Australian Competition & Consumer Commission v Black on White Pty Ltd & Ors [2001] FCA 372

FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Black on White Pty Ltd & Ors [2001] FCA 372 AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v BLACK ON WHITE PTY LTD (ACN 061 507 248) AND OTHERS QG 110 of 1997 SPENDER J BRISBANE 4 APRIL 2001

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY QG 110 OF 1997

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

APPLICANT

AND: BLACK ON WHITE PTY LTD (ACN 061 507 248)

FIRST RESPONDENT

NICKI POTERI

SECOND RESPONDENT

JAMES NICHOLAS POTERI

THIRD RESPONDENT

NICHOLAS JAMES POTERI

FOURTH RESPONDENT

JUDGE: SPENDER J

DATE OF ORDER: 4 APRIL 2001

WHERE MADE: BRISBANE

THE COURT MAKES FINDINGS OF FACT AS FOLLOWS: 1. The First Respondent, trading as the "Australian Early Childhood College" ("the College"), in trade or commerce, advertised to prospective students in the College's promotional material from late 1996 to about August 1997 (namely, the 1997 College Handbook; a brochure entitled "Your Career in Childcare"; and a leaflet), that the following courses offered by the College: · Advanced Diploma of Early Childhood Education and Science (CNADS); · Diploma of Early Childhood Education (CNDEC); · Certificate IV in Early Childhood Education (CNECE); · Certificate IV in Early Childhood Development Traineeship (CNECT); · Certificate IV in Early Childhood Development (CNCED); · Certificate IV in Early Childhood Practices (CNECP); and · Certificate III in Early Childhood Skills (CNECS); ("the 1997 courses"); were accredited: (a) by the Vocational Education Training and Employment Commission of Queensland ("VETEC") pursuant to the Vocational Education, Training and Employment Act 1991 (Qld); and (b) nationally pursuant to the National Framework for the Recognition of Training Agreement ("NFROT"), being an agreement between the Commonwealth and the various State and Territory governments. 2. The 1997 courses were not accredited by VETEC or nationally. 3. The First Respondent, by advertising that the 1997 courses had VETEC and national accreditation when they did not: (a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of section 52 of the Trade Practices Act 1974 (Cth) ("the Act"); (b) made false or misleading representations that the 1997 courses were of a particular standard, quality, value or grade, in contravention of subsection 53(aa) of the Act; (c) made representations that the 1997 courses had approval, uses or benefits they did not have, in contravention of subsection 53(c) of the Act; (d) engaged in conduct that was liable to mislead the public as to the nature, the (e) characteristics or the suitability for their purpose with respect to the 1997 courses, in contravention of section 55A of the Act. 4. The First Respondent, trading as the College, in trade or commerce, advertised to prospective students in the College's promotional material from late 1996 to about August 1997 (namely, the 1997 College Handbook; a brochure entitled "Your Career in Childcare"; and a leaflet), that the College qualified for the use of the VETEC and national accreditation logos in relation to the 1997 courses. 5. The First Respondent was not qualified to use the VETEC and national accreditation logos in documents advertising the 1997 courses. 6. The First Respondent, by advertising that the College qualified for the use of the VETEC and national accreditation logos when it did not: (a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of section 52 of the Act; (b) made false or misleading representations that the 1997 courses were of a particular standard, quality, value or grade, in contravention of subsection 53(aa) of the Act; (c) made representations that the 1997 courses had approval, uses or benefits they did not have, in contravention of subsection 53(c) of the Act; (d) engaged in conduct that was liable to mislead the public as to the nature, the characteristics or the suitability for their purpose with respect to the 1997 courses, in contravention of section 55A of the Act. Fehlberg ~ 7. The First Respondent represented to Mr Grant Fehlberg, Mrs Beverly Fehlberg and Ms Colleen Fehlberg ("the Fehlbergs") that the most Ms Fehlberg would lose for cancelling her enrolment would be $100 for administration costs. 8. The First Respondent, by making the representation referred to in paragraph 7 above engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act, in that: (a) the enrolment form provided that by executing the document the enrollee "must pay to the College the full amount of the tuition and that this amount will be payable regardless of whether the [enrollee] commence[s] the course or otherwise"; (b) the General Regulations provided: "The student may cancel enrolment at any time prior to sixty (60) days of the student's most preferred course and date (i.e. Preference 1) and receive a full refund less $100 administration charge (and less the $75 accommodation booking fee if applicable). A request for cancellation must be in writing and received by the College Administration prior to the above date. Verbal requests for cancellation shall not be valid for any reason. No refund is made in any other situation." 9. In light of the Fehlbergs' conversation with the First Respondent's employee, the Fehlbergs had a reasonable expectation that the terms contained in the enrolment form and the general regulations would be drawn to their attention. By failing to draw the Fehlbergs' attention to the terms contained in the enrolment form and the general regulations, the First Respondent engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act. 10. The First Respondent's reliance upon a term in its enrolment form purporting to render a student liable for the full tuition fee whether the student commenced the course or not (and/or the term in the general regulations purporting to permit cancellation only if received more than 60 days prior to commencement of the first preferred course) was not reasonably necessary for the protection of its legitimate interests. 11. The First Respondent, by including the term referred to in paragraph 8(a) above in its enrolment form without bringing that term to the attention of Ms Fehlberg, engaged in unconscionable conduct, in contravention of section 51AB of the Act. 12. The First Respondent, by: (a) accepting Ms Fehlberg's enrolment form and taking the deposit; (b) further, refusing to accept the cancellation of enrolment and by refusing to refund the deposit paid; (c) further, demanding payment of the full amount of the tuition fees; (d) further, instituting court proceedings against Ms Fehlberg and Mrs Fehlberg claiming the full amount of the tuition fees; engaged in unconscionable conduct, in contravention of section 51AB of the Act. Santos 13. The First Respondent represented to Ms Gricelda Santos that if she changed her mind about the course offered by the First Respondent she would only lose her deposit. 14.The First Respondent, by making the representation referred to in paragraph 13 above: (a) engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act; (b) made a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy, in contravention of section 53(g) of the Act; in that the enrolment form signed by Ms Santos provided that Ms Santos was immediately liable for payment of the full tuition fee whether she commenced her course or not. 15. In light of Ms Santos' conversation with the First Respondent's employee, Ms Santos had a reasonable expectation that the term contained in the enrolment form would be drawn to her attention. By failing to draw Ms Santos' attention to the term contained in the enrolment form, the First Respondent engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act. 16. The First Respondent's reliance upon a term in its enrolment form purporting to render a student liable for the full tuition fee whether the student commenced the course or not (and/or the term in the general regulations purporting to permit cancellation only if received more than 60 days prior to commencement of the first preferred course) was not reasonably necessary for the protection of its legitimate interests. 17. The First Respondent, by including the term referred to in paragraph 16 above in its enrolment form without bringing that term to the attention of Ms Santos, engaged in unconscionable conduct, in contravention of section 51AB of the Act. 18. The First Respondent, by: (a) accepting Ms Santos' enrolment form and taking the deposit; (b) further, refusing to accept Ms Santos' cancellation of enrolment and by refusing to refund the deposit paid; (c) further, demanding payment of the full amount of the tuition fees from Ms Santos; (d) further, instituting court proceedings against Ms Santos claiming the full amount of the tuition fees; engaged in unconscionable conduct, in contravention of section 51AB of the Act. Romero 19. The First Respondent's reliance upon a term in its enrolment form purporting to render a student liable for the full tuition fee whether the student commenced the course or not (and/or the term in the general regulations purporting to permit cancellation only if received more than 60 days prior to commencement of the first preferred course) was not reasonably necessary for the protection of its legitimate interests. 20. The First Respondent, by including the term referred to in paragraph 19 above in its enrolment form without bringing that term to the attention of Ms Abelina Romero, engaged in unconscionable conduct, in contravention of section 51AB of the Act. 21. The First Respondent, by: (a) accepting Ms Romero's enrolment form and taking the deposit; (b) further, refusing to accept Ms Romero's cancellation of enrolment and by refusing to refund the deposit paid; (c) further, demanding payment of the full amount of the tuition fees from Ms Romero; (d) further, instituting court proceedings against Ms Romero claiming the full amount of the tuition fees; engaged in unconscionable conduct, in contravention of section 51AB of the Act. McPherson 22. The First Respondent represented to Ms Mandy McPherson and Mr Gordon McPherson that it would not accept Ms McPherson's application for enrolment until further notification was received from or on behalf of Ms McPherson. 23. The First Respondent, by making the representation referred to in paragraph 22 above when it did not intend to act in accordance with its representation, engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act. 24. The First Respondent's reliance upon a term in its enrolment form purporting to render a student liable for the full tuition fee whether the student commenced the course or not (and/or the term in the general regulations purporting to permit cancellation only if received more than 60 days prior to commencement of the first preferred course) was not reasonably necessary for the protection of its legitimate interests. 25. In light of Ms McPherson's conversation with the First Respondent's employee, Ms McPherson had a reasonable expectation that the term contained in the enrolment form would be drawn to her attention. By failing to draw Ms McPherson's attention to the term contained in the enrolment form, the First Respondent engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act. 26. The First Respondent, by including the term referred to in paragraph 24 above in its enrolment form without bringing that term to the attention of Ms McPherson, engaged in unconscionable conduct, in contravention of section 51AB of the Act. 27. The First Respondent, by: (a) accepting Ms McPherson's enrolment form and taking the deposit; (b) further, refusing to accept the cancellation of enrolment and by refusing to refund the deposit paid; (c) further, demanding payment of the full amount of the tuition fees; (d) further, instituting court proceedings against Ms McPherson and Mrs Louise McPherson claiming the full amount of the tuition fees; engaged in unconscionable conduct, in contravention of section 51AB of the Act. Kinloch 28. The First Respondent represented to Mrs Helen Kinloch that Ms Lynette Kinloch's acceptance into the nominated course would depend on the First Respondent reviewing Ms Kinloch's application to see if she was suitable and that she would be notified in writing that her application had been processed. 29. The First Respondent's reliance upon a term in its enrolment form purporting to render a student liable for the full tuition fee whether the student commenced the course or not (and/or the term in the general regulations purporting to permit cancellation only if received more than 60 days prior to commencement of the first preferred course) was not reasonably necessary for the protection of its legitimate interests. 30. In light of Mrs Kinloch's conversation with the First Respondent's employee, Mrs and Ms Kinloch ("the Kinlochs") had a reasonable expectation that they would be informed that on signing the enrolment form they would be immediately bound to pay the full tuition fees without a right of cancellation. By failing to draw the Kinlochs' attention to the term contained in the enrolment form, the First Respondent engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act. 31. The First Respondent, by including the term referred to in paragraph 29 above in its enrolment form without bringing that term to the attention of the Kinlochs, engaged in unconscionable conduct, in contravention of section 51AB of the Act. 32. The First Respondent, by: (a) processing Ms Kinloch's enrolment form and taking the deposit; (b) further, refusing to accept Ms Kinloch's cancellation of enrolment and by refusing to refund the deposit paid; (c) further, demanding payment of the balance of the full amount of the tuition fees (and the administration fee); (d) further, instituting court proceedings against Ms Kinloch and Mrs Kinloch for recovery of the balance of the full amount for the tuition fees (and the administration fee); engaged in unconscionable conduct, in contravention of section 51AB of the Act. Coombes 33. The First Respondent, by refusing to refund the tuition fees for a course which Ms Debbie Coombes (nee McGregor) had enrolled in and which had been cancelled by the First Respondent, engaged in unconscionable conduct, in contravention of section 51 AB of the Act. 34. The First Respondent's reliance upon a term in its enrolment form purporting to render a student liable for the full tuition fee whether the student commenced the course or not was not reasonably necessary for the protection of its legitimate interests. 35. The First Respondent, by including the term referred to in paragraph 34 above in its enrolment form without bringing that term to the attention of Ms Coombes, engaged in unconscionable conduct, in contravention of section 51AB of the Act. Robaldo ~ 36. The First Respondent represented to Mrs Sandra Robaldo that: (a) the First Respondent was going to introduce a deferred payment plan in March 1997; (b) Ms Sabrina Robaldo would qualify for the plan once it was introduced; (c) until the plan came into operation, fees would have to be paid by instalment but thereafter the remaining amount would be deferred under the plan. 37. The First Respondent, by making the representations referred to in paragraph 36 above engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act, in that: (a) each of the representations referred to in paragraph 36 above was a representation with respect to a future matter within the meaning of section 51A of the Act; and (b) the First Respondent did not intend to make good the representations or had no (c) reasonable grounds for making the representations. 38. The First Respondent, by making the representations referred to in paragraph 36 above made false or misleading representations concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy, in contravention of section 53(g) of the Act, in that: (a) the scheme subsequently proposed by the First Respondent: (i) was not a deferred payment plan; (ii) was not the deferred payment plan which had been offered by the First Respondent; (iii) did not operate like the HECS system; (b) the student was obliged to seek a loan from the ANZ bank (satisfying the usual requirements of a bank when providing a loan); (c) those persons who approached the ANZ bank (including Mrs Robaldo) were told that the bank did not know of any such scheme; (d) having regard to the fine print in the general regulations, the First Respondent had no intention of offering a deferred payment plan in the manner represented to the students. 39. The First Respondent, by: (a) accepting Ms Robaldo's enrolment form and taking the deposit; (b) further, failing to provide a deferred payment plan that operated in a manner similar to the HECS system; (c) further, requiring Ms Robaldo to pay the outstanding balance of her tuition fee (and nominating the ANZ bank as the financial institution from which deferred student loans for tertiary students, or similar, were available); and (d) further, demanding payment of the balance of the tuition fee by letter from Dun & Bradstreet; engaged in unconscionable conduct, in contravention of section 51AB of the Act. Cobb 40. The First Respondent represented to Mrs Sarah Cobb that: (a) the deferred payment plan would commence in March and would operate like the HECS system; and (b) Ms Emma Cobb could start the course in February and be transferred to the deferred payment plan when it started. 41. The First Respondent, by making the representations referred to in paragraph 40 above engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the Act, in that: (a) each of the representations referred to in paragraph 40 above was a representation with respect to a future matter within the meaning of section 51A of the Act; and (b) the First Respondent did not intend to make good the representations or had no reasonable grounds for making the representations. 42. The First Respondent, by making the representations referred to in paragraph 40 above made false or misleading representations concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy, in contravention of section 53(g) of the Act, in that: (a) the scheme subsequently proposed by the First Respondent: (i) was not a deferred payment plan; (ii) was not the deferred payment plan which had been offered by the First Respondent; (iii) did not operate like the HECS system; (b) the student was obliged to seek a loan from the ANZ bank (satisfying the usual requirements of a bank when providing a loan); (c) those persons who approached the ANZ bank were told that the bank did not (d) know of any such scheme; (e) having regard to the fine print in the general regulations, the First Respondent had no intention of offering a deferred payment plan in the manner represented to the students. 43. The First Respondent, by: (a) accepting Ms Cobb's enrolment form and taking the deposit; (b) further, failing to provide a deferred payment plan that operated in a manner similar to the HECS system; (c) further, requiring Ms Cobb to pay the outstanding balance of her tuition fee (and nominating the ANZ bank as the financial institution from which deferred student loans for tertiary students, or similar, were available); (d) further, demanding payment of the balance of the tuition fee by letter from Dun & Bradstreet; engaged in unconscionable conduct, in contravention of section 51AB of the Act.