Australian Competition and Consumer Commission v Cornerstone Investment Aust Pty Ltd

Events since the liability hearing 10 On 29 November 2018, Parliament passed the Higher Education Support Amendment (VET FEE-HELP Student Protection) Act 2018 (Cth). This Act inserted cl 46AA into Sch 1A of the Higher Education Support Act 2003 (Cth) (HES Act). Clause 46AA(1) empowers the Secretary to make a decision, on the Secretary's own initiative, to re-credit a consumer's VET FEE-HELP balance if the Secretary is satisfied that it was reasonably likely that the VET provider or its agent engaged in inappropriate conduct towards the consumer.

"Non-completion students" 11 The Department of Education and Training (Department) initially identified 4,066 consumers who had enrolled in an Empower course in the relevant period, but did not complete a single unit of study (non-completion students). Subsequently, the Department identified an additional 29 such consumers, giving a total of 4,095 non-completion students. Ultimately, it was determined that there were 4,094 non-completion students who were considered by the Department to be "reasonably likely to have been subjected to inappropriate conduct" by Empower as a VET provider for the purposes of cl 46AA; and therefore eligible to be considered to have their VET FEE-HELP balances for their incomplete units of study re-credited by the Secretary of the Department under cl 46AA. 12 The Secretary's delegate, George Thiveos, has agreed to re-credit the VET FEE-HELP balances for the 4,094 non-completion students. The balances were re-credited in around May 2019. As at that time, it was anticipated that the VET FEE-HELP debts for 4,064 of the students would be remitted by the Australian Taxation Office, with steps being taken to secure this outcome for the remaining 30 affected consumers. 13 The result is that the non-completion students will no longer be saddled with the VET FEE-HELP debts that they incurred as a result of enrolling in Empower's courses. 14 The evidence is that the Department paid Empower $55,810,203.82 in respect of the 4,094 non-completion students. 15 The liquidators attempted to verify the Department's calculation of the amount paid in respect of the non-completion students, but were hampered by the lack of disclosure of the identities of the students. The liquidators determined that the total VET FEE-HELP amounts received by Empower during the relevant period in relation to non-completion students (of which they identified 4,051) was $55,337,557.52. As the liquidators observed, these figures are broadly consistent with the Department's evidence. 16 After the July 2019 hearing, the Department filed an affidavit which identifies the 4,094 consumers said to be non-completion students. Thus, it should now be possible for the liquidators to verify the amount paid to Empower in respect of those students.

"Completion students" 17 The Department identified 48 students (completion students) who were enrolled in an Empower course during the relevant period, of which 42 students completed the course and 6 students completed one or more units of study but did not complete the course. 18 On 13 May 2019, the Department wrote to these 48 students, seeking information about whether they wished to have their VET FEE-HELP debts cancelled and if: a) You received misleading or deceptive information when you were enrolled in your course with Empower; and/or b) You were offered an incentive to enrol, such as a free Google Chromebook; and/or c) You did not understand that by being enrolled in your course with Empower, you would owe a debt to the Australian government; and/or d) The Empower course you were enrolled in was not suitable for you… 19 The Department received responses from 39 of the 48 consumers. Of these, 36 consumers told the Commonwealth that they wished to have their VET FEE-HELP debt cancelled in respect of their enrolment with Empower. 20 Ultimately, the applicants identified 35 completion students in respect of which relief is sought under s 239 of the ACL. The Department paid Empower $515,860 in respect of the 35 completion students. 21 The liquidators received material from the Department concerning 34 completion students, including 30 of the 35 now identified. For some of these students, the liquidators expressed reservations as to whether the material shows that they were affected by misleading or deceptive or unconscionable conduct on the part of Empower. I have reviewed this material. Although the evidence is scant in some cases, on balance I am satisfied that all of them were affected by misleading or deceptive or unconscionable conduct on the part of Empower and that it caused them to incur VET FEE-HELP debts. 22 I have also reviewed evidence concerning the five completion students in respect of whom the liquidators were not provided with relevant material. I find that, in each of those cases, the consumer was the victim of contraventions of the kind identified in the liability judgment and that the contravening conduct caused them to incur VET FEE-HELP debts. 23 To be clear, one or more of the following applies to each of the 35 completion students: (1) when they were enrolled in the Empower course they received misleading or deceptive information; (2) they were offered an incentive to enrol in the course, such as a free Google Chromebook; (3) they did not understand that, by being enrolled in the course, they would incur a debt to the Commonwealth; and/or (4) they were unsuitable for enrolment in the course.

Declaration of contravention 24 The applicants initially sought 63 declarations of contravention based upon the findings in the liability judgment. Ultimately, however, the applicants sought a single declaration concerning Empower's contravention of s 21 of the ACL.

Purpose of declaratory relief 25 In Australian Competition and Consumer Commission v LG Electronics [2006] FCA 1118, Siopis J was satisfied that it was appropriate to make four declarations of contravention of s 52 and s 53(g) of the Trade Practices Act 1974 (Cth) (TPA), concerning statements made in user manuals for mobile telephones, saying (at [8]-[9]): …It is, in my view, appropriate to make the binding declarations proposed because this is a case which involves the public interest and the declarations will serve to vindicate the applicant's claim that the respondent contravened provisions of the Act. It may also be of assistance to the applicant in the future in carrying out the duties which are conferred on it by the Act. Further, the declarations will serve to mark the Court's disapproval of the particular conduct engaged in by the respondent in contravention of the Act. I adopt the observations of Lee J in the case of the Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329 at 333 where his Honour said: '...it may be said that there is some utility in declaring contraventions of the Act to have occurred in order to define and publicise the type of conduct that constitutes a contravention of the Act and to set out clearly the foundation on which the consequential orders by way of injunction and pecuniary penalty, including those based on accessorial liability, are grounded. ...' 26 In Australian Competition and Consumer Commission v Midland Brick Company Pty Ltd [2004] FCA 693; (2004) 207 ALR 329, Lee J made four declarations of contravention of the TPA in relation to certain price fixing arrangements. His Honour referred to the view that such orders serve no additional purpose when substantive orders are made, by way of injunction or the imposition of pecuniary penalties, based on the findings of such contraventions set out in the accompanying reasons. However, his Honour was ultimately satisfied that the declarations should be made, saying (at [22]): The object of orders made under s 76, or s 80, of the Act is to protect the integrity of markets and to prevent the subversion and distortion thereof by conduct that has the purpose or effect of adversely affecting competition. The Act sets out the norms to be met by corporations engaged in trade or commerce and in the main seeks to obtain adherence to those standards by providing for penalties to be imposed, and injunctions to be granted, that will be sufficient to deter corporations from risking, whether deliberately or negligently, the consequence of contravening the Act. Therefore it may follow that the foregoing purpose of deterrence will be served by declarations that set out particulars of contraventions of the Act. In the instant case I am satisfied that declarations should be made… 27 In Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2006] FCA 1730, Nicholson J made 12 declarations of contraventions of s 45D(1) of the TPA, saying that they were appropriate for the following reasons (at [6]): 1. [They] are an appropriate vehicle to record the Court's disapproval of the contravening conduct (Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1993) 41 FCR 89 at 100; Australian Competition and Consumer Commission v Chen (2003) 132 FCR 309 at [36] (Chen 132 FCR)); 2. [They] serve to vindicate the Commission's claim that the respondents contravened the Act (Australian Competition and Consumer Commission v Goldy Motors (2000) 23 ATPR 41-801 at [34] (Goldy Motors 23 ATPR)); 3. [They] are of some assistance to the Commission in the future in carrying out the duties which are conferred upon it by the Act (Goldy Motors 23 ATPR at [34]); 4. [They] are of assistance in clarifying the law (Goldy Motors 23 ATPR at [34]; Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (in liq) [2005] FCA 1212 at [146]); 5. [They] may inform consumers of the dangers arising from a respondent's contravening conduct (Chen 132 FCR at [48]); and 6. [They] may deter corporations from contravening the Act (Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329 at [22]). 28 Close attention to the form of proposed declarations should be paid by primary judges: Rural Press v Australian Competition and Consumer Commission [2003] HCA 75; (2003) 216 CLR 5 at [90].

Consideration 29 Now that the proposed relief is confined to a single declaration, I am satisfied that a declaration directed to Empower's unconscionable system of conduct is an appropriate vehicle to record the Court's disapproval of the contravening conduct, and to define the type of systemic conduct that constitutes a contravention of the ACL. 30 Accordingly, I will make a declaration concerning that contravention.

Should penalties be imposed in this case? 31 The applicants accepted that any penalties imposed on Empower would not be provable in its liquidation: s 553B of the Corporations Act; Mathers v Commonwealth of Australia [2004] FCA 217; (2004) 134 FCA 135; Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liquidation) (No 3) [2017] FCA 1018 (GQA) at [78]. 32 While I am doubtful of the utility of imposing penalties where, as here, there is no identified prospect that they will be paid, Courts have recognised that deterrence considerations may warrant the imposition of penalties. In GQA, Beach J observed at [1]: In recent years, the education sector has been infected by the parasitic practices of operators preying upon the vulnerable and the unwary. They have taken unconscientious advantage of those who commendably have sought to improve themselves and their qualifications. It is to be expected that when such practices are exposed to judicial scrutiny, the Court will grant the relief necessary to eradicate such behaviour. Specific and general deterrence are the primary objectives of such relief, with the Court's protective jurisdiction a necessary adjunct. 33 At [78]-[82], his Honour was satisfied that general deterrence considerations warranted the imposition of a substantial pecuniary penalty in the circumstances of that case. Beach J ordered the payment of a pecuniary penalty of $8 million in respect of GQA's contraventions of ss 21, 29(1)(b) and (m), 79 and 86 of the ACL. 34 In Secretary, Department of Health and Aging v Prime Nature Prize Pty Ltd (in liq) [2010] FCA 597, in a case concerning the supply and manufacture of counterfeit therapeutic goods, in respect of which contraventions were admitted, Stone J granted leave to proceed against a company in liquidation, noting (at [22]-[23]): It is evident from the objects of the [Therapeutic Goods Act 1980 (Cth)] that the Act is an important public health and safety measure. As such, there is a significant public interest in declarations of contravening conduct and the imposition of penalties being on the public record. The penalties are directed to ensuring compliance with the Act not only in the future conduct of the contravenor but also by others. This deterrent function is not defeated by the fact that the company is in liquidation and unable to pay penalties; Australian Competition and Consumer Commission v SIP Australia Pty Ltd [2003] FCA 336 at [59]; see also Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) [2005] FCA 254; (2005) 215 ALR 281 at [9] and [11]. Apart from the important deterrent effect, the independent public interest in there being a public record of contraventions and penalties supports the granting of leave to proceed against a company in liquidation… 35 As the contraventions were admitted, there was no separate liability judgment as there is in this case. 36 Based on these authorities, I am persuaded that there is a public interest which justifies the imposition of a pecuniary penalty in this case to assist in identifying the egregious nature of the contravening conduct, and to operate as a general deterrent. In reaching this conclusion, I also rely upon the inference that the applicants are seeking the penalties because they have determined that the public interest will be served by the imposition of penalties in the particular circumstances of this case.

Legal framework 37 Under ss 224(1)(a)(i), (ii) and (iv) of the ACL, the Court may order a person who has contravened, relevantly, ss 21, 29, 74-76, 78 and 79 of the ACL to pay such pecuniary penalty, in respect of each act or omission by the person, as the Court determines to be appropriate. 38 At the time of the contravening conduct, s 224(3) provided for the following maximum penalties where the person liable for the contravention is a body corporate: (1) in respect of s 21 (unconscionable conduct) and s 29 (false representations): $1.1 million; (2) in respect of ss 74-76, 78 and 79 (the unsolicited consumer agreement provisions): $50,000. 39 Section 224(4)(b) provides that, if conduct constitutes a contravention of two or more provisions of the ACL for which a pecuniary penalty may be imposed, a person is not liable to more than one pecuniary penalty in respect of the same conduct.

Relevant factors in assessment of penalties 40 In determining the appropriate pecuniary penalty, s 224(2) of the ACL requires the Court to have regard to all relevant matters, including: (1) the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission; (2) the circumstances in which the act or omission took place; and (3) whether the person has previously been found by a Court in proceedings under Ch 4 or Pt 5-2 of the ACL to have engaged in any similar conduct. 41 The central consideration in determining pecuniary penalties is deterrence, both general and specific, because penalties must be set at such a level as to not merely be seen as "an acceptable cost of doing business": Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 at [65]-[66]; Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 at [62] (Optus v ACCC); NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285 at 292-293 (NW Frozen Foods). 42 The following non-mandatory considerations, set out by Perram J in Australian Competition and Consumer Commission v Singtel Optus Pty Ltd (No 4) [2011] FCA 761; (2011) 282 ALR 246 (Singtel) at [11], are also relevant to the imposition of a pecuniary penalty: (1) the size of the contravening company; (2) the deliberateness of the contravention and the period over which it extended; (3) whether the contravention arose out of the conduct of senior management of the contravener or at some lower level; (4) whether the contravener has a corporate culture conducive to compliance with the ACL, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention; (5) whether the contravener has shown a disposition to cooperate with the authorities responsible for the enforcement of the ACL in relation to the contravention; (6) whether the contravener has engaged in similar conduct in the past; (7) the financial position of the contravener; and (8) whether the contravening was systematic, deliberate or covert.

Judicial process of determining appropriate penalties 43 In Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2015] FCA 330; (2015) 327 ALR 540 (Coles) at [6], Allsop CJ said: The process of arriving at the appropriate sentence for a criminal offence involves an intuitive or instinctive synthesis of all relevant factors: Markarian v The Queen [2005] HCA 25; 228 CLR 357. The approach set out by the High Court in Markarian can be taken to be applicable to civil penalty proceedings of this nature… The setting of the penalty is a discretionary judgment that does not involve assessing with any precision the "range" within which the conduct falls or by applying incremental deductions from the maximum penalty. Nonetheless, the maximum penalty must be given due regard because it is an expression of the legislature's policy concerning the seriousness of the proscribed conduct. It also permits comparison between the worst possible case and the case the court is being asked to address and thus provides a yardstick: Markarian at 372 [31]. 44 In the passage from Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 referred to by Allsop CJ above, Gleeson CJ, Gummow, Hayne and Callinan JJ said that: …careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick. That having been said, in our opinion, it will rarely be, and was not appropriate for Hulme J here, to look first to a maximum penalty, and to proceed by making a proportional deduction from it. That was to use a prescribed maximum erroneously, as neither a yardstick, nor as a basis for comparison of this case with the worst possible case. 45 More recently, in Australian Competition and Consumer Commission v Hillside (Australian New Media) Pty Ltd t/as Bet365 (No 2) [2016] FCA 698 (Hillside) at [19], Beach J said that: [I]t is an arid exercise to engage in a mere arithmetical calculation multiplying the maximum penalty by the number of contraventions even if one could theoretically quantify that latter number (see [Coles] at [17], [18], [84] and [85] per Allsop CJ). But of course some estimate of the number of contraventions is to be taken into account. In the present case, in relation to the number of s 29 contraventions, one is theoretically considering orders of magnitude well above a single contravention. But it is not productive to quantify this further. Moreover, it is not appropriate to quantify a theoretical maximum for the purpose of then ratcheting down, an impermissible exercise.

Determining the maximum penalty 46 Empower has been found to have engaged, over a period of about 6 months, in a system of conduct or pattern of behaviour in contravention of s 21 of the ACL. Based on the reasoning of Beach J in GQA, endorsed by Middleton J in Australian Competition and Consumer Commission v Ford Motor Company of Australia Limited [2018] FCA 703; (2018) 360 ALR 124 at [54], the maximum penalty in respect of that contravening conduct is not limited to the maximum penalty of $1.1 million that is available for a single contravention of s 21. In particular, in GQA at [47], Beach J concluded: [S]trictly there is nothing arising from the interaction between s 21(4)(b) and s 224(1) which limits the Court's discretion to impose a penalty of more than $1.1 million in relation to a system that has involved multiple contravening acts or omissions by GQA directed at a very large number of consumers. Section 224(1) provides that a person can be ordered to pay a pecuniary penalty "in respect of each act or omission by the person to which [the] section applies". 47 Having regard to the features of Empower's system and the number of students who were enrolled but who did not complete a single unit of study, I have no difficulty inferring that the unconscionable conduct that was involved in the operation of the system affected the vast majority of the consumers enrolled during the relevant period. Therefore, I also have no difficulty in accepting the applicants' submission that the Court may impose a penalty of greater than $1.1 million in respect of Empower's systemic unconscionable conduct. 48 In a case such as the present where there is a multitude of contraventions and a system of unconscionable conduct is shown to have impacted a large number of consumers, it may not be possible or helpful to calculate mathematically the maximum available penalty: Coles at [18]; Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; (2016) 340 ALR 25 at [157]-[158]. 49 In addition, this case involves multiple contraventions affecting the individual consumers.

"Course of conduct" principle 50 In Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; (2010) 269 ALR 1, Middleton and Gordon JJ explained at [39]-[42]: (1) where there is an interrelationship between the legal and factual elements of two or more offences, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality; (2) the "course of conduct" principle requires careful identification of what is "the same criminality", which is necessarily a factually specific enquiry; (3) the principle is one of the applicable sentencing principles that guide the Court in the exercise of its sentencing discretion; and (4) the principle is a tool of analysis which the Court is not compelled to use, as the exercise of its sentencing discretion remains a matter of judgment to be exercised according to the facts of each case and having regard to conflicting sentencing objectives. 51 In Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2017] FCAFC 159; (2017) 258 FCR 312 at [424] (Cement Australia), the Full Court confirmed that identifying whether multiple contraventions constitute a single course of conduct, or separate instances of conduct, is of paramount importance "so as to ensure that an appropriate deterrent effect is achieved by the imposition of the penalty or penalties in respect of [the] particular conduct". This is because the "deterrent effect in respect of a civil penalty (at both a specific and general level) is measured by reference to the nature of the conduct for which it is imposed". 52 In Australian Competition and Consumer Commission v Acquire Learning & Careers Pty Ltd [2017] FCA 602 (Acquire), Murphy J considered the number of contraventions arising from telemarketing calls made to eight consumers in which the respondent engaged in a range of conduct which breached ss 18, 21, 29(1)(g), 34 and s 76 of the ACL. His Honour reasoned at [56]-[57]: [E]ach relevant telemarketing call to a Job Applicant involved numerous acts or omissions which were contraventions of the misleading conduct, unconscionability, and unsolicited consumer agreement provisions of the ACL. For example, each time that a Career Adviser made a representation to a Job Applicant that Acquire was affiliated with the government, or that enrolment in the VET FEE-HELP assisted course would help them to secure better paid employment, or that the course was appropriate for the Job Applicant notwithstanding his or her learning difficulties, mental illness or lack of proficiency in English, Acquire breached ss 18, 21, 29(1)(g) or 34. The same telephone call also involved Acquire breaching the unsolicited consumer agreement provisions in s 76 through the failure to provide prescribed information to the Job Applicant. The number of contraventions in each telephone call is relevant to the maximum available penalty. However, rather than imposing a separate penalty for each act or omission, where there is sufficient interrelationship in the legal and factual elements of the acts or omissions constituting the contraventions, the Court may in its discretion apply the "course of conduct" or "one transaction" principle… 53 His Honour continued at [58]-[59]: As Beach J observed in [Hillside] at [24]-[25] (endorsed in Reckitt at [141] per Jagot, Yates and Bromwich JJ), the course of conduct principle does not have paramountcy in the process of assessing an appropriate penalty, and it cannot of itself unduly fetter the proper application of s 224 or operate as a de facto limit on the penalty to be imposed for contraventions. Its application must be tailored to the circumstances. In the finish, the question is one of discretion in coming to the correct penalty and the course of conduct principle is a guide for use where it is appropriate.

"Parity" principle 54 The "parity" principle requires that persons or corporations guilty of similar contraventions should incur similar penalties and that "there should not be such an inequality as would suggest that the treatment meted out has not been even-handed": NW Frozen Foods at 295. 55 By application of the parity principle, assessments of penalty in analogous cases may provide guidance to the Court to ensure that there is parity of treatment of similar circumstances. However, as Hill J observed in Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd (No 2) [2002] FCA 192; (2002) 201 ALR 618 at [34], "while pecuniary penalties imposed in one case provide a guide, that guide will seldom, if ever, be able to be used mechanically". Furthermore, "other things are rarely equal where contraventions of the [TPA] are concerned": NW Frozen Foods at 295. In Singtel at [60], the Full Court observed that: …the Court is not assisted by… citation[s] of penalties imposed in other cases, where the combination of circumstances were different from the present, as if that citation is apt to establish a "range" of penalties appropriate in this case. 56 The applicants submitted that, although Australian Competition and Consumer Commission v We Buy Houses Pty Ltd (No 2) [2018] FCA 1748 (We Buy Houses) involved misleading or deceptive conduct, it is instructive for the purposes of comparison with this case, which is submitted to be objectively more serious and to have caused greater social and financial detriment. I am reluctant to embark on such a comparison because the latter case can provide no more than a yardstick at best against which to determine the appropriate penalty or penalties in this case: cf. Hili v The Queen [2010] HCA 45; (2010) 242 CLR 520 at [54]. However, in my view, it is of significance to note that in We Buy Houses, the respondent company was ordered to pay a pecuniary penalty of $12 million in circumstances that included financial benefits from the offending conduct of approximately $24.2 million. In this case, Empower received approximately $55 million in government funding from enrolling the non-completion students. In my view, both the amount and the fact that the benefits received were government funds are matters of great significance in setting an appropriate penalty in relation to the unconscionable system of conduct. 57 Similarly, I doubt that there is great utility in a detailed comparison of this case with the facts in GQA and Acquire for the purposes of assessing penalties in this case. 58 Both cases involved contraventions of the ACL in the vocational education sector. In GQA, Beach J imposed a penalty of $3 million in relation to GQA's system of unconscionable conduct, and separately imposed three penalties of $450,000 and one penalty of $400,000 in respect of each of GQA's contraventions of s 21 in respect of the four individuals. In total, his Honour ordered GQA pay a total of $8 million for numerous contraventions of the ACL. The penalty of $3 million for systemic unconscionable conduct was imposed in GQA in circumstances where the conduct occurred over a period of 18 months, and around 4,900 consumers did not receive a qualification. GQA received about $16 million in revenue from its conduct. 59 I accept that Empower's conduct was quantitatively (in terms of the amount of loss and damage caused) more harmful than GQA's. As to whether it was qualitatively worse, in terms of the nature of the conduct, I do not think that it is useful to attempt a comparison. I have found that Empower's conduct was unconscionable, which is a finding of serious impropriety. 60 In Acquire, the Court did not find a system of unconscionable conduct. Murphy J imposed penalties totalling $4.5 million in respect of contraventions of the ACL affecting eight consumers on the basis of an agreed position on liability and relief. The admitted contraventions included engaging in unconscionable conduct by failing to disclose adequately the circumstances in which the job seeker would incur a debt to the Commonwealth through enrolling in a VET FEE-HELP course and failing to ascertain whether the job seeker understood the nature of his or her obligations under the VET FEE-HELP scheme. In my view, this decision is based on such significantly different circumstances, particularly that the relevant contraventions were admitted and affected only eight consumers, that it is of very limited weight in assessing the appropriate penalty in this case.

"Totality" principle 61 In Australian Competition and Consumer Commission v Oakmoore Pty Ltd (No 2) [2018] FCA 1170 at [133]-[135], I recorded the following concerning the "totality" principle: In determining the appropriate penalty for a multiplicity of offences, the Court must have regard to the 'totality principle': R v Holder and Johnson [1983] 3 NSWLR 245; Mill v The Queen [1988] HCA 70; (1988) 166 CLR 59; Cahyadi v The Queen [2007] NSWCCA 1; (2007) 168 A Crim R 41; and [Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383]at [4]. This also applies in the context of civil penalties: see [Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113] at [82], [120], [171]; and Australian Competition and Consumer Commission v Singapore Airlines Cargo Pte Ltd [2012] FCA 1395 at [32]. When appropriate penalties have been identified for each contravention, the Court should conduct a "final check" to ensure that the total penalty is not unjust or disproportionate to the circumstances: Mornington Inn at [42]-[43], applying Mill at 62-63. This "totality principle" is distinct from the "course of conduct" principle: Mornington Inn at [41]-[46]. This approach requires the Court to, as an initial step, impose a penalty appropriate for each course or episode of conduct and then as a check, at the end of the process, consider whether the aggregate is considered excessive: Cement Australia at [629]. If the total of the proposed penalties is considered to be appropriate, it is not necessary to impose any further reduction: Mornington Inn at [90]-[92]; Cement Australia at [629].

Assessment of penalty in respect of Empower's unconscionable system 62 In this section of the judgment, I have generally adopted the applicants' submissions as to the evaluation of the matters relevant to the determination of an appropriate penalty.

Nature and extent of the contravening conduct 63 The findings in respect of Empower's unconscionable system are summarised at [11]-[16], [268]-[277] and [745]-[751] of the liability judgment. 64 Generally, I accept the following submissions made by the applicants on this topic (references omitted): 71. Empower's conduct involved multiple contraventions of the ACL, including unconscionable conduct (s 21), false, misleading and deceptive conduct (ss 18, 29(1)(g) and 29(1)(i)) and the unsolicited consumer agreement provisions (ss 74-76, 78 and 79). 72. The Court found that over a period of about 6 months from June 2014 to mid-December 2014, Empower conducted a system of conduct or engaged in a pattern of behaviour in relation to the marketing and recruitment of students to its VET FEE-HELP funded courses, comprising: (a) using recruiters who were practically untrained, who received no ACL training and who were remunerated on a commission basis for securing enrolments; (b) offering inducements to enrol, particularly Google Chromebooks; and (c) making unsolicited consumer agreements with no process for ensuring compliance with the relevant provisions of the ACL. 73. Empower targeted areas with significant populations of persons of low socio-economic status to recruit its students. The system was directed to enrolling students from a disadvantaged sector of the community. 74. Empower's system did not have adequate safeguards for ensuring that Empower's courses were suitable for consumers who enrolled and who by their enrolment incurred a VET FEE-HELP debt. Empower conducted only a cursory verification of students' bona fides by telephone and conducted no LLN testing of prospective students, despite recommendations from staff that that was necessary. 75. Empower's system did not have adequate safeguards for ensuring that Empower's recruiters complied with the ACL and did not dupe consumers into enrolling in an online course and thereby incurring a VET FEE-HELP debt. 76. …the Court summarised several of the features of Empower's system in the following terms: Between June and mid December 2014, Empower had no systems in place to ensure that its courses were marketed to consumers with a genuine interest in undertaking them, and a likely capability to complete the courses. Apart from its verification calls, Empower had no systems to prevent recruiters from duping consumers into incurring VET FEE-HELP debts so that Empower could receive government funding. The system permitted door knocking to obtain enrolments and "group sign-ups". The system also permitted payment of cash incentives. The system also permitted the enrolment of consumers who had no interest in receiving Empower's services, and no ability to benefit from those services. The system resulted in Empower achieving the high volume of enrolments identified above in the period August to December 2014, that is, the majority of the enrolments in the relevant period. 77. It was "…essentially a matter of luck whether a consumer would enrol with an adequate understanding of the services acquired and the debts that would be incurred." 78. Empower's recruiters and employees "routinely made a misrepresentation to consumers to the effect that they would receive a 'free' laptop computer if they enrolled in one of Empower's courses." 79. The system also permitted the payment of cash incentives to consumers to enrol in an Empower course. 80. Prior to 2015, Empower's recruiters were not provided with any training in relation to the content of the courses conducted by Empower, the requirements to complete a course or the important aspects of VET FEE-HELP for consumers. 81. The system was used by Empower to derive significant income from government funding, while consumers incurred significant liabilities to the Commonwealth. ...the Court found that: The evident purpose of the system throughout that period was to maximise Empower's enrolments of students and thereby its receipt of VET FEE-HELP payments and, consequently, Empower's distributable profits. 82. … the Court held that: …the sums of money involved in this proceeding can also be seen as providing a motive for Empower to engage in exploitative practices, or to condone or turn a blind eye to such practices by its recruiters. 83. … the Court also observed that: Since Empower's business was targeted at disengaged members of society (predominantly long term unemployed), its potential students were highly likely to include consumers who were financially and educationally disadvantaged, and who were consequently vulnerable to trickery and inducements. 84. Empower's conduct in this case was extensive, both in terms of the number of consumers affected by Empower's unconscionable system, and the sums of money involved… 85. The courses offered by Empower were expensive. The Diploma of Management and the Diploma of Business each cost $14,800. The cost of the Diploma of Early Childhood Education and Care was $15,000.52 Students entitled to a loan under VET FEE-HELP for each unit of study and who passed their relevant census date incurred a potential lifetime debt to the Commonwealth amounting to 120% of the loan. 86. By its very nature, a contravention of the prohibition on unconscionable conduct is significant and serious, because unconscionable conduct is conduct that is clearly unfair or unreasonable, or involves serious misconduct. 87. Empower's contravening systemic conduct is particularly serious in the present case for at least the following reasons. First, Empower engaged in the contravening conduct for an extended period - some 6 months. In that time, thousands of consumers were affected. Secondly, Empower's conduct caused significant financial loss to consumers and the Commonwealth. Thirdly, consumers were at a significant disadvantage in terms of bargaining position, and were otherwise vulnerable to being misled or deceived. Fourthly, Empower's conduct was unfair to consumers, in circumstances where Empower knew that its consumers may have come from disadvantaged sectors of the community (because that was its stated target demographic). Fifthly, Empower's conduct involved a callous indifference to consumer protection, including whether consumers were "duped" into enrolling in online courses. Empower's conduct evidences a widespread failure to ensure that it had adequate processes to identify suitable students, capable of competing the courses in which they were enrolled, in circumstances where students would incur a significant debt. The revenue Empower derived from the VET FEE-HELP Scheme provided "a motive for Empower to engage in exploitative practices, or to condone or turn a blind eye to such practices by its recruiters."

Loss and damage 65 As explained above, the Commonwealth has now taken action to relieve all but 48 of the 4,142 affected consumers of the VET FEE-HELP debts which they incurred as a result of enrolling in Empower courses. Thus, the losses sustained by reason of Empower's contravention now mostly fall squarely upon the Commonwealth. 66 The applicants seek to have the debts of 35 of the remaining 48 affected consumers annulled by the Court. For the reasons explained below, I will grant that relief. Thus, while the relevant consumers will no longer be affected by significant liabilities, the Commonwealth will have no expectation of recovery of the amounts paid by it to Empower in respect of these consumers and will have suffered commensurate loss.

Size and financial position of Empower 67 As explained above, I accept that it is appropriate to impose a penalty against Empower even though the company is in liquidation.

Deliberateness of contravening conduct 68 Empower's conduct was reckless. While I found, at [750] of the liability judgment, that "the evidence does not establish that Empower's processes were deliberately designed to take advantage of vulnerable consumers", Empower's processes reflected the callous indifference to consumer protection referred to above. I accept both of the following points made by the applicants: (1) Empower prioritised profit and revenue over the provision of courses that students were capable of being able to complete. (2) Empower's contravening conduct was a critical component of its business operations which led to large consumer losses and huge revenues at the expense of Australian taxpayers.

Whether the contravention arose out of the conduct of senior management 69 At [225] of the liability judgment, I found that there was no reason to doubt that Empower (through its senior management) was aware of the conduct of the recruiters and its employees in: (a) targeting pockets of disadvantage; and (b) making offers of cash and computers. At [228], I concluded that I was not satisfied that Empower was aware of any particular conduct or patterns of conduct of recruiters or its employees in implementing Empower's marketing and enrolment process. 70 In support of their contention that the contravening conduct arose out of the conduct of senior management, the applicants referred to the following additional findings: (1) Mr Yang, the sole director of Empower, approved the strategy called "Project Empower" for the establishment of a vocational education college targeting disengaged members of society (predominantly the long-term unemployed) of all age groups. Empower's target demographic was approved by Mr Yang. (2) Mr Yang rejected a recommendation from one of his staff, Ms Chan, who was Empower's Quality and Compliance Manager, to re-introduce LLN testing for students. Mr Yang did not want to hire someone to fill this role. (3) Ms Chan advised Mr Yang that Empower needed to introduce a minimum standard for students enrolling in its courses. From about May 2014, Empower had no processes for ensuring that consumers were capable of undertaking or completing the courses, apart from the verification scripts. The available inference is that Mr Yang rejected Ms Chan's advice. (4) Prior to 2015, Empower's recruiters were not provided with any training in relation to the content of the courses conducted by Empower, the requirements to complete a course or the important aspects of the VET FEE-HELP scheme for consumers. (5) When she commenced at Empower, Ms Chan was told by Mr Yang that they had no systems in place for quality and compliance, and that was why she was needed. Ms Chan proposed mandatory training for all Empower staff and agents, including on consumer law, to Dr Heaney. Ms Chan also told Mr Ohunayo that there needed to be a meeting with recruiters to make sure that they were clearly advised on what they could and could not do when enrolling a student. So far as Ms Chan was aware, no such meeting took place during the six weeks of the relevant period while she was at Empower. 71 Certainly, there was no evidence that senior management of Empower made any effort to ensure that recruiters received ACL training or to ensure that Empower had a process for ensuring that unsolicited consumer agreements were made in compliance with the ACL. The callous indifference reflected in Empower's system was the callous indifference of Empower's senior management.

Whether the company had a corporate culture conducive to compliance with the ACL 72 Empower did not have a corporate culture of compliance with the ACL. To the contrary, as I have previously noted, Empower's processes "reflected a callous indifference to considerations of consumer protection". 73 As the applicants noted, Empower did not provide any instruction or training to its recruiters on how to market its courses in a way that complied with the ACL and did not instruct its recruiters or provide any guidance on how to act in accordance with their obligations arising pursuant to s 18 and s 29 of the ACL, or the unsolicited consumer agreement provisions of the ACL.

Whether the company has shown a disposition to cooperate with the ACCC in relation to the contraventions 74 Until Empower went into liquidation, it actively defended the proceedings. Empower responded to a s 155 notice issued by the ACCC, but that cannot demonstrate a disposition to co-operate given that compliance is a legal requirement. Thus, I accept the applicants' submission that no lesser penalty is warranted on the basis of any disposition on the part of Empower to co-operate.

Whether Empower engaged in similar conduct in the past 75 Empower has not previously been found to have contravened the ACL.

Appropriate penalty in relation to the system 76 Having regard to all of the matters set out above, I accept that Empower's systemic unconscionable conduct was very serious and warrants the imposition of a very significant penalty. 77 In particular, I infer that the conduct affected all or substantially all of the 4,094 non-completion students who are highly unlikely to have submitted to substantial VET FEE-HELP liabilities without taking steps to receive the corresponding benefit of completing the study for which the liabilities were imposed, in the absence of that unconscionable conduct. In short, by reason of Empower's systemic unconscionable conduct, these consumers incurred a large debt for no education. 78 Thus, Empower's systemic unconscionable conduct affected a very significant number of consumers, occurred over a six month period and probably cost Australian taxpayers over $55 million. For each individual consumer, the precise impact of Empower's system will have been different depending on the particular circumstances of his or her enrolment (although, in each case, there was the imposition of the substantial VET-FEE HELP liability which has only recently been remitted). As illustrated by the individual consumers, in some cases, the system exposed consumers to treatment that was demeaning and predatory. I take into account the fact that the system generally permitted exploitation of disadvantaged members of the community who were to be the primary beneficiaries of the VET FEE-HELP system and neglected their rights to protection under Australia's consumer laws. In those circumstances, I have no hesitation in accepting the applicants' submission that a penalty of $25 million is required to ensure an appropriate deterrent effect against this and similar rorts.

Penalties in respect of contraventions affecting individual consumers 79 The applicants submit that it is appropriate to impose additional penalties, because Empower's systemic contravention of s 21 as found by the Court was qualitatively different to the contraventions in respect of the individual consumers. 80 The applicants argued that the essence of the unconscionability found by the Court in relation to Empower's marketing and enrolment system lay in a series of failures: the failure to train recruiters acting on its behalf as to how to comply with the ACL, the failure to undertake any proper verification of consumers' bona fides as students, and the failure to ensure consumers undertook LLN testing. The applicants argued that this contravention occurred at the level of Empower's design and implementation of its marketing and enrolment system, which was said to have occurred independently of any particular consumer and did not depend upon the identification of any particular individual as having been disadvantaged by Empower's conduct. 81 In contrast, the contraventions involving the individual consumers were said to have arisen from the particular facts concerning the interaction between Empower's representative and the relevant individual consumer. With the exception of the contraventions of s 79 (concerning the failure to include certain matters in the agreement between Empower and the consumer), the contraventions depended on what occurred on the occasion when the individual consumer was signed up to an Empower course. 82 In assessing the penalty in respect of Empower's unconscionable system, I have taken generally taken into account that an aspect of the system was securing enrolments by making unsolicited consumer agreements with no process for ensuring compliance with the relevant provisions of the ACL. The penalty that I have assessed above has regard to Empower's routine disregard for the ACL in the implementation of the system. The penalty has also taken account of the number of non-completion students and the total financial benefit received by Empower during the relevant period. 83 However, I have not taken into account particular aggravating features of the unconscionable conduct visited upon individual consumers. I accept that it is appropriate to assess further penalties in connection with those instances of unconscionable conduct.

Consumer A 84 The applicants referred to the following summary of findings in respect of consumer A at [753] of the liability judgment: In short, Consumer A was duped into applying to enrol in an Empower course by the offer of $50 and a free laptop and the claim that it would cost him nothing. As set out above, in dealing with Consumer A, the relevant recruiter contravened ss 18 and 29, as well as various of the unsolicited consumer agreement provisions which are intended to protect consumers. But for Consumer A's subsequent request to cancel, Empower stood to receive government funding as a result of Consumer A's enrolment and, unbeknown to him, Consumer A stood to incur a substantial liability for the course which he was told would cost him nothing. I am satisfied that Empower's recruiter engaged in trickery and contraventions of the ACL which were unconscionable in the circumstances because it exposed Consumer A unknowingly to a substantial liability in the form of a VET FEE-HELP debt. 85 Empower contravened ss 21, 29(1)(i), 76(b) and 79 of the ACL in relation to consumer A, by conduct which occurred on a single occasion in mid-October 2014 at a "group sign-up". 86 The applicants contended that the appropriate total penalty for this conduct was $970,000, assessed as follows: ACL section contravened Liability judgment reference Appropriate penalty 21 [754] $800,000 29(1)(i) [568(1)], [569], [574] $100,000 29(1)(i) [568(2)], [569], [574] $50,000 76(b) [705] $10,000 79 [701] $10,000

87 The applicants acknowledged that s 224(4) provides that if "conduct constitutes a contravention of 2 or more provisions", then a person is not liable to more than one pecuniary penalty under s 224 "in respect of the same conduct". They acknowledged that, in respect of consumer A (and the other individual consumers), the Court had found (for example at [753] of the liability judgment) that the conduct that was unconscionable could be characterised in that way in part because of the other contraventions of the ACL that had been engaged in (such as the making of false and misleading representations in contravention of s 29 of the ACL, and failures to comply with the unsolicited consumer agreement provisions). However, the applicants argued that those findings do not mean that the "same conduct" constituted the contravention of s 21 as constituted contraventions of s 29 and ss 74 to 79, because it is apparent from the Court's reasoning that the findings of unconscionable conduct were not based solely on the findings of contraventions of other provisions of the ACL, or of the aggregation of such contraventions, but on the Court's overall assessment of the situation of the individual consumer, their dealings with Empower's recruiters and the whole of the conduct which resulted in the individual consumer being signed up to an Empower course. Accordingly, the applicants argued, any overlap should be dealt with by way of totality rather than under s 224(4). 88 Section 224(4) is concerned to avoid double punishment for the commission of multiple offences containing common elements. As a general rule, separate contraventions arising from separate acts will attract the imposition of a separate penalty for each contravention: Registrar of Aboriginal and Torres Strait Islander Corporations v Matcham (No 2) [2014] FCA 27 at [197]. However, if it is appropriate to treat the contraventions as part of a single multi-faceted course of conduct, only a single penalty is appropriate for all contraventions: Australian Competition and Consumer Commission v South East Melbourne Cleaning Pty Ltd (in liq) [2015] FCA 25 at [171]; cf. Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70; (2008) 168 FCR 383 at [41]; Johnson v R [2004] HCA 15; (2004) 205 ALR 346 at [5]. It is not clear to me why the applicants did not draw my attention to these authorities, instead referring to Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, which concerned a legislative scheme that did not contain an analogue to s 224(4) of the ACL. 89 The applicants submitted that the maximum penalty available in respect of consumer A is $3.4 million, being the aggregate of the maximum penalties available for each of the contraventions found by the Court. 90 Although not accepting the application of s 224(4), the applicants argued that Empower's contravening conduct should be treated as "one interaction". This, it was said, would not limit the maximum penalty to $1.1 million but would assist the analysis of the extent and seriousness of the conduct. In particular, because the contraventions of s 29 and s 76 were found by the Court to be part of the whole of the conduct which led to the conclusion of unconscionable conduct, the applicants submitted that the Court should proceed on the basis that those contraventions were largely subsumed within the systemic unconscionable conduct, such that only a lower penalty than might otherwise be imposed for this conduct, ought to be attributed to those contraventions. Similarly, the contraventions of s 79, committed directly by Empower as a result of Empower failing to include prescribed matters in its agreements, may be seen to result in a lower penalty (than what might otherwise ordinarily be imposed for this conduct) in respect of each individual consumer, because each contravention arose from a single failure by Empower to ensure that the standard terms of its agreement complied with the requirements of the ACL. 91 In my view, the penalties proposed by the applicants are liable to result in double punishment on two bases: they overlap with the penalty for Empower's systemic unconscionable conduct to the extent that they provide for separate penalties for contraventions of the unsolicited consumer agreement provisions of the ACL; and the conduct that gave rise to the contraventions of s 21 and s 29 is overlapping. In my view, the proper analysis is to assess a separate penalty for the unconscionable conduct to which consumer A was subjected, with a maximum penalty of $1.1 million. The gravity of that contravention is significant: it included the demeaning provision of $50 to the consumer to purchase his enrolment; the dishonest offer of a "free" Chromebook; and the claim that enrolment would cost him nothing, all for the purpose of securing a benefit to Empower (albeit that this purpose was not realised). Accordingly, it is appropriate to impose a penalty of $100,000 in respect of this instance of unconscionable conduct.

Other individual consumers 92 The unconscionable conduct to which the other individual consumers were subjected are set out in the liability judgment. None of them is any less disgraceful than the conduct summarised above in relation to consumer A. They include instances in which the individual consumers were humiliated, demeaned and tricked, including by suggestions that the recruiters with whom they dealt were acting in the interests of the consumers. In my view, it is appropriate to impose a penalty of $100,000 in respect of each of the instances of unconscionable conduct affecting each of the other individual consumers.

Totality 93 The total penalties that I have identified above are $26.5 million. 94 The totality principle requires the Court to consider whether that total figure is appropriate for the individual consumer contraventions considered as a whole, and also whether that figure is appropriate having regard to the penalty in respect of Empower's systemic unconscionable conduct. I am satisfied that the total penalties are appropriate, considered in both those ways.

Orders pursuant to section 237 of the ACL 95 Section 237 is entitled "Compensation orders etc. on application by an injured person or the regulator". The section provides relevantly: (1) A court may: (a) on application of a person (the injured person) who has suffered, or is likely to suffer, loss or damage because of the conduct of another person that: (i) was engaged in a contravention of a provision of Chapter 2, 3 or 4; … make such order or orders as the court thinks appropriate against the person who engaged in the conduct, or a person involved in that conduct. Note 1: For applications for an order or orders under this subsection, see section 242. Note 2: The orders that the court may make include all or any of the orders set out in section 243. (2) The order must be an order that the court considers will: (a) compensate the injured person, or any such injured persons, in whole or in part for the loss or damage; or (b) prevent or reduce the loss or damage suffered, or likely to be suffered, by the injured person or any such injured persons. 96 Pursuant to s 237, the applicants seek orders that: (1) Empower pay compensation to the Commonwealth in the sum of $55,810,203.82 in respect of the identified 4,094 students who did not complete a unit of study in the course in which they were enrolled, and have had their VET FEE-HELP debts remitted by the Commonwealth pursuant to the HES Act; and (2) Empower pay compensation to the Commonwealth in the sum of $515,860, being the amount of VET FEE-HELP payments made by the Commonwealth to Empower in respect of the VET liability of 35 consumers, enrolled during the relevant period and who completed one or more units of study with Empower; and (3) any outstanding liability of the Commonwealth to pay to Empower the amount of the loans made to the non-completion students, in discharge of their VET liability, is annulled. 97 As part of Div 4 of Pt 5-2 of the ACL, s 237 is a compensatory provision. Section 87 of the TPA in general terms may be understood to be the predecessor provision and case law applicable to s 87 of the TPA is applicable to s 237. The wording of the two provisions is materially similar. For example, both provisions refer to the Court's power to make: [O]n the application of a person who has suffered, or is likely to suffer, loss or damage by the conduct of another person that was engaged in a contravention… such orders as the Court thinks appropriate against the person who was involved in the contravention… if the Court considers that the order or orders concerned will compensate the person who made the application, in whole or in part for the loss or damage; or prevent or reduce the loss or damage suffered, or likely to be suffered, by such a person. 98 Section 237 provides a wide remedial discretion. The following observations expressed by the High Court in relation to s 87 of the TPA in I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109 (I&L Securities) are relevant: (1) "[I]t is important to bear in mind, when considering their [s 82 and s 87 of the TPA] operation, that they have potential application to a wide range of conduct proscribed by the Act and, in the case of s 87, to remedies that may be sought in a wide range of circumstances" (Gleeson CJ at [12]). (2) "[Section] 87 provides a broad spectrum of remedies, some of which are monetary…and some of which are not… s 87 is couched in general terms and gives a 'smorgasbord' of remedies" (McHugh J at [114] and [117]).

Order in respect of non-completion students 99 The liquidators accepted that the preconditions for the relief sought are satisfied and did not oppose the orders sought. This was based on the inference that, given the findings in the liability judgment, a non-completion student was probably duped and was the victim of misleading or deceptive and/or unconscionable conduct. 100 The contention is that, because of Empower's conduct in contravention of Ch 2 of the ACL, the Commonwealth made VET FEE-HELP payments to Empower, which it will not recover through the repayment of VET FEE-HELP debts. I accept that the Commonwealth suffered relevant loss by making those payments, the ordinary meaning of "loss" being "detriment or disadvantage resulting from deprivation or change of conditions": Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 47. Although the Commonwealth also acquired a benefit from the students' enrolment, that benefit will not be realised because of the remittal of the VET FEE-HELP debts. 101 Subject to the liquidators' verification of the number of non-completion students and the amount paid by the Commonwealth to Empower by way of VET FEE-HELP payments, by reference to the affidavit of Ms Woodall affirmed 29 July 2019, I accept that an order to the effect set out in [96(1)] above is an order that will compensate the Commonwealth in whole or in part for the loss suffered. Accordingly, I will make an order to that effect.

Order in respect of completion students 102 The liquidators submit that the proposed order is appropriate, subject to the Court being satisfied that each of the students who completed one or more units of study were likely duped and the victim of misleading or deceptive and/or unconscionable conduct. I have made findings to that effect above. 103 The Department paid Empower $515,860 in respect of the 35 completion students. I accept that this was a relevant loss. Subject to any recoveries that it may have received to date in relation to the relevant consumers' VET FEE-HELP debts, I accept that an order for the recovery of this payment will compensate the Commonwealth in whole or in part for the loss suffered.

Outstanding liability of the Commonwealth to Empower 104 The applicants' submissions did not identify any relevant outstanding liability. Without more, I am not satisfied that the proposed order has utility and therefore, I am not satisfied that it should be made.

Order pursuant to section 239 of ACL 105 Section 239, entitled "Orders to redress etc. loss or damage suffered by non-party consumers", provides relevantly: (1) If: (a) a person: (i) engaged in conduct (the contravening conduct) in contravention of a provision of Chapter 2, Part 3-1, Division 2, 3 or 4 of Part 3-2 or Chapter 4; or …; and (b) the contravening conduct … caused, or is likely to cause, a class of persons to suffer loss or damage; and (c) the class includes persons who are non-party consumers in relation to the contravening conduct…; a court may, on the application of the regulator, make such order or orders (other than an award of damages) as the court thinks appropriate against a person referred to in subsection (2) of this section. … Note 2: The orders that the court may make include all or any of the orders set out in section 243. (2) An order under subsection (1) may be made against: (a) if subsection (1)(a)(i) applies - the person who engaged in the contravening conduct, or a person involved in that conduct; … … (3) The order must be an order that the court considers will: (a) redress, in whole or in part, the loss or damage suffered by the non-party consumers in relation to the contravening conduct or declared term; or (b) prevent or reduce the loss or damage suffered, or likely to be suffered, by the non-party consumers in relation to the contravening conduct or declared term. 106 Section 243 relevantly provides for the kinds of orders that may be made under s 239(1), including: (a) an order declaring the whole or any part of a contract made between the respondent and a person (the injured person ) who suffered, or is likely to suffer, the loss or damage referred to in that section, or of a collateral arrangement relating to such a contract: (i) to be void; and (ii) if the court thinks fit - to have been void ab initio or void at all times on and after such date as is specified in the order (which may be a date that is before the date on which the order is made); … (d) an order directing the respondent to refund money or return property to the injured person… 107 The order sought by the applicants pursuant to s 239 is complicated to say the least. In simple terms, it concerns the 35 completion students referred to at [20] above. 108 The relief sought is an order declaring that: (1) any agreement between any of the 35 consumers and Empower in respect of the relevant course or any unit of study within that relevant course is void ab initio; (2) in each case, the consumer's liability to pay a VET tuition fee to Empower for the unit of study in the relevant course or the relevant course itself is annulled; and (3) in each case, any associated liability of the consumer in relation to VET FEE-HELP assistance and the loan fee in respect of that VET FEE-HELP assistance is annulled. 109 The reason given for seeking this relief is a view that, in contrast with the position concerning the non-completion students, the Secretary (or the Secretary's delegate) is not empowered to re-credit the VET FEE-HELP balances for the completion students with the consequence that their VET FEE-HELP debts have not been remitted. This view is based on the proposition that cl 46AA(1)(a) of Sch 1A to the HES Act only empowers the Secretary to re-credit VET FEE-HELP balances for a student who has not completed any units of study. 110 The applicants contend that Empower's conduct in contravention of a provision of Ch 2 of the ACL caused loss or damage to a "class of persons", being the class comprising the 35 completion students. The class includes persons who are non-party consumers in relation to the contravening conduct, because none of the 35 completion students is a party to the proceeding. 111 The reasons why the relief is said to be appropriate are that: (1) The deleterious results of the operation of the unconscionable system, as found in the liability judgment. It is said that the prima facie position should be that consumers who were adversely affected by such a system should have the losses they incurred from having been subjected to the system reversed. (2) The relief could be consistent with the scope and purpose of s 239(1). This is a case where the individual consumers are unlikely to be in a position to take action individually in order to seek relief. 112 The liquidators submitted that, as a matter of principle, declaring an enrolment agreement void ab initio may create an issue as to the status of a student's enrolment and participation in a course and potentially undermine the basis for a certificate confirming that the student has satisfactorily participated in and completed a course. 113 In response to this concern, the applicants read the following evidence of Christopher Alach, Department of Education Assistant Secretary, Skills Programs Compliance Branch, directed to the question whether the relief sought may have any adverse consequence for the affected consumers: 5. I have been informed by Sandra Williamson, Principal Regulatory Officer at the Australian Skills Quality Authority (ASQA), the national regulator for Australia's vocational education and training sector, and I understand that: 5.1 only ASQA has the power to cancel a qualification in a course offered by [Empower]; and 5.2 the voiding of an enrolment agreement between a consumer and [Empower] where a consumer has successfully completed units of study to earn a qualification does not cancel the qualification and, considered alone, does not provide a basis for ASQA to cancel the qualification. 114 On the basis of this evidence, I accept that there is presently no prospect that the proposed relief will have an adverse effect on the 35 completion students. I accept that an order to the effect of the proposed order is appropriate and will redress, in whole or in part, the loss or damage suffered by the 35 completion students in relation to Empower's convening conduct.

Liquidators' proposed relief 115 The liquidators submitted that declarations of the kind referred to at [102] above are legitimate and of utility in respect of each and every consumer whose VET FEE-HELP balance is re-credited or annulled and associated with a compensation order in favour of the Commonwealth. In other words, the liquidators proposed that the non-completion students should also have the benefit of the relief proposed by the applicants in relation to the completion students. 116 The liquidators contended that such declarations are required to provide certainty in respect of the rights and obligations as between consumers, Empower and the Commonwealth and to reflect and mirror any compensation orders. The liquidators argued that such declarations would ensure that, in circumstances where Empower is ordered to pay compensation to the Commonwealth, no further claim can be made against Empower by or on behalf of a consumer and Empower can make no further claim on the consumer or the Commonwealth in respect of an associated VET FEE-HELP debt. 117 I am not satisfied that there is utility in making the proposed orders for the non-completion students. Empower is in liquidation and there is no suggestion that Empower may make any claim on a consumer or the Commonwealth. Nor is there is any identified prospect of any claim against Empower by or on behalf of a consumer who is a non-completion student.

Costs 118 Costs should follow the event, except for the costs of the contradictor (the respondent's liquidators) appointed in respect of the orders sought under s 237 and s 239 of the ACL. Those latter costs are to be borne by the applicants.

Withdrawal of undertaking 119 In applying for leave to proceed under s 500(2) of the Corporations Act, the applicants offered an undertaking not to seek to enforce any monetary orders of the kind then sought without further leave of the Court: see Australian Competition and Consumer Commission v Cornerstone Investment Aust Pty Ltd (in liq) (No 3) [2017] FCA 749 at [20]. The undertaking was given orally on the first day of the hearing by Mr O'Bryan SC, senior counsel for the applicants. 120 In King v Yurisich [2006] FCA 1369; (2006) 59 ACSR 598 at [13]-[14], Weinberg J set out the following concerning the principles under which leave to proceed is granted under s 471B and s 500 of the Corporations Act: Sections 471B and 500 are silent as to the principles under which leave to proceed will be granted. In McPherson's Law of Company Liquidation (2006, 5th ed), it is said (at [7.970]) that the courts have an absolute discretion in deciding whether or not they will grant leave to proceed: Re Aro Co Ltd [1980] Ch 196. It is also said that there is a presumption in favour of leaving those with claims against companies in liquidation to the ordinary proof of debt procedure which is, generally speaking, a cheaper and more efficient way of resolving their claims: Re Gordon Grant and Grant Pty Ltd [1983] 2 Qd R 314. The reason given is that the liquidator's attention and resources should not be diverted into expending substantial funds on defending proceedings by those with claims against the company when there is a simpler procedure available, namely calling for and adjudicating upon creditors' proofs of debt, with a right of appeal under s 1321: Re Gordon Grant and Grant. Other factors said to be important in determining whether leave to proceed should be granted are the amount and seriousness of the claim, the degree of complexity of the legal and factual issues involved, and the stage to which the proceedings, if already commenced, may have progressed: Re Gordon Grant and Grant Pty Ltd at 317 (per McPherson J, with whom WB Campbell CJ and Sheahan J agreed). 121 In Raffles Pty Ltd (in liq) v Cotis [1971] VR 637 at 638, McInerney J explained that such an undertaking is exacted or condition imposed upon a grant of leave to proceed against a company in liquidation: [P]ursuant to the general principle that once winding-up commences no creditor or claimant must be allowed to take possession of the assets of the company without the leave of the Court and this restriction is imposed in order to permit a due and orderly winding up of the company and to obviate what inevitably would otherwise happen, namely, a scramble for the assets of the company. 122 The Court has power to release the applicants from their undertaking when new facts come into existence or are discovered which render its enforcement unjust: Adam P. Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 at 178; Commonwealth Bank of Australia v The Law on Debenture Trust Corporation Plc [no 4] [2018] WASC 165 at [97]-[98]. In the latter case, Pritchard J noted at [107] (citations omitted): The exercise of discretion to release a party from an undertaking is not dependent on whether the other party to the proceeding consents to that course. The plurality in Adam P Brown rejected the submission advanced by counsel for Philip Morris that because the undertaking brought to an end the proceedings for the interlocutory injunction, and that it would be costly and time consuming to Philip Morris to revive those proceedings, Adam P Brown should not be released from its undertaking unless Philip Morris consented to that course. However, the attitude of the other party to the discharge of the undertaking will clearly be relevant to the question whether continuation of the undertaking would be unjust. 123 The applicants submitted that it would be unjust to continue to enforce the undertaking following the liability judgment as it would place the Commonwealth in a position where, having established a liability in its favour through the liability judgment, it could not lodge a proof of debt in the liquidation. The applicants did not cite authority for the proposition that lodgement of such a proof of debt would be inconsistent with the undertaking, but observed that there is a dearth of authority on the question of the release of the undertaking after the liability of the company in liquidation has been established in the litigation for which leave was granted. 124 I am doubtful that the applicants are precluded by the undertaking from lodging a proof of debt in the liquidation. In my view, the undertaking is directed to actions seeking remedies for enforcement of the Court's judgment: cf., for example, s 53 of the Federal Court of Australia Act 1976 (Cth). Such actions may prejudice the liquidation by requiring funds expended in their defence or delay the finalisation of the liquidation. In contrast, lodging a proof of debt simply requires the liquidator to adjudicate upon the relevant proof. Further, the right to prove in the winding up arises out of a relevant debt (albeit one that must be proved in this case by a judgment). However, it is not obvious that exercise of a right to lodge proof of a debt, where founded upon a court order, is relevantly an act of enforcement of that order. 125 The liquidators did not oppose a variation to the undertaking, provided that the applicants did not seek to recover any monetary orders (including costs orders) other than by proving in Empower's liquidation ranking with all other unsecured creditors. 126 In the circumstances, and for the avoidance of doubt, I will release the applicants from their undertaking given on 1 August 2017 in the event that the applicants file a further undertaking to the following effect: The applicants undertake to the Court not to take any steps to enforce the orders of the Court made on 20 September 2019 without further leave of the Court, except by seeking to prove in the external administration of the Cornerstone Investments Aust Pty Ltd (in liq) as unsecured creditors.

Conclusion 127 I will make a declaration and orders accordingly. I certify that the preceding one hundred and twenty-seven (127) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.