Productivity Partners Pty Ltd (trading as Captain Cook College) ACN 085 570 547 & Anor v Australian Competition and Consumer Commission & Anor; Wills v Australian Competition and Consumer Commission & Ors

[2024] HCATrans 6

[2024] HCATrans 006

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney  No S118 of 2023

B e t w e e n -

PRODUCTIVITY PARTNERS PTY LTD (TRADING AS CAPTAIN COOK COLLEGE) ACN 085 570 547

First Appellant

SITE GROUP INTERNATIONAL LIMITED ACN 003 201 910

Second Appellant

and

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

First Respondent

BLAKE WILLS

Second Respondent

Office of the Registry

Sydney  No S116 of 2023

B e t w e e n -

BLAKE WILLS

Appellant

and

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

First Respondent

PRODUCTIVITY PARTNERS PTY LTD (TRADING AS CAPTAIN COOK COLLEGE) ACN 085 570 547

Second Respondent

SITE GROUP INTERNATIONAL LIMITED ACN 003 201 910

Third Respondent

GAGELER CJ
GORDON J
EDELMAN J
STEWARD J
GLEESON J
JAGOT J
BEECH‑JONES J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 8 FEBRUARY 2024, AT 10.00 AM

(Continued from 7/2/24)

Copyright in the High Court of Australia

GAGELER CJ:   Mr Hodge.

MR HODGE:   Thank you, your Honour.  Your Honours, yesterday where we had finished was looking at this Court’s decision in Rural Press, and I had indicated I would go to the Full Court’s decision in order to make good the proposition about what the argument was.

Can I ask your Honours then to take that up. That is 118 FCR 236, and it is in the joint bundle of authorities, volume 8, tab 55, page 2324. The discussion of accessory liability begins at page 280 of the judgment, page 2368 of the joint bundle. You will see there is a heading in the middle of the page which is, “The individual respondents – accessory liability”, and then, at the end of paragraph 154 is set out what appears to be in the initial framing of the argument. You will see it begins:

Mr Douglas argued that they should be –

and could I invite your Honours to read to the end of that paragraph.  Then you will see at the bottom of page 155, the court begins summarising some of the findings made by the primary judge.  And you will see there is an explanation – this is in the second sentence of 155:

He specifically held . . . that each of Mr Law and Mr McAuliffe intended by their communications to procure a result whereby Waikerie Printing ceased to provide the information and services of the River News in the Mannum area.

Could I invite your Honours then to continue to read over the page to the end of that paragraph.  So, there were findings made by the primary judge – and I will come back to some more in a moment.  The Full Court summarised that he established or held the belief, or knowledge, of the two individuals in relation to competition, and the effect on competition.

It looks like the submission then took something of an interesting turn.  You can see this at paragraph 156.  When then happens is the Full Court summarised or set out the primary judge’s summary of what the relevant principles are, which one would have thought were uncontroversial.  Then you will see at the end of that setting out, it said:

In argument before us, Mr Douglas on behalf of the appellants took issue with the proposition in the second last sentence of the above passage –

You will see the second last sentence was: 

It is not necessary that the accessory should have appreciated that the conduct was unlawful –

It appears that, then, the argument that was made was that Yorke v Lucas stood for the proposition – which, with respect, it plainly does not – that you needed to know that the conduct was unlawful.  The court then spends some time explaining why that cannot possibly be right.  They refer back to Giorgianni, and after they go through that, they then return to some things about the facts.  If your Honours come over two pages to page 283 of the judgment, page 2371 of the joint bundle, you will see ‑ ‑ ‑

BEECH‑JONES J:   I am sorry, what page is that, Mr Hodge?

MR HODGE:   I am sorry.  Page 283 of the judgment, page 2371 of the joint bundle.

BEECH‑JONES J:   Yes, thank you.

MR HODGE:   At the bottom of the page, page 162, you will see then the court returns to attempting to grapple with what, in effect, must have been where the original argument had started with.  They identified that the concepts under those particular provisions of what was then the Trade Practices Act can be elusive.  You will see they then set out, though, that whilst they did not turn their mind to the legal characterisation of the facts or the legality of the conduct, that there were specific findings made.  You can see those continuing over the page, and particularly, we would note, at the end of paragraph 162:

The primary judge found that each of them was aware of the general market in which the Standard operated.  Plainly they were aware that the Standard was the only regional newspaper circulating in the Murray Bridge area, including Mannum, before the incursion by the River News.  They intended that the incipient competition in that area should be brought to an end.

Then the concluding point made at 163 is that it is not “necessary” for them to have known that:

the purpose or effect . . . was substantially to reduce competition in the market ultimately identified in the judgment.

And the court says:

The definition of the market is a mixed question of fact and law involving sophisticated economic and legal concepts.

So, it appears as if where it ultimately focused on was the meaning of “market”, and, as is well established, in competition law in this country – at least under the Act – a market is not a “fact” in the conventional way in which we think about facts.  A market is a tool of economic analysis which – I think the most authoritative statement in this country in this Court is the judgment of your Honour the Chief Justice together with Justice Kiefel in the Flight Centre decision, explaining the concept of a market.

This is, as best we can tell, the most detailed explanation of what the argument was that was made before the Full Court.  Presumably, the same argument was what was then taken up to the High Court.  We can see a limited amount of information in that judgment about what was put, but, in our submission, there is simply no comparison between the argument that we are making which is, there is an essential element of unconscionable conduct, which is a fact, and it is necessary to know that fact if you are to have accessorial liability, and this, which deals with two propositions, neither of which – one of which does not even arise here, which is, do you need to know about the economic concept of a market when it is a mixed question of fact and law, and the other of which is, do you need to know that it is a contravention of the law, which we do not submit and everyone accepts, one would have thought, is not consistent with either Giorgianni or Yorke. 

GAGELER CJ:   Did you look at the notice of appeal or the transcript in this Court in this case?

MR HODGE:   No.  I cannot assist your Honours with that.

GAGELER CJ:   Thank you.

GLEESON J:   What would be the position if the accessory knew of the conduct and believed that the conduct was unconscionable for reason A, for example, because they believed that the conduct was degrading – the court found that the conduct was unreasonable for reason B because it took advantage of a person and caused them to suffer significant financial harm?

MR HODGE:   The short answer is they could not be liable.  The longer answer is, as an example there is a challenge with it, which is that the premise of it is that the person knows that it is unconscionable, which is to introduce the language of the statute.  But if I can reframe it to say what is embedded in that example is that they believe that the conduct is dishonest, but the court finds not that the conduct is dishonest but the conduct lacks good faith or takes advantage of somebody, and then says as a matter of legal characterisation that is unconscionable and therefore a contravention of the law.  They do not know the facts which give rise to the legal conclusion.

GLEESON J:   This might come back – I think you were going to take us to the pleading at some point.

MR HODGE:   Yes.

GLEESON J:   But it comes back to the question of:  what is the value or the nature of the unacceptable departure from commercial standards of conduct?

MR HODGE:   Yes, I was going to do that now.  That was all I wanted to say about the second reason advanced by the ACCC, which is that Rural Press precludes the argument that we make.  In our submission, it does not – and it certainly is not a situation where the court in Rural Press was overruling what was said in Yorke v Lucas and Giorgianni.  Either we are right that Yorke v Lucas and Giorgianni set what it is necessary to know or we are wrong, and on that legal point we will lose.

BEECH-JONES J:   Mr Hodge, just so I can re‑orientate myself.  Just to be clear, you are not saying that the person who is secondarily liable has to have a belief that it answers the word “unconscionable”.

MR HODGE:   No.

BEECH-JONES J:   You are saying, they have to have an understanding – it is contrary to what amounts to being unconscionable which is contrary to the standards of, say, ordinary commercial people.  Is that right?

MR HODGE:   Yes.

BEECH-JONES J:   So, you distinguish Rural Press by saying Rural Press is simply authority for the first proposition I put to you.  That is, you do not have to have the relevant belief that matches the words of the statute; it is something that amounts to what matches the words of the statute.  So that, in this case, people saying, well, I intended to get rid of the competition was, effectively, good enough. 

MR HODGE:   All of what your Honour has said is right; that is our submission.  The only reason I am qualifying or hesitating for one moment is that that certainly seems to be what the joint judgment in this Court was dealing with in Rural Press.  It may be that there is a slightly different point that emerges from the Full Court in Rural Press which is this issue of what is a market in competition law and whether you need to know and understand an economic concept, but that is my only qualification to that.

We do not say that you need to know that it is a breach of the law, and we do not say that you need to think in the language of the statute, but what you do need to know is that it is contrary to whatever are the norms and values that are said to then give rise to the unconscionable conduct finding.

BEECH‑JONES J:   I understand, thank you.

MR HODGE:   What I was then going to do was to move to the ACCC’s third reason, which is, in effect, a submission broadly put that it is impractical – the approach for which we contend. As part of addressing this, I am hoping that I can pick up almost all of the homework that I have been given.  So, I will start with the question of what was actually pleaded against my client, in answer to your Honour Justice Gleeson’s question yesterday, and then move to the findings.  If your Honours could first take out the book of further material which contains the pleading.

GORDON J:   This is the respondents’ book of further material?

MR HODGE:   The appellant’s book of further material.  This is the final version of the statement of claim; the second further amended statement of claim.  If your Honours come to page 45 of the book, which is page 41 of the pleading, you will see at the bottom of the page, there is a heading which is:

Part 14 – Wills’s Knowing Involvement in CCC’s –

so that is the College:

Systemic Unconscionable Conduct –

I will just walk you through the knowledge allegation.  You will see paragraph 132 is that Mr Wills:

knew of CCC’s plan to implement the Process Changes and the implementation of the Process Changes.

So, that is making the two changes.  Then, if you go over the page, you will see 133, he:

knew of CCC’s Profit Maximising Purpose in respect of the Process Changes.

Then if you go over the page to page 47 of the book, 43 of the pleading, you will see 134, he:

knew of the CA Misconduct Risk.

So, that is the risk of course advisors engaging in misconduct.

GLEESON J:   Just pause, Mr Hodge.  If you go back to 31 of this book, that conduct risk does include incurring the VFH Debt.

MR HODGE:   Yes.  And then 135, he:

knew of the Unsuitable Enrolment Risk.

So, that is the risk that students who were unsuitable, as broadly defined within the pleading, would be enrolled.  Then, if you go over the page to 48 of the book, you will see 136 is:

At all material times, Wills knew of the matters pleaded in paragraphs 118 to 120 –

and I will come back in a moment to those allegations.  Then you will see 137:

By no later than around May 2016, Wills knew about the Process Changes Results.

and I will come in a moment to what are the process changes results.  Then, if your Honours keep going, you will see there is then an alternative case of knowledge, which is a 137AA, that he knew at the commencement of the implementation – so that is 9 September 2015 – or during the period that they were implemented:

that the Process Changes would likely lead to the Process Changes Results or results of the type of the Process Changes Results –

Then, you will see 137AAA, which is that he knew that they had claimed revenue from a large proportion of consumers, and you will see that that is by May of 2016.  Then, if you look at 137A, which comes at the bottom of page 50, you will see that then moves onto what effectively the acts are that were ultimately relied upon.  The limits of what were pleaded as for his knowledge are the things that I have just shown you, and if you then go back to page 33, you will see at the bottom of the page, paragraph 118:

The Outbound QA Call provided a means by which –

the risks could be mitigated. Then over the page, 119:

The CDWD process –

Which is the campus driven withdrawal process:

provided a means by which –

the risks could be mitigated.  Then 120:

The Process Changes materially reduced –

the ability of the College to mitigate those risks.  Then, if you come through to page 36 of the book, page 32 of the pleading, you will see there, in 122, what is the process changes results.  There are various aspects of the process changes results, or what are said to be the process changes results, set out, and then it gets wrapped up and defined as the process changes results at the bottom of page 39 of the book.

You will see what they are, which is, in effect, there is an enormous increase in the number of students, there is an enormous increase in the number of students progressing through census, there is an enormous increase in the amount of revenue, and there is an enormous increase in the proportion of students who are uncontactable.  There is not an allegation, and there was no finding that Mr Wills knew that these people who progressed through the census – or the people referred to within the process changes results – had been the victims of CA misconduct or were unsuitable.  There is no allegation, as you will see, and there was never any finding that he knew that people who were – to use the Full Court’s words – unwitting were being taken advantage of by the College.

GAGELER CJ:   If there had been such a pleading then the case presented would have been a case of accessorial liability, would it?

MR HODGE:   I beg your pardon, your Honour?

GAGELER CJ:   If you just add those additional words, a new paragraph, that would be a sufficiently pleaded case, would it?

MR HODGE:   If they were to plead that Mr Wills knew that students who were unwitting were being taken advantage of then yes, that would have at least raised the very thing that goes to what it is said to be unconscionable in this case.  I should just add the qualification:  depending upon whether the Court is looking at the findings by the Full Court, or the findings by the primary judge, and I will point out the slight difference there. 

EDELMAN J:   As I understood your submission, that still would not be enough.  Your submission is that there would also need to be a plea that Mr Wills was aware that that taking advantage or the withdrawal, with the possibility of agent misconduct, was contrary to the norms of society regarded as part of the collective social conscience, or however you might express the norm of unconscionability. 

MR HODGE:   Yes, strictly that must be right.  That is, you would need to plead out all of the facts here in an integer-like way.  You would need to say it is a norm of society not to take advantage of people, but in a conventional way of dealing with the pleading, with what might be regarded as the ordinary commercial values embedded within society – do not take advantage of people, do not act dishonestly, fidelity to a bargain – I think it is highly unlikely that anyone is going to take a pleading point to say you needed to specifically plead that society at large held those values. 

GLEESON J:   It has to be taking advantage to a degree that amounts to unconscionable conduct, or taking advantage to a degree that is a substantial departure from accepted commercial standards.

MR HODGE:   I accept there is – once we actually got into the pleading of it and a particular case there might be various issues of degrees – do you need to plead something more than to simply say these people who were unwitting were taken advantage of?  What seems to be built into – the reason I use “unwitting” and “taken advantage of” is because that seems to be the most common way that the Full Court phrases it, and that is a more conventional way of understanding unconscionable conduct because what it is effectively saying is you are a vulnerable person and you have been taken advantage of.  But none of that was pleaded against my client, and it is not – the Full Court is quite express ‑ ‑ ‑

GORDON J:   But it was Mr Hodge, was it not?  In the sense that what was pleaded against your client was that you knew of the two risks, which are misconduct by the agents and unsuitable enrolment.  You knew you had at least two mechanisms in place that minimised or reduced that risk and you took those two away knowing that the risk existed, and that as a result of taking away the risk was necessarily amplified.  One of those was vulnerability, in relation to both categories of student. 

JAGOT J:   Could I just, before you answer that, add to the question, which is, if you add to that the pleading which is “Further or alternatively” at 137AA, you knew that the process changes were likely to lead to the types of things that were the process changes results, and those things include – well, the matters that you have taken us to is 122, is it not, which include (c):

a substantial increase in the number and proportion of consumers who incurred a VFH Debt but who did not complete –

and (d):

were not contactable –

I am just wondering why it is not comparable to the inference‑drawing process that is in Rural Press.  I am assuming you are right that you need to understand – you would need to prove actual language of a norm and the quality of falling seriously short of the norm.  Why is that pleading not adequate to raise those issues?  The norms are not secretive or difficult.  The norm is you do not take advantage of vulnerable people.  Why is it that that is not an adequate pleading – not that that we are really looking at that – but why is it that inferentially you could not get there anyway?

MR HODGE:   Well, my short answer to it as a pleading matter is, if the norm is not taking advantage of somebody and you do not plead that you knew that somebody was being taken advantage of, you on any view have not completed – on my construction of the law, you have not completed the material facts that are necessary for accessorial liability. 

STEWARD J:   Mr Hodge, is your point that when Mr Wills supported the changes of removing the two safeguards, he did so without any knowledge about the difficulties with unwitting and unsuitable students and abuse by course advisers?

MR HODGE:   No, we do not challenge the findings that I will take you to in a moment, which are that he knew that there was a risk.  There is a slight issue which is about campus driven withdrawal because the primary judge accepted that he did not understand the relationship between campus driven withdrawal and the effect of passing through the census, which I will take you to.  But the point is a more fundamental one, which is the premise upon which it is said that this conduct is unconscionable, if you boil it down – that is the primary contravention – is that there were people who were taken advantage of, and that is the thing that makes it against conscience.  There was not a case that was put against Mr Wills that he knew the people were being taken advantage of, and that is the problem.

JAGOT J:   I am just perplexed, given that the whole business model carried within it these known manifest issues that people were being taken advantage of, lots of people, and that is part of the whole – the numbers.  You would only need to look at the numbers and know it was pleaded and found that he knew of the two risks.  Inherent within that is a taking advantage of because it is imposing on people a debt for something they are never going to get any benefit from.

GORDON J:   Put in a different way, your analysis seems to me to ignore what went before.  What went before about knowledge are the things that Justice Jagot just put to you.  Those risks were real.  Your figures before the period the subject of complaint were real, and you knew them.  Not only did they know them, they took steps to minimise them.  What happened was the complaint is – putting aside whether that conduct was unconscionable – you then took off two of things which minimised the very risk that you were seeking had come home.  They were not hypothetical.  They were real.

MR HODGE:   Yes.  Can I respond to that in three ways.  The first two are brief and then the third one I need to take your Honours to the judgment.

JAGOT J:   And in responding could you just – the word “prevalent” appears throughout the reasons that they are not – Justice Gordon says “real”, but in fact they were prevalent.  It was inherent within the business model that this misconduct was occurring at a high level, and then something happens.  So, that is what I am struggling with.  Why does that not inferentially lead to all the knowledge you need?

MR HODGE:   That is a slightly different question from whether or not the case, as pleaded, gives rise to the fact.  But I understand what your Honour says, which is, can you inferentially go from what is found to be known to the finding of “take advantage”.

STEWARD J:   Can I ask you this question, slightly differently.  Why would you not infer knowledge that he was taking advantage of the students on a Jones v Dunkel basis?  Given what we know he participated in and what he did know, why could you not just draw the inference?

MR HODGE:   That was not the allegation that was put.  Of course, whilst it is said Jones v Dunkel – and you can sense the moral outrage that comes through the idea that Mr Wills did not give evidence – but to say we did not plead a case that he took advantage or knew that people were being taken advantage of and then to try to use Jones v Dunkel to pull it up, is problematic.  He has to meet the case that is pleaded against him.

EDELMAN J:   I understood your point to be a different one; not that the knowledge of the likelihood that the process changes results would occur or that the results of that type would occur needed to be characterised as a “taking of advantage”.  I thought your point was that the knowledge of these likely process changes results needs to be accompanied, also, by a knowledge that that risk, or that effect, is contrary to a normative standard of conduct which in the community is so sufficiently serious that it would amount to unconscionable conduct.

MR HODGE:   Yes, that is right. 

BEECH-JONES J:   Or, to put it bluntly, he knew that what the company was doing for a form of sharp practice.

MR HODGE:   Yes.  That is the point.

BEECH-JONES J:   I thought that was your point.  But that is just saying it is not in pleading and it is not in the judgment.

MR HODGE:   Yes. 

GAGELER CJ:   It is no part of your case to say that an inference of knowledge would not have been available if the case had been put.

MR HODGE:   Yes.  Can I just try to give a brief answer, though, to pull together the points made by Justice Gordon and Justice Jagot, which is – and this will become apparent when one looks at the judgment, but the temporal issue does create a problem here because at the time that the process changes are made – and they are not made by Mr Wills – one question is:  is it known that the consequence of the process changes is likely to be people being taken advantage of?

Then, there is another question that would arise at a later point of time, where Mr Wills is said by the Full Court to have been fixed with knowledge, which is, at that point in time, the process changes have already been made, people are already going through the census, and the question then that arises is:  what is the particular conduct then that he has associated himself with and why is that conduct unconscionable?

To illustrate that further, what we know happened was that it was not as if the College simply gave up on the students or did not even attempt to contact the students and so was taking advantage of them in the sense of just bringing in all of the money and not trying to offer a service.  They introduced a process of actively trying to contact the students in order to get them to engage.

The reason I raise that is because that illustrates the complexity of saying, just on the basis of this pleading and what was put against Mr Wills, it must have been unconscionable so long as you knew that there was a real risk that the consequence of the process changes would be that more people would progress through census without actively engaging.  There is always going to be more that is required, and the question ‑ ‑ ‑ 

BEECH-JONES J:   Mr Hodge, that just sounds like Mr Giles’s argument yesterday, and I just did not think that was part of your appeal.

MR HODGE:   It is not.  I do not want to go there.  The reason I raise it is just to illustrate the complexity of saying you can just infer something, some understanding of wrongfulness against Mr Wills just on the basis of these facts.  Can I switch, then, to the judgment.  If your Honours take up the – perhaps the core appeal book from the other appeal.  I can do it off of either, but that way you will only have to have one judgment that you mark up rather than two.

GAGELER CJ:   Are you going to the Full Court judgment?

MR HODGE:   Yes.

GAGELER CJ:   If you give us the paragraph numbers, it might be the simplest thing.

MR HODGE:   Thank you.  If your Honours go to paragraph 122, which is on page 272, you will see there the Full Court quote from the primary judge’s conclusion as to what makes this unconscionable.  Could I just invite your Honours to read that.  You will see there the way in which the primary judge framed it was by reference to what might be thought to be the conventional kinds of values that are embodied within unconscionable practice; taking “advantage of the consumers”, “sharp practice”, “manifestly unfair”, and “preyed on their vulnerability”. 

Then, if your Honours go over the page, you will see the Full Court summarises the findings of what Mr Wills was aware of, at 125.  And which, effectively, the trial judge’s findings, except in one respect, matched up to the finding ‑ ‑ ‑ 

GAGELER CJ:   What paragraph?

MR HODGE:   Sorry, paragraph 125 – matched up to the findings about knowledge that had been pleaded.  Then they identify some other matters, as well that the primary judge found was known, in paragraph 126.  Can I just give your Honours a moment to read that.  The only note I would make is, you see at the end of 126(a), it says:

The ongoing risk of “CA misconduct” had been brought to his attention –

I do not think it makes any meaningful difference, but that is ongoing CA misconduct in the industry, and it is a reference to the fact that there was exposure and a legal case that had been brought in respect of another college called Phoenix, and there was – within this college they were looking at that, and they were concerned to try to prevent CA misconduct.

If your Honours go over the page to 274, you will see subparagraphs (e) and (f) are findings that Mr Wills was aware of part of the process changes results, and you will see, though, that comes after the period when he is the acting CEO, and his knowledge of those outcomes is not linked to the risks of CA misconduct or the unsuitable enrolment risk.  Then, if you come to page 300 ‑ ‑ ‑

BEECH‑JONES J:   What is the paragraph number, Mr Hodge?

MR HODGE:   The paragraph is paragraph 186, on page 300.

GORDON J:   Just before you leave there, do you make anything of what is in 127?  We cannot ignore that, can we?  That is part of the context.

MR HODGE:   Yes.  That is involvement, as I understand it.  I am going to come to that as the second ground.

GORDON J:   I see, thank you.

MR HODGE:   If your Honours go to paragraph 186 on page 300, this seems to be the majority in the Full Court summarising or pulling together why it is that they regarded the conduct as unconscionable.  You will see in about the eighth line, it said:

These were persons being enrolled in the online campus in circumstances where the person did not do so willingly and with full knowledge of the obligation being incurred or where the person is unsuitable for enrolment because they lack sufficient . . . skills –

Presumably, then, what this is saying is what the College knew was going to be the effect – that is, the finding, as we apprehended – or expected to be the effect, was that there will be a large increase in the number of unwitting and unsuitable students, presumably – to put it in a different commercial term – people who did not understand the transaction that they were entering into.

STEWARD J:   Can I ask this question.  Having regard to what Justice Gordon drew to your attention at paragraph 127, why would we not just attribute the knowledge of the College to Mr Wills, who was the representative, if you like, of the shareholder?  He was intimately involved, he had oversight.  In circumstances, he does not give evidence.

MR HODGE:   There are two answers to that.  The first is there was no pleaded case against my client that whatever the knowledge of the corporation was, was attributable to him as an individual.  And the second answer is, as a matter of attribution of knowledge, the fact that you are an officer of a corporation – in fact he, for most of the time, was not actually an officer of the subsidiary – but the fact that you are somebody who is involved in the corporation, even intimately involved in the financial management of the company, does not have the consequences as a matter of law that attributed to you are things that are known by the company but not known by you.

STEWARD J:   But he was a participant in the decision to remove the safeguards.  He was sent the Memorandum and he supported it.

MR HODGE:   He supported changes to the enrolment process.

STEWARD J:   In circumstances, he knew what two risks were, and he knew that these safeguards were designed to ameliorate those risks, so taking them away increases them.

MR HODGE:   Yes.  We might be at cross‑purposes.

STEWARD J:   Sorry.

MR HODGE:   We do not take any issue with the proposition that the things that he is found to have known, he knew.  I understood your Honour was raising the possibility there might be things that he did not have actual knowledge of but which the corporation had knowledge of, and therefore they could just be attributed to him.  But that does not work, in our respectful submission, either as a principle of attribution or what is required for accessorial liability.

STEWARD J:   Perhaps not as a principle of attribution but a principle of inference.

MR HODGE:   I suppose, we are battling with a hypothetical in the sense that there was no case put that it could inferentially be known that he knew whatever it was that the College knew.  The only case of inference is he knew the things that it is said to have been inferred.  He knew based on having read documents and things like that.

If your Honours then go to paragraph 198, this is part of the passage of the judgment where the Full Court is trying to grapple with the temporal issue with the Commission’s case.  It is, in our respectful submission, a paragraph that answers the question that a number of your Honours asked yesterday about what it is that is the conduct that was unconscionable or found to have been unconscionable.  It is clear that it is framed as a composite.  That is not what my focus is on.  My focus is the last two sentences of 198, where it said:

As found by the primary judge, the College took advantage of the students who were enrolled as a result of agent misconduct or who were unsuitable for enrolment by maintaining their enrolment and claiming VFH revenue from the Commonwealth . . . It is in that sense that claiming and retaining the resulting VFH revenue was a composite part of the unconscionable conduct.

It appears, then, the majority there is adopting that “take advantage” finding that we saw earlier in paragraph 500 of the primary judgment.  Then, if your Honours go to paragraph 327, on page 353, you will see here, this is the majority summarising the things that the primary judge found that Mr Wills knew.  Then it said:

they are the essential matters showing that the College engaged in a system of conduct that was unconscionable.

Could I invite your Honours to read that paragraph.

GORDON J:   This is 327?

MR HODGE:   Yes, your Honour.  You will see there is no finding that Mr Wills knew, either before the process changes were implemented – which is an irrelevant period in any event because his knowledge is not said to extend back to that point – or during the time of the implementation of the process changes, that the reason that the high proportion had changed – or the reason there was a change in the proportions was because there was a substantial increase in the number of students who were unwitting or unsuitable, and there is no finding that he knew that those people were being taken advantage of.  Then, if your Honours go through to paragraph 338, which is on page 356.

JAGOT J:   Did we skip 331, or did you go to that?  Just the last bit of 331, in particular.

MR HODGE:   Yes.  Is your Honour referring to the last sentence?

JAGOT J:   Yes.

MR HODGE:   Yes.  In my submission, that does not change what, in our submission, is the problem with the case.

JAGOT J:   No, no.  I understand on your case it does not, because you would say it embodies the problem.

MR HODGE:   It does embody the problem.

JAGOT J:   Yes.  I just thought it was relevant while you were along the way.

MR HODGE:   Thank you, your Honour.  At paragraph 338, you will see the Full Court returns to the question of the essential matters.

BEECH‑JONES J:   What paragraph was that, sorry?

MR HODGE:   Paragraph 338, that begins at the bottom of page 356 of the joint book.  So, could I just invite your Honours to read that.  We will note one thing about that which is you will see there is an extra essential matter that has been added there, which is the last essential matter, that:

the College knew, or ought to have been aware, of the immediate consequences of the changes, which was to escalate the numbers of students who were enrolled unwittingly or who were unsuitable for the course in which they were enrolled.

It is a bit confusing, because that is not a finding that was made by the primary judge, and the Full Court does not say that that was a finding made by the primary judge, but they identify that as one of the essential matters and then proceed on from that.  But they still do not suggest or deal with what we say is the fundamental issue which is, what you need to know is that these students are being taken advantage of.  That is the premise of the thing, and that is the essential matter.

GAGELER CJ:   Mr Hodge, this might be unduly reductionist – I do not think it is – but if you go back to the last sentence of paragraph 331, to which Justice Jagot drew your attention, you accept, I think, that Mr Wills had knowledge of all of the essential matters that rendered the College’s system of conduct unconscionable.  What you say was not pleaded and not put by the ACCC, was that he had knowledge that the conduct was unconscionable; equating unconscionability in this context with taking advantage.

MR HODGE:   No.  We disagree with both propositions because an essential matter that renders the – the primary contravention gives rise to it – is that they are taking advantage of vulnerable students.  So, the two things cannot be disentangled.  It was not said that he knew that and that must, necessarily, be an essential matter that gives rise to the contravention.  It is apparent through the reasons of both the primary judge and also the Full Court. 

EDELMAN J:   I think you might be mixing up two different points.  One point, as I understand it, is that the “taking advantage” element is a necessary factual matter in the context of this case that needed to be established.  The second point – which is what the Chief Justice is also putting to you – is that I understood your case to be that, in addition to that, he also needed to know that the taking advantage in these circumstances was of sufficient gravity as to amount to a serious breach of the norms of society that might otherwise attract the label “unconscionable”.

MR HODGE:   That is right.  But, neither of those things are things that he was said to have known or found to have known.

EDELMAN J:   But they are different points.

MR HODGE:   They are different points – I agree with that.  Can I then pick up the suggestion by Justice Beech‑Jones yesterday that I have a look at R v Ghosh, which is helpful in the sense that it illustrates that there is nothing particularly foreign about the approach that we are suggesting because the standard of dishonesty under Ghosh and also under the Criminal Code has two components to it, as your Honours know – that it is dishonest by the ordinary standards of reasonable and honest people, and that the defendant knew that it was dishonest by those standards.

In our submission, that process of – or that factual necessity that arises in relation to dishonesty is the same kind of standard that arises in relation to unconscionable conduct; that what needs to be known is that the conduct was contrary to the ordinary standards of commercial people.  The court at the end of Ghosh gives a Robin Hood related example, to tie it back to Friar Tuck, but I do not think we need to explore Robin Hood any further, other than to say there is nothing in our submission particularly innovative about the proposition that we put.

The point that we are making is, there is this element, it is an element that is understood as being factual.  There might or might not be some challenges for the Commission in establishing it – though, in our submission, the practical challenges are overblown – and this is the test that the legislature has set. 

Can I then move to the two cases that Justice Gordon wanted me to look at, which are Stefanovski and Colin R Price.  So, Stefanovski (2018) 368 ALR 607 is in the joint book of authorities volume 8, tab 56, at page 2377. If your Honours go to page 628 of the judgment, page 2398 of the joint book. I expect it was paragraph [71] of that judgment to which Justice Gordon was referring. Could I invite your Honours to read that.

So, this was a case where there was a finding of accessorial liability at trial based on, at least seemingly primarily – sorry, accessorial liability to unconscionable conduct at trial.  There were a whole series of problems with what had happened at trial, but this particular one is that the unconscionable conduct was said to arise from:

a breach of a duty of good faith –

In our friends’ submissions, they suggest it is a contractual duty of good faith.  It is not entirely clear from the judgment, but it seems more likely it is a statutory duty of good faith under the Franchising Code that is being referred to.  The court says in that case that it would at least be necessary to know all of those circumstances, and given that in that case the relevant circumstance was said to be a breach of the duty of good faith, that it was necessary to plead that duty, and plead the breach of that obligation.

In our submission, that is certainly not inconsistent with the proposition that we put – and we would say consistent – and we have relied upon it because if the relevant norm – that is, the thing that gives rise to the finding of unconscionable conduct – is that there is a statutory standard of good faith – or even if it is not a statutory standard, there is just a standard of good faith – it is necessary to plead that the accessory knew of that standard and knew that it is breached.  It is insufficient to plead that they knew a series of facts from which ultimately the finding is going to be made that there was a breach without pleading that they knew about the standard and knew about the breach.

Then the other case that is referred to by both my client and the ACCC is the decision of Colin R Price 251 FCR 404. That is volume 7, tab 47, at page 1992 of the joint book. The relevant part is on page 426 of the judgment, page 2014 of the joint book, paragraph 89. Again, in our submission, there is nothing inconsistent in that with the proposition that we put. The two accessories in that case were found to have known about the vulnerability and poor bargaining position, the unfair tactics and undue pressure, and the taking advantage of the predicament.

I am not sure whether a pleading issue arose in this case – there were other procedural issues that arose – but in any event, in answer to your Honour Justice Gordon’s question yesterday as to what were needed to be pleaded, if the case is that the unconscionable conduct arises from the vulnerability of a person and the taking advantage of that vulnerability and the application of unfair tactics to that person – that is, the introduction of the conventional kinds of values embodied in unconscionable conduct – then it would be necessary to at least plead the knowledge by the accessory of the fact of those things.

One would think that it is also necessary to prove that those are conventional values, but as I said before, with most of the standard kinds of things that we are thinking about – fidelity to a bargain, good faith, not taking advantage of vulnerability – I expect, in a practical sense, in courts in this country, there would be no pleading issue that would arise from not saying that that is a norm of society.  It might be, if you were talking ‑ ‑ ‑

EDELMAN J:   I am not sure that is right.  There is values, and there is unconscionability.  It may not be unconscionable to have a breach of the obligation of good faith in all circumstances, or it may not be unconscionable in all circumstances to have a breach of an obligation of fidelity.  Ultimately, it depends upon an evaluative exercise, whether in the particular circumstances it is sufficiently serious a breach of good faith, or a breach of fidelity, and so on.

MR HODGE:   I do not disagree with that.  Can I break that down into two propositions.  One is that if you were dealing with a value that is outside of what we might think of as just the core values of taking advantage of somebody who is vulnerable, and so to take up the point made by Justice Steward yesterday, what happens if it is some unusual value that needs to be pleaded, then you will have to plead it.  So, for example, the statutory duty of good faith.  Undoubtedly, you would need to plead that there is that statutory duty, because that is the value, that is the thing that needs to be contravened.

The second point is the way in which you breach that might or might not be sufficient to give rise to unconscionable conduct, and it might also follow – depending on the particular case – that it is not sufficient to just plead there is a breach of the duty of good faith, you would need to plead other circumstances about the way in which that duty was breached, because it is the way in which that duty is breached that leads to the legal characterisation of unconscionable conduct.

I was about to go back to something from Ghosh.  Perhaps I will do that just to illustrate this point again using the Robin Hood example.  Ghosh is not dealing with accessorial liability, it is dealing with primary liability for dishonesty, but if you had a circumstance in which to take Robin Hood, there was some question about whether if the social norm was not to steal, then undoubtedly you would need to positively plead that the social norm was not to steal.  The actual point made in Ghosh about Robin Hood is:  it does not matter that Robin Hood thinks it is okay to steal, he knows that that is against the standard social value not to steal, but if we were looking at something where there is something unusual or different about the particular values – to go back to Justice Steward’s point – you would undoubtedly need to specifically plead that, and identify the basis upon which that value arises.

JAGOT J:   Even though the source is the statute?

MR HODGE:   Assuming we are talking about the source being the statute, as opposed to a value at large within society, then presumably what you would plead is there is an obligation arising from the statute not to do things without good faith, which is the thing that in Stefanovski the Full Court said needed to be pleaded.

JAGOT J:   I do not want to distract you too much, but you made a point about paragraph 138 where the Full Court said the College knew, or ought to have been aware of, the immediate consequences, which was to escalate the number of students, and you said that, in fact, the primary judge had not found that.  I am trying to work out what significance you give to that, because all they are dealing with there is whether Mr Wills knew that at 7 September or later – and they are saying he knew it later, not at 7 September.

MR HODGE:   Yes.

JAGOT J:   I read that as meaning that they took it that the trial judge had found that he knew that – leave aside the words “ought to have been aware” for the moment – at 7 September.  If that is the way to read that, then is that not a taking advantage of?  Taking advantage of is just another way of describing that sentence.  If that is right that the College knew that, or – leave aside “ought to have been” – expected, anticipated in the sense that it must have because look at its previous numbers – you cannot escalate the numbers, withdrawing the protections, without increasing the number of unsuitable or unwitting students, because that is inherent in the business model.  Why is that not enough, even on your test?  Even accepting what you say, that you need to know a norm, you need to know that what was being done was in breach of the norm, why does that not all get you there?

MR HODGE:   The court does not say that the primary judge found that Mr Wills knew that these students were being taken advantage of.  So, to come back to your Honour’s question to me much earlier this morning and my answer to it – or my attempted answer to it – whether or not the fact that there were many students who had been enrolled unwittingly or who were unsuitable, that there is then a taking advantage of them depends upon what the response is.

For example, when you come to the point when a whole lot of students have been enrolled, one way that you might respond – which, effectively, is the ACCC’s case – is to say you needed to automatically disenroll any of them.  You effectively needed to reintroduce campus driven withdrawals.  But that would not be the only possible response.  Another possible response would be to investigate whether there has been CA misconduct to attempt to institute contacting students in order to determine why they are not active and to then deal with the students in that way.  One way involves taking advantage of the students, the other way presumably does not.  That is, you are not trying to take advantage of the students, you are trying to identify why it is that they have been enrolled. 

JAGOT J:   But you know from the two risks, you know as I am not following, I am just putting together the end of 331, that says: 

Mr Wills had knowledge of all the essential matters that rendered the College’s system of conduct unconscionable. 

And then you go to 338, and they summarise: 

the essential matters that rendered the College’s conduct unconscionable –

That must be relating back to the end of 331.  I mean, it is using the same language.  They are: 

not persuaded that there was any error . . . of all of the essential matters that rendered –

and then you go to 338: 

As summarised in the context of the appeal by the College and Site, the essential matters that rendered the College’s conduct unconscionable at its inception were –

And one of them is this matter where they knew – I am going to leave aside “ought to have been aware” and say expected/anticipated – that the immediate consequence of the change was to escalate the number of students “who were enrolled unwittingly” or “unsuitable”.  There is, really, almost no step there to get to “taking advantage of”.  That is what I am lost by.  You do not challenge that particular thing; you said the primary judge did not find it – you do not say ‑ ‑ ‑

MR HODGE:   No.

JAGOT J:   No, so there it is.  And you do not challenge the end of 331.

MR HODGE:   No, we do not challenge 331. 

JAGOT J:   I am just wondering, even if you are right about quality of conduct, it just seems a microscopic distance – anyway, maybe that is just me, I do not know, I am only thinking for me, I cannot get much distance between that and what you are saying. 

MR HODGE:   I understand.  I think the only answer I can ‑ ‑ ‑

GORDON J:   Can I just add one part to that?  That is what is pleaded.  Although it is identified as a risk, it is actually pleaded, and found, to be the reality.  That is, that students were taken advantage of because they were unwitting, and they knew that not only from their own business model and what had happened in the period before but because there had been reports and things in the media that this is actually what was happening.  So, the taking advantage of was a risk, but it was a risk that had come home in the past which they had sought to minimise.  The daylight between, as Justice Jagot says, those two paragraphs is pretty small, if there is anything at all.

MR HODGE:   As I say, the – and I do not know that I will be able to give any better answer to this than what I am about to say – the fact that you know there is a risk of something bad happening, and the fact that you reduce the protections you have against those risks occurring is not itself, one would think, sufficient to establish unconscionable conduct.  There are other elements that are involved, which are that, relevantly, you are taking advantage of the people who are then – due to the risk having actually come to fruition – are in a position where you are seeking to derive a benefit from them in a way that can be characterised as taking advantage of them. 

STEWARD J:   So, that means that you say that when Mr Wills supported the decision in August 2015 to remove the safeguards in order to increase enrolments, he thought that all the increased enrolments come from students who would not be unwitting or unsuitable or not subject to course advisor risk.

MR HODGE:   There is no finding or suggestion that he thought that the increase in enrolments was going to come from students who were unwitting.

STEWARD J:   It beggars belief.

MR HODGE:   It might not – the reason I say that is ‑ ‑ ‑

STEWARD J:   Given all the things Justice Jagot and Justice Gordon have put to you, it does beggar belief, does it not?

MR HODGE:   Except it was not the case that was put against my client.  And the positive finding that is made about knowledge is, if your Honours come to the primary judgment and go to paragraph 282, which is page 82 of the core appeal book, you will see in the second sentence, it said:

It is not established on the evidence that Mr Wills, unlike the college’s officers, was necessarily aware that the poor conversion rate was because of the high proportion of students who were uncontactable and who were therefore subject to campus driven withdrawal.

The way in which this connects together is that the critical change that was made is not really the change from outbound to inbound calls.  It is a change to remove campus driven withdrawal.  The connection through all of this is that if students were not actively participating then, pre‑ the change, the campus would automatically disenroll them before the census date, but after the change they were not automatically disenrolled.  That fact is presumably the fact that ultimately is the way in which – we would say is the thing that matters when one is thinking about “take advantage”, but none of this is – and I emphasise this – this is just not the way in which the case was put against my client.

GORDON J:   We might have distracted you, but I think the Full Court paragraphs at page 346 and following – I do not seek, Mr Hodge, for you to go through it, but they address this in some detail.

MR HODGE:   They do address it in some detail, your Honour.

GAGELER CJ:   Mr Hodge, where are we up to in your outline?  I am comparing my estimation of your progress with your estimate of two hours in total in chief.

MR HODGE:   Yes.  At this point, I am only at halfway through the second page.  What I might do is give you two sentences to deal with the remainder of the second page of my outline, and then move to what is the last issue, which is in relation to what is participation.

GAGELER CJ:   Yes.

MR HODGE:   And, in relation to the other points that we make, I have addressed already the first, second and third reasons advanced by the Commission.  The fourth reason is, in our submission, effectively a re‑statement of the first reason – it is just another way of saying that there is some distinction that is to be drawn so that the fact of the conduct being unconscionable is something that does not need to be known because it involves an evaluative judgment.

The fifth reason, which invokes the ideas of the morally obtuse, is problematic for two reasons.  The first, I identified yesterday, which is it is really invoking a standard of knowledge which is not the standard of knowledge under accessorial liability under statute.  The second reason is that it seeks to change the standard for accessorial liability depending upon what the primary contravention is, whereas what is the primary contravention cannot affect what is the standard for knowledge.  It always, in our submission, has to be is this an essential matter or an essential element giving rise to the contravention.

GAGELER CJ:   And how long do you expect to be dealing with ground 2.

MR HODGE:   I think 20 minutes.

GAGELER CJ:   Very well.  The Court will take its morning adjournment at this stage.

AT 11.14 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.30 AM:

MR HODGE:   Your Honours, to condense the second point as much as possible, can I ask you to go to the Full Court judgment and go to paragraph 283, which is on page 333 of the appeal book in the other proceeding.

STEWARD J:   Did you say paragraph 283?

MR HODGE:   Paragraph 283, yes, your Honour.

STEWARD J:   Thank you.

MR HODGE:   This is the beginning of the majority’s reasoning as to what is the activity of Mr Wills that was the thing that associated him.  I should just note, the majority acknowledges – if your Honours go back to paragraph 280 – in the middle of that paragraph, that:

Occupation of an office does not of itself establish participation in or assent to conduct.

We do not understand there to be any dispute about that.  What the Court then does – or the majority does – at 283 is to set out various facts that they say show that:

Mr Wills had considerable authority –

If your Honours then go over the page to paragraph 284, you will see they set out some further facts in 284 and 285 saying, in effect, he:

had high level responsibility for the College –

Then, in 286, say:

The foregoing matters do not establish that Mr Wills participated in the contravening conduct.

They say:

They provide the backdrop to the decisions that were made that involved the contravening conduct.  Those decisions, which involved Mr Wills, were as follows.

Then, what follows are a series of five decisions, beginning in paragraph 287 and ending in paragraph 292.  The decision in 287 is a decision made in April 2015.  The decision in 288 and 289 is a decision in August 2015.  The decision in 290 is also a decision in August 2015.  The decision in 291 is a decision in August 2015, and the decision in 292 is a decision in September 2015.  So, all of those five critical are decisions made before the Full Court later finds that Mr Wills had knowledge of all of the essential facts.  But you will see in paragraph 293, the Full Court says: 

On the basis of the above facts, we consider that the primary judge was correct to find that Mr Wills was “concerned” in that part of the College’s contravening conduct that comprised the implementation of the enrolment process changes.

Our submission is simple:  it is impossible that that conduct could constitute his participation in the contravening conduct because it could not be with knowledge and intent because the later finding is he did not have the knowledge until 20 November 2015, or thereabouts.  Then, at 294, the Full Court switches to dealing with the implementation of the enrolment process changes, and your Honours will see in the fourth sentence there is a reference to a decision on 30 September 2015, so also a decision before it was said that he had knowledge, and then there is a reference to his receiving the papers and attending two management meetings of the College on 21 October 2015 and 18 November 2015, so also before he had knowledge, and then there is a discussion about what was discussed in those meetings.  Then when you come to the last two sentences it says:

Mr Wills was acting CEO from 20 November 2015 through to 20 January 2016.  In the period until September 2016, the findings of the primary judge show that Mr Wills continued to exercise authority over the College and received regular reports about the College’s revenue and student engagement (or rather lack of student engagement).

Those facts – and I will come in a moment to what was pleaded against Mr Wills – but those facts are also not capable of establishing participation in the contravening conduct.  It is not said, and was not found, that he was exercising authority over whether the College was continuing to implement this system.  It was not said that he exercised authority over whether the College claimed or retained VFH revenue because that was never the case that was put against him.  In 295 there is then a summing-up of what is said to be his continued exercise of authority and supervision over the College, and you will see there are these points made.  First, that he:

continued to receive reports about the implementation of the enrolment process changes and its effects on enrolments and VFH revenue –

That might go to knowledge, but it does not go to participation.  Second, and importantly ‑ ‑ ‑

GORDON J:   Well, it might, in this sense – your client did not give evidence, but it might in the sense that he continued to receive reports but there is no evidence that any step was taken, having received the reports.  So that is participation by absence of act.

MR HODGE:   If the case that was pleaded against him was that, having regard to his position, he ought to have taken a step and he failed to take that step, then that would be a different case, but that ‑ ‑ ‑

GORDON J:   I do not think that is necessary.  It is that you have this knowledge and your participation was taking no step to stop it.  You do not need to plead that, one just looks to see whether the system – we are doing a systems case here, and we are trying to work out whether someone is accessorily liable.  Anyway, I do not think that one can just say that that is knowledge and not address it as part of participation.

Mr Wills also had knowledge of all of those matters.

And then it says “See”, and it refers specifically to 188, so calling back to that Sero finding, and then says:

It is not established on the evidence that Mr Wills, unlike the college’s officers, was necessarily aware that the poor conversion rate was because of the high proportion of students who were uncontactable and who were therefore subject to campus driven withdrawal.

And his Honour refers back to his finding at 223.  It is that specific finding of what he did not know that is the problem that then the Full Court is overcoming when they then find, well, actually he did have knowledge as at 20 November 2015 of the essential matters because they are finding that by then he understands the significance of this, and that is why, in our submission, the ACCC’s notice of contention cannot succeed. 

There is one other observation I should make about that, which is it is later in the judgment, as your Honours have been taken to.  That is, the primary judge goes through and deals with these specific findings of knowledge as against Mr Wills – and your Honours have seen those, that is in the 500s.  One of the issues that the Full Court had to grapple with was the absence of temporal consideration in relation to most things but particularly knowledge, so that part of the problem was – and this was, as your Honours know, not something that the Full Court necessarily blamed the trial judge for but blamed the ACCC for – that the ACCC did not draw temporal lines and deal with things in that way.

In fact, what is happening when it comes to knowledge, and what the Full Court is doing, is not that they are, in fact, in a true sense reducing the findings of the primary judge.  What they are actually doing is taking those findings and putting them within the context of the necessarily chronological nature of time to say at what point in time does he actually know the things he needs to know.  The second point in reply is in relation to Rural Press.  Could I ask your Honours to take up the transcript of the first day of argument of Rural Press. 

BEECH‑JONES J:   Just before you do, Mr Hodge, do you accept that if the notice of contention succeeds, your ground 2 falls away?

MR HODGE:   Yes.

BEECH‑JONES J:   Thank you.

MR HODGE:   If your Honours have the transcript and go to page 26, at line 1014 is where Mr Douglas’ submissions about accessorial liability begin. Can we direct your Honours to some parts of that. If you go over the page, to page 27, you will see at line 1081 that Justice Heydon said:

Mr Douglas, do you challenge that last sentence, beginning “I do not consider it is necessary for the ACCC to demonstrate”?

Then, Mr Douglas says they do not challenge any factual findings. Then, you will see the exchange that then follows down to line 1095. Then, if you come over the page, to page 28, after it appears that a substantial part of the reasons have been read out, you will see Justice Gummow says:

Mr Douglas, can we just look again for a minute at your submissions in‑chief?

Could I invite your Honours to read from line 1143 and then over the page to line 1167?  You will see what has happened is up to this point, then – and Mr Douglas agrees at 1169 – the questioning from Justices Heydon and Gummow have eliminated paragraphs 38, 39 and 40 of the submissions. Then, at 1179, they then begin on paragraph 37, and Justice Hayne joins in, and the consequence then is that, in effect, the whole of that submission gets seemingly abandoned, and Mr Douglas then reframes the submission.

If you come over the page to the part that our friends referred to, on page 30, at line 1230, you can see the way in which the submission is re‑put is to say it is about an effect of substantially lessening competition in the market as defined, and if your Honours come over the page to page 31, and could I invite you to read from line 1250, part‑way through Justice Heydon’s question, where it begins:

What Justice Mansfield –

who was the trial judge, and then through to line 1276, the conclusion of the observation by the Chief Justice.

GAGELER CJ:   Can you just let us in to the punchline.  Where are we going with all of this? 

MR HODGE:   The point of this is to say what appears to happen is whatever the submission is that was being made by Mr Douglas is reduced, at this point on page 31, to something that is about knowing that it is in a market, which is the submission that I made earlier.  It is not about understanding the characterisation of it in the terms of the Act as, to use our friends’ expression, the norm of substantially lessening competition.  Then, when you go further over the page, to page 32, after the Court returns from the luncheon adjournment, at line 1304 to 1310, it appears that what then happens is Mr Douglas further reduces what is the nature of the submission to something that has been put in their written reply.

GAGELER CJ:   Well, do we know what that is?

MR HODGE:   No.

GAGELER CJ:   Well, it is not very useful then.

MR HODGE:   The point we make is once you work through this, trying to understand what it is that is put, in our submission, if you also add that to the particular things raised in the Full Court and the way it is put in this

Court in the judgment, it is not about something to do with the characterisation of something in accordance with a norm, it is about this issue, confused as it is, either about whether Yorke v Lucas requires knowledge of the contravention or, alternatively, about whether or not it requires knowledge of a market in the way in which it is defined for the purposes of the proceeding.

Our point, then, is whatever Rural Press is dealing with in terms of an argument, which is confused – that is, the argument is confused – it is not something that precludes the proposition or determines the proposition that we put in this case.  The last point we make in reply is this.  The way in which the submission was put to your Honours is that the normative judgment is not an essential matter for a contravention of the unconscionable conduct prohibition.

The difficulty, in our submission, with treating this as something that is a mixed question of fact and law, and therefore something to be removed away from what needs to be understood by the person who is said to be an accessory, can be looked at by considering it in this way.  The reason that you have to have knowledge as an accessory, or a reason, is so that you are also able to intentionally associate yourself with whatever the contravention is. 

If this reasoning was right, that this issue of normative judgment gets removed from what the thing is that you have to know and therefore the way in which you have to intentionally participate, the consequence is that you could have a positive belief that the relevant conduct is within the societal norms of acceptable commercial behaviour and yet, nevertheless, so long as you have done some act that associates you with the conduct and you are aware of all of the facts that the Commission says gives rise to the, what they say is, the pure legal question to be decided by the court, then nevertheless you can be found to have intentionally associated yourself with the contravention.  That, in our submission, is inconsistent with the principle that underlies Giorgianni.

Those are our submissions, your Honours.

GAGELER CJ:   Thank you, Mr Hodge.  The Court will reserve its decision in this matter and will adjourn until 10.00 am on Tuesday, 13 February.

AT 3.14 PM THE MATTER WAS ADJOURNED