mr Makar copying Vernon Wills, Mr Dawson, Blake Wills, Ms Edwards, Khaled Akbery, Mohammed Akbery and Mr Buonora, in which he tasked Mr Makar and his team to be “involved in the review process currently underway of our Marketing, Sales and Enrolment processes, as well as the systems we have in place to engage and monitor the activities of our Sales Agents (both external and L2E) … in light of the recent negative media attention in our sector.” Mr Cook then wrote as follows: [D3709]
I would also welcome your thoughts more broadly on the robustness of our enrolment quality assurance system that we have in place (i.e. how well do you think all of these systems work together to mitigate the risk of unethical behaviour that may affect business continuity, as well as avoid the kind of negative media exposure that we have seen recently in our sector. Note: we also need to concurrently balance the need of maintaining commercial viability throughout all this. This really is a situation where we need to consider the equation of Risk v Reward).
336 Mr Makar’s subsequent review report concluded that “the College takes the behaviour and activity of its External brokers very seriously”, that it “has a number of policies and procedures in place to monitor its brokers” and that all of “the College’s current brokers have been proven to be ethical organisations.” [D3761]
337 On 28 September 2015, Vernon Wills wrote an email to the other directors of Site, including Blake Wills. The email covered a number of matters with regard to the performance of Site. In relation to the college he stated the following: [D3827]
Basically over the last 4 weeks management has pressured PP/CPM into accepting change. Whilst this has been slow we are going to see the benefit of some changes (like enrolment procedure) from September but expected to show real results from October. Early indications are the changes to enrolment and activating marketing are showing significant increases in registrations and should show an upswing in C1 & C2.
338 On 30 September 2015, a decision was apparently taken by the Site executive team – or perhaps by Blake Wills himself – that Mr Wills would be acting CEO when Mr Cook took leave on 20 November. It is apparent from the correspondence that reflects this decision that Mr Cook strongly opposed the decision, arguing that the acting CEO when he was away should be Mohammed Akbery. Mr Wills was, however, unpersuaded by Mr Cook’s strongly advanced arguments and “elected to take the additional responsibility [himself] to facilitate integration & monitor key issues including financial implications surrounding agency negotiations/regulatory change.” [D3959]
339 This appears to have been a continuation of the assertion of Site’s oversight of the college as a business unit and subsidiary and its integration into the business and management of Site which was causing some rancour with Mr Cook who regarded Site’s “heavy focus on budgets, KPIs and efficiency” to threaten the college’s existing culture of awareness “of the social needs, issues and welfare of its staff and students” and the “social and educational service” aspects of its role as an RTO. [D3957]
340 The correspondence also records that Mr Wills would “commence understanding current state of key projects to permit smooth transition” in anticipation of the acting CEO role commencing some six weeks hence. [D3955-9]
341 The correspondence is also illuminating as to the role of Mr Wills, which Mr Cook described to him without disagreement as being to “control 11 business units” and have a “continued watchful eye over PP’s operations”. [D3958] Mr Wills apparently saw himself as having, and in fact did have, high level responsibility for the college. This is relevant when it comes to considering his case that he was not knowingly concerned in the relevant conduct of the college.
342 From the above evidence it is apparent that it was recognised by senior employees of the college and Site executives – who were driving the need for change and closely following the changes – during the month of September that the process changes were not only expected to significantly increase enrolments, but that by the end of the month such increases were already being experienced. It was also recognised that the conduct of CAs posed a significant risk to the college which had to be mitigated by ensuring that the CA selection, engagement and monitoring process was rigorous. No consideration appears to have been given to reintroducing campus driven withdrawals as a means of mitigating CA misconduct. The most natural and probable inference is that that was because campus driven withdrawals had been abolished in order to increase the conversion rate which would be an important incentive to agents and substantially increase revenue to the college. The latter was regarded as particularly important – perhaps non-negotiable, with mitigating the risk of CA misconduct regarded as something that could be done by emphasising CA ethics and monitoring CAs.
N.2 October 2015
343 On 1 October 2015, Mr Makar circulated to Vernon Wills, Mr Cook, Mr Dawson and Blake Wills, a draft of an “Agent Management Review Report” that had been completed by him the previous day. Mr Makar asked everyone to whom his email was addressed to read the report and then have a meeting to discuss it. [D5123] Although the report was generally positive with regard to the college’s management of its CAs and compliance with the relevant standards, it did identify areas of concern. These included that there was a risk of students being enrolled without the controls and support programs in place with some agents, that such enrolments represented a risk to the college with limited control over how they were recruited, and that there were systematic gaps in the control of the processes and implementation of improvements. [D5125]
344 On 14 October 2015, Mr Dawson circulated the college’s financial results for the month of September to, amongst others, Mr Cook and Blake Wills, which Mr Cook then circulated to the college’s senior staff. [D3992] The reports showed that for the distance campus VFH income for September exceeded the budget by 133%, and EBITDA exceeded the budget by 137%. [D3994] As an illustration of the increase, VFH income had increased from approximately $326,000 in August to $830,000 in September, an increase of 255%, and in the same period EBITDA had increased from approximately $138,000 to $520,000, an increase of 376%. [D3995]
345 On 19 October 2015, Mr Cook circulated to Blake Wills and other members of the Advisory Board his business unit report summarising the college’s performance for Q1 FY16, i.e., July-September 2016. [D4224] The report included the following salient aspects:
(1) Revenue for July and August was below expectation, “but volume in September increased to exceed budget.” Further, “[s]trategies implemented to increase revenue seem to be having the desired effect, and I am confident that we can recover the deficiency in our YTD EBITDA by 31 December 2015.” [D4225]
(2) In the performance summary section of the report, it was reported that “[w]e have had a slow start to the year, but on 7th of September we turned things around and are currently trading significantly ahead of budget, and will recover the lost ground on our EBITDA target in the next quarter.” [D4231]
346 A CCC Management Meeting was held on 21 October 2015, with the papers for the meeting circulated the day before. [D4234] Mr Cook’s CEO report included the following:
(1) In respect of agents: [D4237]
After the introduction of an improved enrolment process in early September 2015, the College has begun to see major traction with its external brokers and L2E. We have introduced further policies and procedures surrounding the monitoring of external brokers and have allocated 1 FTE to manage and monitor their performance, behaviour and activities.
(2) In respect of the distance campus, student numbers had increased significantly due to the new enrolment process and on boarding of new agents, and that three new Admissions Officers and two new SSOs had been appointed. [D4238]
(3) A bar graph of the numbers of agent-introduced applications for enrolment per week showed that in each week through July and August 2015 the applications fluctuated between less than 50 per week to somewhere between 50 and 80 per week, and that in each week thereafter beginning with the week commencing 7 September 2015 the applications increased dramatically up to nearly 250 in the week commencing 5 October 2015. [D4240] That is to say, CA introduced applications increased five-fold.
347 The September monthly sales report, which was also distributed for the meeting, reported that “September was our best month in many areas and with the new enrolment system, we are set for a fantastic and successful run into the Xmas break.” [D4249] It was also reported that the “new enrolment process and withdrawal policy has seen a huge increase in volume and quality of students and increased [certificates of enrolment and Commonwealth assistance notices].” [D4249] It was reported that there had been a “massive jump” in enrolments and that “[w]ith the introduction of the new enrolment process through Distance, we have smashed our previous record set in November 2014.” [D4250]
348 The minutes of the CCC Management Meeting on 21 October 2015 record that Blake Wills presented his COO report which was then discussed. [D4276] A number of subjects were discussed, illustrating the breadth of Mr Wills’s responsibility. Mr Wills proposed a number of actions to be considered, including “strategic recommendations to be put forward on improving student outcomes”. It was minuted that in relation to this point, Mohammed Akbery and Ms Edwards discussed that “no matter how good your LMS is students are not engaging”. [D4276] Mr Akbery said in evidence that by this time he was well aware that students were not engaging with their courses (by logging in to the LMS), and that it was sufficiently problematic that he considered it appropriate to raise it at the meeting. [T696:10-26]
349 Blake Wills’s report to the meeting is reflected in a PowerPoint presentation that he circulated by email later that day. [D4286] As with the minutes of his report and the discussion of his report, the report demonstrates the breadth of Mr Wills’s responsibility and involvement. It also reflects his consideration of the relevant legislative framework, the key Senate inquiry recommendations, the changes in 2015 to the VFH guidelines, and the development of strategies for change in the college’s policies and processes in order to adapt to the ever-changing market. [D4287-4313]
350 Mr Wills’s engagement with the detail of the regulatory environment is illustrated by an email from him to Mr Makar and Mr Dawson on 26 October 2015 in which he provided a link to the Department’s VET Administrative Information for Providers and Addendum as updated to October 2015. [D4328] In the email, Mr Wills drew attention to particular parts of the document and commented on its language. The document itself, as discussed above (at ), included the FAQ which recorded that the Department “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.” [D3899] Given his detailed attention to the document and his apparent concern or responsibility for compliance, and his failure to say otherwise, I infer that Mr Wills read and understood that FAQ.
351 On 26 October 2015, Blake Wills circulated his COO report for the November meeting of the Site board. [D4331] The report noted that the college had underperformed in the first quarter of the financial year (i.e., July-September) and identified the following factors as causing the underperformance: poor enrolment systems relative to competition, limited course offering, and limited external broker network. [D4335] Amongst the “key actions” recorded as having been taken to address the underperformance, the report recorded that there had been “substantially more active management involvement and practices in Captain Cook College since June this year when business performance had commenced deteriorating” which was “driving performance for a strong second-quarter”. [D4336]
352 Mr Wills’s report recorded that an urgent review of business performance of the college was undertaken in August, as a result of which “the degree of autonomy in this business unit has been reduced and integration prioritised”. It was also reported that as Mr Cook would be on leave from mid-November to mid-January, Mr Wills would assume Mr Cook’s responsibilities during that period and that he would “focus on five areas contained in the above graph with the support of the CCC senior management, Group Services and CFO.” The five identified areas included marketing, sales, the enrolment process, delivery and student outcomes. Mr Wills also drew attention to expected substantial regulatory change in VFH on 1 January 2016. [D4336]
353 The reported reduction in the college’s autonomy from Site and the prioritisation of its integration, i.e., bringing it increasingly under the management control of Site, is significant. Indeed, Mr Wills said that that had commenced in June. These matters draw attention to the increasing close involvement of Mr Wills in the management of the college.
354 The minutes of the Management Meeting on 21 October 2015, which was chaired by Blake Wills, had recorded that an “enrolment LLN procedure” was being worked on and that Ms Edwards was to circulate “the LLN procedure for feedback”. [D4275] Ms Edwards circulated the “draft Enrolment LLN Assessment Procedure” on 30 October. [D4402] It is apparent from that document that the assessment was not aimed at determining whether a prospective student should be enrolled or not, but rather to determine their support and training needs once enrolled. [D4404-4429] Also on 30 October 2015, in response to Ms Edwards circulating the draft procedure, there was an email interchange between Ms Edwards and Mr Makar during which Ms Edwards said the following: [D4441]
Our QA call process is thorough but it seems harder to determine genuine students from ones that should have their enrolment cancelled. You know from being on campus that if the students insist they want to study we want to give them a go. Then they don’t contact us. It’s a really hard one. I feel unless we changed our withdrawal process back to not pass students through a CAN without some minimum input from them then it’s hard not to have risk. But we can’t do that.
355 The two emphasised sentences in the extracts indicate an appreciation by Ms Edwards that the changed QA call process and the changed withdrawal process were having a detrimental impact on the quality of students enrolled and passing through census. Despite the dramatic increase in applications, and hence income and profit, and knowledge of poor levels of engagement by students, no consideration appears to have been given to reintroducing campus driven withdrawals.
N.3 November 2015
356 A Site board meeting was held on 3 November 2015. The papers for the meeting included a First Quarter Review 2015/2016 that was authored by Vernon Wills, Mr Dawson and Blake Wills. [E132] The review showed that the college’s budgeted revenue for the second quarter was $10 million notwithstanding that the actual revenue in the first quarter had been only $3.257 million. [E138] This reflects the confidence that there was that the changed enrolment and withdrawal processes would bring about vastly improved financial performance. The review repeated much of what had been said about the college in Mr Wills’s COO report for the meeting discussed above (at ). [E146-7]
357 The review included a bar graph showing the monthly figures for the college from January to October 2015 of the number of students enrolled and the number passing through first census. There is then superimposed on the bar graph a line graph showing the percentage of enrolled students passing through first census, which is referred to as the conversion rate. This shows that in the months from January to August the conversion rate varied between a minimum of 46% and a maximum of 66% with the average appearing to be somewhere a little above 50%. That is to say, about half the enrolled students withdrew or were withdrawn prior to first census. By September, the conversion rate had increased to 71% and by October to 76%. That is to say, after the enrolment changes and the abolition of campus driven withdrawals, the number of students withdrawing before first census decreased to about a third in September and a quarter in October. Moreover, these figures were collated by Mr Wills and presented by him to the Site board. [E244] There is nothing to suggest that the quality, suitability or level of engagement improved making it clear that the improved conversion rate meant that unsuitable students in increasing numbers and proportions were being enrolled and incurring debt.
358 The minutes reflect that Blake Wills attended the meeting of the Site board on 3 November 2015 by invitation. [D4609] The minutes record that it was reported to the board that an urgent review of the college’s business performance was undertaken in August as a result of which the degree of autonomy in the business had been reduced and integration prioritised. [D4612] Under the CFO report it was minuted that the projected half-year results were “heavily dependent on large uplift/turnaround of CCC following structural changes and strong October results continuing through November and December”. [D4613]
359 The financial results for the college for October 2015, which were circulated on 16 November, showed that for the distance campus the actual VFH income was 163% above the budgeted VFH income and the EBITDA was 148% above budget. [D4535, D4537] It will be recalled that the September VFH income had been $820,500, which increased in October to $4,301,250, i.e., an increase of more than 500%. [D3994, D4537] Looking at the matter differently, the July and August VFH income had been $428,125 and $326,125 respectively, being an average of $377,125 per month. The increase from then to October was an increase of 1,140%. [D4538] On any view, that is dramatic. There is also nothing to suggest that it was brought about other than by the process changes.
360 On 17 November 2015, documents were circulated for the CCC Management Meeting to be held the following day. [D4552] In Mr Cook’s CEO report he reported, in respect of agents, that the college had “continued to see major traction with its external brokers and L2E”. [D4562] Mr Cook reported that “October has been the greatest month by far for L2E”. [D4562] In respect of the distance campus, Mr Cook reported that student numbers had “increased significantly due to the new enrolment process and on boarding of new agents”, and that as a result there had been “a substantial increase in staff recruitment within the SSO, Admissions and Training teams”. [D4563]
361 Mr Carson’s sales report in respect of L2E for the Management Meeting reported that “October broke all records and was by far our best month in many areas and with the new enrolment system” and that the “new enrolment process and withdrawal policy has seen a huge increase in volume and quality of students and increased [certificates of enrolment and Commonwealth assistance notices]”. [D4574]
362 Mr Dawson’s CFO report for the Management Meeting stated that “as a result of an extremely disappointing first quarter result for the entire Group, The Site Group board requested a reforecast of the FY16 Budget” with the result that for the college budgeted revenue had been increased from $18.1 million to $25.257 million (i.e., by 40%) and that budgeted EBITDA had been increased from $4.144 million to $5.898 million (i.e., by 42%). This was explained on the basis that “significant growth is expected due to the new enrolment portal and the enhanced relationship with the internal sales team and external agents”. [D4599]
363 The minutes of the Management Meeting on 18 November 2015 record that Blake Wills “advised we need to increase our staff to handle the workload” in the context of increased enrolments. It was also minuted that Mohammed Akbery reported that approximately 700 students were commencing at the distance campus each week and that “the pain point is going to shift from staffing to engaging with the students”. [D4700] In relation to this, Mr Akbery’s evidence was that he knew that there were “issues with engagement”, that it was difficult for them to get the students to engage, and that the reference to “engaging with students” was the same as referring to engagement by students. [T698:9-22]
364 On 18 November 2015, Blake Wills sent an email to Mr Buonora asking him for his “projected/required numbers for early 2016” in the following staffing categories, Admissions, SSOs, Distance Trainers and Distance Campus Administration. [D4602] Mr Buonora replied the next day with the “expected numbers” and also attaching his “Notes and assumptions that inform my current position”. [D4602] Mr Buonora’s assumptions in respect of his SSO projection reflected that the “current student cohort is 4500 and the current trend will bring total numbers to 7000”. He recorded that the full load of an SSO to provide adequate support ranges from 150-200 students, “including non-contactable students”. [D4605]
365 Mr Buonora’s assumptions in respect of his projected need for trainers included that the “ratio of active students will remain at a minimum of 20% of the total number of students” and that the “current trend will bring the total number of students to 7000”. [D4607]
366 It is apparent from his assumptions that Mr Buonora based his projections on the expectation that significant numbers of enrolled students would remain uncontactable. Mr Buonora explained in evidence that the 20% figure “was our best estimation at the time of how many of the total number of students we would expect to remain engaged”, and that the “remainder of the students”, i.e., 80%, would be “not engaged in the course”. [T380:4-5, 35-39] Mohammed Akbery accepted that resourcing figures were based on an assumption that something between one in three and one in four students enrolled would not be active students (i.e., 25-30%). [T699:40-43]
367 The figure of 20% engagement is found elsewhere in the college’s documents at that time. Blake Wills’s Short Term Strategy for the college dated 16 November 2015 noted that the current performance of “student participation” was “Student login to ATLAS <20% by week 7 of the course” and that the targeted performance was 75%. [D4514] The same figures were reflected in a document sent by Mr Buonora to Mohammed Akbery on 30 November 2015 as reflecting his “Notes on today’s goal setting meeting for your appraisal”. [Ex B4]
368 Ms Edwards’s evidence was that on a number of occasions between 7 September and 18 December 2015, she accessed the LMS to find out what proportion of students had logged in, and it showed that only a very small proportion of the enrolled students were actually accessing the LMS. [T511:14-34] If a student did not login, they had no prospect whatsoever of getting any benefit from their distance learning course. [T512:9-14] She said that the topic of the level of student engagement was something that was regularly discussed between the management team members. [T532:29-31] The figures for the level of engagement were apparently readily available on the LMS.
369 Mr Buonora gave evidence that, on the last day before Mr Cook went on leave, which was around 20 November 2015, Mr Buonora mentioned to Mr Cook that there was a risk that there would be a lot of students whose enrolments should be reversed because of the type of students and the volume of students that were being enrolled, and that Mr Cook said that he was aware of the risk and he was prepared to reverse enrolments to do right by the students as they were encountered. [T357:14-19]
370 Mr Wills was the acting CEO of the college during Mr Cook’s absence on leave from 20 November 2015 to 20 January 2016. [D3863]
371 On 24 November 2015, Brenda McCaskill, the Admissions Team Leader, sent an updated admissions checklist by email to Ms Edwards and Mr Buonora copied to Mr Wills. The email records that the checklist had been “updated after feedback received from Blake.” [D4693] This indicates the involvement of Mr Wills in the intricate details of the enrolment process, presumably in his capacity as acting CEO.
372 There were 3,579 new enrolment applications received in November 2015. [C120/167]
373 It is apparent that by November 2015 the college was not managing to cope with the increased numbers of enrolments, and the type of students who were being enrolled. This is apparent from the evidence of Ms Stevens and Ms Solly.
N.4 Candice Stevens
374 From 19 October 2015 to January 2016, Candice Stevens was employed by the college as an SSO. [T319:5-6, T335:9-10]. Ms Stevens described this role as involving supporting students when they initially enrolled and throughout their course, providing guidance, including how to use training materials and connecting students with a trainer if they needed one. [T320:8-11]
375 From a practical perspective, Ms Stevens’s role involved a lot of phone calls and emails to students and trying to call the students in their first week. [T320:13-15] Ms Stevens said that she would make sure a student could get onto the college’s website, access their training materials and get started as well as providing study tips. [T334: 1-6] In the following week Ms Stevens would get in contact again with a student to see how the first week was going, if they had any questions or if they needed any help. In the third week, Ms Stevens and a trainer would get in contact with the student or she would attempt to introduce the trainer to the student. Sometimes the trainer would try to reach out to the student themselves. As the course went on Ms Stevens would try and reach out to the student to see how they were going and encourage them to complete the course. [T334:13-33]
376 Ms Stevens said that when she started at the college there was a huge influx of students. The college went from having just a few hundred students to a few hundred joining every week and it had to bring on more SSOs to try and keep up with the demand. [T320:17-23] Ms Stevens said that students were allocated to an SSO. By the time she came to the end of her time at the college, she had been allocated approximately 400 to 500 students and there were more than 30 SSOs. [T320:27-28, T335:17-20] Ms Stevens would set reminders to contact students at the six-week mark and the 10-week mark to see how a student was going but when the enrolments increased she had to drop everything to try and call students before their census date, rather than contact current students. [T336:9-18]
377 Ms Stevens had great difficulty in attempting to contact the students allocated to her. [T320:30]. Ms Stevens described her attempts to contact students as follows: she would try and get through a list of students to call before their census date, work through “sheets and sheets” of students making notes if she got through to them, and she would try to make a note on the system if she left a voicemail or if a number did not work. [T320:32-36]
378 For the most part Ms Stevens was unsuccessful in contacting students. She said she spoke to around 10% of the students that she tried to reach. [T320:41] For the students she was unable to reach through telephone or voicemail, she would “sort of flag them” noting that she could not get in contact so that she, or another SSO, could try again. [T320:44-47] Ms Stevens could not recall exactly but she said there was some type of escalation point if a student could not be reached after two or three attempts. [T321:1-3] Ms Stevens also said she tried to email as well as telephone students, however, this was generally unsuccessful and she did not recall any email replies of substance, emails often bounced and one email was often used for multiple students. [T321:5-10]
379 Out of the students Ms Stevens did contact, there was a small number who she was unable to speak to about their courses because they were not interested. [T323:13-16] Ms Stevens raised the difficulty in contacting students with her team leader, Kristen Feldman, and said it was a constant topic amongst her team. [T323:18-20]. Ms Stevens understood that it was Ms Feldman’s role to escalate the issue to more senior staff at the college on her behalf. These concerns were raised with Ms Feldman by Ms Stevens on a “probably weekly” basis. [T322:27] Ms Stevens preferred to raise queries regarding suitability by email so that she had a record and if she was very concerned she would chat to Ms Feldman as well. [T335:34-36]. To Ms Steven’s knowledge, other staff also raised the same issues with Ms Feldman. [T323:29-30]
380 Ms Stevens also described an incident where Mr Buonora raised with her an investigation into how a significant number of students were all enrolled from the town of Mullumbimby at the same time and that she should not attempt to contact these students. [T324:1-5] On 27 November 2015, Ms Stevens, then known as Candice Dent, sent an email to Khaled Akbery copying Ms Feldman. This email relevantly stated: [E123]
Hi Khaled. I tried to contact students from two of the agent files in the green folder. Only spoke to a few of them. Details in the tables attached. RTO updated as well.
Apologies, but I’m back needing to ring around students whose census is in a couple of days and they haven’t been contacted .
381 Ms Stevens explained that she used the sad face emoji because she had been through education herself and been “lumped” with a HECS-HELP debt, and she felt terrible that these students had been enrolled in a course, their census date was fast approaching and they had not been contacted yet. She went on to say that her SSO team were “relentless” in trying to get in touch with students to make sure they understood “what they were getting themselves into” and that there were “pages of students who hadn’t been contacted yet”. [T325:35-45]
382 The same email had two attachments which were records of engagement with a number of different students who had been enrolled by particular CAs. [E124-125, T326:9-11] The documents have a number of columns for recording the details of calls made, including the student’s understanding of their enrolment in the event that contact was made with a student.
383 In respect of the “green folder” referred to in the email, Ms Stevens said that she remembered that agents’ files in the green folder were “bad”. In other words, they were agents who had been “red-flagged” for having a reputation for signing up students who were not suitable. [T328:21-22, T330:10-11] Ms Stevens recalled that there were two to four files in the green folder. Ms Stevens also said that she sought to contact the students signed up by red-flagged agents a number of times. [T330:15] Of the students reached, she said that “two per cent” were willing to study. [T330:17-18] Further, she escalated the responses she got to Ms Feldman or Khaled Akbery but such escalations were considered “business as usual”. [T330:20-24] Concerns relating to suitability were also raised with Elle Dunston, the student welfare officer. [T333:32-33]
384 Of the 20 students listed in the two documents, Ms Stevens was able to make contact with five of them. Of those, two appear to have understood their enrolment and did not raise a problem. [E124-125]
385 Ms Stevens also said that on other occasions students were given LLN testing and put directly in contact with a trainer, and each course had a dedicated trainer. [T333:35-46] But not everyone had completed an LLN when they reached Ms Stevens. [T334:8-9] When the college had lower numbers of enrolments, students periodically did their LLNs. [T335:40-45] As the enrolments increased and the college had “huge influxes” of students, Ms Stevens noticed students had not completed their LLNs when they reached her, so she saw that her first task as an SSO was to try to get them to complete an LNN. [T336:1-3]
386 With regard to her experience with students who had been enrolled by agents other than those the subject of the email discussed at  above, Ms Stevens noted that, in her experience, she rarely engaged with a “student who had intended to study the course they had enrolled for”. [T328:30-31] The apparent lack of intention to be enrolled, a student’s reasons for signing up, and the extent that a student was told reasons for signing up, were matters raised by Ms Stevens with Ms Feldman. [T329:1-5]
387 On 9 December 2015, Ms Stevens sent an email to Ms Feldman with a link to an article published online by the Sydney Morning Herald titled “Vocational education crisis: AIPE college paid $1 million a graduate” with the comment “Have a read of this when you get a chance and see if it sounds familiar at all.” [Ex B1] Ms Feldman replied saying “It does sound very familiar, I feel like we are trying our best to not have this happen to our students, with Khaled’s investigation and Elle’s, but I don’t know whether student’s are slipping through” [sic].
388 Ms Stevens replied to Ms Feldman saying “it’s good to know there is a dedicated team at CCC between Khaled, Elle and all the SSO’s trying to make sure only suitable students are enrolled.” In cross-examination, Ms Stevens said that this was an accurate statement of what “Khaled, Elle and the SSOs” were doing and that allowing students to withdraw, even if, strictly speaking, the student had passed the census date, did occur from time to time. [T332:32-44]
389 Mr Buonora explained in evidence that there were really four options available in circumstances where an SSO or trainer identified that they had concerns about a student’s suitability or ability to do a course. The first option was to tell the student that they can apply for a withdrawal and give them a withdrawal form. The second option was to try to assist the student by creating modules for the student, whether they were literacy models or other support modules within the course. The third option was to refer the student to a welfare officer who could then make an assessment of the student’s capacity, ability, suitability and if necessary, withdraw the student. The fourth option, which was applied in cases of suspected misconduct, was to withdraw the student. [T395:30-T396:24]
390 All of these options, with the exception in some circumstances of the fourth, involved being in contact with the student. The only circumstances in which a non-contactable and non-engaging student would be withdrawn would be if the college had knowledge from other sources (i.e., not the student) that the student had been subjected to agent misconduct.
N.5 Jo Solly
391 On or around 18 November 2015, Jo Solly commenced contract work as a training and development officer with the college in the Diploma of Business. [D4669, T338:21] Ms Solly worked two days a week. When she first commenced she was given time up until Christmas to acquaint herself with the training material. When the students were introduced it was her role to contact the students online and deliver support while they were doing their course, and then to assess the students. Ms Solly was not allocated any students until January 2016. [T338:12-47]
392 Around the end of January 2016, Ms Solly was given a list of names and her job was to manage the list to make sure she made initial contact with every student, after the student had spoken with the SSO. [T339:10-16] She ended up with 264 names of “actual students”, however she only managed to make contact with a dozen maybe at the most. [T339:40, T340:34] She didn’t have a lot of success. [T340:35-46] The language skills of the students she contacted in some instances were not developed sufficiently to be able to comprehend the course materials. [T342:31-45] None of the students allocated to Ms Solly completed their course, or even a single unit of competency. [T343:1-5]
393 Ms Solly explained that she raised her concerns with regard to the competency of the students with Mr Buonora, both separately and in meetings with other trainers, and that there was a general concern about the English-language skills of the prospective students which had become an issue. [T343] Mr Buonora asked Ms Solly to research resources that the college could make available to students on the LMS, which she did. [T343:45 – T344:4]
N.6 December 2015
394 In December, the financial results for November became available. These showed that for the distance campus VFH income for November 2015 was $13,931,625, 443% over budget, and EBITDA $4,730,762, which was 236% over budget. [D4806] Revenue was more than 5000% greater than the average for July and August (i.e., $377,125). [D4807]
395 The college continued to enrol students in large numbers in December 2015, receiving 1,856 new enrolment applications that month. [C120/167]
396 On 1 December 2015, the Commonwealth Government announced a cap on the total VFH loans existing VET providers would be able to issue in 2016, based on each provider’s 2015 loan levels. On 9 December 2015, the Department sent an email to Mr Cook (who forwarded it to Blake Wills), with attachments describing this and other reforms the government was making to the VFH scheme. [D4779-4782] The cap would be calculated by reference to the VFH loans the VET provider offered in the period 1 January 2015 to 31 August 2015, extrapolated to a 12-month figure. [D4788] This meant that the college’s cap would be calculated on its VFH enrolments in the earlier period before it implemented the process changes and experienced the resultant explosion in its student numbers.
397 On 2 December 2015, Mohammed Akbery wrote to Blake Wills by email making two proposals with regard to how revenue could be maximised in 2015 so as to avoid that revenue, which the college could otherwise expect to receive in 2016, being subject to the cap in 2016. [Ex A6] First, he proposed that some census 1 and census 2 dates that were scheduled to occur in 2016 be brought forward into 2015 so that the revenue generated on those dates would be generated in 2015. Mr Akbery accepted that doing that would involve notifying the students of their changed census dates even though a proportion of those students were not contactable and the college had no means of knowing whether students were receiving the college’s communications. [T707:11-24] Secondly, he proposed that additional intake dates be added up to 17 December because in respect of each of those dates the first census would still fall in 2015. Mr Akbery accepted that the additional intake dates were introduced even though there was every likelihood that a significant proportion of those students would not engage in the courses at all. [T707:30-41]
398 Both of Mr Akbery’s proposals represent a cynical attempt to maximise revenue without regard to the students’ interests.
399 By letter dated 18 December 2015, the Department informed Mr Cook that the cap for the college for 2016 would be $16,818,413, which was based on reported student data for 1 January to 31 August 2015 of $11,212,275. Mr Cook was informed that the college’s estimate for 2016 could not exceed that cap. [D4819] The impact that that would have on the college’s post-process changes income would be dramatic, as illustrated by considering that the VFH income for 2016 would be nearly $3 million more than the VFH income that had been earned in November 2015 alone.
400 Mr Akbery explained that the consequence of the VFH loan cap was that the college would not be able to enrol any new students in 2016. That is because the college’s anticipated VFH revenue from students enrolled in 2015 who would progress through their second and subsequent census dates in 2016 was in excess of the ceiling imposed by the cap. [C120/166]
401 In fact, the college ceased enrolling students in its online courses on 18 December 2015. [D4820] It was explained by Blake Wills in correspondence to one of the college’s recruitment agent organisations that the college would not enrol any students in 2016 as there were enough students continuing study in 2016 who would reach census dates and thereby earn further VFH revenue for the college to use up the entire VFH loan cap. [D4824]
402 In January 2016 the financial results for December 2015 became available. [D4929] These showed that for the distance campus VFH income for December 2015 was $18,938,750, which was 1151% over budget, and EBITDA was $1,744,185, amounting to 218% over the budget. [D4931] The VFH income for December 2015 was 5022% above the average for July and August 2015 (i.e., $377,125).
N.7 Summary of increased income and EBITDA, July – December 2015
403 By way of summary, the VFH income and EBITDA for the months July to December 2015 for the distance campus was as follows: [D4932]
404 These figures can be represented graphically as follows:
405 The decrease in EBITDA by some $3 million from November to December despite an increase in VFH revenue is mostly reflected in an increase in agents’ commissions as a cost of sales from $3.5 million to $6.3 million and appears to be a timing issue. [D4932]
406 The Department’s HELP IT System shows that the college “accessed”, which I understand to mean claimed an entitlement to, $51,786,625 from the VFH Scheme for calendar year 2015, of which $17 million was paid in advance. [Ex B7]
N.8 January – March 2016
407 On 14 January 2016, Blake Wills received a letter from the ACCC addressed to him as COO of Captain Cook College (remembering that he was at that time COO of Site and acting CEO of the college). The letter marks the start of the events that led to the ACCC bringing the present case. The letter referred to issues previously raised with the college by the Western Australian Department of Commerce in respect of incidents at Looma in the Kimberley region of WA in early December 2015. The Looma incidents are discussed separately in these reasons. In its letter, the ACCC sought answers from the college on whether it was aware of representations by its staff or agents that VFH courses are free or free below a certain income threshold, whether it was aware of its staff or agents offering inducements to prospective students to encourage enrolments, and what steps it had taken to remedy conduct by its staff or agents which may contravene the ACL in relation to marketing or enrolment of consumers in VFH courses. A response was sought by 15 February 2016. [D4829]
408 In February 2016, Mr Buonora with assistance from, at least, Mohammed Akbery and Ms Edwards, developed a “Student Support – contact strategy” which set out guidelines for SSOs and trainers to identify and apply the appropriate communications strategy with students in order to give them support. [T371:43–T373:37, D4957-9] The strategy identified five categories of students with regard to their contactability by or engagement with the college, namely: [D4959]
Student initiates and/or responds to contacts from the college (SSO/trainer) and/or student has completed assessments on ATLAS in the past 2-4 weeks
Trainer/SSO team to provide regular and frequent support to the student based on each individual’s needs.
If student does not respond to contacts or submits assessments for more than 4 weeks from the last registered contact, he/she can be moved to category B.
Student responds irregularly to contacts from the college
Trainer/SSO team to attempt different contact mediums (e.g. Phone, SMS, email, letter) and establish the best way/frequency to contact each individual.
Responds regularly or accesses LMS, he/she can be moved to category A.
If a student does not respond to contacts from the College for more than 4 weeks, he/she can be moved to category C.
Student does not respond to contacts from the college
SSO team to attempt different contact mediums (e.g. Phone, SMS, email, letter) and confirm the best way to contact the individual.
Once the SSO has made positive contact with a student twice within 10 days, he/she can be moved to category B.
If the student’s contact information is no longer valid (emails bounce, phone disconnected), he/she can be moved to category D.
Student contact information no longer current
SSO team to attempt different contact mediums, including a contact to the emergency contact and confirm the student’s new contact information.
Once the contact information has been updated, he/she can be moved to category C.
College exhausted electronic communications alternatives with the student
Send letter of concern to postal address registered on the student’s file.
409 Categories C to E are all categories of students with whom the college did not have contact. On 18 February 2016, a report in relation to the 5,561 students then enrolled at the distance campus shows that 15% were in category A, 30% in category B, 54% in category D, and the remaining 1% in the remaining categories. That is to say, 55% of the students, all of whom had by then passed through and incurred census 1 debt, were uncontactable and not engaged with the college. Mr Buonora accepted that it was “highly unlikely” that they would ever be in contact with the college. The college’s strategy was to keep trying to contact them until eventually a “letter of concern” was sent to them, but the withdrawal policy did not permit them to be withdrawn and their debts reversed. [D4983-5, D4989, T373:39 – T375:24, T517:33-42, T520:42 – T521:25]
410 The report that showed that 55% of students were not contactable was sent by Mohammed Akbery to Blake Wills on 18 February 2016. Mr Akbery explained that “basically category C are people that we’ve never managed to make contact with post QA call”. [E431] Mr Wills responded to receipt of the report by asking about resourcing implications which suggests that he considered and understood the information that he had been sent. [D4990]
411 Although no new students were being enrolled in 2016, students who had been enrolled in 2015 were still being passed through their census 1 and subsequent censuses thus earning VFH revenue for the college and incurring VFH debts for the students. The relevant figures are as follows: [D5003, D5079, D5189]
% of budget
% of budget
412 Once again comparing the VFH income in each of the months of January to March 2016 with the average for July and August 2015 (i.e., $377,125), one sees that VFH revenue had increased by 881%, 2013% and 1777% respectively.
N.9 April 2016 and thereafter
413 A distance campus health check was undertaken on 14 and 15 April 2016. Amongst other things, it revealed, positively, that 40 more students each month were accessing the online resources, but it revealed, negatively, that only 361 of 5,032 students were accessing the system. That is to say, only 7% of the students were actively engaged. It was also recorded that the “attrition rate” before first census was 19.26%, which means that the conversion rate was more than 80%. To put this in context, more than 80% of enrolled students were passed through first census even though more than 50% of students were not contactable and only 7% of students were actually logging into the learning management system. [D5096-5112, D5102]
414 On 3 May 2016, Blake Wills requested a copy of the distance campus health check from Mohammed Akbery. [D5211] The campus health check was also discussed at the Management Meeting on 18 May 2016 which was chaired by Blake Wills and attended by, amongst others, Mr Cook, Mohammed Akbery, Mr Carson, Khaled Akbery, Ms Edwards, Mr Makar and Mr Dawson. [D5271-2] Ms Edwards reported to the meeting that the number of complaints that were being received had increased. [D5251] The complaints included from students who did not know that they had been enrolled, who did not know that they would incur a VFH debt, who had not wanted to enrol but had felt under pressure to do so, who did not understand what was required in order to complete a course, and who had been subjected to forms of misconduct by CAs. [T501:35 – T502:40]
415 Also at the Management Meeting on 18 May 2016, Mohammed Akbery’s operations report for May was tabled and discussed. [D5272] The report included an update concerning the categorisation of the 4,052 students at the distance campus according to categories A to E in the Contact Strategy. The report showed that only 36% (i.e., 1,444) of students were in categories A and B, with the remaining 64% (i.e., 2,608) being in the remaining categories and therefore not contactable or not responding to contact. Only 13% of students (i.e., 513) were in category A, which is to say responding irregularly to contact and accessing the LMS. [D5254]
416 The Department’s HELP IT System shows that as at 25 October 2017, the college had “accessed”, which as before I understand to mean that it claimed to be entitled to, $16,075,782, and that it had been paid essentially the amount of the cap, $16,818,401. It had thus been overpaid the amount of $742,619. [Ex B8]
O. COMPLAINTS HANDLING AND CA MONITORING
417 Ms Edwards’s affidavit evidence was that between 2014 and 2016 the Corporate Services team was responsible for maintaining a Complaints Register. The register was intended to record every complaint 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 the Corporate Services team, who would update the Complaints Register. [C158/48]
418 Ms Edwards’s role was to endorse or question the outcomes of each complaint. If she was satisfied that the student had been misled or otherwise treated badly by a CA, then she would reverse the student’s VFH debt. Such an outcome would be recorded in the final column of the register. [C158/49] Ms Edwards gave oral evidence that she was responsible for maintaining the Complaints Register. [T497:45-T498:1] Complaints from students or external parties would only go onto the register if an official complaint form was filled in. [T498:24-29]
419 There was also the Agent Issues and Complaints Register (AICR), which Ms Edwards managed jointly with Khaled Akbery, the partnerships manager. [T498:17-19] Mr Buonora’s evidence was that the normal process was that if there was a complaint about the conduct of an agent it would go to Khaled Akbery to deal with. [T405:24-25] There was no evidence from Khaled Akbery with regard to what he did, if anything, to monitor agents and what he did, if anything, in response to complaints about agents.
420 The college also maintained a Course Advisor Monitoring Log which was used to record the activities/conduct of selected CAs. [D580-591, D6264, T552:44-47]
421 By Sch 2 to a notice under s 155 of the C&C Act dated 10 March 2016, the ACCC required the college to furnish to it by 21 April 2016, amongst other information, details of complaints received by the college in relation to the enrolment of students into VFH courses and the college’s complaint handling processes in relation to such enrolment. [D6241, 6250]
422 It was apparently following that notice that Ms Edwards in 2016 reviewed all of the agent-related complaints to check whether they had been dealt with adequately and that there was a clear outcome recorded against each one. [T571:24-25] As at 4 April 2016, 19 of the 77 items on the Complaints Register and 88 of the 165 items on the AICR remained open, some going back to early 2015, indicating that the ordinary process of review and follow-up on complaints was less than thorough. [Ex A4] Some of the outcomes resulted in a full or partial refund of VFH fees in favour of the student. Such outcomes are recorded in the final column of the AICR. [C158/50]
423 There were a number of particular investigations undertaken by the college in relation to complaints against CAs. The college produced six investigation reports in its response to the s 155 notice under cover of a letter dated 6 April 2017. [D6352, D6376] It is necessary to consider each investigation in turn.
O.1 Looma investigation
424 On 10 December 2015, Paul Maher from the Consumer Protection Division with the Department of Commerce, Western Australia, contacted Blake Wills about the conduct of CAs enrolling consumers from the remote area of Looma in the Kimberley region of WA. [D4800] The ensuing investigation by Khaled Akbery and Blake Wills identified 262 students who had been enrolled from areas within 400 km of Looma in the preceding 30 days by agents who were found to have employed “poor practices” (otherwise unspecified). Of the 262 students, 70 had already been issued with a CAN and had thus incurred VFH debts. Their debts were reversed. The remaining 192 students were not progressed to census and no VFH debts were incurred by them. [D5016-5021]
425 Although the investigation report records the period of the investigation to have been 10 December 2015 to 26 February 2016, implying that the investigation was finalised on 26 February 2016, I note that on 7 April 2016 an email of “updated tasks” to be completed from Khaled Akbery to Mr Cook, Ms Edwards and Mohammed Akbery listed the need to “complete outstanding items” in relation to the Looma investigation. From that it is apparent that the investigation report was not finalised until after receipt of the notice from the ACCC so it is not to be inferred that all actions taken as a consequence of the Looma investigation were not as a result of the college seeking to respond positively to the notice. [D5120] Also, it is not explained what justification there may have been for limiting the investigation to students enrolled in the preceding 30 days or to within a certain radius of Looma – an investigation of all enrolments by the CAs in question would seem to have been warranted because if they were engaging in misconduct in Looma then they were likely engaging in such conduct wherever they were recruiting.
426 One of the outcomes of the investigation was that the college’s contract with GTRS Course Advisors, one of its agency partners, was cancelled. [D5018]
O.2 Umair Butt investigation
427 On 3 November 2015, the college received an enquiry through its website from a student who had been enrolled as follows: “Hello I received a free tablet from youse and I was enrolled at a course. Is this true?” [D4457] The enquiry was referred to Khaled Akbery, the partnerships manager, who initially instructed that the enrolment of the student should be cancelled. He also disengaged the CA. [D4456] However, on the intervention of Mr Buonora who pointed out that the student may be genuine and should not be prejudiced by the malpractice of the agent, Mr Akbery decided on a new process where it was apparent that students had been enrolled as a result of a “dodgy” CA, namely: [D4456]
Student’s checklist to be put aside. These students shall only pass c1 if positive contact has been made by the SSO.
I will provide a list of agents who fit this category. At the moment please flag all enrolments for CD103 - umair.
428 In short, if an agent was identified as “dodgy” then the old system of campus driven withdrawals would be implemented in respect of students enrolled by that agent.
429 In a report dated 15 April 2016, it is stated that the college decided to cancel the enrolments of all 32 of Umair Butt’s referrals but that a review of the investigation in March 2016 (i.e., apparently in response to the ACCC’s s 155 notice) identified that “due to administrative errors” 25 of the 32 referrals in question had progressed through census. It states that the status of those 25 students was reviewed and that 12 students who were identified as “progressing satisfactorily through their course” remained enrolled and that the 13 students “who were uncontactable were not progressing satisfactorily through their course and their enrolments cancelled” and their VFH debts reversed. [D5134]
430 As part of its closing submissions, the ACCC presented an Umair Butt Aide Memoire that contains the ASQA data (explained in more detail below) regarding the 12 students who were said to have been “progressing satisfactorily” and thus remained enrolled and indebted. That data shows that none of those students completed a unit of competency and, with reference to the contact strategy categorisation, only two were in category A and thus regularly in contact with the college and seven had never logged into the LMS. In the circumstances, there does not appear to be any reasonable or proper basis upon which it could have been concluded that all 12 of the students were progressing satisfactorily.
431 Also, the statement in the report that it had been decided to cancel all 32 enrolments from the agent in question and that it later turned out that 25 had not been cancelled “due to administrative errors” is questionable. That is because an approach of cancelling all 32 enrolments is in conflict with the agreed approach recorded above that only students who could not be contacted would have their enrolment cancelled.
O.3 Adil Ganchi investigation
432 On 18 November 2015, Neville Coward, Site’s Quality and Compliance Manager, sent an email to, amongst others, Mr Cook, Blake Wills and Khaled Akbery, about a complaint that had been received about a particular L2E CA, Adil Ganchi. The complaint was that he had enrolled a student with a disability who, according to the student’s employer who made the complaint, was not capable of understanding the VFH loan scheme documentation and was not capable of undertaking a diploma level qualification. [G21]
433 The next day, Khaled Akbery replied to the email reporting that the CA had passed on the student’s request to withdraw but that the “correct procedure” had not been followed and it had wrongly been sent to the “admissions inbox”. I infer that if the correct procedure had been followed then the withdrawal would have been actioned before the student progressed through census. Khaled Akbery reported that following the complaint the COE/CAN had been reversed. He also said that on listening to the QA call there was nothing to suggest that the student had a disability or learning difficulties. He said that all of the CA’s sales would now be monitored. [G21]
434 Subsequently, and unrelated to that earlier complaint, the college undertook an investigation with regard to the same CA. The report records that on 16 December 2015, Blake Wills noted that there was an unusually high number of referrals from the CA. When he raised that with Khaled Akbery, the latter noted that the college had recently received a complaint regarding the same CA. I infer that that is the November complaint referred to above. Khaled Akbery was then asked to undertake an investigation to ensure that nothing unscrupulous had taken place. [D5150]
435 The investigation identified that there were similarities across PEQ answers, particularly the answers to the short response questions, in the enrolments from the CA. That information was provided to Mr Wills who requested “to hold all enrolments” referred by that CA until further investigation took place. [D5150]
436 The students then enrolled by the CA who had not yet passed the census date in their course were identified and those “not progressing satisfactorily through the course as well as those that the college had been unable to contact” had their enrolments cancelled and their VFH debts reversed. Of the 23 students who had been identified, 13 were “cleared to continue” and the remaining 10 were “cancelled and reversed”. [D5150, D5160]
437 The report then records that on 4 April 2016 a review of the investigation was commissioned by Khaled Akbery, presumably in response to the ACCC’s notice. The review identified a number of students with disconnected phone numbers and invalid emails as a result of which the investigation was expanded to include all students whom the CA had referred to the college. As a result, a further 15 students had their VFH debts reversed either due to “inactivity” or because they were deemed unsuitable for the course. Three of the 15 reversals had been cleared to continue in the original investigation but had since “ceased to progress satisfactorily through their course”. [D5150]
438 As part of its closing submissions, the ACCC presented an Adil Ganchi Aide Memoire. Again with reference to the ASQA data and LMS login information, the aide memoire shows that the college allowed 33 students recruited by the CA to remain enrolled and incur VFH debt but that none of those students completed a single unit of competency, most had never logged into the LMS, and all but five were in either category B (responds irregularly to contact from the college) or category C (uncontactable) of the Contact Strategy categories. In the light of those facts, once again it does not appear that there was any reasonable or proper basis to conclude that the students were progressing satisfactorily.
O.4 Ramesh Gaire investigation
439 One of the CA investigation reports furnished by the college in response to the ACCC’s notice is the Ramesh Gaire Investigation Report. [D5141-5148] The report records that on 18 December 2015, Blake Wills contacted Khaled Akbery noting that there was an unusually high number of referrals from the L2E CA Ramesh Gaire. Mr Akbery then identified that there were similarities across PEQ answers, particularly in the emergency number field for the referrals from the CA. Mr Wills then requested “to hold all enrolments” referred by that CA until further investigation had taken place. [D5142]
440 The investigation then identified, from the 42 students who had been referred by the CA, those who were “progressing satisfactorily” through their course. Those 18 students continued, but those who were “not progressing satisfactorily” as well as those whom the college had been unable to contact (being the remaining 24) had their enrolments cancelled and where applicable had their VFH debts reversed. [D5142, D5147]
441 On 4 April 2016, a review of the investigation was commissioned by Khaled Akbery, once again apparently in response to the ACCC’s notice. The review identified a number of students with disconnected phone numbers and invalid emails as a result of which the investigation was expanded to include all students whom the CA had referred to the college. At the conclusion of the review a further 12 students had their VFH debts reversed either due to “inactivity” or because they were deemed unsuitable for the course. Four of those reversals had been cleared to continue to study in the original investigation but had since ceased to “progress satisfactorily through their course”. [D5142]
442 As part of its closing submissions the ACCC presented a Ramesh Gaire Aide Memoire which showed, with reference to the ASQA data and LMS login activity that there were 16 students recruited by the CA in question who did not complete a single unit of competency yet incurred a VFH debt that was not remitted by the college. Only four of those students had ever logged on to the LMS and only four were in category A of the Contact Strategy. Once again, it does not appear that there was any reasonable or proper basis to conclude that those students were “progressing satisfactorily”.
O.5 Walgett investigation
443 Another CA investigation report is the Walgett Investigation Report. [D5166-5172] It records that on 19 January 2016, an SSO received a call from a student resident in the town of Walgett in rural NSW. The student enquired about his loan device as he was yet to receive it from the college. The SSO then noticed that the address on file for the student was incorrect. That led to further investigation which identified the CA who had recruited the student as Raman Kumar from the college’s contracted agency partner Study from Home. [D571/A2016.75, D5167]
444 A report containing a list of students from Walgett was then prepared. There were 42 students on the list. Upon reviewing that report, Blake Wills instructed Khaled Akbery to reverse the CAN notices of students from Gingie Reserve, a small Aboriginal community about 10 km west of Walgett. It is not apparent how many such students there were as the relevant appendix to the report, appendix B, appears to be incorrect. [D5167, D5170]
445 Because the responsible agency was Study from Home, Mr Akbery then commissioned a further investigation into the activities of that agency in Walgett. Twenty-four active students referred by the agency were identified as residing in or around Walgett. Three of those students were identified as “progressing satisfactorily” through their course and were cleared to continue with their studies. The remaining 21 students were either uncontactable or were “not progressing satisfactorily” so their enrolments were cancelled and their VFH debts were reversed. [D5167]
446 The college’s CA monitoring log recorded that a complaint had been raised about Raman Kumar, the CA at the centre of the Walgett investigation, on 11 November 2015. The “area of concern” recorded in the log is that a student had advised that Mr Kumar was “not willing to show id, pressured him, took copies of students id including TFN, told the student what to say during call” [sic]. The “outcome” that was recorded on 9 December 2015 was “CA has no previous complaints raised against him however monitoring is required as copying TFN is forbidden but CA denies this, not sufficient evidence as to whether this actually happened”. [D582] The AICR records against the same complaint (no. A2015.55) that “CA will be monitored” and that on 25 January 2016 the student’s CAN was reversed. [D565]
447 There is a question with regard to the nature of the “monitoring” that was done in respect of the CA concerned. That is because appendix D to the Walgett Investigation Report shows that the CA recruited students with start dates on 9 December 2015 and another eight with start dates on 14 December 2015. [D5172]
448 Another question arises in relation to the adequacy of the Walgett investigation. The investigation arose because of the complaint of the conduct of a particular CA, Mr Kumar, and then it was broadened to include the recruiting agency for whom he worked, Study from Home, but it was limited to the Walgett area. Logically, if there were concerns about the CA and his agency then the investigation should have covered all students recruited by him and other CAs at the same agency, and not have been limited geographically in the way in which it was.
449 The ACCC’s Raman Kumar Aide Memoire shows that Mr Kumar recruited 184 students who incurred VFH debts that were not reversed or remitted by the college at the time that the ASQA data was prepared (i.e., September 2016). None of those students completed a unit of competency, the vast majority never logged in to the LMS and most of them were categorised as category C in the Contact Strategy (i.e., uncontactable).
450 Study from Home had on 9 February 2016 been described by Khaled Akbery to Mr Cook and Mohammed Akbery as one of the college’s three “lowest quality external brokers” with the “most frequent on complaints”. [D4928] On 29 March 2016, Khaled Akbery sent to Mr Cook a “heat map over time” and a report on Study from Home that he had prepared. In the report, he grouped the enrolments of students by individual CAs which showed “a lot of common themes amongst answers” and which he characterised as “doesn’t look great”. [D5093-5095] It is thus apparent that Study from Home was known to Mr Cook and Mr Akbery to be particularly high risk and a source of problems. Nevertheless, the review of the Walgett investigation in April 2016 did not look further at Study from Home.
451 The ACCC’s Study From Home Aide Memoire shows that CAs from that agency recruited 893 students who incurred VFH debts which the college had not remitted at the time that the ASQA data was prepared (September 2016). None of the students completed a unit of competency. The vast majority of the students never logged in to the LMS, and most of them were categorised as category C in the Contact Strategy (i.e., uncontactable).
O.6 Harpreet Kaur (or ‘puppet art’) investigation
452 On 25 November 2015, Ms Stevens wrote to Khaled Akbery and Ms Feldman saying that she had received a complaint about a CA, Harpreet Kaur, from the agency Let’s Get Qualified. It was the complaint of consumer B which is dealt with in detail further below. For present purposes it can be noted that the complaint was that the CA took advantage of the prospective student because of his old age, did not show her ID, insisted he do a course even when he told her that he was on a disability pension and due to being in the first stages of Alzheimer’s disease was “mentally incapable of studying”. The CA also wrote down for him what he had to say on the phone call to the admissions office. [D6152, D568/A2015.54, D580/ML2015.35] The CA wrote to the college denying the conduct that she had been accused of. [D5163] A reversal of the student’s VFH debt was done on the basis of “medical reasons”. [D6151]
453 The AICR records a complaint (A2016.13) about the same CA dated 13 January 2016 in respect of an email from a student received on 21 December 2015. The student stated that they had been enrolled as a student and incurred a VFH debt but had at no time enrolled and had never heard of the college. They asked for the debt to be reversed. It is recorded that the debt was then reversed. [D567] The agents’ monitoring log records “CA no longer engaged – 18/12/2015” adjacent to that complaint. [D581/ML2016.04]
454 Another report produced by the college in respect of CA investigations is the Harpreet Kaur Investigation Report which is in respect of the same CA. [D5162-5165] The report records that on 1 February 2016, Ms Edwards was advised of discrepancies in PEQ answers given by students recruited by the CA. Khaled Akbery compiled a report containing the short response answers of the PEQs in question which showed that 15 of 101 students from that CA who had progressed through census had the term “puppet art” in their answer to question 11 of their PEQ. [D5075, D5163]
455 The 15 students in question were investigated further. Seven of them were judged to be “progressing satisfactorily through their course” and the QA calls of the remaining eight were reviewed to identify any potential unscrupulous activity. Nothing untoward or dubious was identified in the QA calls of the students. There was further follow-up with the CA herself as well as with two of the students and ultimately it was concluded to take no further action because of, amongst other reasons, positive feedback from the students. [D5163]
456 Although what is recorded in the report would seem to reasonably justify no further action being taken, the report did not consider the previous complaints that had been made about the CA, and at the times of those complaints having been made it does not appear that any broader investigation was done in relation to other enrolments by that CA.
457 The ACCC’s Harpreet Kaur Aide Memoire shows that of the 15 students who were the subject of the investigation, none had their VFH debts remitted or reversed notwithstanding that none completed a unit of competency, only two had ever logged in to the LMS, and all but one were categorised in category B or C in the Contact Strategy (i.e., uncontactable).
458 There is a further complaint against the same CA recorded in the AICR and the agents’ monitoring log. The complaint is recorded as having been raised on 18 March 2019, although it is recorded “CA no longer engaged – 18/12/2015”. [D564/ A2016.72, D581/ML2016.50]
459 Although the college had in place systems for recording and investigating complaints about CAs, and it tended to respond to such complaints quickly, there are a number of weaknesses in its investigations and responses. These include limiting some investigations by time and geography where all enrolments by the CA(s) concerned would appear to have warranted investigation, and not taking any action in respect of students categorised as “progressing satisfactorily” where such categorisation appears to have been unjustified.
460 It is also apparent that there was inadequate follow-up on complaints until the college was required by the ACCC to report complaints and investigations, and several of the investigation reports appear to have been prepared specifically in response to that requirement. The quality and nature of complaint handling and investigations is not such as to have justified any belief that it contributed significantly to reducing the risk of CA misconduct or unsuitable enrolment.
P. LOGIN AND COMMUNICATION DATA
P.1 Mr O’Donnell’s analysis of communication with students
461 As indicated, a forensic investigator from Deloitte Risk Advisory Pty Ltd, Matt O’Donnell, gave evidence having been called by the ACCC. Mr O’Donnell did not give evidence as an expert. Rather, parts of his reports were tendered by consent and admitted under s 50 of the Evidence Act 1995 (Cth) as being summaries of facts otherwise contained in documents in circumstances where it would not have been possible conveniently to examine the evidence because of the volume or complexity of the documents in question.
462 Relevantly for present purposes, Mr O’Donnell’s summaries show, in two different periods, communications between students and the college as recorded in the college’s communications logs. The first period is 1 January 2015 to 30 June 2015, and the second is 1 July 2015 to 31 May 2016. Excluded from the figures given by Mr O’Donnell are communications between the college and students in the form of QA calls as part of the student enrolment process. The exercise was aimed at analysing communications between the college and students after enrolment.
463 Only students with a census date and a CAN issue date within the relevant period were included, i.e., enrolled students who progressed through at least one census. In the first period there were 871 students of whom 117 were identified from the LMS as having “no identified activity” and in the second period there were 6,034 students of whom 4,809 were identified as having “no identified activity”. It was only the summaries of the communication activity of the “no identified activity” students that was tendered. [C173/5.9, C201/1.3, C215/1.3]
464 It is apparent from parts of the reports that were not tendered, but which it is necessary to read in order to understand what was tendered, that the “no identified activity” students were identified on the basis that they had not logged in to the LMS or made an assessment attempt in any unit of competency. As I understand the restricted nature of the tender, I cannot take into account Mr O’Donnell’s conclusions, or summaries, that in the one period 117 out of a total of 871 and in the other period a total of 4,809 out of 6,034 students did not login to the LMS or make an assessment attempt in any unit of competency, but I can take into account that 117 and 4,809 students in each period had no communication activity with the college other than the QA call and the activity identified in Mr O’Donnell’s summaries.
465 The summaries can be reflected as follows: [C201, C215]
1 Jan 15 – 30 Jun 15
1 Jul 15 – 31 May 16
No. of students
% of total students*
No. of students
% of total students*
Two-way communication other than with respect to acquisition of a computer or withdrawal from a course
Two-way communication related only to the acquisition of a computer
Two-way communication related only to withdraw from a course
Two-way communication related to acquisition of a computer and withdraw from a course
No two-way communication
* i.e., the percentage of the total number of students who had been identified as having “no identified activity” with the college with reference to LMS login activity.
466 It is really the last category (i.e., “no two-way communication”) that has relevance because it shows the number of students in each period with whom the college had no contact whatsoever after the QA call. The percentages are unhelpful because they reflect only the proportion of “no identified activity” students who in fact had no communication activity with the college. They do not reflect the proportion of enrolled students who had no such activity. For that one would have to go back to the numbers of students who were enrolled in the periods (i.e., 871 and 6,034 respectively) but those figures are not in parts of the reports that were tendered so I take no account of them.
467 Mr O’Donnell stated in his report that the summaries were prepared by a team of five people with an additional two quality assurance personnel and that he considered the summaries to be “materially correct” and to “represent the most reliable analysis based on the available data”. [C174/5.13-4, C170/3.5] In evidence in chief he confirmed the contents of his report to be true and correct. [T433:24] He explained that under his instructions the members of his team categorised each communication recorded in the college’s communications logs according to the categories reflected in the above table. [T437:10-32]
468 The reliability of Mr O’Donnell’s summaries was challenged in cross-examination by senior counsel for the corporate respondents. The relevant part of the cross-examination is the following: [T437:34 – T438:4]
MR GILES: And did they then, one or more of them, report back to you the result of the categorisation?---I quality assured a – approximately, somewhere between 10 and 20 per cent of the categorisations, along with a engagement manager that was working on this project as well.
Right. And what did the quality assurance process involve?---I looked at the communications that they had identified a – and which caused them to create a categorisation and confirmed that – I confirmed the accuracy of that categorisation.
I see. And did you find – in doing that process, did you any errors?---I found some errors. Yes.
And did that – having found those errors, did that lead you to cause the other 80 to 90 per cent which you hadn’t quality assured to be checked?---No.
So that remaining 80 to 90 per cent wasn’t the subject of any quality assurance process?---That’s correct.
Nothing further, your Honour.
469 It is submitted on behalf of the corporate respondents that the summaries cannot be relied on because only 10-20% had undergone quality assurance during which some errors have been found which had not led Mr O’Donnell to check the remaining 80-90% of the evidence. I am not persuaded by that criticism of the summary evidence. The problem is that the cross-examination did not go far enough. It may be that the errors that were detected were too insignificant to have a bearing on Mr O’Donnell’s ultimate conclusion that the summaries were “materially correct”, or that as a result of the errors that he found he gave further instructions to his staff which meant that there was less (or no) likelihood of errors thereafter. His ultimate conclusion that the summaries were materially correct was not challenged. It is also not to the point that the remaining 80-90% of the categorisations were not checked because the very nature of a quality assurance process that checks a sample of the work is that the un-sampled work is not checked on the basis that the sample is representative of the remainder. I therefore accept his summaries as being substantially correct.
470 I therefore find that:
(1) in the six months January to June 2015 there was not a single student who was enrolled in the college and who progressed through at least one census and incurred a VFH debt with whom the college had had no contact after the initial QA call; and
(2) in the 11-month period July 2015 to May 2016 there were 1,859 students who progressed through at least one census and incurred a VFH debt with whom the college had had no contact after the initial QA call.
471 That said, the real value of Mr O’Donnell’s summaries, as I comprehend, is in the use of them that was made by Ms Thompson, to whose evidence I now turn.
P.2 Ms Thompson’s analysis of enrolments, fees and engagement
472 Janine Thompson was called as an expert witness by the ACCC. Ms Thompson is a Chartered Accountant and a partner of McGrathNicol specialising in the provision of forensic accounting services, including the preparation of expert reports concerning loss quantification, accounting matters and the review and construction of data sets. [C380] Ms Thompson’s expertise was not challenged, and it was not contended by any party that the conclusions expressed in her report were not based on her expertise and within her field of expertise.
473 Ms Thompson was provided with a number of data sources the volume of which meant that it was not practical to analyse the data using manual review techniques. Instead, the data sources were consolidated into Microsoft SQL Server, which is a relational database management system that enables the user to automate manipulations and calculations for large data sets. Within that system, a series of programs and conditions can be applied to isolate, extract and calculate the information required. [C392/3.1.1]
474 The data sources relied on by Ms Thompson included the following:
(1) ASQA data, being different versions of data from the Australian Skills Quality Authority for students of the college in the period 1 January 2014 to 28 September 2016. The ASQA data was furnished to ASQA by the college and was accompanied by an information guide to its use. The guide states that the data was current as at 30 September 2016, that the majority of the data was exported from the college’s Student Management System (SMS) and that the college was confident in the integrity of the data; [C387, D8583]
(2) a number of different data sets provided by the college giving information of events concerning students that occurred after 30 September 2016 (i.e., to update the ASQA data) including: the completion by students of one or more units of competency, the completion of their course, the re-crediting by the college of some or all of their VFH debt, the granting of scholarships (i.e., allowing the student to attempt a course again without incurring a further debt), and the enrolment of students without incurring VFH debt or further debt because of the imposition of the VFH cap in 2016; [C388-9, C394/3.8.3(a)(i)]
(3) further data sets provided by the college showing activity by students on the college’s Learning Management System (LMS); [C389 and 390]
(4) further data sets provided by the college including registers of complaints by students and a log of CAs in respect of whom the college had received a tip-off or a complaint; [C389-390]
(5) Some extracts from Mohammed Akbery’s affidavit evidence; and [C390]
(6) Mr O’Donnell’s reports. [C390-1]
475 The starting point for Ms Thompson’s analysis was the ASQA data which was the most comprehensive. [T450:39-41] The ASQA data was prepared by Mohammed Akbery with help from some others at the college in response to a compulsory notice from ASQA. [T619:43-T620:9] There was an initial notice dated 28 September 2016 pursuant to which some information was provided and then a follow-up notice dated 15 November 2016 in response to which further information was produced. [D6339-6343] In the November 2016 notice, ASQA set out several concerns that it had with the college including that on its then information 84% of the entire amount of VFH monies claimed by the college, some $72 million, was in respect of students who completed no units of competency. [D6340] It also raised a concern with regard to the large number of enrolments that appeared to have never logged in to the LMS. [D6340]
476 It was thus clear to Mr Akbery that the information provided to him in response to the notice might be used against the college and that it should therefore not only be accurate but if any assumptions were to be made it was in the college’s interests that those were made in its favour. That is to say, Mr Akbery would not be expected to give inaccurate information, or take short cuts in compiling information, that was against the college’s interests.
477 Mr Akbery explained that the information reflected in the ASQA data spreadsheet was drawn from different systems, primarily the Student Management System, that “aren’t normally combinable” and that in assembling the data “what we attempted to do was to respond as best we can to what ASQA has put in their notice”. [T718:15-18, T725:34-44, T726:1-8] He agreed that he took care to ensure that the information was as accurate as he could make it. [T718:26]
478 Some criticism was directed at the ASQA data on the basis that in some instances a withdrawal date was given that preceded the first census date yet the student was nevertheless recorded as having passed census and incurred a debt. [T451:14-20] There were, however, only nine students whose purported withdrawal dates pre-dated the census dates but were nonetheless recorded as having passed census and incurred a debt. Of those, only four were online students who became enrolled in the earlier period or relevant period and were therefore relevant to Ms Thompson’s analysis. [ACS354 fn 155] In the circumstances those criticisms are immaterial.
479 Mr Akbery explained that at the time that he prepared the LMS activity data he could readily identify from the LMS whether a student had logged in at all or not. [T621:19-21] He later explained in relation to the LMS activity data that it was produced from the “manipulation of combining two different reports” rather than being exported from one existing record, although it did not involve any interpretation in response to which it was produced. [T726:14-22, T727:29-46]
480 It was argued on behalf of Mr Wills that any reliance on Ms Thompson’s analysis was “fraught” because of the unreliability of the underlying ASQA data and LMS activity data as referred to above. I am not convinced by that criticism. Although there were anomalies here and there, there is no reason to suppose that Mr Akbery did not do the best that he could with the information that he had and, if there were errors, they are likely to have been minor and they are more likely to have favoured the college than prejudiced it. In my view, Ms Thompson’s analysis can be relied on as being substantially correct.
481 Ms Thompson explained in a supplementary report that her reliance on Mr O’Donnell’s reports was limited to the findings on two-way communication for the students that Ms Thompson had identified progressed through at least one census date and had not logged into LMS. [C590/2.2.4, C591/3.2.2] However, given the mismatch between Mr O’Donnell’s first and second periods, on the one hand, and the earlier period and the relevant period as used in the litigation and by Ms Thompson on the other, Ms Thompson used her own analysis to determine whether a particular student was enrolled within the earlier period or the relevant period and used Mr O’Donnell’s reports to find the categorisation of communications with that particular student so that her conclusions with respect to the periods remained consistent. [C591/3.1.6, T448:8-12]
482 One of Ms Thompson’s conclusions was that in the relevant period 6,032 enrolments (out of a total of 7,324) passed through at least the first census which meant that the conversion rate was 82.36%. [C399/4.1.3, C402/4.7.2] Senior counsel for the corporate respondents sought to cast some doubt on that figure, or at least its utility, by having her explain that it includes students who later had their fees refunded, re-credited or reversed and students who were not charged fees because of the imposition of the VFH cap in 2016. [T444] That figure was also used to calculate the percentage of enrolments that passed through at least census 1 (also C1 or first census) but who did not login to the LMS, or who did not complete any unit of competency or who did not complete their course. [T448]
483 However, the students who were enrolled in the distance campus in the relevant period who had some or all of their VFH debt re-credited by the college after the preparation of the ASQA data are listed in one of Ms Thompson’s data sources which was also tendered in evidence. [C388, D8592] There are 50 such students. Thus, the number of students who were enrolled in the relevant period who passed through at least the first census and who did not have their fees refunded, re-credited or reversed can be taken to be 5,982 (6032 minus 50) which means that the corrected conversion rate for the relevant period taking into account re-credits is reduced to 81.68%.
484 Corresponding adjustments should also be made to Ms Thompson’s figures for the percentage of enrolments that passed through at least C1 but who did not log in to the LMS, who did not complete any unit of competency or who did not complete their course. Ms Thompson calculated those percentages by taking the relevant number, being 5,217, 5,543 and 5,595 respectively, as a proportion of 6,032. [C405/4.12.2, 4.12.5 and 4.12.7] The difficulty, however, is that the data does not reflect how many of the 50 students who were re-credited did not log in to the LMS or did not complete any unit of competency or their course. Making the assumption in the respondents’ favour that none of those students logged in to the LMS or completed any unit of competency or their course, Ms Thompson’s figures can be reduced by 50 and the percentages recalculated. The recalculation, however, must necessarily be done in relation to the total number of enrolments that passed through C1 being 5,982 rather than 6,032, with the result that the changes in the percentages are negligible.
485 Ms Thompson’s analysis, with adjustments as explained in the preceding paragraphs reflected in parentheses, includes the following conclusions:
Description [Thompson ref.]
Length of the period [Glossary]
No. of course enrolments [4.1.3]
No. of enrolments through C1 [4.3.2, 4.7.2]
% of enrolments through C1 (i.e., conversion rate) [4.3.2, 4.7.2]
% of enrolments withdrawn before C1 (i.e., attrition rate) [4.3.2, 4.7.2]
Tuition fees claimed (and not refunded, re-credited or reversed) [4.3.5, 4.7.5]
% of enrolments through at least C1 with no LMS log in [4.11.2, 4.13.2]
• Tuition fees claimed (and not refunded, re-credited or reversed) in respect of enrolments through at least C1 with no LMS log in [4.11.3, 4.13.3]
% of enrolments through at least C1 who did not complete any unit of competency [4.11.2, 4.13.2]
• Tuition fees claimed (and not refunded, re-credited or reversed) in respect of enrolments through at least C1 who did not complete any unit of competency [4.11.3, 4.13.3]
% of enrolments through at least C1 who did not complete the course [4.11.2, 4.13.2]
• Tuition fees claimed (and not refunded, re-credited or reversed) in respect of enrolments through at least C1 who did not complete the course [4.11.3, 4.13.3]
486 Counsel for the ACCC produced an ASQA Data Aide Memoire during closing submissions which also sought to meet the criticism of Ms Thompson’s figure of 6,032 enrolments in the relevant period progressed through the first census date by taking into account students who had subsequently had their VFH debt refunded, re-credited or reversed. By a methodology set out in their aide memoire they came to a different figure of online course enrolments with the commencement date during the relevant period in respect of whom VFH debt was claimed for at least the first census date. The figure is 5,587. On the face of it, that is a more conservative approach making assumptions in favour of the college than the approach I have taken above. Using that figure, 76% of enrolments during the relevant period progressed through first census.
P.3 Summary of findings on login and communication data
487 With reference to the above data, and using monthly averages in respect of some of the data in order to take into account that the earlier period was approximately 10 months and the relevant period was approximately three months, it can be observed that between the earlier period and the relevant period there was an increase in:
(1) the average enrolments per month from 132 to 2,441, i.e., an increase of 1849% (row 2);
(2) the average number of enrolments per month through at least the first census from 81 to 1,994, i.e., an increase of 2462% (row 3);
(3) the conversation rate of about 20% and corresponding decrease in the attrition rate (rows 4 and 5);
(4) the average tuition fees claimed (and not refunded, re-credited or reversed) per month from $74,030 to $18,055,292, i.e., an increase of 2439% (row 6);
(5) the percentage of enrolments who passed through first census who had no LMS login activity from 28% to 86% (row 7);
(6) the average tuition fees claimed (and not refunded, re-credited or reversed) per month in respect of enrolments through at least the first census who had no login activity from $199,931 to $15,378,820, i.e., an increase of 7692% (row 8);
(7) the percentage of enrolments who passed through at least the first census who did not complete a single unit of competency from 82% to 92% (row 9);
(8) the average tuition fees claimed (and not refunded, re-credited or reversed) per month in respect of enrolments through at least the first census who did not complete a single unit of competency from $565,038 to $16,526,389, i.e., an increase of 2925% (row 10); and
(9) the average tuition fees claimed (and not refunded, recredited or reversed) per month in respect of enrolments through at least the first census who did not complete the course from $707,825 to $16,687,764, i.e., an increase of 2357% (row 12).
488 For completeness, it is apparent that the percentage of enrolments through at least the first census who did not complete the course remained constant across the two periods at approximately 93%.
489 Although Mr O’Donnell’s summaries are less convenient to deal with because the time periods that he dealt with did not correspond with the two periods of time that the ACCC distinguishes between in the manner in which it puts its case, i.e., the earlier period and the relevant period, they are nevertheless instructive. The fact that in the period January to June 2015 not a single student was passed through census with whom the college had had no contact can be ascribed to the policy of campus driven withdrawals – that policy was aimed at achieving exactly that result, that is that all students with whom the college could not make contact before the first census would be withdrawn so that they did not incur VFH debts. Then, in the period July 2015 to May 2016 nearly 2,000 students with whom the college had had no contact and who had had no login activity progressed through first census and incurred VFH debts. Most of that period was when the campus driven withdrawal policy prior to first census had been abolished. It is unavoidable that but for the abolition of the campus driven withdrawal policy those students would not have passed through first census and would not have incurred VFH debts.
490 There is no getting away from the fact that the identified changes between the earlier period and the relevant period are dramatic. As previously identified, the dramatic and sharp increase in enrolments and revenue, the increase in the conversion rate, the substantial lack of LMS login activity and that very substantial numbers of students could not be contacted were all known to the college. To the extent that the other identified data was not actually known, it could certainly have been extracted from the college’s systems – after all, that is where it came from for the purpose of compiling the ASQA data which was the foundation for Ms Thompson’s work.
491 It is submitted on behalf of Mr Wills that it was not proved that these results were caused by the enrolment and withdrawal process changes or, with reference to how the case was pleaded by the ACCC, that it was not proved that the process change results arose “primarily as a result of” the process changes.
492 There is no basis to that submission. The process changes were made precisely in order to turn the college’s economic fortunes around by incentivising CAs to increase enrolments. Campus driven withdrawals were abolished precisely to increase the conversion rate, thereby offering greater incentive to CAs to recruit for the college and increasing the college’s revenue. There is nothing other than the process changes that anyone has pointed to that might have accounted for the dramatic results that were witnessed. Certainly, the respondents led no evidence in that regard. In the circumstances, I infer as the most probable and reasonable conclusion that the process change results that were established in evidence were substantially caused by the enrolment and withdrawal process changes.
Q. CONCLUSIONS ON THE SYSTEM CASE AGAINST THE COLLEGE
493 Thus far in these reasons for judgment I have set out much of the evidence and made factual findings on that evidence. It is now necessary to draw those findings together and analyse whether the ACCC’s system case against the college is established. For that purpose it is worthwhile summarising some key findings.
494 During the earlier period and the relevant period, the college (through its key officers being Mr Cook, Mohammed Akbery and Ms Edwards) knew of the CA misconduct risk and the unsuitable enrolment risk. That is to say, they knew that there was a real risk, that regularly materialised, that CAs would use a range of prohibited or deceptive stratagems to pressurise or trick consumers to enrol in courses at the college with the result that unsuitable consumers became enrolled as students. The prohibited or deceptive stratagems might include making false and misleading statements to consumers to the effect that the online courses were free, failing to properly inform consumers that they would incur VFH debts if they enrolled in online courses or the circumstances in which the debts would have to be repaid, pressuring consumers to enrol in online courses, offering consumers inducements, such as free laptops or other devices, to enrol in an online course, completing consumers’ enrolment documents including the PEQ for them, and coaching consumers during the course of the inbound QA call.
495 Consumers might be unsuitable for enrolment for various reasons including, for example, that they would not be contactable by the college, they would have no or minimal engagement with their online courses, they did not in fact wish to enrol in an online course, or by reason of lacking sufficient LLN skills, computer skills, or access to technology required to undertake online courses.
496 It was known by the college that the outbound QA call enrolment procedure and the campus driven withdrawal procedure, both of which were applied during the earlier period, provided important safeguards against CA misconduct risk and unsuitable enrolment risk. Notwithstanding the safeguard of the outbound QA call, and other safeguards such as CA training and monitoring, it was known to the college that a substantial proportion of applications for enrolment were in respect of consumers who were unsuitable for enrolment, in particular because they were uncontactable by the college and did not engage with their courses by logging in to the LMS at all. The result was that the safeguard of campus driven withdrawals before first census was a critical safeguard against the enrolment of such consumers as students, and those students incurring VFH debts for which they would get absolutely no benefit.
497 Notwithstanding that knowledge and appreciation, for the purpose of profit maximisation substantially driven by budget expectations set by Site, the college devised and introduced the enrolment process and withdrawal changes that were applied during the relevant period. Notably, the college knew that the inbound QA call procedure offered less of a safeguard against CA misconduct risk than the previous outbound procedure – indeed, the college knew that it increased that risk. Notwithstanding that, and notwithstanding the absence of the introduction of alternative rigorous safeguards which might mitigate that increased risk, the college abolished the campus driven withdrawal procedure.
498 To the knowledge of the college, the changes to the enrolment process and the abolition of campus driven withdrawals had a number of immediate consequences. In particular, the number of enrolments at the college increased very significantly, very quickly. The number and proportion of such enrolments that were unsuitable, in one or more of the ways already identified but in particular because they were uncontactable by the college and failed to login to the LMS or otherwise engage with their courses, rapidly escalated. To the extent that the college was not aware of the escalating numbers and proportion of unsuitable enrolments, it should readily have had that awareness. That arises from the fact that its systems meant that it could at any time see whether students were logging in to the LMS, it knew how many students were not able to be contacted, it knew of the increased risk of CA misconduct and unsuitable enrolment because of the enrolment process changes and the abolition of campus driven withdrawals, and it knew of the dramatic escalation in enrolments bringing windfall revenue and profits.
499 The result is that the college well knew that its dramatic increase in revenue and turnaround in profits was substantially built on VFH revenue in respect of students who may have been the victims of CA misconduct, were unsuitable for enrolment, should not have been enrolled and who would gain no benefit whatsoever from their enrolment, yet who incurred very substantial debts to the Commonwealth as a result of their enrolment.
500 In those circumstances, the college took advantage of the consumers who were enrolled as a result of CA misconduct or who were unsuitable for enrolment by maintaining their enrolment and claiming VFH revenue from the Commonwealth or both. That is particularly the case in respect of consumers who, subsequent to applying for enrolment through the inbound QA call process in the presence of a CA, were not able to be contacted by the college and failed to login to the LMS. By allowing such consumers to progress through census so that the college could claim the VFH revenue from the Commonwealth was to act against conscience; it was a sharp practice that was manifestly unfair to such consumers; it was driven by avarice without regard to the interests of such consumers; it preyed on their vulnerability (being their being prey to CA misconduct, their unsuitability or their uncontactability). In the result, the college engaged in a system of conduct in connection with the supply of services to consumers that was, in all the circumstances, unconscionable within the meaning of s 21 of the ACL.
501 There is also the question of what role the ACCC’s case with regard to the college “claiming and retaining” VFH revenue plays in the analysis. Notwithstanding its knowledge identified above, through the latter part of the relevant period and thereafter, the college persisted in retaining and claiming such revenue from the Commonwealth with the result that those unsuitable students’ debts were or would be maintained.
502 I accept, as submitted by the respondents, that the Commonwealth was well able to defend itself from any unjustified claim for revenue by the college, but that does not answer the contention that by claiming revenue from the Commonwealth to which it was legally entitled but which entailed a corresponding debt owed by unsuitable students to the Commonwealth who had been enrolled in the circumstances described above, the college was acting unconscionably vis-à-vis those students; it was seeking payment from the Commonwealth that would have the effect, if paid, of students being burdened with a corresponding loan debt (plus the 20% loan fee) notwithstanding that very substantial numbers (and proportion) of those students were unsuitable for enrolment and could derive no benefit from their debt. Site, on behalf of the college, continued to assert its legal entitlement to such payment in its 2018 and 2019 annual reports. [E464, E507, E578, E623]
503 The corporate respondents submit that insofar as the claiming and retaining of VFH revenue is concerned, the conduct complained of does not constitute unconscionable conduct for the primary reason that such conduct occurred within the detailed constraints and dictates of the HES Act, Sch 1A. They say that they followed the rules of the scheme that they were required to follow, and that after an audit by Deloitte the Commonwealth decided what to pay the college which must be regarded as the proper indebtedness of the Commonwealth to the college. On that basis, it is said that for the college to claim and retain that indebtedness cannot be unconscionable.
504 There is little evidence of just what the Commonwealth did by way of audit and on what basis it decided that certain amounts should be paid and others not. I nevertheless accept that the Commonwealth paid certain amounts which the ACCC says that it is unconscionable for the college to have claimed and to have subsequently retained, and the college continued to claim amounts which the Commonwealth has not paid and which the ACCC says it is unconscionable for the college to continue to claim.
505 There are two principal considerations why the corporate respondents’ submissions on this part of the case are not a satisfactory answer to it. The first is that, as I have said, it is not clear just what exercise the Commonwealth undertook. It is nevertheless to be inferred that it may have approached the matter as one of debt, i.e., with regard to what the Commonwealth’s indebtedness to the college was under the terms of the scheme, and not with regard to whether there was some basis with reference to the unconscionability of the college’s system vis-à-vis consumers to refuse or resist payment. The exercise of a legal right can be unconscionable: Pittmore Pty Ltd v Chan  NSWCA 344 at  per Leeming JA, Bell P and Brereton JA agreeing.
506 That takes me directly to the second consideration, which is that the ACCC’s case is directed at the unconscionability of the college’s system towards consumers. It is consumers who are saddled with considerable VFH debt, for no return, as a consequence of the conduct the ACCC complains of. It is no answer to that case that claiming and retaining revenue from the Commonwealth, which claiming and retaining causes consumers to have debts to the Commonwealth, to say that the Commonwealth can look after itself. The consumers do not have equivalent resources or ability to look after themselves, which is why the ACCC appeals to the Court for a remedy, and the Commonwealth has recourse against the consumers by calling in the VFH loans under the terms of the VFH scheme.
507 Although it adds little to the case at the end of the day, which may be reflected in any penalties that might be imposed, my view is that if the system of conduct or pattern of behaviour that is complained of is unconscionable, then to claim and retain the windfall benefits of that conduct is also unconscionable. That is because the unconscionability of the conduct could have been cured, or at least ameliorated, by not claiming or retaining the revenue derived from the conduct and thereby reverse the consumers’ debts.
508 The corporate respondents advance a number of arguments which they say, both individually and in combination, demonstrate that there was not an unconscionable system of conduct, as alleged in the pleadings, by the college.
509 First, they say that the conduct complained of by the ACCC does not have the requisite character of being unconscionable by reference to societal norms of acceptable commercial behaviour or the statutory criteria in s 22(1). They submit that the ACCC’s case amounts to an invitation to expand the conception of unconscionable conduct to apply to the present circumstances is heterodox and ought to be rejected as quite wrong.
510 In that regard, the corporate respondents emphasise that the use of the term “unconscionable” in s 21 of the ACL rather than terms such as “unjust”, “unfair” or “unreasonable” reflects a deliberate legislative choice to proscribe a particular type of conduct: Kobelt at  per Keane J. They emphasise that a court is not authorised to “dilute the gravity of the equitable conception of unconscionable conduct so as to produce a form of equity-lite”: Kobelt at  per Gageler J. Also, the court must not use the considerations in s 22 of the ACL to “allow the court to arrive more easily at an assessment that conduct amounts to exploitation”: Kobelt at  per Gageler J.
511 The corporate respondents also submit that the absence of dishonesty or moral taint, and the absence of undue influence, pressure or unfair tactics, are material considerations in determining whether conduct involves such a departure from accepted community standards as to warrant the characterisation unconscionable: Kobelt at - per Kiefel CJ and Bell J.
512 I accept that in the present case no dishonesty was alleged or established. While that is a relevant factor, the absence of dishonesty does not mean that the conduct was not unconscionable.
513 It is not so easy to accept the notion that there was an absence of undue influence, pressure or unfair tactics. A form of CA misconduct risk was the risk that CAs might use undue influence, pressure or unfair tactics on unsuspecting consumers, and indeed the evidence bore out that that form of CA misconduct risk materialised from time to time. Moreover, the college knew of that. It nevertheless introduced enrolment and withdrawal process changes that weakened the protections against those risks materialising, or if they did materialise, against the college saving consumers from the debt consequences of being victims of such misconduct. For the reasons I have already given, the conduct of the college was sufficiently egregious to be unconscionable.
514 The corporate respondents submit that each of the process changes (i.e., the enrolment and withdrawal process changes) is characterised by features that are ordinarily acceptable aspects of everyday commercial life in Australia. They submit, for example, that there is nothing inherently unconscionable about selling an online course by telephone, and that the fact that the origination of a telephone call changes from an outbound call to an inbound call does not change the character of the call sufficient to convert the conduct from conscionable to unconscionable without reference to what is said on the call or the character of the conduct of the call.
515 That much may be accepted. But to analyse the conduct in that way is to fall into exactly the trap that elsewhere the respondents, correctly, urge the Court to avoid. That is the trap of considering any particular part of the overall system in isolation and deciding whether that particular part is unconscionable or not. It is the system as a whole – “in all the circumstances” – that must be considered. Of course, a system of enrolment that has an inbound QA call in materially the same form and circumstances as that adopted by the college in the relevant period would not on its own be unconscionable. However, it is that aspect of the system of enrolment taken together with a number of other factors, most notably, but not exclusively, being the knowledge of the college of the CA misconduct risk and unsuitable enrolment risk, the significant numbers and proportions of students who became enrolled who were unsuitable and who were not able themselves to withdraw, the abolition of campus driven withdrawals, and the knowledge of the consequences of those process changes, that lead inexorably to a conclusion of unconscionability.
516 The corporate respondents also submit that there is nothing unconscionable about the withdrawal policy that was applied in the relevant period (i.e., without a provision for campus driven withdrawals as there had been in the earlier period) which, they say, is borne out by the fact that the ACCC did not adduce evidence to suggest that consumers who enrolled in comparable online courses in other colleges were able to withdraw from their courses on more favourable conditions which founds an inference that the college’s withdrawal policy was consistent with the withdrawal policy of every other VET provider in Australia.
517 I reject the submission that such an inference can or should be drawn. The corporate respondents sought to tender evidence of the withdrawal policies of other colleges which I rejected on the basis that it is irrelevant to the exercise of deciding whether the college’s enrolment and withdrawal processes taken together (i.e., the “system”) was, “in all the circumstances”, unconscionable. To gain anything useful from an analysis of withdrawal policies of other colleges would require an analysis of their whole systems of enrolment and withdrawal, including supervision of agents and so on. That is because it may be that such other colleges also had unconscionable systems – the fact that something is a common practice in the particular sector of the market does not mean, necessarily, that it is not unconscionable. To put it differently, just because everyone is rorting a poorly designed and/or administered scheme does not mean that no one’s rorting is unconscionable. Also, it may be that an identical withdrawal policy in another college is not unconscionable because of other aspects of its overall system of enrolment which offers better protection against CA misconduct risk and unsuitable enrolment risk than that of the college. In short, considering withdrawal policies of other colleges in isolation is unhelpful to the statutory task that must be undertaken in the present case.
518 The corporate respondents also submit that the withdrawal policy in the relevant period was consistent with the VET Guidelines and the HES Act, in particular because campus driven unilateral withdrawal has never been mandated. There are two responses to the submission. One is that just because particular conduct is not proscribed by particular rules applicable to it does not necessarily mean that it is not unconscionable. I accept that if particular conduct is not against the rules that may be relevant in the evaluative judgement with regard to unconscionability, but it is not determinative. That much is made clear by Gageler J in Kobelt (at , cited at  above) where his Honour characterised the statutory norm of unconscionability as preventing a person from relying on what are, in terms of the general law, their legal rights.
519 The other response is that the VET Guidelines proscribed any “barriers to withdrawal” and that an absence of awareness by a consumer that they have been enrolled or that they can withdraw is a barrier to withdraw. If, after having been enrolled through the inbound QA call process by which a CA made a telephone call on the CA’s telephone to the college’s admissions office, a student is thereafter uncontactable – which is to say that numerous telephone calls and emails go unanswered – and they have not themselves made contact with the college or logged in to the LMS, the probability is that they do not know that they have been enrolled or, if they do know that they have been enrolled, that they have not received and appreciated the information telling them that they can withdraw. That probability is borne out by the actual experience of the college. It is therefore not accurate to say that by abolishing campus driven withdrawals the college did not have or introduce any barriers to withdrawal.
520 The corporate respondents submit, with reference to what was said by McHugh J in a very different context in Perre v Apand Pty Ltd  HCA 36; 198 CLR 180 at , that “one of the central tenets of the common law is that a person is legally responsible for his or her choices.” On that basis they submit that consumers are generally imputed with a degree of personal responsibility and personal autonomy for their decisions and that it is the decisions of the so-called unsuitable students to enrol and then not withdraw that led to their VFH debts for which they derived no benefit, rather than the abolition of campus driven withdrawals.
521 Obviously, the personal responsibility and autonomy of consumers must be recognised; we are indeed free to make our own bad decisions. However, Parliament in its wisdom has imposed a particular standard of behaviour on suppliers of goods and services in trade and commerce, namely that they do not engage in conduct (or a system of conduct) that is unconscionable in all the circumstances. Where there is knowledge of CA misconduct risk and unsuitable enrolment risk, and significant numbers and proportions of consumers who are enrolled as students cannot thereafter be contactable by the college and do not engage in any way with their courses, it is very clear that something is remiss. It is that there are students for whom CA misconduct risk or unsuitable enrolment risk (or both) has materialised and those students have not, for one reason or another, which could include that they did not know that they were enrolled or did not know or properly appreciate that they could withdraw, withdrawn prior to census. To consciously take advantage of such students with that knowledge by not withdrawing them is to act unconscionably. Such a conclusion no more undermines notions of personal responsibility and autonomy than what Parliament requires by way of offering protection against a particular type of conduct, namely that which is in all the circumstances unconscionable.
522 The corporate respondents also make submissions about what the ACCC characterises as their profit maximisation purpose. They rightly draw attention to what Keane J said (at ) in Kobelt (identified at  above), namely that the pursuit by those engaged in commerce for their own advantage is an omnipresent feature of legitimate commerce and thus to say that someone was pursuing their own commercial interests with a view to profit is to state the obvious, but also to say very little as to whether they engaged in unconscionable conduct. I accept that in this case the profit maximisation purpose of the college, and indeed Site, says little about whether or not the conduct in question was unconscionable. But it does not say nothing about it. Had the purpose of the changes been to offer students better protection against the predations of unscrupulous CAs but they had been misjudged and had the adverse effect, the situation would have been quite different. “Well-intentioned conduct may have dire consequences for other people; malign conduct may be without consequence; adventitiously, it may have benign consequences”: Director of Consumer Affairs Victoria v Scully  VSCA 292; 303 ALR 168 at  per Santamaria JA, Neave and Osborn JA agreeing.
523 The relevance of the profit maximisation purpose in the present context is that it was because of that purpose that changes were made to the system which significantly weakened existing protections, even in the knowledge that that would be the result of the changes. The correspondence between Mr Cook and Ms Edwards on 18 August 2015 (described at - above) illustrates that the changes were adopted regardless of that knowledge. The changes were also maintained thereafter as their adverse results materialised and became apparent.
524 Secondly, the corporate respondents submit that the ACCC failed to identify the whole of the system that the college had in place for consumers enrolled during the relevant period. They submit that the process changes took place within a broader system that the college had implemented over an extended period of time, and that was characterised by measures designed to minimise the risk that students would be subjected to misconduct by CAs or that unsuitable students would be enrolled. As such, they say that the broader system “cannot be pigeon-holed into the false dichotomy between the earlier period and the relevant period”, but instead represents a process of continuous development and refinement.
525 In particular, the corporate respondents point to a number of components of their overall system of enrolment which they say acted as important safeguards for consumers. These components are:
(1) the college’s contractual terms with its marketing partners that required the latter to, for example, carry out sales honestly and fairly, to provide accurate information to consumers and to comply with all applicable legislation and regulatory obligations;
(2) the college’s CA induction and onboarding process aimed at training CAs to do the right thing;
(3) the requirement that a prospective student speak with someone from the college (i.e., in the QA call, whether outbound or inbound) rather than to rely only on communications between the recruiting CA and the prospective student;
(4) the college’s efforts to obtain some measure of prospective students’ LLN capabilities and their understanding of the VFH scheme through the PEQ;
(5) the provision for an SSO to try to contact students after enrolment and before census; and
(6) the maintenance of the college’s student complaints register, agent issues and complaints register and CA monitoring log.
526 None of these components of the overall system, individually or together, was sufficient to protect consumers and there was no evidence from the corporate respondents to support any finding that any officer on behalf of the corporate respondents believed that these components operated effectively to protect consumers. Moreover, each of these components was part of the system, in one form or another, in both the earlier period and the relevant period. The significance of the so-called dichotomy between the two periods is that because of declining market share in the earlier period the college undertook changes specifically aimed at reversing the trend. None of those changes was aimed at compensating for the key recognised consequences of the changed QA call procedure and the abolition of campus driven withdrawals, namely that there was a greater likelihood that unsuitable students would be enrolled and that they would progress to census without being withdrawn.
527 There were contractual terms requiring CAs to act promptly and honestly, and they received training in that respect, but it was known that there was a risk that they would not act as required. The protection offered by requiring that a prospective student speak with a college admissions officer prior to enrolment was common to both periods, yet such protection as it offered was weakened by the QA call process changes for the relevant period. The same is true of using the PEQ as an indicator of LLN capabilities. To the extent that it was so used in the relevant period, it was for the purpose of providing post-admission LLN support rather than as a filter to admission. Providing for an SSO to contact students after admission and before census was very important, and it did serve to identify a number of students who should not have been enrolled and who then asked to be withdrawn. However, it was useless in respect of students who could not be contacted. Moreover, as the evidence of Ms Stevens shows, the SSOs could not keep up with the increasing enrolments. The complaints registers relied on students contacting the college and making complaints, and as the evidence established in respect of those who only raised matters after census there was a limited ability to allow them to withdraw and reverse their debts.
528 I therefore reject the submission that the ACCC’s case impermissibly focuses on aspects of the overall system in isolation from the others. The evidence in the case canvassed the system as a whole, and the corporate respondents had every opportunity to put on evidence, if they had it, of the efficacy of other measures in protecting consumers from CA misconduct risk and unsuitable enrolment risk, and in their belief at the relevant time in such efficacy. As indicated, there was no evidence with regard to belief and the evidence did not support any submission in favour of the efficacy of such measures. They were plainly ineffective in respect of substantial numbers and proportions of enrolled consumers.
529 Thirdly, the corporate respondents submit that the ACCC’s case relies upon a false comparator for assessing unconscionability. They submit that the ACCC’s comparison is between the college’s conduct during the relevant period and its own conduct during the earlier period, rather than with reference to societal norms of acceptable commercial behaviour.
530 The corporate respondents are, of course, correct in identifying that any ultimate conclusion with regard to unconscionability must entail a testing of the identified conduct, in all the circumstances, against the statutory norm. Of course, the fact that a person changed their conduct with the consequence that it was less protective of consumers is not on its own sufficient to establish unconscionability because even the changed and less protective conduct may be well within the bounds of acceptable commercial behaviour. But that is not what the ACCC’s case does. The relevance of the comparison between the system of conduct in the earlier period and the system of conduct in the relevant period is what it demonstrates with regard to the college’s knowledge and intention, and the effect of the conduct on consumers. The fact that the system was changed in material respects and the reasons for those changes, as well as the knowledge and understanding of the college as to their predicted and subsequently realised effects, are all part of the relevant circumstances to be taken into account when making the ultimate evaluation.
531 Fourthly, the corporate respondents submit that the ACCC’s allegation regarding knowledge, or reasonable foreseeability, of risk is indeterminate and in any event foreign to the law of unconscionable conduct. They submit that to the extent that the ACCC’s case relies on the college knowing of, or that it should reasonably have foreseen, CA misconduct risk and unsuitable enrolment risk as a step in the reasoning to unconscionability is to introduce notions of tort-like duty of care or fiduciary duty between supplier and consumer which is novel to the statutory proscription against unconscionability.
532 There can be no doubt that the state of mind of the party who is alleged to have engaged in unconscionable conduct is relevant to the assessment of whether that conduct is unconscionable. That state of mind may be as to their intention or their knowledge, or even as to what they ought reasonably to have known. For example, in the context of unconscionability in equity, before there can be a finding of unconscientious taking of advantage it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage: Thorne v Kennedy at  per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ, citing Commercial Bank of Australia Ltd v Amadio  HCA 14; 151 CLR 447 at 462 per Mason J. To put it another way, the special disadvantage must have been sufficiently evident at the time of the transaction to make it unconscientious to procure or accept the assent of the innocent party: Thorne v Kennedy at  per Gordon J; Blomley v Ryan  HCA 81; 99 CLR 362 at 428 per Kitto J; Amadio at 474 per Deane J; Louth v Diprose  HCA 61; 175 CLR 621 at 637 per Deane J; Kakavas v Crown Melbourne Ltd  HCA 25; 250 CLR 392 at  and  per French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ. The above examples were all cited in the context of statutory unconscionability by Nettle and Gordon JJ in Kobelt at .
533 In the circumstances, the submission that to identify as an element of the college’s unconscionable conduct what it knew or ought to have known is to impermissibly expand statutory unconscionability into the territory of tort and fiduciary duties is rejected.
534 Fifthly, the corporate respondents submit that the system of conduct alleged by the ACCC does not establish an intelligible system by reference to knowledge at any particular point in time that would render conduct capable of assessment by reference to conscience. They refer to paragraph  of the statement of claim (quoted at  above) which alleges the conduct of implementing the process changes in the relevant period and the conduct thereafter of claiming and/or retaining VFH revenue amounts to unconscionable conduct in the enumerated circumstances which includes knowledge in different time periods. On that foundation, they submit that the case is structurally flawed in that it relies on conduct over different times and conduct once the alleged risks had ceased as follows:
(1) the profit maximising purpose is relied on but it was no longer applicable once the college ceased enrolling new students on 18 December 2015, yet that period is relied on in respect of claiming and retaining;
(2) the college’s knowledge, or the reasonable foreseeability, of certain risks which, if not established at the commencement of the period, could only be taken into account from the day from which such knowledge or reasonable foreseeability is held to be acquired, and which was no longer operative once the college ceased enrolling students on 18 December 2015 yet that period is relied on in respect of claiming and retaining; and
(3) the college’s knowledge, or the foreseeability, of the process change results in circumstances where the process change results are particularised by reference to matters not arising until well into 2016 yet that period is not relied on for the system changes which ended when the college ceased enrolling new students on 18 December 2015.
535 The first two points lack validity because the college’s profit maximising purpose and its knowledge of the risks continue to be relevant to the case after the end of the relevant period. The profit maximising purpose was self-evidently a continuing purpose in claiming and/or retaining VFH revenue in respect of students who had been enrolled subject to the risk that they had been enrolled as a consequence of CA misconduct and that they were unsuitable for enrolment. There is a similar answer to the third point, namely that the complaint about claiming and retaining is dependent upon, or builds on, the case about the process changes such that knowledge of the results of such changes, which only became apparent after the relevant period, is relevant to the ongoing claiming and retaining of revenue earned as a consequence of the process changes. In any event, in the case as I have analysed it, no reliance is placed on knowledge that was gained only after the relevant period.
536 Insofar as the third point is concerned, in my reasoning to the conclusion that the college operated an unconscionable system no reliance is placed on any results that only became apparent in 2016 and thereafter.
537 Sixthly, the corporate respondents submit that the ACCC’s case against the college fails to take into account “all of the circumstances” as mandated by the statutory language. In that regard, they identify a number of matters which they say must be taken account of as being part of the relevant circumstances. They are the following:
(1) the regulatory environment, and in particular that the ACCC does not allege any contravention of the regulatory framework and it was an express purpose of the VFH scheme to make vocational education available to sections of the community who suffered disadvantages in terms of obtaining vocational education in the past; and
(2) the commercial context and environment, in particular (with reference to s 22(e) of the ACL) “the amount for which, and the conditions under which, the customer could have acquired identical or equivalent goods or services from a person other than the supplier” and that the enrolment process and withdrawal process changes were made to meet the conditions of the market as it changed in response to the changing regulatory environment.
538 I have already dealt with these submissions in other guises above.
R. WAS MR WILLS ‘KNOWINGLY CONCERNED’ IN THE IMPUGNED CONDUCT?
R.1 The case against Mr Wills
(1) from around August 2015, the plan to implement the enrolment and withdrawal process changes and then the implementation of those changes (SOC );
(2) from around August 2015, the profit maximising purpose in respect of the enrolment and withdrawal process changes (SOC );
(3) at all material times, the CA misconduct risk (SOC );
(4) at all material times, the unsuitable enrolment risk (SOC );
(5) at all material times, that the outbound QA call and campus driven withdrawals that applied in the earlier period provided means by which the college could mitigate CA misconduct risk and unsuitable enrolment risk, and that the enrolment and withdrawal process changes (by abolishing those mechanisms) reduced the college’s ability to mitigate those risks (SOC  with reference to SOC -, referred to at  above);
(6) by no later than May 2016, the process changes results (SOC  with reference to  above) or that the enrolment and withdrawal process changes would likely lead to the process changes results or results of the type of the process changes results (SOC [137AA]); and
(7) by May 2016 at the latest, that the college claimed and/or retained from the Commonwealth VFH revenue in respect of a large proportion of consumers who became enrolled during the relevant period who passed one or more census dates (SOC [137AAA]).
540 It is then pleaded that by reason of that knowledge, his role as COO of Site, his role as acting CEO of the college and his participation in Advisory Board meetings and Management Meetings and the meeting on 15 December 2014 that discussed the Sero CHC (discussed at  above), Mr Wills was involved in the management and oversight of the college at all material times and was associated with, or had a practical connection with, the college’s unconscionable conduct (SOC [137A]).
541 On the basis of those matters, it is pleaded that Mr Wills was directly or indirectly knowingly concerned in, or a party to, the college’s contravention of s 21 of the ACL (SOC ).
R.2 Mr Wills’s overall role
543 The evidence already canvassed reveals that the operations of the college and its strategic direction were overseen by the Advisory Board, which met monthly, and then, subsequently, the monthly Management Meetings. Mr Wills was a member of the Advisory Board, along with other Site executives, and he was usually recorded as the “facilitator” of its meetings.
544 As dealt with above, the charter for the Advisory Board explained that it had a “primary responsibility” to the shareholders of Site and for the welfare of the college “by guiding and monitoring its activities” and that the Board was required to “ensure” that the college was “properly managed and constantly improved”. The board was also responsible for setting the college’s “strategic objectives”, and for evaluating, approving and monitoring its strategic plans and annual budgets and ensuring appropriate resources were available. [D898] The operation and management of the college was nevertheless delegated to the CEO who was primarily responsible to the Board for the college’s affairs. [D899] The Advisory Board was not a mechanism for decision-making, which was the role of the CEO. [D992]
545 A Site Group strategy document, apparently authored by Mr Wills, in January 2015 set out descriptions of the roles of each of the executive officers of Site. Mr Wills’s COO role description was described as “to establish business unit objectives (plan), allocate resources (implement) & hold individuals accountable (evaluate).” [D1219] The document as a whole shows the substantial integration of the group and Productivity Partners’ very substantial contribution. [D1202-1229] It also records Mr Cook, as Productivity Partners’ CEO, as one of the “key management personnel” of the group, and the organisational chart shows Mr Wills’s oversight of Productivity Partners. [D1215, D1221]
546 Another organisational chart with the heading “Productivity Partners Pty Ltd Governance Structure” in the period 1 July 2014 to 11 March 2016 shows Mr Wills as COO of Site having direct oversight over Productivity Partners. [D5113]
547 The due diligence undertaken by Site in April 2014 before it purchased the college, discussed above (at ), was done by Mr Wills and Mr Dawson. Mr Wills was therefore well aware of the details of the college’s business, including its reliance on VFH funding.
R.3 Mr Wills’s knowledge and involvement
549 In September 2015, Mr Wills was putting the changes that had been introduced “under the microscope”, he was aware that increased enrolments and hence revenue were beginning to show, and the problems of CA misconduct at Phoenix, and hence the ongoing risk of CA misconduct at the college, had been brought to his attention. He also “elected to take the additional responsibility” himself in taking on the position of acting CEO some six weeks later when Mr Cook would be on leave “to facilitate integration & monitor key issues”. He had a “continued watchful eye over PP’s operations” which included driving the need for change and closely following the changes. See - above.
550 In October 2015, Mr Wills continued to be involved across all areas of the college’s operation. This was consistent with his report during the month that since June “the degree of autonomy in this business unit [i.e., the college] has been reduced and integration [i.e., with Site] prioritised”. A dramatic increase in enrolments and hence income became apparent. Mr Wills became aware that the Department “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”, but did not act on that. See - above.
551 By November 2015, Mr Wills had such confidence in the improved enrolment and financial position of the college that he (with others at Site) set the college’s budgeted revenue for the second quarter at $10 million notwithstanding that revenue in the first quarter had been only $3.257 million. Mr Wills was aware that the conversion rate had increased from a little over 50% before the enrolment and withdrawal process changes to about 76% in October. This carried with it the implication that increased numbers of unsuitable students were being enrolled. Mr Wills knew from Mr Buonora’s projections that he had requested, that the ratio of active students may be as low 20% of the total number of students, i.e., that very significant numbers of students would remain uncontactable. He also knew from his own figures that less than 20% of students logged in to the LMS by week 7, i.e., after the first census for a 28-week unit of study. From 20 November, Mr Wills became acting CEO of the college. See - above. It was also from November 2015 that Mr Wills became aware of or was involved in the CA investigations.
552 Mr Wills was acting CEO in December 2015 through to 20 January 2016. In that period, the Commonwealth imposed a cap on total VFH revenue for 2016 and the college’s enrolments and revenue continued to increase. Under Mr Wills’s leadership, the college ceased enrolling students for 2016 but continued to claim revenue in respect of students who had enrolled in 2015. See - above.
553 By February 2016, Mr Wills was aware that as many as 55% of students who had passed through and incurred census 1 debt were uncontactable and had not engaged with the college. Mr Wills’s response was to consider resourcing implications but not to withdraw those students and save them further debt. Although no new students were enrolled in 2016, students who had been enrolled in 2015 who were uncontactable and had not engaged at all with their courses continued to be progressed through their first and subsequent censuses so that the college could claim the VFH revenue. See - above.
554 In May 2016, Mr Wills knew from the campus health check that had been conducted the previous month that more than 50% of students were not contactable and only 7% of students were logging in to the LMS. Also, 77% of students were not engaging with their courses. Despite this, to Mr Wills’s knowledge, the college maintained the enrolment of the uncontactable and disengaged students and continued to claim VFH revenue in respect of them. See - above.
R.4 Conclusion on Mr Wills being knowingly concerned
555 The ACCC’s case is that Mr Wills was knowingly concerned in the college’s system contraventions. As noted at - above, for Mr Wills to be knowingly concerned in the system contraventions it must be established that he had actual knowledge of each of the essential elements of the contravention, and he must be implicated in or practically connected to the contravention.
556 I deal with each paragraph of the statement of claim in turn.
557 In respect of the plan to implement the enrolment and withdrawal process changes and then the implementation of those changes (SOC ), I have found (at  above) that Mr Wills was aware of these matters. He was an addressee of the email with the enrolment process flowchart and an attendee at the Management Meeting of 19 August 2015 (at ) above). The email and report of 18 August 2015 (at  above), also identified that a revised enrolment process was scheduled for release shortly and addressed key related financial data that would have concerned him.
558 While I have said that the email at  above suggests that at as at 13 September 2015, Mr Wills may not have been aware of the details of the changes to the enrolment and withdrawal processes that had commenced, it does not mean he was not aware of the changes in a more general sense (see  above). I have already inferred that he was aware of them by the Management Meeting of 16 September 2015 (at  above). Given this, I do not accept the general submissions about Mr Wills not reading the material he was sent in these instances. I therefore find that Mr Wills was aware of the matters pleaded at SOC  and given his attendance at the meeting and his role, was practically connected with them.
559 Regarding the profit maximising purpose in respect of the enrolment and withdrawal process changes (SOC ), I have found that Mr Wills was aware of the enrolment and process changes. In relation to the connection with the profit maximising purpose, a number of matters are relevant. They include Mr Wills’s minuted presence at the 19 August 2015 Management Meeting and that he 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” (at  above). [D3604] These statements, in my view, go to the need for the college to improve financially by changing the way the college recruits and retains students.
560 When this is read with Mr Wills’s comments before the 16 September 2015 Management Meeting, and my findings regarding Mr Wills’s knowledge following the 16 September 2015 Management Meeting, namely that he would have wanted to be satisfied that the changes that had been introduced would have the promised results measurable in increased revenue and profit (at  above), the process changes and the profit maximising purpose are connected.
561 Mr Wills’s knowledge mentioned at  above is also relevant in that Mr Wills increased budget projections notwithstanding being aware of the potential for a low percentage of student engagement. My findings at  and  are also relevant. I am therefore satisfied that Mr Wills was aware of the matters pleaded at SOC  and given his attendance at the relevant meeting and the inferences I have drawn, that he was practically connected to them.
562 In respect of the CA misconduct risk (SOC ), I have found at , - and  above that Mr Wills was aware of the CA misconduct risk at all material times. The matters in relation to the consumer investigations are also relevant to Mr Wills’s knowledge (see , , ,  and  above).
563 In respect of the unsuitable enrolment risk (SOC ), I have found at , - and  that Mr Wills was aware of the unsuitable enrolment risk at all material times. The matters in relation to the consumer investigations are also relevant to Mr Wills’s knowledge (see , , ,  and  above).
564 In respect of the abolishment of the outbound QA call and campus driven withdrawals as mechanisms to mitigate CA misconduct risk and unsuitable enrolment risk (SOC ), given the findings at - and  above, I infer that Mr Wills was aware that the abolishment of the outbound QA call and campus driven withdrawals would remove mechanisms to mitigate CA misconduct risk. The matters at  to  above mean Mr Wills was practically connected to these matters.
565 Mr Wills was also aware of the process changes results or that the enrolment and withdrawal process changes would likely lead to the process changes results (SOC , [137AA]). To be specific, he was aware that there was a substantial increase in the number of students who became enrolled in an online course, in the number and proportion of students who passed at least census 1, and in the revenue of the college. There was no other reason for so generously increasing revenue forecasts mentioned at  above. See also my findings at  to . In relation to the increased number and proportion of students who incurred a VFH debt without completing a unit of competency, in the number of uncontactable students, and those who made complaints, he was aware of these matters. See  and  above and in relation to the CA investigations and, indeed, the ACCC notice.
566 In light of the matters set out at  above, Mr Wills was aware that the college claimed and/or retained from the Commonwealth VFH revenue (SOC [137AAA]). Indeed, as noted, under Mr Wills’s leadership, the college ceased enrolling students for 2016 but continued to claim revenue in respect of students who had enrolled in 2015. Given this leadership role, he can also be said to be implicated in this conduct.
567 Mr Wills also injected himself into the running of the college as acting CEO against the wishes and advice of Mr Cook. This decision reflects the culmination of his increased involvement in the affairs of the college. As noted, he had been increasingly involved since June 2015 (see  above), and he attended a meeting in August 2015 where enrolment matters were discussed. In late October 2015, as COO, he drafted a report for the Site board in which he referred to the college’s financial underperformance in the first quarter of FY2016, and stated that key actions that had been taken to address that had involved “substantially more active management involvement” and collaboration with the college’s senior management (at  above). At the October 2015 Management Meeting, he also personally presented a detailed paper outlining regulatory changes that had occurred in the VFH sector, and ones which were to occur and also setting out actions for the college to take in response to changes in the regulatory landscape. [D4287]
568 While he may have had a number of business units to manage, there is no submission that those other business units were taking up most or all of his time. The contrary inference to be drawn is that, in taking up the acting CEO role for a short period of time, Mr Wills was in fact devoting much of his time and energy to the college because he wanted to improve its financial situation and manage changes that he already knew had been planned and were being implemented. As I also noted at , the financial success of the college was very significant to the performance of Site overall and therefore of key concern to Mr Wills at all times.
569 Mr Wills wants the Court to accept, without giving evidence, that he had in effect an incredible level of obliviousness to the operation of the core functions of the college at a critical and transformational stage for the business and draw the best possible inferences on the available documents. This is contrary to the evidence and his own actions. If he was in fact relying totally, or thought he could have relied, on Mohammed Akbery during his time as acting CEO, then there would have been no need for Mr Wills to take the acting CEO role himself. These factors all make Mr Wills practically connected to the college’s system contravention. [T982: 6-20]
570 With reference to the facts are as I have found them outlined above, I am satisfied of the following.
571 Mr Wills’s involvement with the college, until the weeks before he became acting CEO and when he was acting CEO, was at a step removed. For the most part, that period excepted, he was not involved in the detail of the college’s enrolment and withdrawal processes.
572 However, Mr Wills was well across the detail of the college’s financial position throughout the earlier and relevant periods and was generally aware that changes to college processes were being implemented. It is true that the college was only one of many business units he was responsible for, but it was the largest and made the biggest contribution, whether positive or negative, to Site’s financial position at any point in time. This meant that he was keenly interested in the college’s performance.
573 That in turn meant that he was a key driver of the changes at the college to ensure that its financial performance improved. He was doubtless not the architect of the changes that were then made, but they were reported to him at least at a high level. There was nevertheless enough detail reported to him and which he learnt in the various meetings that he attended such that he knew that the enrolment and withdrawal process changes that were introduced had the effect of weakening the protections that the college otherwise had in place against CA misconduct and unsuitable enrolment risks as those terms are discussed above.
574 In particular, Mr Wills was aware of the dramatic turnaround in the financial position of the college off the back of equally dramatic increased enrolments. Although steps were taken to increase the available resources to support students, the levels of non-contactability and disengagement remained extremely high. In particular, by the time he took over as acting CEO, Mr Wills knew that substantial numbers and proportion of students were getting nothing from the college yet they were incurring very substantial debts to the Commonwealth. Mr Wills then oversaw the process of continuing to progress those students through their first and subsequent censuses, even after the Commonwealth introduced the VFH cap, and the college claiming and retaining revenue in respect of those students.
575 In short, the college ran a system of recruitment, enrolment and progression through census dates of students which enabled the college to pocket vast sums of money, effectively from students, via the VFH scheme, in return for which the college had to deliver nothing to very substantial numbers of students. That was well known to Mr Wills. Moreover, he was very much associated with it and was a participant in key aspects of it.
576 On that basis, I am satisfied that Mr Wills was knowingly concerned in the unconscionable system or pattern of conduct of the college.
S. SITE’S KNOWING INVOLVEMENT
577 The ACCC relies on s 139B(1) of the C&C Act to attribute Mr Wills’s knowledge to Site and on and s 139B(2) to attribute his conduct to Site. The ACCC submits that at all times, including when Mr Wills was also acting as the college’s CEO, Mr Wills was carrying out his role as COO for and on behalf of Site. It submits that even when acting as CEO of the college, Mr Wills did not stop acting “on behalf of” Site within the meaning of s 139B(2), but rather he was acting jointly for both companies. On this basis, the ACCC submits that just as Mr Wills was knowingly concerned in the systemic unconscionable conduct, so was Site.
578 Site submits that it was not knowingly involved in any systemic unconscionability for three reasons. First, and since the ACCC’s knowing involvement case against it rests on Mr Wills’s knowledge, it contends that Mr Wills did not have the requisite knowledge to establish his knowing involvement. I have already dealt with and rejected that submission.
579 Secondly, Site submits that the participation of Mr Wills was insufficient to establish his participation in the systemic conduct. I have also already dealt with and rejected that submission.
580 Thirdly, and most significantly for present purposes, Site submits that Mr Wills’s conduct cannot be attributed to Site because he had different roles at different times, namely COO of Site and acting CEO of the college. It submits that when he was doing something in one role he was not necessarily also doing it in the other. In particular, it submits that when he was acting CEO of the college he was not acquiring knowledge or undertaking conduct on behalf of Site.
581 The reality of Mr Wills’s position, as identified above (at - and -), is that the college was one of several business units of Site, albeit located in a separate company wholly owned by Site, for which Mr Wills was responsible. It was also the most significant of those business units. There was significant vertical integration within the activities of Site, illustrated by the consolidated financial reporting between the different business units including those housed in separate companies. When Mr Wills took on the position of acting CEO of the college, which was an appointment made either by himself as COO of Site or by the Site executive team, he did that as a means of asserting Site’s oversight of the college.
582 In the circumstances, it would be artificial to consider Mr Wills’s conduct as acting CEO of the college to not also be conduct on behalf of Site. The separate corporate personality of Site and Productivity Partners does not have the effect of Mr Wills not doing the work of and on behalf of Site when he was acting CEO of the college. That is illustrated by, for example, Mr Wills using his Site email address and continuing to use his Site COO electronic signature even when he was doing work as acting CEO of the college. [e.g., D4799-4800, D4824-4825]
583 There was no suggestion in the evidence, and no basis in the evidence for any submission, that Mr Wills’s involvement with the college including as acting CEO was anything other than in the course of his authority and responsibilities for Site. There is no suggestion, for example, that as acting CEO of the college he was remunerated separately by the college as opposed to his the usual remuneration by Site as its COO.
584 In Trade Practices Commission v Tubemakers of Australia Ltd  FCA 99; 47 ALR 719 the knowledge and conduct of the manager of a subsidiary company, Mr Achterberg, was held to be on behalf of the holding company, Tubemakers, on the basis that Mr Achterberg took direction from the regional manager of Tubemakers: at 741 per Toohey J. See Consolo Ltd v Bennett  FCAFC 120; 207 FCR 127 - per Keane CJ, McKerracher and Katzmann JJ. The case for Mr Wills having acted on behalf of Site in his involvement in the college is a stronger case than that.
585 I therefore find that Mr Wills’s knowledge and conduct by which he was knowingly concerned in the unconscionable system or pattern of conduct of the college is attributable to Site and that it too was knowingly concerned in that conduct.
T. INDIVIDUAL CONSUMER COMPLAINTS
586 The ACCC pleads a number of contraventions against the college with respect to five consumers who were signed up by CAs to courses with the college. The consumers are referred to by letter, namely A to E. They will each be dealt with in turn by first setting out the facts relating to each consumer and then consideration of the ACCC’s case in respect of each of them.
587 As a preliminary matter there is a dispute about when the unsolicited consumer agreement was formed in respect of each of consumer A to E within the meaning of s 69(1) of the ACL. The ACCC submits it was formed during the course of the QA call. In that regard, in closing submissions the ACCC did not submit that the agreement was formed before the QA call so I take it that that case as asserted in the second further amended originating application is not pressed. The college submits that the agreement was formed after the QA call when it accepted the consumer’s application for enrolment.
588 The college makes the submissions, among others, that an enrolment application may have errors, or the consumer may be ineligible for VFH, or the call flagged as problematic and then investigated and therefore the college may reject the enrolment. I do not accept these submissions. Part of the purpose of the change from an outbound to an inbound QA call was for the consumer to be able to be signed up immediately, i.e., on the call. In my view, that is what occurred. That is confirmed by the QA calls and admissions checklist which shows that the college admissions officer on the QA call says at the end of the call words to effect of “congratulations on your decision to study with Captain Cook College”. Objectively, such “congratulations” would not be in order if the agreement was not formed.
589 The fact that an enrolment may subsequently be rejected because, for example, the TFN turned out to be wrong or the consumer did not qualify for the VFH scheme, merely gave to the college the right to cancel the enrolment at that point, it being a necessarily implied term of the enrolment that the information supplied would turn out to be correct or acceptable and the consumer genuinely entitled to VFH. This was a resolutive condition or condition subsequent that did not suspend formation of the contract but allowed it to be cancelled prospectively in the event that the condition turned out not to be met. See Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd  HCA 6; 54 CLR 361 at 369 per Latham CJ and 379 per Dixon and Evatt JJ.
590 As is clear from the matters set out below, the sending of the “letter of offer” and training plan was immaterial to the formation of the agreement to each of the consumers. In the circumstances, I find that the agreement was formed on the QA call. [D3554]
591 All this being said, nothing in this case particularly turns on the dispute about when the agreement was formed except for the purpose of triggering the commencement of the running of time for the time period in s 78(2) of the ACL for the sending of the “agreement document” to the consumer. The ACCC makes no complaint about breach of this requirement. Had the agreement been formed before the QA call then the requirement of s 78(1) that the dealer who negotiated the agreement immediately give a copy of the agreement to the consumer would have been triggered. As I have said, the ACCC did not press this alternative.
592 The ACCC also alleges breaches of s 79(b) of the ACL. Section 79(b)(ii) provides that an unsolicited consumer agreement must on its front page include a notice that conspicuously and prominently sets out any other information prescribed by the Competition and Consumer Regulations 2010 (Cth). Regulation 85 relevantly provides for the following:
(a) the text, ‘Important Notice to the Consumer’;
(b) the text, ‘You have a right to cancel this agreement within 10 business days from and including the day after you signed or received this agreement’;
(c) the text, ‘Details about your additional rights to cancel this agreement are set out in the information attached to this agreement’.
T.1 Consumer A
593 On 16 October 2015, consumer A was enrolled at the college for a Diploma of Business. Her enrolment documents were received by the college admissions team from its enrolment portal that day. [D6123]
594 Consumer A lived at the time in remote Western Australia and worked as a disability support worker. [C32/6] She was approximately 40 years of age, had completed only up to year 10 at school, had had a child at 16, and helped take care of her nine younger siblings from the age of 21 after her father died. [C32/1-6] Consumer A’s partner was a full-time carer for five children. The children were aged 6 months to 11 years. [C32/7]
595 Consumer A had heard about colleges enrolling people in courses through her mother and sister, who had both signed up to courses with a college. A number of family members and friends had told her they had received free laptops from signing up to a college. Consumer A’s mother had relevantly told her that “fellas are driving around giving out free laptops if you sign up to a study a course” and “if you want a laptop ring this guy up”. [C33/11-12]
596 The CA who had signed up consumer A’s mother dropped around to a family gathering that was being held at her mother’s house. [C33/14] The CA said to consumer A “you can have a laptop if you sign up for a course”. [C33-34/17-18] Consumer A said she was not interested in doing the course but was just happy to be getting a laptop. She did not have a laptop and believed that she could keep the laptop. [C34/19]
597 Consumer A’s enrolment application indicates that she dealt with a CA from Global Training and Recruitment Services Pty Ltd (GTRS). The college had a sales agreement with GTRS trading as One Click Learning, which was entered into on 18 September 2015 (GTRS Agreement). [D6033]
598 The GTRS Agreement provided that the college was not obliged to enrol every prospective student who completed an application (cl 2.7) and could reject any application at its sole discretion (cl 2.8). The GTRS Agreement also included a series of clauses regarding the requirement for GTRS and its representatives to behave ethically, provide only accurate information about the courses, complete mandatory training provided by the college and agent declaration forms, and to comply with regulatory requirements (cll 4, 5, 8). [D6036-7]
599 The CA showed consumer A a list of courses, did not explain them and said to “pick one from the list”. Consumer A said that the CA did not ask questions about whether she worked, her income, interests or what she wanted to do for work. [C34/20-21]
600 After choosing a course, the CA put the tablet in front of consumer A and did the selecting for her. Consumer A does not recall if she used the tablet at all. Consumer A did not remember if the CA asked any questions about her reading and writing or education or the reason that she wanted to do the course. Consumer A did not remember reading and answering any questions on the tablet either. There was also some paperwork which was printed out but consumer A could not remember what it was. [C34/22]
601 The CA said to consumer A, “you are taking out a loan but you won’t have to pay it back until you earn over the threshold”. Consumer A did not recall what the threshold was or if the CA told her what the threshold was. The CA also had a list of questions and answers which he gave to consumer A. The CA then said that he would ring up the college and that consumer A would be asked “some questions and I’ll guide you through some answers”. [C34-35/22-25]
602 The CA then made a phone call on loudspeaker (the QA call). The CA nodded and shook his head at consumer A during parts of the call. He also gestured to the answer sheet. Consumer A said she felt she had to just do what he said. [D6133, C35/26]
603 Consumer A has subsequently listened to a recording of the call. She said that she did not understand the “man on the phone very well”, either then or at the time. Consumer A said the man on the phone was talking about loan computers and consumer A did not understand that the laptop the CA had said that she would receive was a loan laptop. The man on the phone spoke about “RPL credit transfers”. Consumer A did not know what “RPL credit transfers” were. The CA helped consumer A answer the questions that were posed to her. [C35/29-32]
604 During the QA call, a recording of which was tendered in evidence, the college informed consumer A that: the call was being recorded for quality assurance purposes; the course she was enrolling in was a Diploma of Business; the duration of the course was 28 weeks; the total cost of her course was $15,600; she would become liable to repay the VFH loan through the taxation system once she started earning above the income threshold, which was $54,126 at the time; the start date of her course was 19 October 2015; she could withdraw from her course prior to her census date without incurring a VFH debt; she could arrange for a loan computer through the college; she would be receiving an orientation pack by email, including her letter of offer, training plan and VFH booklet; and that an SSO would be in touch on a weekly basis to provide personalised assistance with her studies. All of these issues were covered at high speed – they are difficult to digest even on listening to the call several times.
605 While on the QA call with the college admissions officer, consumer A confirmed that: the CA had shown her identification; her postal address was correct; she completed the PEQ on her own; she agreed to enrol in the course described to her; she understood the withdrawal procedure; she wanted to borrow a computer because the computer she had at home was “stuffed up”; she had completed a loan equipment form; and she preferred to be contacted by her SSO in the mornings. However, consumer A’s evidence is that she was coached through these answers.
606 After the call ended, the CA went to his car and came back with a laptop for consumer A. Consumer A was given a tablet and a laptop and then the CA left. Consumer A did not recall filling out a form for either item. Consumer A “felt that they were mine to keep and that I could do whatever I wanted with them”. [C35/33]
607 In her affidavit consumer A said she did not recall the CA telling her that she could withdraw from, or cancel, the course. He did not tell consumer A anything about a census date. He did not give consumer A any information about if she could “quit the course”. Consumer A also did not recall the CA telling her that she could change her mind about the course or how much the course would cost. [C35-36/34]
608 Consumer A says she got “the shock of my life when I went to do my tax return and found out how much it was”. [C35-36/34]
609 In her affidavit, consumer A said that nobody from the college got in touch with her after she was signed up. Consumer A did not recall receiving any emails from the college either. She did not have access to the internet at the time except on her phone but only when it had credit. Consumer A said she never received any course materials or completed any study or assessments and did not receive a diploma for the course. [C36/37-38]
610 Consumer A says that she did not receive any calls from the college and she did not recall speaking to anyone from the college again. She said she did not think much about the course again after signing up. The CA had told her that she was taking out a loan, but since she never heard from the college, she did not think about it. [C36/38-39]
611 A partly corrupted communication log recording attempts by the college to communicate with consumer A was tendered. [D6136] It records that on 23 October 2015 an email was sent by the college to consumer A giving her a username and password to access the LMS. It also records that on 30 October 2015 the college sent consumer A an email congratulating her on being accepted to study the Diploma of Business and stating that it attached an offer letter and a training plan. The training plan records the start date of the course as 19 October 2015, the census dates to be 2 November 2015 and 22 January 2016 and the cost to be $15,600. The document also states that tuition fees would apply if consumer A withdrew after the census date for each unit of study. [D6128-9] Consumer A said she cannot remember seeing this document. [C38/50]
612 The communication log also records that on 3 November 2015 (i.e., the day after the first census), a “letter email” was sent to consumer A but the nature of what was sent is not apparent because of the corrupted data in the log. I infer that what was sent was the COE and the CAN, both of which are dated 3 November 2015. [D6134-5] They record the fees payable and the debt incurred. Consumer A said she cannot remember seeing these documents. [C38/51]
613 The communication log reveals that the college attempted contact with consumer A through a variety of means on roughly 40 occasions between 23 October 2015 and 6 April 2017 without success. [D6136]
614 When consumer A did her 2016/2017 tax return she found out that she had a “big tax debt that year from being enrolled in the college”. She tried to sort out her debt before filing her tax return. When she did file her tax return she did not get the assessment she was hoping for. She and her partner “were homeless and living in a cabin park at the time and I was hoping my tax refund would be enough for us to pay to move into permanent accommodation”. [C37/40-43]
615 Consumer A said that the debt badly affected her and her partner and said in her affidavit “you can’t trust anyone now”. [C37/45]
616 Consumer A was shown, and exhibited to her affidavit, an “Application for Enrolment BSB50215 - Diploma of Business Online” which had her details filled in. She could not remember seeing a document like this or who completed it. She identified a number of errors in the document that she would not have made had she completed it. [C37-38/46-49, D6113]
617 The ACCC submits that the CA’s conduct is attributed to the college because consumer A was being signed up to an online course on behalf of the college within the scope of the actual or apparent authority of the agent and therefore attributable to the college under s 139B(2)(a) of the C&C Act.
618 The college argues that it was not and says that the CA, among other things, actively sought to undermine the processes CCC had in place by filling out the application for consumer A inaccurately and without asking her any questions about herself. It submits that the conduct was in effect idiosyncratic and only in the CA’s interests to earn a commission, and against the interests of the college.
619 I refer to the analysis above at  to  for each of consumer A to E. The agreement with GTRS appointed GTRS to promote and market courses offered by the college. [D6035-6] The agreement included a provision requiring GTRS to ensure that consumers were informed that GTRS was providing sales services “as an agent” for the college. While I accept that the CA did not solicit consumer A’s enrolment in the college’s prescribed way, and in that sense it may be said to be in breach of or beyond the CA’s actual express authority, the conduct was nonetheless for the purpose of signing up consumer A to a college course for the college’s benefit (being conduct in an authorised class) and therefore within the CAs apparent authority. Importantly also, by styling the CA as a “Course Advisor” for the college and sending the CA into the field as such, the college held out to the world that the CA would have the usual or expected authority of a course advisor. That gave the CA the apparent authority to make representations on behalf of the college with regard to recruitment. It is these representations about which the ACCC complains. The conduct is therefore taken to be on behalf of the college: see also Empower at .
620 The ACCC submits that the CA was involved in two instances of misleading and deceptive conduct. First, by not telling consumer A the cost of the course she was being signed up to, the CA conveyed a misleading representation with respect to the price of services being offered in contravention of s 29(1)(i) of the ACL.
621 Secondly, by not telling consumer A about census dates and consumer A’s ability to withdraw prior to the census date without incurring a VFH debt, the CA engaged in misleading or deceptive conduct in contravention of s 18 of the ACL. The college accepts that the CA’s failure to disclose to consumer A the cost of the course in which she enrolled was misleading and deceptive as to the price of the course in contravention of s 29(1)(i) of the ACL. Also, that the CA’s failure to explain the withdrawal policy and relevance of census dates was misleading or deceptive in contravention of s 18 of the ACL.
622 The college denies, however, the pleaded allegation that by the CA not telling consumer A the cost of the course, and that she was taking out a loan but will not have to pay it back until she earns over a threshold, conveyed a representation, within the meaning of s 29(1)(i) of the ACL, to the effect that any cost constituted a good deal for consumer A. The college says that no such representation was said by consumer A to have been made in those terms, or was understood in that sense, and the alleged representation runs counter to consumer A’s evidence that “[the CA] didn’t even tell us how much we would have to pay for the course in the end” . I accept that submission.
623 The ACCC also submits that the conduct of the CA was unconscionable within the meaning of s 21 of the ACL. The CA’s conduct was engaged in circumstances where: (a) he had failed to explain key aspects of the VFH scheme to consumer A (such as the need to withdraw before the census date to avoid incurring a VFH debt); (b) he had filled out the enrolment documents (including the PEQ), rather than ensuring consumer A filled them out herself; (c) he let consumer A believe she could keep the laptop he gave her, when offering inducements to enrol was inconsistent with cl 4.4 of the VET Guidelines; and (d) he told consumer A the answers she should give to some of the questions in the QA call, such that a procedure which might have protected consumer A’s interests was subverted.
624 The college admits that the CA’s conduct was unconscionable within the meaning of s 21 of the ACL, but does not admit that it was it was on behalf of the college and in all circumstances unconscionable.
625 For the reasons given above, in my view the conduct was undertaken on behalf of the college. Regarding “all the circumstances”, in my view they include the way consumer A was assessed on the QA call. If, for example, the script used in the QA call required consumer A to explain why she had selected the course, what she hoped to achieve with the qualification or some other basic enquiry regarding consumer A’s understanding of the information presented, one would expect that the consequences of the CA misconduct would be to some extent avoided (if not entirely avoided). This is because it would have been evident that consumer A did not actually want to undertake the course.
626 In other words, the consequences of the unconscionable conduct were able to arise because of the QA call script, a script drafted by the college. I also refer to my comments on the inbound QA call at  above and that the inbound QA call was not a genuine safeguard for consumers. The circumstances also include the matters canvassed extensively above regarding the changes to the enrolment process and my findings against the college regarding its systemic conduct. Accordingly, I find that the unconscionable conduct is imputed to the college.
627 The ACCC also submits that the college contravened ss 78(2) and 79(b) and (c) of the ACL (see  above) in relation to unsolicited consumer agreements and certain requirements regarding the agreement and its contents. The college admits that an unsolicited consumer agreement was formed. In respect of s 78(2), the college submits that implied consent should be inferred because the college told consumer A she would be receiving her orientation pack and letter of offer by email and consumer A had provided her email address to the college.
628 Consumer A does appear to have been aware that she was signing up for a course albeit on the basis that she was getting a free laptop. While it is clear enough that consumer A did not understand or consent to the relevant terms of her enrolment, that is a different point to whether or not she gave her consent to receive email communications about the course. The standard set by s 78(2)(c) is not so high as to require a consumer to have consented to all the terms of the unsolicited consumer agreement but rather only that the consumer has consented to receive a document evidencing the agreement. Since Consumer A does not say that the email address used by the college is not her email address, I infer that she gave the CA, and hence the college, her email address and on that basis impliedly consented to receiving the agreement document by email.
629 Regarding s 79(c), the college concedes that there was a breach in so far as the training plan did not attach a form that could be used to terminate the agreement. The college says that the breach of s 79(b) is one of degree because it did inform consumer A in bold writing that it was her obligation to withdraw from the course prior to the identified census dates in order to avoid incurring the identified fees. Notwithstanding this, the college was still in breach of s 79(b). The evidence is that on 30 October 2015, the college sent consumer A an email congratulating her on being accepted to study the Diploma of Business and stating that it attached an offer letter and a training plan. However, no offer letter was found and the training plan does not meet the requirements of s 79(b), but I note it mentions withdrawal on the second page. While I infer that the letter of offer was sent, the college was nonetheless in breach for the reasons given at - below.
T.2 Consumer B
630 Consumer B was enrolled at the college in a Diploma of Project Management in November 2015.
631 Consumer B is unemployed and was approximately 57 years old when he was enrolled. He has a brain injury from a motorbike accident when he was 18 years old. Since the accident, he cannot remember his childhood and has problems with short-term memory. Due to his brain injury, consumer B’s wife is his carer and assists him with medication and medical appointments. He is also in the first stages of Alzheimer’s disease. [C3/2-6]
632 Consumer B has been on a disability support pension since about 1999 because of his brain injury. He was on unemployment benefits before being on the disability support pension. [C3/7]
633 In his affidavit, consumer B said that he is computer illiterate and he hardly ever uses a computer. He said he would not be able to do a course online. He did not have access to the internet when he was signed up by the college. While he has a computer now, it is his wife who uses it, he rarely does, and only for limited searches. He recently got a mobile phone and sometimes uses it to go on Facebook. [C4/10]
634 Consumer B has not undertaken study for many years. He did not complete high school and was expelled in year 9, when he was about 14 or 15. The last time consumer B undertook any study was 25-30 years ago when he went to TAFE at Cessnock for “something to do with literacy”. [C4/11-12]
635 Consumer B said that a few years ago, “a lady” (a CA) turned up at his door asking him to enrol in a course. The CA was from Let’s Get Qualified with which the college had a sales agreement which was entered into on 23 September 2015 (the LGQ Agreement). [D6053]
636 The LGQ Agreement provided that the college was not obliged to enrol every prospective student who completed an application (cl 2.7) and could reject any application at its sole discretion (cl 2.8). The LGQ Agreement also included a series of clauses regarding the requirement for LGQ and its representatives to behave ethically, provide only accurate information about the courses, complete mandatory training provided by the college and agent declaration forms, and to comply with regulatory requirements (cll 4, 5, 8). [D6056-7]
637 Consumer B said the CA had an accent which was not always easy for him to understand. She was not wearing any ID badge, and she did not show him any other ID or give him a business card. After a general conversation, the CA said she was from the college and she had been signing up people to do courses they are interested in. Consumer B said to the CA that he “can’t do any courses”. The CA replied by saying the courses were easy to pass, to which consumer B replied “no”. [C4-5/13-14]
638 Consumer B said “no, all along” but “she would not take ‘no’ for an answer”. He described the CA as “pushy, like a car salesman”. During their conversation, the CA said that the course was free and that if he signed up he would receive a free laptop. Consumer B never received a laptop. Consumer B said he let her “keep going through her spiel”. He said he felt pressured and did not feel he could tell her to go. He said she asked him what type of course he wanted to do, to which he said that he did not want to do any courses. [C5/15-19]
639 The CA asked for consumer B’s pension card. She said that she needed his pension card to look up how much he would get paid by the government if he signed up. He handed over his card. Consumer B said he was on a disability pension because of his memory problem and motorbike accident. The CA’s reply was that he could contact the college if he had any problems or needed assistance. [C5/20]
640 The CA then looked at consumer B’s information on his pension card and recorded it in her phone. She also asked for another card, which may have been consumer B’s driver’s licence. The CA also asked for consumer B’s email address. He did not have one so, consumer B said, she made one up for him. The CA said he would need one because the college would “contact you through email”. [C6/21-23]
641 The CA then said she had to “call her supervisor”. She put the phone on speaker and consumer B had to speak with another person on the call (the QA call). The CA had a list of questions and answers in an exercise book. The CA prompted consumer B’s answers and he did not feel like he could get out of it but was nonetheless suspicious and questioned it in his head at the time. He said he did not want to answer the questions. For some questions, he said that before he answered he looked at the CA as if to say “I shouldn’t be saying that”, but she would point to the answer in the exercise book. He said he wanted to get the whole thing over so she would go. [C6/24-25, D6157]
642 During the inbound QA call, a recording of which was tendered, the college informed consumer B that: the call was being recorded for quality and assurance purposes; the course he was enrolling in was a Diploma of Project Management; the duration of the course was 28 weeks; the total cost of his course was $18,000; his course had 12 units of study; the start date of his course was 4 November 2015; the college had received his application for VFH and that he would become liable to repay the VFH loan through the taxation system once he started earning above the income threshold, which was $54,126 at the time; he should pay close attention to the course census date, and that the first census date for his course was 16 November 2015; he could withdraw from his course prior to his census date without incurring a VFH debt and that it was his responsibility to contact the college by phone or email and lodge the appropriate forms by the census date; he would be receiving an orientation pack by email, including a letter of offer, training plan and VFH booklet; and that a college SSO would be in touch with him on a weekly basis to provide him with personalised assistance with his studies. The information was run through quickly and is difficult to understand. No attempt was made to confirm that consumer B understood what was being said. [D6157]
643 While on the QA call with the college admissions officer, consumer B confirmed that: the CA had shown him identification (although this is not a clear confirmation); his postal address, email address and mobile telephone number were correct; he completed the PEQ on his own; he agreed to enrol in the course described to him; he understood the withdrawal procedure; he had completed the loan equipment forms for a loan computer; and any time would do to be contacted by an SSO. However, as has been seen, these answers were prompted by the CA.
644 After the phone call with the college, the CA left and did not leave any documents or brochures with consumer B. [C7/27] The college’s records show that consumer B was enrolled on 2 November 2015 for a start date of 4 November 2015. [D6143]
645 On 17 November 2015, the college emailed to consumer B a username and password for access to the LMS. [D6156] That was two weeks after the course start date and on the first census date.
646 On 19 November 2015, the college emailed to consumer B an offer of enrolment dated 11 November 2015 and a training plan dated 4 November 2015. [D6148-6150, D6156] Those documents stated that the first census date was 17 November 2015 and that consumer B could withdraw before the census date without incurring a fee, but the first census date had already passed.
647 At the time consumer B swore his affidavit he could not recall previously having seen his application for enrolment. Consumer B identified a number of errors in the document reflecting answers that he would not have given had he completed it. [C7/26, D6138]
648 Consumer B says in his affidavit that within a week of being enrolled, he called the college because “I realised there was something fishy about the situation”. He spoke with someone and made a complaint about the CA who had enrolled him, noting that he felt pressured and that the CA had showed him the answers he had to give during the phone call. The college said they would look into the situation. [C8/28]
649 Consumer B recalled having more than one phone conversation with the college in the weeks following the CA’s visit. During one of the conversations he noted that he had a brain injury and was not interested in studying. [C8/29]
650 The college’s communications log does not record any telephone contact between the college and consumer B until 25 November 2015 when Candice Dent called consumer B and left a voicemail message asking him to return her call. It is recorded that shortly thereafter consumer B called, presumably in response to the message, and told Ms Dent that he was in the first stages of Alzheimer’s disease, he did not want to study at all and was treated poorly by the CA. It was also recorded: “Withdrawing the student, escalated to Khaled.” [D6156]
651 On the same afternoon, Ms Dent sent an email to Khaled Akbery, Ms Feldman and others at the college head office stating that she was particularly concerned about a conversation that she had just had with consumer B.
652 Ms Dent asked Mr Akbery to follow up on reversing consumer B’s study debt even though he had passed through census. Ultimately, the college re-credited consumer B’s VFH account and cleared the debt on the basis that his explanation met the requirement of “medical reasons” to re-credit or reverse a debt after census. [D6151]
653 Consumer B received at least two calls from the college informing him that his enrolment had been withdrawn. [C8/31-32, D6158, D6159]
654 Consumer B received a letter from the college dated 13 January 2016 noting that his enrolment had been cancelled and the debt erased. [C8/33-34, D6155] The CAN is recorded has having been cancelled on 15 March 2016. [D6156]
655 The ACCC submits that the conduct of the CA, in the course of signing consumer B to a course, was engaged in by the CA “on behalf of” the college as an agent of the college within the scope of the actual or apparent authority of the agent, such that the conduct is attributable to the college under s 139B(2)(a) of the C&C Act.
656 The LGQ Agreement included a provision that required Let’s Get Qualified to ensure that consumers were informed that Let’s Get Qualified was providing sales services “as an agent” for the college. The college says that the CA actively sought to undermine the processes the college had in place and the CA’s conduct was against the college’s interests. It was also conduct that exposed it to loss and was not undertaken on behalf of the college.
657 I accept that a number of the statements made by the CA were said without actual authority, such as the provision of a free laptop. However, for the same reasons as set out at  above, the conduct is taken to be on behalf of the college.
658 The ACCC contends that the conduct in signing up consumer B involved three instances of false, misleading or deceptive conduct and representations. First, the CA told consumer B that the course he was being signed up to was free, which was false, because it cost $18,000, which was said to be a false representation in contravention of s 29(1)(i) and misleading or deceptive under s 18.
659 Secondly, the CA told consumer B that the laptop he would get if he signed up for a course was free, but that was false and misleading because the laptop was available only on a loan basis during the course and would need to be returned at the end of the course. This was said to be a false representation in contravention of s 29(1)(m) and false or misleading under s 18. Thirdly, by telling consumer B the course and the laptop were free, the CA also conveyed a false representation that any cost of the course was such that signing up constituted a good deal for consumer B. This was said to be a contravention of both s 29(1)(i) and s 18 of the ACL.
660 The college accepts that the CA’s conduct in telling consumer B that the course in which he enrolled was free was misleading and false in contravention of s 29(1)(i). It also accepts that that the CA’s conduct in telling consumer B that he would get a free laptop was misleading in contravention of s 29(1)(m). The college does not accept the third alleged instance, saying that no such representation is said by consumer B to have been made in those terms, or understood in those terms. The college also says that this instance is in substance no different from the first two and as such there is no independent contravention. I accept this submission. It is not clear what the third instance captures that is not already captured by the first two. The “good deal” is implicit in the first two instances.
661 The ACCC also submits that the CA’s conduct was unconscionable within the meaning of s 21 of the ACL. The CA’s conduct was engaged in in circumstances where: (a) consumer B had an acquired brain injury and was on a pension, and had told the CA this; (b) the CA persisted in seeking to have consumer B sign up to an online course even though consumer B had told her he was not interested, and as a result, consumer B felt pressured and unable to tell the CA to leave; (c) she had filled out the enrolment documents (including the PEQ), rather than ensuring consumer B filled them out himself; and (d) she told consumer B the answers he should give to some of the questions in the QA call, such that a procedure which might have protected consumer B’s interests was subverted.
662 The college admits that the CA’s conduct was unconscionable but denies the conduct was on behalf of the college, or alternatively, that it was not unconscionable when assessed in all the circumstances. I reject this submission for the same reasons given above at  to .
663 There is also a submission that because consumer B’s enrolment was reversed that this should count against a finding of unconscionable conduct in all the circumstances. I find this submission unpersuasive because the fact that the college cancelled his enrolment and reversed his VFH debt does not do away with conclusion that there was unconscionable conduct, nor does it take back the distress caused to consumer B.
664 The college admits that an unsolicited consumer agreement was formed with consumer B. In relation to a breach of s 78(2), the college again contends that implied consent should be inferred from the circumstances, since the college told consumer B he would be receiving his orientation pack and letter of offer by email, and consumer B had provided his email address to the college.
665 I find it difficult to accept that the relevant documents were sent with consumer B’s consent. The email address was fictitious and made up for him and his unchallenged evidence is that the CA would not take “no” for an answer and was “pushy, like a car salesman”. At no point did consumer B express interest in undertaking a college course. I therefore find that the college was in breach of s 78(2).
666 In relation to s 79(b), the college says that the letter of offer conspicuously and prominently informed consumer B of his right to terminate the agreement. It says that the letter of offer identifies in bold writing that the student must notify the college administration staff if the student intended to withdraw by completing a withdrawal form and that tuition fees would apply if the student withdrew after the census date.
667 The letter of offer does state that “you must notify the college administration staff if you intend to withdraw by completing a Withdrawal form”. This phrase appears about two thirds down the page as a dot point under bolded text “Please note”. This phrase does suggest that a consumer can un-enrol from a course, however, it is presented in such a way that is no more conspicuous or prominent than the other matters set out on the page. That is, it is not easily seen, standing out or readily attracting the attention of the reader. It is in the same size font and colour as the rest of the page and refers to a document, the withdrawal form, that was not enclosed with the letter.
668 Section 79(b) also speaks of a “right to terminate” and the regulations use the word “cancel”. The phrase in the letter does not mention a right or that the agreement can be cancelled, and instead more neutral language of “withdrawal” is used.
669 In any event, consumer B never actually received the letter as it was sent to a fictitious email address invented by the CA, the college’s agent. It also did not contain the text as required by Regulation 85 and the withdrawal form did not accompany the letter of offer, as required by s 79(c). The college admits a breach in this regard. For the reasons given, the college was also in breach of s 79(b).
T.3 Consumer C
670 In November 2015, consumer C was enrolled at the college in a Diploma of Human Resources Management.
671 Consumer C was approximately 31 years old when she was enrolled. She was born in Eritrea and her native language is Tigrinya. She came to Australia as a refugee with her mother. Consumer C went to high school in Australia and completed year 12. She also completed a Certificate III in Children’s Services at TAFE in 2001. [C12/3-5]
672 Consumer C has previously worked at a factory and as a cleaner at a hotel. Between 2010 and 2016 she received Centrelink carer payments while she was a carer for a friend. She had also recently lived in a boarding house. [C12/6-8]
673 In or around the end of 2015, consumer C was in a park near a government housing high-rise. Her friend pointed to two men in the park and said that “they give you a free laptop if you do a course”. Consumer C did not have a laptop and wanted one. [C12/10-11]
674 Consumer C spoke with the men (both CAs) who indicated they were from the college. [C13/13-15] Consumer C’s enrolment application indicates that she was enrolled by a CA from Why Learn. [D6160] The college had a sales agreement with Why Marketing Pty Ltd trading as Why Learn which was entered into on 18 September 2015 (Why Learn Agreement). [D6023]
675 The Why Learn Agreement provided that the college was not obliged to enrol every prospective student who completed an application (cl 2.7) and could reject any application at its sole discretion (cl 2.8). The Why Learn Agreement also included a series of clauses regarding the requirement for Why Learn and its representatives to behave ethically, provide only accurate information about the courses, complete mandatory training provided by the college and agent declaration forms, and to comply with regulatory requirements (cll 4, 5, 8). [D6026-7]
676 One of the CAs asked consumer C if she was on Centrelink, said that the course was free if she was on Centrelink, and if she could get a second person to sign up she would get $100 cash. Consumer C was then asked to sit in the car with one of the CAs for her to be signed up. [C13/15-16] Consumer C did not have her citizenship papers and TFN on her, so arranged to have the CAs meet her a couple of days later. [C14/21-22]
677 Consumer C met the CAs in her room, with her boyfriend, in the public housing where she lived. Consumer C said the CAs did not have ID badges but did have business cards. Consumer C told the CAs that she wanted to be a flight attendant. She was told by a CA that the college had a course that would help her become a flight attendant. [C15/25-28]
678 The CAs said to consumer C that she could study at her own pace, there would be someone online to help her, a tutor, and she would not have to pay anything unless she earned about $70,000. The CAs also reiterated that the course was free if she was on Centrelink. The CAs did not say how much the course would cost but did say that consumer C could “cancel the course but you have a limited time to do that”. [C15/30-34]
679 The CAs then asked for consumer C’s date of birth, TFN, citizenship papers and health care card details. Consumer C handed over these details and one of the CAs filled in her details using a tablet. Consumer C does not recall having to fill in any forms but recalls signing using her finger on the tablet. [C15/35-36]
680 The CA then made a phone call to the college. Before the CA dialled the number he said to consumer C that the person on the phone “just has [to] read out the policy” and that she should “just say ‘yes, yes, yes’.” [C16/37].
681 During the QA call, the CA nodded at consumer C to indicate that she should agree to what was being said to her. Consumer C recalls the college admissions officer speaking fast and that she agreed to the course. [C16/38-39] A recording of this call was not tendered.
682 Consumer C did not remember being asked about her eligibility requirements or literacy skills to do the course. [C16/40] The CA then again said that consumer C would receive a free laptop to keep “forever”. [C16/42]
683 The college’s communications log records that consumer C’s user account was created on 20 November 2015. [D6179] It records that on the same day, an email was sent to consumer C giving her username and password so that she could access the LMS. [D6178]
684 On 26 November 2015, the college sent to consumer C by email a letter of offer (dated 20 November 2015) and a training plan (dated 23 November 2015). Those documents record that the course start date was 23 November 2015 and the first census date was 7 December 2015. They also set out the total cost of the course, being $15,600, and that tuition fees would apply if she withdrew after the census date for each unit of study. [D6167-9, D6177-8]
685 The communications log records that on 11 December 2015 the college sent to consumer C by email a COE and a CAN, both dated that day. Those documents also recorded the census dates and the total cost of the course, and also that it was consumer C’s responsibility to formally request to withdraw on or before the next census date to avoid incurring a debt for the next unit of study. [D6170-1, D6175-7]
686 Consumer C recalled receiving the COE and the CAN. She said she was concerned about the dollar amount on the CAN ($15,600) but she remembered that the CA had said it would only apply if she was earning over $70,000. [C17/50-51]
687 Despite making several enquiries over a period of time with the CA, consumer C never received a laptop. She also did not log onto the LMS or do any work on the course. When it became clear she would not receive a laptop she wanted to “quit”. [C17/47-48]
688 Sometime after the enrolment meeting, consumer C’s boyfriend said to her that he was going to check the work address they were given by the CAs. Consumer C’s boyfriend reported back to her that he could not find the address. This made consumer C worry because of the “amount of money that they were charging us, and we weren’t even getting a laptop”. [C18/52-53]
689 Consumer C then approached a social worker for help. She said that the social worker “sorted it out” and later she received a letter saying she had been withdrawn from the course. [C18/54-55]
690 The college’s communications log records that consumer C was withdrawn from her course after her support worker called the college on 5 February 2016 to report that she was from a “homeless shelter” and had been promised a laptop by the CA to sign up. [D6174] On the same day, the VFH debt consumer C had incurred was reversed and she was sent a letter and a new CAN recording the cancellation of her enrolment and the re-credit of the debt. [D6172-4]
691 The ACCC submits that conduct of the CAs, in the course of signing consumer C to a course, was engaged in by the CAs “on behalf of” the college as agents of the college within the scope of the actual or apparent authority of the agents, such that the conduct is attributable to the college under s 139B(2)(a) of the C&C Act. It says that the college entered into the Why Learn Agreement, by which the college appointed Why Learn to promote and market courses offered by the college. The agreement also included a provision requiring Why Learn to ensure that consumers were informed that Why Learn was providing sales services “as an agent” for the college.
692 The college says that the CAs actively sought to undermine the processes the college had in place by filling out the application for consumer C without asking her any questions about herself or eligibility requirements and that the conduct was in direct opposition to the training provided by the college. I accept that a number of the statements made by the CA were said without actual authority, such as the $100 incentive and that it was free for people on Centrelink. However, for the same reasons as set out at  above, the conduct is taken to be on behalf of the college.
693 The ACCC contends that the CAs’ conduct in signing up consumer C involved four instances of false, misleading or deceptive conduct and representations. First, the CAs made a false or misleading representation that the course she was being signed up to (a Diploma in Human Resources Management) would help her become a flight attendant, which was said to be a contravention of s 29(1)(g) and s 18.
694 Secondly, the CAs made a representation that the course was “free” for people on Centrelink benefits and that a person did not have to pay anything unless they earned a lot of money, which was said to be a contravention of s 29(1)(i) and s 18. Thirdly, by not telling consumer C the cost of the course she was being signed up to, the CAs conveyed a misleading representation with respect to the price of the services, such as a free laptop, which is said to be a contravention of s 29(1)(m) and s 18. Fourthly, by telling consumer C that the course was free for her and that the laptop was free, the CAs also conveyed a false representation that any cost of the course was such that signing up to the course in order to get the laptop constituted a good deal for consumer C in contravention of s 29(1)(i) and s 18.
695 The college accepts the first instance was false or misleading in contravention of s 29(1)(g) of the ACL. The college accepts the second instance was false or misleading in contravention of s 29(1)(i). The college also appears to accept that the third instance was misleading within the meaning of s 29(1)(m) of the ACL, but it says that the conduct it is not attributable to the college. I have found that it is. The fourth instance is denied in the college’s defence. Again, it is not clear what this instance in substance says that the other three do not. I accordingly do not find it to be a separate contravention.
696 The ACCC submits that the CAs’ conduct was unconscionable within the meaning of s 21 of the ACL. The CAs’ conduct was engaged in in circumstances where: (a) one of the CAs had filled out the enrolment documents (including the PEQ), rather than ensuring consumer C filled them out herself; (b) the CAs let consumer C believe she could keep the laptop she was to receive, when offering inducements to enrol was inconsistent with cl 4.4 of the VET Guidelines; and (c) one of the CAs told consumer C the answers she should give to some of the questions in the QA call, such that a procedure which might have protected consumer C’s interests was subverted.
697 The college admits that the CAs’ conduct was unconscionable but denies it was on behalf of the college or alternatively that it was not unconscionable when assessed in all the circumstances. I reject this submission for the same reasons given above at  to .
698 The college admits that an unsolicited consumer agreement was formed between it and consumer C. However, it denies a breach of s 78(2) on the basis that the training plan and letter of offer, which constituted the “agreement document”, were emailed to consumer C on 26 November 2015 following the QA call. Consumer C’s evidence is that she consented to receive communications about the course from the college by email.
699 In relation to s 79(b), the college says that the letter of offer, emailed to consumer C on 26 November 2015, conspicuously and prominently informed Consumer C of her right to terminate the agreement. For the reasons given at  to , I do not accept this submission. The letter of offer also does not contain the information as required by Regulation 85. Given these matters, I find that there was a breach of ss 79(b) and (c).
T.4 Consumer D
700 In December 2015, consumer D was enrolled in the college’s Diploma of Business. Consumer D was approximately 52 years of age when she was enrolled, is disabled and receives a disability support pension. [C23/6-7, C24/17]
701 A CA from Innovium Pty Ltd visited consumer D at her home. [C23/8] The college had entered into a sales agreement with Innovium on 4 June 2015 (Innovium Agreement). [D5943]
702 The Innovium Agreement provided that the college was not obliged to enrol every prospective student who completed an application (cl 2.7) and could reject any application at its sole discretion (cl 2.8). It also included a series of clauses regarding the requirement for Innovium and its representatives to behave ethically, provide only accurate information about the courses, complete mandatory training provided by the college and agent declaration forms, and to comply with regulatory requirements (cll 4, 5, 8). [D5946-7]
703 The CA asked consumer D if she was interested in doing an online course. She said she would listen and that her daughter might be interested. The CA did not have any ID badge or other attire identifying where the CA worked. The CA said he was “recruiting for Captain Cook”. [C24/14] The CA was Aboriginal so consumer D trusted him, because she is also Aboriginal. [C24/11-17]
704 The CA said to consumer D that he had signed up a lot of Aboriginal people and that it was a good opportunity for studying. [C24/18] He also said the study was online and a laptop was available for free. [C25/20] The CA said to consumer D that she could cancel at no cost and could keep the laptop. The CA did not tell consumer D how to withdraw from the course but said that the course was “free for you people”, which consumer D took to mean Aboriginal people. [C25/21-23]
705 Consumer D was interested in undertaking the business course offered by the college. She also liked the idea of a free laptop, because she would not have been able to do the course without one. [C25/24]
706 Consumer D filled out a two-page application form inserting her personal details. The CA was separately “jotting down details” on a “big touch screen smartphone”. The CA also asked for consumer D’s pension card and TFN and said that “if you have a tax bill you won’t be eligible”. Consumer D thought this statement was strange and confusing because she wondered what that had to do with being eligible for the course. [C26/25-27]
707 The CA did not ask consumer D about her literacy or numeracy skills or tell her that a certain level of education was needed. She was not told about the support that she could receive while studying. The CA did not say he was working on commission. [C26/28]
708 The CA then made a call and gave the phone to consumer D and she had a QA call with the college. The CA said to consumer D that any questions about fees did not involve consumer D because the “course is at no cost to you” and “it is just something they will read out”. Further, that “when you are asked any questions you just need to say ‘yes, yes, yes’.” [C26/28-30]
709 The recording of the QA call shows that the college informed consumer D that: the call was being recorded for quality assurance purposes; the course she was enrolling in was a Diploma of Business; the duration of the course was 28 weeks; the total cost of her course was $15,600; her course had two units of study; the start date of her course was 9 December 2015; the college had received her application for VFH and that she would become liable to repay the VFH loan through the taxation system once she started earning above the income threshold, which was $54,126 at the time; she should pay close attention to the course census date, and that the first census date for her course was 22 December 2015; she could withdraw from her course prior to her first census date without incurring a VFH debt and that it was her responsibility to contact the college by phone or email and lodge the appropriate forms by the census date; the computer was the property of the college and was on loan for the duration of the course; she would be receiving an orientation pack by email, including her letter of offer, training plan and VFH booklet; and an SSO would be in touch on a weekly basis to provide personalised assistance with her studies. As with the other calls, the information was delivered at a rapid pace and is difficult to understand.
710 While on the QA call with the college admissions officer, consumer D confirmed that: the CA had shown her identification; her postal address was correct, email address and mobile telephone number were correct; she completed the PEQ on her own (a statement which was wrong and induced by the CA); she agreed to enrol in the course described to her; she understood the withdrawal procedure; she had completed the loan equipment form for a loan computer; and any time would do to be contacted by her SSO. As with the other call, this information was prompted by the CA.
711 Consumer D listened to a recording of the QA call prior to swearing her affidavit. She noted that she did not understand everything the woman was saying because she spoke quickly and was uncomfortable saying “yes”; did not understand what VET FEE-HELP meant and the CA had not mentioned this to her – she only found out what it meant when she received a letter from the college; had not actually filled out the loan application form but said “yes” because the CA was prompting her to do so; and said she filled out a PEQ but had not actually done so. [C26-27/31, D6190]
712 The CA did not mention how consumer D would receive her course materials. The CA said to consumer D that the college would be in contact by email and that she would receive a laptop in three to four days in the mail. Consumer D never received a laptop. [C27/32-24]
713 At some point during the visit, the CA offered consumer D cash and an Apple laptop (“instead of the normal one”) for taking him to where she was from – an Aboriginal community in remote south-western Queensland – in order to sign up further people. [C27/35]
714 Consumer D said that she had never seen her application for enrolment before preparing her affidavit. She identified a number of errors in the answers recorded in the application which indicate that she did not complete it. [C28/39, D6182] With reference to what consumer D said earlier about filling in a two page form, I infer that the CA transferred her personal details from that form to the electronic form and then filled in the remainder of the electronic form himself taking the answers from the conversation that he had with her.
715 In the case of consumer D, there is no communications log of the communications between the college and the student. It is therefore not possible to determine exactly when documentation from the college was sent to her. The ACCC points to a communication log which it says is in respect of consumer D, but the student number and name used in that log does not match consumer D’s student number and name so it cannot be the correct log. [D6200-6202]
716 There is an offer of enrolment, dated 8 December 2015, and a training plan, dated 9 December 2015, which were presumably sent to consumer D. [D6187-9] These documents recorded that the course was to start on 9 December 2015, that the first census date was 22 December 2015, that the second census date was 1 March 2016, that the total cost of the course was $15,600 and that “tuition fees will apply if you withdraw after your census date for each unit of study”.
717 Consumer D says that she was shocked when she received a “bill” (which may have been the offer of enrolment and training plan or a COE and the CAN, the latter two both dated 23 December 2015) in the mail because she thought the course was free. The COE and the CAN relevantly recorded the same information as the offer of enrolment and the training plan as identified above. [D6191-2]
718 She later contacted the college wanting her debt reversed. The college sent her a form to fill in. Consumer D filled in a complaints form dated 11 March 2016 and returned it. [C29/45-6, D6193-5] She later completed a reversal application form, dated 29 April 2016, and, I infer, returned it to the college. [D6197]
719 Consumer D was sent a letter from the college dated 19 May 2016 advising that her complaint had been investigated and that “the outcome you wished to have applied has been successful”. It stated that the rationale for the decision was “based on you not receiving all the relevant information to enable you to make a decision about the course by the Course Advisor”. [D6198]
720 She later received a letter, dated 11 July 2016, advising her that “upon review” the college had elected to reverse the CAN issued on 23 December 2015 meaning that consumer D had not incurred a VFH debt. [C28-29/47-48, D6196, D6199]
721 The ACCC submits that the conduct of the CA, in the course of signing consumer D to a course, was engaged in by the CA “on behalf of” the college as an agent of the college within the scope of the actual or apparent authority of the agent, such that the conduct is attributable to the college under s 139B(2)(a) of the C&C Act.
722 The ACCC says that under the Innovium Agreement, the college appointed Innovium to promote and market courses offered by college. The Innovium Agreement also included a provision requiring the company to ensure that consumers were informed that it was providing sales services “as an agent” for the college. [D5945-6]
723 The college submits that, again, the CA’s conduct was not in the college’s interests, undermined the processes the college had in place and that the conduct was contrary to the training provided by the college, and that therefore it was not conduct on behalf of the college. I accept that a number of the statements made by the CA were said without actual authority. However, the key statements were nonetheless made for the purpose of signing up consumer D to a college course (being conduct in an authorised class) and therefore within the CA’s apparent authority.
724 For the same reasons as set out at  above, the conduct is taken to be on behalf of the college.
725 The ACCC contends that the CA’s conduct in signing up consumer D involved four instances of false, misleading or deceptive conduct and representations. First, the CA told consumer D the course was free, which was false, because in fact it cost $15,600. This was said to be a contravention of s 29(1)(i) and s 18.
726 Secondly, the CA told consumer D she could cancel her course at any time, which conveyed a representation that she could cancel the course at any time without incurring a debt, which was false in contravention of s 29(1)(i) and s 18. Thirdly, the CA told consumer D she could get a free laptop if she signed up for a course, in contravention of s 29(1)(m) and s 18. Fourthly, by telling consumer D that the course and laptop were free, the CA also conveyed a representation to the effect that any cost of the course consumer D was signing up to in order to obtain a laptop was a good deal in contravention of s 29(1)(i) and s 18.
727 The college concedes that the first, second and third instances were false or misleading and contraventions of s 29(1)(i) and 29(1)(m). The college made no written submissions on the fourth instance and denies it in its defence. Similar to the other consumers, it is not clear what this instance captures that the others do not. I find there was no independent contravention in respect of the fourth instance. [A141G/221B(b)]
728 The ACCC submits that the CA’s conduct was unconscionable within the meaning of s 21 of the ACL. The CA’s conduct was engaged in in circumstances where: (a) he had failed to explain key aspect of the VFH scheme to consumer D (such as the need to withdraw before the census date to avoid incurring a VFH debt); (b) he had filled out the enrolment documents (including the PEQ), rather than ensuring consumer D filled them out herself; (c) he let consumer D believe she could keep the laptop he gave her, when offering inducements to enrol was inconsistent with cl 4.4 of the VET Guidelines; and (d) he told consumer D the answers she should give to some of the questions in the QA call, such that a procedure which might have protected consumer D’s interests was subverted.
729 This is accepted by the college but it is denied that the conduct was on behalf of the college and, alternatively, that it was not in all the circumstances unconscionable. I reject this submission for the same reasons given above at  to .
730 The colleges admits that an unsolicited consumer agreement was formed between it and consumer D. However, the college denies a breach of s 78(2) because implied consent to send the “agreement document” by email should be inferred from the circumstances, since the college told consumer D she would be receiving her orientation pack and letter of offer by email, consumer D had provided her email address to the college, and did not object to being sent the relevant material by email on the QA call.
731 Consumer D’s evidence is that she was interested in undertaking the business course offered by the college and appears to have provided her email for that purpose. While it is unclear when and how consumer D received the letter of offer and training plan, I infer that she received those documents. She did not say that her email was recorded incorrectly in circumstances where she identified a number of other errors in her enrolment documents. As indicated, the evidence does not establish exactly when consumer D was signed up, or when the documentation was sent to her. I therefore find there was no breach of s 78(2). For the same reasons set out at  to  there was a breach of ss 79(b) and (c).
T.5 Consumer E
732 In November 2015, consumer E was enrolled in a Diploma of Human Resources Management.
733 Consumer E did not complete his year 10 certificate. He went to schools that provide special needs support. Consumer E has difficulties reading and writing because of an acquired brain injury. He was approximately 30 years old at the time he was enrolled. [C41/3-4]
734 Consumer E said in his affidavit that he can read part of a text message but not all of it. He can navigate his phone but cannot type a text message, instead he sends messages using voice to text. He is unable to read a book but “might have a go at figuring out what a newspaper article is about by recognising some words”. [C41/4]
735 Consumer E has completed a Certificate III in Warehousing Operations and other certificates in forklift driving, construction, logistics and food handling. These courses were undertaken in a classroom. He has never undertaken a class online. Consumer E has been on a disability support pension from Centrelink since he turned 18. His pension or income is paid to the State Trustee and he receives an allowance to pay for his bills and other things. This has been the case for around 15 years. [C41/5-6]
736 Sometime in late 2015, two CAs knocked on consumer E’s door. They showed consumer E their ID badges and one of them said they were there to “sign people up to study online”. Consumer E invited them inside. [C42/7-9] His enrolment application indicates that he was enrolled by a CA from Career Developer. [D6209] The college had a sales agreement with Contact Plus Pty Ltd trading as Career Developer entered into on 22 October 2015 (CD Agreement). [D6073]
737 The CD Agreement provided that the college was not obliged to enrol every prospective student who completed an application (cl 2.7) and could reject any application at its sole discretion (cl 2.8). The CD Agreement also included a series of clauses regarding the requirement for Career Developer and its representatives to behave ethically, provide only accurate information about the courses, complete mandatory training provided by the college and agent declaration forms, and to comply with regulatory requirements (cll 4, 5, 8). [D6076-7]
738 One of the CAs said that “if you sign up, you can get a free laptop”. Consumer E recalls they may have also offered him a tablet. [C42/9]
739 The course that was suggested to consumer E was a “Diploma in Business and Logistics or something like that”. However, consumer E said that this would not have been useful because he cannot “really read or write” but he thought the free laptop would be useful. [C42/10]
740 Consumer E said that the CAs’ English was “very poor” and he had trouble understanding them. At one point in the conversation, consumer E let the CAs know that he could not do an online course with his reading and writing ability and that he had an intellectually disability. A CA responded “just sign up and we’ll be on our way”. Consumer E felt they did not seem to understand or were not listening to him regarding his disability. [C42/11-13]
741 At another point in the conversation, one of the CAs said to consumer E that “if you want to go places you should do it” and that online assistance would help him. Further on in the conversation, after saying he was not interested, a CA said again “just sign up with us today”. Consumer E said that the CAs were “very forceful” and he felt he had to sign up even though he did not want to. [C42-3/14-16]
742 One of the CAs then asked for consumer E’s Centrelink and Medicare cards and licence. Consumer E gave the CA what he asked for and he saw the CA write some things down on a piece of paper and then the CA did something on his phone. Consumer E did not fill out anything on the phone himself or do any paper work. [C43/17-18]
743 The CA then called the college and put consumer E on the phone for the QA call. Before the QA call he said to consumer E to “just say ‘yes’ to everything”. The CA nodded to prompt consumer E on the QA call. [C43/22, D6219]
744 The CA did not tell consumer E how much the course would cost. When the college told him on the phone the costs he got “a bit of a shock to the system” but he thought that by then he could not pull out. Consumer E had concerns about how he was going to pay. At the time consumer E was working in a bar at night and as a cleaner in the day. [C43/23]
745 The recording of the QA call shows that during the call the college informed consumer E that: the call was being recorded for quality and assurance purposes; the course he was enrolling in was a Diploma of Human Resources Management; the duration of the course was 28 weeks; the total cost of his course was $15,600; that his course had two units of study; the start date of his course was 11 November 2015; the college had received his application for VFH and that he would become liable to repay the VFH loan through the taxation system once he started earning above the income threshold, which was $54,126 at the time; he should pay close attention to the course census date, and that the first census date for his course was 23 November 2015; he could withdraw from his course prior to his census date without incurring a VFH debt and that it was his responsibility to contact the college by phone or email and lodge the appropriate forms by the census date; he would be receiving an orientation pack by email, including a letter of offer, training plan and VFH booklet; and a college SSO would be in touch with him on a weekly basis to provide him with personalised assistance with his studies. As with the other calls, the information was conveyed very quickly and is difficult to follow.
746 While on the QA call with the college admissions officer, consumer E confirmed that: the CA had shown him identification; his postal address, email address and mobile telephone number were correct; he completed the PEQ on his own; he agreed to enrol in the course described to him; he understood the withdrawal procedure; he had completed the loan equipment forms for a loan computer; and any time would do to be contacted by an SSO. As has been seen, these answers were prompted by the CA.
747 The person on the phone from the college did not explain what the course was about and what he was going to be doing. Consumer E did not know what was going on and the CA was nodding at him. After the phone call finished the CA talked more about the course and the support the college could offer. [C43/24-25]
748 The college’s communications log records that consumer E’s user account was created on 13 November 2015. [D6226] On the same day, the college sent consumer E his username and password to access the LMS. [D6225-6]
749 On 20 November 2015, the college emailed to consumer E a letter of offer (dated 13 November 2015) and a training plan (dated 11 November 2015). [D6216, D6214, D6225] Those documents recorded that the start date for the course was 11 November 2015, the first census date was 24 November 2015, the cost of the course was $15,600, and that tuition fees would apply if consumer E withdrew after the census date for each of the two units of study.
750 On 25 November 2015, the college emailed to consumer E a COE and a CAN. [D6217-8, D6223-4] Those documents relevantly recorded the same information as recorded in the letter of offer and the training plan identified above.
751 On 9 December 2015, an SSO from the college made a call to consumer E. He told the SSO that he could not read or write properly and that he wished to withdraw from the course. [D6222, D6227] The college subsequently received information confirming consumer E’s unsuitability for a diploma-level course. [D6221] The college then re-credited consumer E’s VFH debt. [D6220-1]
752 The ACCC submits that the conduct of the CA, in the course of signing consumer E to a course, was engaged in by the CA “on behalf of” the college as an agent of the college within the scope of the actual or apparent authority of the agent, such that the conduct is attributable to the college under s 139B(2)(a) of the C&C Act.
753 The college denies that it was conduct on behalf of the college because the CA sought to undermine the processes of the college by, among other things, coaching answers. Further, that the CA’s conduct was in direct opposition to the training provided to the CA. The CD Agreement appointed the company to promote and market courses offered by the college. The CD Agreement also included a provision requiring the company to ensure that consumers were informed that it was providing sales services “as an agent” for the college.
754 I accept that a number of the statements made by the CA were said without actual authority, such as the provision of a free laptop. However, for the same reasons as set out at  above, the conduct is taken to be on behalf of the college.
755 The ACCC contends that the CAs’ conduct in signing up consumer E involved two instances of false, misleading or deceptive conduct and representations. First, the CAs represented to consumer E that he could get a free laptop if he signed up for a course, but that was a false or misleading representation, in contravention of s 29(1)(m) and s 18. Secondly, by not telling consumer E the cost of the course, the CAs conveyed a representation that the cost of the course was such that signing up to the course in order to get a laptop constituted a good deal. This was said to be breach of both s 29(1)(i) and s 18.
756 The college accepts that the CAs’ conduct telling consumer E he would get a free laptop if he signed up was misleading within the meaning of s 29(1)(m). It also accepts that the CAs’ failure to disclose to consumer E the cost of the course in which he enrolled was misleading and deceptive with respect to the price of the course in contravention of s 29(1)(i). The college appears to deny that the allegation that the CAs conveyed a representation that the cost of the course was such that signing up to the course in order to get a laptop constituted a good deal. This allegation, like the others made against each of the other consumers does not say anything more than the other breaches so I find no contravention in respect of it. [A141L/ 239(d)]
757 The ACCC submits that the CAs’ conduct was unconscionable within the meaning of s 21 of the ACL. The CAs’ conduct was engaged in in circumstances where: (a) the CAs’ conduct in offering consumer E a laptop and telling him he could keep it was inconsistent with cl 4.4 of the VET Guidelines; (b) the CAs persisted with their attempts to sign consumer E up even though consumer E had told them he had disabilities which meant he could not do a course, and was not interested; (c) the CAs’ conduct led to consumer E feeling pressured to enrol; and (d) the CAs told consumer E the answers he should give during the QA call, such that a procedure which might have protected consumer E’s interests was subverted.
758 The college admits that the CAs’ conduct was unconscionable within the meaning of s 21 of the ACL. However, the college denies it was conduct engaged in on behalf of the college or, alternatively, that it was not in all of the circumstances unconscionable. I reject this submission for the same reasons given above at  to .
759 The college admits that an unsolicited consumer agreement was formed between it and consumer E, but it says there was no breach of s 78(2) because the training plan and letter of offer arrived within five business days and because consent to send them by email should be implied from the circumstances. Consumer E provided and then confirmed his email address. It was apparently a genuine email address. Unlike, for example, consumer A, consumer E had no interest in doing a course and did not intend to consent to anything. He was pressured and bamboozled. Considered objectively, the provision by him of his email address was not consent to receive the agreement document by email because he had said that he did not want to sign up at all. There was therefore a breach of s 78(2).
761 In summary, I have found that the college engaged in a system of conduct or pattern of behaviour that was unconscionable as proscribed by s 21 of the ACL in relation to consumers who were enrolled in the college during the period 7 September 2015 to 18 December 2015. The conduct in question was the weakening of protections or mechanisms against CA misconduct and unsuitable enrolment risk by changing its enrolment and withdrawal processes by abolishing an outbound QA call process and replacing it with an inbound QA call process and, in particular, abolishing its system of campus driven withdrawals.
762 A further dimension to the unconscionable conduct was the claiming by the college of VFH revenue from the Commonwealth in respect of consumers enrolled during that period with whom the college was able to make no contact after the initial inbound QA call and who would for that reason have been withdrawn by the college from their enrolment prior to the abolition of the campus driven withdrawal process, and the retaining of such of that revenue as was paid by the Commonwealth. The claiming and retaining of the revenue had the result that the uncontactable students incurred VFH debts to the Commonwealth.
763 I have also found that Mr Wills was knowingly concerned in the identified unconscionable conduct, and that on account of his knowing concern Site was also knowingly concerned in the conduct.
764 In respect of the individual consumer complaints I have found that the conduct of the CAs is the conduct of the college with the result that there were the following contraventions.
765 In respect of consumer A, the college contravened:
(1) section 29(1)(i) of the ACL by failing to disclose to consumer A the cost of the course in which she enrolled;
(2) section 18 of the ACL by failing to explain the withdrawal policy and relevance of census dates;
(3) section 21 of the ACL by failing to explain key aspects of the VFH scheme, filling out the enrolment documents (including the PEQ) rather than ensuring that consumer A filled them out herself, letting consumer A believe she could keep the laptop which constituted a prohibited inducement to enrol, and the unsatisfactory nature of the QA call;
(4) section 79(b) of the ACL by failing to include on the front page of the agreement document a notice that conspicuously and prominently informed consumer A of her right to terminate the agreement; and
(5) section 79(c) of the ACL by failing to attach to the agreement document a form that could be used to terminate the agreement.
766 In respect of consumer B, the college contravened:
(1) sections 18 and 29(1)(i) of the ACL by telling consumer B that the course was free;
(2) section 29(1)(m) of the ACL by telling consumer B that the laptop he would get was for free;
(3) section 21 of the ACL by enrolling consumer B in circumstances where the CA knew that he suffered from a brain injury which meant that he was not capable of doing the courses and was on a pension and did not want to do a course, pressurising consumer B to enrol, filling after the enrolment documents (including the PEQ) rather than ensuring that consumer B for them out himself, telling consumer B the answers he should give to questions on the QA call and the unsatisfactory nature of the QA call;
(4) section 78(2) of the ACL by not sending the agreement document to consumer B as required;
(5) section 79(b) of the ACL by failing to include on the front page of the agreement document a notice that conspicuously and prominently informed consumer B of his right to terminate the agreement; and
(6) section 79(c) of the ACL by failing to attach to the agreement document a form that could be used to terminate the agreement or containing the text required by the regulations.
767 In respect of consumer C, the college contravened:
(1) sections 18 and 29(1)(g) of the ACL by in forming consumer C that the course she was being enrolled for would help her become a flight attendant;
(2) sections 18 and 29(1)(i) of the ACL by representing to consumer C that the course was free for people on Centrelink;
(3) sections 18 and 29(1)(m) of the ACL by conveying a misleading representation with respect to the price of the course by telling consumer C that she would get a free laptop;
(4) section 21 of the ACL by enrolling consumer C in circumstances where the CA filled out the enrolment documents (including the PEQ) rather than ensuring that consumer C filled them out herself, letting consumer C believe that she could keep the laptop she was to receive when offering such an inducement was contrary to the guidelines, by telling or prompting consumer C the correct answers during the QA call, and the unsatisfactory nature of the QA call;
(5) section 79(b) of the ACL by failing to include on the front page of the agreement document a notice that conspicuously and prominently informed consumer C of her right to terminate the agreement; and
(6) section 79(c) of the ACL by failing to attach to the agreement document a form that could be used to terminate the agreement or containing the text required by the regulations.
768 In respect of consumer D, the college contravened:
(1) sections 18 and 29(1)(i) of the ACL by telling consumer D that the course was free;
(2) sections 18 and 29(1)(i) of the ACL by telling consumer D that she could cancel her course at any time;
(3) sections 18 and 29(1)(m) by telling consumer D that she would get a free laptop if she signed up for the course;
(4) section 21 of the ACL by enrolling consumer D without explaining key aspects of the VFH scheme, such as the need to withdraw before the census date to avoid incurring a VFH debt, filling out the enrolment documents (including the PEQ) rather than ensuring that consumer D filled them out herself, letting consumer D believe that she could keep the laptop which was contrary to the prohibition against inducements in the guidelines, telling consumer D the answers she should give to some of the questions in the QA call, and the unsatisfactory nature of the QA call;
(5) section 79(b) of the ACL by failing to include on the front page of the agreement document a notice that conspicuously and prominently informed consumer D of her right to terminate the agreement; and
(6) section 79(c) of the ACL by failing to attach to the agreement document a form that could be used to terminate the agreement or containing the text required by the regulations.
769 In respect of consumer E, the college contravened:
(1) sections 18, 29(1)(i) and 29(1)(m) by telling consumer E that he would get a free laptop if he signed up for the course;
(2) section 21 of the ACL by enrolling consumer E in circumstances of offering consumer E a laptop and telling him he could keep it contrary to the guidelines, persisting in attempts to sign up consumer E even though he had said he has disabilities which meant he could not do a course and was not interested, pressurising consumer E to enrol, telling consumer E the answers he should give during the QA call, and the unsatisfactory nature of the QA call;
(3) section 78(2) of the ACL by not sending the agreement document to him other than by email for which it did not obtain his consent;
(4) section 79(b) of the ACL by failing to include on the front page of the agreement document a notice that conspicuously and prominently informed consumer E of his right to terminate the agreement; and
(5) section 79(c) of the ACL by failing to attach to the agreement document a form that could be used to terminate the agreement or containing the text required by the regulations.
770 I will direct the parties to bring in agreed or competing orders reflecting my findings, and on costs and the future conduct of the proceeding.
Dated: 2 July 2021