Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Hueter v Learn To Trade Pty Limited [2018] NSWCATCD 71 Hearing dates: 7 and 28 June 2018 Date of orders: 19 November 2018 Decision date: 19 November 2018 Jurisdiction: Consumer and Commercial Division Before: G J Sarginson, Senior Member Decision: 1. The respondent, Learn to Trade Pty Ltd, is to pay the applicant, Allysha Hueter, the sum of $16,362.84 on or before 14 days from the date of this decision. Catchwords: CONSUMER CLAIM - Training and education services - Whether misleading or deceptive conduct - Whether services provided with due care and skill - Whether services fit for purpose - Breach established - Assessment of compensation Legislation Cited: Australian Consumer Law 2010 Australian Consumer Law and Fair Trading Act 2012 (Vic) Australian Securities and Investment Commission Act 2001) (C'th) Australian Securities and Investment Commission Regulations 2001 (C'th) Commonwealth Constitution Competition and Consumer Act 2010 (C'th) Corporations Act 2001 (C'th) Fair Trading Act 1987 (NSW) Judiciary Act 1903 (C'th) Cases Cited: Attorney General for NSW v Gatsby [2018] NSWCA 254 Audsley v AF&L First Mortgages Ltd [2015] VCAT 1684 Avoca Consultants Pty Ltd v Millenium3 Financial Services Pty Ltd [2009] FCA 883; (2009) 179 FCR 46; 73 ACSR 307 Curtis v Potter & Co Pty Ltd t/as The Africa Safari Co [2016] NSWCATAP 196 Herbert v American Express Australia Ltd & Ors [2016] NSWCATAP 47 Herbert v American Express Limited & Ors (No 2) [2016] NSWCATCD 98 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640 Vati v Commonwealth Securities Limited [2015] VCAT 307 Jenkinson v Chaw [2015] NSWCATAP 127 Lam v Steve Jarvin Motors Pty Ltd [2016] NSWCATAP 186 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 270 ALR 204 Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388 Parkdale Custom Built Furniture Pty Ltd v Puxu Ltd [1982] HCA 44; (1982) 141 CLR 191 Perpetual Trustee Limited and Anor v Ishak [2012] NSWSC 697 Qantas Airways Limited v Lustig [2015] FCA 253 Scenic Tours Pty Ltd v Moore [2018] NSWCA 238 Sy v The Trustees for the Nero CKD Trust t/as View By Sydney [2017] NSWCATCD 98 Taco Co of Australia Inc v Taco Bell Pty Ltd Wang v Commonwealth Bank of Australia [2018] VCAT 693 Category: Principal judgment Parties: Allysha Hueter (Applicant) Learn To Trade Pty Limited (Respondent) Representation: Applicant (self-represented) Respondent: Mr M. Merchant; Mr N. Harvey; and Ms D. Gunning File Number(s): GEN18/14887 Publication restriction: Nil REASONS FOR DECISION 1. The dispute involves the provision of financial training and coaching services by the respondent to the applicant to become a successful foreign exchange ('forex') trader. The services included applicant participating in a "Learn Forex Course" and an "Unlimited Wealth Course". The services also involved a computer program for forex trading known as "Smart Charts". 2. The relationship between the parties commenced on 17 June 2016 when the applicant attended a 'Free Forex Lean to Trade' seminar conducted by the respondent on 17 June 2016, until at least March 2018, when the applicant sent a letter of demand to the respondent. 3. There is no dispute that both parties are located in NSW and the services provided occurred in NSW. 4. The applicant commenced proceedings on 29 March 2018. The matter was listed for a Group List and Conciliation hearing at the Tribunal on 30 April 2018, when it was set down for hearing, with directions regarding the filing and serving of documentary evidence. 5. The matter was listed before the Tribunal for hearing on 7 June 2018. The hearing was adjourned part-heard, as the respondent had filed its documents with the Tribunal, but not served them on the applicant. The respondent also sought to file and serve further documents. The hearing concluded on 28 June 2018. 6. The applicant appeared in person at the various hearings in the Tribunal. At the hearing on 7 June 2018, Mr G. Merchant (who stated he was a "trading floor manager" of the respondent) appeared with Mr N. Harvey (who stated he was a "manager) for the respondent. On 28 June 2018, Ms D. Gunning (who stated she was a "global operations manager" of the respondent) and Mr G. Merchant appeared for the respondent. The Claim 1. The applicant sought a refund of the following monies: 1. Course fee for the 'Learn Forex Course'-$4,995. 2. Course fee for the 'Unlimited Wealth Course'-$24,995. 3. Fee for the 'Smart Charts' subscription-$2,561.76. 4. Trading losses incurred by the applicant using the 'Smart Charts' subscription-$1,365.84. 1. The total amount claimed by the applicant is $33,917.60. 2. The causes of action identified by the applicant were as follows: 1. Misleading and deceptive conduct, or conduct likely to mislead or deceive-s 18 of the Australian Consumer Law 2010 ('the ACL'). 2. False or misleading representations-s 29 of the ACL. 3. Breach of the consumer guarantee to provide services with due care and skill-s 60 of the ACL. 4. Breach of the consumer guarantee to provide services that are fit for any expressly or implied purpose-s 61 of the ACL. 5. Breach of various Regulations under the Australian Securities and Investment Commission Act 2001 (C'th); and provisions of the Australian Securities and Investment Commission Regulations 2001 (C'th); and Corporations Act 2001 (C'th) regarding disclosure statements and information in respect of the provision of financial products. 6. In the applicant's oral closing submissions, she submitted that the Tribunal should consider breach of contract and negligent misstatement as causes of action, in addition to the causes of action identified in the application and her documents. Documentary Evidence of the Applicant 1. Unfortunately, neither party file and served a comprehensive statement setting out the relevant factual events that occurred. The applicant's documents contained a chronology of events and written submissions that comprised of a mixture of references to various factual events, and legal submissions. The respondent's documents contained a written "response" to the applicant's documents, but that document does not clearly set out the factual events from the respondent's perspective. The oral evidence of both parties regarding the specific events that occurred was ill-defined and often referenced technical terminology regarding forex trading. 2. The applicant and the representatives of the respondent gave oral evidence and were given the opportunity to question the opposing party. No other witnesses were called to give evidence. 3. The applicant's documents were as follows: 1. 'Points of Claim' which briefly set out the relevant events. 2. A written submission regarding the operation of the ACL and securities regulations. 3. Emails between the parties dated 13 November 2017 and 21 November 2017. 4. An 'Unlimited Wealth' Course Program of the respondent 5. Screen shots of the 'Forex CFD' website by a broker upon which the applicant states the 'Smart Charts' "sits" upon. 6. Screen shots of the 'Smart Charts' trading platform. 7. An undated document of Ms Amundsen, "Unlimited Wealth Manager" of the respondent, commencing: "Congratulations on making one of the best investments of your life and enrolling into the Unlimited Wealth programme". 8. An undated document entitled "Unlimited Wealth Case Study". 9. An electronic "trade alert" dated 12 July 2016 from Smart Charts. 10. An extract from the respondent's Facebook page dated 29 July 2016 with a photograph of food about to be served on a yacht and the caption: "Another successful PTP Preview lunch aboard or 52 ft. Luxury Sea Ray Yacht with a wonderful bunch of our PTP partners; relaxing, live trading and inspiring one another on the journey to become Fund Managers". 11. A screen shot of "Finsa Pty Ltd (Forex CFDs)" dated 15 December 2016 showing deposits and withdrawals. According to the applicant, this document was a "broker statement" showing her losses at the time of closing her "live trading account". 12. Invoice dated 7 June 2016 in the amount of $4,995. The invoice is headed "Learn to Trade. Leading Trader Education", but also contains a reference to "Knowledge to Action Pty Ltd". 13. Invoice dated 28 June 2016 in the amount of $24,995. Again, the invoice is headed "Learn to Trade. Leading Trader Education", but also contains a reference to "Knowledge to Action Pty Ltd". 14. A further chronology events identified as a "timeline". Documentary Evidence of the Respondent 1. The documents of the respondent were as follows: 1. Emails between the parties dated 9 January 2018 and 15 January 2018. 2. Emails between the parties dated 10 December 2018. 3. Email from Mr Talukdar of the respondent to the applicant dated 24 November 2017. 4. Unsigned and undated "Learn to Trade Specialist Advisor Course Enrolment Form". 5. Learn to Trade "General Advice Warning". 6. A document entitled "Unlimited Wealth, Your Richer Life Awaits-Unlimited Wealth 12 Month Program" signed by the applicant and dated 28 June 2016. The back of the document contains written terms and conditions. 7. "Financial Services Guide" of the respondent (undated). 8. A screen shot from the respondent's electronic records which the respondent states shows the account details of the applicant, including the events she attended. Evidence of the Applicant 1. The applicant's evidence can be summarised as follows: 2. In 2016 the applicant sought to become a foreign exchange trader. She performed a 'Google search' on currency trading, and obtained details of the respondent's website. The website advertised a free "introduction to forex trading" seminar, which the applicant registered for. 3. The applicant attended the free seminar on 17 June 2016. Mr Brent Eaton spoke at the seminar. At the seminar, a video was shown of Mr Greg Secker, who is a self-described "master trader" and, although not a director of the respondent, a person promoted as being responsible for the trading techniques of the respondent. 4. According to the applicant, the video showed Mr Secker making $19,000 in 4 minute using the 'Smart Charts' trading software. Nothing was said at the seminar that there were any risks of losses or fees. 5. Mr Brent Easton represented the respondent at the seminar. According to the applicant, there were two courses promoted at the seminar. The first was a "Learn Forex Course" (known as 'LFX') of a 2 day forex trading workshop and a 1 day "live" trading day. To attend such a course, a "live trading account" for the course participant must be set up with a broker known as ForexCFD. ('the broker'). The cost of the 'LFX' course was $4,995. 6. The second course was the "Unlimited Wealth Course" (known as 'UW'). The cost of this course was much more substantial, being $24,995. The 'UW' course was for 12 months and involved access to the 'Smart Charts' trading software. Completion of the 'LFX' course was a pre-requisite to enrolling in the 'UW' course. A component of the 'UW' course was a "Professional Traders Partnership" ('PTP') course that allowed the student to conduct forex trades using a $50,000 account provided by the respondent, with income being generated on a "80/20 spilt" between the applicant and respondent. 7. The applicant stated that it was emphasised at the free seminar on 17 June 2016 that completion of the courses offered by the respondent would result in the student becoming a successful forex trader. 8. The applicant stated that she signed up to the LFX course after attending the free seminar on 17 June 2016, and paid $4,995 in two instalments. 9. On 27 June 2016 the applicant attended the first day of the LFX course. The applicant told the respondent that she wished to also enrol in the UW course, and paid $24,995. The applicant was given information including a "manual" (a complete copy of which the applicant did not provide in her documents) and the documents "Unlimited Wealth Your Richer Life Awaits" that were contained in the applicant's documentary evidence, including a courseguide setting out the components of the course. 10. The applicant stated she "couldn't remember" whether or not she attended the second day of the LFX course. 11. The applicant attended day 3 of the LFX course. This included 3 "coaching seminars" of 30 minutes each. By this stage, the applicant had been set up with a "live trading account" with the broker. The applicant started to conduct trades on this day. 12. The applicant stated that on or about 29 June 2016 she applied to register for the "Professional Traders Partnership" ('PTP') component of the UW course. This component was identified in the respondent's course materials as "not something to rush into and is most likely sat around 10 months into your 12 month UW journey". According to the course materials, it is stated the PTP is "Step 9" of the course being "subject to approval" and a "3 day program". The PTP: "…provides you with all the tools, regulatory framework and portfolio management techniques, learn how to leverage your performance and run trading as a business; elevating your status to be a successful Independent Fund Manager. You will also enrol onto studying for the RG146 Qualification at this time. This is to be done online, independent of the LTT and should take approximately 3 months depending on your 3 months depending on your learning style". 1. The course materials of the respondent further states that the PTP involves a 3 day course comprising of 3 modules and: "Once you have obtained your RG146 Qualification you will be ready to become an authorised representative of Olive Financial Markets who will provide you access to their ASFT. We will cover the finer details of how this works when you attend this course". 1. The respondent's course materials stated, in respect of the 'PTP' course that it was "subject to approval" and that students must attend two "Live Trading Beginners Bootcamps" and have passed a "Trader Competency Check" (intermediate and final). The final "Trader Competency Check" is described in the respondent's materials as "Step 8" and that: "Passing this final 'Check point' in your education you will be signed off as an advanced level trader, ready to sit the PTC program (Professional Traders Certification) and enrol in you RG146 qualification which you will need to obtain in order to trade money for clients of your own as part of the framework we are providing you with". 1. In respect of the $50,000 "proprietary trading account", the respondent's course materials stated: "You have the ability to access Learn to Trade's Proprietary Trading accounts. With an account size of $50,000 you can immediately begin to generate an income from our money with an 80/20 split. In order to activate your account, you must prove 3%+ growth on your personal live account for two months consecutively, without breaking risk management rules, in order to qualify". 1. The applicant stated that she was told the PTP would be held in the "first quarter of 2018", but it was never held. According to the applicant, if she completed the PTP she would, as part of the UW course, be provided with a trading account to the value of $50,000; would have earned money from trades and demonstrated her abilities as a forex trader. The applicant stated that she was informed by the respondent that she had "not qualified" for the PTP component of the course. The applicant stated that she believed the respondent could never deliver the PTP component of the UW course because it had "lost its license". 2. Between August 2016 and December 2016 a number of "bootcamps" and "Smart Charts" courses were scheduled as components of the UW course. The applicant registered for and attended some of these courses, but not others. 3. In the period from August to December 2016 the applicant had conducted trades using the Smart Charts program. The applicant had deposited $10,000. The applicant made a number of trades, and lost $1,365.84. The applicant then ceased using the program and withdrew the balance of her $10,000. 4. In January 2017 the applicant enrolled in a Masters of Business Administration at the University of New South Wales. 5. In April 2017 the applicant had obtained "employment" as a forex trader at Genesis Trading. According to the applicant she was "trained" by Genesis Trading, and so did not attend any further courses of the respondent. 6. In October 2017, the applicant informed the respondent that she believed she had qualified for the PTP component of the UW course. 7. On 13 November 2017, the applicant emailed the respondent, stating "I have recently signed the contract for the Prop account and David Long has set up a Demo account for the $50k. Just writing to inform you that according to my contract, the Prop account is a real account. I would like to be trading a real account with monthly statement sent to me. The Demo set up will not work for me and it's not what I signed up for with UW. I joined with UW with the plan to be a fund manager and the idea of building a real live proprietary trading account to show clients or future employment. Please set up a real account for me was with everyone else previously. I have also made inquiry with Abdallah as to when the PTP course is running and was told they do not have a definitive date for the course. Please advise a definite date for this as I am in University at the moment and I have to co-ordinate my schedule to allocate time for this. I was also informed that we do not need to show that we are in profit for 3 months in our own account to qualify to do the Rg 146. This is again not stipulated in the contract. I would like to be enrolled to do my Rg 146 in Dec 2017 when I have semester break…Please rectify the above by 20 November 2017…" 1. According to the applicant, the respondent emailed stating that it "agreed" to provide a "live account" and it was sending the applicant a "contract for a live account". The respondent also stated that it would be "running a PTP program at some point during Q1 2018" and "would advise of the date shortly". The respondent also stated it would enrol the applicant in a "RG 146" qualification, and asked the applicant to inform of the date she wished to commence. 2. In January 2018 the respondent established a "demo proprietary account" for trading of $2,500 rather than $50,000. The applicant did not use the account for trading and in March 2018 cancelled her subscription to Smart Charts. On 17 March 2018 the applicant sent a letter of demand to the respondent and commenced proceedings in the Tribunal on 29 March 2018. Evidence of the Respondent 1. The evidence of the respondent can be summarised as follows: 2. The respondent is the provider of training services to become a successful forex trader, and is not a broker; the provider of financial advice; or the provider of the Smart Charts trading platform. 3. The respondent did not represent at its free seminar, or at any stage, that forex trading was completely risk free or that the Smart Charts trading platform was a failsafe system that meant that only trades that would gain a profit would be notified. 4. The course materials provided by the respondent were not misleading and were adequate. 5. The applicant did not attend many components of the UW course, which was not the fault of the respondent. 6. The respondent provided coaching and mentoring assistance to the applicant. 7. The reason the applicant was not enrolled in the PFP component of the course and provided with a trading account of $50,000 is that she had not completed the earlier components of the course and qualified sufficiently to participate in the PFP component. 8. The respondent made the following written submission on the issue of attendance and the provision of the PTP course: "The respondent acknowledges the email from its Managing Director to the applicant undertaking to offer her the PTP course and third party RG 146 training some months ago (Applicant's annexure 'A' and 'A1') and stands ready to deliver on that should the applicant wish to continue with it in good faith… The respondent notes that the applicant appears to be particularly displeasured by not having attended a PTP training course that was potentially included in the training. It should be noted that this offering was styled "subject to approval" in the contract. The respondent has and had several prerequisites before advancing its clients to PTP and more particularly beyond to an introduction to a potential provider of the necessary authorisations for people to trade other people's money. These include trading sufficiently well to be offered a proprietary trading account belonging to the respondent (which the applicant achieved in Nov 17) attending external RG146 certification training (which the respondent approved to be offered to the applicant) and attending the respondent's PTP course. The respondent provided this training several times during the applicant's enrolment. A course was held in May 2017 but at that time the applicant had not qualified (by obtaining a Prop (sic) account). The applicant attended a couple of the respondent's free introductory seminars before signing up in June 2016 for its three day LFX course where she also signed up for its extensive two year Unlimited Wealth programme (contract attached in Appendix 1). The respondent's records show attendance at a multitude of typically one or two days courses and two dozen individual one on one half hour or so coaching sessions are detailed in Appendix 2. These together total about a dozen hours of individual coaching and a couple of dozen days of structured training courses and trading days with qualified presenters and coaches…" 1. The respondent's submissions stated that PTP courses were held on a number of occasions, the last being 30 May 2017. It submitted that the reason no further PTP courses had been held was insufficient numbers. Jurisdiction of the Tribunal 1. The Tribunal is satisfied that the applicant is a "consumer" within the meaning of s 79D of the Fair Trading Act 1987 (NSW) ('the FTA') and the claim is a "consumer claim" within the meaning of Section 79E of the FTA. 2. By reason of ss 28 and 32 of the FTA, the Australian Consumer Law 2010 ('the ACL') is a law of NSW. 3. The jurisdictional provisions under Part 6A of the FTA do not identify which causes of action the Tribunal has the power to consider. However, the Tribunal has the power to consider the consumer guarantee provisions of the FTA; breach of contract; and tort provided the claim is a "consumer claim" under s 79E of the FTA: Lam v Steve Jarvin Motors Pty Ltd [2016] NSWCATAP 186 at [149]). The Tribunal also has jurisdiction to consider the cause of action under s 18 of the ACL: Jenkinson v Chaw [2015] NSWCATAP 127. There is a distinction between the ACL as a law of the Commonwealth and a law of NSW: Jenkinson v Chaw [2015] NSWCATAP 127 at [48]; Herbert v American Express Australia Ltd & Ors [2016] NSWCATAP 47 at [46]. 4. The respondent submits that under s 131A of the Competition and Consumer Act 2010 (C'th) ('the CCA') the ACL does not apply to financial services. However, the operation of s 131A of the CCA (C'th) does not apply to the circumstances of this matter. Section 131A (1) of the CCA (C'th) states that the ACL, as a law of the Commonwealth "does not apply (other than in relation to the application of Part 5-5 of Schedule 2 as a law of the Commonwealth) to the supply, or possible supply, of services that are financial services, or of financial products". 5. "Financial service" is defined in the CCA (C'th) as having the same meaning as in s 12BAB of the Australian Securities and Investment Commission Act 2001 (C'th) ('the ASIC Act'), which involves the provision of financial product advice, dealing in a financial product; operating a registered scheme; providing a custodial or depository service; operate a financial market or clearing and settlement facility; or provide a service that is otherwise supplied in relation to a financial product. A "financial product" is a facility through which, or through the acquisition of which, a person makes a financial investment, manages a financial risk, or makes cash payments: Avoca Consultants Pty Ltd v Millenium3 Financial Services Pty Ltd [2009] FCA 883; (2009) 179 FCR 46; 73 ACSR 307. 6. The operation of s 131A of the CCA (C'th) does not appear to have been considered by this Tribunal. However, the Victorian Civil and Administrative Tribunal has considered the issue, albeit without a clear principle being enunciated. In Audsley v AF&L First Mortgages Ltd [2015] VCAT 1684, Member Edquist of VCAT held that the effect of s 131A of the CCA (C'th) was that from 1 July 2011 consumer protection in respect of financial services is within the sole province of ASIC. 7. In Vati v Commonwealth Securities Limited [2015] VCAT 307, Jenkins J (as Vice President of the Tribunal) refused to summarily dismiss proceedings involving the provision of services from an on-line broker in a matter where the alleged causes of action were misleading and deceptive conduct under s 18 of the ACL and unconscionable conduct under s 21 of the ACL. The Tribunal found that the applicant could seek to articulate a case which did not fall within the ambit of the Corporations Act 2001 (C'th) or the ASIC Act (C'th). 8. In Wang v Commonwealth Bank of Australia [2018] VCAT 693, Deputy President Lulham of the Tribunal summarily dismissed a claim by the applicant arising from a bank loan. The basis for summary dismissal was that the loan documents that the applicant had signed were clear, and there was no evidence that could establish any misleading or deceptive conduct or unconscionable conduct by the bank. 9. However, by way of obiter dicta, the Tribunal considered the argument of the bank that the provisions of the ACL did not apply in any event by reason of s 131A of the CCA (C'th). Without making a finding (as the proceedings had been summarily dismissed on other grounds), the Tribunal expressed the view that the s 131A of the CCA (C'th) may not apply to proceedings in VCAT by reason that s 131A of the CCA (C'th) applies to the ACL as a law of the Commonwealth rather than as a law of Victoria (ss 7 & 8 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) adopting the ACL as a law of Victoria), and it was "not clear" that effect of s 131A of the CCA (C'th) prevented VCAT from applying the ACL to a claim involving the provision of financial services or financial products. 10. The Tribunal in this matter is satisfied that s 131A of the CCA (C'th) does not apply, as the services provided by the respondent were the education and training of persons to become forex traders, which falls outside the definition of the provision of financial services or financial products and within the ambit of the Tribunal's jurisdiction. Accordingly, the provisions of the ACL, including the consumer guarantee provisions, can be considered by the Tribunal in the circumstances of this matter. 11. Further, the Tribunal s 131A of the CCA (C'th) does not deprive the Tribunal of jurisdiction in respect of the ACL, as it refers to the ACL as a law of the Commonwealth, rather than a law of NSW. The Tribunal has jurisdiction to apply the ACL as a law of NSW to the extent it is empowered to do so by reason of the operation of ss 28, 30, and 32 of the FTA. The basis of this distinction was explained in detail by the Appeal Panel of the Tribunal in Herbert v American Express Australia Ltd & Ors [2016] NSWCATAP 47 at [45]-[47]. 12. However, there remains a further jurisdiction issue by reason of the applicant seeking to rely on provisions of the ASIC Act and the ASIC Regulations as causes of action. 13. The Tribunal is not a "Court of a State" invested with federal jurisdiction under Chapter III of the Commonwealth Constitution and s 39 of the Judiciary Act 1903 (C'th): Attorney General for NSW v Gatsby [2018] NSWCA 254. The powers of the Tribunal come from NSW legislation, and the Tribunal has no power to consider causes of action under the ASIC Act or ASIC Regulations. 14. Further, if there was a defence available to the respondent under the ASIC Act or ASIC Regulations to which the Tribunal did not have power to consider, and such a defence conflicted with causes of action that the Tribunal did have power to consider, the Tribunal would not have jurisdiction to the extent of the conflict: Qantas Airways Limited v Lustig [2015] FCA 253 at [105]-[115]; Herbert v American Express Limited & Ors (No 2) ('Herbert No 2') [2016] NSWCATCD 98 at [72]. However, the respondent raised no alleged defences under the ASIC Act or ASIC Regulations, unlike the respondent in Herbert No 2 who was a superannuation trustee and raised defences under Commonwealth superannuation legislation. 15. Accordingly, the Tribunal is satisfied that: 1. It has jurisdiction to consider the causes of action under the ACL (including the consumer guarantee provisions). 2. It does not have jurisdiction to consider the causes of action under the ASIC Act or ASIC Regulations. No clear cause of action was raised under the Corporations Act 2001 (C'th) and it is unnecessary to further consider the Corporations Act 2001 (C'th). Application of Legal Principles-Consideration Misleading or Deceptive Conduct 1. The applicant claims that the respondent engaged in misleading or deceptive conduct under s 18 of the ACL 2. Section 18 of the ACL relevantly states: "18 Misleading or deceptive conduct A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. ..." 1. Section 4 of the ACL relevantly states: "4 Misleading representations with respect to future matters (1) [No reasonable grounds for making representation] If: (a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and (b) the person does not have reasonable grounds for making the representation; the representation is taken, for the purpose of this Schedule to be misleading. …" 1. Section 4 (2) of the ACL places an evidential onus on a party or person who makes a representation as to a future matter to adduce evidence that it had reasonable grounds for making the representation. Section 4 (3) (b) of the ACL states that the person or party who made the representation does not have to prove that it had reasonable grounds for making the representation. 2. The principles applicable to whether or not conduct is misleading or deceptive or likely to mislead or deceive were summarised by Brereton J in Perpetual Trustee Limited and Anor v Ishak [2012] NSWSC 697 ('Ishak') at paragraphs [75]-[76]. Although the Court in Ishak was dealing with the former s 42 of the FTA, the same principles are applicable to s 18 of the ACL. The principles were summarised by Brereton J as follows: "Section 42 (like its TPA and ASICA analogues) is not confined to misrepresentations: it is contravened if the acts, omissions, statements and/or silence of the defendant, taken as a whole and considered in light of all relevant circumstances, are misleading or deceptive or are likely to mislead or deceive [Campbell v Backoffice Investments Pty Ltd [2009] HCA 25 ("Campbell"), [102]; (2009) 238 CLR 304; Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60 ("Butcher"), [104]; (2004) 218 CLR 592]. Conduct is misleading if it induces, or is capable of inducing, error [Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191, 198; Rhone-Poulenc Agrochomie SA v UIM Chemical Services Pty Ltd [1986] FCA 218; (1986) 12 FCR 477; Campbell, [25]; Butcher, [111]], and likely to mislead or deceive where there is a real (or not remote) chance or possibility that the conduct will have that effect [Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] FCA 180, [14]; (1984) 2 FCR 82]. Whether conduct has a tendency to lead into error is an objective question of fact, to be determined on the basis of the conduct of the defendant as a whole viewed in the context of all relevant surrounding facts and circumstances [Campbell, [102]; citing Butcher, [109] (McHugh J: where the conduct involves delivery of a document, the effect of the document must be examined in the context of the evidence as a whole, and the court must have regard to all the defendant's conduct in relation to the document, including its preparation and distribution and any statement, action, silence or inaction in connection with it)]. In this exercise, often called "characterization", the subjective impact of the conduct on the plaintiff is irrelevant, the focus being the objective tendency of the conduct to induce an erroneous assumption on the part of a hypothetical individual, but taking into account the respective positions of the parties, including such matters as their knowledge of each other from previous dealings and their respective familiarity with the subject matter [Sutton v AJ Thompson Pty Ltd (In Liq) [1987] FCA 167, [30]; (1987) 73 ALR 233]. The objective nature of this inquiry means that a finding that conduct is misleading or deceptive is not avoided merely because a plaintiff could by proper inquiries have discovered the misleading or deceptive conduct [Butcher, [111]; Henjo Investments Ply Ltd v Collins Marrickville Pty Ltd (No 1) [1988] FCA 40, [40]; (1988) 39 FCR 546 (Lockhart J: it is no answer to say that a plaintiff should have made its own inquiries and that, if it had done so, it would have found out the true position)]. However, this does not create by a side wind an obligation of full disclosure in commercial negotiations [Poseidon Ltd v Adelaide Petroleum NL [1991] FCA 663; (1991) 105 ALR 25, 26; Lam v Ausintel Investments Australia Pty Ltd (1990) 97 FLR 458 ("Lam"), 475]. Nor does it mean that a party to commercial negotiations is obliged to volunteer information that will be of assistance to the decision-making of another, or that will avoid the consequences for another (of equal bargaining power and competence) of careless disregard for its own interests [Miller & Associates Insurance Broking v BMW Australia Finance [2010] HCA 31 ("Miller v BMW"), [22]; (2010) 241 CLR 357]. A party that itself independently forms an erroneous impression [Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc [1993] FCA 630; (1992) 38 FCR 1] or leaps to its own erroneous conclusion [Miller v BMW] is not to be regarded as misled, and failure to make reasonable inquiries may be a relevant circumstance in assessing whether a non-disclosure is correctly characterised as misleading [Miller v BMW, [91]]." 1. In respect of who must be misled for the purpose of s 18 of the ACL, a four step process was set out by Deane and Fitzgerald JJ in Taco Co of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136 (1982) 42 ALR 177 at 202-3 as follows: Firstly, identify the relevant section of the public by reference to whom the question of whether the conduct is, or is likely to be, misleading or deceptive falls to be tested; Secondly, once the relevant section of the public is established, the matter is to be considered by reference to all who come within it, which includes: the astute and the gullible, the intelligent and the not so intelligent, the well-educated and the poorly educated, men and women of various ages pursuing a variety of vocations. Thirdly, evidence that some person has formed an erroneous conclusion is admissible and may be persuasive but is not essential. Such evidence does not itself conclusively establish that conduct is misleading or deceptive. The test is objective; Fourthly, it is necessary to inquire why proven misconception has arisen. It is only by this investigation that the evidence of those who are shown to have been misled into error can be evaluated and it can be determined whether they are confused because of misleading or deceptive conduct. 1. Conduct can be misleading or deceptive notwithstanding there is no intention to mislead or deceive: Parkdale Custom Built Furniture Pty Ltd v Puxu Ltd [1982] HCA 44; (1982) 141 CLR 191. 2. Conduct needs to be considered as a whole, and silence can, in the context of other conduct, be misleading or deceptive. In Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 270 ALR 204, French CJ and Kiefel J stated (at [5]): In commercial dealings between individuals or individual entities, characterisation of conduct will be undertaken by reference to its circumstances and context. Silence may be a circumstance to be considered. The knowledge of the person to whom the conduct is directed may be relevant. Also relevant, as in the present case, may be the existence of common assumptions and practices established between the parties or prevailing in the particular profession, trade or industry in which they carry on business. The judgement which looks to a reasonable expectation of disclosure as an aid to characterising non-disclosure as misleading or deceptive is objective". 1. In her written submissions that form a component of the applicant's documents, the applicant identifies the misleading and deceptive conduct of the respondent as: 1. Mr Eaton representing at the free seminar the applicant attended that: "You can't make mistakes. Smart Charts will pick the winning trades for you. If there is a 'sell' signal there won't be a 'buy' button to click on". 2. Mr Eaton represented at the free seminar that participants in the course would make significant profits. 3. The course materials and components of the course were inadequate to be a successful fund manager, and the respondent had represented at the first seminar that the course would make the applicant a successful fund manager. 4. The applicant was not given the choice of a "cheaper broker". 5. The course materials and coaching were insufficient for the applicant to be a successful forex manager, despite the respondent representing that the course was of high quality. 6. The respondent did not disclose "variances in the margin requirements". 1. In respect of the alleged representation by Mr Eaton that: "You can't make mistakes. Smart Charts will pick the winning trades for you. If there is a 'sell' signal there won't be a 'buy' button to click on" the Tribunal accepts the oral evidence of the applicant that such a representation was made. The respondent provided no evidence from Mr Eaton that he did not use such words (or words of the same effect) and there was no explanation as to why Mr Eaton had not provided a written statement of evidence, or attended the Tribunal to give evidence. 2. The Tribunal finds that, assessed objectively, the representation by Mr Eaton was made on behalf of the respondent and it was likely to mislead or deceive, as the 'Smart Charts' trading software platform was not 'risk free', as the respondent accepted in evidence. 3. The Tribunal is satisfied that the applicant relied on this representation as a reason (but not the only reason) to pay fees and participate in the LFX and UW courses. 4. The Tribunal is satisfied that representation has caused a loss to the applicant, being the amount that she lost performing trades in the sum of $1,365.84 using the 'Smart Charts' trading software. 5. The respondent submits that 'Smart Charts' is a product that is not owned by the respondent. However, the relevant issue under s 18 of the ACL is the conduct (including words and actions that constitute representations) of the respondent promoting the use of 'Smart Charts' as a component of its own course. In such circumstances, the respondent is bound by the representations it made about 'Smart Charts' irrespective of whether or not it owned 'Smart Charts' or directly received any financial benefit from the use of 'Smart Charts'. 6. However, the Tribunal is not satisfied that the other representations identified were, assessed objectively, misleading or deceptive, or (even if there had been a breach of s 18 of the ACL) any breach caused the applicant to suffer loss. 7. Regarding any representation regarding course materials, the applicant did not provide in evidence a complete copy of the course manual, nor any expert evidence that the course materials were not reasonably adequate. Further, by her own admission, the applicant missed a number of the training sessions as part of the LFX and UW courses. The applicant did not complete components of the UW course, and sought to participate in components of the course out of the order set out in the UW course materials. 8. The applicant seeks damages for a full refund of the monies that she paid to enrol in the LFX and UW courses. If this was accepted, the applicant would be awarded damages on a restitutionary basis (i.e. a full refund of all of the monies paid to the respondent) rather than to compensate the applicant for actual loss incurred. In respect of breach of s 18 of the ACL the Tribunal has discretion to adopt the appropriate measure of damages as compensation for the breach, and the measure of damages is more flexible than a strict application of the principles in tort or contract: Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388. 9. However, the Tribunal is not satisfied that a restitutionary basis is the appropriate measure of damages. The applicant received services from the respondent, including the provision of seminars and coaching; a course manual; and access to the 'Smart Charts' forex trading software. The applicant provided no evidence of any comparative market value for the services provided by the respondent, so no loss has been established in the sense that the applicant had paid an amount in excess of the true value of the services provided or goods acquired: HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640. The Tribunal is not satisfied that the services provided by the respondent had no value. In any event, it was the applicant's decision not to further participate in the course after participating in aspects of the course because of her subjective dissatisfaction, and it was the applicant's decision to stop using the services of the respondent before utilizing the remaining coaching and training services. 10. The applicant has also not provided sufficient evidence to establish any expectation damages in respect of loss of profits arising from the respondent's breach of s 18 of the ACL. 11. The compensatory orders that the Tribunal can make for breach of s 18 of the ACL arise under s 236 of the ACL, or in the alternative, under s 79N of the FTA. Under s79U (1) of the FTA, the Tribunal must be satisfied that orders will be "fair and equitable to all parties to the claim", and the factors to be considered in this regard are set out in s 79U (2) of the FTA. However, s 79U(1) of the FTA does not empower the Tribunal to depart from established legal principles and simply award damages on the basis of a general concept of "fairness": Curtis v Potter & Co Pty Ltd t/as The Africa Safari Co [2016] NSWCATAP 196 at [69]-[72]. 12. The Tribunal is not satisfied that any basis has been established by the applicant to award damages or compensation for the respondent's breach of s 18 of the ACL other than in respect of the losses incurred by the applicant for the short period she used the 'Smart Charts' forex trading software in the amount of $1,365.84. However, assessment of damages for breach of s 18 of the ACL is a separate issue from the alleged breaches of s 60 and 61 of the ACL, which are discussed subsequently. 13. The applicant has raised s 29 of the ACL, which involves false representations. However, the Tribunal is not satisfied that there is any conduct of the respondent to which s 29 of the ACL applies separate and distinct from the conduct to which s 18 of the ACL applies. Breach of Consumer Guarantees in the ACL 1. The applicant relies upon the provisions of s 60 and s 61 of the ACL, which provide as follows: 60 Guarantee as to due care and skill If a person supplies, in trade or commerce, services to a consumer, there is a guarantee that the services will be rendered with due care and skill. 61 Guarantees as to fitness for a particular purpose etc. (1) If: (a) a person (the supplier) supplies, in trade or commerce, services to a consumer; and (b) the consumer, expressly or by implication, makes known to the supplier any particular purpose for which the services are being acquired by the consumer; there is a guarantee that the services, and any product resulting from the services, will be reasonably fit for that purpose. (2) If: (a) a person (the supplier) supplies, in trade or commerce, services to a consumer; and (b) the consumer makes known, expressly or by implication, to: (i) the supplier; or (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the services were conducted or made; the result that the consumer wishes the services to achieve; there is a guarantee that the services, and any product resulting from the services, will be of such a nature, and quality, state or condition, that they might reasonably be expected to achieve that result. (3) This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier. (4) This section does not apply to a supply of services of a professional nature by a qualified architect or engineer. 1. The applicant's written submissions in her documents identifies the services provided by the respondent as not being performed with due care and skill, or not fit for purpose, in the following respects: 1. The 3 day LFX workshop was "inadequate". 2. The respondent's training materials and provision of coaching was inadequate for persons to become successful forex traders. 3. The 'Smart Charts' forex trading platform exposed the applicant to high risk trades and losses. 4. The PTP course was not held according to the UW training program, and was "cancelled without notice". Although the applicant's written submissions on regarding the asserted breaches of ss 60 and 61 of the ACL are not expressed with clarity, the substance of the submission asserts that the respondent's failure to provide the PTP course and RG 146 qualification course to the applicant as promised in November 2017 within a reasonable period of time constituted a breach of ss 60 and 61 of the ACL. 1. Whether s 60 of the ACL has been breached requires an objective assessment of whether the services provided were provided with reasonable care and skill, taking into account all relevant circumstances, including the type of services to be provided and the price of the services. In this matter, the amount paid by the applicant for the provision of the LFX and UW courses was significant, with the total cost of the courses being $29,990. 2. Although the invoices provided regarding payment of the monies by the applicant referred to "Knowledge to Action Pty Ltd", the invoices also referred to "Learn to Trade". No submission was made by the respondent that the correct respondent was "Knowledge to Action Pty Ltd". In any event, the Tribunal is satisfied for the purpose of s 79E (1) of the FTA and s 2 of the ACL (which defines "services" under the ACL) that the services for which the applicant paid for were provided by the respondent, rather than a separate entity. 3. The definition of "services" in both s 60 and 61 of the ACL includes the benefits or facilities the consumer can reasonably expect the supplier will provide in return for the consumer's payment, and are not limited to the terms of any contract between the supplier and the consumer: Scenic Tours Pty Ltd v Moore [2018] NSWCA 238 at [175]-[177]. In respect of s 61 of the ACL, whether services are fit for purpose also involves an objective assessment, and the consumer does not have to demonstrate that the consumer acquired the services for a purpose beyond the purpose that the supplier of services represented the services to be suitable for: Scenic Tours Pty Ltd v Moore [2018] NSWCA 238 at [226]. In this regard, an assessment is made between the services actually supplied and services which could reasonably satisfy the particular purpose the consumer made know (expressly or impliedly) to the supplier: Scenic Tours Pty Ltd v Moore [2018] NSWCA 238 at [232]. 4. In this matter, the key services that were not provided by the respondent were the provision of the PTP component of the UW course, and the RG 146 training. The respondent submits that provision of the PTP component was at the discretion of the respondent, and that the applicant had not satisfactorily qualified for that component of the course. 5. However, the email exchange between the parties in November 2017 makes clear that the respondent had agreed to enrol the applicant in the PTP component of the UW course, and provide RG 146 training. In such circumstances, the respondent cannot argue retrospectively that the applicant was not qualified to participate in the PTP component, as it had agreed to enrol her in that component of the course. The respondent's email in November 2017 informed the applicant that the PTP component of the course would occur in "the first quarter" of 2018. 6. However, the respondent's written submissions make clear that no PTP component of the UW course had taken place since May 2017. The applicant was not informed that the PTP component was subject to sufficient numbers, or that she was not sufficiently qualified to participate in it. 7. The respondent submits that the applicant could still participate in the PTP component of the course, and the respondent is prepared to offer it. However, there was no evidence of any PTP component of the UW course having occurred since May 2017, or when any future PTP component of the UW course has been scheduled. In such circumstances, the Tribunal is not satisfied that the respondent could have provided the PTP component of the course at any period from November 2017 within the two year total duration of the UW course for which the applicant had paid for, or at any period up to the date of the final hearing in the Tribunal. No evidence was provided that the respondent wrote to the applicant informing her when a PTP course would be occurring, or explaining why a PTP course had not occurred. No evidence was provided as to why the respondent did not provide the RG 146 training as it had agreed to do. The Tribunal accepts the evidence of the applicant that she was ready, willing and able to participate in such courses from November 2017 until March 2018 when she wrote a letter of demand to the respondent and commenced proceedings in the Tribunal. 8. The failure of the respondent to provide the PTP course component and RG 146 training to the applicant, as it had promised to do in November 2017, within a reasonable time constitutes a failure to provide services with due care and skill. Under such circumstances, irrespective that the applicant did not clearly raise the consumer guarantee under s 62 of the ACL that services will be provided within a reasonable time, the Tribunal is satisfied that the applicant has established breach of s 60 of the ACL. 9. Further, the Tribunal is satisfied that the provision of such services within a reasonable period after November 2017 constitutes a breach of s 61 of the ACL, as it was reasonable for the applicant to rely upon the skill and judgement of the respondent regarding the provision of the PTP component of the UW course and RG 146 training, and that the particular purpose the applicant acquired the services for involved the provision of the PTP component of the UW course and RG 146 training within a reasonable period after November 2017, up to March 2018 when the applicant issued a letter of demand and commenced proceedings in the Tribunal. The failure of the respondent to provide such services constitutes a breach of s 61 of the ACL, because the purpose of the UW course for which the applicant paid for included the provision of such training. Assessment of Compensation 1. As discussed previously, the Tribunal can award compensation under s 236 of the ACL or s 79N of the FTA in the circumstances of this matter. 2. In Scenic Tours Pty Ltd v Moore [2018] NSWCA 238 ('Moore'), the NSW Court of Appeal held that, when assessing the difference between the services actually provided and the services that should have been provided if due care and skill or services fit for purpose were provided, compensation can be awarded on the difference between the market value of the services actually provided and the amount the consumer had paid for the services (i.e. if the market value of the services provided was less than the services paid for, the difference between the two amounts). 3. In this matter, there is no evidence of the market value of the services provided by the respondent. However, the methodology in Moore is one method of assessing compensation. As discussed by the Tribunal in Nguyen and Sy v The Trustees for the Nero CKD Trust t/as View By Sydney [2017] NSWCATCD 98 the Tribunal can make its own assessment on the evidence of the diminution of the value of the services actually provided compared to the value of the services paid for when assessing compensation under s 79N of the FTA. 4. In the circumstances of this matter, the applicant did participate in aspect of the LFX and UW course, and failed to attend some components of the course that were offered by the respondent for her own reasons. Reasons that the applicant did not attend some components of the course or avail herself of some of the coaching offered by the respondent was that she was enrolled in an MBA, and had obtained her own employment as a forex trader at Genesis Trading. 5. The Tribunal is satisfied that, in circumstances where the applicant participated in most of the LFX course and some aspects of the UW course but the respondent failed to provide the PTP component of the course and RG 146 training, that it is appropriate the respondent be compensated by way of a refund of 60% of the course fees for the UW course, because the PTP component of the UW course and RG 146 training were substantial components. 6. Accordingly, under s 79N of the FTA, the Tribunal awards the applicant: $14,997 (being 60% of $24,995) for the respondent's breach of ss 60 and 61 of the ACL, and, additionally, $1,365.84 for the respondent's breach of s 18 of the ACL. 7. The applicant also claimed $2.561.76 for the cost of a 'Smart Charts' subscription. However, there was no documentary evidence in the applicant's documents that this money was paid to the respondent, nor that it was paid at all. The applicant has not provided sufficient evidence that such a loss was incurred by the applicant, nor that it was caused by breach of ss 18, 60, or 61 of the ACL by the respondent. Orders 1. The respondent is to pay the applicant $16,362.84 on or before 14 days from the date of this decision. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 January 2019