Idp Education Ltd v Lejburg Pty Ltd
[2015] VSC 650
•24 November 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
List B
S CI 2015 1841
| IDP EDUCATION LTD & ANOR | Plaintiffs |
| v | |
| LEJBURG PTY LTD & ANOR | Defendants |
---
JUDGE: | Judd J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 31 August and 1 and 8 September 2015 |
DATE OF JUDGMENT: | 24 November 2015 |
CASE MAY BE CITED AS: | IDP Education Ltd v Lejburg Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2015] VSC 650 |
---
CONSUMER LAW – Misleading or deceptive conduct – False or misleading representations – Advertisement and promotional material on website – Whether representations made – Whether representations likely to mislead or deceive – Competition and Consumer Act 2010 (Cth), Sch 2, Australian Consumer Law, ss 18, 29(1) – Australian Consumer Law and Fair Trading Act 2012 (Vic) s 12.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr Muller | JRT Partnership |
| For the Defendants | Mr Burger appeared in person and with leave for the first defendant |
HIS HONOUR:
The first plaintiff, IDP Education Limited, is owned by Seek Limited and Education Australia Limited, which in turn is owned by the 38 Australian universities. The second plaintiff, IELTS Australia Pty Ltd, is a wholly owned subsidiary of the first plaintiff, and one of the owners of the International English Language Testing System, known as IELTS.
The IELTS system is jointly owned by Cambridge English Language Assessment, a department of Cambridge University, the British Council and IELTS Australia. Cambridge University has primary responsibility for preparing the test and ensuring its validity and reliability. The preparation of test materials is undertaken in consultation with IELTS Australia and the British Council. IELTS Australia and the British Council are responsible for delivering the test to candidates. The IELTS was first developed by the British Council in 1980. It was revised in 1988 and officially launched in 1989. It is now undertaken in more than 140 countries.
The second defendant, Leon Burger, is the sole director and shareholder of the first defendant, Lejburg Pty Ltd, and its controlling mind. At trial, Mr Burger was self‑represented, and given leave to appear on behalf of Lejburg. He claimed to have some legal training and experience, although the extent of his training and experience was uncertain. He did not hold a practising certificate.
IELTS Australia is responsible for administering and delivering the testing of candidates in four key test areas — speaking, reading, writing and listening. It does so through testing facilities operated by IDP and other third party contractors.
IELTS tests are offered at over 1,000 locations around the world on 48 test dates each year. There are two test formats, IELTS Academic and IELTS General training. Most candidates undertake the test for entry into an academic institution, or for professional recognition. The listening, reading and writing tests are conducted on the same day. The speaking test may be conducted at another time, before or after the other elements.
The users of test results are known as ‘Recognising Organisations’. There are over 9,000 such organisations throughout the world, including universities, employer and professional bodies, and immigration and other governmental agencies. The Department of Immigration and Border Protection in Australia, and immigration authorities in the United Kingdom, Canada and New Zealand are Recognising Organisations who rely on test results. Lawyers seeking admission to practise in an Australian jurisdiction are required to achieve prescribed scores under IELTS testing.
Recognising Organisations require language testing for different purposes, and set their own score requirements. For example, Australian immigration authorities, which require testing for visa purposes, employ test results in quite a different way than do educational and professional institutions. Within a university, different minimum scores may be required by different faculties, and for undergraduate and postgraduate work. A different emphasis on particular aspects of the test may be applied by professional associations, depending on the particular skills required.
A candidate does not pass or fail a test. IDP provides a ‘band score’ for each separate assessment, and an overall average score. Whether a candidate’s score is adequate for a given purpose is a judgement made by the Recognising Organisation deploying the assessment, not the plaintiffs.
The band score ranges from 9 (expert user) to zero (did not attempt the test) for each component. Candidates may prepare or train for the test, although the plaintiffs do not provide that service. Training is provided by third parties, without any endorsement from the plaintiffs. IDP does, however, provide a range of information to candidates, free of charge, to assist them in preparing for the test. This information includes an ‘IELTS Essentials Pack’, containing test tips, and information as to what to expect on a test day. There is also a free 90‑minute class known as the ‘IELTS Master Class’, which provides test information and tips, identifies common mistakes, and provides information on assessment criteria. IDP also provides a free practise test, and information about what other assistance might be available from third parties.
The website
The plaintiffs alleged, and it was not challenged by the defendants at trial, that the defendants established and operated a website, Co‑Assist Legal Information Service, known as CALIS. The defendants did not suggest that Lejburg was not a trading corporation within the meaning of s 4 of the Competition and Consumer Act 2010. The absence of any challenge on these matters was not surprising. The registrant of the website is Lejburg, the first defendant. The registrant’s contact person was the second defendant, Leon Burger. The domain name was calis.com.au. The registrant contact email was [email protected]. The website promoted a service for sale.
On his LinkedIn page, Mr Burger described himself as a director of CALIS. In his background summary, he said:
In Australia I studied a Bachelor of Laws and Bachelor of Accounting at Victoria University in Melbourne Australia.
Mr Burger made other claims involving his presidency of the student union for two consecutive terms, employment history, membership of a political party, and other associations. The evidence revealed that Mr Burger is not admitted to practice as an Australian lawyer. He conceded as much at trial, informing the court that he was unfamiliar with the court’s process, and had only studied a number of law subjects.
The purpose of the website was self-explanatory: to provide those who had undertaken the language test, but were dissatisfied with their score, with a complaints mechanism to assist them to obtain a refund or higher band score. A refund or higher score would be achieved by threatening the plaintiffs with legal proceedings on standardised grounds.
The website invited a defined class of person to ‘Buy English Test Dispute Packages’. The dispute packages were offered for what are described as OET and IELTS English tests. The IELTS dispute package was described as the ‘IELTS English Test Complaints Information Guide’, and could be purchased at a cost of $165. The package was promoted as a means by which test candidates may ‘complain about your IELTS English test results to get your money back or get your mark changed to a higher mark’.
Under the heading ‘Product Description’ was the following information:
This complaints information guide will help you successfully complain about your IELTS English test to get your $330 reimbursed that you paid for your IELTS test OR to get your IELTS test results changed to a 7 or higher.
This statement was later amended to read:
The complaints information guide will help you successfully complain about your IELTS English test result to get your test remarked to a higher result or to get your test fees reimbursed.
As an estimate, we have an 75–85% chance of helping students to get reimbursed all or part of their test fee or get their test remarked to a pass or higher.
The defendants promoted their products by claiming:
We have successfully helped countless immigrants successfully complain about their OET or IELTS test results to achieve a higher result so they can pass or receive financial reimbursement from their OET and IELTS tests they had failed.
Our mission is to help immigrants understand that there are methods of successfully complaining and you do not have to accept a fail in your OET or IELTS test.
Australian Consumer Law can be difficult for you to understand however CALIS understand the Australian Consumer Law and can provide you enough information to present an argument strong enough to demand your IELTS or OET test to be successfully remarked or to get your test application fee reimbursed.
A common scenario
An immigrant has attempted the IETLS English test multiple times (5–12 times) and he does not want their money reimbursed. Rather they want a pass for their IELTS test to gain employment in Australia.
We then provide information to build an argument that the test is conducted in beach [sic] of the Australian Consumer Law. At this stage we then give you information to threaten to execute your complaint in a court or tribunal. Once the IELTS test organizers (IDP Education) or the OET test organizers (Cambridge Boxhill Language Assessment) acknowledge your complaint they will know you have sought information from CALIS.
The test organizers at this stage will most certainly settle the complaint by either reimbursing you the amount you request or remarking your previous test.
Our complaints process has been fine tuned from helping countless students and the test organizers will know when you have sought information from CALIS so they will most likely settle the complaint as they know they will loose [sic] money otherwise.
We help migrants by providing a guided service to make it more cost effective rather than using a lawyer for legal advice. A lawyer providing legal advice will cost around $300 per hour. By providing you with a legal information guide you can do some of the work and save money.
The dispute package included a complaint letter, which could be modified to suit the complainant’s particular circumstances. The website continued:
The complaint letters aim to persuade the testing authority to reimburse your test application fee or to re‑mark your test.
The dispute package also included a guide for making an application to a tribunal or court and the following:
1 Application wording
2 Tribunal fee waiver guidance lines
3 Negotiation letter template once hearing is confirmed
4 Scripted guide to appear at hearing
5Evidence to prove test marking negligence or a consumer trade breach
6 Freedom of information evidence to show marking inconsistency
7 Specific sections of legislation to argue a trade breach
8 Previous court cases to support evidence of marking inconsistency
9ASIC (Australian Securities and Investment Commission) company search extracts
Under the heading ‘Success Rate’ the defendants stated:
Based on the average student that we help. We have about 80–90% success rate to get OET or IELTS English test fee reimbursed. We estimate that there will be a 10–20% chance we successfully get your test re‑marked. Reimbursements are usually [text incomplete]
Under the heading ‘Test Complaint’ on the website, the author asked, ‘Why should you complain about your IELTS or OET test result?’ and continued, ‘Australia has laws to protect you’. Following some introductory material, the author continued:
We understand the Australian Consumer Law and the specific sections that help you complain that:
• Your test results are inconsistently marked
•That the test examiners are required to provide reasons for their marking and a copy of their marking and calculations of your results should be provided to you.
•There ought to be a disclaimer about the high probability of failure.
•That is [sic] is unconscionable to create extra revenue by excessively failing applicants.
Under the heading, ‘How CALIS can help you get your IELTS or OET test results changed to a pass’, there is a subheading, ‘How CALIS can help you’, with the following information:
Our complaints information guide aims to assist you to analyse the legal breaches that OET or IELTS have made.
Once the legal breaches by OET or IELTS are identified. Our complaints information guide assists you to build an argument against OET or IELTS.
The purpose of building an argument against OET or IELTS is that they will not be motivated to change your results based on a mistake in marking, as their goal is to make a profit.
Once we have created an argument where OET or IELTS feel threatened that you will successfully get reimbursed if you apply to a tribunal to be compensated, IELTS or OET will see a financial reason to change your marks to a pass and they do not want to loose [sic] revenue.
The defendants posed the question, ‘Do you believe OET and IELTS excessively fail students?’, and responded:
International students are very vulnerable and usually desperate to complete their IELTS or OET test to gain a skilled job in Australia.
The more applicants that fail their English test, the more profit testing facilities make. The appeals process that testing facilities have are bias [sic] and time consuming. Their complaints process is arguably designed to take such a long time, it becomes easier to simply re‑sit the test.
The good news is that Co‑Assist Information Service have learned all the dirty tricks that testing facilities are using and we can help you get financial compensation or help you get a B or high so you can pass the English test.
We have identified the specific legal breaches and the most efficient method of getting a positive result for you.
The defendants’ website contains particular representations concerning the plaintiffs’ purpose and motivation in providing testing services. For example, under the heading ‘Complaining on your own’, the defendants state:
IELTS and OET tests are a commercial profit making venture. They commonly will not change your mark if you complain via their website form. It is in their best interest to not change your result as they make more revenue by test takers re‑doing their OET or IELTS English test.
Under the heading, ‘Why we provide a complaint information guide?’, the defendants stated:
Many students who attend the OET or IELTS test fail multiple times and the tests are conducted under terrible conditions almost wanting the candidates to fail. … The sad truth is that the more students that fail, the more profit they make.
The defendants’ website relied upon testimonials in the nature of ‘success stories’ to promote the sale of dispute packages. As the evidence revealed, they were wholly fabricated. The defendants did not seek to justify or even explain the testimonials, referring to them as their ‘Achilles heel’.
A testimonial from Hans Gerda Ulrich was published with a photograph image. A search of the image revealed the photo to be that of Bernd Jurgen Armando Brandes, a victim of murder and cannibalism in Germany in 2001. A testimonial from Gupta Agate was accompanied by his photo image. A search of the internet revealed that the photograph was that of Jayant Maru, a student at the University of London International Programme, studying BSc Sociology and Law. The photograph of Sun Lei, who provided another testimonial, was that of an actor, Song Seung Hun. The photograph of Amee Krishnamurthy appears to be that of another person known as Aparna Krishnamurthy from Bangalore. The photograph of Wang Siwen, who provided a testimonial, appears to be that of Janlyn Kor. The photograph of Wang Wing, who provided a testimonial, appears to be that of a Japanese woman taken by photographer, Cedric Bertrand. The photograph of Gao Wuan, who provided a testimonial, appears to be that of Celestine Lee, who works with MMR Solutions in Singapore in the financial services industry.
The defendants did not suggest that any of those persons had in fact made a complaint about a test result. Jason Leigh Parker, the senior audit and investigation manager for IDP, gave evidence on behalf of the plaintiffs. He said that a search of the plaintiffs’ records did not reveal any such candidate or complainant. His evidence on this topic was unchallenged.
Plaintiffs’ test complaint mechanisms
Test complaint mechanisms are available to IELTS candidates. The defendants stated in their website that:
The appeals process that testing facilities have are bias [sic] and time consuming. Their complaints process is arguably designed to take such a long time, it becomes easier to simply re-sit the test.
Under the plaintiffs’ complaints process, a candidate may lodge a complaint about the conduct of the test on a particular day before leaving the test centre. Complaints mechanisms are set out in the IELTS application form, which is completed by every candidate. Candidates are also informed on the test day that if they wish to complain about the conduct of the test they must do so before they leave the test venue. Helen Louise Robertson, an IELTS test day supervisor at Melbourne Polytechnic, gave evidence of the complaints regime on a test day.
There is a second complaints mechanism, available after results are published, known as the ‘Enquiry on Results’. Candidates are informed:
If you are unhappy with your test result, you can apply for a re‑mark (Enquiry on Results) at the centre where you took the test. You must make the application no later than six weeks after the test date. You can choose which test components are re‑marked. There is a fee for this service which will be refunded if your score on any component is increased. Enquiry on Results take six to eight weeks to complete. IDP will re‑mark any candidate’s results where the score for speaking or writing for the speaking or writing component is significantly different from their scores on other components. This is done without application by the candidate.
There are limited circumstances in which fees will be refunded. In addition to a refund, available in prescribed circumstances following an Enquiry on Results, IDP will refund test fees if the candidate withdraws from the test five weeks in advance, or is sick on the day of the test. A medical certificate will be required. If a test centre is unable to conduct the test on the appointed day, candidates may be offered an opportunity to sit the test on another day, or a refund. Sometimes a candidate may be invited to re‑sit a test. But if a test has been conducted and result published, the plaintiffs’ policy is that no refund of the test fee is given. Mr Parker said that the only mechanism for obtaining a different score was through the Enquiry on Results procedure.
The representations
The plaintiffs alleged that the statements made on the website involved conduct by the defendants in trade or commerce in contravention of s 18 of the Australian Consumer Law, and that the website contained false and misleading representations about the attributes of their English language testing system in contravention of s 29(1)(g) of the Australian Consumer Law. Further, they alleged that the website contained false and misleading representations concerning the testimonials, in contravention of s 29(1)(f) of the Australian Consumer Law. The plaintiffs alleged that, by reason of s 12 of the Australian Consumer Law and Fair Trading Act 2012 (Vic), Mr Burger was also guilty of the same contraventions of the foregoing provisions.
Section 18 of the Australian Consumer Law 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).
Note:For rules relating to representations as to the country of origin of goods, see Part 5-3.
Section 29(1) provides:
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:
…
(f) make a false or misleading representation concerning:
(i)a testimonial by any person; or
(ii)a representation that purports to be such a testimonial;
relating to goods or services; or
(g)make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; …
The plaintiffs alleged that the statements fell into three categories of representations, made either expressly or by implication, on the defendants’ CALIS website. The first category related to the attributes of the defendants’ product:
(a)the CALIS IELTS Test Complaints Information Guide will assist a candidate who has failed an IELTS test in either:
(i)attaining a refund from IELTS Australia; or
(ii) attaining a higher band score from IELTS Australia;
(b)the CALIS IELTS Test Complaints Information Guide and/or CALIS has assisted candidates who failed an IELTS test in either:
(i) attaining a refund from IELTS Australia; or
(ii) attaining a higher band score from IELTS Australia;
(c)if the candidate who has failed an IELTS test uses the CALIS IELTS Test Complaints Information Guide, IELTS will most certainly settle the complaint by either:
(i) providing the complainant with a refund; or
(ii) awarding the complainant a higher band score.[1]
[1]Statement of Claim, para 14 (a) to (c), emphasis added.
The second category of representations relate to the conduct of IELTS Australia:
(a) IELTS Australia,
(i)conducts the testing of candidates in a manner which lessens a candidate’s opportunity to achieve a desired band score;
(ii)and does so to improperly increase IELTS Australia’s revenue;
(b) IELTS Australia,
(i)conducts the appeal process, that is an EOR in a manner which lessens an unsuccessful candidate’s opportunity to successfully appeal; and
(ii)and does so improperly in order to encourage the unsuccessful candidate to re‑sit the IELTS test, and thereby increase IELTS Australia’s revenue.[2]
[2]Statement of Claim, para 15 (a) to (b), emphasis added.
The third category of representations concerned the testimonials or success stories. It is unnecessary to set out the pleaded representations in any detail. They were to the effect that the person identified had used the defendants’ product and was assisted in obtaining a refund in some other way. The defendants did not attempt to explain or justify these wholly contrived testimonials. I am satisfied that the representations alleged by the plaintiffs were made. They were false, because the named individuals did not exist, and the individual whose photograph was deployed by the defendants did not use the defendants’ test complaints information guide, or any other related service of the defendants. I am satisfied that the use of the success stories by the defendants involved the contravention by each of them of ss 18 and 29(1)(f) of the Australian Consumer Law.
In respect of categories one and two, the plaintiffs alleged that by making the statements on their website, the defendants contravened the Australian Consumer Law in that:
(a)the CALIS IELTS Test Complaints Information Guide will not assist a candidate who has failed an IELTS test in either:
(i) attaining a refund from IELTS Australia; of
(ii) attaining a higher band score from IELTS Australia;
(b)the CALIS IELTS Test Complaints Information Guide and/or CALIS has not assisted any candidate who failed an IELTS test in either:
(i) attaining a refund from IELTS Australia; or
(ii) attaining a higher band score from IELTS Australia;
(c)if a candidate who has failed an IELTS test uses the CALIS IELTS Test Complaints Information Guide, IELTS Australia will not settle the complaint by either:
(i) providing the complainant with a refund; or
(ii) awarding the complainant a higher band score.[3]
And that:
(a)IELTS Australia does not conduct the testing of candidates in a manner which lessens a candidate’s opportunity to achieve a desired band score in order to increase IELTS Australia’s revenue or at all;
(b)IELTS Australia does not conduct the appeal process, that is an EOR in a manner which lessens an unsuccessful candidate’s opportunity to successfully appeal in order to increase IELTS Australia’s revenue or at all.[4]
[3]Statement of Claim, para 18 (a) to (c), emphasis added.
[4]Statement of Claim, para 21 (a) to (b), emphasis added.
Some of the statements were about future matters, such as the predictions of success in obtaining a refund or increased score. The plaintiffs alleged that the defendants did not, and do not, have reasonable grounds for making the predictions. The defendants did not adduce any evidence of reasonable grounds. The plaintiffs might have, but did not, allege implied representations of present fact, to the effect that the defendants had a reasonable basis for making the predictions. Instead, they relied on s 4 of the Australian Consumer Law, so that the defendants were taken not to have reasonable grounds in the absence of evidence to the contrary.
The plaintiffs also relied on statements that constituted the expression of opinion concerning the plaintiffs’ motivations for profit at the expense of fair testing and appeals procedures. Expressions of opinion do not easily fall within the description of ‘future matters’. The plaintiffs did not rely on implied representations that the opinions were reasonable and genuinely held. Instead, they relied on the statements as representations of present fact about the way in which the testing and appeals processes were conducted. Thus, when seeking to demonstrate that by making the statements, the defendants were involved a contravention of the Australian Consumer Law, the plaintiffs assumed a burden to rebut the statements of fact and establish that the testing and appeals processes did not, and were not intended to, operate in a manner prejudicial to candidates, or for the purpose of an improper commercial advantage.
The plaintiffs submitted that the court should order the defendants to remove the website from the internet permanently. They submitted that it was not appropriate for the court to undertake a line by line analysis, directing the defendants to remove offending words or phrases. The plaintiffs contended that the false, misleading or deceptive material permeated the website, and justified a direction that it be removed as a whole.
Following orders by consent made on 28 April 2015 that the defendants remove the website until the further hearing of the application for an interlocutory injunction, and eventually the trial, the web page was no longer available, although some sub‑pages remained. A complaint was made to the defendants’ solicitor, and the sub‑pages were removed.
In June 2015, the plaintiffs identified two new websites apparently designed to assist candidates to complain about their IELTS and other test results. One site, the ITO Complaints website, offered a complaints guide for US$130. The other website, Educational Complaints website, offered a complaints guide for A$165. While aspects of the new websites resemble the defendants’ website, the identity of the registrant was protected and unavailable. The plaintiffs also sought the removal of those additional websites as a continuing breach. On the material before the court, the plaintiffs were unable to establish that these new sites involve conduct by the defendants.
The trial
Mr Burger, who had been given leave to appear on behalf of Lejburg, cross‑examined some of the plaintiffs’ witnesses, and prepared lengthy written submissions in response to those prepared on behalf of the plaintiffs. When invited to make oral submissions at the conclusion of the trial, Mr Burger required additional time to prepare. Ultimately, he indicated a preference to make his submissions in writing, and a date was fixed by which he was to file and serve written submissions. The defendants’ written submission responded, more or less, on a paragraph by paragraph basis, to the plaintiffs’ closing outline of submissions.
Any trial in which one or more party is self-represented places an additional burden on the court and sometimes on those parties who are legally represented. The adversarial system of justice fails to function as intended in the absence of qualified legal representation for all parties, who owe duties to the court as well as to their clients. The trial process may be compromised if one party is not bound by the same duties as the other, or under the same control of the court. Judicial intervention to assist an unrepresented party to understand procedure, tender documents, adduce oral evidence or cross-examine is sometimes regarded as antithetical to the adversarial system. While appearing to assist the unrepresented litigant, judicial intervention may unfairly prejudice the case of a represented party. Sometimes a represented party will assume an additional burden to assist the court. That, too, can be prejudicial.
Mr Burger claimed to have some legal training. As the trial advanced, it became apparent that Mr Burger did not have the legal training and experience claimed by him on his webpage. Nevertheless, I am satisfied that he understood the nature of the court process, and the seriousness of the allegations made against him. I am also satisfied that he understood enough of the trial process to fully participate to the extent he was willing to do so. His conduct during directions hearings and the trial revealed a level of sophistication and skill beyond that usually observed in the case of litigants in person. His written submissions also evidenced legal assistance from a third party, or a high level of legal knowledge and strategic sophistication. He was given assistance by the court and the plaintiffs, and was an effective advocate on his own behalf and on behalf of his company.
The evidence at the trial was by affidavit. While viva voce evidence had previously been directed, with witness outlines to be filed and served, further directions were made on 17 July 2015 for the filing of affidavits. The plaintiffs were to file any further affidavit by 4.00 pm on 20 July 2015, and the defendants by 4.00 pm on 7 August 2015. The trial was set down for 31 August 2015 on an estimate of two days.
At the conclusion of the evidence, the plaintiffs advanced their final submissions in writing, supplemented by oral submissions. Following directions for written submissions by the defendants, the trial was adjourned until 10.30 am on 8 September 2015, to give the parties an opportunity to return to court on that day, if they wished, to make any further oral submissions arising from the defendants’ written submissions to be filed by 5.00 pm on the previous Friday, 5 September 2015. The parties were not expected to attend, unless desirous of further addressing the court. They were informed that, in the absence of their attendance, they would be notified when judgment was to be delivered.
In his written submissions, filed on 7 September 2015, Mr Burger complained that he was unable to properly conduct his defence because he misunderstood his right to cross‑examine the witness Mr Torpey, who filed three affidavits on behalf of the plaintiffs. The affidavits were dated 22 April 2015, 12 May 2015 and 20 July 2015. No affidavit in response had been filed on behalf of the defendants.
Mr Torpey was the plaintiffs’ solicitor. His evidence went to the registration and ownership of the defendants’ website and its content. He also conducted a web‑based investigation into certain testimonials. He deposed to having sent letters of complaint to the defendants on behalf of the plaintiffs. He deposed to complaints received by the plaintiffs from candidates who were offered an opportunity to re‑sit a test or refunded a fee. He deposed to a complaint made on behalf of the plaintiffs to the Australian Competition and Consumer Commission about the defendants’ conduct, and a complaint to the Legal Services Commissioner that Mr Burger purported to give legal advice, although was not authorised to practise law.
At the trial, Mr Burger cross-examined two of the plaintiffs’ witnesses on their affidavits. He did so purposefully and with some skill. In his written submissions, Mr Burger argued that he had been denied procedural fairness. He submitted:
Because the court failed to appraise me on a continuing basis of the procedure in the court I was effectively prevented from cross examining any of the witnesses sufficiently. Particularly Luke Torpey with the respect to the importance and volume of his affidavit.
We believed that the witness would give their evidence by speaking in the witness box.
We would then listen to the evidence being lead by the plaintiff as would in court, there and then, construct and deliver my examination of the witness.
We did not appreciate and, with the greatest respect, the court of its own duty failed properly or at all to advise me and as an unrepresented litigant appearing for myself against professional litigators, warn and advise me respecting the proper course to be followed.
Luke Torpey gave his evidence via an affidavit and though I desired to cross examine his affidavit, that opportunity was not open to me because he left the witness stand and I did not appreciate that that meant we agreed on his whole affidavit, even though it was not expressed under oath.
Your Honour we ask for leave to cross examine Luke Torpey or all the witnesses again for the above mentioned reasons.
If your Honour grants me leave to cross examine the witnesses I will fly back to Australia. As it was necessary based upon an urgent matter I needed to attend.
While Mr Burger said that he would ‘fly back to Australia’, he did not say where he was, or when he might be able to return. In the absence of the usual courtesy of attending court to make his application to cross‑examine, I had no opportunity to even enquire of a suitable date, if leave were to be granted, to cross-examine Mr Torpey. Nor did Mr Burger provided any indication of the topics on which he proposed to cross-examine Mr Torpey, whose evidence, I had assumed, was uncontested. Furthermore, it was difficult to imagine the scope for cross‑examination in the absence of contradicting evidence.
Notwithstanding his claimed legal training, Mr Burger said that he was unfamiliar with court procedure. I am satisfied that he had some knowledge of the trial process, and was able to conduct the defendants’ case, when he put his mind to it, with reasonable success.
While not persuaded that Mr Burger suffered from the misunderstanding he claimed, I extended to him a further opportunity to cross‑examine Mr Torpey at 10.30 am on Tuesday 15 September 2015. Mr Torpey was required to attend for cross‑examination on that day, and the parties notified. To accommodate any possible inconvenience to the parties and Mr Torpey, I adjourned the hearing until 10.00 am on Friday 11 September 2015, to give the parties an opportunity to inform the court if the proposed date for cross‑examination (15 September) was unsatisfactory. Prior to Tuesday 15 September 2015, Mr Burger notified the court that he no longer wished to cross‑examine Mr Torpey.
Legal principles
The legal principles applicable to an allegation that promotional material, of the kind published by the defendants on the internet, is misleading or deceptive, or is likely to mislead or deceive, are not controversial. As Gordon J said in Australian Competition and Consumer Commission v Telstra Corporation Limited,[5] the principles have been well traversed by Australian courts. Her Honour continued:
A two-step analysis is required. First, it is necessary to ask whether each or any of the pleaded representations is conveyed by the particular events complained of …
Secondly, it is necessary to ask whether the representations conveyed are false, misleading or deceptive or likely to mislead or deceive. This is a “quintessential question of fact” …[6]
[5][2007] FCA 1904, [14]–[20].
[6]Ibid [14]–[15] (citations omitted).
Where an advertisement is capable of more than one meaning, the question of whether it is misleading or deceptive is to be tested against each meaning which is reasonably open.[7] Comparative advertising does not involve any different approach, although by engaging in such conduct an advertiser may become exposed to the risk that a seemingly innocuous statement will become coloured or informed by the comparison.[8] By purporting to analyse and comment upon the services offered by the plaintiffs, the defendants expressed opinions and made predictions about the plaintiffs’ commercial objectives and motivation, and the success of the defendants’ product.
[7]Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 per Hill J, [50]; ACCC v Coles Supermarkets Australia Pty Ltd (2014) 317 ALR 73, [46]–[47]. See also Telstra Corporation Ltd v Singtel Optus Pty Ltd [2014] VSC 35, [29]–[35].
[8]Gillette Australia Pty Ltd v Energiser Australia Pty Ltd (2002) 193 ALR 629, [44]; Andale Repetition Engineering Pty Ltd v Hoshizaki Lancer Pty Ltd [2011] VSC 496, [13]; Specsavers Pty Ltd v Luxottica Retail Australia Pty Ltd [2013] FCA 648, [49]; Specsavers Pty Ltd v Optical Superstore Pty Ltd (2010) 276 ALR 569, [1].
Conduct is misleading or deceptive if it has a tendency to lead into error, although there must be a sufficient causal link between the conduct and the error on the part of the relevant class exposed to the conduct.[9] Consideration of conduct under inquiry should not involve a dissection, or line by line analysis. The conduct should be considered as a whole, in its proper context. Context will include the market to which the conduct is directed, the nature of the product being promoted and the characteristics of those in the particular market to whom the promotion is directed. Regard must also be had to qualifying statements, disclaimers or explanations.[10]
[9]ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 634, [39].
[10]Coles Supermarkets supra [41].
A contravention of ss 18 or 29 of the Australian Consumer Law does not depend upon the intention or belief concerning the accuracy of the facts stated, but upon whether the statement conveys a meaning that is false or misleading.
When the impugned conduct involves statements made in a public forum, such as the internet, regard must be had to the effect of the statements or representations on ordinary or reasonable members of the class of prospective purchasers.
The dominant message of promotional or advertising material will be of crucial importance.[11] The advertising or promotional material must be considered as a whole, rather than straining at the meaning of critical words and phrases.[12] The first impression conveyed by promotional material is often that which creates the greatest impact on the member of the class to which it is directed.
[11]Coles Supermarkets supra [42].
[12]Reckitt Benckiser (Australia) Pty Limited v SC Johnson & Son Pty Limited [2004] FCA 1237, [38].
The class
The defendants challenged the basis upon which the plaintiffs identified the class of persons who may be misled or deceived, or otherwise led into error. The plaintiffs characterised the class as candidates who had completed an English language test and were dissatisfied with their result. English was not their first language. Such persons were, by definition, at a disadvantage in an English‑speaking country. They required an English language proficiency grading for employment, education or migration purposes. It is likely that such persons would be unfamiliar with the Australian legal system, and the regulation of persons giving legal advice. To varying degrees, they might be more reliant on advice given by third parties to resolve issues arising from dissatisfaction.
The defendants directed their website and advertising to a class of persons defined by their own website. The target class was, as the plaintiffs contended, vulnerable people in a foreign country, required to prove language competence, and dissatisfied with the outcome of testing. They would be unfamiliar with their rights. It was a class who might be gullible, easily influenced by the defendants’ representations about product attributes, and the defendants’ claimed legal knowledge and skills in formulating a credible threatening legal claim. The defendants’ own website acknowledged that the class would include people who may be desperate to obtain a place at university, employment, or citizenship.
The defendants relied on the absence of evidence of any community complaint about the website. While the website was published to the world, it was directed to a narrow class. The absence of any complaints from the class was unsurprising. Members of the class were very likely to be unfamiliar with opportunities to complain about the website. Having identified the target class, an objective assessment of the tendency of the defendants’ website to mislead or deceive is all that is required. The defendants’ website was designed to give the target class confidence and comfort in the accuracy of the information conveyed and the outcome.
The only evidence of disappointed candidates, who deployed the defendants’ product, was advanced by the plaintiffs. The defendants did not advance any evidence from candidates who had received a repayment of fees, or increase in their score as a consequence of deploying the defendants’ dispute package.
Were the representations made?
While the representations as pleaded by the plaintiffs were formulaic, as is often the case, they were a fair, if not conservative, reflection of the statements contained on the website. There were dominant themes. The court must look at the impugned conduct as a whole and ascertain the dominant message or impression conveyed by the website (and the representations contained therein), having regard to the nature of the product as one promoted on the internet with the intention of attracting the attention of the class.
In my opinion, a candidate dissatisfied with his/her test result might reasonably interpret the statements found on the website as conveying that the CALIS guide had assisted, and would assist many candidates to obtain a higher score or refund. A reader in the relevant class may also interpret the statements to convey that the plaintiffs were engaged in improper conduct in relation to language testing and complaints handling processes. They may reasonably interpret statements concerning the plaintiffs’ test and appeals process to mean that the plaintiffs had designed the processes to force candidates to be re‑tested, motivated by profit.
An important feature of the dominant theme was the false testimonials. These would have been reasonably interpreted by the class as proof of the success and benefit of the disputes package. Another important feature was the concept that a candidate passed or failed a test. In fact, a candidate received a score which might be acceptable in one context but not another. Candidates were not simply passed or failed.
The dominant themes were a combination of representations as to present fact, future matters and opinion. The representations as to present fact involved the performance attributes of the defendants’ product in having assisted ‘countless immigrants’ to successfully demand a refund of fees or increased score and a predicted success rate. These representations were augmented by the false testimonials. The representations about future assistance to candidates, who might choose to purchase and use the CALIS product, was augmented by predicted rates of success and the false testimonials. Insofar as the statements concerned future matters, the defendants were required to adduce evidence of reasonable grounds, if the operation of s 4(2) of the Australian Consumer Law was to be avoided.
The defendants did not set out to establish, through witnesses called on their own behalf, or through evidence given by the second defendant, Mr Burger, that there were reasonable grounds to predict a successful outcome for candidates in the nature of a refund or increase in score. Mr Burger did, however, cross‑examine some of the plaintiffs’ witnesses in an attempt to establish that the disputes package had achieved some degree of success. He had that opportunity because the plaintiffs called evidence of their complaints procedure, and of complaints made by persons who had received refunds. They might have relied solely on s 4(2) of the Australian Consumer Law, but chose not to do so.
Contraventions
The defendants denied that the statements on the website were misleading or deceptive. They initially said that the testimonials required further explanation. No explanation was forthcoming. They subsequently conceded that the testimonials were fictitious, but claimed inadvertent error in their publication. I reject that submission. They were an important feature of the website, designed to entice vulnerable readers, by wholly contrived testimonials, into buying the defendants’ product.
In his written submissions, Mr Burger complained that he should not be made liable for a breach of the Australian Consumer Law merely because he was a director of the first defendant, Lejburg. His liability is not determined merely by his role as a director and secretary of Lejburg, the registrant of the website. Mr Burger was actively involved in the establishment and operation of the website, and the provision of the services forming part of the defendants’ product for sale. That is evident from the registrant details, Mr Burger’s LinkedIn page, and his role in the preparation of letters of demand.
The defendants relied on their refund policy. The website contained a statement that if ‘We cannot get your IELTS … test results re‑marked or receive part or full reimbursement for your previous tests, we will refund your money!’. They submitted that these words prevented any misleading or deceptive conduct. I disagree. The refund policy and guarantee, so called, perpetuate the representations concerning the predicted success of a complaint in having test results improved, or reimbursement from the plaintiffs. The refund policy and guarantee would be reasonably understood by members of the class to be an expression of emphatic confidence by the defendants in the efficacy of their prediction.
The plaintiffs’ evidence revealed only two occasions on which candidates, who had issued a complaint in a court or tribunal, had received a refund. It is unnecessary to identify the candidates more fully than by their initials. Candidate JOL received a refund for a test conducted on 11 April 2015, and candidate EJDH received a refund for a test conducted on 9 May 2015, after filing his complaint on 6 May. The evidence disclosed that JOL filed a complaint in the Magistrates’ Court of Western Australia against IDP on 30 April 2015. He claimed to have sat 14 tests, resulting in inconsistent results. Mr Parker said the claim had not been resolved, and was to be set down for hearing. According to Mr Parker, the IDP database did not disclose the reasons for the refunds, although there was a request for a refund accompanied by a medical certificate.
In the case of EJDH, his application to VCAT was dismissed on 14 July 2015. The refund paid to him was in respect of a test, which he undertook after the date on which his application to VCAT was initially filed. Electronic versions of the letters of demand received from JOL and EJDH, when interrogated, revealed the author to be Mr Burger. There was evidence of other complaints from candidates who had initiated some legal proceeding, having purchased the defendants’ products and sent letters of demand.
Mr Burger cross‑examined Mr Parker to establish that JOL and EJDH had successfully deployed the defendants’ product to obtain the refund. Thus, he suggested, ‘The CALIS website has a 100 per cent success rate in helping students’. Mr Burger failed in his attempt to demonstrate, through these examples, that his product had assisted any candidate in obtaining a refund or an increased score. There was no correlation established between the deployment of the defendants’ disputes package and the refunds.
The plaintiffs advanced detailed evidence of the development of the tests, their worldwide application and of more than 9,000 Recognising Organisations. They adduced evidence of the preparation and administration of test audits conducted to maintain reliability and integrity of results for end users, publication of data on test reliability across candidates from different backgrounds, and the verification of testing regimes by independent research. The plaintiffs’ evidence provided a credible basis for the contention that the tests and testing procedures were fair and fairly administered, and were reliable. The extent of reliance on IELTS language testing by Recognising Organisations is evidence of the high regard in which the tests, the testing regime and their continuing validity is held by organisations who, it may be assumed, demand consistency and validity of outcomes. The evidence of Mr Parker on these matters was not challenged.
It was against this background that the defendants’ statements on their website, that test results are inconsistently marked, and the complaints process was arguably designed to ensure candidates will re‑sit a test to generate revenue for the plaintiffs, must be assessed. The website stated that the plaintiffs wanted candidates to fail. The website alleged breaches of the law in the testing and complaints procedures. These breaches were reflected in the allegations made in the few proceedings commenced in a court or tribunal by candidates using the defendants’ product.
The defendants did not advance any evidence of reasonable grounds on which to express the opinions adverse to the integrity of the plaintiffs’ testing regime. Mr Burger failed in his attempt, through his cross‑examination of the witness Parker, to demonstrate that the plaintiffs were inclined to give a refund in the face of a threatened or actual proceeding.
I am satisfied on the evidence that the plaintiffs have not and will not refund fees as a consequence of deployment of the defendants’ dispute package. Accordingly, the representation that to employ the package will assist a payment of money, or an increased score, is false. The two instances in which a refund had been obtained by a candidate were explained by the plaintiffs. While in the case of EJDH, the explanation is incomplete, I am satisfied that the refund was not in response to any threat of legal proceedings, or the institution of proceedings.
There is a further matter of concern to the administration of justice, which does not directly arise from the plaintiffs’ pleaded case of breaches of the Australian Consumer Law. The defendants’ standardised complaints package encouraged disappointed candidates to make an application in a court or tribunal alleging contraventions of the Australian Consumer Law. Mr Burger did not attempt to establish any reasonable basis on which to make such allegations, recited by some candidates in legal proceedings. In my opinion, the allegations are a formulaic contrivance of the defendants, promoted for adoption by a purchaser of the dispute package, in the hope that by merely making a claim against the plaintiffs, the complainant will be rewarded with a payment. Proceedings commenced in such circumstances would be an abuse of process.
Ms Robertson sought to give evidence about the origin of some documents that came into her possession. The defendants objected to part of her evidence concerning her conversation with security personnel at her place of work. If accepted, such evidence might support an inference that Mr Burger attended the testing centre to solicit customers for the disputes package. The plaintiffs sought to introduce the evidence to support an extension of the injunctions to restrain Mr Burger from distributing material promoting the defendants’ product at test sites. In my view, the evidence of the conversation between Ms Robertson and a security guard is inadmissible. Ms Robertson’s admissible evidence goes no further than that on a particular day during testing she was handed a copy of a CALIS information sheet and Mr Burger’s business card by a security officer. While it may be inferred, from the admissible evidence, that Mr Burger was or had been in the vicinity of the testing site, it is not a sufficient basis upon which to grant final injunctions directed specifically against him, restraining his attending at a particular place or places.
The plaintiffs relied upon the failure of the defendants to give evidence. They did not contradict any of the evidence adduced by the plaintiffs, or adduce oral evidence of reasonable grounds for the representations as to future matters. They asked the court to infer that evidence available to the defendants would not have assisted them. The defendants had every right to decline to go into evidence. They relied instead upon limited cross‑examination and submissions on the plaintiffs’ evidence. The defendants might have attempted to establish, through the plaintiffs’ witnesses, reasonable grounds for their predictions, forecasts and opinions. They failed to do so.
For the most part, the evidence before the court was unchallenged. Evidence of the content of the defendants’ website was uncontroversial. The absence of any evidence as to the reasonableness of the defendants’ predictions of success and opinions concerning the plaintiffs’ purpose in conducting the tests, their propensity to compromise complaints by refunding money or increasing a score, and the extent to which the defendants’ product had assisted anyone to achieve a refund or increase score, was not surprising. The defendants did not advance one witness who claimed to have been assisted by their product in obtaining a refund or increased score. From the cross‑examination of the plaintiffs’ witnesses, there was no indication of a serious challenge by the defendants to the integrity and validity of the plaintiffs’ testing regime. I have found that the defendants made the predictions and expressed the opinions without any reasonable grounds. I have also found that the predictions and opinions were factually incorrect.
The defendants made damaging allegations on their website concerning the plaintiffs’ purpose and motivation, yet made no real attempt to justify those allegations. I find that they are false. There was no credible evidence that the plaintiffs compromised any claims made by a candidate using the defendants’ product. Those representations are also false.
The defendants submitted that the plaintiffs’ complaints process was not transparent, was unfair and was amenable to review by a court or tribunal if a candidate chose to take that step. That may well be so, but the defendants’ website was not confined to that representation. It went much further than providing a guide to assist a disappointed candidate who was inclined to seek some remedy or relief beyond the review and refund policy of the plaintiffs. The website was designed to induce members of the class to buy the defendants’ product by misleading or false statements about the plaintiffs’ testing policy, procedures and integrity, and the attributes of the disputes package. The fact that it may be possible to bring a claim in a court or tribunal is not to the point. The plaintiffs’ case concerned the manner in which the defendants sought to promote their product in breach of the Australian Consumer Law.
The plaintiffs have established a strong case of contraventions by the defendants of ss 18 and 29(1)(f) and (g). The publication by the defendants of the website was in trade or commerce. It was not contended otherwise. By reason of s 12 of the Australian Consumer Law and Fair Trading Act, Mr Burger also contravened those parts of the Australian Consumer Law. Accordingly, the plaintiffs are entitled to declarations and corresponding orders in the nature of injunctions under s 232 of the Australian Consumer Law and s 202 of the Australian Consumer Law and Fair Trading Act. Such declarations and injunctions should be confined to the particular breaches pleaded and established by the plaintiffs to the satisfaction of the court, and no more. I am persuaded that the CALIS website, as a whole, is so permeated by false or misleading statements that it must be removed as a whole, and not be republished. The central themes and dominant messages are false or misleading.
I make the following declarations:
The defendants, in trade or commerce, made the following representations in contravention of the Australian Consumer Law and by reason of s 12 of the Australian Consumer Law and Fair Trading Act:
(a)the CALIS IELTS Test Complaints Information Guide will assist a candidate who has failed an IELTS test in either:
(i) attaining a refund from IELTS Australia; or
(ii) attaining a higher band score from IELTS Australia;
(b)the CALIS IELTS Test Complaints Information Guide has assisted candidates who failed an IELTS test in either:
(i) attaining a refund from IELTS Australia; or
(ii) attaining a higher band score from IELTS Australia;
(c)if the candidate who has failed an IELTS test uses the CALIS IELTS Test Complaints Information Guide, IELTS Australia will most likely settle the complaint by either:
(i) providing the complainant with a refund; or
(ii) awarding the complainant a higher band score;
(d)IELTS Australia,
(i)conducts the testing of candidates in a manner which lessens a candidate’s opportunity to achieve a desired band score;
(ii)and does so to improperly increase IELTS Australia’s revenue;
(e)IELTS Australia,
(i)conducts the appeal process, in a manner which lessens an unsuccessful candidate’s opportunity to successfully appeal; and
(ii)and does so improperly in order to encourage the unsuccessful candidate to re-sit the IELTS test, and thereby increase IELTS Australia’s revenue.
I am not satisfied that the two additional websites identified by the plaintiffs operate under the management and control of the defendants. They may well do so, but the evidence does not go that far. On the other hand, the plaintiffs are entitled to injunctions restraining any further breach by the defendants. The power of a court to grant an injunction does not depend upon proof of an imminent threat that the defendants will repeat the impugned conduct. Accordingly, injunctions will be framed to restrain the defendants, by themselves, their employees, agents or otherwise howsoever from making any statement or representation, whether by publication on a website or however otherwise, to the following effect:
(a)the CALIS IELTS Test Complaints Information Guide will assist a candidate who has failed an IELTS test in either:
(i)attaining a refund from IELTS Australia; or
(ii)attaining a higher band score from IELTS Australia;
(b)the CALIS IELTS Test Complaints Information Guide has assisted candidates who failed an IELTS test in either:
(i)attaining a refund from IELTS Australia; or
(ii)attaining a higher band score from IELTS Australia;
(c)if the candidate who has failed an IELTS test uses the CALIS IELTS Test Complaints Information Guide, IELTS Australia will most likely settle the complaint by either:
(i)providing the complainant with a refund; or
(ii)awarding the complainant a higher band score;
(d)IELTS Australia,
(i)conducts the testing of candidates in a manner which lessens a candidate’s opportunity to achieve a desired band score;
(ii)and does so improperly to increase IEL TS Australia’s revenue;
(e)IELTS Australia,
(i)conducts the appeal process, in a manner which lessens an unsuccessful candidate’s opportunity to successfully appeal; and
(ii)and does so improperly in order to encourage the unsuccessful candidate to re-sit the IELTS test, and thereby increase IELTS Australia’s revenue.
(f)The testimonials, or any testimonial containing any of the foregoing representations.
I will order that the defendants permanently remove the website, from the internet forthwith.
I will hear from the parties on the plaintiffs’ claim for damages and costs.
0
7
0