Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (trading as Captain Cook College) (No 5)

• Jurisdiction: Australia Federal only
• Judge: STEWART J
• Judgment Date: 04 August 2021
• Neutral Citation: [2021] FCA 919
• Date: 04 August 2021
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (trading as Captain Cook College) (No 5) [2021] FCA 919

File number:	NSD 2059 of 2018
Judge:	STEWART J
Date of judgment:	4 August 2021
Catchwords:	PRACTICE AND PROCEDURE – declarations on liability – whether hearing on penalties and other remedies should await foreshadowed appeal on liability – costs of liability proceeding
Legislation:	Competition and Consumer Act 2010 (Cth) Sch 2 (Australian Consumer Law) ss 224, 246, 248
Cases cited:	ACCC v MSY Technology Pty Ltd [2012] FCAFC 56; 201 FCR 378 ACCC v Productivity Partners Pty Ltd (trading as Captain Cook College) (No 3) [2021] FCA 737 ACCC v Unique International College (No 7) [2017] FCA 1289 ACCC v Valve Corporation (No 4) [2016] FCA 382 ACCC v viagogo AG (No 2) [2019] FCA 907 Australian Building and Construction Commissioner v CFMEU [2017] FCAFC 113; 254 FCR 68 Rural Press Ltd v ACCC [2003] HCA 75; 216 CLR 53 Unique International College Pty Ltd v ACCC [2018] FCAFC 155; 266 FCR 631 Warramunda Village Inc v Pryde [2001] FCA 61; 105 FCR 437
Date of hearing:	4 August 2021
Registry:	New South Wales
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Regulator and Consumer Protection
Number of paragraphs:	13
Counsel for the Applicant:	O Bigos SC and S Patterson
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:	MinterEllison
Counsel for the Fourth Respondent:	M Hodge QC and C Schneider
Solicitor for the Fourth Respondent:	HWL Ebsworth Lawyers

ORDERS

		NSD 2059 of 2018
BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
AND:	PRODUCTIVITY PARTNERS PTY LTD (TRADING AS CAPTAIN COOK COLLEGE) ACN 085 570 547 First Respondent ; SITE GROUP INTERNATIONAL LTD ACN 003 201 910 Second Respondent ; BLAKE WILLS Fourth Respondent

JUDGE:	STEWART J
DATE OF ORDER:	4 AUGUST 2021

THE COURT DECLARES THAT:

1. The first respondent, Productivity Partners Pty Ltd (ACN 085 570 547) trading as Captain Cook College (CCC), in connection with the supply or possible supply of online diploma level courses (courses) to consumers whose enrolment was processed during the period 7 September 2015 to 18 December 2015 (Relevant Period), engaged in conduct that was unconscionable in contravention of s 21 of the ACL, in that CCC engaged in a system of conduct or pattern of behaviour:

(a) which comprised:

(i) making and implementing the following changes to its enrolment and withdrawal processes (Process Changes):

(A) outbound calls made by CCC staff to consumers after CCC had reviewed consumers’ enrolment documents, and during which CCC staff asked the consumer a range of questions directed at identifying any issues concerning the consumer’s suitability for the course, were replaced by inbound calls to CCC, made by the persons who conducted marketing and recruitment on behalf of CCC (Course Advisors) immediately after electronically submitting the prospective student’s enrolment documents, so that the Course Advisors were generally present when the consumer completed the call. On these calls, CCC staff followed a script which consisted principally of closed questions (requiring only “Yes/No” answers) and reading scripted information, and did not have an opportunity to conduct an analysis of the enrolment documents in advance and identify any problems; and

(B) CCC abolished its campus driven withdrawal (CDWD) procedure, by which, prior to the Relevant Period, CCC had taken steps to withdraw consumers from their course prior to the first or subsequent census date if a consumer was not engaging in their course, was not contactable or if CCC staff otherwise concluded that the consumer was not suitable for their course, so that consumers subject to a CDWD would not incur VET FEE-HELP (VFH) debt (which arose upon the passing of a census date); and

(ii) claiming and retaining the consequently increased revenue by way of payment from the Commonwealth in respect of VFH debts incurred by consumers (VFH Revenue);

(b) and which occurred in circumstances where:

(i) a substantial purpose of CCC adopting and applying the Process Changes was to increase its VFH Revenue;

(ii) CCC knew that:

(A) there was a real risk that consumers recruited and enrolled by Course Advisors may not wish to enrol in an online course, would lack the language, literacy and numeracy skills, the computer skills and/or access to technology necessary to undertake the course, would not be contactable by CCC, and/or would have no or only minimal engagement with their course;

(B) there was a real risk, that regularly materialised, that Course Advisors marketing the courses and recruiting consumers on a commission based payment structure would engage in misconduct such as by making false or misleading representations to consumers that the courses were free, failing to properly inform consumers that they would incur VFH debt if they enrolled in the courses or the circumstances in which that VFH debt would have to be repaid, pressuring consumers to enrol, offering inducements to enrol, completing consumers’ enrolment documents for them and coaching consumers for the purposes of the call with CCC with the result that unsuitable consumers became enrolled as students; and

(C) the Process Changes would increase the susceptibility of the enrolment process to Course Advisors' misconduct and reduce CCC’s ability to promptly detect and prevent CA misconduct or to assess a prospective student’s circumstances or ability to complete the course, and would therefore be likely to result in an increase in the number of consumers enrolled in courses who were not contactable, not engaged with the course, or who were unsuitable for the course incurring VFH debt for which they would get no benefit because they remained enrolled on a census date;

(iii) CCC knew, through its own analysis, audits, investigations and the receipt of complaints from consumers that, as a result of the Process Changes, in the 14 weeks comprising the Relevant Period when compared to the 10 months comprising the period 1 November 2014 to 6 September 2015 (Earlier Period), there was a substantial increase in:

(A) the number of consumers whose enrolment in a course was processed by CCC, with approximately 1,300 consumers enrolled during the Earlier Period and approximately 7,300 consumers enrolled in the Relevant Period;

(B) the number and proportion of consumers who, once enrolled, incurred a VFH debt;

(C) the number and proportion of consumers who incurred a VFH debt but who did not complete any unit of study or the course as a whole;

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

(E) CCC’s VFH Revenue, with CCC claiming approximately $57.1 million in VFH Revenue for the combined Earlier Period and Relevant Period for students who did not complete the course, of which around $50.1 million was in respect of consumers whose enrolment was processed in the Relevant Period.

2. Blake Alan Wills (Wills) was knowingly concerned in, or a party to, CCC’s contravention of s 21 of the ACL as set out in paragraph 1 above.

3. By reason of Wills’s knowledge and conduct being attributable to Site Group International Ltd (ACN 003 201 910) (Site), Site was knowingly concerned in, or a party to, CCC’s contravention of s 21 of the ACL as set out in paragraph 1 above.

Consumer A

4. In around October 2015:

(a) a course advisor (Recruiter A) who was engaged to market and promote CCC’s courses to consumers, during the course of signing up Consumer A to a course offered by CCC (Sign-Up Meeting A):

(i) failed to tell Consumer A the cost of the course in which she was enrolled; and

(ii) failed to explain to Consumer A her ability to withdraw prior to the census date and the relevance of census dates;

(b) Recruiter A engaged in the conduct described in sub-paragraph 4(a) above on behalf of CCC, and as an agent of CCC acting within the scope of his authority, such that Recruiter A’s conduct is taken, by...