Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liquidation) (No 2)
[2017] FCA 709
•23 June 2017
FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liquidation) (No 2) [2017] FCA 709
File number: VID 1074 of 2016 Judge: BEACH J Date of judgment: 23 June 2017 Catchwords: CONSUMER LAW – contraventions of the Australian Consumer Law – representative case based on system of conduct or pattern of behaviour – misleading or deceptive conduct – false or misleading representations – unfair consumer contract terms – unsolicited consumer agreements – unconscionable conduct – accessorial liability of company director – leave to proceed against company in liquidation under s 500(2) of the Corporations Act 2001 (Cth) – leave to proceed under r 30.21(1)(b)(i) of the Federal Court Rules 2011 (Cth) where respondents absent at trial – contraventions of Australian Consumer Law established Legislation: Competition and Consumer Act 2010 (Cth), Sch 2, ss 4, 18, 21, 22, 23, 24, 25, 27, 29, 60, 61, 62, 69, 70, 79, 86, 155, 159, 224, 267
Corporations Act 2001 (Cth) s 500(2)
Federal Court Rules 2011 (Cth) r 30.21
Cases cited: Australian Competition and Consumer Commission v ACN 117 372 915 Pty Limited (in liq) (formerly Advanced Medical Institute Pty Limited) [2015] FCA 368
Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited (2014) 317 ALR 73; [2014] FCA 634
Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682
Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (2016) 244 FCR 538Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd [2016] FCA 1560
Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90
Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640
Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45
Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435
Knight v Beyond Properties Pty Ltd (2007) 242 ALR 586; [2007] FCAFC 170
National Exchange Pty Ltd v Australian Securities and Investments Commission (2004) 61 IPR 420; [2004] FCAFC 90
NRM Corporation Pty Ltd v Australian Competition and Consumer Commission [2016] FCAFC 98
Paciocco v Australia and New Zealand Banking Group Limited (2015) 236 FCR 199
SAP Australia Pty Ltd v Sapient Australia Pty Ltd (1999) 169 ALR 1; [1999] FCA 1821
Tec & Tomas (Australia) Pty Ltd v Matsumiya Computer Company Pty Ltd (1984) 1 FCR 28
Yorke v Lucas (1985) 158 CLR 661
Date of hearing: 28 March 2017 Date of last submissions: 4 April 2017 Registry: Victoria Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 416 Counsel for the Applicant: Mr N J O’Bryan SC with Ms C Cunliffe Solicitor for the Applicant: Corrs Chambers Westgarth Counsel for the Respondents: The respondents did not appear ORDERS
VID 1074 of 2016 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant
AND: GET QUALIFIED AUSTRALIA PTY LTD (IN LIQUIDATION) (ACN 144 813 543)
First Respondent
ADAM MAZEN WADI
Second Respondent
JUDGE:
BEACH J
DATE OF ORDER:
23 JUNE 2017
THE COURT ORDERS THAT:
1.Within 14 days of the date of these orders, the parties file and serve short minutes of orders to give effect to these reasons and for the further conduct of the matter.
2.Costs reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BEACH J:
The present reasons should be read with my reasons for judgment dealing with the ACCC’s freezing order application in Federal Court of Australia proceeding VID 896 of 2016 (the freezing order proceeding), Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (2016) 244 FCR 538, and my reasons for judgment on the separate interlocutory injunction application in the present proceeding, Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd [2016] FCA 1560.
From 24 June 2010 to around 17 March 2017, the first respondent in this proceeding, Get Qualified Australia Pty Ltd (in liquidation) (GQA), operated a business involved in assisting and advising customers to obtain nationally recognised qualifications from registered training organisations (RTOs). RTOs are regulated, inter alia, by the National Vocational Education and Training Regulator Act 2011 (Cth) and National Vocational Education and Training Regulator Regulations 2011 (Cth). GQA operated various RTOs under its own auspices and had relationships with a broader pool of RTOs.
The second respondent in this proceeding, Adam Mazen Wadi, has been at relevant times GQA’s chief executive officer, sole director and the sole shareholder of GQA. For relevant purposes, Mr Wadi was the controlling mind of GQA and responsible for, and directly involved in, the day to day operations of GQA’s business.
A central part of GQA’s business involved assisting customers to obtain nationally recognised qualifications by the process of “Recognition of Prior Learning” (RPL). GQA assisted customers to gain formal certification of their skills on the basis of recognising both their prior formal and informal education and experience in the workplace. GQA assisted candidates in advising and assisting them to compile evidence to submit to the appropriate RTO to obtain a formal qualification. In essence, GQA acted as an intermediary between the RTOs and candidates seeking nationally recognised qualifications.
In engaging in these activities, the ACCC has alleged that GQA engaged in the following contraventions of the Australian Consumer Law (ACL) being schedule 2 to the Competition and Consumer Act 2010 (Cth) (the CCA):
(a)First, GQA engaged in misleading or deceptive conduct within the meaning of s 18 of the ACL and made false or misleading representations within the meaning of s 29(1)(m) of the ACL, by making statements to the effect that if GQA’s customers were not successful in obtaining qualifications through the RPL process, they would be entitled to a refund of 100% of the money that they paid to GQA (the 100% money back guarantee representation). It is alleged that such conduct and representations were misleading or deceptive or false because GQA applied undisclosed or unclear eligibility criteria to its refund policy and inappropriately relied on these criteria to decline customer refund requests, including when customers did not receive the promised qualification.
(b)Second, GQA engaged in misleading or deceptive conduct within the meaning of s 18 of the ACL and made false or misleading representations within the meaning of s 29(1)(b) of the ACL, by making statements through the online skills review tool (described later as the Free Skills Review) to the effect that customers would be eligible for a qualification from an RTO affiliated with GQA without the need for any further study or assessment (skills review representation). It is alleged that such conduct and representations were misleading or deceptive or false because at the time they were made, GQA had no reasonable grounds for making them. Further, it is alleged that the skills review tool did not enable GQA to properly assess customers’ eligibility for the qualifications, did not give GQA sufficient understanding or knowledge of their circumstances and experience to assess whether they were eligible to obtain qualifications using RPL, and generated the same automated response regardless of the information provided by the customer.
(c)Third, GQA engaged in misleading or deceptive conduct within the meaning of s 18 of the ACL and made false or misleading representations within the meaning of s 29(1)(b) of the ACL, by advising customers that they were eligible for and could obtain a qualification from RTOs affiliated with GQA using the RPL process (the eligibility representation). It is alleged that such representations were misleading or deceptive or false because on each occasion the eligibility representation was made, GQA had no reasonable grounds for making it, including because many GQA employees were not qualified to assess, or capable of assessing, the customers’ eligibility for the qualifications, and did not have sufficient understanding or knowledge of their circumstances and experience to assess whether they were eligible to obtain qualifications using RPL.
(d)Fourth, GQA engaged in misleading or deceptive conduct within the meaning of s 18 of the ACL and made false or misleading representations within the meaning of s 29(1)(m) of the ACL, by representing that any refund was at GQA’s discretion and that GQA could charge a full service fee regardless of whether any service was provided and would not refund fees unless the customer had submitted all evidence to GQA and the RTO had determined that there was insufficient evidence to grant the qualification (the refund ineligibility representation). It is alleged that this representation was misleading or deceptive or false because customers were entitled to a refund and to terminate their relevant contract under s 267 of the ACL given that GQA did not comply with applicable consumer guarantees as to services under ss 60 to 62 of the ACL.
(e)Fifth, GQA imposed an unfair contract term (ie the refund policy that I elaborate on later) on customers in breach of s 24 of the ACL.
(f)Sixth, GQA entered into unsolicited consumer agreements within the meaning of s 69 of the ACL with those consumers contacted by phone after completing a skills review, but failed to comply with s 79 of the ACL (which requires that all terms of the agreement be set out in full) and s 86 of the ACL (which requires that the party who solicited the agreement may not provide services or require any payment within ten business days of providing the agreement to the consumer).
(g)Seventh, GQA engaged in unconscionable conduct towards four individual customers (WJ, GF, JA and AV) in breach of s 21 of the ACL. Moreover, GQA engaged in a system of conduct or pattern of behaviour which, in all the circumstances, constituted unconscionable conduct in breach of s 21 of the ACL.
The ACCC has also alleged that Mr Wadi aided, abetted, counselled or procured and was directly and indirectly knowingly concerned in each of GQA’s contraventions of the ACL within the meaning of s 224(1) of the ACL. Accordingly, it is said that Mr Wadi should be held accessorially liable in relation to GQA’s contraventions.
For the reasons that follow, in my opinion the ACCC has established the relevant contraventions by GQA and Mr Wadi’s accessorial liability, save and except that in relation to unconscionable conduct, Mr Wadi’s liability extends only to the systemic contraventions and not in relation to specific consumers, contrary to the ACCC’s contentions. I will hear further from the parties as to the necessary orders to give effect to my reasons and for the further conduct of this proceeding.
I should also say at this point that I accept that s 140(2) of the Evidence Act 1995 (Cth) applies in the present case such that given the serious nature of the allegations and the fact that pecuniary penalties and disqualification orders are sought, it is necessary for the ACCC to establish its allegations by clear and cogent proof of the necessary elements, which it has done.
PROCEDURAL BACKGROUND
It is convenient to set out the procedural background to this proceeding. As I mentioned above, the background to the freezing order proceeding is set out in my reasons in (2016) 244 FCR 538.
On 9 September 2016, the ACCC for the purposes of the present proceeding filed an originating application and concise statement. Unlike the freezing order proceeding, only GQA and Mr Wadi were named as respondents. Ms Lama Al-Natour, Mr Wadi’s wife and former Director of Operations of GQA, was the third prospective respondent in the freezing order proceeding but was not named as a respondent in the present proceeding.
On 18 October 2016, I ordered that the present matter be listed for trial on liability commencing on 28 March 2017 on an estimate of four days.
On 13 December 2016, the ACCC sought an interlocutory injunction to restrain GQA until the determination of this proceeding from:
(a)commencing or progressing (directly or indirectly) any debt collection activities against “affected consumers” (as defined in the application for the interlocutory injunction);
(b)reporting any “affected consumer” to any credit reporting agency; or
(c)threatening to bring, or bringing, legal proceedings against any “affected consumer”.
On 19 December 2016, I granted such an injunction but on a narrower basis than that sought by the ACCC. I limited the injunction to the pursuit of debt recovery proceedings against a narrower class of affected consumers being those who had complained to GQA or the ACCC or who had sought refunds from GQA.
On 17 March 2017, Mr Blair Pleash of Hall Chadwick and Ms Kathleen Vouris of Hall Chadwick were appointed joint and several liquidators of GQA.
On 20 March 2017, the solicitors for the ACCC wrote to the liquidators seeking clarification of their position in respect of a proposed application by the ACCC for leave to proceed against GQA under s 500(2) of the Corporations Act 2001 (Cth). On 21 March 2017, the liquidators of GQA informed the ACCC that they neither consented nor objected to the ACCC being granted leave to proceed.
Further, on 21 March 2017, the solicitors then on the record for the respondents (Etienne Lawyers) informed the Court that they had been instructed to cease acting in the matter.
On 22 March 2017, the ACCC’s solicitors notified the Court that they sought leave to proceed against GQA. On 23 March 2017, my chambers informed the parties that the Court would deal with the ACCC’s application for leave to proceed on the first day of the trial. My chambers also requested that the ACCC take such steps as were necessary to ensure that the respondents were given proper notice that the case would proceed to trial as scheduled in the absence of any adjournment application. Further, my chambers requested that Etienne Lawyers provide an up-to-date email address for the respondents and the last known residential address of Mr Wadi. In response, Etienne Lawyers informed the Court and the ACCC that they did not have a residential address for Mr Wadi, that the only address they had was the address disclosed on the ASIC company extract for GQA and that the only email address they had for Mr Wadi was his email address at GQA. On 24 March 2017, the ACCC’s solicitors informed the Court that they were taking steps to contact Mr Wadi to notify him that the trial would proceed as scheduled in the absence of any adjournment application.
On 27 March 2017, the ACCC filed an affidavit of John William Fogarty of Corrs Chambers Westgarth, in which he deposed as to the various ways Corrs had sought to contact Mr Wadi to notify him that the trial would proceed in the absence of any adjournment application. Mr Fogarty deposed that Corrs:
(a)on 23 March 2017 at 2.52 pm and at 5.57 pm, sent an email to Mr Wadi via his GQA email address;
(b)on 23 March 2017, sent a Facebook message to the Facebook account operated by Mr Wadi;
(c)on 24 March 2017 and 27 March 2017, telephoned Mr Wadi using a mobile telephone numbered obtained from the RTO report for Get Qualified Australia – Canberra Pty Ltd which identified Mr Wadi as its chief executive officer;
(d)on 24 March 2017, telephoned Ms Alexandra Sella, a former employee of GQA, who informed Mr Fogarty that she believed that Mr Wadi was in Dubai and would not return for the trial; and
(e)on 24 March 2017, sent a letter to Mr Wadi’s last known residential address.
Further, Mr Fogarty deposed that despite such efforts to contact Mr Wadi, Corrs had not received any response from Mr Wadi.
On 28 March 2017, ie the first day of the trial, the respondents did not appear. I granted the ACCC leave to proceed against GQA under s 500(2) of the Corporations Act. Further and to the extent necessary, I also granted to the ACCC leave to proceed with the trial under r 30.21(1)(b)(i) of the Federal Court Rules 2011 (Cth) given that neither of the respondents then appeared, although I expressed the view that such leave may not have been necessary.
UNCONTROVERSIAL LEGAL PRINCIPLES
Before proceeding with a detailed analysis of the evidence and my factual findings, it is appropriate to outline some of the applicable legal principles relevant to the present matter concerning:
(a)misleading or deceptive conduct and false or misleading representations;
(b)unfair contract terms;
(c)unsolicited consumer agreements; and
(d)unconscionable conduct.
(a) Misleading or deceptive conduct
Section 18 of the ACL provides:
18 Misleading or deceptive conduct
(1)A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2)Nothing in Part 3–1 (which is about unfair practices) limits by implication subsection (1).
Sections 29(1)(b) and 29(1)(m) of the ACL provide:
29 False or misleading representations about goods or services
(1)A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
[…]
(b)make a false or misleading representation that services are of a particular standard, quality, value or grade; or
[…]
(m)make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3–2); …
It is appropriate to state a number of non-contentious principles applicable to the present case.
First, there is no meaningful difference between the words and phrases “misleading or deceptive”, “mislead or deceive” or “false or misleading” (see Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682 at [14] per Gordon J and Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited (2014) 317 ALR 73; [2014] FCA 634 at [40] per Allsop CJ).
Second, in the present case the relevant class consists of actual and prospective consumers of GQA’s services. Where the issue is the effect of conduct on a class of persons such as consumers (rather than identified individuals to whom a particular misrepresentation has been made or particular conduct directed), the effect of the conduct or representations upon ordinary or reasonable members of that class must be considered (see Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at [102] and [103] per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ; Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 at [6] to [9] per French CJ, Crennan and Kiefel JJ). This hypothetical construct avoids using the very ignorant (or gullible) or the very knowledgeable (or astute) to assess effect or likely effect; it also avoids using those credited with habitual caution or exceptional carelessness; it also avoids considering the assumptions of persons which are extreme or fanciful. The objective characteristics that one attributes to ordinary or reasonable members of the relevant class may also differ depending on the medium for communication being considered. There is scope for diversity of response both within the same medium and across different media.
Third, in considering the hypothetical ordinary and reasonable member of the relevant class, one considers the dominant message conveyed (Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [20], [40] and [45] per French CJ, Crennan, Bell and Keane JJ). The question is whether there is a real rather than a remote possibility of the member of the relevant class being misled or deceived by the relevant conduct or statement. In the present context, does the relevant conduct or statement have a tendency to lead persons of the relevant class into error?
Fourth, conduct that exploits the mistaken views of members of the relevant class may be misleading or deceptive or likely to mislead or deceive and may not be corrected by any obscure fine print, whether in content, size or location, that sets out the true position.
In ACCC v TPG, French CJ, Crennan, Bell and Keane JJ at [51] analysed TPG’s advertisements in terms:
The tendency of TPG’s advertisements to lead consumers into error arose because the advertisements themselves selected some words for emphasis and relegated the balance to relative obscurity. To acknowledge ... that “many persons will only absorb the general thrust” is to recognise the effectiveness of the selective presentation of information by TPG.
Fifth, for the purposes of s 18, one must identify the relevant conduct and then consider whether that conduct, considered as a whole and in context, is misleading or deceptive or likely to mislead or deceive. Such conduct is not to be pigeon-holed into the framework or language of representation (cf the language of s 29).
Sixth, conduct is misleading or deceptive or likely to mislead or deceive if it has the tendency to lead into error (ACCC v TPG at [39] per French CJ, Crennan, Bell and Keane JJ). But conduct causing confusion or wonderment is not necessarily co-extensive with misleading or deceptive conduct (Google Inc v Australian Competition and Consumer Commission at [8] per French CJ, Crennan and Kiefel JJ).
Seventh, the question is whether there was a real but not remote chance or possibility that the relevant conduct was misleading or deceptive or likely to mislead or deceive. To assess this one looks at the potential practical consequences and effect of the conduct.
Eighth, for the purposes of s 18, the words “likely to mislead or deceive” demonstrate that it is not necessary to show actual deception. Relatedly, it is not necessary to adduce evidence from persons to show that they were actually misled or deceived.
Ninth, there must be a sufficient nexus between the impugned conduct or apprehended conduct and the consumer’s misconception or deception. As was said in SAP Australia Pty Ltd v Sapient Australia Pty Ltd (1999) 169 ALR 1; [1999] FCA 1821 at [51] by French, Heerey and Lindgren JJ:
The characterisation of conduct as “misleading or deceptive or likely to mislead or deceive” involves a judgment of a notional cause and effect relationship between the conduct and the putative consumer’s state of mind. Implicit in that judgment is a selection process which can reject some causal connections, which, although theoretically open, are too tenuous or impose responsibility otherwise than in accordance with the policy of the legislation.
Subject to one qualification, the error or misconception must result from the respondent’s conduct and not from other circumstances for which the respondent was not responsible. But conduct that exploits or feeds into and thereby reinforces the pre-existing mistaken views of members of the relevant class may be misleading or deceptive or likely to mislead or deceive.
Tenth, conduct that is merely transitory or ephemeral where any likely misleading impression is likely to be readily or quickly dispelled or corrected does not constitute conduct that would infringe s 18 (Knight v Beyond Properties Pty Ltd (2007) 242 ALR 586; [2007] FCAFC 170 at [58] per French, Tamberlin and Rares JJ).
Eleventh, and relatedly, it is one thing to say that the conduct must be more than transitory or ephemeral, but it is another thing to say that the conduct or its effect must endure up to some “point of sale”. There is no such requirement to establish a s 18 contravention.
Even if the effect of relevant advertising is, or is likely to be, dispelled prior to any transaction being effected, it may still be misleading or deceptive. In ACCC v TPG at [50] it was noted that a contravention may occur, not only when a contract has been concluded under the influence of a misleading advertisement, but also at the point where members of the relevant class have been enticed into “the marketing web” by an erroneous belief engendered by an advertiser. Such a contravention may be established even if the consumer may later come to appreciate the true position before a transaction is concluded. The tendency of advertisements to mislead is to be determined not by asking whether they were apt to induce consumers to enter into contracts, but by asking whether they were apt to bring them into negotiation (ACCC v TPG at [48]). See also Tec & Tomas (Australia) Pty Ltd v Matsumiya Computer Company Pty Ltd (1984) 1 FCR 28 at 38.
The question of whether conduct is misleading or deceptive is anterior to whether a person has entered into contractual relations. It is no answer that relevant consumers who signed up for the service or product could have been expected to understand fully the nature of their obligations by the time they actually became customers.
Twelfth, terms or conditions of particular offers that have significant advantage for the representor and disadvantage for the representee require due notice; see National Exchange Pty Ltd v Australian Securities and Investments Commission (2004) 61 IPR 420; [2004] FCAFC 90 at [55] per Jacobson and Bennett JJ. Further, as their Honours observed at [50] and [51]:
[50]… A document which, when read as a whole, is factually true and accurate may still be capable of being misleading if it contains a potentially misleading primary statement which is corrected elsewhere in the document but without the reader’s attention being adequately drawn to the correction.
[51]The principle which applies to those cases is that the qualifying material must be sufficiently prominent or conspicuous to prevent the primary statement from being misleading …
Further on this aspect, in assessing the effect and significance of conduct that diminishes or relegates to obscurity information that is necessary to qualify or correct any dominant message, one looks at the relevant course of conduct as a whole in light of the surrounding facts and circumstances.
Thirteenth, in determining whether a contravention of s 18 of the ACL has occurred, the focus of the inquiry is on whether a not insignificant number within the class have been misled or deceived or are likely to have been misled or deceived by the respondent’s conduct. There has been some debate about the meaning of “a not insignificant number”. The Campomar formulation looks at the issue in a normative sense. The reactions of the hypothetical individual within the class are considered. The hypothetical individual is a reasonable or ordinary member of the class. Does satisfying the Campomar formulation satisfy the “not insignificant number” requirement? I am now inclined to the view that if, applying the Campomar test, reasonable members of the class would be likely to be misled, then such a finding does not necessarily carry with it that a significant proportion of the class would be likely to be misled. A finding of a “not insignificant number” of members of the class being likely to be misled is conceptually speaking an additional requirement that needs to be satisfied.
In relation to s 29 of the ACL, the following propositions are not in doubt.
First, a representation is a statement that can be made orally or in writing, but it can also arise by implication from what is or is not said or written including an implication from conduct.
Second, the concept of “false” and cognate expressions may be equated with “contrary to fact”.
Third, in relation to the question of falsity, that may be established irrespective of the knowledge of the representor.
Fourth, representations that do not reflect a representor’s obligations under applicable consumer guarantee provisions may contravene either or both of s 18 and s 29(1)(m).
(b) Unfair contract terms
Section 23 of the ACL provides that a term of a consumer contract is void if the term is unfair and the contract is a standard form contract. Section 24 provides that a term of a consumer contract is unfair if it would cause a significant imbalance in the parties’ rights and obligations arising under the contract, it is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term, and it would cause detriment (financial or otherwise) to a party if it were to be applied or relied on. Section 24(2) provides that in determining whether a term of a contract is unfair, the court must take into account the extent to which the term is transparent (ie expressed in reasonably plain language, legible, presented clearly and readily available to any party affected by it) and the contract as a whole. There is a rebuttable presumption that a term is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by it (s 24(4)).
It is presumed that a contract is a standard form contract unless proved otherwise (s 27(1)). In determining whether a contract is a standard form contract, I am required to take into account the factors referred to in s 27(2) being:
(a)whether one party had all or most of the bargaining power relating to the transaction;
(b)whether the contract was prepared by one party before any discussion relating to the transaction occurred with the other party;
(c)whether another party was, in effect, required to accept or reject the terms of the contract, other than the term concerning the subject matter or price of the contract, in the form in which they were presented;
(d)whether the other party was given an effective opportunity to negotiate the terms of the contract other than the term concerning the price of the contract; and
(e)whether the terms of the contract have taken into account the particular characteristics of the party or of the particular transaction.
It is appropriate to refer in detail to one case in this context dealing with refunds. In Australian Competition and Consumer Commission v ACN 117 372 915 Pty Limited (in liq) (formerly Advanced Medical Institute Pty Limited) [2015] FCA 368, salespeople reassured patients that they could get a refund if the treatment being sold did not work. But the salespeople did not say that patients had to try all treatment options in order to qualify for a refund. The respondent had a dominant bargaining position obtained by using high pressure selling techniques, and patients did not have a chance to negotiate the terms of the contract. North J noted that the questions of whether the refund term would cause a significant imbalance in the parties’ rights and obligations arising under the contract and whether the term would cause detriment, whether financial or otherwise, to the patient if it were to be applied or relied upon (at [950]):
… may be considered together and in the light of one of the examples of an unfair term provided by s 25(1)(c). That section provides that a term which has the effect of penalising one party and not the other for terminating the contract may be unfair. As to the nature of a significant imbalance in rights, in Director General of Fair Trading v First National Bank plc [2002] 1 AC 481 at 494; [2001] UKHL 52, Lord Bingham said at [17] of a regulation in similar terms:
The requirement of significant imbalance is met if a term is so weighted in favour of the supplier as to tilt the parties’ rights and obligations under the contract significantly in his favour. This may be by the granting to the supplier of a beneficial option or discretion or power, or by the imposing on the consumer of a disadvantageous burden or risk or duty.
The trial judge concluded that the refund term caused detriment to the patient, if relied upon, within the meaning of s 24(1)(c) in circumstances where the refund term required the patient to pay a 15 per cent administration fee, a pro-rata fee for the expired portion of the treatment, a pro-rata fee for the 30-day notice period, and the cost of medication supplied or prepared for the patient, and where the refund term operated whether the reason for the termination was a change of mind very soon after the phone consultation, a severe adverse side effect, or where the medication proved ineffective. The trial judge also held that the refund term caused a significant imbalance in the parties’ rights and obligations because it had the effect of binding patients to continue treatment in disadvantageous circumstances, or alternatively suffer a financial penalty.
His Honour also concluded that the relevant refund term lacked transparency to a significant extent, because the basis on which the administration fee was calculated was not disclosed to the patient at all, the method of calculation of the cost of the medication was not disclosed to the patient at all, at the time that the agreement was made, the patient was told about the refund term in a recorded message which was either read out very fast and softly or monotonously at a fast pace, and which was played after the patient had provided bank details, and the patient was not provided with a written copy of the refund term until after the contract was entered into, save in the case of patients who attended clinics.
His Honour concluded that when regard was had to the contract as a whole, the unfairness of the term became incontrovertible, because the contract provided for the supply of medications which were not regarded by the medical profession as the usual forms of treatment and there was no cogent evidence that they were effective. In those circumstances it was unfair to hold the patient to the agreement on penalty of payment of fees, the method of calculation of which was unknown, imposed in order to cancel the treatment. This conclusion was upheld by the Full Court in NRM Corporation Pty Ltd v Australian Competition and Consumer Commission [2016] FCAFC 98 at [196] to [205].
(c) Unsolicited consumer agreements
Sections 74 to 79 of the ACL impose particular obligations on “dealers” in relation to “unsolicited consumer agreements.” Section 70 of the ACL creates a rebuttable presumption that an agreement is an unsolicited consumer agreement. A “dealer” is defined, relevantly, in s 71 of the ACL to be a person who, in trade or commerce, enters into negotiations with a consumer with a view to making an agreement for the supply of goods or services to the consumer, or calls on a consumer for the purpose of entering into such an agreement.
The definition of “unsolicited consumer agreement” is set out in s 69 of the ACL, and has four elements:
(a)first, the agreement is for the supply, in trade or commerce, of goods or services to a consumer;
(b)second, it is made as a result of negotiations that took place either on the telephone or at a place that was not the supplier’s ordinary business premises;
(c)third, the consumer did not invite the dealer to come to that place, or make a telephone call, for the purpose of entering negotiations; and
(d)fourth, the total price paid or payable under the agreement is either not ascertainable at the time the agreement is made, or is more than $100.
Section 79 of the ACL sets out requirements for the information and notices which must be set out in, or accompany, an unsolicited consumer agreement. These requirements include that the agreement must, inter alia:
(a)set out in full all the terms of the agreement, including the total consideration (s 79(1)(a));
(b)have on its front page a notice that “conspicuously and prominently” informs the consumer of the right to termination (s 79(1)(b));
(c)be accompanied by a notice the consumer can use to terminate the agreement (s 79(1)(c)), and conspicuously and prominently set out in full all of the supplier’s details (s 79(1)(d)); and
(d)be transparent (s 79(1)(f)).
Section 86 of the ACL provides that the supplier under an unsolicited consumer agreement must not supply to the consumer under the agreement the goods or services to be supplied under the agreement, or accept any payment or any other consideration in connection with those goods or services, or require any payment or any other consideration in connection with those goods or services during the period of ten business days starting at the start of the first business day after the day on which the consumer was given the agreement document relating to the agreement (if the agreement was negotiated by telephone).
(d) Unconscionable conduct
Section 21(1) of the ACL provides that a person must not, in trade or commerce, in connection with the supply or possible supply of goods or services, “engage in conduct that is, in all the circumstances, unconscionable”.
The following propositions are not seriously contestable in relation to ss 21 and 22.
First, “unconscionability” means something not done in good conscience or conduct against conscience by reference to the norms of society. But that is to be understood and applied in the context of trade or commerce, but including consumer protection objectives directed at the requirements of honest and fair conduct free of deception (see generally Paciocco v Australia and New Zealand Banking Group Limited (2015) 236 FCR 199 at [259] to [304]). But one must be careful in using the phrase “norms of society” to ensure that the identification thereof is not interlarded with some distorted subjective view of social philosophy. It is fraught with risk to move beyond the explicit and implicit norms enshrined in and bounded by the statutory language of ss 21 and 22 construed in context, being trade or commerce, notwithstanding the apparent breadth of s 21(4) and the non-limiting prefatory words of s 22(1). Moreover, the evaluation of unconscionability must not be decontextualised from the particular case under consideration.
Second and relatedly, in order to determine whether conduct is unconscionable, it is necessary to look at all the conduct, by “[s]tanding back and looking at the whole episode” (Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90 at [44]).
Third, as the norms of society include statutory prohibitions on deceptive conduct and the regulation of unsolicited consumer agreements, deceptive practices and contraventions of provisions concerning unsolicited consumer agreements can form part of the “whole episode”, for the purpose of assessing whether, in all the circumstances, the conduct in question is unconscionable (Lux Distributors at [41] to [44]).
Fourth, s 22(1) of the ACL sets out a non-exhaustive list of factors to which the Court may have regard for the purpose of determining whether a person has contravened s 21. The matters enumerated assist in understanding the scope of the meaning of unconscionable conduct, but the presence of one or more matters contained in s 22(1) (or indeed their absence) is not necessarily determinative.
Fifth, s 21(4)(b) of the ACL states that it is the intention of Parliament that s 21 is “capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour”.
Relatedly, proof of examples of similar unconscionable conduct in respect of individual cases can be used to demonstrate the features of a system of conduct or pattern of behaviour, even though no particular individual need be identified as having been disadvantaged.
Finally, the evidence of unconscionable conduct may be quite varied and, in some cases, not even substantial, but still form part of an overall pattern or system of unconscionability. It may be established by a systemic pattern of behaviour involving an accumulation of minor incidents.
GQA – SYSTEMS, PRACTICES AND CONDUCT
It is appropriate to begin with some matters of background.
RPL is granted when a registered training organisation gives recognition or credit to an enrolled student for units of competency which form part of a qualification, or the whole qualification. This is a form of assessment not based on traditional classroom study. To obtain RPL, the consumer must be able to show that they have already undertaken the learning which is necessary to obtain competence, through previous experience, or have developed the competence in the workplace. RPL assessment is optional and only undertaken when a student applies for it. Formal assessment is conducted by teachers or assessors.
Where consumers are enrolled through TAFE institutions, RPL is typically offered as an adjunct to traditional learning. Students can pay to be assessed using RPL for individual units, and then enrol in “gap training” to study any further units necessary so as to provide sufficient evidence to establish competence in using RPL.
GQA is not an RTO and therefore cannot provide RPL. It acted as an intermediary between RTOs and consumers. In substance, GQA’s role was largely administrative. It compiled portfolios based on information sent by consumers and forwarded them to third party assessors at RTOs, and then passed feedback which related to the application back to consumers.
From at least 1 January 2015, GQA had undertaken extensive marketing, via the internet, social media and radio, in which it represented that it could obtain nationally recognised RPL qualifications for consumers quickly and simply. For example, GQA marketed its services in a Facebook promotional video as follows:
What if I said you could earn more money?
You could, by turning your experience into qualifications and better pay.
Take Get Qualified Australia’s Free Skills Review and in just 3 minutes, discover what qualifications you’re already eligible for and those you can be fast tracked to obtain. With Get Qualified Australia, there’s no classroom study, you save time and money and get nationally recognised qualifications in any industry. Within weeks you could be on your way to a better future, be better qualified, be better paid. Take the free skills review today and turn your experience into qualifications and more pay. Visit Get Qualified Australia at GQAustralia.com.au or call 133 775.
It was not apparent from GQA’s marketing campaign or sales process that GQA was in substance acting as an intermediary, rather than a training or assessment facility, and that the only assistance which GQA would provide was of an administrative nature, and from staff who were largely not trained or experienced in the areas in which consumers were seeking to be qualified.
It was also unclear from GQA’s advertising that consumers might not be able to obtain an entire qualification solely on the basis of RPL, that consumers might be required to pay for additional gap training for areas where they were unable to establish competence, and that the gap training might involve considerable time and expense for consumers. GQA’s marketing campaign was to the effect that GQA offered a quick, simple and certain process of obtaining qualifications using RPL.
It is to be noted that the Standards for Registered Training Organisations (RTOs) 2015 (Cth) (Standards) (it is unnecessary to refer to the predecessor version) provide that RTOs must ensure that information, whether disseminated directly by the RTO or on its behalf, is both accurate and factual, and does not guarantee that a learner will successfully complete a training product on its scope of registration or that a training product can be completed in a manner which does not meet the requirements of some aspects of the Standards or that a learner will obtain a particular employment outcome where this is outside the control of the RTO. GQA’s marketing campaign and sales process, which implied that qualifications could be gained through a simple paperwork based process, did not comply with these requirements and failed to adequately inform consumers of the evidence they would be required to submit in support of their RPL application. Further, GQA’s conduct in marketing and selling its services did not comply with other aspects of the Standards. These deficiencies in GQA’s marketing campaign and sales process meant that GQA’s marketing campaign was misleading or deceptive or false.
GQA’s marketing directed consumers to undertake a Free Skills Review (discussed later) on the GQA website, which was located at the two URLs: and advertising campaign
Some of GQA’s advertisements were entitled “100% Success Guaranteed”, “100% Money Back Guaranteed” and “100% Success or Money Back!”. Some consumers saw these advertisements on Facebook and were attracted to the website. Others saw such advertisements on Facebook and called GQA. In 2015, the GQA website advertised a “100% money back guarantee”, with no apparent qualification.
In 2016, the landing page for GQA’s Free Skills Review advertised the same guarantee, with limited qualification, “We also offer a 100% Money Back Guarantee should we be unable to get you your qualification after you’ve supplied all of your valid evidence”. GQA’s website also advertised the “100% money back guarantee” with explanatory text which was only displayed where consumers clicked to expand the view of the website: “Get Qualified Australia has a 100% Money Back Guarantee should we be unable to get you the qualification. This means that after you have provided us with all your mentioned evidence and after exhausting all possible avenues, if the Registered Training Organisation deems you not yet competent, you will be eligible for a 100% refund of your paid fees.”
In at least 2015, GQA advertised the 100% money back guarantee, in email communications to customers and potential customers. In an email with the subject “5 reasons to choose Get Qualified” GQA advertised the guarantee as the second of five reasons to choose GQA, “100% Money Back Guarantee – It’s our aim to get our applicants qualified and we’re confident we can, if you’re eligible. If, however, your application is unsuccessful, we’ll give you your money back.” In a further email distributed in 2015, GQA again advertised the guarantee. An email entitled “Concerned about the Cost of RPL?” stated:
Do you have concerns you’ll pay for your application only to have it rejected?
You’re not alone. To make sure this doesn’t happen for any of our applicants, we’ve removed the risk altogether. Here are three reasons you can be confident Get Qualified Australia is the right choice for your Recognition of Prior Learning:
1. 100% Money Back Guarantee – It’s our aim to get our applicants qualified and we will do everything we can to help you once we determine you’re eligible. If, however, your application is unsuccessful, we will give you your money back
2. Lowest Price Guarantee – We think our prices are competitive, but if you find a better price, we’ll beat it.
3. We Won’t Waste Your Time – As the market experts in RPL and Skills Recognition, we’re experienced in assessing candidates and identifying possible skills gaps that need to be closed. We’re also permitted to conduct assessments on behalf of the RTO and we’re familiar with the requirements for achieving qualifications. This means that if we decide you’re eligible, we’re confident we can get you qualified. If you’re still concerned, see point 1!
[…]
In each instance, GQA made the 100% money back guarantee representation.
(b) The Free Skills Review
GQA’s marketing and advertising directed consumers to the GQA website and to complete a Free Skills Review. Some of GQA’s advertisements through Google AdWords directed consumers to the Free Skills Review including: “Start Your Free Skills Review In under 3 minutes, find out if you’re eligible to achieve a fast qualification” and “Start Your Free Skills Review Find out if you’re eligible to achieve a Cert IV within weeks, and without study”.
GQA’s Facebook advertising also directed consumers to complete a Free Skills Review.
One such advertisement posted on 17 August 2015 stated:
All you need is experience.
Start a FREE Skills Review with Australia’s leading Skills Recognition – Get Qualified Australia!
Have Years In Construction? Need a Qualification?
With your work experience, you deserve a qualification! Start a free skills review today, and see if you’re eligible to convert your skills into a qualification within weeks!
The advertisement reached 41,931 people.
Another advertisement posted on 6 November 2015 stated:
Get your Trade Skills Recognised today!
Have plenty of work experience, but are missing the qualification you deserve? Get those skills recognised now!
Qualifications available in Automotive, Building & Construction, Engineering, Carpentry, Plumbing and many more industries!
√ NO Classroom Study
√ Get a Qualification in Just a Few Weeks
√ Over 25 Industries Supported
√ 300+ Qualifications to Choose From
Click one of the links below to learn how, and start a FREE Skills Review to see if you’re eligible.
The advertisement reached 1,134,756 people.
GQA’s Facebook advertising was prolific, and there are numerous examples. In the 2015/2016 financial year, GQA paid $534,208.49 to Facebook and $782,990.69 to Google AdWords in respect of this advertising.
The GQA website offered consumers the ability to complete a Free Skills Review to “find out how many qualifications you are eligible for via Skills Recognition” and represented that consumers could have their eligibility determined “without spending a dollar”. Customers were required to enter a number of variables, including:
(a)their industry (from a range of choices including “Automotive”, “Australian Meat Industry”, “Agriculture, Horticulture and Land Management”, “Aviation”, “Beauty”, “Building & Construction”, “Business & Management”, “Community Services”, “Electrotechnology”, “Engineering”, “Financial Services”, “Food Processing”, “Glass & Glazing”, “Hairdressing”, “Health & Massage”, “Hospitality, Events, Tourism and Travel”, “Information Technology”, “Manufacturing”, “Mining & Civil Engineering”, “Property & Security”, “Retail”, “Sports, Fitness & Recreation”, “Sustainability”, “Vocational Education & Training”, “Transport & Logistics” and “Am Not Sure”);
(b)their number of years of experience (1-3 years, 3-5 years, 5-10 years and 10+ years);
(c)whether the experience was in Australia, overseas or both;
(d)their postcode;
(e)whether there was a specific qualification the consumer was looking for;
(f)whether the consumer had any formal qualifications; and
(g)whether the consumer wished to upload a resume.
Irrespective of the information which was submitted by consumers, the Free Skills Review function produced an automated response, which said:
Good news!
Based on your answers, it looks like you might be eligible to achieve a qualification without the need for study.
In order to receive your personalised eligibility assessment, please enter your contact details and we’ll email you an information package and conduct your FREE eligibility assessment with a Skills Recognition Specialist.
This message conveyed the skills review representation. The representation was misleading because the representation was a representation of a future matter (that consumers could obtain a qualification through RPL) and GQA did not have a reasonable basis to make an assessment of the consumer’s eligibility when it made the representation, given the very basic information which was provided by consumers. Indeed, the same response was given to every consumer.
Although it purported to be an assessment tool, it is apparent from GQA’s own internal documents that the Free Skills Review was a very crude marketing device. In their training, GQA sales representatives were told that “the intent of the Skills Review is get the phone number of the client so that GQ (YOU) can contact them”. It is also apparent that the marketing device was remarkably effective. 95% of GQA’s leads came through the website.
Further, consumers who completed the Free Skills Review and provided their contact details would have expected that these details would have been used for the provision of an information package and to conduct a free eligibility assessment. They would not have expected that their details would be provided to sales representatives, given the substance of the response which appeared upon the completion of the Free Skills Review. For that reason, each contract entered into on a phone call following a Free Skills Review was an unsolicited consumer agreement. Moreover, none of these contracts complied with the ACL, since the terms of the agreement were not set out in full (s 79) and since GQA purported to provide services or and to require payment within ten business days of providing the agreement to the consumer (s 86).
(c) The Sales Call
The skills recognition specialists
Consumers’ first point of contact with GQA was generally through a “skills recognition specialist”. But although these GQA employees were directed to identify themselves as skills recognition specialists, they were not in fact specialised in skills recognition. Their role appeared to be more of a sales agent. For this role, GQA did not recruit for specialists in skills recognition or RPL. Its advertised requirements were as follows:
Skills & Requirements:
•MUST HAVE minimum 3-5 years inbound and/or outbound contact centre experience both warm and cold
•MUST HAVE excellent communication skills
•MUST HAVE the drive to over achieve and be extremely money hungry
•Experience working towards KPI’s and targets and proven results in achieving these
•Self-motivated, confident and a positive attitude
•The drive to meet and exceed customer’s expectations with a high degree of expertise, integrity and professionalism.
In communications with recruitment agents, Mr Wadi expressed the preference to recruit sales managers who were not from the education industry but who had a solid sales record.
Although a considerable portion of the five day training GQA provided to skills recognition specialists was spent explaining the vocational education training sector and the role of RPL, this training was rudimentary if at all. Moreover, even if the training had been more substantive, it was inappropriate for unskilled salespeople to attempt to engage in “skills assessment”, given the complexities of the qualifications offered and their lack of technical background. At the least, salespeople should have explained the RPL process and assessment method, the role of the facilitator, the nature of the service offered by GQA and the fee structure.
As GQA’s conversation guide discussed later makes clear, skills recognition specialists were trained to access an Australian government website, training.gov.au to identify for clients possible qualifications and the associated units of competence. Apparently, according to Mr Wadi, “they read out those units of competence to the customer on the phone”. GQA did not provide scripts for each of the more than 500 qualifications offered by RTO’s associated with it. There were too many variables. Moreover, consumers who called GQA for advice on eligibility could have obtained the same or very similar information by reviewing publicly available government resources. If anything, consumers would have received more detailed information about their desired qualifications from publicly available sources as skills recognition specialists typically omitted or passed on brief details of these qualifications.
In keeping with the recruitment advertisements, skills recognition specialists had high sales targets. Sales staff selling trade qualifications had a sales target of $80,000 per month, while sales staff selling non-trade qualifications had a sales target of $50,000 per month. Sales staff also had key performance indicators: 2.5 to 3 hours of talk time per day, or 100 calls a day; if a sales representative made a hundred calls continuously in an eight hour day, each call would average less than five minutes in duration. Skills recognition specialists were also provided with significant incentives to make sales. GQA offered commission: 1% of sales for sales representatives who made 95% to 99% of their target sales, 2% of sales for sales representatives who made 100% to 109% of their target sales, and 3% of sales for sales representatives who made 110% of their target sales or more. Other ad hoc incentives were also offered, including Plasma TVs, iPhones, MacBook Airs, and significant cash bonuses (initially up to $300). By the end of 2015, GQA was offering skills recognition specialists $25 per sale, $500 for meeting their monthly targets and $500 for topping the sales league.
By recruiting sales people rather than vocational educational specialists, providing very little training on RPL or the specific qualifications offered by GQA, imposing sales targets and key performance indicators which required a high volume of sales and a number of telephone calls which inevitably meant that each customer interaction was abbreviated, and providing significant sales incentives, in substance GQA’s business model emphasised sales and required unqualified sales representatives to undertake “eligibility assessments” to reassure customers of their ability to obtain certain qualifications. None of this was satisfactory, to say the least.
An ex-employee’s evidence (LR) was to the effect that in practice the skills recognition specialists in terms of their dealings with customers:
(a)under-represented the length of time that RPL took;
(b)under-represented the work involved;
(c)suggested that RPL would always result in a qualification;
(d)placed a very strong emphasis on the 100% money back guarantee;
(e)suggested that there were limited enrolments through GQA, when there were no such limitations; and
(f)failed to ascertain the particular customer’s suitability.
That evidence is consistent with the consumer experiences detailed later in my reasons and with the oral evidence given before me from another former GQA employee, Mark Allen West.
The conversation guide
GQA provided its skills recognition specialists with “leads”, being the information obtained from consumers who completed the Free Skills Review or otherwise provided their contact details to GQA through the GQA website, and instructed these sales representatives to contact these consumers by telephone and email.
Once GQA sales representatives had the phone number of a consumer, they pursued the lead relentlessly, to use the ACCC’s description put to me. Training materials indicated that “new leads” would be called twice and sent an SMS and an email on the first day; called once on the second day; called once, emailed and sent an SMS on the fourth day; called once and sent an SMS on the sixth day; called once, emailed and sent an SMS during the second week; called once, emailed and sent an SMS during the third week; and called once during the fourth week.
When skills recognition specialists managed to speak to consumers, they were given a script to follow (conversation guide). Its content is revealing. It read:
Hi [Callers name if known] this is [Agent name] calling from Get Qualified Australia, how are you? Important to listen to response and acknowledge.
I’m getting back to you with regards to your [online or via phone or other means] enquiry into gaining a qualification for yourself through Recognition of Prior Learning (RPL).
That’s great, so just a little bit about myself and GQ Australia. I am the Skills Recognition and RPL Specialist here at Get Qualified Australia.
GQ Australia specialise in recognising the work experience you HAVE ALREADY UNDERTAKEN and assisting you get a Nationally Recognised Qualification.
Essentially, if you have ENOUGH of this experience and you are ABLE TO PROVIDE CURRENT evidence to back this up, you MAY be able to gain a Nationally Recognised Qualification, without having to do any classroom work, wasting time and effort or study. Does that make sense? Great!
•is there any particular area/qualification you had in mind that you would like to apply for RPL? (Note: they could advise you of industry or specific qualification, take this into consideration when discussing the below.)
•what is the main reason you are looking at RPL? (licence, Visa)
•are you currently working in the industry?
•tell me a bit about what job(s) you have been doing in the last 5 years. (Get them to expand on day to day tasks - this is so you can start thinking about suitable units)
•do you have any previous qualifications?
•do you manage any staff?
Based on what you have told me, there are a few options I can suggest for you (discuss the qualifications you had in mind – qualification name, descriptor). How does that sound? (see if you can agree on a qualification) Great!
The qualification we have agreed on requires you to submit evidence for [insert the qualification total of units required] subjects. Let’s talk about some types of evidence you can supply:
•Do you have a Resume (don’t ask if they have already submitted this). If not, don't worry I can send you a template to fill in
•Can you get a minimum of two reference letters from current and previous employers?
•Do you have access to copies of any previous qualifications you have obtained?
•Do you have access to your Job Description, Employment contract?
•Do you have access to work samples (Note: if you have an Evidence guide discuss ALL core evidence requirements and some suitable elective requirements If no Evidence Guide then you will need to flick over to training.gov.au looking at ALL core units and suitable electives under the Qualification you are recommending and discuss suitable evidence requirements)
Great, it looks like you'll have no problem providing ALL the evidence required. Let me tell you how it works.
Once you are enrolled, you will be assigned with one of our Customer Service Agents (previously known as facilitators) who will:
•call you within 48 hrs to introduce themselves
•discuss the RPL process
•Guide you on the types and quantity of evidence to collect for each subject to build your Portfolio of evidence for the qualification
•answer any questions
•run through the types of evidence you can supply and
•send you an RPL Kit to complete.
You have 90 days to collect ALL the evidence.
The Customer Service Agent will then send your Portfolio to our qualified Assessors who will review the evidence and advice of any gaps with the evidence supplied. The assessor may phone you to discuss your experience and may request additional evidence or information from you.
Once the Assessor is satisfied that ALL evidence has been supplied, they will sign off on your Portfolio and you will receive your Qualification within 2-4 weeks from this point.
How does that sound [Callers name if known]?
Excellent, now in terms of pricing, the total cost is [$Qual.Price].
If the client asks for a discount you could say
We are running a promotion until the end of the month whereby if you pay in FULL, you can get 20% off; or you can pay by payment plan and get 10% off. All you have to do is put down a deposit and pay the remaining balance over weekly, fortnightly or monthly payments over 90 days. You can also claim some money back as a tax deduction.
To get you started, all I need know from you is to take payment. Would you like to pay in full or via payment plan? We accept Visa, Mastercard or American Express. (If they still object look at Objections Handling Process)
If paying by card following below:
Can I get the long number?
Expiry Date?
Confirm course cost and amount taken
The total cost of RPL for [qualification name] is [$Qual.Price]. I have taken a deposit of [$Dpt] and schedule the remaining to be paid, interest free, over [weekly fortnightly or monthly] payments. Is that correct?
You will shortly receive via email a receipt and can view our Terms and Conditions on our website gqaustralia.com.au
Areas covered by our Terms & Conditions include:
•All documents stored safely
•Recognising other qualifications giving Credit Transfer
•Plagarism
•90 days
•100% Money Back Guarantee
Congratulations on your enrolment! Your Customer Service Agent will be in contact with you within the next 48 hrs. You will shortly receive an email from me with an attachment. Have a look at this ready to ask any questions when your Customer Service Agent calls.
The focus in this conversation guide was on documentary evidence: résumés, reference letters, formal qualifications, job descriptions and employment contracts. Although work samples were mentioned, the topic was not dealt with in detail. Further, there was no real explanation of what a work sample might be. This emphasis meant that after speaking with a GQA skills recognition specialist, and after agreeing to use GQA’s services and making substantial payments to GQA, many consumers had very little understanding of what the RPL process entailed.
Moreover, as I have said, GQA did not provide scripts for each of the more than 500 qualifications offered by it as there were too many variables. Accordingly, even if the skills recognition specialists had attempted to explain the particular evidence that might be required, they only had the information from training.gov.au. In the absence of industry knowledge which might inform an understanding of the specific units of competence, it was unlikely that this explanation would provide real assistance.
GQA’s approach to objections handling
Conversations with customers did not always go according to the conversation guide. Accordingly, skills recognition specialists were provided with an objection handling guide to assist in overcoming objections from consumers.
GQA instructed its skills recognition specialists to tell customers who wanted to have “a think”:
I completely understand, this is something that’s going to change your future, for the better. However, there are limited places allocated to each assessor, meaning that once those places are gone we can’t be sure of when an assessor will next become available.
They are only able to take on so many clients at one time, for your specific qualification we do have assessors available now that is, but I can’t guarantee that would be this case next week or next month, meaning you may have to wait longer to be assessed if you chose to put this on hold.
This was not true. Places were not limited.
The objection handling guide also provided a response for the query: “What if I can’t supply all the evidence”:
That won’t be a problem. We are able to help you every step of the way. Our aim is to get you the qualification, we don't benefit from you not achieving it. So if you aren’t able to supply some of the evidence required, then there are options such as e-learning or gap training available which may come at an additional cost however we are still up to 50% cheaper than some other colleges.
GQA’s approach to consumers who found themselves unable to provide evidence in support of the qualification was less benevolent than the objection handling guide would suggest. Further, in most cases, GQA benefited whether or not consumers received a qualification, given the restricted operation of the 100% money back guarantee. GQA retained the contract price even when consumers had changed their mind immediately and had not received any services.
Further, in response to complaints about price, the objection handling guide recommended the following responses:
After speaking with my Manager they’re willing to offer you a X% or $X off the qualification. However, this only applies for today, meaning that it can’t be honored if you call back in a week’s time and want to enroll then.
OR
The reason our fee’s are what they are, is because we use only the best RTO’s that are available. Meaning you receive the qualification a lot quicker than you would with another company. Our assessor’s are able to provide one-on-one customer contact with you throughout the whole process, again something I don’t think other companies can say they offer. We pride ourselves on delivering, meaning if we say you qualify for X qualification that is what you will receive. That’s the beauty of us being able to offer the ‘money back guarantee’ I think we are the only company in Australia that actually offer that.
[sic]
The time limited discounts were a way of pressuring consumers into sales. As the case of consumer MK has demonstrated, they were effective in achieving that aim.
In relation to the second of these responses, the reference to the 100% money back guarantee is not qualified in any way. The effect of the suggested response is that any consumer who was told by GQA that they were eligible for a qualification and did not receive it would be eligible for the 100% money back guarantee. It is also apparent that GQA was holding itself out as being able to assess consumers’ eligibility (“if we say you qualify … that is what you will receive”).
GQA’s sales tactics
It is apparent that GQA’s staff used the scripts GQA provided to them and adopted consistent sales tactics to pressure uncertain or wavering consumers into sales.
GQA did not undertake a thorough review of eligibility
GQA’s most notable sales tactic was to enrol consumers without confirming that they had the required documents or adequately explaining the RPL process. It was Mr Wadi’s evidence that before about May 2014, consumers’ eligibility for RPL assessment was assessed by qualified assessors, rather than skills recognition specialists. That is, the same person who would assess an applicant’s portfolio of evidence to see if the evidence was sufficient, current and authentic would speak to the consumer before enrolling them.
There were advantages for GQA in the process which was adopted after May 2014, especially given the approach taken by GQA to refunds. Enrolling candidates without confirming that they had all of the required documents or experience increased the number of enrolments and thereby, GQA’s revenue.
It was also useful for GQA to be able to offer the 100% money back guarantee in these circumstances. Customers were more likely to enrol with GQA on the basis that they would not lose out if they did not obtain a qualification.
GQA and Mr Wadi appreciated those advantages, as can be seen from a January 2016 email from the Contact Sales Manager, Tamsin Leigh, to other members of the GQA team regarding the enrolment of electrotechnology applicants:
After a discussion with Adam, effective immediately we are able to enrol Electrotechnology applicants without all there [sic] required documents. Make sure you are asking the questions and if they verbally communicate that they can provide what is required we don’t necessary [sic] need this before they enrol.
We are going to try this out and if it works then it will increase your sales massively.
We can verbally say to them on the recorded line, that they could be eligible for a refund if they don’t qualify. This will come off your stats and you obviously won’t get paid the commission for it.
This will help get a few over the line that maybe struggling to get the documents prior to enrolling.
GQA kept in constant contact with prospective consumers
In addition to the phone calls made by skills recognition specialists to individual customers and the text messages and emails the skills recognition specialists sent to them, GQA would also send ad hoc bulk text messages to consumers who had expressed initial interest but had not taken up its services. These text messages frequently offered time limited discounts. Sometimes, GQA would send multiple text messages in a week to promote a particular discount.
GQA suggested that there were limited spaces
In its conversations with consumers, GQA frequently suggested that enrolments were limited where consumers were wavering. In the words of GQA’s sales manager:
… The assessor availability is to encourage the customers to enrol on the phone call as they always want to view information first or are dubious about paying $XXX after one or two phone calls, we have a great product that sells itself however so do other RPL companies at a cheaper price. Creating urgency in our sales pitches is needed to close the sale, otherwise we will never be close to the targets that have been set. If we can create “urgency” with a reduced price if enrolled today that may help however I fear you may still suffer the same complaints. These issues are always arising so I think we need to decide whether we are sales or customer service.
The technique of suggesting that enrolments were limited was calculated and deliberate, and was intended to persuade customers who wanted more information or were uncertain about the price to commit to GQA. The technique was an integral part of GQA’s business model.
This can be seen in an exchange between a skills recognition specialist and DH:
DH: It’s a – it’s a lot of coin to come across with, you know.
GEMMA: Yeah. Yeah, sure. No. We understand that. That’s why we offer the payment plan and – as well, but I’ll just look and see how many spaces are left with the facilitators, because we can offer discounts on trade qualifications dependent on space. I mean, with regard to – have you got deposits available to yourself at the moment, or would it depend, obviously, how much it is, first?
[… ]
GEMMA: Yep, perfect. Sorry to keep you. So I’ve got the best option that we would be able – so the maximum discount we’d be able to offer. There are spaces, by the way. There’s three left for the Certificate III level with the facilitators we’ve got for that trade industry, so that’s the good news, first of all…
[…]
DH: Okay. Well, when does your course – I mean, I suppose, it doesn’t really start, does it ... does it start. I mean, I’m – I can’t give you a decision right now. I do need to speak to my – my wife, and but … I understand…
[...]
GEMMA: Well, as I said, at the moment, there’s three spaces left, so we could ---
DH: I ---
GEMMA: --- have them three spaces fill up today.
DH: I know.
GEMMA: They could fill up by the end of the week. We could still have one left next week, but it depends on ---
DH: Sure.
Similarly, in exchanges between VM and skills recognition specialists, VM was told that spaces were limited:
ARRAN: Well, look, mate, what I can do is I can send you out the details if you like ---
VM: Let me …
ARRAN: --- for the qualification. Okay. So you can – what I will do is I will send you out our process of how it works, okay, and I will send you the details for the Certificate III in Plumbing. Okay. So you can just have a read through it and speak to your partner if it is something that you’re looking to go ahead with. Then we can, you know, get the ball rolling because last time I checked with the assessor I think there was around four or five spaces available and that will probably be gone by Monday. So, look, I can send you through the details, anyway. Just have a look through and then, you know, I can catch up with you ---
VM: Okay.
ARRAN: --- on Monday. Is that all right? Okay, mate.
And, in a subsequent discussion, the issue arose again:
MR DAVIS: So what I could do for you now is secure the place for you. With your deposit, how did you want to pay that? By Visa or MasterCard.
VM: ..... speak to ..... tonight and you can call me by Friday or next Friday.
MR DAVIS: Okay. Is she paying for it for you, is she? Is your ---
VM: That’s too early.
MR DAVIS: All right. Next Friday it won’t be available.
VM: .....
MR DAVIS: I can give you a call tomorrow. We’re very low on spaces. That’s all. So the ---
VM: Sorry?
MR DAVIS: How – do you mind me asking why? Unfortunately, it won’t be available then. Do you mind me asking why it would take you that long to speak to your wife?
VM: Yeah. It should be okay. Just give me – Wednesday or Thursday. Just give me enough – at least a week.
MR DAVIS: Yeah. No problem. Yeah. As I said it won’t be available next week. We have … here which is we partner with 26 RTOs in Australia, okay. Each RTO will take on certain applicants for plumbing. This plumbing qualification was meant to close yesterday, okay, due to an overload of applicants. It will re-open in six months’ time again. Okay. But it is due to close tomorrow evening. Okay. If you feel that you can’t afford it yourself, we do have a third payment option where we have a partner company called zipMoney. Okay. They would pay in full for you and you would be able to pay them back completely interest free.
VM: Well, I think if you call me tomorrow afternoon ---
In fact, there were not limited places allocated to each assessor. Mr Wadi’s evidence was that there was no limit set by the RTOs and no limit set by GQA on the number of customers it would take on for a given qualification.
GQA offered discounts which were said to be limited by time or enrolments
GQA also offered consumers discounts which were apparently limited by time, or related to the number of enrolments, or both. As I mentioned before, GQA’s sales manager acknowledged in an internal email that these discounts were intended to create a sense of urgency. She also acknowledged that the strategy of pressuring consumers to enrol by offering time limited discounts was likely to lead to complaints. Again, it is apparent that time limited discounts were an integral and systemic part of GQA’s sales tactics.
For example, DH’s facilitator offered a time limited discount that was said to be available because of the number of spaces left:
GEMMA: …. So I’ve got the best option that we would be able – so the maximum discount we’d be able to offer. There are spaces, by the way. There’s three left for the Certificate III level with the facilitators we’ve got for that trade industry, so that’s the good news, first of all. Second good news – the manager can do a discount off it. Again, this is because of how much space within the facilitation team, so the most we’d be able to go down to is a $500 discount, so that would bring the qualification down to 3200. Normally we only do 50 per cent deposits when they’re on a payment plan; however, we can also reduce that down to 25 per cent.
[…]
GEMMA: --- but I’ll just put somewhere in the email, obviously, what we’ve offered you. Obviously, any discounts that we offer can only last until the end of that week, so at least you’ve got until ---
DH: Yes.
GEMMA: --- Friday. You’ve got to talk to wife – the – obviously, what they want to do. If it’s a lot of information ---
Further, JR was told:
BRUCE: Yeah. Okay. Because what we aim to get you – we basically aim to get you the qualification within two to four weeks then. Now, obviously the course is $3000, however for the rest of this week we are able to 10 per cent off so for any enrolments made this week, between today and tomorrow, we can offer $300 of that … qualification. So $2700 for yourself, sir. You can – it doesn’t need to be paid in full. Obviously if you’re able to pay it in full that is the easiest option but if you would prefer we can offer an interest free payment plan to allow you to spread the cost. So you place a deposit to secure your spot, the cheaper rate, and then the rest we’ve done on an interest free payment plan.
[…]
BRUCE: No worries. I will send you the email now, sir, and hope I catch up with you. Actually we’ve got that offer running today or tomorrow so if you are, you know, interested in getting the discount rate ---
JR: Yeah, no worries. Sounds good.
BRUCE: --- maybe speak tomorrow. Okay.
The time limited nature of the discount was emphasised in a subsequent conversation:
BRUCE: No, I wouldn’t be able to offer the discount on Monday morning.
JR: Yeah.
BRUCE: So, as I say, the promotion ends today. That’s why I was calling you again this morning was to see if you wanted to take advantage of the offer.
JR: The offer is not available on Monday? Yeah, right.
BRUCE: As I said the offer ends today. Yeah. So ---
JR: Yeah, I could if I ---
BRUCE: --- are you in a position today to put a deposit down today and we could secure you a spot or I can go – yeah, as I say, sir, if you want to leave to Monday we can do but I just wouldn’t be able to, unfortunately, offer ---
Further, MK was told:
CHRIS: So them, with that – with that then, you know, you will be – you will be issued a nationally recognised qualification by the college. Now, you came to us the very last day of the month which is – you know, we’re doing offers all this month in September. So it will be 20 per cent discount for full payment on it and 10 per cent discount for a payment plan. So you won’t pay the full price if you enrol today at all.
MK signed up because he did not want to miss the discount, although he felt unprepared and rushed.
Further, AS was also offered a time limited discount:
GARY: … after speaking to you last week, I wanted to follow up regarding those trade certificates that we spoke about, okay. You probably noticed already, but you would have gotten a text message there on Wednesday regarding a $500 discount, okay.
AS: Yes, yeah.
GARY: You’ve received that message, yeah?
AS: Yes, I have received that message. Yeah.
GARY: Good. Okay. Now, today is the last day, so as of Monday and next week, prices go back up to full price.
AS: Yeah.
GARY: So if you wanted to enrol and secure that discount, you would be required to make a deposit and then we can actually get the ball rolling for you.
JA was also offered a time limited discount:
PAT: Yeah, so ... the only reason why I’m really, like, going through all this here with you is purely because we can’t offer taking off a discount for more than a day. That’s the sort of thing, so it’s really down to you when you want to get started, but we can’t honour, like, having administration costs if – if you’re not going to actually take it up in the same day.
GQA emphasised the 100% money back guarantee and consumers’ eligibility, and provided very little detail about the requirements of each course
The skills recognition specialists adhered closely to the overarching message articulated in the conversation guide and the objection handling guide during telephone and email communications with consumers. They repeated the 100% money back guarantee representation and advised consumers that they were eligible for and could obtain a qualification from RTOs affiliated with GQA using the RPL process, thereby making the eligibility representations.
In the course of discussions with consumers, skills recognition specialists also provided simplistic or incomplete information to the consumer about the RPL process, the evidence required to support a RPL application and the units of competency for particular qualifications. Skills recognition specialists also failed to make proper inquiries of the consumers as to their individual background and experience and failed to inform consumers about key terms and conditions of GQA’s standard form consumer agreement.
This pattern of behaviour was an inevitable outcome of the fact that GQA advertised its services in a misleading way. Skills recognition specialists were not experienced in RPL and had very little training in RPL, so that they were effectively relying on the same material which was available to consumers as the source of their so-called “expertise”. Further, the pattern of behaviour was manifested by the fact that skills recognition specialists were trained in the use of the conversation guide and the objection handling guide, and they had significant incentives to make as many sales as quickly as possible.
Consumers who agreed to use GQA’s services were usually required by GQA to make full payment of GQA’s fees (or in some cases, to make a partial payment with a payment plan) before GQA would assist them to compile a portfolio of evidence and to make their RPL application. GQA provided credit facilities to assist consumers.
Further, GQA imposed a strict requirement on its customers to make the payment of fees in full before any application for a qualification based on RPL was submitted to the relevant RTO.
Further, it was only after the consumer made a payment to GQA that GQA provided the customer with an information pack, including details of the relevant competency requirements and the enrolment form. GQA did not provide the customer with a document containing the terms and conditions which applied to GQA’s services. But this document could be accessed from GQA’s website.
GQA’s representations about eligibility
Mr Wadi also knew that the skills recognition specialists were entirely dependent on training.gov.au for information about qualifications, and that the entirety of their training was to refer them to training.gov.au, as is apparent from the following excerpt from his s 155 examination:
MR LANG: And it’s the skills recognition specialist’s job to identify a qualification for which the customer is eligible and which is appropriate for the customer?
MR WADI: If the customer have not indicated a certain qualification, yes.
MR LANG: What happens if the customer does indicate a certain qualification?
MR WADI: It’s the job of the skills recognition specialist to go through the units ---
MR LANG: Yes?
MR WADI: - - - that makes up the qualification and to make sure that the applicant is able to provide evidence related to the units to deem them eligible to enrol in the process.
MR LANG: How do they do that?
MR WADI: They go either on training.gov, the government website, for every qualification under the AQF, or they could choose to go on our internal system, which is a mirror of training.gov, cause that’s where we pulled the content from, and they go and read every unit of competency to, to make sure that the person is aware what evidence they need to provide for that unit.
MR LANG: I see, and that’s what happens on the phone call?
MR WADI: Yes.
MR LANG: And--
MR WADI: Or at least that’s what I expect them to do on the phone call.
MR LANG: Is there a written protocol that requires the salesperson to do that?
MR WADI: They go through it in the training. Again, as a start-up company, written operational processes is, is not 110 per cent there, but staff are aware of the process. They are trained on the process and we have team managers that have been with the company for a long time to refer to as well.
MR LANG: So is it the case there’s not a written protocol that requires that process?
MR WADI: What do you mean by written protocol?
MR LANG: Well, you’ve set out the steps which the skills recognition specialist goes through when a particular qualification is sought by a customer, yes?
MR WADI: Yes.
MR LANG: And they include going to a website which identifies the units of competence for that qualification?
MR WADI: Mm-hmm.
MR LANG: Is that yes or no?
MR WADI: Yes.
MR LANG: And they read out those units of competence to the customer on the phone, yes or no?
MR WADI: Yes.
MR LANG: Is there a written protocol that tells the skills recognition specialist that that’s what they have to do?
MR WADI: As far as I know the training is the written documented training—
MR LANG: Yes.
MR WADI: --that they go through?
MR RENEHAN: Do they have scripts?
MR WADI: They have scripts that they follow when they are enrolling an applicant before they take any fees, but, because they’re not able to have a script for the qualification, other than the script available on the website, because it differentiates between what qualification and what are the units based on the conversation with the applicant.
MR RENEHAN: So are you saying that there’s no script for this first conversation because there are too many variables, if you like?
MR WADI: Correct, so matching, yeah.
MR RENEHAN: And what you say is that you provide or your company provides training as to what they should do but there are no scripts?
MR WADI: Correct.
MR RENEHAN: Is that correct?
MR WADI: Yes.
MR RENEHAN: All right.
MR LANG: And the training as to what they should do involves going to the website for the particular qualification and reading off the units of competence?
MR WADI: Yes.
MR LANG: Anything else?
MR WADI: No.
Indeed, Mr Wadi was of the view that a skills recognition specialist was not able to assess the eligibility of the consumer to receive the qualification following the sales call:
MR LANG: At some point in the conversation between these skills recognition specialists and the customer, a qualification for the customer is identified?
MR WADI: Yes.
MR LANG: Is that a qualification which the skills recognition specialist considers the customer is eligible for?
MR WADI: No.
MR LANG: Why do you say--
MR WADI: Eligible to enrol in that process, not eligible for the qualification.
Mr Wadi later confirmed that he considered that the initial call only determined eligibility to enrol and not eligibility to obtain the qualification.
Mr Wadi was also aware that there was no written instruction for a skills recognition specialist to obtain evidence from a consumer before enrolling them: “They can ask for evidence prior to enrolling them, but it’s not a must, if they feel it’s not necessary”.
That is to say, Mr Wadi devised the scheme by which consumers would “enrol” with GQA, and the training which salespeople received in “eligibility assessment”.
He appreciated that GQA’s sales people were not, in fact, able to assess eligibility to receive a qualification on the basis of their interactions with consumers.
It is apparent that Mr Wadi was an intentional participant in the eligibility representation, with actual knowledge of the matters constituting the contravention.
(d) The refund ineligibility representation
In my view, based upon the evidence, Mr Wadi was also knowingly involved in GQA’s conduct concerning the refund ineligibility representation.
(e) The unfair contract term
GQA imposed an unfair contract term (the refund policy) on consumers, in breach of s 24 of the ACL.
Mr Wadi was aware that where a consumer cancelled before any work was done on their portfolio, GQA would retain the entire fee paid to it for the qualification. He considered that to be an appropriate outcome.
Consistently with this evidence, in June 2015, Ms Sella wrote to Mr Wadi in relation to refunding a customer who had sought to cancel his enrolment before receiving any services, and said:
I know that you have declined the refund for this candidate once before, and we can certainly let this go until he takes legal action and contacts the Office of Consumer and Business Services.
However, I must stress that this chap has taken up plenty of our time and that is not only Aine and myself, but he calls daily and will not stop talking to whoever answers the phone. Are we not better off just getting rid of someone like that and not wasting our valuable time on it. This is definitely going the legal route and I really don’t want people to carry on talking to Fair Trading, the Office of Consumer and Business Services- as one day that will end up with the ACCC. As you know I was at AMI when the ACCC when after Jack Wiseman and the company and they became like a dog with a bone. I don’t want that for you or GQ.
Mr Wadi responded to Ms Sella’s email by saying:
So what did we do wrong to refund him, has he signed the terms and conditions and accepted,
Where did we go wrong to pay a $2700 penalty?
This response demonstrates Mr Wadi’s view that GQA was entitled to retain 100% of payment made, even where a consumer had received no services whatsoever.
Further, in August 2015, a representative of zipMoney, an entity which provided credit to GQA students, wrote to GQA about GQA’s policy of charging 25% for administration when customers cancelled. He observed “a $675 fee for a customer who cancels 1 day after they enrolled for the course is probably bordering on unreasonable ... The time to cancel should be factored in when applying the 25% cancellation fee ... We will be monitoring this closely as this category is a significant risk both for GQ Australia and zipMoney”. Mr Wadi responded to this email by saying “I guess we now have a policy in place and we need to stick to it”.
In my view, Mr Wadi was an intentional participant in instituting the refund policy and he was knowingly involved in implementing that policy in a way which was unfair to consumers.
(f) Unsolicited consumer agreements
Mr Wadi appreciated that the purpose of the Free Skills Review was to obtain the details of consumers, so that they could be contacted by GQA, and was not, as it purported to be, an assessment tool.
In January 2015, Mr Wadi engaged in internal discussions as to whether to institute a cooling off period, when a meeting took place “to brainstorm and determine a procedure and handling policy for requests relating to refunds, extensions, cancellations and applications on hold”. The idea of a short cooling off period (which is required by the ACL) was vetoed by Ms Sella, on the basis that “This may open a whole new can of worms; I think that opens us up for even more actual refunds. The ones we are getting now are being told they cannot have a refund; it is possible for us to keep them on board”.
No cooling off period was introduced by Mr Wadi. As an inadequate (and noncompliant) substitute, from at least 17 December 2015 the “Refund Policy” provided that “Within the first 7 days, an applicant can submit a refund request to the GQA Refunds Department where a decision will be made under GQA’s Discretionary Guidelines within a 4 week period. If the refund request proceeds, there will be a 25% administration fee applicable to the total cost plus any transaction processing fees”. Requests determined under the “Discretionary Guidelines” were refused, as can be seen from the experiences of MA (who enrolled on 14 June 2016 and sought to cancel the same day when he realised he had misunderstood the nature of GQA’s services) and MK (who enrolled on 30 September 2016 and sought to cancel the same day because he was sceptical about GQA’s ability to deliver a formwork qualification using RPL).
By approving the Free Skills Review, and by failing to introduce a cooling off period when the issue was raised in a meeting facilitated by him in January 2015, Mr Wadi made himself an intentional participant in the scheme by which GQA obtained customer details to make unsolicited calls to consumers (who had provided those details for the purposes of an assessment).
(g) Unconscionable conduct
GQA engaged in a system of conduct or pattern of behaviour which, in all the circumstances, constituted unconscionable conduct in breach of s 21 of the ACL. The system had the following features:
(a)GQA enticed consumers to enter into agreements under which they paid substantial sums of money to GQA by making the false and misleading representations about its services.
(b)As set out above, GQA systemically contravened unsolicited consumer agreement provisions contained in the ACL by using the ruse of a free assessment to obtain consumers’ contact details. In this regard, it should be noted that these provisions were included in the ACL with the purpose of addressing the information asymmetry between the supplier and consumer, the incentives for unfair conduct and the impact of unfair conduct given the added vulnerability or disadvantage faced by consumers in the context of unsolicited sales.
(c)Skills recognition specialists were not experienced in RPL and had very little training in RPL, so that they were effectively relying on the same material which was available to consumers as the source of their “expertise”.
(d)GQA trained its skills recognition specialists in the use of the conversation guide and the objection handling guide.
(e)GQA provided its skills recognition specialists with significant incentives to make as many sales as quickly as possible.
(f)GQA usually required consumers who agreed to use GQA’s services to make full payment of GQA’s fees (or in some cases, to make a partial payment with a payment plan) before GQA would assist them to compile a portfolio of evidence and make their RPL application. GQA provided credit facilities to assist consumers.
(g)Further, GQA imposed a strict requirement on its customers to complete the payment of fees in full before any application for a qualification based on RPL was submitted to the relevant RTO.
(h)It was only after the consumer made a payment to GQA that GQA provided the customer with an information pack, including details of the relevant competency requirements and the enrolment form. GQA did not provide the customer with a document containing the terms and conditions which applied to GQA’s services. This document could be accessed from the GQA website.
(i)GQA often failed to respond to customer concerns and correspondence in a reasonable time or at all and ultimately failed to obtain the promised qualification for many of its customers.
(j)In addition, GQA relied on an unfair contract term (its refund policy) to deny refunds to consumers, contrary to the promised 100% money back guarantee.
(k)Finally, notwithstanding the matters set out above, GQA’s policy was to take debt recovery action against consumers who wished to discontinue their relationship with GQA and sought refunds in accordance with the 100% money back guarantee.
Mr Wadi had close oversight over every aspect of GQA’s operations.
For example, in April 2016 when Mr West worked at GQA, Mr Wadi regularly walked around the office (which was contained in one floor) and spoke regularly to staff, in particular the Chief Operating Officer (who was in charge of the sales department) and the head of marketing. He was hands on, and engaged regularly on operational matters. GQA’s Head Assessor, LR, raised concerns with Mr Wadi and GQA’s sales manager about the sales tactics used by the skills recognition specialists. The sales manager, Ms Robertson, responded to LR and Mr Wadi by saying that it was necessary to create a sense or urgency to meet sales targets and that GQA needed to decide “whether we are sales or customer service”. It is also apparent from LR’s evidence that, during the period of her employment from March to May 2016, Mr Wadi was closely involved in the business.
Further, and by way of example, in June 2016 Mr Wadi explained that a new business improvement manager “will be working closely with me to get an idea of the big picture, every operation and priority projects”.
The evidence shows that Mr Wadi was closely involved in each of these elements of the system of unconscionable conduct:
(a)In mid-2015, the process of enrolment changed at Mr Wadi’s behest for all qualifications except electrotechnology so that consumers paid for the course after speaking to a skills recognition specialist and before providing any evidence. Before that time, consumers paid after submitting documentary evidence which was considered by a qualified assessor. GQA and Mr Wadi appreciated that there were advantages to enrolling consumers before confirming that they had documents supporting their eligibility, as can be seen from a January 2016 email from the Contact Sales Manager to other members of the GQA team regarding the enrolment of electrotechnology applicants:
After a discussion with Adam, effective immediately we are able to enrol Electrotechnology applicants without all there [sic] required documents. Make sure you are asking the questions and if they verbally communicate that they can provide what is required we don’t necessarily need this before they enrol.
We are going to try this out and if it works then it will increase your sales massively.
We can verbally say to them on the recorded line, that they could be eligible for a refund if they don’t qualify. This will come off your stats and you obviously won't get paid the commission for it.
This will help get a few over the line that maybe struggling to get the documents prior to enrolling.
(b)Mr Wadi was aware that the sales team had daily, weekly and monthly targets. He received reports in relation to these targets and approved the company budget including these targets. He was aware of the justifications for the targets, and the factors considered in determining targets. Ms Sella’s evidence was that Mr Wadi was responsible for setting sales targets.
(c)By his own account, Mr Wadi had spent a lot of time and paid a lot of attention to the sales team in the months prior to March 2016, and had “been working very closely with Andy and Tony to build strong and dynamic teams”.
(d)In communications with recruitment agents, Mr Wadi expressed the preference to recruit sales managers who were not from the education industry but who had a solid sales record.
(e)In March 2016, Mr Wadi delegated his support of the sales department to Mr Mikati, so he could focus on the expansion of the marketing department. By at least April 2016, Mr Wadi was closely involved in the marketing department (demonstrated by his regular interactions with the head of marketing, which was the subject of the evidence from Mr West).
(f)However, Mr Wadi continued to have a lasting impact on the sales group, since he helped develop the employment induction plan for skills recognition specialists. He was also aware of the conversation guides and scripts. Mr Wadi retained his oversight of the induction plan until at least June 2016.
(g)The training materials focused heavily on Mr Wadi’s motivations in starting GQA.
(h)Mr Wadi continued to train new employees in customer service, the customer journey, and advanced RPL and VET (Vocational Education and Training) until at least August 2016.
(i)Mr Wadi was aware of the use of time limited discounts as a “regular marketing strategy” and that a standard discount of 20% was always offered for full payment upfront.
(j)Mr Wadi was aware of the practice of encouraging customers to pay immediately because there were a limited number of places, and concerns had been raised about this practice with him. He was also aware that there were not limited places allocated to each assessor. Mr Wadi’s evidence in the s 155 examination was that there is no limit set by the RTOs and no limit set by GQA on the number of customers it will take on for a given qualification. Although he had concerns about the practice, he took no action to stop it because he had not received major customer complaints about it.
(k)Mr Wadi was aware that the documents explaining the units in each qualification were only sent after the consumer had enrolled and made payment. Ms Sella’s evidence was that Mr Wadi was responsible for putting in place this structure, and made the relevant rule.
(l)Mr Wadi made the decision that facilitators should not be required to have qualifications (either in training or assessment or in the technical areas in which GQA offered qualifications).
(m)Mr Wadi designed the training for facilitators.
(n)Mr Wadi decided on the commissions payable to facilitators for lodging portfolios.
(o)Mr Wadi received monthly reports on whether facilitators were lodging portfolios efficiently. He communicated with the facilitators about their results.
(p)Mr Wadi had concerns about compliance in terms of the skills recognition process (that is, the work done by facilitators) for complex trades such as plumbing and electricity, but did not act on those concerns.
(q)By May 2015, GQA’s learning and development manager had recommended to Mr Wadi to engage remote assessors to assist with qualifications which were high risk or involved technical skills and in-house staff were not qualified to provide advice, because call centre staff (facilitators) often had candidates that needed more detailed information. He did not take action to implement this recommendation.
(r)Also by May 2015, Mr Wadi was aware that GQA did not have affiliated RTOs for every qualification it had sold, that many portfolios had exceeded 90 days, that portfolios had not been reallocated after facilitators had left, that not all facilitators had the right number of portfolios in their name in their specialisation, and that new facilitators had not been trained.
(s)By October 2016, Mr Wadi was aware that many consumers who had enrolled in trades qualifications were unable to compile their evidence in the allotted 90 day period.
(t)Mr Wadi kept himself informed about the level of complaints made about the business “to an extent”. The Chief Operating Officer would bring individual complaints to Mr Wadi’s attention if he could not make a decision or he was not sure what decision to make. But it is clear that by mid-2015, Mr Wadi was aware of the level of complaints about the business. In October 2015, Mr Wadi emailed Ms Sella and Ms O’Malley and said “I’m sick of seeing complains [sic] and refunds, what is wrong here. No sales, refunds and complains [sic] is all what I have been hearing in the last three month and I’m extremely frustrated”.
(u)Mr Wadi was also informed by the Chief Operating Officer if an excessive number of consumers complained to NSW Fair Trading or sought relief from tribunals.
(v)Further and relatedly, by January 2016, Mr Wadi knew that negative reviews of GQA were affecting GQA’s ratings on external sites. The marketing director of GQA proposed to provide incentives to consumers to place positive reviews online to offset negative reviews. Mr Wadi sent an email saying:
We need to have full feedback on where we are going wrong in both sales and operations so we can improve on it and reduce unhappy customers.
We need a monthly report on how many refund, on hold, cxld customers we had in one month, this is the way we get CLEAR customer satisfaction, we are not sitting on 4 stars if we are honest with ourselves, we are working on pushing people to positively rate us and our effort is what is getting us the 4 stars. The clear satisfied or unsatisfied customer experience will always be in Renna’s monthly report.
(w)Mr Wadi approved the complaint resolution process.
(x)Mr Wadi was clearly aware that there were issues with customer service and consumer complaints arising from GQA’s systems. On 2 February 2016, Ms Markson and Ms O’Malley met with NSW Fair Trading to discuss the 31 complaints which had been received by NSW Fair Trading in the previous six months. Mr Wadi had actual knowledge of each of these issues following the meeting. He circulated the minutes of the meeting with NSW Fair Trading to selected staff, with an acknowledgment that “we have never focused on customer satisfaction, and kept our eyes on Leads and Sales, till recently Amine highlighted to me when he joined the company back in October that the money is in the operation side and not the enrolment stage of the customer journey”. Further, Mr Wadi said following the meeting that a continuous improvement committee would be established and he would head that body. However, GQA did nothing to rectify the deficiencies in those systems.
(y)On 4 February 2016, Mr Markson wrote to Mr Wadi explaining that the skills recognition specialists’ representations about refunds and the 100% money back guarantee were leading to a very large volume of customer complaints. However, Mr Wadi did nothing to modify the guarantee which he had created. It was not until August 2016, when the freezing order proceeding commenced, that GQA abandoned the 100% money back guarantee.
(z)Mr Wadi knew about the number of complaints but dismissed many of them. For example, in about March 2016, Mr Wadi told Mr West in Mr West’s interview that GQA had quite a lot of negative reviews online about the business and that Mr Wadi wanted those dealt with. Mr Wadi explained that customers weren’t getting the qualifications that they wanted and that Mr Wadi felt that they did not qualify for those qualifications. In another example, Mr West told Mr Wadi in April 2016 that the complaints were very serious and that GQA could be risking action against it by the way it was handling complaints. Mr West asked for a dedicated complaints officer to assist him. Mr Wadi refused, and told him that GQA’s debt collections staff could assist. Mr West told Mr Wadi that it was not good practice to have collections staff handling complaints, and Mr Wadi dismissed this response.
(aa)In April 2016, Mr West left just over two weeks after joining GQA. In his resignation letter, he cited GQA’s amendment of customer records, knowing breaches of Fair Trading Rules, consistently poor determinations on customer refunds where GQA did not meet its service obligations, and undertaking collections activity against customers where there had been a major defect in the service due to GQA’s fault, and a pervasive attitude that all consumers who complained were liars, scammers or whingers. Mr West said that he was concerned that GQA’s actions were unethical and possibly illegal, and would lead to sanctions by regulatory bodies and a poor reputation. Mr Wadi dismissed Mr West’s concerns, saying, “Let’s not waste any more time on this as I truly believe he got the wrong idea of what we want for our customers and most of what he is saying below is not true”.
(bb)On 12 July 2016, Mr Wadi was told by an electrotechnology assessor that the practice (suggested by him) of enrolling electrotechnology candidates without verifying their credentials was a waste of time, and had led to money being taken from consumers for courses for which they were not eligible. Mr Wadi did not take any action to change GQA’s basic structure, which he had devised, and which enshrined this practice.
(cc)GQA employed two staff whose job it was to collect on unpaid instalments. It is telling of Mr Wadi’s attitude towards GQA’s customers that when Mr West recommended that he employ a dedicated complaints officer, Mr Wadi responded that Mr West could use GQA’s debt collectors for this role.
As is apparent from the matters set out above, Mr Wadi was intimately involved in devising and implementing the marketing scheme, sales tactics and GQA’s business strategy.
There can be no doubt from the materials set out above that Mr Wadi’s close involvement in every aspect of GQA meant that he was an intentional participant in each aspect of GQA’s contravening conduct (save and except specific unconscionable conduct in relation to some individual consumers) and that he had actual knowledge of the matters constituting the contravention.
(h) Unconscionable conduct towards individuals
GQA engaged in unconscionable conduct towards four individual customers (WJ, GF, JA and AV) in breach of s 21 of the ACL. The ACCC has contended that Mr Wadi was knowingly involved in the contraventions against WJ and GF, but I do not accept these contentions. In my view, he is only liable in relation to the systemic deficiencies giving rise to the systemic unconscionable conduct engaged in by GQA.
Mr Wadi remembered WJ’s complaint and had concluded, on the basis of his review of the emails between Ms Markson and MJ and his review of the call recording, that WJ was not entitled to a refund. Mr Wadi’s view having listened to the call recording and reviewing the correspondence was that WJ’s case was an appropriate application of GQA’s policies, including the refund policy. Mr Wadi undertook to revisit WJ’s case in August 2016, but because GQA engaged external debt collectors to make demands for payment from WJ in November 2016 and WJ had not received a refund by December 2016, it may be assumed that Mr Wadi concluded based on his further investigations that WJ was not entitled to a refund. I do not consider that this involvement of Mr Wadi gives rise to the relevant accessorial liability.
Further, although Mr Wadi did not specifically remember GF’s complaint, he agreed that he could have received GF’s letter and handed it to his Chief Operating Officer to deal with. Mr Wadi concluded when the case of GF was brought to his attention that GF had failed to provide sufficient evidence to enable GQA to qualify him. Although Mr Wadi said in August 2016 that he needed to look at the case in more detail, it may be assumed that once he had looked at the case in more detail, Mr Wadi concluded that GF was not entitled to a refund, since GF had not received a refund by January 2017. But again, I do not consider that this involvement gives rise to the relevant accessorial liability.
(i) Conclusion on Mr Wadi’s liability
In summary, and on the basis of the foregoing matters, Mr Wadi aided, abetted, counselled or procured and was directly and indirectly knowingly concerned in each of GQA’s contraventions of the ACL, being:
(a)misleading or deceptive conduct and making false or misleading representations by making the 100% money back guarantee representation, the skills review representation, the eligibility representation and the refund ineligibility representation;
(b)the inclusion of an unfair contract term (the refund policy) within the meaning of the ACL;
(c)GQA’s practice of entering into unsolicited consumer contracts with consumers identified through the Free Skills Review process, without complying with the ACL in relation to those contracts;
(d)GQA’s systemic practice of unconscionable conduct, but not in relation to the individual customers that the ACCC has identified.
CONCLUSION
I will hear further from the parties as to the orders to give effect to these reasons and for the further conduct of the matter.
I certify that the preceding four hundred and sixteen (416) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach. Associate:
Dated: 23 June 2017
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