Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (trading as Captain Cook College) (No 4)

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judgment Date: 05 July 2021
• Neutral Citation: [2021] FCA 752
• Date: 05 July 2021

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (trading as Captain Cook College) (No 4) [2021] FCA 752

File number:	NSD 2059 of 2018
Judgment of:	BROMWICH J
Date of judgment:	5 July 2021
Catchwords:	PRACTICE AND PROCEDURE – orders and declarations sought by consent by the applicant and third respondent in proceedings arising from an application for orders and declarations as to contravention of Australian Consumer Law – where third respondent admitted contraventions – held: appropriate relief in the circumstances – third respondent disqualified from managing corporations for a period of 3 years.
Legislation:	Competition and Consumer Act 2010 (Cth) Schedule 2 (Australian Consumer Law) ss 21, 224(1)(e) Higher Education Support Act 2003 (Cth)
Cases cited:	Australian Competition & Consumer Commission v Renegade Gas Pty Ltd (t/as Supagas NSW) [2014] FCA 1135 Australian Competition and Consumer Commission v Colgate-Palmolive (No 2) [2016] FCA 528 Australian Competition and Consumer Commission v GlaxoSmithKline Consumer Healthcare Australia Pty Ltd (No 2) [2020] FCA 724 Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (trading as Captain Cook College) (No 3) [2021] FCA 737 Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482
Division:	General Division
Registry:	New South Wales
National Practice Area:	Commercial and Corporations
Sub-area:	Regulator and Consumer Protection
Number of paragraphs:	15
Date of hearing:	3 June 2020
Counsel for the Applicant	O Bigos QC
Solicitor for the Applicant	Johnson Winter & Slattery
Counsel for the Third Respondent	S Lawrance
Solicitor for the Third Respondent	Wotton & Kearney 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 LIMITED ACN 003 201 910 Second Respondent ; IAN COOK (and another named in the Schedule) Third Respondent

order made by:	BROMWICH J
DATE OF ORDER:	5 jULY 2021

FURTHER TO THE ORDERS MADE ON 3 JUNE 2020, THE COURT DECLARES THAT:

1. The third respondent, Ian Cook (Cook), was knowingly concerned in, or a party to, a contravention of s 21 of the Australian Consumer Law (ACL) by the first respondent trading as Captain Cook College, 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), constituted by the College engaging in an unconscionable 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 College staff to consumers after the College had reviewed consumers’ enrolment documents to identify any issues concerning the consumer’s suitability for the course were replaced by inbound calls to the College, made by the persons who conducted marketing and recruitment on behalf of the College (Course Advisors or CAs) 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, the College staff followed a script which consisted principally of closed questions (requiring only “Yes/No” answers) and reading scripted information; and

B. the College abolished its campus-driven withdrawal (CDWD) procedure, by which, prior to the Relevant Period, the College 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 or was not contactable, so that consumers subject to a CDWD would not incur VET FEE-HELP debt (which arose upon the passing of a census date); and

(ii) claiming the consequently increased revenue by way of payment sought from the Commonwealth in respect of VET FEE-HELP debts incurred by consumers (VFH Revenue);

(b) and which occurred in circumstances where:

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

(ii) the College knew or ought to have known that:

A. there was a real risk that some consumers recruited and enrolled by Course Advisors would lack the language, literacy and numeracy skills, the computer skills and/or access to technology necessary to undertake the course, and/or would have no or only minimal engagement with their course;

B. there was a real risk that some 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 VET FEE-HELP debt if they enrolled in the courses or the circumstances in which that VET FEE-HELP debt would have to be repaid, offering inducements to enrol, pressuring consumers to enrol, falsifying or incorrectly completing consumers’ enrolment documents; and

C. the change from the outbound call to the College, to the inbound call to the College, would increase the susceptibility of the enrolment process to Course Advisors’ misconduct and reduce the College’s ability to detect and prevent CA misconduct or to assess a prospective student’s circumstances or ability to complete the course; and

D. the abolishment of the CDWD procedure would result in an increase in the number of consumers enrolled in courses who were not contactable, or not engaged with the course, incurring VET FEE-HELP debt because they remained enrolled on a census date;

(iii) the College knew or ought to have known, following the Relevant Period, 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 the College, with 1,316 consumers enrolled during the Earlier Period and 7,324 consumers enrolled in the Relevant Period;

B. the number and proportion of consumers who, once enrolled, incurred a VET FEE-HELP debt;

C. the number and proportion of consumers who incurred a VET FEE-HELP 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 VET FEE-HELP debt but who did not engage in their course or were not contactable;

E. the amount claimed by the College on account of VFH Revenue, with the College claiming approximately $61.57 million in VFH Revenue for the combined Earlier Period and Relevant Period, of which around $54.17 million was in respect of consumers whose enrolment was processed in the Relevant Period.

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

REASONS FOR JUDGMENT

BROMWICH J:

1 These are the reasons for orders made on 3 June 2020, and for a declaration hereby made today, in relation to the third respondent, Mr Ian Cook, both of which were deferred pending the determination of liability on the part of the remaining respondents by the docket judge for the contested part of this proceeding, Stewart J. His Honour delivered judgment on liability in relation to the remaining three respondents in this proceeding on 2 July 2021: Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (trading as Captain Cook College) (No 3) [2021] FCA 737.

2 In November 2018, the...