Australian Competition and Consumer Commission v Phoenix Institute of Australia Pty Ltd (Subject to Deed of Company Arrangement) (No 3)

In the matter of Australian Competition and Consumer Commission v Phoenix Institute of Australia Pty Ltd (Subject to Deed of Company Arrangement) (No 3), the court was tasked with determining the appropriate pecuniary penalties to be imposed on the respondents, Phoenix Institute of Australia Pty Ltd and CTI, for their unconscionable conduct during the supply of online VET courses. The court also considered the issue of non-party redress for students who completed one or more units of study with Phoenix and compensation for the Commonwealth due to the respondents' unconscionable conduct. The respondents had previously been found liable for unconscionable conduct under the Australian Consumer Law (ACL) in Australian Competition and Consumer Commission v Phoenix Institute of Australia Pty Ltd (Subject to Deed of Company Arrangement) [2021] FCA 956.

The court assessed the appropriate penalties by considering the gravity of the respondents' conduct, which was found to be grossly exploitative, dishonest, and lacking in respect for the dignity and autonomy of the vulnerable consumers targeted. The court found that the conduct of the respondents was informed by a desire to maximize profit over consumer engagement and a callous disregard for the suitability and eligibility of consumers. The court held that the respondents engaged in unconscionable conduct through their marketing and enrolment systems, which exploited reforms to the Commonwealth's VET FEE-HELP loan scheme designed to benefit disadvantaged and vulnerable Australians. The total penalties imposed on the respondents exceeded $400 million.

Regarding non-party redress, the court held that it was in the interests of justice to grant redress for the loss or damage likely suffered by the students who completed one or more units of study as a result of the respondents' unconscionable conduct. The court voided enrolment agreements, annulled tuition fee liabilities, and annulled liabilities to the Commonwealth in relation to VET FEE-HELP assistance and loan fees for these students.

In relation to compensation for the Commonwealth, the court held that the Commonwealth was unable to recover any payments for VFH debts from the 11,393 consumers who were enrolled in the Phoenix Online Courses. The Commonwealth, therefore, incurred a debt from all consumers as a result of the Phoenix's unconscionable conduct. The court awarded compensation in the sum of $104,138,195.00.

The final orders included the imposition of pecuniary penalties on the respondents, annulment of enrolment agreements, tuition fee liabilities, and liabilities to the Commonwealth for affected students, and an award of compensation to the Commonwealth. The court also granted liberty to apply and directed the parties to file and serve written submissions in support of their proposed orders.