Australian Competition and Consumer Commission v Phoenix Institute of Australia Pty Ltd

Cases cited: Aliotta v Broadmeadows Bus Service Pty Ltd (1988) 65 LGRA 362 Australian Competition and Consumer Commission v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Limited) [2015] FCA 368; (2015) ATPR ¶42-498 Australian Competition and Consumer Commission v Australian Institute of Professional Education Pty Ltd (in liq) [2017] FCA 521 Australian Competition and Consumer Commission v Australian Institute of Professional Education (in liq) (No 2) [2018] FCA 1459 Australian Competition and Consumer Commission v Australian Institute of Professional Education Pty Ltd (in liq) (No 3) [2019] FCA 1982 Australian Competition and Consumer Commission v Australian Power & Gas Co Ltd [2013] FCA 1358 Australian Competition and Consumer Commission v CJ Berbatis Holdings Pty Ltd (No 2) [2000] FCA 2; (2000) 96 FCR 491 Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 Australian Competition and Consumer Commission v Cornerstone Investment Aust Pty Ltd (in liq) (No 4) [2018] FCA 1408 Australian Competition and Consumer Commission v EDirect Pty Ltd [2012] FCA 1045 Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liq) (No 2) [2017] FCA 709 Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90; (2013) ATPR ¶42-447 Australian Competition and Consumer Commission v Phoenix Institute of Australia Pty Ltd (Subject to Deed of Company Arrangement) [2016] FCA 1246; (2016) 116 ACSR 353 Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (trading as Captain Cook College) (No 3) [2021] FCA 737 Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40 Australian Competition and Consumer Commission v Radio Rentals Ltd [2005] FCA 1133; (2005) 146 FCR 292 Australian Competition and Consumer Commission v Unique International College [2017] FCA 727 Australian Securities and Investments Commission v Kobelt [2019] HCA 18; (2019) 267 CLR 1 Australian Securities and Investments Commission v National Exchange Pty Ltd [2005] FCAFC 226; (2005) 148 FCR 132 Briginshaw v Briginshaw (1938) 60 CLR 336 Colonial Mutual Life Assurance Society Ltd v The Producers and Citizens Co-operative Assurance Company of Australia Ltd (1931) 46 CLR 41 Commercial Bank of Australia v Amadio (1983) 151 CLR 447 Commonwealth Bank of Australia v Kojic [2016] FCAFC 186; (2016) 249 FCR 421 Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Company Pty Ltd (1975) 133 CLR 72 Ex parte Colonial Petroleum Oil Pty Ltd (1944) 44 SR (NSW) 306 Federal Commissioner of Taxation v SNF (Australia) Pty Ltd [2011] FCAFC 74; (2011) 193 FCR 149 Havyn Pty Ltd v Webster [2005] NSWCA 182 Jacara Pty Ltd v Perpetual Trustees WA Ltd [2000] FCA 1886; (2000) 106 FCR 51 Kakavas v Crown Melbourne Ltd [2013] HCA 25; (2013) 250 CLR 392 Lisciandro v Official Trustee in Bankruptcy [1995] ATPR ¶41-436 Minister for Immigration and Border Protection v Egan [2018] FCA 1320 NMFM Property Pty Ltd v Citibank Ltd [2000] FCA 1558; (2000) 107 FCR 270 NRM Corporation Pty Ltd v Australian Competition and Consumer Commission [2016] FCAFC 98; (2016) ATPR ¶42-531 Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50; (2015) 236 FCR 199 Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28; (2016) 258 CLR 525 Perish v The Queen [2016] NSWCCA 89; (2016) 92 NSWLR 161 Phoenix Institute of Australia Pty Ltd v Australian Competition and Consumer Commission [2017] FCAFC 155 Thorne v Kennedy [2017] HCA 49; (2017) 263 CLR 85 Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 Unique International College Pty Ltd v Australian Competition and Consumer Commission [2018] FCAFC 155; (2018) 362 ALR 66

National Practice Area: Commercial and Corporations

Sub-area: Regulator and Consumer Protection

Date of hearing: 5-8, 11-15 and 18-19 November 2019

Counsel for the Applicants: Ms N Sharp SC with Mr R White and Ms D Forrester

Solicitor for the Applicants: Australian Government Solicitor

Counsel for the Respondents: The Respondents filed a submitting notice save as to costs

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION First Applicant

COMMONWEALTH OF AUSTRALIA Second Applicant

AND: PHOENIX INSTITUTE OF AUSTRALIA PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 084 806 575 First Respondent

COMMUNITY TRAINING INITIATIVES PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 157 767 881 Second Respondent

JUDGE: PERRY J DATE OF ORDER: 13 august 2021

1. During the period from around 13 January 2015 until around 23 November 2015, Phoenix, in trade or commerce, in connection with the supply or possible supply of certain online vocational education and training (VET) courses to consumers, engaged with respect to each consumer in conduct, being the Phoenix Marketing System (as defined by paragraph [73] of the Amended Statement of Claim), that was unconscionable, thereby separately contravening section 21 of the Australian Consumer Law (ACL), being Schedule 2 of the Competition and Consumer Act 2010 (Cth), in respect of each consumer, in the circumstances set out below: (a) the purpose of Phoenix, in marketing to consumers, eliciting enrolment applications from them, and enrolling them in online VET courses, was to maximise the number of consumers enrolled who received VET FEE-HELP, so as to maximise the revenue to Phoenix from the Commonwealth via the VET FEE-HELP Assistance Scheme; (b) Phoenix displayed a callous indifference as to whether the consumers it sought to and did enrol were within the target cohorts for the courses, satisfied the eligibility criteria for those courses, were suitable for the courses, whether the consumers had reasonable prospects of successfully completing the courses and whether the course delivery was adequately resourced; (c) consumers to whom brokers and agents marketed the online VET courses were more likely to include vulnerable individuals as compared with other individuals within the Australian community; (d) the tactics employed on behalf of Phoenix in soliciting enrolment applications were unfair and high pressure; (e) the representations made on behalf of Phoenix by brokers and agents to consumers that: (i) in order to receive a free laptop all the consumers needed to do was to sign up to an online VET course which was free; and (ii) the online VET courses were free, or were free unless the consumer's income was in an amount which they were unlikely to earn on completion of an online VET course, or at all; were misleading; and (f) completed enrolment forms were a necessary precursor to a consumer being enrolled in an online VET course or courses and exposed to a debt or likely debt where they were an Eligible Student or Purported Eligible Student.
2. During the period from around 13 January 2015 until around 23 November 2015, Phoenix, in trade or commerce, in connection with the supply or possible supply of online VET courses to consumers, engaged with respect to each consumer in conduct, being the Phoenix Enrolment System (as defined by paragraph [86] of the Amended Statement of Claim), that was unconscionable, thereby separately contravening section 21 of the ACL in respect of each consumer, in the circumstances set out below: (a) the purpose of Phoenix, in marketing to consumers, eliciting enrolment applications from them and enrolling them in online VET courses was to maximise the number of consumers enrolled who received VET FEE-HELP, so as to maximise the revenue to Phoenix from the Commonwealth via the VET FEE-HELP Assistance Scheme; (b) Phoenix displayed a callous indifference as to whether the consumers it sought to and did enrol were within the target cohorts for the courses, satisfied the eligibility criteria for those courses, were suitable for the courses, whether the consumers had reasonable prospects of successfully completing the online VET courses and whether the course delivery was adequately resourced; (c) consumers to whom brokers and agents marketed the online VET courses were more likely to include vulnerable individuals as compared with other individuals within the Australian community; (d) many consumers were exposed to incurring a debt or a likely debt even though the online VET courses were unsuitable to them or they were unsuitable to the online VET courses; and (e) consumers were often deprived of the reasonable opportunity to withdraw from the online VET course before the census date for each unit of study had passed and therefore deprived of the opportunity to avoid incurring a debt or likely debt to Phoenix or the Commonwealth.
3. During the period from around 13 January 2015 until around 23 November 2015, Phoenix, by the conduct of its brokers and agents, in trade or commerce, in representing to Consumers A, B, C and D (as set out in the Amended Statement of Claim), in order to encourage them to enrol in its online VET courses that: (a) if they enrolled in an online VET course, they would receive a free laptop; and (b) the online VET courses were free or in the case of Consumer A, free until she earned a particular amount; and (c) the consumer would not incur a debt by enrolling in one or more of the online VET courses; engaged in conduct that was false or misleading or deceptive in contravention of each of sections 18 and 29(1)(i) of the ACL.
4. During the period from around 13 January 2015 until around 23 November 2015, Phoenix, in trade or commerce, in connection with the supply or possible supply of online VET courses to Consumers A, B, C and D, engaged in conduct that was unconscionable, thereby contravening section 21 of the ACL, in the circumstances set out below: (a) each of the consumers was a vulnerable person and in a weaker bargaining position than Phoenix; (b) Phoenix enrolled each of the consumers in one or more online VET courses for which the consumer was not suited and for which she or he did not have the skills or work experience necessary to successfully complete; (c) Phoenix, by the conduct of its brokers and agents, in trade or commerce, represented to each consumer, in order to encourage her or him to enrol in its online VET courses: (i) that if the consumer enrolled in an online VET course, she or he would receive a free laptop; or (ii) that the online VET courses were free or in the case of Consumer A, free until she earned a particular amount; and (iii) that the consumer would not incur a debt by enrolling in one or more of the online VET courses; thereby engaging in conduct that was false or misleading or deceptive in contravention of each of ss 18 and 29(1)(i) of the ACL.
5. During the period from around 13 January 2015 until around 23 November 2015, CTI aided, abetted, counselled or procured Phoenix's contraventions of s 21 of the ACL in connection with the Phoenix Marketing System (as defined by paragraph [73] of the Amended Statement of Claim), or was directly or indirectly knowingly concerned in, or a party to those contraventions.
6. During the period from around 13 January 2015 until around 23 November 2015, CTI, in trade or commerce, in connection with the supply or possible supply of online VET courses to consumers, engaged with respect to each consumer in conduct, being the Phoenix Enrolment System (as defined by paragraph [86] of the Amended Statement of Claim), that was unconscionable, thereby separately contravening s 21 of the ACL in respect of each consumer, in the circumstances set out below: (a) the purpose of CTI, in marketing to consumers, eliciting enrolment applications from them and enrolling them in online VET courses was to maximise the number of consumers enrolled who received VET FEE-HELP, so as to maximise the revenue to Phoenix from the Commonwealth via the VET FEE-HELP Assistance Scheme; (b) CTI displayed a callous indifference as to whether the consumers it sought to and did enrol were within the target cohorts for the courses, satisfied the eligibility criteria for those courses, were suitable for the courses, whether the consumers had reasonable prospects of successfully completing the online VET courses and whether the course delivery was adequately resourced; (c) consumers to whom brokers and agents marketed the online VET courses were more likely to include vulnerable individuals as compared with other individuals within the Australian community; (d) many consumers were exposed to incurring a debt or a likely debt even though the online VET courses were unsuitable to them or they were unsuitable to the online VET courses; and (e) consumers were often deprived of the reasonable opportunity to withdraw from the online VET course before the census date for each unit of study had passed and therefore deprived of the opportunity to avoid incurring a debt to Phoenix or the Commonwealth. THE COURT ORDERS THAT:
7. Subject to the following orders and to further order of the Court, pursuant to s 37AI of the Federal Court of Australia Act 1976 (Cth) and in order to prevent prejudice to the proper administration of justice, the reasons of Perry J in this proceeding delivered on 13 August 2021 (Reasons for Judgment) not be made available to or published to any person save for the following: (a) Court staff and any other person assisting the Court; (b) the applicants, commissioners, and staff of the first applicant, staff of the second applicant, and barristers and external solicitors retained by the applicants for the purposes of the proceeding; (c) the liquidators of the respondents, and barristers and external solicitors retained by them for the purposes of the proceeding; (d) the amicus curiae and solicitors instructing the amicus curiae for the purposes of the proceeding; (e) the additional liquidators of the first respondent, and barristers and external solicitors retained by them for the purpose of performing their functions in relation to the first respondent; (f) support staff of the persons listed in sub-paragraphs 7(b) to 7(e) above; and (g) insofar as the relevant parts of the Reasons for Judgment refer to them, persons referred to in the judgment.
8. To the extent that the Reasons for Judgment refer to information which may be confidential to, or in respect of, a third party, if necessary an extract from the Reasons for Judgment containing that confidential information may be disclosed to the relevant third party for the purpose of obtaining instructions as to confidentiality.
9. No later than five (5) business days following delivery of the Reasons for Judgment, the applicants' external legal advisors are to provide to the liquidators of the respondents a copy of the Reasons for Judgment which identifies any alleged confidential information. Such identification is to make clear: (a) the person to whom the information may be confidential; (b) the basis on which the information may be confidential; and (c) the means by which or the manner in which the issue of confidentiality may be addressed.
10. No later than eight (8) business days following delivery of the Reasons for Judgment, the liquidators of the respondents are to respond to the copy of the Reasons for Judgment provided pursuant to order 9 above, outlining: (a) their position in relation to the confidentiality issues identified by the applicants' external legal advisors pursuant to order 9; and (b) any additional confidentiality issues, identifying: (i) the person to whom the information may be confidential; (ii) the basis on which the information may be confidential; and (iii) the means by which or the manner in which the issue of confidentiality may be addressed.
11. No later than ten (10) business days following delivery of the Reasons for Judgment, the external legal advisors for the Applicants and the liquidators are to jointly provide the Court with an agreed version of the Reasons for Judgment identifying any proposed redactions of allegedly confidential information and the basis for the proposed redaction of the confidential information or, in lieu of agreement, the external legal advisors for the Applicants and the liquidators are to separately provide the Court with versions of the Reasons for Judgment identifying any proposed redactions of allegedly confidential information and the basis for the proposed redactions of the allegedly confidential information.
12. Nothing in these orders prevents a person in sub-paragraphs 7(a) to 7(g) above reporting on the Reasons for Judgment in a manner that does not identify an individual referred to therein.
13. There be liberty to apply on short notice. THE COURT NOTES THAT:
14. The matter is listed for case management on Monday, 30 August 2021 at 4:30pm where, among other things, it is anticipated that a timetable will be set for the determination of any penalties and other relief sought by the applicants. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

PERRY J: 1 INTRODUCTION [1] 2 THE RESPONDENTS AND RELATED COMPANIES [37] 3 PROCEDURAL HISTORY [57] 4 OVERVIEW OF THE APPLICANTS' PLEADED CASE [88] 5 STATUTORY UNCONSCIONABILITY: LEGAL PRINCIPLES [106] 6 VET FEE-HELP AND THE REGULATORY FRAMEWORK [176] 7 THE PHOENIX ONLINE COURSES [247] 8 EVIDENCE OF EX-EMPLOYEES AS TO ENROLMENT PRACTICES UNDERTAKEN FOR THE PHOENIX ONLINE COURSES [287] 9 EVIDENCE OF TRAINERS AND ASSESSORS [439] 10 THE COURSE OF EVENTS IN 2015 AND 2016 [491] 11 ATTRIBUTION OF THE CONDUCT OF THE BROKERS AND AGENTS TO PHOENIX [892] 12 THE CONSUMER WITNESSES [965] 13 DATA ANALYSIS [1067] 14 THE PROFIT MAXIMISING PURPOSE [1175] 15 THE CALLOUS INDIFFERENCE [1189] 16 THE TARGET COMMUNITIES AND THEIR LIKELY ATTRIBUTES [1247] 17 THE PHOENIX MARKETING SYSTEM [1251] 18 THE PHOENIX ENROLMENT SYSTEM [1279] 19 FINDINGS ON THE SYSTEMS UNCONSCIONABILITY CASE [1319] APPENDIX 1: GLOSSARY APPENDIX 2: LIST OF CONTRACTS ENTERED INTO BETWEEN CLI/PHOENIX AND BROKERS (ASOC, ANNEXURE A) APPENDIX 3: LIST OF CONTRACTS ENTERED INTO BETWEEN BROKERS AND AGENTS (ASOC, ANNEXURE B) APPENDIX 4: COMPREHENSIVE TABLE OF CONTENTS

1.1 Overview of the issues 1 The applicants, the Australian Competition and Consumer Commission (the ACCC) and the Commonwealth, seek declarations, pecuniary penalties, and orders for non-party redress pursuant to s 239 of the Australian Consumer Law (ACL), being Sch 2 of the Competition and Consumer Act 2010 (Cth) (the CCA), against the respondents, Phoenix Institute of Australia Pty Ltd (Subject to Deed of Company Arrangement) (Phoenix) and Community Training Initiatives Pty Ltd (Subject to Deed of Company Arrangement) (CTI). 2 While the respondents were in administration, on 7 October 2016 I granted leave to the applicants under s 444E(3)(c) of the Corporations Act 2001 (Cth) (the Corporations Act) to proceed against the respondents on the condition that the applicants do not seek to enforce any pecuniary penalties, any injunction pursuant to s 232(6)(a) of the ACL requiring monies to be refunded, and any costs order in their favour, without further leave of the Court: Australian Competition and Consumer Commission v Phoenix Institute of Australia Pty Ltd (Subject to Deed of Company Arrangement) [2016] FCA 1246; (2016) 116 ACSR 353 (Phoenix (No 1)). An appeal against that decision was dismissed on 29 September 2017 by the Full Court in Phoenix Institute of Australia Pty Ltd v Australian Competition and Consumer Commission [2017] FCAFC 155. 3 In broad terms the applicants allege that from around 13 January 2015 until around 23 November 2015 (the relevant period), Phoenix and CTI engaged in conduct in connection with the supply of vocational education and training (VET) courses to consumers that was unconscionable in contravention of s 21 of the ACL. In particular, the applicants seek to establish a "system of conduct … whether or not a particular individual is identified as having been disadvantaged" (s 21(4)(b), ACL) that was, in all of the circumstances, unconscionable contrary to s 21(1) of the ACL. The applicants also seek to establish specific contraventions vis-à-vis four individual consumers, consumer witnesses A, B, C and D, as illustrations of the allegedly unconscionable systems in operation. It is further alleged that the respondents engaged in misleading and deceptive conduct in marketing the online courses to the four consumer witnesses contrary to ss 18 and 29(1)(i) of the ACL on the basis that the actions of the Agents concerned are to be attributed to Phoenix under s 139B(2) of the CCA. 4 Initially, the respondents sought to defend the matter and filed a defence on 1 May 2019 (Defence).1 That defence responded to the statement of claim as originally filed on 5 March 2019 (SOC).2 Subsequently by leave granted on the first day of the trial (5 November 2019), the applicants filed and served an amended statement of claim (ASOC). Those amendments, as I later explain, were few in number and largely did not affect the case to which the defence had pleaded. Nonetheless, as no amended defence was filed to the ASOC, references have been included also to the SOC where admissions or other pleadings contained in the defence are relevant. 5 On 9 August 2019, the respondents filed a notice submitting to any order of the Court save as to costs on which they requested an opportunity to be heard. Nonetheless, as the applicants accept, s 140(2) of the Evidence Act 1995 (Cth) (the Evidence Act) applies, and consequently it remains necessary for them to prove their case on the balance of probabilities, having regard to the gravity of the matters alleged. As the applicants also accept, it is therefore incumbent upon them to establish the necessary elements of the statutory causes of action on the balance of probabilities by clear and cogent evidence, given the seriousness of the matters alleged and their potential to give rise to the imposition of pecuniary penalties: Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liq) (No 2) [2017] FCA 709 (Get Qualified) at [8] (Beach J); Australian Competition and Consumer Commission v Cornerstone Investment Aust Pty Ltd (in liq) (No 4) [2018] FCA 1408 (Empower) at [5] (Gleeson J); Australian Competition and Consumer Commission v Australian Institute of Professional Education Pty Ltd (in liq) (No 3) [2019] FCA 1982 (AIPE (No 3)) at [61] (Bromwich J). In discharging that onus, the applicants rely upon a voluminous body of evidence from a number of different sources. This included approximately 50 witnesses spanning expert witnesses, ex-employees, consumers, ACCC investigators, and other lay witnesses, extensive business records such as enrolment and student activity records and data, enrolment forms, complaints, records of complaint handling, policies, and internal correspondence. As such, the ACCC's case was not only circumstantial but included important direct evidence of the internal workings of the respondents, as was the case also in AIPE (No 3) where similar allegations were upheld. 6 While acronyms and particular terms are defined during the course of these reasons, for convenience a glossary is also included at Appendix 1 to these reasons. A comprehensive table of contents has also been included in Appendix 4. For clarity, I note that each of the appendices (1 to 4 inclusive) comprise part of my reasons for judgment.

1.2 Summary of key aspects of this decision 7 Given the length of this decision and the scale of the evidence canvassed, it is helpful at the outset to provide a brief introduction to, and summary of, some of the key findings. This does not, of course, supplant my detailed reasons which follow and of its nature, involves a degree of repetition. 8 Phoenix was an approved VET provider with 378 enrolled students in face-to-face courses before it was purchased by the Australian Careers Network (ACN) Group in January 2015. 9 Following its acquisition, the key officers of Phoenix and CTI (and the parent company, ACN), Mr Ivan Robert Brown and Mr Harry Kochhar (also known as Harpreet Singh), acted swiftly to radically reorientate Phoenix's operating model so as to offer for the first time, online diplomas nationally to many thousands of consumers under the banner of "myTime Learning". Central to the respondents' plans for rapid growth was the deployment of hundreds of Agents across the country through contracts with Brokers, who primarily employed high-pressure sales tactics, including the offer of inducements and the making of misrepresentations, so as to persuade thousands of consumers to sign up to Phoenix's Online Courses largely through door-to-door sales. The consumers targeted included Indigenous Australians, people from non-English speaking backgrounds, with a disability, from regional and remote areas, from low socio-economic backgrounds and/or who were unemployed at the relevant time. 10 It is no coincidence that consumers from these target groups also fell within the demographic groups to which reforms to the Commonwealth's VET FEE-HELP loan scheme were directed. These reforms had liberalised the scheme so as to make VET an end in itself as opposed to a pathway to higher education, in order to increase participation in VET by people from these demographic groups. As such, while in itself the targeting of consumers from these groups was not necessarily unconscionable, a not insignificant proportion of such consumers were likely to be vulnerable. Conscionable marketing and enrolment systems therefore needed to incorporate measures to mitigate the inherently higher risk that members of these demographic groups may be unsuitable for an online diploma, or require additional support in order to have a reasonable opportunity of successfully completing an online diploma. 11 Provided that a student was entitled to VET FEE-HELP assistance under cl 43 of Sch 1A of the Higher Education Support Act 2003 (Cth) (the HES Act) (an Eligible Student), the fees for these courses were paid directly to the VET provider by the Commonwealth. In return, the Eligible Student would incur a debt to the Commonwealth via a loan scheme for the cost of the course, together with a loan fee. However, the debt would become repayable through the tax system by the students concerned once they began to earn more than a minimum amount. Safeguards existed under the scheme which the VET provider was required to observe in order to ensure that students were fully informed about their rights and liabilities under the VET FEE-HELP loan scheme before embarking upon a course and incurring the liability. This included ensuring that no liability for a debt to the Commonwealth would arise until the census date had passed. This key element of the scheme was intended to afford each student a "cooling off" period within which to ensure that she or he wished to pursue the unit of study or course and that it was suitable for them. 12 However, once the census date had passed, neither the student's liability for the debt nor the making of payments to the VET provider depended upon the student actually embarking on the course in which they were enrolled. Furthermore, if approved by the Department of Education and Training (the Department or DET), VET FEE-HELP payments could be made to the VET provider in advance on the basis of the VET provider's estimate of the amount of VET FEE-HELP to which it expected to be entitled during the calendar year. These features of the VET FEE-HELP scheme in particular rendered it ripe for ruthless exploitation by unscrupulous agents and brokers and VET providers, as Mr Brown candidly explained in a radio interview in April 2016. Hundreds of millions of dollars in revenue under the scheme were potentially available to a VET provider, without the provider actually affording any meaningful educational service to its "students". 13 That is precisely what occurred in this case. The figures are telling. (1) Between mid-January and mid-November 2015, at least 11,393 consumers were enrolled in 21,413 online courses with Phoenix, with most being enrolled in two diplomas concurrently despite each diploma involving a full-time study load. (2) Phoenix was paid over $106 million by the Commonwealth under the VET FEE-HELP assistance scheme in advance payments pursuant to cl 61(1) of Sch 1A to the HES Act, and claimed to be entitled to a further amount of approximately $250 million in payments from the Commonwealth. (3) Only nine of the 11,393 enrolled consumers formally completed an online course with Phoenix. Indeed, only a very small number of the 11,393 enrolled consumers even attempted a unit of study of their courses, while some were unaware that they were enrolled at all and many remained enrolled even after requesting cancellation. 14 This was achieved first by the deployment without any effective training, monitoring or control, of a veritable army of at least 548 Agents engaged by the Brokers with whom the respondents contracted to market Phoenix's Online Courses. The Brokers and Agents were highly incentivised by substantial commissions payable only after the census date to prey on vulnerable consumers likely to sign up unaware that an offer presented to them as a great deal to obtain a free laptop or other inducement, was in fact a very bad deal under which they would incur substantial debts. In particular, the Agents and Brokers (and respondents on whose behalf they acted) targeted vulnerable consumers whose general attributes meant they were less likely to understand their rights and obligations under the VET FEE-HELP scheme, to interrogate the misinformation they were given, and to resist the inducements offered to them for signing up. Far from reining in the unethical conduct of the Brokers and Agents or responding with a "root and branch" reappraisal of their operating model, among other things, the respondents actively sought and rewarded the submission of hundreds and even thousands of enrolment forms weekly by Brokers and increased the commission payable to the worst offending Broker. 15 Secondly, despite being aware from the outset of the risks (duly realised) of ineligible and unsuitable candidates applying for enrolment by deploying this marketing system, the respondents engaged in conduct which included enrolling consumers without verifying their eligibility or suitability for the course, their capacity to speak English, or even whether they intended to undertake the course. Directions were regularly given by Mr Brown and Mr Kochhar to bypass measures intended to protect against such risks, such as instructing staff not to undertake telephone verifications of enrolment applications, to overlook "red flags" when telephone verifications were in fact conducted, and not to check for suspicious patterns in enrolment forms indicating that they may have been forged. Moreover, a significant number of consumers were enrolled after the commencement date of their online course(s) without any extension to the relevant census date, or were enrolled on, shortly before, or after the census date so as to deprive consumers of the statutorily mandated "cooling off" period. Furthermore, staff who repeatedly raised concerns with Mr Brown and Mr Kochhar about these and other issues, including suspected Broker and Agent misconduct, and endeavoured to address them, were undermined, sidelined, bullied, subjected to verbal abuse, and directed to ignore the problems and to act against their conscience. 16 Not surprisingly, the flow of complaints by consumers and consumer advocates throughout the relevant period was unrelenting. Furthermore, as the respondents' conduct increasingly came to the attention of the regulators, they sought to conceal what was truly occurring by, among other measures, statements of compliant policies which they knew were not in fact observed ("guff" as such statements were described in internal correspondence), the impersonation of student activity on Phoenix's learning management system, and the backdating and falsification of student records on an industrial scale. 17 This conduct, together with other evidence, established that the focus of key officers of Phoenix and CTI was upon attaining the highest possible levels of enrolment so as to generate and retain revenue derived from VET FEE-HELP payments, rather than genuinely attempting to provide education and training to those ostensibly enrolled in online courses offered by Phoenix. As such, the respondents' focus was upon presenting the appearance of compliance with precisely the kinds of measures required to protect and support consumers, but not upon implementing such measures in circumstances where to have done so would have undermined their business model and significantly impacted upon revenue. As Bromwich J found in AIPE (No 3) at [688], equally in this case it was both an accepted and anticipated part of the respondents' business model that a very high proportion of students would pass the census date and incur a VET FEE-HELP debt in circumstances where it was predictable that they would never require training and support. This was a highly profitable outcome for the respondents who therefore were not required to, and did not, invest in the staff and resources which would have been required to train and support over 11,000 genuine students enrolled in over 21,000 full-time diplomas. 18 I have concluded that in all of the circumstances, the respondents engaged in a marketing system and an enrolment system which were separately "unconscionable" within the meaning of s 21 of the ACL. Both systems were informed by the desire to maximise profit over even modest levels of engagement by consumers with their courses, and by a callous indifference, among other things, to the suitability and eligibility of consumers to undertake the courses in which they enrolled. I also find that Phoenix has, by the conduct of its Brokers and Agents, engaged in conduct with respect to Consumers A, B, C, and D that was false or misleading or deceptive in breach of ss 18 and 29(1)(i) of the ACL and in conduct that was unconscionable, thereby contravening s 21 of the ACL.

1.3 The applicants' multipronged approach to proof of the alleged contraventions of the ACL 19 The applicants relied upon a number of different sources of evidence, accepting both that cogent evidence was required to prove the systems of unconscionable conduct and that that evidence must be representative of the systems across the whole cohort of consumers enrolled in Phoenix Online Courses (Applicants' Closing Submissions dated 21 November 2019 (ACS) at [36]). The various strands of evidence relied upon may be summarised as follows: (1) the evidence of eleven ex-employees of the respondents as to the development, emergence, and operation of the respondents' marketing and enrolment systems and the callous indifference allegedly shown, among other things, towards consumers' capacity to successfully complete the courses in which they were enrolled; (2) the expert evidence of Ms Jana Scomazzon on VET online diploma courses including those offered by Phoenix (being an expert in evaluation and quality assurance of VET courses, and VET policy and product development and evaluation); (3) the evidence of ACCC investigators; (4) the contemporaneous documentary record (the chronological tender bundle (Exhibit A-1) (TB), the supplementary tender bundle (Exhibit A-4) (STB) and other documents in electronic form) including: (a) internal correspondence involving key officers of the respondents, Mr Ivan Brown and Mr Harry Kochhar, said to demonstrate that the business model was "rotten to the core" to the knowledge of the senior officers of Phoenix; (b) complaints from consumers and others on behalf of consumers and the respondents' responses and approach to those complaints and the issues which they raised; (c) contracts between CTI, Phoenix and Brokers, and contracts between Brokers and Agents; and (d) investigations, inquiries and the audits by various State, Territory and Commonwealth regulators; (5) the evidence of 24 individuals who were either approached by Agents on behalf of Phoenix in 2015 or subsequently assisted consumers who had been approached, including the four individual consumer witnesses the subject of specific alleged contraventions of the ACL said to illustrate the systems in operation; (6) the formal audit of the reported enrolment data for 2015 and 2016 undertaken by McGrathNicol on 16 September 2016 at the behest of the Department in accordance with cl 26(2) of Sch 1A to the HES Act for the purposes of determining Phoenix's entitlement to payments under the HES Act, including to consider the veracity of the enrolments that had been obtained (Forensic Audit of the Phoenix Institute of Australia Pty Ltd (Administrators Appointed) dated 16 September 2016) (the MGN Audit Report);3 and (7) expert evidence analysing data and statistics from various datasets maintained by the Department, CTI and Phoenix, including as to course completion rates, the extent to which students' suitability to undertake the Online Courses was assessed, problems with enrolment forms, and the lack of student engagement with the Phoenix Online Courses. 20 The data analysis is of particular significance in establishing the systemic nature of the impugned conduct. Notably in some instances, the data analysis covers the complete cohort of consumers enrolled with Phoenix, while in other cases statistically relevant representative samples selected at random are relied upon. This evidence (and the expertise of the expert witnesses to address the subjects on which they express their opinions) is dealt with later in these reasons. 21 The Court Book (CB), which was comprised of the pleadings and affidavit evidence of 47 witnesses, constituted 9 folders provided in hard copy and electronic format including the exhibits to those affidavits. In addition, the applicants relied upon a tender bundle (TB) and supplementary tender bundle (STB) which cumulatively comprised 29 folders and was also supplemented by documents and files in purely electronic form (such as, eg the electronic Supplementary Broker Tender Bundle (Exhibit A-5)). The tender bundle and supplementary tender bundle are accompanied by a lengthy separate Narrative Chronology providing a chronological analysis of the documentary tender, interspersed by witness accounts, together with a Detailed Chronology in table format and the applicants' Dramatis Personae. The presentation of this voluminous body of material in readily workable, user-friendly format clearly involved a substantial, but necessary, amount of planning and work, and was of very great assistance to the Court.

1.4 The structure of these reasons 22 The following structure has been adopted in these reasons. 23 Chapter 2 of these reasons explains the respondents' background and their relationship to the other companies in the ACN Group, as well as identifying the key officers within the respondents and the ACN Group of companies and their interests in the respondent entities. 24 Chapter 3 sets out the procedural history including the respondents' initial defence of the proceeding, the appointment and role of amicus curiae, Dr Higgins SC, following the filing of a submitting appearance by the respondents, a preliminary issue of procedural fairness which ties in with certain aspects of the pleadings history, and suppression and non-publication orders made in the proceeding. 25 Chapter 4 gives an overview of the applicants' pleaded case, key aspects of which are: (1) the alleged Profit Maximising Purpose over the interests of customers; (2) the alleged Callous Indifference to the suitability of customers for the Phoenix Online Courses or even whether they wished to undertake them; (3) the Target Communities and their attributes; and (4) the Phoenix Enrolment and Marketing systems which are said separately to be unconscionable systems within s 21 of the ACL or in the alternative, cumulatively to establish unconscionable conduct contrary to s 21. 26 Chapter 5 explains the principles by which it is determined whether Phoenix engaged in unconscionable conduct contrary to s 21 of the ACL. 27 Chapter 6 explains the VET FEE-HELP assistance scheme and the statutory obligations imposed upon VET providers by the HES Act, the National Vocational Education and Training Regulator Act 2011 (Cth) (NVETR Act), and legislative instruments including, in particular, the VET Guidelines, the Registered Training Organisation (RTO) Standards, the VET Administrative Information for Providers, and the Australian Qualifications Framework (AQF) which governs the design and learning outcomes of VET accredited courses. It also identifies the inherent vulnerability of the scheme to exploitation by unscrupulous VET providers and Brokers and Agents, such as I find occurred in this case. 28 Chapter 7 deals with the Phoenix Online Courses. This chapter describes the learning outcomes specified for the diploma level courses and their target cohorts under the Training Package Qualification Rules published on the National Register of VET and the AQF. It also considers the mandatory admission requirements for enrolment under these statutory instruments and as specified by Phoenix. 29 The evidence of ex-employees of CTI as to recruitment and enrolment practices undertaken by the respondents are detailed in Chapter 8 of these reasons. In this chapter, I make findings based upon the evidence of the ex-employees on certain important themes, including as to: (1) the different groups within CTI responsible for undertaking the various tasks involved in managing relationships with the Brokers and Agents engaged in recruiting potential students and in the enrolment process; (2) the respondents' lack of capacity to properly verify the extraordinary volume of enrolment applicants for the Online Courses submitted by Brokers and Agents, and instructions from key officers of the respondents, Mr Ivan Robert Brown and Mr Harry Kochhar, to the Data and Telephone Verification Teams to bypass the proper verification and assessment processes; (3) the setting of weekly student enrolment targets of up to 1,000 to 5,000 students by Mr Brown and Mr Kochhar; and (4) patterns in enrolment forms submitted by Brokers and Agents indicative of fraudulent behaviour by them and the responses by Mr Brown and Mr Kochhar when these concerns were drawn to their attention by ex-employees. 30 The evidence of former trainers and assessors is considered in Chapter 9. This evidence is striking in, among other things, establishing the extraordinarily high trainer-to-student ratios and the steps engaged in by the respondents to hide these ratios from the regulators. 31 Chapter 10 provides a comprehensive chronological account of the operations of Phoenix over the relevant period, included the nature and ever-escalating stream of complaints received by the respondents about unethical conduct by Brokers and Agents, the way in which the respondents responded to the complaints, the initial audit of Phoenix's compliance initiated by the then CEO of Phoenix, Mr Bill Gale, and the actions of the regulators ending in the deregistration of Phoenix as a RTO including the audit by the Australian Skills Quality Authority (ASQA). 32 Chapter 11 addresses the question of whether the conduct of the Brokers and Agents is to be attributed to Phoenix, including a discussion of the legal principles relevant to s 139B(2) of the CCA. 33 Chapter 12 considers the evidence of the 24 consumer witnesses including the alleged contraventions of the ACL with respect to Consumers A, B, C and D. In addition to the allegation that the respondents were in breach of s 21 of the ACL with respect to Consumers A to D, this chapter also considers whether Phoenix engaged in misleading or deceptive conduct contrary to ss 18 and 29 of the ACL in the case of these consumers and the legal principles governing that question. 34 Chapter 13 considers the data analysis evidence relied upon by the applicants in support of their systems unconscionability case. This Chapter addresses the expertise of the various expert witnesses addressing this topic, the methodologies which they adopted, and the source of their data, in the course of considering the following issues: (1) the available data sets; (2) the lack of successful course completion; (3) the enrolment of students in multiple courses; (4) the findings from the MGN Audit Report; (5) the enrolment forms and how they were analysed; (6) Pre-Training Review (PTR)/Language, Literacy and Numeracy (LLN) tests and discrepancies observed in the completion of these test indicative of fraudulent conduct; (7) the results of analysing the enrolment forms; (8) the absence of student engagement with the Phoenix Online Courses as revealed by FinPa, Phoenix's online learning platform; (9) the analysis of FinPa withdrawal notes and cancellation notes; and (10) the analysis of telephone verification calls by CTI to consumers and the absence thereof. 35 The remaining chapters draw the evidence together to determine whether the applicants have established the various elements of their case that the respondents engaged in unconscionable conduct contrary to s 21 of the ACL by reason of the Phoenix Marketing System and the Phoenix Enrolment System (the systems unconscionability allegations), namely: (1) the Profit Maximising Purpose (Chapter 14); (2) the Callous Indifference (Chapter 15); (3) the Target Communities and their Likely Attributes (Chapter 16); (4) the Phoenix Marketing System (Chapter 17); and (5) the Phoenix Enrolment System (Chapter 18). 36 My conclusions on the applicants' systems unconscionability case are contained in Chapter 19.

2.1 Phoenix, ACN and CTI 37 The first respondent, Phoenix, was established in 1998 and was then known as the Ikon Institute.4 38 On or about 16 February 2005, Phoenix was registered as a National VET Regulator (NVR) RTO under s 17 of the NVETR Act by the NVR, the Australian Skills Quality Authority (ASQA), and thereby became a RTO within the meaning of cl 1 of Sch 1 to the HES Act.5 It was approved as a VET provider under Div 3 of Sch 1A to the HES Act with effect from around 5 November 2009.6 39 ACN was incorporated on 17 March 2014.7 Phoenix was acquired by ACN on 12 January 2015 and remains a wholly-owned subsidiary of ACN.8 Following the acquisition, ACN derived its primary revenue from the operations of Phoenix.9 On 23 November 2015, ASQA notified Phoenix that it would be deregistered as a RTO.10 40 The second respondent, CTI, was also a wholly-owned subsidiary of ACN at all relevant times11 and was renamed VIA Network in October 2015, as advised in an email to all CTI staff on 16 October 2015.12 CTI operated as the marketing arm for the 11 RTOs owned and operated by ACN, including Phoenix.13 Over the relevant period, CTI managed relationships with Brokers and Agents and enrolments into Phoenix's Online Courses on behalf of Phoenix via CTI's Client Relationship Management Team (CRM Team), Data and Quality Team, Telephone Verification Tea, as well as the course trainers. That relationship was formalised in an agreement dated 1 July 2015 pursuant to which CTI agreed on a "non-exclusive basis" to: (a) market or promote the RTO's [Phoenix's] VET courses of study; (b) recruit persons to apply to enrol in the RTO's VET courses of study; (c) provide information and/or advice on the RTO's VET courses of study; (d) provide information and/or advice on the VET FEE-HELP scheme; (e) accept an application to enrol from, or enrol, any person on the RTO's behalf; (f) refer a person to the RTO for the purposes of enrolling in a VET course of study or VET unit/s of study; and (g) provide career counselling to a person on the RTO's behalf.14 41 CTI and ACN operated out of an office located at Spotswood in Victoria.15 42 ACN, CTI, CLI Training Pty Ltd trading as CLI Training (CLI) and Phoenix went into administration on 21 March 2016 and became subject to a Deed of Company Arrangement on 4 May 2016.16

2.2 Key officers/controlling minds of Phoenix, CTI and the ACN Group 43 As the applicants contend, Mr Ivan Brown and Mr Harry Kochhar were controlling minds of CTI and Phoenix. 44 Mr Ivan Brown established the parent company, ACN, and a number of companies in the ACN Group, together with Mr Atkinson Prakash Charan.17 Mr Brown was the CEO and managing director of ACN at all relevant times,18 and had been appointed as a director and company secretary of ACN on 17 March 2014 when ACN was incorporated.19 Mr Charan sought to exit the Group through the sale of his shares in ACN via the public offering in November 2014 and, while he retained a 4.1% shareholding in ACN, it is not alleged that he had any ongoing role in any of the companies the subject of this litigation during the relevant period.20 45 Mr Brown was appointed as a director of Phoenix with Mr Stephen Williams when Phoenix was acquired, in place of Mr Martin Peake who ceased to hold office as the sole director of the company at the same time.21 Mr Brown was also the Chief Executive Officer of the "myTime Learning" division of Phoenix from August 2015 to 21 March 2016, being a separate division established in August 2015 and vested with responsibility for offering the Online Courses.22 In addition, Mr Brown was: (1) a director of CTI from 7 September 2013, as well as the company secretary of CTI for the periods 7 September 2013 to 30 September 2014 and 4 September 2015 to 26 October 2015;23 and (2) a director of CLI which was another of the suite of ACN's wholly-owned subsidiaries and conducted marketing activities on behalf of Phoenix in respect of its Online Courses.24 46 Mr Brown's expertise and experience in the VET sector is described in the 2015 ACN Annual Report as follows: Mr Brown is the CEO and co-founder of Community Training Initiatives and has been instrumental to its growth and success. Mr Brown has had a substantial career working in the VET sector in executive management roles. He holds a Masters of Business Administration (Finance), Graduate Certificates in Management (Learning), Vocational Education and Training, Management and Human Resource Management and a Graduate Diploma in Community Sector Management. He is a Fellow of the Australian Institute of Management.25 47 The other directors of CTI over the relevant period were Mr Stephen Ray Williams (from 30 September 2014), Mr David Keith Green (30 September 2014 to 4 September 2015) and Mr Wayne Norman Treeby (from 26 October 2015).26 48 In the case of ACN, the other members of the Board of Directors during the relevant period were: (1) Mr Stephen Ray Williams (Chair) (from 27 August 2014); (2) Mr Raymond Keith Griffiths (from 27 August 2014 to 16 October 2015); (3) Mr Craig Graeme Chapman (from 27 August 2014); (4) Ms Samantha Martin-Williams (from 27 August 2015 to 27 November 2015); and (5) Mr Bruce MacKenzie (from 27 August 2014 to 19 January 2015).27 49 Mr David Green held the position of company secretary and Chief Financial Officer (CFO) of ACN.28 50 Mr Brown also had a significant interest in ACN throughout the relevant period. 51 First, the Prospectus issued by ACN dated 26 November 2014 advised that: Importantly, your Chief Executive Officer, Ivan Brown, who is a co-founder of Community Training Initiatives and one of two major Existing Shareholders will continue to hold 23,267,974 Shares comprising 27.78% of the Company on completion of the Offer.29 52 Secondly, the 2015 ACN Annual Report disclosed that Mr Brown has "an indirect interest in 23,288,874 Shares (which are directly held by IBT Holdings Pty Limited as trustee for the IBT Holdings Family Trust, an entity controlled by Ivan Robert Brown) as well as an indirect interest in 8,700 Shares through Ivan Brown Superannuation Fund Pty Ltd."30 Mr Brown was a director of IBT Holdings Pty Limited.31 A notation to the Directors' Report contained in the ACN 2015 Annual Report at p. 24 records that "[t]he shares in ACN were issued to Mr Brown as part of the group reconstruction wherein Mr Brown received shares in ACN in exchange for his shares in entities that were rolled-up into the ACN Group as part of that transaction". The share capital identified in the ACN company search dated 7 November 2019 is comprised of 74,895,834 ordinary shares with the amount paid being identified as $113,378,401.00.32 53 Mr Brown was based in CTI's office in Spotswood in the western suburbs of Melbourne and had an office on the first floor next door to Mr Kochhar, who was also based in Spotswood.33 The close physical proximity of their offices is indicative of how closely Mr Brown and Mr Kochhar worked together, which is to be expected given their responsibility for day to day governance of the corporate group. 54 Mr Harry Kochhar (also known as Harpreet Singh)34 was the Chief Operating Officer (COO) of: (1) ACN from September 2014 to December 2015; (2) Phoenix from January 2015 to December 2015; and (3) CTI from April 2014 to December 2015.35 55 Mr Kochhar's experience and expertise, including in the VET sector, is described as follows in the 2015 ACN Annual Report: Mr Kochhar has significant experience in RTOs, encompassing 10 years in senior management positons, including strategic management roles and operational management roles. Most recently, Mr Kochhar held the role of operations manager for Aegis Services Australia Limited, a global business process outsourcing company with over 55,000 employees. Mr Kochhar has been involved in the application, implementation and stakeholder management of funded and fee for service programs. His experience includes defining and monitoring project budgets, identifying market needs and executing strategy to fulfil labour market needs. Mr Kochhar has extensive practical training experience through his training roles with William Angliss Institute of TAFE, Holmes Institute, Sarina Russo Institute & Sarina Russo Schools, MCIE and Futurum Australia.36 56 Mr Kochhar resigned as COO from Via Network on 4 December 201537 but continued to work on a retainer as a consultant. 38 There is no evidence that Mr Kochhar had any shareholding in either of the respondents.

3.1 Initial pleadings 57 The applicants filed an originating application on 20 November 2015, together with an affidavit annexing a proposed draft concise statement. On 9 February 2016, the respondents filed a concise response. (The applicants' concise statement was subsequently filed on 17 February 2016 after the commencement of amendments to the Court's Commercial and Corporations Practice Note (C&C-1).)

3.2 The DOCA and leave to proceed 58 On 21 March 2016, the directors of the respondents, with other companies in the ACN Group, resolved to place the companies into voluntary administration. Under s 435C of the Corporations Act, the administration ended on 24 May 2016 when a Deed of Company Arrangement (DOCA) was executed by companies in the ACN Group, including the respondents. By force of s 444E of the Corporations Act, a person bound by the DOCA cannot proceed with a proceeding against the respondents until the DOCA terminates, save with leave of the Court and in accordance with such terms (if any) as the Court imposes. 59 By an interlocutory application dated 29 August 2016, the applicants sought orders pursuant to s 444E(3)(c) of the Corporations Act that leave be granted (to the extent that leave was required) to proceed against the respondents. The grant of leave was opposed by the respondents. 60 On 21 October 2016, I held in Phoenix (No 1) that leave to proceed should be granted to both applicants on condition that they did not seek to enforce any pecuniary penalties, any injunction pursuant to s 232(6)(a) of the ACL requiring monies to be refunded, or any costs order in their favour, without further leave of the Court. As earlier mentioned, an appeal against that decision was dismissed.

3.3 Amendments to the pleadings 61 On 8 December 2017, the applicants filed an amended originating application and amended concise statement which omitted some of the relief sought as a result of the grant of leave to the applicants to continue the proceeding against the respondents. Annexures A and B to the amended concise statement comprised particulars of the Profit Maximisation and Enrolment Conduct and particulars of the Agency Relationship between Brokers and the respondents respectively, such particulars having been requested by the respondents. 62 The parties thereafter embarked upon a protracted course of correspondence in which the respondents sought additional particulars. The additional particulars sought concerned, among other things, the issue of causation of loss or damage which forms part of the applicants' cause of action pursuant to s 239. 63 The applicants subsequently applied for leave to file a proposed further amended originating application (FAOA) pursuant to r 8.21 of the Federal Court Rules 2011 (Cth) (FCR) and a proposed further amended concise statement pursuant to r 16.53 of the FCR. The application was taken to be an application to amend in terms of Annexures A and B respectively to the applicants' written submissions filed on 22 June 2018, as amended by [4] of the applicants' submissions in reply dated 20 July 2018. At the hearing of that application on 23 July 2018, I granted leave to the applicants to amend the amended originating application in terms of the FAOA, and to amend in part the further amended concise statement. I also set down a timetable permitting the parties to endeavour to reach agreement as to the remaining, more controversial proposed amendments. 64 On 11 September 2018, I made orders setting down a timetable for the hearing of an interlocutory application by the applicants for leave to file a proposed second further amended concise statement. On 9 October 2018, the parties advised the Court that, in light of the decision of the Full Court in Unique International College Pty Ltd v Australian Competition and Consumer Commission [2018] FCAFC 155; (2018) 362 ALR 66 (Unique (FCAFC)) delivered on 19 September 2018, the applicants intended to file an affidavit annexing a revised second further amended concise statement. The application was heard on 1 February 2019. 65 By an email to the Court dated 19 November 2018, the parties provided the Court with draft short minutes of order which provided for the filing of an affidavit annexing a proposed statement of claim. On 1 March 2019, the applicants' solicitors advised by email that the respondents consented to the filing of a statement of claim and second further amended originating application (SFAOA) in the forms attached to that email. I made orders granting leave to the applicants to do so by 4 March 2019. 66 On 1 May 2019, the respondents filed a defence.

3.4 The respondents' submitting notice and issues raised by the respondents' counsel prior to withdrawing from the matter 67 At the case management hearing on 31 July 2019, (then) counsel for the respondents, Mr Brennan, referred to the affidavit of Mr George Georges affirmed on 30 July 2019, which was read for the purposes of the case management hearing, in which Mr Georges explained (at p. 76) that the respondents would shortly file a notice of termination of their solicitors' retainer. That notice was filed on 13 August 2019. 68 Before withdrawing from the case, Mr Brennan drew a number of matters to the Court's attention which he submitted may be of assistance to the Court.39 Mr Brennan first explained that while the applicants correctly characterised some of the respondents' conduct as a "rort", the difficult issues before the Court were whether the evidence established an unconscionable system and, if so, the extent of that system and the extent of the relief which might then be available under the ACL. 69 Mr Brennan then said that while he did not intend to make submissions, it may assist the Court to consider the following three matters:40 (1) First, Mr Brennan submitted that difficult factual issues arose in determining what inferences could properly be drawn about the conduct of all or some of the Brokers and Agents (and ultimately, the conduct of the respondents) from "evidence which focuses upon misconduct by small subsets of agents [or] of a small subset of brokers".41 Mr Brennan also identified difficult factual issues relating to the impact of the alleged failure by the second respondent, by the deliberate choice of its management, to apply the student verification system to all enrolments. (2) Secondly, Mr Brennan identified mixed issues of fact and law concerning the vulnerability of consumers, including the consumers in this proceeding, in light of recent High Court and Full Court authorities, and made remarks about the administration of vocational education policy. Mr Brennan explained that in so doing, he sought to give "colour" and context to the Court's eventual consideration of the vulnerability of consumers. (3) Finally, Mr Brennan referred to legal issues which may arise in applying s 239, ACL, which concerns orders to redress loss or damage suffered by non-party consumers. I note that by orders made on 31 July 2019, the question of liability in the proceeding is to be heard separately from the question of relief other than declaratory relief. 70 On 9 August 2019, the respondents filed a notice submitting to any order of the Court save as to costs.

3.5 The appointment of the amicus curiae 71 At the case management hearing on 14 August 2019, Ms Sharp SC, senior counsel for the applicants, submitted that the Court would be assisted by the appointment of amicus curiae as a contradictor on the legal issues surrounding systems unconscionability.42 By orders made on 28 August 2019, Dr Higgins SC was appointed as amicus curiae under r 1.32, FCR. The Court wishes to express its gratitude to Dr Higgins for her valuable assistance. 72 The amicus curiae was provided with a copy of the pleadings and the High Court's decision in Australian Securities and Investments Commission v Kobelt [2019] HCA 18; (2019) 267 CLR 1 (Kobelt), as well as the transcript of the case management hearing on 31 July 2019 at which Mr Brennan made concluding remarks, as explained above.43

3.6 The grant of leave to amend the statement of claim 73 By an email to the Court dated 25 October 2019, the applicants provided the Court with an agenda for the case management hearing on 28 October 2019 which included an item, "Application re Amended Statement of Claim". At that case management hearing, Ms Sharp SC, senior counsel for the applicants, explained that the applicants sought to amend the statement of claim "to correct errors and to bring the pleading into alignment with the evidence", save for one significant amendment.44 74 That significant amendment was to designate Ms Nidhi Bagga as an additional controlling mind of the respondent companies as a result of the applicants' further review of the documents, where previously only Mr Brown and Mr Kochhar had been identified as controlling minds.45 On the first day of the trial, however, the applicants ultimately did not press the application for leave to amend the ASOC in this respect.46 75 Leave otherwise to amend the statement of claim was granted on the first day of the trial. In reaching the view that the amendments were appropriately allowed, I took into account the fact that the amendments were not extensive, and did not alter the nature of the applicants' case or seek any additional relief. Rather, they sought to supplement existing pleadings with additional factual details in line with the written submissions filed before the hearing, as well as omitting certain allegations that were no longer pressed.47 In particular, the amendments: (1) identified the consumers to whom the Diploma of Community Services Work offered by Phoenix was directed and its course requirements with greater particularity;48 (2) identified a further face-to-face course offered by Phoenix prior to its acquisition by ACN;49 and (3) added the allegation that Phoenix failed to withdraw a significant number of enrolled consumers who sought to cancel their enrolment and continued to claim VET FEE-HELP payments in respect of those consumers.50

3.7 A preliminary issue of procedural fairness 76 In the context of the discussion at the case management hearing on 28 October 2019 about the proposed amendments to the ASOC to include Ms Bagga as a controlling mind of the respondents, I raised an issue with the applicants' counsel and the amicus curiae concerning procedural fairness to Mr Brown and Mr Kochhar (as well as, then, Ms Bagga), who were alleged by the applicants to be the controlling minds of the respondents and in respect of whom allegations of a most serious nature were made. Notwithstanding that these individuals are not parties to the proceeding, in circumstances where the respondent companies are subject to a DOCA and had filed a submitting notice, I was concerned to ensure that they were afforded procedural fairness and had the opportunity to be heard in a real and practical sense such that they could, if they so wished, apply to intervene in this proceeding. 77 On 4 November 2019, the amicus curiae and the applicants filed separate short submissions addressing this issue. Given that, as explained above, the applicants did not ultimately press the amendments to the statement of claim to include Ms Bagga as a controlling mind of the respondents, it is not necessary to consider the procedural fairness issue in relation to Ms Bagga. With respect to Mr Brown and Mr Kochhar, the applicants submitted: It is commonplace - and almost inevitable in large documentary cases - that observations are made about non-parties to litigation (who are also sometimes not even called as witnesses) in judicial reasons … (Applicants' note concerning procedural fairness dated 4 November 2019 at [11], citing Ashby v Slipper [2014] FCAFC 15; (2014) 219 FCR 322 at [320] (Siopis J).) 78 The applicants contended that this proceeding has been properly constituted as to the parties, and that all parties interested or concerned in the relief claimed are before the Court.51 The applicants emphasised that Mr Brown and Mr Kochhar are not parties to the proceeding, will not be bound by any of the orders sought by the applicants, if granted, and that the respondents had not sought to adduce any evidence from Mr Brown or Mr Kochhar save for a statutory declaration relating to the veracity of student data.52 79 The applicants also submitted that when this proceeding was commenced in November 2015 and the respondent companies had not yet entered into administration, Mr Brown and Mr Kochhar were named in the concise statement. The applicants submitted that as senior management of the respondents, both individuals have been on notice of the allegations of their involvement in the conduct the subject of the proceeding since its commencement.53 I note that while the defence was filed after the respondents had entered into administration, the respondents filed their concise response prior to entering into administration. The evidence also establishes that while Mr Kochhar left the respondents' employment in December 2015, he remained thereafter in a consulting capacity. 80 The amicus curiae also submitted that the present proceeding was properly constituted as to the parties. In addition, Dr Higgins SC addressed the issue of whether the relevant individuals have been accorded any, and an appropriate, opportunity to be heard. In her submission, on the available material, there was a basis to conclude that Mr Brown and Mr Kochhar have, at relevant times, been sufficiently on notice of the allegations against them to have received a real and practical opportunity to be heard had they sought to do so.54 81 I agree for the reasons given by Dr Higgins SC that Mr Brown and Mr Kochhar have been afforded procedural fairness, and the opportunity to be heard in a real and practical sense.

3.8 Suppression and non-publication orders under s 37AF, FCA Act 82 On 12 February 2016, while this proceeding was docketed to Yates J, his Honour made orders, by consent, relating to the anonymisation of the ex-employee witnesses. Order 1 of those orders provided that "[a]ny statement given by any Former Employee to the applicants or their legal representatives … be filed as … confidential", and was followed by several other protective orders. 83 At the commencement of the trial, the applicants sought more extensive suppression and non-publication orders in order to ensure the confidentiality of personal information relating to consumers enrolled in Phoenix Online Courses and potential students, such as their names, addresses and dates of birth.55 The applicants handed up short minutes of order which provided for the following regime. (1) Under proposed orders 1 to 3, order 1 of the orders made on 12 February 2016 would be vacated. In its place, until 29 November 2019, only parties to this proceeding, their experts and legal representatives, and the Court would be able to inspect the documents listed in Annexure A to the short minutes. Annexure A identified a large number of documents including, for example, the tender bundle and supplementary tender bundle, and a number of affidavits, exhibits and annexures in the Court Book. (2) Proposed order 4 of the short minutes permitted the applicants, between 5 and 29 November 2019, to uplift and amend the tender bundle to remove documents which were not referred to in the course of the hearing or in written submissions. (The deadline was later extended to 3 December 2019 by orders made on 19 November 2019.) (3) Under proposed order 5 of the short minutes, upon receipt of a non-party inspection request relating to any of the documents identified in Annexure A, the Registry was to notify the applicants' solicitors of the request, and within 2 business days the applicants would advise the Registry of their position in relation to the access request. If the access request was opposed by the applicants, the applicants would file an interlocutory application and submissions within 5 business days of being notified of the request. (4) Proposed order 6 required that any non-party intending to disclose "confidential student information" (which was given a detailed definition in notation 1 to the orders including, for example, name, signature, date of birth, address and tax file number) which had been referred to in open Court must notify the applicants' solicitors of that intention. Orders 5 and 6 were to operate until 31 October 2020. 84 Section 37AF(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) relevantly empowers the Court, on grounds permitted by s 37AG, to restrict the publication or disclosure of information tending to reveal the identity of any person who is related to or otherwise associated with any party in a proceeding (s 37AF(1)(a)), or information that relates to a proceeding before the Court and comprises evidence or information about evidence (s 37AF(1)(b)(i)). Under s 37AF(2), the Court may make such orders as it thinks appropriate to give effect to an order made under s 37AF(1). 85 In light of the large volume of evidence containing confidential student information and the sensitivity of that information, particularly given the vulnerability of enrolled consumers and potential students, I was satisfied that these orders were necessary to prevent prejudice to the proper administration of justice within the meaning of s 37AG(1)(a) of the FCA Act. I have taken into account that a primary objective of the administration of justice is to safeguard the public interest in open justice (s 37AE). However, as the Chief Justice explained in Minister for Immigration and Border Protection v Egan [2018] FCA 1320, while the principle of open justice "involves justice being seen to be done … [o]pen justice is not an absolute concept, unbending in its form. It must on occasion be balanced with other considerations, including but not limited to considerations such as the avoidance of prejudice in the administration of justice or the protection of victims." 86 Accordingly, I made orders in terms of the short minutes of order at the commencement of the trial on 5 November 2019. Annexure B to these orders comprised a one-page notice including an extract of order 6, and was placed on the door of the courtroom on each day of the trial. I have also substituted the names of consumers with pseudonyms, for the same reasons.

3.9 Evidence initially omitted from the Court Book 87 The Court Book was received into evidence in electronic form as Exhibit A-2.56 On 13 November 2019, Mr White, junior counsel for the applicants, explained that certain documents, being the curriculum vitae of Ms Scomazzon and other attachments, were not included in the filed version of the Court Book57 and handed up a hard copy volume entitled "Attachments to Annexure JS-1 to the affidavit of Jana Scomazzon affirmed 11 September 2019". On 5 February 2020, in response to an enquiry by the Court, the applicants confirmed that this volume was intended to be admitted into evidence, and provided an electronic copy of these documents. On 6 February 2020, I made an order including that bundle of documents in evidence as part of the Court Book.

4.1 The radical changes effected to Phoenix's operations following its acquisition by ACN 88 In early 2015, ACN purchased Phoenix. By this time, CTI was a wholly-owned subsidiary of ACN. As the applicants allege, following the acquisition of Phoenix, there was a radical reorientation in Phoenix's operating model. Prior to the acquisition Phoenix had offered only face-to-face classes for 300-400 students at any given point in time. Upon acquiring ACN, however, the respondents embarked upon recruiting many thousands of consumers Australia-wide to enrol in online courses in new subjects with Phoenix trading under the banner of "myTime Learning". For each of these courses, Phoenix charged fees of $18,000 to $21,000.

4.2 Brokers and Agents marketing the Phoenix Online Courses 89 Phoenix and CTI marketed the Phoenix Online Courses by engaging third parties referred to by the applicants and in these reasons as Brokers. As the respondents admitted: (1) between 16 January 2015 and 1 June 2015, CLI (another entity in the ACN Group of companies) entered into standard form contracts on behalf of Phoenix with at least 28 marketing entities which authorised those entities to act for or at the direction of CLI to recruit students into the Online Courses (the CLI Broker Contracts); and (2) between 1 July 2015 and approximately 23 November 2015, Phoenix entered directly into standard form written contracts with at least 29 marketing entities, some but not all of whom had previously entered into CLI Broker Contracts, and these authorised those marketing entities to act for or at the direction of Phoenix to recruit students into the Online Courses (the Phoenix Broker Contracts).58 (Together, the CLI/Phoenix Broker Contracts.) 90 Annexure A to the ASOC (reproduced in Appendix 2 below) identifies the Brokers in question, the dates on which they entered into the contracts, and key terms of the contracts, with the agreements themselves being reproduced in the tender bundle. Every Broker negotiated its own commission with Phoenix and, while different, they were all substantial with the highest being 35%. As will become apparent, the existence and size of the commissions is one of the features relied upon by the applicants to establish the Profit Maximising Purpose. 91 The Brokers in turn entered into contracts with at least 548 entities and individuals (the Agents) to recruit consumers into the Online Courses (the Agent Contracts).59 Particulars of each agent contract are set out in Annexure B to the ASOC and reproduced in Appendix 3 to these reasons. 92 For reasons I later explain, I agree with the applicants' submission that the Brokers and Agents were plainly agents of Phoenix such that their conduct is properly attributed to Phoenix pursuant to s 139B(2) of the CCA.60

4.3 Target Communities and Vulnerable Consumers 93 The applicants further allege that the marketing of the Phoenix Online Courses occurred in circumstances where Phoenix and CTI were aware of reforms to the VET FEE-HELP assistance scheme introduced by the Commonwealth in late 2012 and early 2013 in order to increase the VET participation rates of Indigenous Australians, and people from non-English speaking backgrounds, with a disability, from regional and remote areas, from low socio-economic backgrounds, and/or not currently engaged in employment (the Target Communities).61 It is also alleged that Phoenix and CTI were aware that the consumers to whom the Brokers and Agents marketed the Online Courses were likely to include the Target Communities and that some members of those communities were likely to have low LLN results, low levels of formal education, and low levels of computer literacy (Vulnerable Consumers).62

4.4 The Profit Maximising Purpose and Callous Indifference 94 As earlier adverted to, an essential aspect of the applicants' unconscionability case is that Phoenix and CTI were driven by a Profit Maximising Purpose which prioritised maximising the number of consumers enrolled in Phoenix Online Courses who received VET FEE-HELP, so as to maximise the revenue to Phoenix from the Commonwealth via the VET FEE-HELP assistance scheme. In furtherance of that purpose, it is alleged that in eliciting enrolment from consumers and then enrolling them in the Online Courses, Phoenix and CTI were callously indifferent as to whether: (a) the consumers were in the target cohorts of the online courses; (b) the consumers satisfied the eligibility criteria for those courses; (c) the online courses were suitable for the consumers and the consumers were suited to the courses, having regard to their formal education, previous work experience, and literacy, numeracy and computer skills; (d) the consumers had reasonable prospects of successfully completing the online courses in respect of which they applied to be enrolled; (e) the consumers meaningfully participated in the Online Courses, including any assessments; (f) Phoenix had appropriate trainer to student ratios; (g) there was a reasonable prospect that a consumer enrolled in an online course which required a work placement could secure a work placement; and (h) Phoenix was capable of inspecting those work placement venues, (the "Callous Indifference").63 95 The applicants also allege that, when the level of complaints against Phoenix came to the attention of regulators including the ACCC, the respondents engaged in a desperate attempt to cover up their unconscionable conduct and to mislead the regulators, including by falsifying documents and dates, in order to maximise their profits from the VET FEE-HELP assistance scheme. 96 In this regard, the applicants contend that there were two stages to a consumer enrolling in an online course. First, Brokers or Agents marketed the courses to consumers face-to-face and elicited a series of completed enrolment forms from the consumers, by which the consumers sought to be enrolled. At the second stage, the consumers were supposed to be vetted by CTI following which they would be enrolled if they successfully passed the vetting process. However, while that was the system in theory, among other difficulties little or no effort was in fact made at the vetting or verification stage to ascertain the suitability of consumers to undertake the Online Courses or to ensure that mandatory admissibility criteria were met. 97 On this basis, the applicants allege that two relevant systems were in play, which were unconscionable separately and cumulatively, namely the Phoenix Marketing System and the Phoenix Enrolment System.

4.5 The Phoenix Marketing System 98 The applicants allege at SOC/ASOC [73] that there were eight essential features of the Phoenix Marketing System which consisted of Phoenix directly, and indirectly via CTI and CLI: 73.1 engaging Brokers and Agents to market its Online Courses to consumers as its agents, by way of unsolicited, "face[-]to[-]face" marketing; 73.2 engaging Brokers and Agents to obtain: 73.2.1 completed Online Course enrolment application forms; 73.2.2 completed Request for VET-FEE HELP Assistance forms [this was sometimes known as a Commonwealth Assistance Form or "CAF"]; 73.2.3 completed LLN test sheets; 73.2.4 completed "Pre-training Review" (PTR) forms; 73.2.5 federal or State-issued ID and proof of citizenship or of permanent humanitarian residency status; and 73.2.6 completed Agreement to Tuition Fees forms, (collectively, the Enrolment Forms); 73.3 engaging Brokers and Agents to represent to consumers that: 73.3.1 in order to receive a free laptop all the consumers needed to do was sign up to a Phoenix (or myTime) Online Course; or 73.3.2 the Online Courses were free, or free unless the consumer's income was in an amount which they were unlikely to earn on complet[ion] of a course, or at all; 73.4 engaging Brokers and Agents to obtain, from the vast majority of applying consumers, completed Enrolment Forms applying to enrol in more than one Online Course, notwithstanding that each Online Course had an EFTSL [(equivalent full-time study load)] of 1.0; 73.5 providing financial incentives to the Brokers and Agents to maximise the number of completed Enrolment Forms for Online Courses; and 73.6 failing to: 73.6.1 train or adequately train the Brokers and Agents in their obligations under the ACL; 73.6.2 train or adequately train the Brokers and Agents in their obligations to comply with the RTOs Standards; and 73.6.3 instruct or require the Brokers and Agents to ascertain whether the consumer was suited to the Online Course and the Online Course to the consumer; 73.7 failing to ascertain whether the consumer was suited to the Online Course and the Online Course to the consumer; 73.8 Brokers or Agents often completing the LLN and PTR forms themselves, or coaching the consumers on how to complete these forms, when these forms were ostensibly designed to determine a consumer's ability to undertake and interest in an Online Course (collectively, the Phoenix Marketing System). 99 It is alleged at ASOC [74] that the Phoenix Marketing System was deployed on consumers in circumstances where: 74.1 Phoenix had the Profit Maximising Purpose and the Callous Indifference; 74.2 some consumers were likely to be Vulnerable Consumers; 74.3 notwithstanding the above, the tactics employed by the Brokers and Agents in soliciting enrolment applications were unfair and high pressure; 74.4 the representations made by the Brokers and Agents to consumers that: 74.4.1 in order to receive a free laptop all the consumers needed to do was sign up to a Phoenix (or myTime) Online Course; and 74.4.2 the Online Courses were free, or were free unless the consumer's income was in an amount which they were unlikely to earn on complet[ion] of a course, or at all; were misleading; and 74.5 completed enrolment forms were a necessary precursor to a consumer being enrolled in an Online Course or Online Courses and exposed to [a] debt or likely debt [to the Commonwealth upon receiving a loan by way of the VET FEE-HELP assistance scheme] where they were an Eligible Student or Purported Eligible Student. 100 In these circumstances, the applicants allege that the conduct of Phoenix constituting the Phoenix Marketing System was unconscionable and Phoenix thereby contravened s 21 of the ACL. Furthermore, the applicants plead that CTI monitored and liaised with the Brokers on behalf of Phoenix and received the enrolment forms from them. It is the applicants' case that CTI aided, abetted, counselled, or procured Phoenix's contraventions and was knowingly concerned in these contraventions, such that CTI is also liable for the contraventions by s 224(1) of the ACL.64

4.6 The Phoenix Enrolment System 101 The applicants also allege that the function of considering enrolment applications and enrolling consumers in online courses was performed on behalf of Phoenix by CTI within the scope of its actual or apparent authority.65 The essential features of the Phoenix Enrolment System employed by CTI are alleged66 to have consisted of it processing completed enrolment forms procured by the Brokers or Agents and enrolling consumers in Phoenix Online Courses in circumstances where CTI: 86.1 often enrolled the consumer without first contacting the consumer, meaning that CTI was unable to verify any of [the] following matters: 86.1.1 the consumer's identity and citizenship status; 86.1.2 that the consumer intended to enrol in the Online Course or Online Courses; 86.1.3 whether the Online Course or Online Courses were suitable for the consumer and the consumer was suited to the Online Course or Online Courses; 86.1.4 the consumer's capacity to speak and understand English; 86.1.5 that the consumer had completed the LLN and PTR forms without improper assistance from the Broker or Agent; 86.1.6 in instances where the consumer had purportedly applied for more than one simultaneous full-time Online Courses [sic], how the consumer was planning on being able to complete all of those Online Courses; 86.1.7 where the consumer was an Eligible Student or Purported Eligible Student, that he or she understood: 86.1.7.1 the nature of the VET FEE-HELP Assistance Scheme; and 86.1.7.2 the amount of debt or likely debt he or she would incur to Phoenix and the Commonwealth respectively; or 86.1A often did not verify the matters pleaded in paragraph 86.1 above where the consumer was contacted [by CTI] prior to enrolment; and 86.2 often did not confirm that a trainer or assessor had marked the consumer's LLN test; 86.3 often enrolled consumers without ascertaining whether: 86.3.1 the consumers were within the target cohort of the particular Online Course or Online Courses …; and 86.3.2 the consumers satisfied the eligibility criteria for the particular Online Course or Online Courses …. 86.4 enrolled consumers in the Diploma of Community Services and the Diploma of Early Childhood Education and Care without regard to whether: 86.4.1 the consumer would be able to secure a workplace placement, which was an essential aspect of each of those Online Courses; and 86.4.2 Phoenix or CTI had the capacity to inspect each such workplace and observe the student in the workplace; 86.4 usually enrolled consumers in more than one Online Course, despite each course having an EFTSL of 1.0; 86.6 often charged enrolled consumers duplicated and unnecessary fees for particular units of study; … [pleaded examples omitted] 86.7 often enrolled a consumer in an Online Course: 86.7.1 after the Commencement Date, without extending the census date; 86.7.2 on or shortly before the census date, without extending the census date; or 86.7.3 after the census date; and 86.8 often sent a consumer: 86.8.1 his or her log-in details for the Online Course (which enabled the student access to the materials for the Online Course) less than 7 days before the census date or on or after the census date; and 86.8.2 a laptop around 4 to 6 weeks after the census date, such that the consumer did not have a reasonable opportunity, between his or her enrolment date and the census date, to audit the Online Course and determine whether to withdraw prior to the census date. (Emphasis added.) 102 The applicants also allege that the Phoenix Enrolment System was deployed on consumers in circumstances where: 87.1 Phoenix had the Profit Maximising Purpose and the Callous Indifference; 87.2 some consumers were likely to be Vulnerable Consumers; 87.2A many consumers were exposed to incurring a debt or a likely debt … even though the Online Courses were unsuitable to them or they were unsuited to the Online Courses; 87.3 the Phoenix Marketing System existed; and 87.4 Eligible Students and Purported Eligible Students were often deprived of the reasonable opportunity to withdraw from the Online Course before the census date had passed and therefore the opportunity to avoid incurring a debt or a likely debt …67 103 In these circumstances, the applicants allege that the conduct of CTI constituting the Phoenix Enrolment System was also unconscionable and CTI thereby separately contravened s 21 of the ACL with respect to each consumer.68 Furthermore, the applicants plead that as CTI's conduct was engaged in on behalf of Phoenix and within the scope of its actual or apparent authority, CTI's conduct is taken to be Phoenix's conduct by virtue of s 139B(2) of the CCA such that Phoenix equally contravened s 21 of the ACL with respect to each such consumer.69 In the alternative, the applicants contend that the conduct of Phoenix comprised by the Phoenix Marketing System and the Phoenix Enrolment System was, in all of the circumstances, a system of unconscionable conduct contrary to s 21 of the ACL,70 and that CTI aided, abetted, counselled or procured this conduct and was knowingly concerned in it such that it is also liable to pay a penalty for that conduct.71

4.7 The four individual consumer witnesses 104 In addition, the applicants allege that Phoenix made representations to four individual consumers (Consumers A, B, C, and D) who were enrolled in Phoenix Online Courses that were misleading or deceptive, or likely to mislead or deceive, in contravention of ss 18(1) and 29(1)(i) of the ACL. They also allege that the conduct of Phoenix's agents vis-à-vis Consumers A, B, C and D, was unconscionable and contravened s 21 of the ACL. The evidence of these consumers, as well as 20 additional consumers, is relied upon by the applicants to give direct evidence of the marketing and enrolment processes utilised by the respondents in an illustrative, rather than representative, way. 105 In common with the approach adopted by Bromwich J in AIPE (No 3) at [11], I refer to these consumers as "consumer witnesses" and not as students because, for reasons which will become apparent, the evidence plainly established that none of them were suitable to be enrolled as a student by Phoenix.

5.1 Introduction 106 Section 2 of the CCA provides that the object of the Act is "to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection." One of the means by which this object is implemented by the CCA is to proscribe unconscionable conduct in Pt 2-2 comprising ss 20 to 22A in Chapter 2 (General Protections) of the ACL. 107 Equivalent provisions were enacted in Subdiv C of Div 1 of Pt 2 of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) comprising ss 12CA, 12CB and 12CC. These provisions relevantly mirror the terms of ss 21, 22 and 22A of the ACL save that the ASIC Act provisions apply only to conduct in connection with the supply or acquisition of financial services, and were recently considered by the High Court in Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28; (2016) 258 CLR 525 (Paciocco (HCA)) and Kobelt. As the amicus curiae and the applicants agreed, the construction of unconscionable conduct adopted with respect to the "materially identical" provisions of the ASIC Act (ss 12CA, 12CB and 12CC) applies with equal force to ss 20, 21 and 22 of the ACL: Kobelt at [87] (Gageler J); see also Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40 (Quantum Housing) at [36] (the Court).

5.2 Unwritten law of unconscionability (s 20, ACL) 108 Section 20 of the ACL picks up the unwritten law of unconscionability and provides context to the statutory concept of unconscionability enacted by s 21. Section 20 reads: (1) A person must not, in trade or commerce, engage in conduct that is unconscionable, within the meaning of the unwritten law from time to time. Note: A pecuniary penalty may be imposed for a contravention of this subsection. (2) This section does not apply to conduct that is prohibited by section 21. 109 It is well established that, in referring to "unconscionable, within the meaning of the unwritten law", s 20 picks up the equitable concept of unconscionable conduct but imposes an additional statutory sanction: Kobelt at [82] (Gageler J); see also eg Explanatory Memorandum to the Competition and Consumer Legislation Amendment Bill 2010 (Cth) (the 2010 Explanatory Memorandum) at [2.13]. The equitable doctrine of unconscionable conduct was explained by Kiefel CJ, Bell, Gageler, Keane and Edelman JJ in Thorne v Kennedy [2017] HCA 49; (2017) 263 CLR 85 in the following passage: 38. A conclusion of unconscionable conduct requires the innocent party to be subject to a special disadvantage "which seriously affects the ability of the innocent party to make a judgment as to [the innocent party's] own best interests [citing Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 462 (Mason J)]. The other party must also unconscientiously take advantage of that special disadvantage. This has been variously described as requiring "victimisation", "unconscientious conduct", or "exploitation". Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage. (See also eg Commercial Bank of Australia v Amadio (1983) 151 CLR 447 at 462 (Mason J); Kakavas v Crown Melbourne Ltd [2013] HCA 25; (2013) 250 CLR 392 at [124] (the Court); Kobelt at [15] (Kiefel CJ and Bell J)) and [81] (Gageler J).) 110 It follows that equity sets a high bar for the setting aside of transactions on the ground of unconscionable conduct.

5.3 Statutory unconscionability (ss 21 and 22, ACL) 111 Section 21(1) also proscribes unconscionable conduct, but the proscription is freed from the requirements which constrain the equitable concept of unconscionability. That subsection provides that: (1) A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of goods or services to a person (other than a listed public company); or (b) the acquisition or possible acquisition of goods or services from a person (other than a listed public company); engage in conduct that is, in all the circumstances, unconscionable. (Emphasis added.) 112 Section 21(3) provides that for the purpose of determining whether a person has contravened subsection (1): (a) the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and (b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section. 113 Importantly, s 21(4) sets out the intention of Parliament in relation to the interpretation of s 21 of the ACL, being to "clarify, rather than alter, the effect of the statutory prohibition of unconscionable conduct" (2010) Explanatory Memorandum at [2.18]). That subsection provides that: (4) It is the intention of the Parliament that: (a) this section is not limited by the unwritten law relating to unconscionable conduct; and (b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and (c) in considering whether conduct to which a contract relates is unconscionable, a court's consideration of the contract may include consideration of: (i) the terms of the contract; and (ii) the manner in which and the extent to which the contract is carried out; and is not limited to consideration of the circumstances relating to formation of the contract. 114 The 2010 Explanatory Memorandum explained the role of the interpretative principle introduced by s 21(4)(a) as follows: 2.19 … Paragraph 21(4)(a) of the ACL makes it clear, on the face of the statute, that statutory unconscionable conduct may, where appropriate, continue to develop independently from the equitable and common law doctrines … 115 In this regard, it was established even before s 21 was amended that statutory unconscionability in the predecessor provision to s 21, namely s 51AB of the Trade Practices Act 1974 (Cth) (TPA), was not limited by the equitable doctrine concerning unconscionable conduct: Australian Competition and Consumer Commission v CJ Berbatis Holdings Pty Ltd (No 2) [2000] FCA 2; (2000) 96 FCR 491 at [24]; Australian Competition and Consumer Commission v Radio Rentals Ltd [2005] FCA 1133; (2005) 146 FCR 292 at [24]. 116 However, the extent to which the concept of unconscionability enacted by s 21(1) had moved away from equitable doctrine was a significant point of difference between the amicus curiae and the applicants at the trial. Specifically, the amicus curiae contended that special disadvantage remains an essential element of statutory unconscionability, contrary to the applicants' position. Subsequently, that debate was resolved by the Full Court's decision in Quantum Housing, as I explain below, which rejected the proposition that special disadvantage is a necessary, as opposed to relevant, element of statutory unconscionability having regard, in particular, to s 21(4)(a) of the ACL. 117 With respect to s 21(4)(b) of the ACL, the 2010 Explanatory Memorandum explained that: The unconscionable conduct provisions of the ACL are not limited to individual transactions. Rather, the focus of the provisions is on conduct that may be said to offend against good conscience; it is not specifically on the characteristics of any possible 'victim' of the conduct (though these may be relevant to the assessment of the conduct). (Emphasis in the original.) 118 The 2010 Explanatory Memorandum also observed at [2.21] that, in line with recent case law (citing Australian Securities and Investments Commission v National Exchange Pty Ltd [2005] FCAFC 226; (2005) 148 FCR 132 (National Exchange)), "conduct may be unconscionable even where there is no 'victim' identified". The purpose of s 21(4)(b) was therefore to embody in legislation the point made in National Exchange by "indicat[ing] Parliament's intention that the provision may apply whether or not there is an identified person disadvantaged by the conduct or behaviour" (2010 Explanatory Memorandum at [2.23]). In this regard, s 21(4)(b) plainly departs from the position in Equity, reflecting the different purpose served by s 21, being to prescribe normative standards enforceable by the statutory regulator in the public interest. This contrast between the equitable and statutory concepts was highlighted by Allsop CJ in Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50; (2015) 236 FCR 199 (Paciocco (FCAFC)): 280. … it is important to recall that Equity operated to set aside or not enforce a particular transaction between the parties. The conduct and circumstances that gave rise to equitable relief related to the parties themselves, and to the transactional setting in which they found themselves. This is to be contrasted with s 12CB [of the ASIC Act], which, in para (4)(b), provides that the section is capable of applying whether or not a particular individual is identified as having been disadvantaged by the conduct. 119 A non-exhaustive list of factors which the Court must consider in determining whether particular conduct was, objectively speaking, unconscionable for the purposes of s 21 is contained in s 22(1) which provides that: (1) Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the supplier) has contravened section 21 in connection with the supply or possible supply of goods or services to a person (the customer), the court may have regard to: (a) the relative strengths of the bargaining positions of the supplier and the customer; and (b) whether, as a result of conduct engaged in by the supplier, the customer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and (c) whether the customer was able to understand any documents relating to the supply or possible supply of the goods or services; and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the customer or a person acting on behalf of the customer by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the goods or services; and (e) the amount for which, and the circumstances under which, the customer could have acquired identical or equivalent goods or services from a person other than the supplier; and (f) the extent to which the supplier's conduct towards the customer was consistent with the supplier's conduct in similar transactions between the supplier and other like customers; and (g) the requirements of any applicable industry code; and (h) the requirements of any other industry code, if the customer acted on the reasonable belief that the supplier would comply with that code; and (i) the extent to which the supplier unreasonably failed to disclose to the customer: (i) any intended conduct of the supplier that might affect the interests of the customer; and (ii) any risks to the customer arising from the supplier's intended conduct (being risks that the supplier should have foreseen would not be apparent to the customer); and (j) if there is a contract between the supplier and the customer for the supply of the goods or services: (i) the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the customer; and (ii) the terms and conditions of the contract; and (iii) the conduct of the supplier and the customer in complying with the terms and conditions of the contract; and (iv) any conduct that the supplier or the customer engaged in, in connection with their commercial relationship, after they entered into the contract; and (k) without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the customer for the supply of the goods or services; and (l) the extent to which the supplier and the customer acted in good faith. 120 The applicants submitted that ss 22(1)(a), (c), (d), (i) and (l) were particularly relevant in the present case.72

5.4 What is meant by unconscionable conduct for the purposes of s 21, ACL 121 First, as the applicants and the amicus curiae accepted, the statutory question posed by s 21(1) is whether the conduct in question is objectively to be characterised as "unconscionable" in the sense that it is "so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience": Kobelt at [92] (Gageler J); see also eg NRM Corporation Pty Ltd v Australian Competition and Consumer Commission [2016] FCAFC 98; (2016) ATPR ¶42-531 (NRM Corporation Pty Ltd) at [163] (citing Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [36]) and Empower at [717]. This means, as Gageler J further explained in Kobelt at [93] that an assessment of whether conduct is unconscionable is "… informed by a sense of what is right and proper according to values which can be recognised by the court to prevail within contemporary Australian society", including respect for the dignity and autonomy and equality of individuals and the cultural diversity of communities. Similarly, in the earlier, oft-quoted judgment of Allsop CJ in Paciocco (FCAFC), his Honour had explained that: 296. The working through of what a modern Australian commercial, business or trade conscience contains and requires, in both consumer and business contexts, will take its inspiration and formative direction from the nation's legal heritage in Equity and the common law, and from modern social and commercial legal values identified by Australian Parliaments and courts. The evaluation of conduct will be made by the judicial technique referred to in Jenyns. It does not involve personal intuitive assertion. It is an evaluation which must be reasoned and enunciated by reference to the values and norms recognised by the text, structure and context of the legislation, and made against an assessment of all connected circumstances. The evaluation includes a recognition of the deep and abiding requirement of honesty in behaviour; a rejection of trickery or sharp practice; fairness when dealing with consumers; the central importance of the faithful performance of bargains and promises freely made; the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage; a recognition that inequality of bargaining power can (but not always) be used in a way that is contrary to fair dealing or conscience; the importance of a reasonable degree of certainty in commercial transactions; the reversibility of enrichments unjustly received; the importance of behaviour in a business and consumer context that exhibits good faith and fair dealing; and the conduct of an equitable and certain judicial system that is not a harbour for idiosyncratic or personal moral judgment and exercise of power and discretion based thereon. 122 The views of the Full Court on unconscionable conduct in Paciocco (FCAFC) were affirmed on appeal by the High Court and no doubt was cast upon the correctness of Allsop CJ's statements of principle: Paciocco (HCA) at [292]-[294] (Keane J) (with whose reasons French CJ and Kiefel J agreed at [2] and [70] respectively), and [181]-[191] (Gageler J). 123 More recently in Quantum Housing at [89], the Full Court of the Federal Court explained in line with these principles that: … the values and considerations that inform the answer to a question whether conduct is against business conscience will be drawn from the values and considerations that one finds in the text, structure and context of the statute, in particular those in s 22, from statutes relevant to consider in the context of the conduct in question: Lux (2013) ATPR 42-447 at [23] and Medibank 267 FCR at 605 [241], and from the informing norms of equity and the common law, many of which need no restating by any Parliament, nor by any honest business person to another in their dealings. The Chief Justice sought to set some of these out in Paciocco 236 FCR at 274-75 [296]-[298]. These are not considerations outside the statute. They are basal values and considerations of equity and the common law in which the statute sits. Most are matters which honest business people understand and do not need expressly to require of each other (Paciocco [296]) … 124 Secondly, while an allegation of unconscionability is a serious allegation about the conduct of a person or corporation in business (Unique (FCAFC) at [155]), unconscionability "is not limited to the worst kind of unconscionable conduct. There may be more or less serious examples. That will reflect in penalty" (Quantum Housing at [92]). Thus, as the Full Court continued in Quantum Housing at [92]: The task is an evaluation of the impugned conduct to assess whether it is to be characterised as a sufficient departure from the norms of acceptable commercial behaviour as to be against conscience or to offend conscience and so be characterised as unconscionable. In any particular case, it should be recognised that if the evaluative answer be "no: it is not unconscionable", the court is concluding that by an Australian business conscience the conduct was conscionable and is not to be deterred by penalty. 125 Thirdly, in Quantum Housing the Full Court unanimously held that: 4. … Whilst some form of exploitation of or predation upon some vulnerability or disadvantage of people will often be a feature of conduct which satisfies the characterisation of unconscionable conduct under s 21, such is not a necessary feature of the conception or a necessary essence in the embodied meaning of the statutory phrase. (See also Quantum Housing at [36].) 126 In so holding, the Full Court: 78. … reject[ed] the proposition that ratio or seriously considered obiter dicta of a majority of the High Court, indeed, of any justice of the Court in Kobelt (other than Keane J) requires in any case that for conduct to be unconscionable by reference to ss 12CB and 12CC of the ASIC Act (or ss 21 and 22 of the ACL) there must be found some form of pre-existing disability, vulnerability or disadvantage of which advantage was taken. 79. The notion of what is a "pre-existing" vulnerability or disadvantage as we described it at [36] above introduces a requirement that the so-called victim of the conduct brings to the relationship an attribute of vulnerability in some factor and to some degree. Such vulnerability or disadvantage will often exist: as it did in the Anangu people in Kobelt. But their Honours' reasons in Kobelt (other than Keane J) do not express that requirement as a matter of principle as to the meaning of s 12CB (s 21). 127 The Full Court also held that the judgments of the Federal Court and other intermediate appellate courts were contrary to the proposition that the taking of advantage of a special disability is an essential ingredient of statutory unconscionability (Quantum Housing at [80]-[81]). Rather, the Full Court held that the words "unconscionable" and "conscionable" "have an ordinary meaning, derived from the inner human sense of doing right" (at [87]), with some of the human values which inform an Australian business conscience having been set out in Paciocco at [296] (quoted above). It follows, their Honours held, that: 91 Predation on vulnerability, taking advantage of disability or disadvantage and victimisation may be found in business, as in other fields of human life. Such behaviour does not, however, exhaust the meaning of against conscience. The kinds of consideration in s 22 and the kinds of circumstance to which the Chief Justice referred in Paciocco 236 FCR at 274-75 [296]-[298] are apt to inform evaluations about business standards that the courts are required by Parliament to make. They may be contestable judgments; they may be by reference to a standard that is not definable; but they are evaluative judgments that Parliament commands be made. That they are the subject of a civil penalty requires that the boundary of impugned conduct be reasonably known to the subject. This last factor reinforces the proposition that it is no light matter, indeed it is a serious matter, to have one's conduct impugned as against or as offending conscience. Business people understand such things, as do ordinary people. They need no definition to assist them. "Unconscionable" is the language of business morality and unconscionable conduct is referable to considerations expressed and recognised by the statute. The word is not limited to one kind of conduct that is against or offends conscience. Surely to predate on vulnerable consumers or small business people is unconscionable. But why is it not also unconscionable to act in a way that is systematically dishonest, entirely in bad faith in undermining a bargain, involving misrepresentation, commercial bullying or pressure and sharp practice, using a superior bargaining position, behaving contrary to an industry code, using significant market power in a way to extract an undisclosed benefit that will harm others who are commercially related to the counterparty? The proposition that such conduct (not all of which might be seen to be present here) is not unconscionable by an Australian statutory business standard of conscience because the counterparty to the business transaction suffered from no relevant pre-existing disadvantage, disability or vulnerability (other than, perhaps, having a decent degree of trust and faith in its business counterparty's honesty and good faith) is difficult to accept, unless one posits a narrow defined meaning of "unconscionable" that remains hinged in some way to the structural form of the equitable doctrine as expressed in cases such as Kakavas 250 CLR at 439-440 [161]. The history, text and structure of the Act is contrary to such a conclusion. It is not to be derived from the meaning of the word "unconscionable". 128 The Full Court's emphasis upon the seriousness of a finding of statutory unconscionability as conduct well outside acceptable commercial behaviour, despite its decoupling from the equitable doctrine, resonates with the caution sounded by Gageler J in Kobelt at [90] that the normative standard of statutory unconscionability is not "equity-lite". Thus, it "does not allow a court to adopt a process of reasoning which starts with the equitable conception of unconscionable conduct, involving exploitation of a special disadvantage, and then uses considerations identified in s 12CC to water down the court's assessment of what amounts to a special disadvantage or to allow the court to arrive more easily at an assessment that conduct amounts to exploitation" (Kobelt at [90] (Gageler J)). 129 The correctness of the Full Court's approach notwithstanding the absence of a special disadvantage was said to be illustrated by the circumstances in Quantum Housing itself. As the Full Court held: … Here the facts that were agreed for the penalty hearing are such as to permit the conclusions (substantially drawn by the primary judge) that the respondents engaged in deliberate systematic conduct of misusing their superior bargaining position by dishonestly misleading commercial counterparties (referred to as the investors of no proven particular vulnerability other than from their place in the relevant commercial circumstances) and pressuring the investors by imposing entirely unjustified and unnecessary requirements upon the investors as their contractual counterparties, thereby clearly exhibiting a dishonest lack of good faith, all in order to extract for at least one of them financial benefits which were surreptitious and undisclosed to the investors. 130 Fourthly, the prohibition in s 21 is informed by the considerations prescribed by s 22(1) which are broader than those otherwise taken into account in assessing equitable unconscionability: Kobelt at [83]-[84] (Gageler J) (by analogy). In this regard, Gageler J in Kobelt agreed with the Full Court in Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90; (2013) ATPR ¶42-447 (Lux (FCAFC)) at [23] and [41] that: 87. … The correct perspective is that s 12CB [of the ASIC Act] operates to prescribe a normative standard of conduct which the section itself marks out and makes applicable in connection with the supply or possible supply of financial services. The function of a court exercising jurisdiction in a matter arising under the section is to recognise and administer that normative standard of conduct. The court needs to administer that standard in the totality of the circumstances taking account of each of the considerations identified in s 12CC if and to the extent that those considerations are applicable in the circumstances. 131 Fifthly, the answer to the question posed by s 21(1) turns, as the section expressly provides, upon an assessment of "all the circumstances": Paciocco (HCA) at [188] (Gageler J); Kobelt at [87] (Gageler J); Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 (Tonto Home Loans) at [291] (Allsop P (as his Honour then was)). This involves, as the Full Court explained in Lux (FCAFC) at [44] "standing back and looking at the whole episode". Thus, in Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (trading as Captain Cook College) (No 3) [2021] FCA 737 (Captain Cook College), Stewart J explained at [77] with respect to a systems unconscionability case that "it is wrong to approach a system case by seeking to isolate each integer of the system and reach a conclusion whether each is unconscionable in isolation. Clearly it is the system as a whole as constituted by, potentially, many inter-related integers that is to be assessed." 132 It also follows from the requirement to have regard to all of the circumstances that no single factor is determinative: see eg Paciocco (HCA) at [292]-[294] (Keane J) (with whose reasons French CJ and Kiefel J agreed at [2] and [70] respectively); see also Empower at [713] (Gleeson J). Thus, for example, the mere existence of a disparity in bargaining power between the supplier and the customers is not sufficient to establish that the supplier's conduct was unconscionable: Paciocco at [293] (Keane J). 133 Equally, it does not necessarily follow from the fact that consumers entered voluntarily into contracts for the sale of goods or services that the conduct of inducing them to do so was conscionable in all of the circumstances, as Kiefel CJ and Bell J explained in Kobelt at [57]-[58] referring by example to Lux (FCAFC). In Lux (FCAFC), the Full Court held that Lux Distributors Pty Ltd engaged in unconscionable conduct contrary to s 51AB of the TPA and its successor, s 21 of the ACL, arising from the sale of vacuum cleaners by direct salespeople to three elderly women in their own homes. The sales practice employed against the women and held to be unconscionable by the Full Court in Lux (FCAFC) involved a deceptive ruse to gain access to their homes and, once access was gained, a sales technique was employed which was designed to create a real sense of obligation from the subtle vulnerability of the householder to buy an expensive item which they did not really want or need: Lux (FCAFC) at [27]-[28], [39] and [44] (the Court). In reaching that conclusion, the Full Court took into account that the supply of the vacuum cleaners was in breach of provisions of the ACL and state laws requiring sellers making unsolicited calls on potential consumers to disclose their purpose and leave upon request. Equally here non-compliance with the regulatory framework applying to VET providers such as Phoenix and governing the VET FEE-HELP loan scheme is an important aspect of assessing whether the relevant conduct was unconscionable for the purposes of s 21 of the ACL. 134 Sixthly, while the umbrella to s 22(1) states that the factors listed at (a) to (l) are matters to which the Court "may" have regard, the word "may" in this context imports a requirement: see Commonwealth Bank of Australia v Kojic [2016] FCAFC 186; (2016) 249 FCR 421 at [72] (Besanko J). As such, regard must be had to all of the considerations listed in s 22(1) to the extent that they are relevant to the particular case. As Gageler J held in Paciocco (HCA) by analogy with respect to the factors specified in s 12CB(2) of the ASIC Act relevant to assessing whether conduct in connection with the supply of financial services is unconscionable: 189. The word "may" in s 12CB(2) of the ASIC Act was not permissive but conditional. The import of s 12CB(2) was to spell out that circumstances relevant to the determination of whether conduct was objectively to be characterised as "unconscionable" according to the ordinary meaning of that term might or might not include, in respect of particular conduct, all or any of the particular matters referred to in s 12CB(2). The provision made clear that, where any one or more of those matters existed in respect of particular conduct, each of those extant matters was to form part of the totality of the circumstances mandatorily to be taken into account for the purpose of determining the statutory question posed by s 12CB(1). The provision did not leave it open to a consumer who alleged that conduct of a supplier was in breach of s 12CB(1) to pick and choose. The customers could not choose to rely on matters referred to in s 12CB(2)(a) and (b), yet to ignore matters referred to in s 12CB(2)(c), (d) and (e). 135 In this regard, Kiefel CJ and Bell J explained in Kobelt at [14] that the values which inform the standard of conscience set by s 12CB(1) of the ASIC Act (and by analogy, s 22(1) of the ACL) include those identified by Allsop CJ in Paciocco (FCAFC) at [296] and quoted above. Thus, Allsop CJ observed in Paciocco (FCAFC) at [285] that the matters in s 12CC of the ASIC Act "assist in setting a framework for the values that lie behind the notion of the relevant conscience of the parties in trade or commerce identified in s 12CB. Those values and conceptions can be seen as: fairness and equality: see paras (a), (b), (d) - (k); a lack of understanding or ignorance of a party: para (c); the risk and worth of the bargain: paras (e) and (i); and good faith and fair dealing: para (l)." 136 Furthermore, the matters specified by s 22(1) of the ACL "[have] the potential to bear positively or negatively on the characterisation of conduct as conduct that is or is not unconscionable" (Kobelt at [83] (Gageler J); see also eg National Exchange at [40] (the Court)). Equally the absence of any of the matters listed in s 22(1), such as the absence of undue influence, pressure, unfair tactics, or dishonesty, will also bear upon the assessment of whether the supplier's conduct involves such a departure from accepted community standards as to render it unconscionable (Kobelt at [58]-[59] (Kiefel CJ and Bell J)). In this regard, it must be borne in mind that the statutory proscription does not require suppliers to act in an altruistic or disinterested way with consumers; nor necessarily in their customers' best interests (Kobelt at [75] (Kiefel CJ and Bell J), [100] (Gageler J), [117] (Keane J)). The subject matter of the ACL, being the regulation of trade and commerce in furtherance of the objects specified in s 2 of the Act, suggests otherwise. As Keane J observed in Kobelt by analogy: 117. … the purpose of s 12CB of the ASIC Act is to regulate commerce. The pursuit by those engaged in commerce of their own advantage is an omnipresent feature of legitimate commerce. A trader does not, generally speaking, stand in a fiduciary relationship with his or her customers, and good conscience does not require a trader to act in the interests of others. To say that the respondent was pursuing his own commercial interests with a view to profit is to state the obvious, but also to say very little as to whether he engaged in unconscionable conduct. In particular, it does not assist in discerning whether the conduct in question exhibits those features which distinguish unconscionable conduct from the legitimate pursuit of self interest. 137 In short, as Allsop CJ said in Paciocco (FCAFC): 306. As Deane J said in Muschinski v Dodds 160 CLR at 616, property rights (and the same can be said of jural relations in trade or commerce) should be governed by law, and not some mix of judicial discretion or the subjective views as to who should win based on the formless void of individual moral opinion. Nothing in Subdiv C and ss 12CB and 12CC or the other statutes with which this case is concerned should be seen as requiring this. The notions of conscience, justice and fairness are based on enunciated and organised norms and values, including the organised principles of law and Equity, taken from the legal context of the statutes in question and the words of the statutes themselves. Employing judicial technique involving a close examination of the complete attendant facts and rational justification, the Court must assess and characterise the conduct of an impugned party in trade or commerce against the standard of business conscience, reflecting the values and norms recognised by Parliament to which I have referred.

5.5.1 Characterisation of a system or pattern as unconscionable 138 The amicus curiae's submissions as to the characterisation of a system or pattern as unconscionable were not in issue and afforded particularly helpful guidance. As such, I have drawn from those submissions in explaining the issue of characterisation. 139 The Full Court in Unique (FCAFC) held that "[a] 'system' connotes an internal method of working, a 'pattern' connotes the external observation of events" (at [104] (cited with approval by Nettle and Gordon JJ in Kobelt at [143])). In line with this, in the earlier decision in Australian Competition and Consumer Commission v EDirect Pty Ltd [2012] FCA 1045 (EDirect) (concerning a mobile phone telemarketing scheme using overseas call centres), Reeves J construed the word "system" according to its ordinary meaning as "an assemblage or combination of things or parts forming a complex or unitary whole; … a co-ordinated body of methods, or a complex scheme or plan of procedure": Macquarie Dictionary" at [91]. As his Honour continued, "[t]o similar effect, Dixon CJ said of the word 'scheme' that it 'connotes a plan or purpose which is coherent and has some unity of conception': see Australian Consolidated Press Limited v Australian Newsprint Mills Holdings Limited (1960) 105 CLR 473 at 479". Similarly, in Australian Competition and Consumer Commission v Unique International College [2017] FCA 727 (Unique (FCA)) Perram J held that a system encompasses "an internal process … deliberately adopted", while "the phrase 'pattern of behaviour' will also cover those situations where a process emerges without necessarily ever having been expressly articulated": at [757]. 140 As the amicus curiae submitted, in certain cases the nature of the system will readily disclose inequity of a kind which supports a finding that the conduct involved in the system is unconscionable (Amicus' Closing Submissions dated 23 October 2019 (Amicus' CS) at [18]). National Exchange is an example of such a case, with the inequity of the transactions being evident on their face (National Exchange at [33]). A further example of a system of conduct which readily disclosed its unconscionable character was that alleged in Australian Competition and Consumer Commission v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Limited) [2015] FCA 368; (2015) ATPR ¶42-498 (AMI) which I discuss in more detail below. That case concerned the marketing of alleged cures for premature ejaculation and erectile dysfunction. As the amicus curiae submitted, that decision indicates that in certain circumstances where the systemic conduct targets an attribute common to members of a class, the question of whether or not any individual actually suffers disadvantage may be immaterial to a finding that the system was unconscionable, as may idiosyncrasies of individual members of that class (Amicus' CS at [20]-[22]; Unique (FCAFC) at [65] and [133]). Equally, the directed and deliberate use of unfair sales tactics and other forms of plainly unconscionable conduct may, if integral, make systems conduct unconscionable irrespective of individual outcomes. 141 Yet another possible scenario is that which confronted Gleeson J in Empower where the targeting of disadvantaged groups was both consistent with the purposes of the relevant government policies with respect to the VET FEE-HELP assistance scheme and apt to result in exploitable conduct. The approach adopted by Gleeson J remains relevant despite the ACCC's reliance on it in the event that special disadvantage was an essential feature of statutory unconscionability, which the binding decision in Quantum Housing has made clear is not the case. 142 First, Gleeson J held at [729] that a system of conduct or pattern of behaviour may be unconscionable "even though not every individual affected by the conduct or behaviour is or has been disadvantaged by the conduct or behaviour. What appears to have been significant was that the conduct targeted a group to take advantage of their likely, although not certain, vulnerability". The Full Court's decision in National Exchange, to which Gleeson J referred, is an example of a system held to be unconscionable in this sense. In National Exchange, ASIC alleged that, in sending unsolicited off-market share offers to members of a demutualised company to buy shares at a price which was substantially less than the market price, National Exchange had engaged in unconscionable conduct contrary to s 12CC of the ASIC Act. The Full Court held on appeal that National Exchange had engaged in unconscionable conduct because, among other reasons, it had taken advantage of the fact that there would be some people among the target company's members whom National Exchange perceived to be vulnerable and would accept the offer against their commercial interests. As the Full Court held: 43. National Exchange set out to systematically implement a strategy to take advantage of the fact that amongst the official members there would be a group of inexperienced persons who would act irrationally from a purely commercial viewpoint and would accept the offer. They were perceived to be vulnerable targets and ripe for exploitation, as they would be likely to act inadvertently and sell their shares without obtaining proper advice, and they were a predictable class of members from whom Tweed could procure a substantial financial advantage by reason of their commercially irrational conduct. This is not a case of shrewd commercial negotiation between businesses within acceptable boundaries. The conduct can properly be described as predatory and against good conscience. This is not a case of obtaining a low price by shrewd negotiation. It is predatory conduct designed to take advantage of inexperienced offerees. The primary emphasis is on the conduct of the offeror towards the offeree in deciding whether conduct is unconscionable. The law is not, of course, intended to protect the reckless or the unreasonable and, as Spigelman J stated in Attorney General of NSW v World Best Holdings Ltd [2005] NSWCA 261 at [121], "[u]nconscionability is a concept which requires a high level of moral obloquy". The concept of unconscionability is, however, concerned to prohibit conduct such as that of the offeror in this case, which was directed at exploiting the targeted recipients. There is a strong element of moral obloquy in this case. 143 Secondly, Gleeson J in Empower held that the evidence did not establish that Empower's processes were deliberately designed to take advantage of vulnerable consumers and there was no actual direction per se to use unfair sales tactics or encouragement to make misleading representations (Empower at [750]). However, Gleeson J held that its processes "reflected a callous indifference to considerations of consumer protection, including whether recruiters complied with the ACL or whether they duped consumers into enrolling in an online course and incurring a VET FEE-HELP debt, for the purpose of deriving income from VET FEE-HELP" (Empower at [750], emphasis added). This inference in turn supported a conclusion that the system was unconscionable. As her Honour explained: 751. … at least in the period June to mid-December 2014 Empower conducted a system or engaged in a pattern of behaviour 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 the Google Chromebooks; and (c) making unsolicited consumer agreements with no process for ensuring compliance with the relevant provisions of the ACL. These features of Empower's system, when coupled with cursory verification of students' bona fides by telephone and no LLN testing, meant that 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. The system enabled Empower to receive substantial income pursuant to a government funded scheme intended to improve the lives of members of the community by providing them with education and, consequently, improved employment prospects. 144 On this basis, Gleeson J held at [751] that: [W]here the system was directed to enrolling students from a disadvantaged sector of the community - who were vulnerable to being misled or deceived - in order to accrue very substantial financial benefits to Empower, and where the system reflected a callous indifference to the consumer protection considerations I have identified above, a conclusion that, by its operation of that system, Empower engaged in conduct that was, in all the circumstances, unconscionable is justified. 145 In effect, therefore, as the amicus curiae submitted (Amicus' CS at [43]-[44]), where a system of conduct designed and implemented by a respondent, while not directing, nonetheless accommodates unconscionable conduct, it is incumbent on the respondent to integrate measures into its system to ensure that those under its direction adhere to consumer protections. A system which fails to integrate such measures into its system as a result of indifference to consumer protection considerations may, on this approach, constitute conduct against conscience by reference to societal norms. As the amicus curiae submitted, "[t]he same conscience that operates to restrain a party from engaging in unconscionable conduct and to compel it to make amends where it has done so, can also operate to require that party to take steps to mitigate the risk that unconscionable conduct will figure in systems under its control" (Amicus' CS at [44]). 146 Importantly on this approach, as the applicants contend, a system of unconscionability for the purposes of s 21 of the ACL was established where: (1) there was a cohort of consumers which included those labouring under a special disadvantage (vulnerable consumers); (2) the respondent knew this; (3) in designing and operating its system, the respondent "paid little regard to the educational needs of any of its students, including the most vulnerable and those requiring the greatest guidance and support in making an informed choice about what was in their best interests" (ACS at [96]); (4) the system included features which accommodate the exploitation of the special disadvantage or disadvantages; and (5) the respondent failed to take steps to guard against exploitation of the vulnerable consumers. 147 A similar line of reasoning in AIPE (No 3) also led to a finding of unconscionability against the education provider, AIPE. In that case, the ACCC and the Commonwealth alleged that AIPE engaged in an unconscionable system of conduct contrary to s 21 of the ACL, as well as unconscionable conduct contrary to s 21 with respect to 13 individual consumers. Relevantly for present purposes, the applicants alleged that AIPE operated a system for enrolling consumers in courses eligible for VET FEE-HELP loan assistance without regard to their suitability for the courses. In common with the present case and the circumstances in Empower, the system employed by AIPE was to use agents and their employees to sign up consumers which AIPE then enrolled in a manner described by Bromwich J as "somewhat akin to a real estate agent, who facilitates a sale, but leaving the sale contract to take place between the vendor and purchaser" (AIPE (No 3) at [8]). 148 While the first step in the regulator's case in AIPE (No 3) was that disadvantaged persons were targeted for enrolment, their case did not stop at that point. As Bromwich J explained, "[t]here were ways and means of carrying out such targeting that would be unobjectionable and in keeping with the deliberate liberalising of the VET FEE-HELP scheme by the government, or at least could not be shown to be objectionable even if shown to be troubling" (at [169]). Rather, his Honour explained that the substance of the applicants' case was that the VET FEE-HELP program design "was unconscionably exploited for profit by AIPE in a way that inevitably was productive of harm to consumers who were enrolled as students who were never likely to, and in the much greater part never did, in fact partake of the courses" (ibid). That case was upheld by Bromwich J. As his Honour found: 686. The main conclusion to be drawn from this evidence is that, despite the efforts of the employee witnesses and some of their staff to improve AIPE enrolment practices to avoid unsuitable consumers being enrolled as students, the highest level of AIPE was concerned with high levels of enrolment rather than even modest levels of successful study. The overall conclusion is that Mr Khanche [(the CEO of AIPE)] and thus AIPE were fully aware that most of the consumers who were enrolled as online students were not partaking of the course in which they were enrolled, and that this was largely the situation from the moment that enrolment took place. 149 Key aspects of the business model employed by AIPE were that: (1) AIPE was only willing to have the appearance of taking steps to confine the imposition of VET FEE-HELP debts to genuine students but did not in fact want or allow that to happen if it had any significant impact on enrolments (at [687]); (2) it was an accepted and anticipated part of the business model that a very high proportion of consumers who were enrolled would pass the census date and incur a VET FEE-HELP debt in circumstances where it was not only predictable that they would never need any student support, but it was also a highly profitable outcome (at [688]); (3) a significant number of consumers enrolled as students never commenced the courses in which they were enrolled (at [689]); and (4) despite the substantial increase in enrolments, the fact that there was no substantial increase in staff numbers demonstrated that AIPE understood that the great bulk of consumers enrolled as students who were withdrawn after the census date were unsuitable to be enrolled or not genuine students such as by reason of being told that enrolment was a means of getting a "free" laptop (at [690]). 150 Thus his Honour held that given the predictable effect of AIPE's business model on vulnerable prospective consumers, the business model was unconscionable: "[i]t was incumbent on AIPE to conduct any recruitment from this disadvantaged pool of consumers in a way that did not take advantage of their vulnerability. That was the legal and practical framework in which AIPE was operating" (at [691]). 151 In reaching this conclusion, Bromwich J rejected the submission by AIPE that the regulator had tacitly assumed without evidence that the consumers enrolled as students were vulnerable contrary to the Full Court's caution in Unique (FCAFC) at [235] against making such stereotypical assumptions. Rather, his Honour held in AIPE (No 3) at [772(6)] that: This overlooks what the Full Court said in Unique at [135] to [136]. The applicants' unconscionabil[i]ty case relied upon general attributes of the disadvantaged consumers who were targeted to be enrolled, in the sense of being less able to detect defects in the information they were given, and to resist becoming enrolled in a course despite being unsuitable. Any member of society who was told, for example, that a course was "free" when it was not free of a debt burden, or that a laptop was for use in such a course (or otherwise) was "free" when in fact it too was provided in the context of and upon the condition that a debt burden was assumed, could well be encouraged to enrol in such a course. The burden of the applicants' case is that persons from disadvantaged backgrounds, who were targeted in accordance with the liberalised VET FEE-HELP scheme, were more likely to be misled by such conduct and therefore to become enrolled, even if they were also not suitable to be enrolled in the first place. This was not an improper or silent assumption, let alone one relying upon stereotypes, but rather a normal understanding of differential capacity, and therefore vulnerability, to be misled by conduct of the kind that the applicants rely upon. 152 His Honour characterised the vulnerability of which advantage was taken as "the vulnerability of a general class of consumer with an inherently higher risk of being unsuitable to be enrolled as a student, rather than having features specific to one consumer but absent from another" (at [692]) and held that: 692. … The outcomes and events pointing to that general vulnerability, and thus particular and special disadvantage, was not left to speculation, or generalisation, but rather was repeatedly raised by each of the three employee witnesses, sought to be rectified and thwarted or otherwise undermined by the most senior decision-makers at AIPE …

5.5.2 Proof of a "system of conduct or pattern of behaviour" 153 Issues regarding the proof of an unconscionable system of conduct or pattern of behaviour under the ACL were the subject of close consideration by the Full Court recently in Unique (FCAFC). It is therefore helpful to consider this decision in some detail. 154 The ACCC alleged that Unique, a RTO, had engaged in a system of conduct or a pattern of behaviour in connection with the supply of online vocational educational courses to consumers under VET FEE-HELP which was unconscionable contrary to s 21 of the ACL. Aspects of the conduct relied upon included the offering and provision of "free" iPads and laptop computers. Unique ran 428 recruitment sites. The regulator led evidence as to the marketing conduct used in relation to six individual students at three of those sites but did not lead evidence as to how the nominated consumers had been selected in those towns from amongst the thousands of consumers enrolled with Unique across the relevant period. The primary judge, Perram J, held that absent that information, the Court could not "rationally conclude that what took place in those towns was generally representative" (Unique (FCA) at [721]). 155 However, Justice Perram considered that other evidence led by Unique and unrelated to four towns in which 'sign-up meetings' were held established "certain more limited systemic features" namely: 721. … first, the gift of computers to proposed students on signing up (either directly as a gift before 31 March 2015 or on a purported loan basis after that date); secondly, the use of incentives for its own staff to encourage them to sign up students; and thirdly, the holding of sign-up meetings at the targeted locations. 156 His Honour concluded that he could not rationally extrapolate anything as to a system from his findings concerning the targeted locations, but nevertheless proceeded to find that a system had been proved on the basis of the evidence concerning the four recruitment sites. (As the amicus curiae submitted, on appeal the Full Federal Court found that a thread of the argument that these events were somehow representative of a broader system or pattern remained in his Honour's reasoning.) In particular, Perram J held that the gifting of laptops, the incentivising of recruitment, and the holding of recruitment meetings were "the result of considered decision making by senior management within Unique" and constituted a system within the meaning of s 21(4) of the ACL (Unique (FCA) at [774]-[777]). His Honour also found that Unique had targeted disadvantaged individuals by reference to indigeneity, remoteness and social disadvantage (whether that targeting was deliberate in its original conception or not, and despite not being satisfied as to the method by which the targeting was undertaken). Perram J concluded that the applicants had succeeded in establishing within the meaning of s 21(4) of the ACL, the existence of both a system and a pattern of behaviour with these four features (Unique (FCA) at [777]). Perram J further found that, while these features would not necessarily be unconscionable, when deployed against a targeted group of disadvantaged persons different issues arise. His Honour concluded that: 778. … In terms of s 22(1), it seems to me relevant to note in an assessment of the system that the targeted cohort consisted of people who were unlikely to understand the documentation involved (s 22(1)(c)) and that the use of the gift of a free (or 'lent') computer was apt to confuse this particular cohort into thinking a very bad deal was a good one - in my opinion an unfair tactic within the meaning of s 22(1)(d). The effect of the system in (b) to (d) was to supercharge the exploitation of the disadvantaged group which was being targeted (and also Unique's remarkable profits). The system was unconscionable within the meaning of s 21. 157 The Full Court overturned this finding on the basis that the evidence could not support either the existence of the system or its characterisation as unconscionable (Unique (FCAFC) at [92]). Much of the Full Court's judgment in Unique (FCAFC) necessarily addresses the use of evidence of individual consumers as representative of a wider pool of consumers to whom the allegedly unconscionable conduct was directed, as I have explained. In particular, the Full Court held that the evidence of six student witnesses out of more than 3,600 students and from four out of 428 sites was not capable of establishing the representative case advanced by the ACCC in the absence of evidence about how the sites or students were chosen or how they might be representative or random (Unique (FCAFC) at [162], [208]-[209]). That issue does not arise in this case because, as in AIPE (No 3), the ACCC and the Commonwealth expressly disavowed advancing the individual consumer evidence as representative evidence (AIPE (No 3) at [150] (Bromwich J)). Nonetheless, as I have foreshadowed, the decision provides valuable guidance on issues of proof in the context of an unconscionable systems case. 158 First, the Full Court in Unique (FCAFC) held that: 104. … How a system or a pattern is to be proved in any given case will depend on the circumstances. It can, however, be said that if one wishes to move from the particular event to some general proposition of a system it may be necessary for some conclusions to be drawn about the representative nature or character of the particular event. 159 Thus, the appropriate method for proving the existence of a system will depend on the facts of the case and the form of the pleading, and the extent of the probative exercise undertaken may be significant (Amicus' CS at [10]-[11]). As Bromwich J explained in Australian Competition and Consumer Commission v Australian Institute of Professional Education Pty Ltd (in liq) [2017] FCA 521 (AIPE (No 1)): 11. … there are inherent difficulties in the applicants seeking to establish an overall system of conduct or pattern of behaviour based upon a relatively small sample of the alleged contravening conduct. A clear and sound evidentiary and legal basis is required before the conduct of a sample can safely form the basis of a conclusion that it is sufficient, and in particular, sufficiently representative, to prove the existence of an overall system or pattern applicable to the balance of activities of a respondent. 160 Secondly, after discussing the difficulties which may arise in a systems unconscionability case, including as to the relevance of analytical evidence, the differences between proving an individual consumer case as opposed to a system case, and the potential complexities in assessing the evidence, the Full Court in Unique (FCAFC) observed that: 126. None of the above is to set the burden of proving a system case too highly. As we discuss below unconscionability is a serious issue to which the terms of s 140(2) of the Evidence Act 1995 (Cth) are relevant. Some assertions of unconscionability will be more serious than others. That is inevitable due to the fact- and context-specific evaluation that is necessary to undertake by reference to the values recognised by the statute. Regard should also be had to the ability of a party to prove or disprove the existence or nature of any system: Blatch v Archer (1774) 1 Cowp 63; 98 ER 969. 161 Section 140 of the Evidence Act, to which the Full Court referred, provides that: (1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities. (2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account: (a) the nature of the cause of action or defence; and (b) the nature of the subject‑matter of the proceeding; and (c) the gravity of the matters alleged. 162 In particular, s 140(2)(c) reflects the principle in Briginshaw v Briginshaw (1938) 60 CLR 336 that the seriousness of an allegation made, and the gravity of the consequences flowing if the allegation is made out, bear upon whether the allegation is established to the reasonable satisfaction of the decision-maker. Thus with respect to proof of an allegation of unconscionable conduct, the Full Court held in Unique (FCAFC): 155. There is no third standard of proof: see Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; 110 ALR 449 at 449-450 (Mason CJ, Brennan, Deane and Gaudron JJ). No doubt an allegation of unconscionable conduct is a serious allegation, to use the plurality's characterisation in Neat Holdings, and this explains its inclusion in r 16.42. (Though a court rule is not helpful in the construction and interpretation of a statute). To behave unconscionably should be seen, as part of its essential conception, as serious, often involving dishonesty, predation, exploitation, sharp practice, unfairness of a significant order, a lack of good faith, or the exercise of economic power in a way worthy of criticism. None of these terms is definitional. … These are descriptions and expressions of the kinds of behaviour that, viewed in all the circumstances, may lead to an articulated evaluation (and criticism) of unconscionability. It is a serious conclusion to be drawn about the conduct of a businessperson or enterprise. It is a conclusion that does the subject of the evaluation no credit. This is because he, she or it has, in a human sense, acted against conscience. The level of seriousness and the gravity of the matters alleged will depend on the circumstances. Courts are generally aware of the character of a finding of unconscionable conduct and take that into account in determining whether an applicant has discharged its civil burden of proof. … 163 Furthermore, as the amicus curiae submitted, an approach to proving the existence of a system which relies upon evidence of conduct in relation to particular individuals may require consideration of the intersection of proof of such a system and the tendency evidence provisions of the Evidence Act: Unique (FCAFC) at [206]-[207]; AMI at [92] (North J); and Jacara Pty Ltd v Perpetual Trustees WA Ltd [2000] FCA 1886; (2000) 106 FCR 51 at [67] (Sackville J (Whitlam and Mansfield JJ agreeing)). 164 Thirdly, the Full Court in Unique (FCAFC) discussed the decision of North J in AMI. In that case, the ACCC alleged that AMI engaged in unconscionable conduct contrary to s 51AB of the TPA and subsequently s 21 of the ACL. An appeal against this decision was dismissed: NRM Corporation Pty Ltd. The contravening conduct was said to be the offering of treatments for premature ejaculation and erectile dysfunction using nasal spray and later oral strips. AMI's revenue for this program ranged between $40 and $55 million between 2008 and 2010 (AMI at [102]). Its method was telephone sales. The ACCC seized approximately 3 million recordings of such calls, and adduced a sample of them in evidence. 165 Relevantly to the question of the existence of an unconscionable system or pattern of behaviour, North J held that AMI had designed a selling strategy to target the anxiety and distress of men seeking treatment for these conditions, and that its salespeople were trained to use "high-pressure selling techniques" using methods likely to frighten men into agreeing to the treatments, including telling men of adverse physical consequences if they did not agree to the treatment (such as shrinkage of the penis and psychological impotence) (AMI at [891]-[894]). The threat of dire medical and social consequences placed pressure on men to accept the treatments (AMI at [894]). North J held that there was no scientific evidence that the sprays were effective treatments, nor were men warned about the side effects (AMI at [558], [894], [931]). 166 North J found with respect to the system employed by AMI as a whole that: 939. The ACCC demonstrated that AMI and NRM designed a system of conducting business which included some general elements. The nature of the advertising, the process by which patients interacted with AMI and NRM, the role of salespeople and their remuneration by commission, the contract terms and relevant refund policies, and the length and cost of treatment programs, were all matters which AMI and NRM implemented systemically and marked the way they conducted business. These systemic features could be seen in the individual cases which the ACCC proved. 940. In addition, the 168 individual cases demonstrated some features which occurred in most of those cases, such as the offering of medications being limited to the AMI and NRM medications, the failure of doctors to diagnose an underlying cause or refer patients to GPs or specialists for those causes or presenting conditions, and the use of high-pressure selling techniques by salespeople. The individual cases also involved some features which were specific to those cases, such as the refusal of refunds in particular cases. 941. The conduct which has been found to have been unconscionable existed in most of the 168 individual instances. Certainly, the most serious unconscionable conduct existed in most cases. That is not to say that all of the unconscionable conduct existed in all 168 cases. However, all the conduct found to have been unconscionable was sufficiently widespread to justify the relief sought… 942. … the ACCC did not set out to show that the patients in each of the 168 cases suffered some disadvantage. Proof of unconscionable conduct depended on what AMI and NRM did, whether or not it had an effect on the individual patient. For instance, some of the Annexure B patients did not enter into agreements at all. That did not mean that, for example, in using high-pressure selling techniques in attempting to procure contracts, AMI and NRM did not engage in unconscionable conduct. The circumstances that no contract was concluded may bear on whether the Court would grant relief, but it does not prevent a finding that AMI and NRM engaged in unconscionable conduct. So much is clear from National Exchange and, now, s 21(4)(b) of the ACL. 167 The approach of North J in AMI was approved by the Full Court in Unique (FCAFC) at [132], in holding that in principle there was no reason why evidence as to what occurred in the circumstances of a number of individual consumers could not also be adduced as evidence to prove a system. However, the Full Court continued: 133 Nevertheless, the circumstances of the alleged unconscionable conduct, and the evidence adduced, will be critical. The proportion or distribution or some other feature that the individual consumers can be seen to represent of the entire consumer class may be important. Whether the class can be said to have substantially common relevant characteristics, or not, will also matter. In AMI, the class (men seeking treatment for impotence) all had a number of common characteristics which were what gave rise to their vulnerabilities. More individual attributes - level of education, literacy, socio-economic grouping - did not, or could be seen not to, matter. How many of the transactions involving individual consumers reveal features said to be part of the "system" will be important. Obviously, the more features which self-evidently have an unconscionable character, the easier it will be to prove an unconscionable system. For example, in AMI, some of the features included: (a) the training of salespeople in methods which were likely to frighten men into agreeing to buy the treatment programs; (b) the remuneration of salespeople by commission and the failure to disclose this fact in a context where men believed they were consulting a medical practice, which would characteristically have patient welfare as a primary concern; (c) the "unduly harsh" refund terms, which required parties to try all treatment options (including invasive self-treatment procedures) before becoming entitled to a refund or cancellation of debts, and the strict enforcement of such terms; (d) the exploitation of the doctor/patient relationship, which created an inherent power imbalance and was combined with concealment of the lack of scientific basis for the medications sold; and (e) the use of long-term contracts with consumers, in circumstances where this was without medical justification and was not necessary to protect the legitimate interests of suppliers. 134 Further, the nature of the evidence adduced from those responsible for the alleged design and implementation of the system will be important. In AMI at [891], North J summarised his findings about the evidence about Dr Vaisman: Dr Vaisman knew that men who suffered from ED or PE generally felt anxious about their condition. He believed that they felt frustrated, ashamed, dissatisfied, distressed, and that they suffered from low self-esteem. Dr Vaisman targeted these characteristics as a method of pressuring patients to agree to treatment programs. Salespeople were trained by him to take advantage of these feelings as a means to sell treatment programs. 135 Most critically, the nature of the allegations of unconscionable conduct will govern how probative the evidence of individual consumers will be. The more generic the alleged conduct, and the less the unconscionability depends on the attributes of consumers, the more probative evidence about what happened to a number of consumers may be. An example is EDirect and its telemarketing scripts and calls: the attributes of consumers did not play such a central role in those allegations. The facts of AMI are another example. The vulnerabilities of the male consumers were generic vulnerabilities, which could be said to arise from the very situation of seeking treatment from AMI: they were concerned about their sexual performance. (Emphasis added.) 168 The Full Court in Unique (FCAFC) contrasted the case before it with AMI, holding that: 136. … the vulnerabilities of the consumers were very much dependent on their individual circumstances: their levels of education, their literacy and numeracy, whether they had intellectual impairments, what was explained to each of them and what was not, and whether they had access to the internet and whether they understood how to operate a computer. These were not matters about which inferences could be drawn without sufficient evidence. 137 In AMI, the Court again had the scripts used in the telemarketing calls, and samples of the recordings of the calls. The unconscionable nature of the conduct was, at least in part, demonstrable from the contents of this evidence. That is not the case in the current appeal - for example, the scripts about the enrolment process and the programs were not found by the primary judge to contain, and were not suggested on appeal to contain, anything that could be said to be a feature of unconscionability. (Emphasis added.) 169 In the fourth place, the Full Court concluded in Unique (FCAFC) as to the approach to proving the existence of an unconscionable system that: 150 In conclusion, what the authorities demonstrate, unsurprisingly, is that the debate about whether or not a corporation or an individual has engaged in conduct that reveals a "system" or "pattern of behaviour" will be highly fact-specific, and will rely to a significant extent on the forensic exercise the regulator chooses to undertake to prove the existence of the system, as well as any forensic exercise the respondent undertakes by way of answer. The same is true of the characterisation of conduct as unconscionable. In a case like Kobelt, both parties adduced lay and expert evidence about whether it was correct to describe what Mr Kobelt did as unconscionable. ASIC persuaded the primary judge, but not the Full Court. 151 In upholding the appeal, we are not to be taken as deciding that a regulator needs to adduce evidence which covers a majority of consumers affected by the alleged conduct, nor as deciding that some kind of representative or random sampling method cannot be adopted to prove the existence of a system. Rather, it is clear from the cases we have discussed that all those methods and others are open, and may be sufficient depending on the particular circumstances of the case. 152 Nor are we to be taken as deciding that evidence of what occurred to individual consumers is incapable of being used to prove a system. As North J said in AMI, depending on how that evidence is presented, and the use sought to be made of it, it may not be tendency or coincidence evidence at all. If it is (and whether or not this is so will need to be determined on a case-by-case basis) then a regulator should be aware of the need to comply with the provisions of the Evidence Act. 153 Proving that a characterisation of unconscionability is appropriate also requires careful attention to precisely what it is about the class of consumers that is relied upon. The more that individual characteristics of consumers are said to be what makes them vulnerable, the greater the need for evidence about individual consumers is likely to be. The more that unconscionability depends on specific interactions between the respondents and consumers, the more likely it is that a level of representative evidence will be required. Where, as in the current appeal, the features of the alleged "system" depended on what happened at various enrolment sites, what was said and what was not, and what attributes those who attended and enrolled had, it is unlikely that an unconscionable system case can be proven without more attention being paid by the regulator to the need to prove representativeness of individuals, or to have a sufficient sample of individual consumers, or expert evidence, which addresses these matters. 170 Crucially, in determining the characteristics of those targeted and the kind of evidence required to demonstrate special disadvantage, the Full Court in Unique (FCAFC) emphasised the need to avoid the making of unwarranted stereotypical assumptions and identified the kind of evidence which may be necessary to establish an unconscionable system so as to avoid the difficulties encountered by the ACCC in Unique: 165. Even if Indigenous or poor or unemployed people were "targeted", that would at one level only be to focus upon the expressed aims of the government policy. It is important also not to make unwarranted stereotypical assumptions about these groups of people. It was a feature of many of the submissions of the ACCC, even if sometimes only implicit, that either the individual consumers and the conduct towards them could be taken as representative or, if not, assumptions of vulnerability should be made about all those "targeted". It was this latter silent assumption that not only underpinned many of the ACCC's submissions but also [778] of his Honour's findings. The use of gifts of laptops or iPads, the use of incentives to staff to encourage them to sign up students and the holding of sign-up meetings (see 774, (c) and (d) of the primary judgment), which could be an otherwise inoffensive system (see the second sentence of [778]), became unconscionable because of the targeting of Indigenous, remote and socially disadvantaged communities (without knowing anything at all in the evidence about those communities). 166 Unique submitted, and we accept, that the equivocal nature of the evidence was, in fact, recognised by the primary judge when at [653] he found there were matters that were left "rather up in the air" by the evidence. We accept Unique's submissions that those matters were central to the system case, and in particular whether Unique's conduct could be described as unconscionable. 167 What could have brought the evidence down out of the air? It should not be thought that we are of the view that the task was Herculean. Apart from Ms Martin there was no educational expert. In Kobelt, for example, there was considerable expert evidence about the Indigenous communities themselves. An educational expert might have explained how online courses operate in an education sense: the kinds of facilities necessary for a student to tackle them successfully and the levels of literacy necessary. 168 An educational expert might have given an opinion on the fact, well-established in the evidence as the ACCC submitted, that although Unique's revenue increased from $40,301 in 2013 to $33,779,726 in 2015, its expenditure on staff and resources did not increase at all. How, one might have asked an expert, would a program in a business such as this, enrolling more than 3,600 students to participate in online courses from remote locations and knowing many students might face literacy and social challenges, have been appropriately planned, resourced and delivered? Assertions from the bar table about the accounts were of no assistance. … 169 … What was required to characterise a system as unconscionable was some coherent evidence of what a proper system would look like compared to any inadequacy of Unique's system (on this hypothesis). 170 An expert familiar with the government policy could also have contextualised the policy which led to the changes in the VET FEE-HELP program, the assumptions underlying how it would be delivered and to whom, and what support the policy contemplated would be given to students, especially those in remote locations or with particular educational, or economic, disadvantage. The "failures" alleged in [22] of the ASOC could have been explored, at a systemic level, and through Unique's own documentation, with Unique's witnesses. A larger cohort than six individual consumers and four locations could have been selected. At the very least, evidence about how and why these consumers and locations were selected could have been adduced. A properly prepared representative sample could have been used. (Emphasis added.) 171 In line with this, the Full Court held that the fact that the proportion of Indigenous students enrolling in Unique's programs in NSW "far outstripped even the higher proportions of Indigenous students enrolling in VET programs across the country" was "equivocal in terms of what they prove. The numbers are just as capable of proving that Unique was 'targeting' its enrolments to those whom the Commonwealth had identified should be targeted" (Unique (FCAFC) at [183]). Furthermore, the Full Court held that to infer exploitative conduct from these figures "makes an unarticulated and suppressed assumption about the necessary vulnerability of the Indigenous communities approached" (ibid). Nor was there any direct evidence about what Unique's employees knew about the demographic make-up of the locations they visited, the basis on which they chose particular locations over other locations, or whether they recruited Indigenous staff in order to exploit their family or community relationships despite the onus of proof resting squarely upon the ACCC (Unique (FCAFC) at [196]). The Full Court also held that "[e]vidence of what occurred on numerous occasions, in different places and at different times, with different students, would all be admissible to prove the existence of such a system or pattern" (Unique (FCAFC) at [207]). 172 Justice Bromwich in AIPE (No 3) accepted that the regulator's case did not suffer from the defects in the regulator's case in Unique which had led the Full Court to allow the appeal. Bromwich J identified two potential difficulties relevant to the pleading and proof of a systems unconscionable conduct case, namely: 60. …The more general or abstract the system or behaviour that is alleged and proven, the harder it may be to establish that it has the character of being unconscionable for want of necessary detail to show that is so, or that it has the necessary pervasive and proscribed character. By contrast, too granular an approach may more readily demonstrate isolated instances of contravening conduct, but may fall short of showing that any overall proscribed system or behaviour took place. … 173 However, his Honour found that these difficulties had been addressed by the approach adopted by the regulator in AIPE (No 3) in "draw[ing] all of the threads of evidence together" (at [60]). That evidence included in particular the evidence of ex-employees and business records such as enrolment records and data, enrolment forms, complaints and records of complaint handling, as well the evidence of 13 individual consumers which was relied upon only to illustrate by detailed examples the unconscionable way in which the system worked overall "at the enrolment coalface" (at [163]; see also at [44]). As such, his Honour held that the evidence of the individual consumer witnesses "was helpful and made for a stronger case for the applicants", but, in contrast to Unique, "was not indispensable and not used as evidence that of itself was representative of the system or pattern" (at [163]). 174 Furthermore, unlike Unique, the applicants' case in AIPE (No 3): 167. … has the additional pleaded and proven dimension of a positive motive to deliberately enrol students who would not be likely ever to partake of study and to keep them enrolled until the census date, or at least deliberately to keep and maintain in place an enrolment system which produced that outcome. That motive has been shown to have been acted upon, even if not overtly discussed, because, when the problem of unsuitable students being enrolled and remaining enrolled past the census date was pointed out, steps were either not taken to alleviate it, or were overridden or watered-down when they resulted in a reduction in the rate of such enrolments continuing to the census date. It needs to be kept steadily in mind that the applicants did not need to prove intention to produce a particular outcome. But the character of the regime by which the outcome was produced has to be shown to be unconscionable. (Emphasis added.) 175 Thus, while the ACCC's systems case in Unique (FCA) was "overwhelmingly circumstantial", Bromwich J held that the ACCC's case in AIPE (No 3) was not only circumstantial but included "important and far-reaching direct evidence" of the internal workings of AIPE (at [170]). His Honour concluded on this issue that: 170. … This was not a case of extrapolation from what was done to individual students: cf Unique at [74]. Rather, the evidence of what was done to individual consumers was illustrative of how the pattern of behaviour by AIPE played out in the field, avoiding that being left only to inference or abstract evaluation. The totality of evidence supports a reasonable inference that the pattern of behaviour was widespread, and thereby had a widespread effect, contributing to a very high proportion of that type of enrolment. The ACCC did not have to go so far as to eliminate every other possible explanation - that would be to impose a standard of proof beyond the balance of probabilities. 171. The evidence was more than enough to prove that it was an inevitable outcome of the enrolment system that unsuitable consumers would be enrolled as students, which it actively resisted changing in a way that would limit, let alone avoid, that outcome being highly prevalent. This materially assists the applicants' unconscionabilty case. There is nothing compelling to suggest any other significant cause for this extreme outcome, so as to stand in the way of this conclusion. The liberalised nature of the post-2012 VET FEE-HELP scheme does not provide as good an explanation and may safely be put to one side, because disadvantage is better understood as a barrier to, rather than a cause of, unsuitable enrolment. The applicants' evidence went far enough to remove as any reasonable explanation that the outcome arrived at was due simply to the inevitable consequence of disadvantaged persons having a higher rate of failure than other members of the community. What mattered in this case was how such persons came to be enrolled in the first place. That exercise in blaming the consumers was, to my mind, a most troubling and almost patronising conclusion to reach in any event, but one that can be reduced to, at most, a minor and inconsequential explanation in this case.

6.1 Importance of the regulatory framework 176 As earlier explained, in Unique (FCAFC) the Full Court (Allsop CJ, Middleton and Mortimer JJ) described unconscionability as "a fact-specific and context-driven application of relevant values by reference to the concept of conscience" (at [104]). Among those factors which may be relevant, the Full Court considered in Lux (FCAFC) that "in assessing the conscionability or not of a particular instance of such selling, the compliance with public regulations will be centrally important" (at [73]). 177 In this case, that assessment falls to be made against the regulatory framework governing VET FEE-HELP and VET providers such as Phoenix, as the applicants contend. 178 First, it is necessary to understand the vulnerabilities in the VET FEE-HELP system which rendered it open to exploitation, such as occurred in Empower, AIPE (No 3), and Captain Cook College, and in the present case. 179 Secondly, in the context of considering the alleged Callous Indifference and whether there was a lack of good faith among other factors, the legislative background is necessary to consider,, among other things: (1) the alleged discrepancy between the target cohorts to whom the diplomas were directed and those who were in fact enrolled; (2) alleged non-compliance with requirements such as the prohibition on the offering of inducements to prospective students and the requirements for the provision of vital information to prospective students about their rights and obligations under the VET FEE-HELP system and capacity to withdraw prior to the census date; (3) alleged non-compliance with enrolment procedures and in particular those directed at determining whether consumers enrolled in Phoenix Online Courses met statutory admissibility requirements and Phoenix's own mandatory admissibility requirements; and (4) the alleged reckless indifference as to whether the mandatory work placements necessary to complete the Diplomas of Community Services and of Early Childhood Education and Care were feasible given, for example, the volume and location of consumers enrolled in those qualifications. 180 Thirdly, Mr Brown and Mr Kochhar were well aware both of the vulnerabilities in the VET FEE-HELP system to exploitation and of Phoenix's obligations as a RTO under the HES Act and associated delegated legislation and guidelines, including with respect to the conduct of Agents and Brokers marketing its Online Courses. I have earlier referred to Mr Brown and Mr Kochhar's relevant experience and qualifications, as disclosed by them in ACN's 2015 Annual Report. 181 In addition, when Phoenix was acquired Mr Brown was the CEO of ACN and Mr Kochhar was the COO of ACN which already owned a number of RTOs and would have been in receipt of regular HELP Newsletters issued by the Student Support Branch of the Department from at least December 2014 and throughout the relevant period. These warned of the prevalence of unethical practices being engaged in by Brokers and Agents marketing courses to the public, of RTOs' obligations to guard against such practices, and of legislative amendments. 182 Furthermore, on 11 February 2015, Mr Brown made a Senior Authorised Officers' Statutory Declaration of Adherence to the HES Act including that he had read and fully understood the HES Act and associated legislative guidelines applying to approved providers, and declared that Phoenix was willing, able and agreed to comply with the requirements in the HES Act and legislative instruments including the quality and accountability requirements and those associated with the entitlement to HELP assistance.73 He also completed a Fit and Proper Person Requirements declaration as required by cl 7.1(b) of Attachment A to the 2015 RTO Standards.74

6.2 The Commonwealth VET FEE-HELP assistance scheme 183 The applicants plead relevant features of the VET FEE-HELP assistance scheme and associated regulatory framework in the SOC/ASOC at [11]-[28]. While not admitted by the respondents, they are not controversial (as the applicants submit). 184 The HES Act provides for the Commonwealth to support higher education and certain vocational education and training through financial assistance to students, generally extended in the form of contingent loans, in order to remove upfront cost barriers to tertiary education. At the relevant time, as the overview in ss 3-10 of the HES Act explains, that assistance was afforded by the following schemes to students: (a) HECS-HELP assistance for student contribution amounts; (b) FEE-HELP assistance for tuition fees; (c) OS-HELP assistance for overseas study; (d) SA-HELP assistance for meeting student services and amenities fees imposed by higher education providers. 185 The VET FEE-HELP assistance scheme comprised effectively an "offshoot" of the FEE-HELP assistance scheme and was directed towards certain specific targeted groups, as I explain below.

6.2.1 Enactment of the VET FEE-HELP assistance scheme and the target communities 186 The VET FEE-HELP assistance scheme was introduced on 1 January 2008 by the Higher Education Support Amendment (Extending VET FEE-HELP for VET Diploma, Advanced Diploma, Graduate Diploma and Graduate Certificate Courses) Act 2007 (Cth). Pursuant to that scheme, the Commonwealth provided financial assistance to students studying higher level VET courses by way of advancing loans to students that paid their tuition fees (VET FEE-HELP Loans). As Perram J observed in Unique (FCA) at [5], the phrase "VET FEE-HELP" is a shorthand expression for Vocational Education and Training FEE Higher Education Loan Program. 187 Substantial amendments were made to the HES Act in late 2012 and early 2013 by the Higher Education Support Amendment (Streamlining and Other Measures) Act 2012 (Cth) (the 2012 HES Amendment Act) and the Higher Education Support Amendment (Further Streamlining and Other Measures) Act 2013 (Cth) (the 2013 HES Amendment Act) (together the 2012/2013 HES Amendment Acts). The purpose of these amendments was to increase the VET participation rates of people from specific demographic groups which correlate with those identified in the SOC/ASOC as the "Target Communities" (see at [93] above). As the Explanatory Memorandum to the Higher Education Support Amendment (Streamlining and Other Measures) Bill 2012 (Cth) explained (under the heading "2. The problem"): Since its inception in 2008, take-up of VET FEE-HELP by RTOs, and thus students, has been below Government expectations. This has limited the extent to which VET FEE-HELP can fully achieve its objectives, including improving VET access and participation, consequently limiting the HELP scheme's ability to realise its full potential in supporting national skill reform and productivity agendas. … The low take-up of VET FEE-HELP is an equity issue. People from identified demographic groups have a lower participation rate in education and training. These groups include Indigenous Australians, and people from a non-English speaking background, with disability, from regional and remote areas, from low socioeconomic backgrounds, and people not currently engaged in employment. Increased student take-up of VET FEE-HELP is key to lifting VET participation amongst these groups nationally. 188 The Explanatory Memorandum identified VET FEE-HELP's "complex administrative policies and processes for RTOs [as] a major contributing factor to the low participation rate", explaining that "[w]hile stakeholders are supportive of the rigorous requirements in place to ensure only high quality RTOs are approved, perceptions about the burden of administrative compliance has contributed to deterring would-be VET FEE-HELP applicants". 189 The amendments therefore sought to better balance the administrative burden imposed to ensure that effective safeguards are in place for students and public monies, on the one hand, while reducing the barriers to participation by RTOs in VET FEE-HELP on the other hand in order to increase the number and location of RTOs offering VET FEE-HELP and therefore student take-up of loans under the scheme (ibid). 190 Consistently with these objects, the 2012 HES amendments also marked a shift away from a system of VET as a pathway to further higher education, to a system whereby VET was effectively "an end in itself". As a result, it was no longer necessary for approved course providers to have arrangements with institutions offering a higher education award such as a degree. As the Full Court explained in Unique (FCAFC): 7. One of the changes made by the 2012 legislation was to remove the need for a course to count towards a course at a higher education institution. This was consistent with the rationale for the changes expressed in the extrinsic material we have quoted above. Participation in vocational training was seen as an end in itself, and not only a pathway to higher education. Indeed, a media release from "Skills Australia" in May 2011 described the changes as a "sweeping overhaul of the country's vocational education and training (VET) system in order to help raise productivity, and address skills challenges that threaten future economic growth and prosperity". 191 In short, as Bromwich J observed in AIPE (No 3): 4. The VET FEE-HELP scheme was deliberately and significantly liberalised by the government in 2012 for the express purpose of addressing low participation rates of disadvantaged people, including those with a disability, living in regional and remote areas, coming from lower socio-economic backgrounds, from non-English speaking backgrounds, not in paid employment, and Aboriginal and/or Torres Strait Islander peoples. Prior requirements of progression to study at a higher education institution were removed, making vocational training an independent objective.

6.2.2 Overview of the VET FEE-HELP assistance scheme 192 The eligibility criteria and other aspects of the legislative framework pertaining to FEE-HELP Assistance at all relevant times are set out in Pt 3-3 of the HES Act. In turn, Sch 1A of the HES Act provides for VET FEE-HELP assistance to be made available to students undertaking certain accredited VET courses. In addition, the Department published VET FEE-HELP guidelines from time to time as provided for by s 238-10 of the HES Act. The principal guidelines applicable at the relevant time were: (1) the VET Guidelines 2013 as amended at 1 July 2014, which were repealed on 1 April 2015; (2) the VET Guidelines 2015, which commenced on 1 April 2015; and (3) the VET Guidelines 2015 as amended by Amendment No 1 to the VET Guidelines 2015 made on 18 June 2015, which came into effect on 1 July 2015. 193 The guidelines published in April 2015 entitled VET Administrative Information for Providers75 (AIP Manual) are also relevant. The AIP Manual set out the payment arrangements and data reporting requirements for VET providers and contained information to assist VET providers generally to implement the requirements under the HES Act and associated legislative instruments. The scope and structure for each set of data required to be reported to the Department for the VET FEE-HELP data collection 2015 reporting year were specified in a Ministerial Notice issued on 31 July 2014 under cl 24(1) of Sch 1A to the HES Act.76 In September 2015, the DET issued an updated version of the guidance document "VET Administrative Information for Providers".77 194 The decision of Perram J in Unique (FCA) affords a convenient starting point for considering the statutory scheme. While an appeal against Perram J's decision was allowed insofar as his Honour had upheld the allegations of unconscionable conduct on the particular facts of that case, Perram J at [5] provides a helpful overview of key features of the VET FEE-HELP assistance scheme during the period 1 July 2014 to 30 September 2015, which also applied during the relevant period in this case: • it was available to Australian citizens or holders of a permanent humanitarian visa who were resident in Australia, provided that they were enrolled in a full fee paying course approved for VET FEE-HELP …; • the Commonwealth would pay in full whatever the tuition fee was for each unit of the approved course and would treat the combined amounts as a loan to the student; • the loan would be repayable through the tax system once the student began to earn more than the "minimum repayment income" ($53,345 for the period 1 July 2014 to 30 June 2015; $54,126 for the period 1 July 2015 to 30 June 2016) on the income above that amount at a sliding scale of between 4% to 8%. The highest rate became applicable at $99,070 during the relevant period; • each person had a maximum lifetime amount which could be borrowed through this and other related schemes (such as HECS). This amount was indexed and was $97,728 for the 2015 financial year. The amount which the student had at any time borrowed was specified in an account maintained by the Commonwealth called the FEE-HELP balance; • there was a 20% loan fee on top of the tuition fee which was also payable to the Commonwealth and which was debited to the student's FEE-HELP balance; and • the amount of the student's FEE-HELP balance was indexed to the Consumer Price Index ('CPI').

6.2.3 Student eligibility requirements for VET FEE-HELP assistance and the lifetime cap upon FEE-HELP assistance 195 A student was entitled to VET FEE-HELP assistance under s 104-1 of the HES Act if (and only if): (1) the student met the citizenship or residency requirements under s 104-5 of the HES Act in relation to a unit of study, ie the student was an Australian citizen or a permanent humanitarian visa holder who would be resident in Australia for the duration of the VET unit of study; (2) the student's FEE-HELP balance was greater than zero (ie the student had not exhausted her or his lifetime FEE-HELP maximum loan limit as per ss 104-15(1) and 104-20, HES Act); (3) the student: (a) was enrolled in an eligible VET unit of study as part of a VET course of study on or before the census date (as explained below) for that unit of study; and (b) remained enrolled in the unit at the end of the census date; (4) on or before the census date, the student had completed, signed, and given to an appropriate officer of the VET provider, a request for Commonwealth Assistance form (CAF or VET FEE-HELP Assistance Form) in the form approved by the Minister (HES Act, Sch 1A, cll 43(1)(h) and 88(3)):78 (a) in relation to the unit of study; or (b) where the course of study of which the unit forms a part is to be undertaken with the provider, in relation to the course of study; and (5) the student had provided an appropriate officer of the VET provider with her or his Tax File Number (TFN) and the provider was satisfied that the TFN was a valid TFN, or the student had provided a certificate to the officer indicating that she or he had applied for a TFN (ss 104-1(h) and 187-1, HES Act).79 196 With respect to the second criterion identified above, it is important to emphasise that the VET FEE-HELP assistance limit not only capped the amount of VET FEE-HELP assistance that a student may access during her or his lifetime, but at all relevant times also capped the amount of FEE-HELP assistance which a student could borrow from the Commonwealth over the course of her or his lifetime and, from 1 January 2017, the amount of VET Student Loans (collectively Commonwealth assistance) which a student could borrow. Further, at all material times, a person's FEE-HELP balance was reduced by the amount of Commonwealth assistance that the person had borrowed from time to time, thereby reducing the amount that the person could borrow in the future under the Commonwealth assistance schemes. In 2015, the FEE-HELP limit, applied then only to FEE-HELP assistance and VET FEE-HELP assistance, was relevantly $97,728 (as Perram J found in Unique (FCA) at [5]).80

6.2.4 The census date 197 As the applicants submit, the census date is a key concept in the VET FEE-HELP scheme. This is because the census date is the date after which a VET student (being an Eligible Student) incurred a debt for the VET unit of study in which she or he was enrolled: see the definition of "census date" in cl 1.3, VET Guidelines 2013 and 2015. Conversely, on and before the census date for a VET unit of study, the consumer could withdraw from the VET unit of study without incurring any financial liability to the VET provider or to the Commonwealth. Thus, cl 8.4 of the 2013 and 2015 VET Guidelines required the VET provider to repay VET tuition fees paid by the student for a VET unit of study if the student withdrew on or before the census date. Not surprisingly, therefore, the AIP Manual emphasised at [3.4] that "[s]tudents must be able to clearly identify which census date applies to them".81 The AIP Manual also emphasised that unless the withdrawal process is online or by email, the census date cannot fall on a non-business day, and that: VET providers are reminded their administrative processes must support the provision of assistance under the [HES Act] and therefore administrative processes must be in place to allow students to be able to withdraw from units of study on or before the census date. VET provider withdrawal policies and processes or late withdrawal fees must not prevent students from being able to withdraw from units of study on or before the census date. VET providers should also ensure students are made aware of withdrawal requirements. Staff likely to provide advice to students should also be aware of correct withdrawal procedures, or be able to direct students to accessing correct information regarding withdrawal so that students are not misled.82 198 The obligation to determine the census date lay upon the VET provider. Specifically, during the relevant period, a VET provider was required, pursuant to cl 67 of Sch 1A to the HES Act, to determine a census date for each VET unit of study that it intended to provide each year in accordance with the VET Guidelines. Importantly, however, the VET provider could not determine a census date that was less than 20% of the way between the VET unit of study commencement date as determined by the VET provider and the completion date as determined by the VET provider (cl 7.4, 2013 and 2015 VET Guidelines). In effect, therefore, this aspect of the VET FEE-HELP system was intended to afford a consumer a "cooling off" period for at least an amount of time comprising 20% of the course duration. Thus, as Stewart J explained in Captain Cook College at [18], "[f]or a 28-week unit of study, the first census date could therefore be less than six weeks after the commencement date, and for a 52-week unit of study it could be less than 11 weeks after the commencement date." This enabled the student, without financial detriment, to trial a VET course and determine in an informed manner whether she or he in fact wished to complete the course and incur the financial liability of repaying a loan to the Commonwealth. Furthermore, a VET provider was required to repay any VET tuition fees paid by a student in respect of a VET unit of study if the student withdrew on or before the census date (cl 8.4, VET Guidelines). 199 Once however the census date was passed, the consumer incurred a debt amounting to 120% of the loan regardless of whether or not the student completed or indeed even commenced the unit of study in which she or he was enrolled (albeit that the debt was subject to remission in limited circumstances), as Gleeson J observed in Empower at [20]. This last aspect, as I later explain, was one of two inherent features of the VET FEE-HELP assistance scheme which rendered it liable to be exploited in pursuance of maximum profits to the detriment of consumers enrolling in the courses and the public purse: AIPE (No 3) at [72] (Bromwich J).

6.2.5 Repayment of VET FEE-HELP loans by Eligible Students 200 In 2015, Eligible Students were required to repay their VET FEE-HELP loans on the following terms: (1) Eligible Students were required to repay 120% of their VET FEE-HELP loan to the Commonwealth;83 (2) an Eligible Student with a VET FEE-HELP debt to the Commonwealth was liable to make repayments to the Commonwealth of amounts which were compulsorily deducted from their taxable income once their income exceeded the minimum repayment income for an income year (Minimum Repayment Income);84 and (3) the Minimum Repayment Income is calculated in accordance with s 154-10 of the HES Act and was the sum of $53,345 for the period 1 July 2014 to 30 June 2015 and $54,126 for the period 1 July 2015 to 30 June 2016 (as Perram J found in Unique (FCA) at [5]).

6.2.6 A key component in the VET FEE-HELP scheme: the Commonwealth Assistance Form or CAF 201 The requirement that prospective students complete, sign and submit the CAF to the VET provider on or before the census date for the VET unit of study was a key component in the VET FEE-HELP scheme. This is because it was the principal means by which the Government sought to ensure that students were aware of what VET FEE-HELP entailed, and the amount of the loan which they would assume and their obligations to repay it if their request for VET FEE-HELP were approved. 202 This is apparent from the following aspects of the CAF. 203 First, the prospective student was required to complete the form if she or he was requesting VET FEE-HELP assistance for some or all of her or his VET courses of study. 204 Secondly, the form stated in bold and enlarged text on the top of the form: Before completing this form, You must read the VET FEE-HELP information booklet, Available at www.studyassist.gov.au (Emphasis in the original.) 205 Furthermore, the form required the prospective student to acknowledge her or his obligations, including that "I have read the VET FEE-HELP information booklet and I am aware of my obligations if I receive VET FEE-HELP assistance", and to sign a declaration that she or he had read the information booklet and understood among other things her or his repayment obligations. 206 The form also stated that "[y]ou will be given a copy of this form for your records". In furtherance of this, the form itself was in two parts which were in identical substantive terms marked respectively "provider copy" and "student copy". 207 Thirdly, the VET FEE-HELP Information for 2015 booklet (Commonwealth of Australia, 2014) at page 2 stated, again in large bold text, that: YOU MUST READ THIS BOOKLET BEFORE SIGNING THE COMMONWEALTH ASSISTANCE FORM BELOW. WHEN YOU SIGN THIS FORM, YOU DECLARE THAT YOU HAVE READ THIS BOOKLET AND THAT YOU ARE AWARE OF YOUR OBLIGATIONS UNDER VET FEE-HELP.85 208 The booklet then explained in some detail the key points which a person accessing the VET FEE-HELP loan scheme needed to know including the criteria, the importance of the census date, what happens if she or he withdraws from a unit, the 20% fee charged for the loan, the FEE-HELP lifetime limit, and the student's obligations with respect to repaying the loan. 209 Fourthly and consistently with this, the AIP Manual emphasised the need for the VET provider to provide information about the CAF and VET FEE-HELP assistance, for the student to complete the form, and for the VET provider to check that the form had been correctly completed. Specifically, at [7.4] the AIP Manual provided that: Paper and electronic forms The paper Request for VET FEE-HELP Assistance form must be completed and returned to an appropriate officer of the VET provider by all students wishing to access VET FEE-HELP. The VET provider should ensure that students are made aware of these requirements. … Providing students with the VET FEE-HELP Information booklet Students eligible for VET FEE-HELP must be given a VET FEE-HELP information booklet for the relevant year prior to completing and submitting the Request for VET FEE-HELP Assistance form. Students declare on the request form they have received and read the booklet. Information booklets are available from the department. … Signing the form Generally, only the student receiving VET FEE-HELP is permitted to sign the Request for VET FEE-HELP Assistance form. However, the VET provider may accept a form that has been signed by a person who is exercising a legal power of attorney for the student. … Checking the form and correcting errors The VET provider should ensure that students have completed the Request for VET FEE-HELP Assistance form correctly, including the selection of all relevant boxes. … If the VET provider is not satisfied that details on the form are correct, it should attempt to resolve the differences with the student. If this is not possible, the VET provider should reject the form and advise the student that it has not been submitted. … Distributing the form The student retains the original student copy of the Request for VET FEE-HELP Assistance form. The VET provider should retain the VET provider copy.86 (Emphasis added.) 210 As Bromwich J observed in AIPE (No 3) at [69], it is clear from the design of the VET FEE-HELP scheme that the CAF was intended to be a vital step in the enrolment process and, in particular, "to ensure, as much as possible, that consumers as prospective students understood the legal and financial obligations they were assuming by becoming enrolled in a course to which VET FEE-HELP applied." As Bromwich J continued: 71. … the integrity of the VET FEE-HELP scheme, and in particular the protection of the financial interests of the Commonwealth and of consumers, depended on each and every consumer enrolled as a student being aware of, and understanding, the vitally important features of that scheme as set out in the Assistance Request Form. It was a critical and mandatory safeguard, intended to prevent consumers who were unsuitable for VET study from becoming enrolled and incurring VET FEE-HELP debts. Doubtless that was why consumers were, by lodging that form, taken to declare that they [were] aware of the obligations they were assuming if they received VET FEE-HELP assistance.

6.2.7 Payment of funds by the Commonwealth to a VET provider in respect of VET FEE-HELP loans 211 Under cl 55 of Sch 1A, where a student was entitled to an amount of VET FEE-HELP assistance for a VET unit of study with a VET provider, the Commonwealth was required to lend the student the amount of the VET FEE-HELP assistance and to pay the amount lent directly to the provider in discharge of the student's liability to pay the VET tuition fee for that unit. The time and manner of the Commonwealth payments to the VET providers, in turn, was at the discretion of the Secretary of the Commonwealth DET and the relevant Minister (cl 60, Sch 1A, HES Act). 212 Mr Geoffrey Koochew, the Director of the Data and Reporting Team, VET Student Loans Branch (formerly the VET FEE-HELP Branch, DET) explained the ordinary procedure in 2015 for the payment of funds by the Commonwealth to a VET provider in respect of VET FEE-HELP loans: 10.1 A VET provider would submit an estimate in HITS [(HELP Information Technology System)] of the amount of VET FEE-HELP that was expected to be provided to entitled students for VET units of study with census dates during the calendar year (refer to paragraph 13.2 of the AIP Manual); 10.2 if a determination was made under subclause 61(1) of Schedule 1A to pay a VET provider VET FEE-HELP payments in advance, the Department then made advance payments of VET FEE-HELP to the provider monthly, based on that estimate (refer to paragraph 13.2 of the AIP Manual); 10.3 following the census date for the unit of study, the VET provider reported, on a quarterly basis, the student liability data being the actual amount of the loans accessed by the provider's students to the Department through HEIMS [(Higher Education Information Management System)] (refer to paragraph 12.3 of the AIP Manual); 10.4 the VET provider was required to submit a variation to their estimate when they became aware that their estimate was significantly different to the actual amount of loans being accessed (refer to paragraph 13.3 of the AIP Manual); 10.5 the VET provider was required to verify its reported data in HEIMS twice annually in order to confirm the reported data is being complete and correct (refer to paragraph 12.3 of the AIP Manual); 10.6 following the verification of data, the Department ordinarily reconciled the advance payments made during the previous calendar year against the reported data (refer to paragraph 13.4 of the AIP Manual); 10.7 where a reconciliation identified that the amount of advance payments made to a VET provider was greater than the actual amount of VET FEE-HELP assistance payable to the VET provider, the Department could pursuant to subclause 61(2) of Schedule 1A either deduct that amount from further payments to the VET provider or recover the overpayment from the VET provider as a debt due to the Commonwealth (also refer to paragraph 13.4 of the AIP Manual).87 213 In this regard, during the relevant period the respondents claimed that a large number of consumers enrolled in Phoenix Online Courses met the eligibility criteria for VET FEE-HELP assistance while recklessly indifferent as to whether or not in fact they did so, forwarding VET FEE-HELP loan applications on behalf of these consumers and claiming VET FEE-HELP payments with respect to them. For example, many enrolments by Phoenix were not accompanied by the necessary confirmation of citizenship or permanent residency.88 Furthermore, as I also later explain, the evidence identified a large number of enrolled consumers (1,174) for whom there was no request for VET FEE-HELP Assistance form, or CAF, and a further 474 consumers for whom Phoenix claimed VET FEE-HELP payments for subsequent units of study despite the consumers having withdrawn from a unit of study prior to the census date.89

6.2.8 The potential for abuse of the VET FEE-HELP assistance scheme 214 On 26 November 2019, following the conclusion of the trial in this matter, Bromwich J delivered judgment in AIPE (No 3), which, as earlier explained, also involved alleged unconscionable conduct exploiting the VET FEE-HELP scheme. On 2 December 2019, in response to an enquiry by the Court, the applicants and the amicus curiae sought leave to file short written submissions addressing Justice Bromwich's decision. I made orders in Chambers granting leave to reopen the case for that limited purpose. The amicus curiae and the applicants filed further, helpful submissions on the decision in AIPE (No 3) on 13 and 19 December 2019 respectively. 215 In AIPE (No 3), Bromwich J identified two inherently vulnerable features of the VET FEE-HELP assistance scheme rendering it ripe for exploitation. Those features are also relevant to the present application and I agree with his Honour's explanation of the significance of these features. 216 The first feature, as I have earlier mentioned, is that an eligible student incurred a VET FEE-HELP debt to the Commonwealth upon the passing of the census date even if she or he had not commenced the unit of study. As Bromwich J explained: 72. … If a person who had been approved for a VET FEE-HELP debt was enrolled as a student with a VET provider as at the census date, but did not in fact ever partake in the course, that provider would get the revenue benefit of the course fees from the Commonwealth, but would not have to incur the variable costs of providing the course to that person, including any related support. That would happen irrespective of whether the person who was enrolled was a bona fide or genuine student or not. 73. To the extent that the outcome of enrolling consumers who were not bona fide or genuine students was able to be maximised across a large enough pool of individuals, the VET provider would obtain revenue for those consumers without needing to employ staff to provide the services that were needed for bona fide or genuine students who did partake of study. This feature therefore created a significant, and reasonably obvious, windfall profit opportunity to a VET provider who wished to exploit it, or was even prepared to let it occur without correction. 74. There was nothing in the express terms of the VET FEE-HELP scheme that prohibited a VET provider from engineering such a windfall profit outcome, and a corresponding debt being incurred by someone who was never a bona fide or genuine student. … 217 This vulnerability to exploitation was candidly explained by Mr Brown, CEO of Phoenix, when, in the course of an interview on the ABC's Background Briefing radio program broadcast on 10 April 2016, he told an ABC journalist that: It states very clearly that students if they're enrolled before a census date and still enrolled after, so in other words they're enrolled in the course, even if they don't participate they are still eligible or liable for the full course cost. Now, there was nothing in relation to participation, there was nothing in relation to completion of any study, and it's there in information to students that that's the case. The biggest issue was that then encourages brokers and aggregators to go out and enrol people that have no intention of completing the course. That's what they're rewarding, you're only going to get the behaviour that you're rewarding and they're rewarding that behaviour. When it comes down to it it's a lot cheaper to train students who don't turn up than it is to train students who do.90 (Emphasis added.) 218 As to the significance of the CAF and the potential for exploitation in terms of assessing the evidence, Bromwich J in AIPE (No 3) held that: 77. What was required to be done in relation to the Assistance Request Form is an important tool by which to assess the true character of what was permitted - and even encouraged - to happen by those enrolling individual consumers as students. This was usefully illustrated by the evidence of the individual consumer witnesses considered in some detail below, giving a real world indication of how the system was capable of playing out in reality. Such illustrations mean that the Court does not need to rely solely upon abstract policies or make purely abstract assessments as to what would, on the balance of probabilities, be likely to have happened to any consumer who was enrolled as a student by any recruiter acting for AIPE. 78. The evidence of what actually took place, both at AIPE via the employee witnesses, and by way of illustration in the field with individual consumers, dovetails with AIPE's enrolment data proving, as far as it goes, the outcome that was produced. It is readily able to be inferred in all the circumstances that the enrolment outcome was either intended or at least accepted to be what the enrolment system produced. 79. The words and conduct of AIPE generally, including by its recruiter agents and by its CEO, Mr Amjad Khanche, must inevitably be inferred to have occurred in the context of awareness of the contents of the Assistance Request Form and both its express and implicit requirements. Alarm bells should have been ringing if there was a concern that consumers were being enrolled as students in circumstances where they might not, did not, or realistically could not, have understood what they were getting themselves into. If alarm bells did not ring, or were not listened to, it can be inferred that this is because inaction was a desirable thing from the point of view of a VET provider like AIPE looking to maximise profit at the expense of the actual provision of educational services - an issue addressed in some detail below. 219 His Honour further considered that: 80. An enrolment process that predictably produced, or even encouraged a situation in which such unsuitable consumers became enrolled would invite close scrutiny to see whether that was, in all the circumstances, unconscionable. The conclusion that the conduct overall was unconscionable would be more readily reached if such an outcome was either intentional or sufficiently predictable or recurrent to require overt steps to be taken to minimise the chance of it occurring. This is so even having regard to the caution to be applied before reaching such a serious conclusion. 81. A VET provider acting in good faith with the VET FEE-HELP scheme, having regard to the centrality of the Assistance Request Form, should have had an enrolment process that would minimise the prospect of consumers who were not likely to be bona fide or genuine students becoming enrolled in the first place, or remaining enrolled as at the census date. 82. A VET provider should have had in place enrolment procedures by its own staff, and by any third party agents and recruiters, that ensured that the Assistance Request Form was brought to the attention of consumers who were prospective students, that its contents were understood and that a declaration was meaningfully given. These procedures should have included monitoring such procedures for their effectiveness. If a consumer was an inactive "student" in the time between enrolment and the census date, that would be a warning sign that the consumer possibly had not appreciated that they had become enrolled as a student, or did not appreciate the debt that they were about to incur. Complaints about the enrolment process would also be a warning sign that the enrolment procedures might not be effective, or might not be properly implemented, or might even be improperly carried out. Examples of consumers being enrolled without having the requisite level of awareness would be illustrative of the malfunctioning of the enrolment system. If complaints to that effect were brought to the attention of senior personnel at the VET provider, and either were not acted upon, or not acted upon effectively, that would tend to indicate that this went beyond a merely unintended and unknown outcome, and was instead accepted to be a feature of the enrolment system that was in place. Enrolment data might rebut that as being an outcome, or contribute to that conclusion. 83. In this context, evidence of complaints made to AIPE about its enrolment processes, even though not admitted as evidence of the truth of the assertions as to what had occurred, is important evidence of AIPE being put on notice of potential problems with its enrolment processes. How such complaints were dealt with may be a cogent indicator of the attitude that prevailed at AIPE, including as to whether and when this was a cause for concern and what action was considered appropriate. Reluctance to act on such a complaint, or the way or basis upon which it was responded to, may be a telling sign of whether the outcome complained about was a source of concern, or just an accepted feature, as well as fixing AIPE with awareness of the issue that had been raised. It may go further in contributing to a conclusion that the outcome was considered desirable, or was even intended. 220 In addition, his Honour considered that: (1) the step of ensuring that the terms of the declaration in the CAF were brought expressly to the attention of a prospective student was a strong sign of a good system, while the absence of such a step was a warning sign that the system may be defective whether as a matter of design, intention, predicable consequence, or otherwise (at [84]); (2) any demonstrated state of mind was especially relevant because of the obvious and powerful financial incentive to enrol consumers as students who would incur VET FEE-HELP debts producing corresponding revenue, without the consumers being aware of the declaration in the CAF which might have caused them not to be enrolled (pointing out that this class of consumer would produce the greatest profits by bringing in revenue without much in the way of related marginal costs beyond the recruiter's commission) (at [85]); and (3) an inexplicably small number of staff to provide services to a large number of consumers ostensibly of enrolled students, or a lack of any notable increase in staff numbers co-relative to the increases in enrolments, may be a telling indication that it was anticipated that a greater number of staff would not be needed because many such consumers who were enrolled would never need those services. Indeed, his Honour considered that "[i]f the discrepancy between these two statistics was large enough, that, together with other evidence, might support an inference that this was not merely a matter of good fortune or happenstance from the perspective of the course provider, but rather an outcome that was deliberately allowed to happen" (at [86]). 221 The second vulnerable feature of the VET FEE-HELP assistance scheme arose from the lack of any prohibition on VET providers paying commissions, let alone substantial commissions, to Agents and Brokers who recruit consumers for enrolment. Those commissions in turn relied upon the student remaining enrolled only as at the census date at which point the Commonwealth's liability to pay the loan payment was triggered. As Bromwich J explained in AIPE (No 3): 88. That feature of large recruiter commissions facilitated the windfall profits to VET providers described above. Recruiters acting as an agent for a VET provider had powerful financial incentives to convince every consumer they came across not just to sign up for a course, but to do so in a way that would maximise the likelihood that they would remain enrolled until the census date. That in turn provided incentives to a recruiter to minimise the prospect of enrolment being cancelled before the census date, whether by a student or by a VET provider. This feature would tend to encourage practices that ensured that a consumer being enrolled as a student either did not know that was happening, or did not know about, or understand, the declaration in the Assistance Request Form. It would also tend to encourage the spruiking of the benefits of being a student by half-truths or even overtly false information. That could involve such things as: (1) representing to a consumer that a course was free when in fact there would be a debt obligation incurred; (2) offering some collateral advantage to a consumer for becoming a student, such as a "free" laptop which was collateral to the debt being incurred, so as not to be truly free at all; (3) not telling a consumer that they would incur a debt; (4) not telling a consumer about the census date; and (5) even not telling a person that they had been enrolled at all (though students unknowingly being enrolled in a course of study does not form part of the unconscionable system alleged against AIPE). 89. The likelihood of any such conduct achieving the objective of a consumer becoming enrolled until at least the census date would potentially be enhanced if the consumer to whom such conduct was directed was in some way lacking the capacity to look after their own interests. It is important to remember that the Commonwealth government had intentionally expanded the reach of VET training to consumers who had historically been excluded by reason of disadvantage. The VET FEE-HELP scheme was intended to address the financial aspect of that disadvantage, in the same way as prior loan schemes had for university education. It was inevitable that a higher proportion of consumers who were bona fide or genuine students might not succeed compared with consumers who did not have to deal with the burden of disadvantage. 90. A VET provider was entitled to target disadvantaged consumers in keeping with the post-2012 liberalised VET FEE-HELP scheme, but was necessarily required to take such consumers as they found them and therefore to proceed upon the basis of their greater vulnerability. The same conduct might be unconscionable in relation to one class of consumers, but not for another, when regard is had to vulnerabilities, either inherent or separately proven. … 222 However, as Bromwich J continued: 91. Though the VET FEE-HELP scheme was targeted at disadvantaged groups, service providers and their agents were not permitted to seize upon these vulnerabilities such that consumers were incurring liabilities without their eyes wide open. It is clear that the scheme was only meant to be made available to consumers who were aware of its essential features; that is, course fees being charged, those fees being met by the Commonwealth as a loan, and that loan resulting in a debt being incurred by the student and made repayable once the student's income was above a particular threshold. Each and every consumer who was enrolled as a student and who remained enrolled past the census date was meant to do so on a sufficiently informed basis, expressly reflected in the declaration in the Assistance Request Form. 92. Similarly, although low language, literacy and numeracy skills was not an express barrier to participation in the VET FEE-HELP scheme, it is obvious that it should not have to be express. Self-evidently, no provider should have been enrolling consumers as students if they did not have the minimum threshold of language, literacy and numeracy skills required to have any realistic possibility of participating in, and completing, a course. To do so would be a cruel hoax to perpetrate on disadvantaged consumers by giving them a false hope of this being a means of improving their lives, because even a remote possibility of success would likely be illusory in these circumstances. (Emphasis added.) 223 As Bromwich J concluded: 93. If the two features identified above were sought to be taken advantage of, or at least allowed to be taken advantage of, it was in the simultaneous interests of the VET provider and the agents and their recruiters to make sure that as many consumers as possible were signed up as students and remained signed up until the census date. However, only the VET provider stood to gain windfall profits if the consumer never actually partook of the course after that, unless this resulted in the VET FEE-HELP debt later being cancelled despite the census date passing. (Emphasis added.)

6.3 Requirements with which RTOs and VET providers must comply

6.3.1 Requirements imposed upon a VET provider by the HES Act 224 Part 1 of Sch 1A to the HES Act deals with VET providers. 225 First, in order to be approved by the Minister as a VET provider in the first instance, a body corporate must be a RTO as listed on the National Register (cl 6(1)(c), Sch 1A, HES Act). Conversely, approval as a VET provider must be revoked by the Minister if, as occurred here, the body ceases to be listed as a RTO (cl 29B(1)(a), Sch 1A, HES Act). In addition, the body corporate must also meet the following criteria (among others) under cl 6(1) of Sch 1A: (d) the body either fulfils the *VET tuition assurance requirements or is exempted from those requirements under clause 8; and (da) the body offers at least one *VET course of study; and … (f) the Minister is satisfied that the body is willing and able to meet the *VET quality and accountability requirements; and (g) the body complies with any requirements set out in the *VET Guidelines; and (h) the Minister is satisfied that: (i) the body; and (ii) each person who makes, or participates in making, decisions that affect the whole, or a substantial part, of the body's affairs; is a fit and proper person. 226 Secondly, once approved, a VET provider must comply with the following requirements: (1) the VET tuition assurance requirements which are set out (relevantly) in the 2013, and subsequently the 2015, VET Guidelines (cl 7, Sch 1A, HES Act); (2) the VET quality and accountability requirements which, as summarised in cl 13 of Sch 1A, are: (a) the VET financial viability requirements (see Subdiv 4-B) including the provision of a financial statement for each annual financial reporting period in which a student received assistance under Sch 1A (cl 15, Sch 1A, HES Act); (b) the VET quality requirements (see Subdiv 4-C); (c) the VET fairness requirements (see Subdiv 4-D); (d) the VET compliance requirements (see Subdiv 4-E), namely, the HES Act and regulations, VET Guidelines applying to the provider, and any conditions on the VET provider's approval (cl 23A, Sch 1A, HES Act); (e) the VET fee requirements (see Subdiv 4-F); and (f) any other requirements for VET quality and accountability set out in the VET Guidelines; and (3) any (other) requirements set out in the VET Guidelines. 227 The VET Guidelines, in turn, required compliance by the VET provider with the RTO standards and the AQF. In particular, from 1 April 2015, cl 4.4 expressly prohibited a VET provider from offering Prohibited Inducements, from engaging or encouraging any other person to offer any Prohibited Inducements, and from enrolling a person in a VET unit or course of study unless the VET provider was satisfied on reasonable grounds that the person was not offered a Prohibited Inducement.91 Prohibited Inducements were defined in cll 4.4.4(ii) and (vii) to include "an electronic device (e.g. tablets, iPads, mobile phones, Wi-Fi, computers and including associated software licences) before or after unit/course completion" and "any item not required for educational delivery".

6.3.2 The RTO standards with which a VET provider, as a RTO, must comply 228 During the relevant period, Phoenix, as a RTO, was also required to comply with: (1) the Standards for NVR Registered Training Organisations 2012, which applied until 1 April 2015 (the 2012 RTO Standards);92 and (2) the Standards for Registered Training Organisations 2015 made on 20 October 2014, which commenced on 1 April 2015 (the 2015 RTO Standards).93 (Collectively the RTO Standards.) 229 These standards were made pursuant to ss 185(1) and 186(2) of the NVETR Act and formed part of the VET Quality Framework, being a system intended to ensure the integrity of nationally recognised qualifications, as I shortly explain. 230 Of particular relevance to the present case were the 2015 RTO Standards. The purposes of those Standards were to: 1. set out the requirements that an organisation must meet in order to be an RTO; 2. ensure that training products delivered by RTOs meet the requirements of training packages or VET accredited courses, and have integrity for employment and further study; and 3. ensure RTOs operate ethically with due consideration of learners' and enterprises' needs.94 231 The 2015 Standards consisted of 8 standards which were, in turn, spelt out in a set of clauses comprising each standard. In order to comply with a standard, a RTO was required to comply with all of the clauses.95 Background information for each standard was also set out in a context statement. 232 First, Standard 1 required that "[t]he RTO's training and assessment strategies and practices are responsive to industry and learner needs and meet the requirements of training packages and VET accredited courses." The contextual statement relating to Standard 1 explained that: Learners, employers and industry must have confidence in the integrity, currency and value of certification documents issued by RTOs, through high quality training and assessment practices that: • meet the requirements of training packages and VET accredited courses; • [are] responsive to industry and learner needs; and • [are] delivered by appropriately qualified trainers and assessors with the right support services, facilities and equipment.96 233 The term "Training Package" is defined in the 2015 RTO Standards to mean: … the components of a training package endorsed by the Industry and Skills Council or its delegate in accordance with the Standards for Training Packages. The endorsed components of a Training Package are: units of competency; assessment requirements (associated with each unit of competency); qualifications; and credit arrangements. The endorsed components form part of the requirements that an RTO must meet under these Standards. A Training Package also consists of a non-endorsed, quality assured companion volume/s which contains industry advice to RTOs on different aspects of implementation.97 234 A "VET accredited course" is also defined in the 2015 RTO Standards to mean "a course accredited by the VET regulator in accordance with the Standards for VET Accredited Courses."98 235 Those clauses of Standard 1 relied upon in particular by the applicants in the present case are as follows: (1) by cl 1.1, the RTO's training and assessment strategies and practices, including the amount of training they provided, were consistent with the requirements of the training packages and VET accredited courses and enabled each learner to meet the requirements for each unit of competency or module in which they were enrolled; (2) by cl 1.2, for the purposes of cl 1.1 the RTO determined the amount of training they provided to each learner with regard to the existing skills, knowledge and experience of the learner and the mode of delivery; (3) by cl 1.3, the RTO, consistent with its training and assessment strategies, had sufficient trainers and assessors to deliver the training and assessment, and educational and support services to meet the needs of the learner cohorts undertaking the training and assessment; (4) by cl 1.7, the RTO determined the support needs of individual learners and provided access to the educational and support services necessary for the individual learner to meet the requirements of the training product as specified in training packages or VET accredited courses; and (5) by cl 1.13, the RTO's training and assessment was delivered only by persons who had the appropriate qualifications. 236 The applicants also placed particular weight upon the following additional standards (see ACS at [137]): (1) Standard 2 required that the operations of the RTO were quality assured and specifically, that: (a) the RTO ensured that it complied with the RTO Standards at all times (cl 2.1); and (b) the RTO had sufficient strategies and resources to systematically monitor any services delivered on its behalf, and used these to ensure that the services delivered complied with the RTO Standards at all times (cl 2.4); (2) Standard 4 required that "[a]ccurate and accessible information about an RTO, its services and performance [was] available to inform prospective and current learners and clients", and specifically, that the RTO ensured that specified information, whether disseminated directly by the RTO or on its behalf, was both accurate and factual, including the requirements that: (a) the RTO "[made] clear where a third party [was] recruiting prospective learners for the RTO on its behalf" (cl 4.1(e)); and (b) included details about any VET FEE-HELP arrangements associated with the RTO's provision of training and assessment (cl 4.1(k)); (3) Standard 5 required that "[e]ach learner [was] properly informed and protected" and specifically that, "[p]rior to enrolment or the commencement of training and assessment, whichever came first, the RTO provided advice to the prospective learner about the training product appropriate to meeting the learner's needs, taking into account the individual's existing skills and competencies" (cl 5.1) (note that a "Training Product" means "AQF qualification, skill set, unit of competency, accredited short course and module");99 and (4) Standard 8 required that the RTO co-operated with the VET Regulator and was legally compliant at all times, and specifically under cl 8.2 that the RTO "ensured that any third party delivering services on its behalf [was] required under written agreement to cooperate with the VET Regulator: (a) by providing accurate and factual responses to information requests from the VET Regulator relevant to the delivery of services; and (b) in the conduct of audits and the monitoring of its operations." 237 Clauses 4.1 and 8.2 in particular emphasise the responsibilities of RTOs such as Phoenix for the agents and brokers engaged by them to recruit consumers.

6.3.3 The Australian Qualifications Framework and the specifications for diploma level courses 238 The "Australian Qualifications Framework" or AQF is defined in the Dictionary in Schedule 1 to the HES Act to mean: … the framework for recognition and endorsement of qualifications: (a) that is established by the Council consisting of the Ministers for the Commonwealth and each State and Territory responsible for higher education; and (b) that is to give effect to agreed standards in relation to the provision of education in Australia; as in force from time to time. (See also s 3 of the NVETR Act; and the definition of the AQF in the RTO 2015 Standards).100 239 The first edition of the AQF was released in July 2011. The AQF (2nd ed, January 2013) (the AQF (2nd ed)), which applied throughout the relevant period, explains that it is "the national policy for regulated qualifications in Australian education and training. It incorporates the qualifications from each education and training sector into a single comprehensive national qualifications framework".101 The AQF (2nd ed) further explained that: The AQF provides the standards for Australian qualifications. It is an integrated policy that comprises: • The learning outcomes for each AQF level and qualification type • The specifications for the application of the AQF in the accreditation and development of qualifications • The policy requirements for issuing AQF qualifications • The policy requirements for qualification linkages and student pathways • The policy requirements for the registers of: - organisations authorised to accredit AQF qualifications - organisations authorised to issue AQF qualifications - AQF qualifications and qualification pathways • The policy requirements for the addition or removal of qualification types in the AQF, and • The definitions of the terminology used in the policy.102 240 In essence, as Ms Scomazzon, the education expert relied on by the applicants, explained, the AQF defines all nationally recognised qualifications in schools, vocational education and training (TAFE institutes and private providers) and the higher education sectors (mainly universities) in Australia, describing 10 levels of qualifications from Senior Secondary Certificate to PhD.103 241 The AQF is also a key component of the scheme regulating RTOs for the following reasons. 242 First, it was a condition of registration as a RTO under the NVETR Act that the body comply with various standards including the AQF. Specifically, s 22 of the NVETR Act provided that: (1) An NVR registered training organisation must comply with the Standards for NVR Registered Training Organisations. (2) An NVR registered training organisation must comply with the Australian Qualifications Framework. (3) An NVR registered training organisation must comply with the Data Provision Requirements. 243 An additional subsection, s 22(1A), was inserted by the National Vocational Education and Training Regulator Amendment Act 2015 (Cth) with effect from 3 April 2015 and provided that "[a]n NVR registered training organisation must comply with the Quality Standards." 244 Secondly, a student was entitled to VET FEE-HELP assistance only for courses of study which lead to the award of a VET qualification, being a qualification relevantly at the level of a diploma in the AQF, and complied with the AQF. Specifically: (1) as earlier explained, a student is only eligible for VET FEE-HELP assistance if she or he is enrolled in an eligible VET unit of study as part of a VET course of study; (2) a "VET course of study" in turn is defined in the Dictionary to the HES Act to mean: … a structured and integrated program of vocational education or vocational training, usually consisting of a number of modules (units of study) or shorter programs, and leading to the award of a *VET qualification. (3) a VET qualification, as defined in the Dictionary to the HES Act, means: (a) a *VET diploma; or (b) a *VET advanced diploma; or (c) a *VET graduate diploma; or (d) a *VET graduate certificate; or (e) a qualification specified by the *VET Guidelines. (4) In each case, the VET diploma, VET advanced diploma, VET graduate diploma and VET graduate certificate (as defined in the Dictionary to the HES Act) means a qualification at that level in the AQF and which meets the guidelines for a VET award as set out in the AQF. 245 Thirdly, in deciding whether or not to grant an application for accreditation of a course as a VET accredited course, ASQA (as the National VET Regulator) must consider whether the course meets the AQF, as well as the Standards for VET Accredited Courses (s 44(2), NVETR Act). 246 Finally, the AQF relevantly specifies educational qualifications at Levels 1 to 6 in ascending order of difficulty which correspond to Certificates I, II, III and IV, Diploma and Advanced Diploma respectively. The online courses offered by Phoenix were diploma level courses and therefore at AQF Level 5 requiring advanced skills and integrated technical and theoretical knowledge.104

7.1 Introduction 247 The question of whether the respondents' conduct is unconscionable falls to be assessed not only having regard to Parliament's intention to increase the participation rate of specific demographic groups of vulnerable people in education and training by the 2012/2013 reforms the VET FEE-HELP scheme. Equally significant in assessing this question are the target cohorts for the online diplomas offered by Phoenix and the high level of difficulty involved in successfully undertaking courses at the diploma level. Thus the fact that Phoenix was marketing only full-time diplomas to these vulnerable groups serves to highlight the need for effective systems to be devised and implemented from the start to ensure that only those consumers who are eligible and have a reasonable chance of successfully completing the course are enrolled and that proper support mechanisms are in place to meet their needs. As such, this Chapter explains the learning outcomes specified for diploma level courses under the AQF and the target cohorts and mandatory admission requirements for each of the Phoenix Online Courses. 248 The specific VET Online Courses offered by Phoenix during the relevant period were: (1) the Diploma of Business identified under the AQF by the code BSB50207; (2) the Diploma of Business, AQF code BSB50215, which was offered from 1 June 2015 and superseded the Diploma of Business BSB50207; (3) the Diploma of Management, AQF code BSB51107; (4) the Diploma of Leadership and Management, AQF code BSB51915, which was offered from 26 June 2015 and superseded the Diploma of Management BSB51107; (5) the Diploma of Early Childhood Education and Care, AQF code CHC50113; and (6) the Diploma of Community Services Work, AQF code CHC50612. (The Online Courses.) 249 These courses were all offered under the banner of "myTime Learning".105 250 Each of these courses was defined by Phoenix as having an equivalent full-time study load (EFTSL) of 1.0, meaning that the study load was intended to be completed on a full-time basis over an academic year. Yet, as I later find, the vast majority of Phoenix "students" were simultaneously enrolled in two online courses. The course fees for each online course were between $18,000 to $21,000.106 Different courses were delivered in different stages of VET units of study and components of the course fee were levied per VET unit as detailed in the SOC/ASOC at [29]-[34] and admitted in the Defence at [8]-[13]. 251 According to the 2015 VET FEE-HELP Payment Schedule prepared by Phoenix,107 so-called "students" were divided into Groups, with each Group being assigned a commencement date, census date, and payment date. For example, Group 1 (which embraced the Diploma of Business, the Diploma of Community Services and the Diploma of Early Childhood Education and Care) had a first commencement date of 19 January 2015, a census date of 23 February 2015, and a payment date of 4 March 2015. There was also a Group 2 for each of the Diplomas of Business, Management, Community Services and Early Childhood Education and Care. For example, Group 2 for Diploma of Business students set a commencement date of 23 February 2015, census date of 16 March 2015, and payment date of 25 March 2015. These dates were different from the dates for Group 2 for the Diploma of Management, for example. Groups 3 to 10 similarly specified various cut-off dates.

7.2 The expert evidence of Ms Scomazzon (VET/educational expert) 252 The applicants relied upon the expert evidence of Ms Jana Scomazzon. Ms Scomazzon's expert report dated 10 September 2019 (Ms Scomazzon's report) is attached to her affidavit affirmed on 11 September 2019.108 That report was prepared in compliance with the Federal Court Expert Evidence Practice Note (GPN-EXPT) and Ms Scomazzon agreed to be bound by the Harmonised Expert Witness Code of Conduct annexed to the Practice Note.109 253 Ms Scomazzon was awarded a Bachelor of Arts (Honours) Psychology (Research Methodology) from the University of Melbourne and a Postgraduate Diploma of Education (English as a Second Language and Psychology) also from the University of Melbourne. 254 She has worked in VET for 26 years and is an expert in: evaluation and quality assurance; VET policy development and evaluation, product, and practice; and in the provision of advisory services during the development of VET programs and product. Her professional background includes research methodology, psychology, teaching adult literacy, developing and implementing professional development for RTOs, and government-appointed skills service organisations. 255 In her capacity as director of the VET consultancy company established by her in 2001, LTG, Ms Scomazzon has worked in diverse industries and sectors with, among others, public and private RTOs, employers, vocational trainers and assessors, compliance managers and literacy specialists, and state and federal industry regulators. This work has drawn on Ms Scomazzon's expertise in evaluation and strategic reviews, and the preparation and quality assurance of VET endorsed and non-endorsed material and resources. 256 Ms Scomazzon has also served for 20 years as a recognised expert on various government panels established for the purpose of quality assurance in VET, including: (1) as a government-appointed training package quality assurer on the government's Training Package Quality Assurance Panel; (2) as a government-accepted evaluator of the alignment of LLN assessment tools to the Australian Core Skills Framework (ACSF); (3) as a government-appointed training package equity panellist including review of the sufficiency and suitability of training package content; (4) as an equity advisor to the Australian Government Partnerships for Development (GPFD) program - the VET Qualifications Benchmarking and Development Project (2015); and (5) as a government-appointed resource evaluator for the then Workplace English Language and Literacy program (2010 to program closure in 2014). 257 I am satisfied that Ms Scomazzon had ample qualifications and expertise on the basis of which to give the opinions which she expressed on the following matters: (1) the training package qualification rules for the VET diplomas offered by Phoenix; (2) the minimum skills, knowledge and experience ordinarily required to undertake each VET diploma as opposed to those stipulated by Phoenix in its Course Overview and Training and Assessment Strategy (TAS); (3) any additional skills, knowledge and experience, or tools or facilities required ordinarily by a student to undertake an online VET diploma; (4) the sufficiency of Phoenix's enrolment application form, PTR form and LLN assessment; (5) the appropriate trainer/assessor-to-student ratios for each VET diploma offered by Phoenix based on Phoenix's course delivery schedule; and (6) necessary requirements for those VET diplomas requiring a work placement. 258 In essence, Ms Scomazzon concluded that first, the course duration indicated in Phoenix's documentation mostly underestimated the time required to complete a course. Secondly, she considered that the target student profiles set out in Phoenix's Course Overview documents indicated a level of skill, knowledge and experience which was insufficient to commence, let alone successfully complete, diploma level qualifications. Thirdly, in her view there was no indication in the Phoenix documentation that the digital and other skills, knowledge and experience which a student would require to complete a VET diploma online were identified or supported. Nor was there any indication that the digital equipment and facilities required for online training and assessment were available to students. Fourthly, she considered that the Phoenix enrolment forms, PTR forms and LLN assessments were not adequate to sufficiently identify students' existing skills, knowledge and experience and the necessary support services. 259 I note, however, that Ms Scomazzon did not consider that she was qualified to express an opinion on the benefit or otherwise to a student from enrolling in dual VET diplomas of business, management, or leadership and management.110 However she did express a view, which I accept, that the justification for dual enrolment in the Diploma of Early Childhood Education and Care (CHC50113) and Diploma of Community Services Work (CHC50612) appeared scant, as the industry sectors to which the qualifications relate are different, as are the employment pathways into and from the two qualifications.111 Ms Mason, the Data and Quality Manager at CTI for part of the relevant period, was of the same view (see at [391] below). Yet, of the 3,110 consumers enrolled in Phoenix's Diploma of Early Childhood Education and Care and the 3,497 consumers enrolled in its Diploma of Community Services Work where the first census date fell between 1 January and 11 November 2015, 2,226 consumers were enrolled in one of more units of study for both diplomas.112

7.3 Learning outcomes specified for diploma level courses under the AQF 260 Completion of any of the Online Courses offered by Phoenix led to the award of a VET qualification, such that each course was a "VET course of study" as defined in the Dictionary in Sch 1 to the HES Act.113 Each course was also a diploma level course and was therefore designed to achieve the learning outcomes at Level 5 of the AQF.114 In this regard, the AQF explained that: The purpose of the Diploma qualification type is to qualify individuals who apply integrated technical and theoretical concepts in a broad range of contexts to undertake advanced skilled or paraprofessional work and as a pathway for further learning.115 261 The AQF further explained that:116 Diploma qualifications must be designed and accredited to enable graduates to demonstrate the learning outcomes expressed as knowledge, skills and the application of knowledge and skills specified in the level 5 criteria and the Diploma descriptor. … AQF level 5 criteria Summary Graduates at this level will have specialised knowledge and skills for skilled/paraprofessional work and/or further learning Knowledge Graduates at this level will have technical and theoretical knowledge in a specific area or a broad field of work and learning Skills Graduates at this level will have a broad range of cognitive, technical and communication skills to select and apply methods and technologies to: •analyse information to complete a range of activities •provide and transmit solutions to sometimes complex problems •transmit information and skills to others Application knowledge and skills Graduates at this level will apply knowledge and skills to demonstrate autonomy, judgement and defined responsibility in known or changing contexts and within broad but established parameters

262 The diploma qualification type descriptor explains that the volume of learning for a diploma is typically 1 to 2 years.117 This translates into 1,200 to 2,400 hours which are comprised of: (1) hours in supervised structured learning and assessment activity required to sufficiently address the content of a unit (called "nominal hours") to acknowledge that progress can vary between learners; and (2) hours in unsupervised learning and assessment activities that contribute to achieving the course outcomes but are not supervised by a RTO trainer or assessor (such as private study and/or assignment work, non-supervised work experience, and field placement).118 263 The specific entry requirements and packaging rules for each of these diplomas are set out in the Training Package Qualification Rules (the Packaging Rules) which, during the relevant period, were prepared by the Industry Skills Councils on behalf of the Commonwealth Government and published on the National Register of VET (National VET Register).119 264 Furthermore, the AQF provides that the diploma qualification may be issued only by an organisation authorised by an accrediting authority to do so, and which meets any government standards for the sector. In particular, the AQF provides that the issuing organisation is responsible for ensuring the quality of the learning outcomes and satisfactory completion by graduates of any requirements for the award of the qualification.120 265 It follows that Phoenix was required to deliver qualifications that complied with the Packaging Rules set out in this framework and in particular, with the AQF specifications for the diplomas offered by Phoenix. However, as I later explain, the expert evidence of Ms Scomazzon121 establishes that they failed to do so.

7.4 Target cohorts for the Phoenix Online Courses under the Packaging Rules and mandatory Phoenix admission requirements

7.4.1 Preliminary 266 The respondents admitted the target cohorts for each of the Phoenix Online Courses as set out in the National VET Register (which I explain below), as well as the number of VET units of study and their delivery in stages in each of the Online Courses, as pleaded in the SOC.122

7.4.2 General skills requirements 267 Self-evidently, as the Online Courses were delivered online, it was essential for students to have the necessary hardware and software, a student email address, access to the internet, potentially cloud-based technology, and a degree of computer literacy.123 Ms Scomazzon explained that the last of these would need to include the digital skills, for example, to understand terminology used in course materials such as "browser" or "link", and to understand: (1) how to perform basic computer operations such as opening, saving and managing files and folders, using the software applications used by Phoenix and (where applicable) employers during work placements, and to download and send learning and assessment activities; (2) how to communicate online including by accessing and participating in webinars (ie online seminars), and communicating with trainers, assessors and peers using email, discussion boards and chats; and (3) how to conduct research to satisfy assessment assignments, through accessing and using browsers and using search engines.124 268 In addition, Ms Scomazzon explained that students enrolling in a Phoenix VET diploma would require: 71.2 high level reading and writing skills as most of the training and assessment material is communicated to them in writing - text-based tools, emails, discussion forums, etc. 71.3 initiative, enterprise and time-management skills as there is less structured scheduling and so students need to be self-motivated and independent to ensure regular and sufficient study time 71.4 learning skills to enable students to: 71.4.1 use explicit strategies to organise information and ideas 71.4.2 use a range of techniques to reinforce learning.125 269 Yet Ms Scomazzon found that there was no indication in the Phoenix documentation reviewed by her that these skills and knowledge were identified or supported (as I later explain).126

7.4.3 The target cohorts for the Diplomas of Business, Management, and Leadership and Management 270 Consistently with the fact that the diploma is an AQF Level 5 qualification, the target cohorts for the Diplomas of Business, Management, and Leadership and Management (the Business Diplomas) specified in the Packaging Rules comprised people with substantial experience or with sound relevant theoretical skills and knowledge. 271 Taking each of the diplomas in turn, first the Diploma of Business (AQF code BSB50207) had a target cohort as specified by the Packaging Rules that was: "… intended to reflect the role of individuals with substantial experience in a range of settings who are seeking to further develop their skills across a wide range of business functions" and was a qualification "also suited to the needs of individuals with little or no vocational experience, but who possess sound theoretical business skills and knowledge that they would like to develop" (emphasis added).127 272 The Phoenix TAS for this diploma also stated that the program was delivered over a standard 45-week period and students were to "use a blend of interactive online resources, self-directed reading, summative assessment projects and research activities that combined we have allowed up to 470 hours of Diploma level".128 273 Secondly, the Packaging Rules specified that the Diploma of Business (AQF code BSB50215) had a target cohort of: 30.4.1 "individuals with various job titles including executive officers, program consultants and program coordinators. Individuals in these roles may possess substantial experience in a range of settings, but seek to further develop their skills across a wide range of business functions"; or 30.4.2 "those with little or no vocational experience, but who possess sound theoretical business skills and knowledge that they would like to develop in order to create further educational and employment opportunities."129 (Emphasis added.) 274 Thirdly, the target cohort specified in the Packaging Rules for the Diploma of Management (AQF code BSB51107) was to reflect: the role of individuals who are engaged to manage the work of others or to add value to or review management practices. Their role may be in any industry or organisational setting. Typically people in these roles will have considerable experience in their respective industries or vocational areas and combine an informed perspective of specific work requirements with their managerial approaches. The qualification requires a sound theoretical knowledge base and managerial competencies to plan, carry out and evaluate own work or the work of a team.130 (Emphasis added.) 275 Fourthly, according to the National VET Register, the Diploma of Leadership and Management (AQF code BSB51915) had a target cohort that reflected the role of individuals: … who apply knowledge, practical skills and experience in leadership and management across a range of enterprise and industry contexts. Individuals at this level display initiative and judgement in planning, organising, implementing and monitoring their own workload and the workload of others. They use communication skills to support individuals and teams to meet organisational or enterprise requirements. They plan, design, apply and evaluate solutions to unpredictable problems, and identify, analyse and synthesise information from a variety of sources … 131 (Emphasis added.)

7.4.4 The Phoenix mandatory admission requirements for the Diplomas of Business, Management, and Leadership and Management 276 Phoenix also imposed its own mandatory admission requirements for the Business Diplomas.132 These included: (1) requirements as to the age of the consumer, namely, that the consumer was at least 18 years of age in the case of: (a) the Diploma of Business (BSB50215) from 1 June to 9 September 2015 (reduced to 17 years of age from 10 September 2015); (b) the Diploma of Management (BSB51107); and (c) the Diploma of Leadership and Management (BSB51915) from 26 June to 31 August 2015, although the target participants were identified as "[a]ge group, typically 25+"133 (reduced to 17 years of age from 1 September 2015); (2) digital literacy skills and access to a computer or laptop which could be provided by Phoenix in the case of the Diploma of Business (BSB50215), the Diploma of Management (BSB51107), and the Diploma of Leadership and Management (BSB51915); (3) minimum school qualifications as follows: (a) completion of year 10 or equivalent in the case of the Diploma of Business (BSB50215) from 10 September 2015 and the Diploma of Leadership and Management (BSB51915) from 1 September 2015; (b) completion of year 12 in the case of the Diploma of Management (BSB51107) from February 2015; (I also note that, while it was not a mandatory admission requirement in the case of the Diploma of Business (BSB50215), the Phoenix TAS for this diploma stated that "Phoenix expect that participants in the course will have completed some formal education to at least year 12 (or equivalent)");134 and (4) LLN requirements in all of the Business Diplomas and, in the case of the Diploma of Business (BSB50215) and the Diploma of Leadership and Management (BSB51915) from 10 and 1 September 2015 respectively, LLN skills at ACSF Level 3. 277 As to the last of these requirements, Ms Scomazzon explained that the ACSF was "[a]n Australian Government tool released in 2008 and revised in 2012 that provides a consistent national approach to identifying and developing the language, literacy and numeracy (or 'core') skills of reading, writing, oral communication, numeracy and learning in three diverse contexts in which people work, learn and communicate: personal and community, workplace and employment, and education and training."135 Ms Scomazzon further explained this tool was adopted by many RTOs in their pre-enrolment and training and assessment practices, procedures and templates. It describes five levels of performance ranging from 1 (low level performance) to 5 (high level performance). However, she further explained that: Because there are only five levels in the ACSF, there is a significant difference between each level. High performance (level 5) describes an autonomous VET student whose LLN levels are sufficient to deal with highly complex verbal and written tasks and texts in a broad range of contexts; who is able to synthesise and evaluate that information. A student at a low level (level 1) in a training and assessment context will need a mentor to provide prompting and advice when working with highly familiar, short and simple tasks and text; and would be able to only locate and recognise that information.136 278 As such, she considered that a student at ACSF Level 3 would struggle significantly when undertaking a course requiring ACSF Levels 4 to 5.137 Added to this, how (one might ask rhetorically) could a person of 17 or 18 years of age who had completed high school only to Year 10 possibly have the considerable experience or sound theoretical knowledge or skills and managerial competencies to fall within the Target Cohorts specified in the Packaging Rules for these diplomas? 279 Finally, additional mandatory Phoenix admission requirements were imposed in the case of two of the Business Diplomas, namely: (1) in the case of the Diploma of Management (BSB51107), it was a Phoenix admission requirement from February 2015 that the consumer be engaged in roles that required managing the work of others or to add value/review management practices, and had current skills and knowledge in communication, problem solving and research skills; and (2) in the case of the Diploma of Leadership and Management (BSB51915), it was a Phoenix admission requirement that the consumer had 3 years of workplace experience in any industry. 280 While the mandatory admission requirements set out in the preceding paragraph might theoretically have ameliorated the risk that 17 or 18-year-olds with no experience or knowledge base might be enrolled in these diplomas, there is no evidence to suggest that these criteria were in fact applied by Phoenix or those acting on its behalf to screen potential students.

7.4.5 The target cohorts for the Diplomas in Early Childhood Education and Care and in Community Services Work, and mandatory requirements 281 The target cohorts for the Diplomas in Early Childhood Education and Care and in Community Services Work (the Service Diplomas) also reflected the fact that as diplomas, they were at Level 5 of difficulty. There were also, in the case of these diplomas, mandatory admission requirements and a requirement that students must complete a 240-hour work placement imposed by the Packaging Rules.138 In addition, Phoenix imposed certain mandatory admission requirements. 282 First, the Diploma of Early Childhood Education and Care (AQF code CHC50113) had a target cohort that reflected: the role of early childhood educators who are responsible for designing and implementing curriculum in early childhood education and care services. In doing so they work to implement an approved framework within the requirements of the Education and Care Services National Regulations and the National Quality Standard. They may have responsibility for supervision of volunteers or other staff.139 283 According to the Packaging Rules, the Diploma of Community Services Work (AQF code CHC50612) was targeted at consumers who: work in roles that usually involve service delivery, either direct client work and/or community education or development projects. Workers at this level operate at an advanced skill level and may also have responsibility for the supervision of other staff and volunteers.140 284 Secondly, and consistently with the target cohort, the Packaging Rules for the Diploma of Community Services Work imposed admission requirements that the consumer: (i) had trained and been assessed as competent in two core units of study; namely, Work Effectively in the Community Sector (identified under the AQF with the code CHCCS411C) and Work Effectively with Culturally Diverse Clients and Co-workers (identified under the AQF with the code HLTHIR403C); or (ii) had sufficient relevant experience and knowledge of community work and/or community services would likely succeed in a role involving: A. application of knowledge with depth in some areas and demonstrate a broad range of technical and other skills; B. work in a variety of contexts that involve complexity and choice of actions, including working with culturally diverse clients and co-workers; and C. exercise of discretionary judgement and decision making under general guidance; …141 (Errors in the original.) 285 Thirdly, Phoenix also set mandatory admission requirements for each of these courses which were amended on 1 September 2015,142 namely, that the consumer: (1) was at least 18 years of age; (2) possessed digital literacy skills and had access to a computer or laptop which could be provided by Phoenix (in the case of the Diploma of Community Services Work (CHC50612), from 1 September 2015); (3) had work experience or minimum school qualifications as follows: (a) in the case of the Diploma of Early Childhood Education and Care (CHC50113) prior to 1 September 2015, the consumer was employed in a childcare role/workplace; (b) in the case of the Diploma of Community Services Work (CHC50612) prior to 1 September 2015, the consumer was employed in a community service role or workplace; (c) in the case of both diplomas from 1 September 2015, completion of year 10 or equivalent only; (4) satisfied LLN requirements and specifically from 1 September 2015, LLN requirements at ACSF Level 3; (5) in the case of the Diploma of Early Childhood Education and Care (CHC50113): (a) prior to 1 September 2015, the consumer held a current Working with Children Check; (b) from 1 September 2015, held or was willing to undertake a Working with Children Check and a National Crime Check (NCC) Work Experience/Work Placement - Healthcare or Vulnerable Groups before undertaking the mandatory work placement; and (6) from 1 September 2015 in the case of the Diploma of Community Services Work (CHC50612), held or was willing to undertake a NCC Work Experience/Work Placement - Healthcare or Vulnerable Groups before undertaking the mandatory work placement. 286 Fourthly, as previously mentioned, the Service Diplomas stipulated substantial work placement requirements. Ms Scomazzon explained that where workplace experience is required and outsourced to a third party, in her experience a range of compliance requirements are usually put in place including: 126.1 determining the work requirements of the unit and selecting a suitable workplace 126.2 confirming that the third-party workplace will provide a safe and suitable practical placement 126.3 confirming that the student's workplace supervisor is suitably qualified to perform the role 126.4 ensuring that the workplace supervisor is suitably qualified to undertake assessment, or arranging a time for a Phoenix assessor to visit for the purposes of assessing Phoenix students 126.5 identifying and planning the assessment requirements and required workplace-based evidence to be produced 126.6 where assessment is undertaken by the workplace supervisor: agreeing assessment procedures and evidence requirements with workplace-based assessor 126.7 constructing evidence templates to ensure appropriate and specified assessment methods and tools are used, and that the assessment is documented according to agreed procedures.143

8. EVIDENCE OF EX-EMPLOYEES AS TO ENROLMENT PRACTICES UNDERTAKEN FOR THE PHOENIX ONLINE COURSES

8.1.1 General observations 287 The primary ex-employee witnesses for the applicants were Mr Bill Gale, formerly the CEO of Phoenix, Ms Janice Crittenden, the Director of Operations, Quality and Compliance at Phoenix, Ms Jennifer Mason, Data and Quality Manager at CTI, Ms (Susan) Lesley Blefari, Group Compliance Manager, and Mr Shaun Lewis, the Contact (Phone) Centre Manager at CTI. Each of these witnesses gave oral evidence, supplementing, expanding upon, and contextualising their affidavit evidence. Their evidence was clear, detailed, and credible. Their evidence as to the essential elements of the applicants' case was consistent with each other's, with the contemporaneous documentary evidence, and with the results of the data analysis. 288 Each of these employees when still employed by Phoenix or CTI attempted to raise their concerns with senior management about issues such as the lack of control exercised over Brokers and Agents, non-compliant enrolment documentation submitted by Brokers, worrying patterns in enrolment documentation indicative of fraud, and instructions from Mr Brown and Mr Kochhar to enrol consumers without conducting a telephone verification. Some were also able to take some small steps independently of senior management to investigate and ameliorate specific problems, such as ensuring that no consumers were enrolled in more than two courses. However, when they raised concerns with senior management or took steps like sending non-compliant forms back to Brokers, their concerns were generally brushed aside, ignored, or met with an angry, aggressive response delivered in strong language. 289 In this regard, as I later explain, during the relevant period, these employees were bullied and worked in a highly toxic environment at Phoenix and CTI given, in particular, the unpredictable and abusive behaviour of Mr Kochhar towards them. As a result, they were frequently required to comply with directions with which they disagreed from Mr Kochhar and Mr Brown and some other senior management figures, such as Ms Bagga, or with instructions the true purpose of which was deliberately hidden from them. 290 Furthermore, there was a pattern whereby staff were sidelined when they raised complaints. Steps were also taken to shut down communications between staff, such as stopping interdepartmental staff meetings, and from staff to the ACN Board about serious non-compliance issues such as Mr Brown's direction through his personal assistant to Ms Blefari to reduce the detail in her compliance reports to the Board. A number of these employees ultimately resigned because they were so disturbed and concerned about what was happening at Phoenix and what they were being asked to do by senior management. 291 As against this context, it is important to acknowledge the considerable courage exhibited by each of these witnesses in giving evidence in this proceeding. Their evidence was of very great assistance.

8.1.2 Mr Bill Gale (CEO, Phoenix) 292 Mr Bill Gale was the CEO of Phoenix from December 2013 until August 2015 when he became CEO of Phoenix Institute of Australia Pty Ltd trading as Phoenix Institute of Higher Education. As I explain below, Mr Gale was quickly sidelined by the new management and from the outset was wholly excluded from oversight of the new Online Courses. That situation was ultimately formalised in August 2015 when Phoenix was restructured into two divisions: (1) the Phoenix Institute of Higher Education, of which Mr Gale became CEO which was concerned with face-to-face education only; and (2) myTime Learning, of which Mr Brown became CEO, which had exclusive responsibility for the Online Courses. 293 Mr Gale ceased his employment with Phoenix in mid-December 2015, not long after Phoenix ceased offering face-to-face courses.144 294 Mr Gale gave evidence of the acquisition of Phoenix, the changes which he observed following the acquisition, the concerns which he repeatedly raised with senior management, and the engagement of an external compliance consultant, Damien Nash, to conduct an internal audit of the new Online Courses against ASQA standards.

8.1.3 Ms Janice Crittenden (Director of Operations, Quality and Compliance at Phoenix) (employed at Phoenix from 2010 to June 2015) 295 Ms Janice Crittenden worked for different RTOs for approximately 10 years before she began working for Phoenix in around 2010 as a general manager. She held the position of Director of Operations, Quality and Compliance for Phoenix when Phoenix was acquired. In that role, she had responsibility for "checking the qualifications of trainers against the requirements for their teaching a given course, as well as ensuring that all trainers kept up-to-date in their required professional development. This included organising the running of workshops for trainers and bringing in experts to conduct them."145 Prior to the acquisition, Ms Crittenden was also responsible for the development of Phoenix's enrolment forms,146 and wrote all of Phoenix's policy and student manuals, ensuring that they complied with ASQA and Tertiary Education Quality and Standards Agency (TEQSA) requirements. In addition, she was responsible for liaising with the Department and for managing the inflow of VET FEE-HELP funds to Phoenix which was then in the order of $3 million annually. 296 Ms Crittenden's evidence addressed Phoenix's operations before and after its takeover by ACN until her decision to retire in June 2015. In particular, she addressed concerns that she raised with senior management about enrolment forms following the acquisition and the responses of senior management to those concerns. Among other things, she observed from Wise.NET that after the acquisition of Phoenix by ACN, enrolments in Phoenix diploma courses increased at an accelerating rate and that many of the consumers were enrolled into more than one online diploma course.147 297 Ms Crittenden resigned by choice from her position at Phoenix in June 2015.

8.1.4 Ms Jennifer Mason (Data and Quality Manager, CTI, 13 February to 31 July 2015) 298 Ms Jennifer Mason gave evidence by affidavit affirmed on 4 May 2016 (the Mason affidavit) and orally. She was the Data and Quality Manager, CTI, from 13 February to 31 July 2015. Prior to that time, Ms Mason worked in the education industry in a variety of roles including as a trainer and assessor, training manager, compliance manager, and data and quality manager. She held a Bachelor of Arts degree from the University of La Trobe, a Certificate IV in Training and Assessment from the North Melbourne Institute of TAFE, and a Diploma of Workplace Training and Assessment. She had also partially completed a Masters in Education and Training at Deakin University. 299 Ms Mason was employed by CTI as the Data and Quality Manager at their main office in Spotswood, Victoria, for the period from 13 February 2015 to 31 July 2015. In that role, she reported directly, and in general on a daily basis, to the COO of CTI, Harry Kochhar, whom she described as her "direct line manager"148, as well as reporting occasionally to Ivan Brown as CEO of CTI.149 She oversaw the Data and Quality Team, as I explain below, and in the course of that role, saw many thousands of enrolment applications for Phoenix Online Courses. 300 Ms Mason left her employment with CTI at the end of July 2015 because she did not like the manner in which other staff were treated, and because she "fundamentally disagreed" with CTI's operations which she regarded as unethical.150 She explained in her evidence that: I was just sick to my stomach around: we were ripping people off; this is not what education is about. I am a very big believer in education and this is not education and this is making a mockery of something I believe in really passionately. And I am - my father was a police officer. I have come from a very honest background; and it is just not what I am about, at all. So it was really unsettling for me. So I resigned at the four month mark.151

8.1.5 Ms (Susan) Lesley Blefari (compliance consultant from July 2014 and subsequently Group Compliance Manager) 301 Ms (Susan) Lesley Blefari gave oral evidence in chief elaborating upon aspects of her evidence contained in her affidavit affirmed on 14 June 2018. 302 Ms Blefari holds Diplomas in Training and Assessment, Management, and Project Management and has worked with RTOs in compliance since 2005. Her experience included working for the Victorian Taxi Association as a consultant on their RTO operations, as a learning and development business manager for Esset Australia, ARRB Group, and an associated RTO of the University of Wollongong. From December 2012, she worked as a compliance consultant on a contract basis for various RTOs.152 303 Ms Blefari was initially engaged in July 2014 by Mr Kochhar to work for CTI as a contracted consultant on an ad hoc basis. That compliance work consisted of conducting "validations" in which she mapped the assessments and learning outcomes of a course to the requisite performance criteria, knowledge, and skills, in order to ensure that the course was set at the appropriate level and that it covered all aspects of the units of competency. Mr Kochhar was Ms Blefari's primary contact within CTI for that work.153 304 In early January 2015, Mr Kochhar engaged Ms Blefari on a permanent full-time basis as Group Compliance Manager and she continued to report directly to Mr Kochhar in her new role. As Group Compliance Manager, she was ultimately responsible for the compliance of all of ACN's eleven RTOs with the relevant government standards including in particular those overseen by ASQA. Ms Blefari was also responsible for completing applications to add new courses to the scope of work that ACN's RTOs were authorised to perform, as well as acting as a liaison between ACN and ASQA.154 305 Ms Blefari was based throughout her time at CTI in its office in Spotswood. Her office was on the ground floor and, when she commenced in the role as Group Compliance Manager she was the only internal compliance officer employed by CTI. Over time, however, several more compliance officers were engaged by Mr Kochhar to work under her supervision and they also worked on the ground floor of the Spotswood offices.155 306 Ms Blefari's direct involvement with each RTO in the ACN group varied, and she was primarily involved with another RTO in the group. She explained that most of the routine compliance tasks for Phoenix, such as the conduct of the required annual internal audit for compliance with the ASQA Standards, were conducted by Mr Phillip Bevan and Ms Marie Vassallo who were external consultants engaged by CTI for that purpose. 307 Despite her more limited role in relation to Phoenix, Ms Blefari was frequently approached by other CTI employees and, in particular, Ms Mason, to consult with them about their perception of Phoenix's lack of compliance with the RTO Standards.156 Ms Blefari said that while initially she was shown enrolment forms only occasionally, as concerns escalated this occurred almost daily.157 308 In August 2015, Ms Blefari was informed by Mr Kochhar that Mr Marco Grandi was taking over as Head of Compliance. Thereafter Ms Blefari did not perform any further compliance work for Phoenix, and the compliance staff who had previously reported to her, then reported to Mr Grandi. Ms Blefari was made redundant from CTI in December 2015.158

8.1.6 Mr Shaun Lewis (Phone Centre Manager, CTI, August 2015 to February 2016) 309 Finally, Mr Shaun Lewis was employed at CTI as the Contact (Phone) Centre Manager in Spotswood from August 2015159 until his redundancy in February 2016.160 Mr Lewis initially reported to Mr Mario Cugliandro, then Head of Client Relations Management, who left not long after Mr Lewis commenced at CTI, and thereafter directly to Mr Kochhar.161 While it was not Mr Lewis' function to make any calls to potential students, he sat down regularly with each of his team members to listen to the calls being made by them.162 310 Mr Lewis had 12 years' experience working in different call centres including in the telecommunications and education industries. Immediately before working for CTI, he had worked for a company which developed online educational content for Monash University as a Student Recruitment Manager.163 311 Mr Lewis' evidence in his affidavit affirmed on 27 June 2018 was supplemented and expanded upon in his oral evidence.

8.2 The toxic working environment at CTI 312 As I have foreshadowed, the evidence of the ex-employees needs to be understood in the context of the toxic, bullying behaviour to which they were routinely subjected at CTI and Phoenix, the control exerted over staff as to whom they could speak and with whom they could hold meetings, and the extraordinary pressure placed upon staff in terms of the volume of work which they were expected to undertake and the hours expected or demanded of them. For example, in explaining the reasons why she left CTI, Ms Mason said that: So I felt that I looked after my staff well, I felt Le [Quan Dien] looked after her team well, I thought Mario was appropriate, but we weren't allowed to talk to each other. So Le and I had to talk to each other, but I was instructed to not talk to Mike, not talk to Lesl[ey] Blefari, who was the compliance manager. That's an odd thing. We tried to set up interdepartmental meetings; they were shut down. And it was a regular occurrence for Harry to come out and scream at the staff and was really unpleasant. When I first started working there, the first week I worked there I worked on a Saturday. The next weekend, I worked all weekend. At one point, I worked 21 days in a row; that was just expected. And they would call you all hours of the day, asking about numbers.164 313 Ms Blefari said that she felt bullied by Mr Kochhar, particularly when she raised concerns about third-party brokers. She said that he would get quite aggressive with her and tell her not to worry, everything would be okay, and to get out of his office.165 She also said that he used meetings with the leaders of each of his teams and CTI, including Ms Blefari, Ms Nidhi Bagga, and Ms Mason, to criticise and abuse them about their performance. These meetings were described by Ms Blefari as "impromptu. … It was never organised. It was just a demand to be in his office within a couple of minutes, and then suddenly it would all - you know, the topic of whatever he wanted to talk about would explode, I guess."166 314 She said that Mr Kochhar was very aggressive in particular towards Ms Mason: He was unkind, particularly to Jennifer Mason … Jennifer was trying to do her job but she - the location was across the - the corridor from him. So he would - I felt that I felt that he was on her back all the time, forcing her to do things that were not right, and that's - so she and I would have conversations about what is wrong with these PTRs, the fact that they were the same handwriting, and the answers were the same, that - we were enrolling people into multiple diplomas, the ages of the people, all of the things that I said before, and he was very aggressive towards her and other people in the management meeting, depending on what the topic was at the time.167 315 She said that his aggressiveness manifested itself in abusive and unacceptable language particularly towards the training manager and Ms Mason, in swearing at employees, and in "voice volume, running down the stairs, demanding we come up and see him, and then he would tear strips off us for something, and it was - it's very difficult for me to explain. It was not a nice environment."168 Ms Blefari also explained that criticisms towards her by Mr Kochhar arose when she was "questioning compliance standards or things that I had to do to maintain compliance for the RTO, that I was getting into too much detail and, you know, I am complicating things. So that was regular."169 316 Mr Lewis' evidence also highlights the bullying tactics used by Mr Kochhar: Throughout the whole period I got the sense that - a strong sense that he hated any questions that I had to ask, and I'm a very inquisitive person. I need to understand why - why certain things are being done and when the answers can't come to me I will continue to ask why. That is my way of learning and my way of understanding and knowing that what I'm doing is correct. He just didn't like it. So I had to figure it out myself, which is fine, I can do that, but he used to get very angry, and Harry was not the kind of person that you would want angry because he would make sure that he was angry quite publicly at you and quite abusive at you. Which to me I didn't tolerate, so whenever he did I would - I would tell him to pipe up and ..... himself, but others wouldn't do that, so that was probably a summary of really how - how our interactions were, your Honour. [Her Honour] How did he exhibit that anger? [Mr Lewis] Quite physically in - in his body language, and raised voices, verbal abuse. There's some instances that stick out of my head as pretty bad. At one point it was quite racist, a massive racist slur that occurred with a number of people in the office at a - at a Israeli man which was just horrible, and I just remember going home to my wife saying, "I cannot believe that I work in a place like this - with a person like this". He was just horrible.170 317 Not surprisingly, this had an impact upon the extent to which Mr Lewis and no doubt other employees felt confident to raise concerns with Mr Kochhar. As Mr Lewis explained: … it definitely made me think twice about what I took to Harry and - and what I challenged with Harry, and as a result I would say to myself, well, you know what, it's probably better to ask for forgiveness than for permission with some of these things, so I just - I just did, and fortunately some of them didn't come up so I didn't have to explain myself or ask for forgiveness, and I could go home at night thinking, yes, I made a good call on that one. But I just didn't think the business was making good calls or Harry. [Ms Sharp SC] And you didn't feel that there were other people with whom you could raise these issues aside from the people you've identified? [Mr Lewis] Yes - no, I - I didn't really trust anyone until - so Mario I trusted. I think he was great. ... And throughout that time, then, I didn't trust my peer who was the student success team manager. I didn't trust Nidhi, I didn't trust Harry obviously. Ivan was just somebody that you wouldn't even go towards - go near. You know, Maria [Spiteri] was close to Harry, you know, like I would have to escalate things through her sometimes but I still didn't feel I could trust her. It was only until Brett [Head of HR] came along did I feel that we had somebody who was actually going to listen and take some action, which I felt that he did but it was too little too late.171

8.3 The groups within CTI undertaking enrolments (the CRM Team, the Data Team, the Phone Team, and the Course Trainers) 318 Within CTI, there were four main groups undertaking the enrolment of consumers in Phoenix Online Courses when Ms Mason commenced her employment with CTI on 13 February 2015. 319 The first group was the Client Relationship Management Team. Ms Mason explained that: One of the main functions of the CRM Team was to monitor, liaise and engage with third parties (brokers) selling or marketing Phoenix courses. This included liaising with brokers and receiving completed course applications from them. I understood the brokers were the organisations and people who sold the courses to prospective students and collected their course applications. The client relationship managers reported to the manager of the CRM Team (who in turn reported to Harry Kochhar).172 320 As Ms Mason also explained, this team was responsible "for making sure they [ie the Brokers] were doing the right thing, setting up the expectations and liaising directly with them."173 Initially, Ms Karlie Arnold was the manager of that team but Mario Cugliandro took over that position when Ms Arnold took maternity leave.174 321 The second group was the Data and Quality team (Data Team). As the Data and Quality Manager, Ms Mason was responsible for management of the Data Team. This team was initially comprised of 19 personnel, including three staff trained to enrol consumers in the VET FEE-HELP system which oversaw seven RTOs including Phoenix. In time, the Data Team increased to 36 personnel, including five to six staff within the ACN group who were trained to enrol consumers within the FEE-HELP system.175 In this regard, when Ms Mason joined CTI the Data Team had three staff permanently dedicated to processing Phoenix enrolments which had increased to six permanent staff by the time Ms Mason left in July 2015.176 The number of additional staff dedicated to processing Phoenix enrolments increased from time to time depending on the number of applications and directions from senior staff members.177 322 The Data Team was responsible for the following tasks: (1) receiving enrolment packs for each student provided by Brokers to their client relationship managers (although initially the Data Team received the application forms directly from the Brokers); (2) checking whether the enrolment packs were completed correctly and all of the necessary information had been provided; (3) entering student enrolment data into CTI's student management system, Wise.NET; (4) processing cancellations of enrolments or courses; (5) entering the student data into the Higher Education Information Management System (HEIMS), which informed the Department of a student's enrolment into a course; (6) transferring the enrolled student into the FinPa learning management system, being Phoenix's online database by which enrolled consumers could access their learning materials and submit assessments online for marking; and (7) sending out Commonwealth Assistance Notices (CANs) to consumers who had been successfully enrolled after the relevant census date had passed.178 323 The third group within CTI concerned with enrolling consumers in Phoenix Online Courses was the phone verification team (the Phone Team). This group had responsibility for calling the consumers identified on application forms which had been received by Phoenix. Management of the Phone Team changed in the middle of 2015. Le Quan Dien was the Student Support & Enquiry Team Leader in the Phone Team at CTI until she resigned in about June 2015.179 Ms Mason's time with CTI overlapped with that of Ms Dien and Ms Mason worked closely with this group until her resignation in July 2015, speaking several times a day in particular with Ms Dien.180 Subsequently, Mr Lewis joined CTI in August 2015 and commenced as the Contact (Phone) Centre Manager where he remained until February 2016. In that role, Mr Lewis supervised a team of fourteen staff members, whose responsibility it was to conduct the student verification calls.181 As such, the Contact Centre was primarily an outbound call centre even though it had the capacity to receive inbound calls.182 The Phone Team worked in a room next door to the Data Team on the third floor of the Spotswood Offices.183 324 The fourth group within CTI consisted of the course trainers and assessors who were located in the Broadmeadows office. Their role in the enrolment process was to assess and mark the language, literacy, and numeracy tests that CTI received at the Spotswood office as part of the enrolment packs. However, as I later explain, during the period that Ms Mason was at CTI, she only ever observed the course trainers attending the Spotswood office twice to mark LLN tests.184 She also estimated that at best only 20 to 30% of LLNs were marked by assessors before the consumers were entered into the systems.185

8.4.1 Receipt of the enrolment packs and verification of student enrolment data by the Data Team 325 From at least mid-February 2015 when Ms Mason commenced working at CTI, there was a process for the enrolment of consumers.186 The Data Team received the enrolment forms, often in bulk, directly from the Brokers or from one of their Agents or sometimes by mail.187 From late March or early April 2015, the Brokers gave the forms directly to the CRM Team to check against the Broker's student list which then forwarded the forms to the Data Team.188 The enrolment forms included the following documentation:189 (1) the student course application forms; (2) the PTR, being a series of questions for the student about the kind of course the student wanted to do, their understanding about the course, and why they wanted to enrol; 190 (3) LLN test sheets; (4) the request for Commonwealth Assistance Form/CAF; (5) after 1 April 2015, a laptop loan application or rejection form; and (6) a copy of federal or state issued identification. 326 As I have mentioned, the Data Team were responsible for verifying student enrolment data for consumers enrolled into online learning courses including the Phoenix Online Courses. 327 In order to facilitate the verification process, Ms Mason developed what was referred to as a VET FEE-HELP checklist which was provided to members of the Data Team.191 While there were a number of iterations of the form during Ms Mason's time with CTI, the checklists comprised a series of tick-a-box questions about whether a student had photographic identification, proof of citizenship, and had completed the request for Commonwealth Assistance Form, the PTR and LLN forms, and the student application form.192 Ms Mason instructed the Data Team members that where these forms were missing a piece of information such as a date of birth, the team member was to complete the form with information already provided by the student elsewhere on the application forms or on their identification. Alternatively, Data Team members or Phone Team members were instructed to contact the student directly by phone to request the information in question. However, if the application was missing a lot of information and could not be completed, then it was to be rejected and the forms given back to the Broker.193 328 As an aspect of this process, the Data Team would check the PTR forms against the requirements in the VET FEE-HELP regulations. However, the Data Team did not have the qualifications to mark the LLN tests. These had to be assessed by appropriately qualified assessors. As Ms Mason explained: So a student couldn't access a student loan because they wanted to do a course out of interest. They had to want to have an occupational outcome of it and there were specific questions that the government mandated to that effect. So if a question on a form didn't meet that requirement my team could refuse that. However, the LLNs my team couldn't mark those. To mark an LLN, although there's no - there wasn't any strict mandate on those requirements back then than there is today, generally it should be done by an assessor, and it should be done by someone who is - had good English and is literate. So all of the members of my team were literate but they weren't assessors, and by an assessor that means that they must hold either the assessment units within the Certificate IV Training and Assessment qualification or they actually hold the Cert IV in Training and Assessment which was known then as the - either the TAE or the TAA, depending on which version. My team weren't - they weren't assessors, nor [were] they trained in that, and for many of them English wasn't their first language, and so it wouldn't necessarily be appropriate from a - although they were literate and they could do their jobs, they had sufficient English to be able to transcribe information from a form into a database, it doesn't mean that they had enough English to be able to assess an LLN.194

8.4.2 Assessment and marking of LLN tests by the course trainers at Broadmeadows 329 Where an application for enrolment passed the VET FEE-HELP checklist, the next step which should have occurred was the assessment and marking of the LLN tests by course trainers. However, the course trainers were based at Broadmeadows.195 Ms Mason gave emphatic evidence both that it would have been inappropriate for the files to have been sent away to be marked and that they never in fact left the Spotswood office to be sent for marking at Broadmeadows.196 Nor, aside from a small number of occasions, did course trainers attend Spotswood to mark the LLN tests. In this regard, Ms Mason explained that trainers only ever came down from the Broadmeadows office twice during her time at CTI to help mark the tests, and as a result there was "a large backlog of unmarked LLN tests".197 330 Eventually in mid-2015, a trainer was appointed based at Spotswood to mark LLN tests but he worked only three days a week and had other responsibilities.198 As a result, Ms Mason explained that "many LLN tests were never checked or marked, but students were nevertheless enrolled into Phoenix courses".199 In her oral evidence, Ms Mason estimated that between 70 to 80% (and possibly higher) of the LLN tests were not marked by assessors before the consumers were entered into the systems.200-

8.4.3 Phone Group to call individual consumers 331 Once the Data Team had completed checking an application, it was typically passed on to the Phone Group which was tasked with calling each individual student,201 although the order later changed so that the telephone verification was to occur first, followed by the quality assurance process undertaken by the Data Team.202 Ms Mason (who, it will be recalled, was at CTI until July 2015) explained that the Phone Group: … would then ring to confirm that the person had, in fact, completed the forms themselves and actually did want to be enrolled and also to make sure that they were aware that they were entering into a loan agreement.203 332 Mr Lewis (who commenced in August 2015 and was the Contact (Phone) Centre Manager) explained the process of calling potential students from that time as follows: 6. Edna Chakrabarty, Manoj Jacob and Olivia Uka, three of the team members I supervised, showed me the process that they undertook in calling potential students. The details from a potential student's application form were filled out by a separate data team onto a software system called "Podio". The application forms were then given to the phones team, for which I was responsible. A member of the phones team took an application form, found the matching student record on Podio, and called the potential student to whom that form belonged to confirm details including the potential student's name, address and email address. 7. The team member then asked a series of "yes or no" questions from a script, including whether the potential student had access to the internet, whether the potential student had completed their enrolment forms themselves, whether the potential student wanted to proceed to enrolment into the course/s for which he or she had applied. If a potential student answered "yes" to each of the qualifying questions then that student's status was updated on Podio to "confirmed" for each course for which he or she had applied. 8. My colleagues and I placed potential students' forms into piles in the following categories: (a) Potential students yet to be called (first call); (b) Potential students for whom one unsuccessful contact attempt had been made (second call); (c) Potential students for whom two unsuccessful contact attempts had been made (third call); (d) Potential students for whom three unsuccessful contact attempts had been made (uncontactable forms); (e) Potential students who had been contacted but had either said they were not interested in continuing to enrolment, or [regarding] whom the members of the phones team had determined [they] should not proceed (cancelled forms); (f) Potential students who answered "yes" to each qualifying question and indicated to the phones team that they wished to proceed to enrolment (confirmed forms).204 333 The scripts referred to by Mr Lewis were supplied by Nidhi Bagga, and Mr Lewis had little input into the scripts, aside from making suggestions primarily concerning disabilities which stemmed from Olivia Euka (who managed the applications made by consumers who identified as having a disability).205 Podio was described by Mr Lewis as a "customer relationship tool" which recorded interactions with potential students, their contact details, and the outcomes of any conversations with them.206 334 Mr Lewis explained that each day he or one of his senior team members would allocate a stack of forms from the first, second and third call categories to each of the phone team members and instruct them to call the potential students in the forms given to them on that day.207 335 Finally, Mr Lewis passed the completed forms on to the Data Team then led by Mr Sunny Banga.208

8.4.4 The final steps in the enrolment process by the Data Team 336 As to the final steps in the enrolment process, Ms Mason explained as follows.209 (1) Following telephone verification, the application form was to be returned to the Data Team which undertook a final check against the VET FEE-HELP checklist for any errors or missing information. (2) The student's application and personal information was then individually uploaded to the Wise.NET student management system following which each applicant was then enrolled into the relevant course on Wise.NET, either individually or in bulk. (3) The number of students enrolled in Wise.NET each week ranged from 200 to 2,000 students, with the team routinely enrolling up to 1,000 students per week. If one team within the Data Team required additional staff to upload more students into Wise.NET for a particular college, then other members of the Data Team would assist. (4) The Data Team members who were trained to enrol students for VET FEE-HELP assistance, extracted the Wise.NET data of those students and uploaded the information onto the Higher Education Client Assistance Tool (HEPCAT) managed by the DET. This occurred monthly and was necessary only in the case of students receiving VET FEE-HELP. 210 HEPCAT then gave the Wise.NET student data a final independent check or "datawash" before it validated the application for VET FEE-HELP. HEPCAT would reject an application if it had missing or invalid data such as an invalid TFN. (5) The validated data was uploaded to the HEIMS database maintained by the Department. (6) Ms Mason then directed the students' details to be entered in bulk onto the FinPa learning database which permitted the student to access and complete their course online. It was at this point that Ms Mason described the students as "officially enrolled".211 As Ms Mason explained, in essence we "pulled a report out of Wise.NET. We had to modify that report a little bit because FinPa was a fairly unsophisticated system and then we would upload. So basically it pulled out … [t]heir student ID and then it uploaded them and then you assign them into the courses - the relevant courses that they were enrolled in."212 Importantly, for reasons that are later apparent, all log-in history and student course completion progress was automatically recorded and managed through FinPa. (7) Finally, Ms Mason would direct the Data Team to send the student a Commonwealth Assistance Notice within 28 days of the VET FEE-HELP census date to inform them of the loan amount for that census date. Initially, there were three census dates so that three CANs were sent. However, in March 2015, this was changed to two census dates as a consequence of which two CANs were issued after that time. 337 Once the students were enrolled, the enrolment forms were archived by CTI in several rooms within its Spotswood office213 and the students were handed over to the team overseen by Ms Nidhi Bagga.214

8.5 Ms Blefari's evidence about non-compliance with RTO standards

8.5.1 Non-compliance with RTO standards in recruitment practices and completion of enrolment forms 338 During her time as a Group Compliance Manager, Ms Blefari had serious concerns about the respondents' compliance with the RTO standards in a number of significant respects. 339 First, Ms Blefari had concerns as to whether or not Phoenix was accurately reporting all of the Brokers who were representing it in recruiting consumers,215 despite it being a requirement (at least from 1 July 2015) that Phoenix identify to ASQA those Brokers representing it. She said that "it was very hazy about how the structure worked and who they [ie the Brokers and Agents] were actually assigned to".216 340 Secondly, Ms Blefari had concerns about the number and quality of the Brokers and Agents. She shared Ms Mason's concerns about the significant number of applications submitted by Brokers every week completed in the same handwriting, as I later explain. Ms Mason frequently called Ms Blefari to raise her concerns about the enrolment bundles received by her administration team for prospective Phoenix students including enrolment forms which had not been filled in correctly and similarities in the handwriting on the forms allegedly completed by different students.217 341 On a couple of occasions (including in March 2015), Ms Blefari asked Ms Mason to provide her with a random sample of 10 to 15 Phoenix student enrolment bundles for enrolled students from the rooms in which the archived enrolment bundles were stored.218 On examining those bundles, Ms Blefari reached the view that approximately 50% of the bundles viewed did not comply with the RTO standards in various respects including that: (a) the students had not ticked some of the boxes on the enrolment forms that they were required to tick; and/or (b) there was some other data missing from the students enrolment forms, such as the student not filling out the course code for the courses into which they intended to enrol, or giving what appeared to me to be a preferred name rather than their legal name; and/or (c) the information on the student's PTR forms did not satisfy me that the student was capable of undertaking the level of study into which they had sought enrolment.219 342 As to the last of these matters, Ms Blefari referred to the requirement that a RTO assess each student's ability to conduct the course into which she or he had enrolled, as well as the time and level of support that a student would require in order to complete their chosen course or courses. Yet on most of the PTR forms which she examined, she found that: (1) very short and simple answers were given to most questions of a few words in length despite the space allocated on the form for answers; (2) the students' highest level of educational attainment was year 10 or below; (3) the students had disclosed that they were unemployed; (4) in answer to the question about their prior relevant work experience, almost all students wrote "none" despite a Diploma of Business or Management, for example, being an advanced course usually undertaken by individuals with some experience in either management or in the supervision of others in a work environment (as I have earlier explained); and (5) the students answered "no" to the question about whether they had access to a computer or the internet.220 343 Indeed, as to the second point, Ms Blefari could not recall seeing a single application where the student's highest level of educational attainment exceeded year 10, despite seeing applications almost on a daily basis.221 She also recalled seeing applications from consumers who had not progressed in their schooling beyond years 8 or 9, and explained that most of the applications were by consumers from non-English speaking backgrounds.222 The latter is supported by the contemporaneous internal documents. For example, in an email from Ms Bagga to Mr Kurt Walters at CTI, Ms Bagga requested that: Inform Leigh, Laila etc of the same and make sure this is done without waste of time and drama by any trainer. These students speak diff language and I would prefer Vijay [Dasam] to assist them.223 344 The attached student list recorded some 164 consumers.224 345 Another issue observed by Ms Blefari was that some prospective students were significantly older than students she had seen undertake similar diploma courses in the past, including at least one student who was older than 70 and a number of other forms suggesting that the students were in their 60s.225 346 Ms Blefari spoke with Mr Kochhar a number of times alerting him to the fact that Agents were presenting forms for enrolment into Phoenix courses which she did not believe complied with the RTO Standards. Mr Kochhar would simply respond along the lines of "do not worry about that", "do not bring these things up", "do not worry about it, I will deal with it", or "that is not your concern. Marie [Vassallo] is looking after that."226 Ms Blefari also sent emails to Mr Kochhar copied to Mr Brown at least two or three times a week detailing areas of non-compliance within Phoenix.227 However, she never received any responses to those emails from Mr Brown and, while Mr Kochhar did not respond by email, he would frequently ask Ms Blefari to see him in his office about the issue. Again his response was that Ms Blefari should not worry about anything to do with Phoenix and that Ms Vassallo would deal with Phoenix.228 Notwithstanding Mr Kochhar's reassurances, the issues were not resolved and Ms Blefari continued to see forms raising the same compliance issues.229 Indeed, at one meeting called by Mr Kochhar with the team leaders of CTI, he told Ms Blefari, in effect, that "I do not want to keep hearing about these non-compliances. You are just wasting my time and complicating things."230 347 Eventually, in about August 2015, Ms Mason and Ms Blefari decided that they should send back non-compliant student enrolment bundles to the recruitment agents. They met with Mr Peter Vogel, who was the Head of Sales and Marketing, and directed that forms which were not properly completed be sent back,231 leaving him with a large stack of about 40 to 50 enrolment papers which were incomplete or faulty in order to demonstrate the problem.232 Shortly thereafter, Mr Kochhar called Ms Blefari into his office, saying in an angry and aggressive fashion words to the effect of, "[w]hat do you think you're fucking doing sending these forms back? What gives you the right to send these back to the salespeople?"233 348 Thirdly, Ms Blefari was concerned at reports by Ms Bagga, the Operations Manager for Phoenix, that the unit of competency completion rates for Phoenix students was around only 1% to 2%.234 Ms Blefari interviewed the trainers at Phoenix in order to understand why this was the case, being advised that they could not contact many of the students, in line with the explanation given by Ms Bagga.235 Ms Blefari also raised her concerns about completion rates with Mr Kochhar.236 While this should have sent "alarm bells ringing" that something was seriously wrong with the respondents' recruitment and enrolment systems, nothing was done to investigate or remedy the problem by the respondents. 349 As I explain later, the types of issues in the recruitment processes engaged in by Brokers to which Ms Blefari referred were also raised time and time again by complaints received by Phoenix and government agencies following its acquisition by ACN. I refer to examples of these in Chapter 10 in the course of explaining the chronology of events. By way of example, in early 2016, the DET received information from the Western Australian police that Phoenix representatives were unlawfully entering Indigenous lands in the Kimberley region of Western Australia and seeking to enrol people with Phoenix in VET FEE-HELP courses.237 Based on this information, Departmental officers went to the Kimberley region to verify this information. Departmental officers also conducted investigations in Perth in Western Australia in late February 2016 and in Dubbo, NSW, in May 2016 based on a number of complaints relating to Broker activities. During the course of those investigations, the DET obtained statutory declarations from Indigenous consumers in those regions who were enrolled in Phoenix courses.238 Their declarations repeat the themes already the subject of voluminous complaints described earlier, including that: (1) all of the consumers were offered either a laptop and/or money to sign up for a VET FEE-HELP course; (2) 17 of the consumers were enrolled in two separate courses; (3) none of the consumers had commenced any study; (4) of the 10 consumers who gave information about their highest level of schooling, eight had completed only year 9 or year 10, one had completed year 8, and one had completed year 11; (5) in most cases, the Broker provided answers for the enrolment verification call with the RTO; (6) in most cases the student was not informed of the VET FEE-HELP loan scheme or about the course fees; and (7) of the 10 consumers who addressed the issue, nine had no internet access and one had internet access only via mobile phone.239 350 Indeed, Consumer JE gave evidence about her conversation with an Agent for Phoenix signing up Aboriginal people in Dubbo over a number of days in July and August 2015 who asked her to take him around because "I need to sign up 10 people". When she asked him, "Why don't you sign up white fellas instead of Aboriginals?", he responded with words to the effect of "[b]ecause we only want to sign up Aboriginal people that you know."240

8.5.2 Ms Blefari required to restrict information in her compliance reports to the ACN Board 351 Ms Blefari explained that, as Group Compliance Manager, she was required to prepare a document updating the ACN Board at its monthly meetings on the compliance status of each of ACN's RTOs. The first couple of compliance reports which she submitted set out the compliance issues that had been identified for each of ACN's RTOs including Phoenix. On these occasions, Mr Brown's personal assistant, Erin, returned Ms Blefari's reports to be re-drafted with instructions no doubt conveyed at Mr Brown's direction, to the effect of "[y]our reports are too detailed. You need to make these much shorter and more general."241 Thereafter, when Ms Blefari reported to the Board that ACN's RTOs including Phoenix had ongoing ASQA compliance issues, Ms Blefari did not specify what the issues were but would simply report something along the lines of "[t]he compliance team is currently engaging with Phoenix to address some issues with its compliance with the ASQA Standards."242 In this regard, even though Ms Blefari explained that she felt it was important to provide detail about compliance issues to the Board, she did not feel that she had any choice but to abbreviate her reports. As she explained: … it was very difficult to argue a point with - with management - with Harry, so it was much easier just to - to go with the flow … Although, that is what my job was - compliance. He was not interested in that detail. Just, you know, get to the point and make it easy … It was easier to go with the flow and get the job done and move on to more - other compliance issues that we had in other RTO[s] than to argue the point, because the argument would not go in my favour … Harry could be aggressive with his language. So … So it was easier to stop and just go along with what the request was.243 352 As she also later explained in her oral evidence, "I was very restricted at CTI. It was a very different environment from a compliance point of view, because RTOs - that's what it's all about. We're delivering education, and we must adhere to the standards. So other RTOs understood the importance of it."244

8.5.3 The lack of training for Brokers and Agents 353 A workshop was finally held for Brokers and Agents at Ms Blefari's insistence in around August 2015 in the offices of an ACN RTO in a suburb north of Melbourne. While the invitation was extended to all Brokers and Agents, only approximately 30 or 40 attended.245 The purpose of the presentation was to ensure that the Brokers and Agents understood exactly what they should be doing from a compliance perspective. However, Ms Blefari was removed from her role shortly after the workshop and was not given a further opportunity to hold another presentation even though she wanted to do so in order to capture more of the Brokers and Agents. 354 The effect of Ms Blefari's evidence is that this was the only occasion of which she was aware where any compliance training was extended by the respondents or the ACN Group to the Brokers and Agents. Given Ms Blefari's role up to September 2015 as Group Compliance Officer, if any other training had been provided to them, no doubt she would not only have been aware of the training, but involved in its organisation. Furthermore, the evidence does not suggest that the respondents were aware of the identity of all of the Agents, let alone that they provided any induction or further professional training to them contrary to representations made to the Department in requests to increase advance VET FEE-HELP payments to Phoenix, to the regulators, and in Phoenix's own Policy Manual.246

8.6 Ex-employees' evidence as to the volume of enrolments, multiple enrolments, enrolment targets and instructions to defer phone verification, and work placements 355 The sheer volume of student enrolments rendered it effectively impossible for the verification processes to keep pace with the number of students to be enrolled.247 The evidence establishes that Mr Brown and Mr Kochhar were well aware of this but directed the Data and Phone Teams nonetheless to enrol the students, as I explain below.

8.6.1 Weekly targets for enrolment 356 First, Ms Mason explained that Mr Brown regularly gave instructions to her directly and in team meetings as to weekly targets to be met for the enrolment of new students into Phoenix Online Courses. These targets could be as high as 2,000, 4,000, or even 5,000, new enrolments. Often when these directions were given, Mr Brown and sometimes Mr Kochhar told Ms Mason that no one was to go home until the target was reached. 248 Ms Mason expanded on this in her oral evidence in the following passage: … the first big target was 3000 [enrolment packs] by the end of the month. We were halfway through the month and I think we enrolled maybe 200 at that point. There was one time when they wanted 1000 in by the end of the week. There [were] several times when they wanted 3000 and there was one time when they wanted 5000, and I would say, "We don't have that many here. We physically don't have that many. We have entered everything that we have - that we're able to enter", and magically files would appear. So on a Monday we might get told that they wanted 3000 by the end of the week, and I would say, "I don't have 3000 to enter in … …And then magically in the middle of the week brokers would walk in with boxes and boxes and boxes of them. 249 357 These instructions were given to Ms Mason normally by Mr Brown and generally it was GG Sales who would provide the additional (and unusually high) 1,000 or 3,000 files by the end of the week which Ms Mason's team used to call the "magic boxes".250 358 In this regard, Ms Mason overheard conversations from time to time between Mr Brown and Mr Kochhar with Brokers which she described as follows: So there would sometimes be - so it was very - the nature of them was very ["]palsy["], lots of slapping on the backs. And there would be conversations like - so Ivan used to use the word "brother". So he would say, "Brother, I need - I need 1000 in, or I need these in," so that he - I would overhear them - him giving those instructions to get them in. And they would say, "Sure thing. We'd get those in."251 359 In answer to a question about the capacity of her team to enrol so many students in a week, Ms Mason explained that: We had the ability to shuffle people around. So what would - I would get sometimes members of my team to help out with the telephone team to do the verifications, but Le Quan Dien, who was the team leader of the phone team, and I calculated that we could not possibly do that, because she didn't have enough capacity in her team, even with my team helping out. And then with my team we - we could throw - sometimes we threw every single resource within my team, with the exception of the filing staff, onto entering data. So there were efficiencies within our systems. The quality checks took about 10 minutes to do, so that wasn't a huge amount of time. And entering them, what they could do was they could enter all the students' names in and then bulk and roll literally hundreds of students into the relevant courses at a time. And the guys would - there were efficiencies that we found in - to do it. But it was a tough gig, and people were working from 8 o'clock in the morning until midnight some days, and we worked all weekends as well.252 360 Ms Mason also said that on occasions when her team was given enrolment targets of several thousand students, she often saw Mr Kochhar or Mr Brown meet with Broker representatives in the Spotswood office in the middle of the week, and overheard Mr Brown saying things to Brokers to the effect "Brother could you get me a thousand more by the end of the week?"253 361 Ms Mason's evidence as to the setting of high enrolment targets is supported by the documentary evidence. 362 First, on 16 March 2015 Ms Bagga sent an email to staff with the subject matter "This week VFH", stating relevantly: We have a target of about 800 enrolments to be punched in the system in the next few days, as confirmed most of you are workin [sic] on Saturday 21/3/2015. The aim [sic] to try and get a hold of all N/A's and qualify as many as we possibly can.254 363 On Saturday, 21 March 2015, Ms Bagga emailed Ms Dien and others with the subject heading "Plan of action today 21/3/2015 Saturday".255 In her email, Ms Bagga stated that "[w]e need to call as many people as we possibly can. Target should be a 100% of N/A's today". It is apparent from the email that the reference to "N/A's" is a reference to consumers who had not answered telephone calls or emails from CTI to verify their enrolment. The email also said "[p]lease note that some of the or most of the people that have not answered the phones from LOG 1 will already be on FINPA and wisenet so we need to give them an appropriate spiel." Ms Bagga further advised "please be mindful of the census dates as it may have way past [sic]". It is clear from this correspondence that even as early as March 2015, consumers had been enrolled in Phoenix Online Courses and incurred a debt to the Commonwealth for VET FEE-HELP assistance by reason of the census date having passed, despite the fact that it had not been possible to contact them in order to confirm their enrolment. The email also provided a script for those who were to be contacted because they had "never logged in", whereby the caller from the Phone Team was to offer to assist the consumer to log on and explain that the process would only take a couple of minutes. 364 The pressure to press through as many enrolments as possible in accordance with high targets is also evident, for example, from an email sent on 27 May 2015 from Ms Dien to Ms Desiree Smith of myTime Learning (Client Services Team Leader) in relation to "email verification" which Ms Smith in turn forwarded to Ms Bagga. In her email, Ms Dien advised that: Just letting you know that this week and last week we have a couple of member [sic] from data team helping us to do vet fee help calls. You will find that a lot of enrolments, emails haven't been run through kickbox. Sorry it's impossible to fully train everyone as we want to push through thousands of enrolments.256 (Emphasis added.) 365 Consistently with this, Mr Kochhar was kept up-to-date with a weekly report of enrolment figures: see eg the email on 18 May 2015 to Mr Kochhar, among others, containing a weekly report of enrolment figures from Mr Yannis Souvan, CTI Data & Quality Team Leader.257 This pressure increased significantly in July 2015 amid expectations that Phoenix was about to be audited by ASQA, with daily reports being given, as I later explain. 366 The pressure to enrol as many students as possible continued into September 2015. In a telling chain of email correspondence commencing with an email dated 31 August 2015, Ms Bagga wrote thanking her team "for your hard work and dedication and most importantly the commitment you have shown all along. Literally burning the mid night [sic] oil."258 The reason for the congratulations is revealed by the response of Mr Souvan on the following day: Just off the back of Nidhi's email … I also want to thank each and every one of you - we truly did an amazing job and exceeded the expectations that were set for us. If you don't already know, with the confirmations that came through from the call centre and the data entry that was completed, we ended up enrolling just over 1200 students in only 2 days! Awesome work!259 (Emphasis in the original.) 367 Finally, an example of the Brokers setting high targets can be found in the StudyNet 20 Week Sales Plan to sign up 1,275 consumers.260

8.6.2 Inability to process and verify all of the applications and instructions nonetheless to enrol the consumers 368 Secondly, I accept, as Ms Mason explained, that when such targets were set, it was difficult for the Data Team to process the applications and (as I explain below) impossible for the Phone Team to make all of the verification calls within the specified timeframes. On the first few occasions when the teams were directed to enrol thousands of students in a week, Ms Mason raised these issues with Mr Brown. However, he responded to her and Mr Banga (a Team Leader in the Data Team) with words to the effect of "[j]ust enrol the students. The phone verification can come later"261 thereby directly instructing staff to bypass critical safeguards intended to ensure that consumers were only enrolled if eligible and the courses were suitable for them. Ms Mason did as she was instructed and did not refer those students to the Phone Team for verification, instead arranging for them to be input directly into Wise.NET, HEPCAT, HEIMS, and lastly, FinPa.262 369 Ms Mason was also informed by Ms Dien that Mr Brown and sometimes Mr Kochhar had instructed Ms Dien not to do phone verifications for those students but just to enrol them, and overheard instructions to Ms Dien to this effect given by Mr Brown and Mr Kochhar.263 These instructions related to verifications for particular Brokers being the Shantey Group, the SM Group, 1-2-3, and GG Sales.264 When Ms Mason raised these instructions with Mr Kochhar and Mr Brown, she was told to enter the students in the system despite the failure to verify them.265 370 Based upon the number of staff members in the Phone Team (three to six people), the average length of each phone call, and the number of times each staff member could make a call between 9:00am to 5:00pm (and later 10:00am to 7:00pm) during the business week, Ms Mason calculated with Ms Dien that: (1) at best, a maximum of about 150 students per day could be verified by the Phone Team by telephone; whereas, (2) in order to meet, for example, a target of 5,000 enrolments, the Phone Team would have had to verify up to 850 students a day. 371 It follows that it was impossible for CTI to enrol several thousand consumers within a week if it was to follow all of the verification and checking processes.266

8.6.3 Instructions not to verify applications from particular Brokers 372 Ms Mason also refers to an incident in March 2015 where she was advised by Ms Dien that she had been instructed by Mr Brown not to ring any students from a particular Broker because they did not understand English. As a result, Ms Mason spoke with Mr Brown expressing her concerns about the fact that CTI was not ringing the students because of their lack of English. Mr Brown, however, responded they were all elderly Chinese people from a Chinese community centre who only wanted the free laptop and did not intend to study, and said "just enrol them." Ms Mason then enrolled them as instructed.267 Again, instructions were given directly by Mr Brown to bypass safeguards in place to protect the interests of consumers in line with Phoenix's obligations under the VET FEE-HELP scheme. Regrettably, the provision of instructions of this kind by Mr Brown and Mr Kochhar emerges as a recurrent theme from the evidence. 373 Mr Lewis who commenced as the Contact (Phone) Centre Manager for CTI shortly after Ms Mason left, also referred to instructions given to him regularly by Mr Kochhar to enter forms into the system as confirmed without calling the consumers to verify their applications for enrolment. Specifically, he said that: 20. In the first few days after I commenced working at CTI, Mario Cugliandro said to me words to the following effect: Harry will often come in with a bunch of applications that he wants entered into the system as confirmed, but without calling them. 21. Sometime during August, approximately 1-2 weeks after I started working for CTI, Harry Kochhar called me into his office and handed me a pile of several dozen application forms. Harry said to me words to the following effect: I need you to enter these forms into the system as confirmed, but do not worry about calling them. I am going to do this from time to time, just do it and don't ask questions. 22. I took those forms from Harry and gave them to one of the members of my team and said to them words to the following effect: Don't bother about calling these, just mark them off in Podio as having been confirmed. 23. Harry gave me piles of application forms approximately every one to 2 weeks with the instruction that the forms were to be entered into Podio as "confirmed" without being called. The practice continued until Phoenix's registration to operate as an RTO was suspended. On each occasion I gave the pile of forms to one of my team members and requested that the student should be entered as "confirmed" into Podio without calling them.268 374 Early on in his employment at CTI, Mr Lewis raised his concerns about enrolling students without calling them, to which Mr Kochhar responded "[d]on't fucking ask questions. Just fucking do it."269 375 Mr Lewis also said that the enrolment forms that he was asked to enter without telephone verification frequently emanated from the Broker, Gagan. While Mr Lewis never spoke directly with Gagan, he saw Gagan attending the Spotswood premises on roughly three occasions in the last six-month period of Mr Lewis' employment with CTI. This included an occasion around December 2015, on which Mr Lewis, on Mr Kochhar's instructions, collected several boxes of the uncontactable and cancelled forms for loading into Gagan's car (as I later explain). 376 After Phoenix lost its accreditation, the Phone Team was advised that everything they were doing had to cease "[s]o we could no longer make any calls to any forms that we might have stockpiled, or any forms that were in a first, second or third call pile, and we had to cease any calls that - for any of those, or any new ones that came in - any new applications that came in."270 Nonetheless, those applications which had not yet been confirmed were input into the system by the Data Team and still handed to the Phone Team, even though the Phone Team could not call the consumers to verify their applications. As such, Mr Lewis explained that "[t]hey just sat on and - and piled up on our shelves."271 A couple of weeks later, the Phone Team was split into different roles and Mr Lewis was instructed to report to Ms Bagga and Ms Maria Spiteri, Mr Kochhar's personal assistant, with other team members being moved to a different location and given the task of calling consumers who had been enrolled but had not logged in to their study portal or completed any work "to see what's holding them back from actually logging in and - and starting their studies."272 They were also instructed to tell the students about "a series of 'roadshow' events around the country where those students can go to meet with some trainers and get through the first couple of modules in their courses. You can tell the students that if they do that then they will get a gift voucher"273: see further Section [10.18.4] "The "never logged-in reach out" campaign". 377 Email correspondence in April 2015 corroborates the evidence of ex-employees that enrolment verification procedures were bypassed, and that this was done with Mr Kochhar's knowledge and at his direction. 378 For example, on 13 April 2015, the Enrolment Officer at CTI, Ms Celine Hong, sent an email, among others, to Ms Dien (copied to Ms Bagga) under the subject heading "VFH Calls - 313" stating: Just to let you know, by request of Harry I have forwarded all 313 enrolments to the data team (with the exception of withdrawals). It is not necessary to phone them any further as they will be enrolled.274 379 It is evident that the reference to "313" is a reference to 313 Services, which was one of the Brokers engaged by the respondents. 380 Furthermore, on 14 April 2015, Ms Dien circulated an email to members of her team in which she noted that: Recently, we have been asked to put through quite a few enrolments to data team without qualifying the students. When this happens, we will need to update our spreadsheet accordingly, change the form location, highlight colour especially in the comment column we need to note that we were advised to put these enrolments through by (Ivan/Harry) without qualifying initial your name, date and time … So that in the future, if something happens, we can always go back and explain ourselves. If anyone other than Harry and Ivan ask us to put through the enrolments without qualifying, we will need to verify with them that this has been approved by Harry.275 381 Later that day, Mr Banga, Data & Quality Team Leader276 at CTI, emailed Mr Kochhar and stated, "[a]s requested, attached is a list of students that you approved for enrolment even though these were not contacted for some reason".277 Mr Kochhar forwarded this to Ms Bagga a little later that day saying that he would explain it tomorrow. Ms Bagga replied on 17 April 2015 Sure thing. I hope these are the Not to contact students cos I heard one of the trainers saying the name Ursala[ ](the first one on the list) out loud. 382 In response Mr Kochhar replied "[h]ence we had a conversation yesterday." 383 Furthermore, internal email correspondence suggests that consumers were enrolled despite unsuccessful attempts before or after enrolment to contact them. For example, in an email on 5 June 2015, Ms Dien forwarded the "uncontactable spreadsheet".278 In forwarding the spreadsheet to Ms Bagga, ostensibly on Mr Kochhar's instructions, Ms Dien subsequently advised Ms Bagga on 9 June 2015 that these were the "[g]roup 4 students [who] are uncontactable but have been enrolled".

8.6.4 Applications for multiple diplomas 384 Thirdly, both Ms Mason and Ms Blefari gave evidence that the vast bulk of applications throughout the relevant period were for dual diplomas.279 No instructions were ever given to Ms Mason not to enrol students in dual diplomas despite the fact that all of the Online Courses offered by Phoenix had an equivalent EFTSL of 1.0. To the contrary, Ms Mason recalled frequently hearing Mr Brown ask Brokers whether they had enrolled "singles or doubles" in discussions about how many students the Broker had enrolled - the reference to "singles" being to students enrolled in single courses, and doubles being to those enrolled in double courses.280 If the Broker said mostly doubles, Mr Brown typically responded along the lines of "[g]ood work brother", "that's great work brother" or "well done brother".281 She also recalled overhearing Mr Brown and Mr Kochhar discuss the question of multiple enrolments: [Ms Sharp SC] Did you ever have the opportunity to observe any discussions between Mr Brown or Mr Kochhar and the brokers in relation to multiple diploma enrolments?---[Ms Mason] Yes. So it was usually - if they were bringing things into our area, the conversations were usually, "How many have you got? Are they singles or doubles?" Singles was one - an enrolment for one course and doubles was a student that was being enrolled into two courses. At the start, there were also triples and quadruples, which I had an issue with, because that just doesn't seem fair or possible for a student to complete four Certificate IV - sorry - four diploma level courses within a six to 12 month period. 282 385 As referred to at the end of this passage from her evidence, Ms Mason also saw instances of applications for three or four diplomas to be undertaken by a single student over the same period of time. Initially, while Mr Brown and Mr Kochhar told Ms Mason to "[p]ut them through", Ms Mason declined to follow those instructions, finding reasons not to process part or all of these applications (such as a lack of appropriate identification).283 Eventually, she raised the issue with Mr Kochhar telling him that it was impossible for a student to complete four diploma courses at once, and he accepted that they should be rejected from then on. Ms Mason then directed the Data Team to advise her if they received any applications for more than two enrolments and never to enrol students into three or more diplomas at the same time.284 386 In this regard, an email from Mr Phillip Bevan (one of two external consultants engaged by CTI on compliance issues) on 5 June 2015 specifically warned Mr Kochhar (and Ms Bagga) about the duration of a "VET Unit of Study" in cases where consumers were enrolled in double diplomas. He pointed out that "[w]here double qualifications are being undertaken by students, ACN should be particularly mindful of these durations, as the study load of the student has effectively doubled". As such, Mr Bevan emphasised that students undertaking double diplomas "may well be under significant pressure from a volume of learning perspective" and explained that "it would be a potential audit argument that ACN is in breach of Volume of learning requirements, evidenced by the percentage of students who do not complete their UoS [(units of study)] on schedule. This will be compounded in cases where students are progressed onto subsequent VET Units of Study without completing the previous one [and thereby incur further debt]."285 387 The extent of enrolments in double diplomas was discussed in an email from Ms Bagga to Mr Kochhar on 27 August 2015. In the email, Ms Bagga pointed out that FinPa was not set up to release units in two diplomas after students were enrolled which therefore required manual processing, thereby increasing the burden on her team. In this context, Ms Bagga explained that "[m]ost of" Phoenix's students "enrol in double diplomas", and indeed, "95-97% [of] students are double dips".286

8.6.5 High enrolments in the Diplomas of Community Services and Early Childhood Education and Care despite the impossibility of providing work placements 388 Fourthly, Ms Mason observed that about 4,000 students were enrolled in the Diploma of Community Services, which required the completion of a work placement to pass the course.287 As she explained in her evidence: 84. During my work at CTI, I checked the 12,000 students on FinPa and I saw at least 4,000 students were enrolled into a Diploma of Community Services. I was aware that each student would need to complete a work placement to pass that course. I thought "how can 4,000 students enrolled in the Diploma of Community Services find that that many community service work placements?"288 389 Ms Mason raised her concerns about the viability of finding work placements for all of these students with Ms Bagga, explaining that even if, as Ms Bagga suggested, the students would have to find their own work placements, CTI would still have to inspect every workplace for its suitability and document the inspection in a workplace inspection form.289 Yet Ms Mason never saw any workplace agreements or inspection reports.290 Similarly, when Ms Mason raised the matter with Mr Kochhar, he "pretty much told me to keep my nose out of it."291 390 Ms Mason expanded upon the practical difficulties which enrolling so many students in courses requiring work placements caused in her oral evidence and the response of senior management when she raised these difficulties with them: … there are two broad methods of work placements for RTOs. One is - actually, there's three. So one is that people are already employed and they're in the work placement. Or, two, that you as an organisation have agreements with other organisations to do work placements. So normally what would happen is if you're in Melbourne and you're delivering that course, you would have agreements with various child care centres to send students to. And the workplaces have already been vetted and they've vetted you as a provider of quality education. The third one is that the students have to find their own placements. So Nidhi [Bagga] told me that all the students had to find their own placements. There is a requirement under the RTO Regulations and I think there were the AQTF 2011 Standards at the time and they changed over to the ones that you mentioned before, the AQTF - sorry, to the RTO Regulations 2015. But there was a requirement that for work placements that you as the RTO are responsible to ensure that that workplace can actually provide the relevant work experience that the student needs. So that means you actually have to inspect the workplace in an audit. As - in an audit, auditors will actually ask to see the agreement. They will - that you have to sign an agreement with the workplace and with the student that by [sic] all parties agree to. And you also have to have inspected the workplace. So, for example, if you're doing hospitality, you know, they have to have ovens, gas cook stoves, fridges, freezers, all that kind of stuff. So if you're a bar, you have to have [a] minimum number of requirements. And if you're a child - early child care centre, you have to have things like a kitchen, you have to have classrooms, you have to have sleep rooms. You have to have, you know, a certain number of toilets. All these things that would make the workplace suitable for work experience students. If a workplace can't provide all of those things, then you can't - either can't put the student there or you can put the student there for the experiences that they can provide and you send them to somewhere else. So sometimes that happens in nursing where a student might - the hospital that they're going to, if it's a country hospital, might not have a geriatric section, so they might have to go into a bigger hospital to do work experience in geriatric care. There was not one single inspection form that came my way. Now, they wouldn't necessarily come my way. They should have been - they probably should have gone Nidhi's way. I said, "You understand that we have to inspect them personally?" She said, "Yes." I said, "Do you have the capacity to fly people around the country to do these inspections?" She goes, "Don't worry about that. That's my concern." I said - and I raised several times - I said, "I haven't received any, you know, agreements. They should come and live with the students' files." "Yes, yes. They will. They will." I said, "Do you have the forms set up?" And there was kind of a non-answer. And I raised it with Harry. … But I saw no evidence that anyone ever did any work experience and that there [were] no agreements in place.292 (Emphasis added.) 391 Ms Mason referred by way of illustration to an incident where one Broker submitted a batch of applications from 180 consumers living in a remote Aboriginal community, each of whom sought enrolment in both the Diplomas of Community Services and Early Childhood Education and Care. When Ms Mason checked the number of childcare centres in the Kalgoorlie area, she discovered that there were only three.293 Ms Mason again elaborated upon her concerns regarding this incident and the impossibility of finding work placements for all of these students as required by the two diplomas in her oral evidence, which it is helpful to set out in full: … the child care one and the community one - they don't make sense that you would do those together. It's not a common thing. Community service just normally deals with older children and adults - young adults and older adults. Early childhood is specifically dealing with early childhood. It doesn't make sense that someone will also do community services. One day, I was walking out the back and by - and the other thing that didn't - also didn't sense was that both of those two qualifications required work placements. So there was - they had to go out and get actual experience in a workplace. One day, I was walking out the back of the office where the CRM team worked, and Fiona - I don't remember her surname - was one of the CRM team members, and she was meeting with one of the brokers and she called me over and she said to me, "Hi." I don't remember the broker's name, but she said he has brought in - Adam. His name was Adam, "He has brought in about 180 application forms" - well, applications for 180 people, I should say, "And none of them have got ID. Can we accept stat decs?" They all had stat decs. By this stage, we weren't accepting stat decs any more, and I said 180 of them? Where are they from? Kalgoorlie. Kalgoorlie is really not that big of a town. It's - it's inflated by people working in the mines. And it struck me as odd and I said, "What are they enrolled in?" They were - every single one of them was a dual enrolment into both the early child care course and the community services one. And that just seemed really odd to me because a town like Kalgoorlie is likely to only have one community services place that people could go and do work placements at, and possibly only has one or two child care services that are outside of the mines. I had previously worked with an organisation that did work for the mines and it's very restrictive. They wouldn't - it's very competitive and there is no way that they would ever allow work experience students into the child care centre at the mine. So that just struck me as really odd. How are 180 people going to get work placements. So I actually did look that up. There was one community services centre and there were three - there were actually more child care centres. But still is [sic] 180 people that have to do placements. At the time, Fiona asked if I could accept them. And I said to Adam, "None of these people have a drivers licence?" He said, "No. It's really odd." I said, "Sure is." And I said, "None of them have ever travelled and have a passport?" He said, "No." And I said, "None of them have a birth certificate?" No. The birth certificates hadn't been supplied, either. I said, "I can't make a decision on that. I have to speak to Mario", who was the head of the CRM team. I walked into the office where Mario was and he could - there was a window - it was a portable inside the factory area and we could see out to where Fiona and Adam were sitting. I said to Mario, "He has got 180-something applications there and I guarantee that every single one of them is Indigenous." And he went, "Right." And he went out and he spoke to them. He came back to me later. Every single one of them was from a remote Indigenous community just outside of Kalgoorlie. And Mario rejected every single one of them and told them that we won't accept any of those. That's why they didn't have ID.294 (Emphasis added.) 392 Eventually, in about April 2015, Ms Mason's team were instructed by Mr Brown and Mr Kochhar not to enrol anyone who "looked like they were Indigenous or from an Indigenous community".295 Notably, this occurred only after formal complaints were lodged with the police and ASQA which exposed Broker practices in Darwin in signing people up to Phoenix Online Courses in remote Indigenous communities who were not literate and/or lacked any or an appropriate level of English (see further below).296 393 In about May or June 2015, a number of CTI staff members, including a trainer for the childcare qualification, raised their concerns with Ms Blefari about the lack of any arrangements in place either to find, or to assist students in finding, appropriate work placements to complete their diplomas. Ms Blefari in turn raised this with Mr Kochhar, advising him something needed to be done about this as no one was then tasked with that responsibility.297 Subsequently, two CTI staff members were assigned to find childcare centre placements for Phoenix students. Consistently with this, in early June a recruitment request was received by Falak Jani, CTI Human Resources Officer, who explained in an email to Mr Kochhar on 6 June 2015 that: Initially we received [a] recruitment request for one individual in the role of Work Placement Officer for myTime Learning. However, due to [the] increasing number of students, the request has increased to at least 2 Work Placement Officers for now and may be more as we have more students. We are facilitating this request and have two shortlisted candidates, one at offer stage and one at reference check stage.298 394 Not surprisingly, however, the staff members ultimately tasked with finding childcare centre placements reported that they were having a lot of trouble in finding enough placements for the volume of students being enrolled.299 Furthermore, Ms Blefari pointed out that because the students were not employed and were enrolled in the Diploma of Early Childhood Education and Care without any relevant background knowledge, they also lacked networks which might otherwise, have assisted them to find work placements.300 Moreover, there was no-one at CTI with responsibility for assisting students in finding placements for the Diploma of Community Services.301 395 The evidence given by trainers and assessors with respect to work placements raised similar issues. 396 As I later explain, Ms Mandy Bennett was a trainer for Phoenix to whom some 500 students were allocated over the four-month period ending in December 2015. It was her evidence that none of those students reached the point of requiring a work placement during that four-month period.302 Yet, Ms Bennett explained that students undertaking the Diploma of Early Childhood Education and Care could begin their work placements after completing only a couple of the early units of competency in the course, including one concerning workplace health and safety. Furthermore, from a practical perspective, she explained that it was necessary for students to commence their work placements at an early stage of their diploma in order to complete the requisite 240-hours placement within the 12-month timeframe for the course, especially given that placements were usually only performed for one or two days a week.303 397 Similarly, Mr Howley, who was a trainer engaged by Phoenix to deliver the Diploma of Community Services Work from May 2015 to February 2016, gave evidence that to the best of his knowledge, none of his students ever did a placement even though he had discussions with them in which he suggested ways in which they might find a placement.304 In this regard, Mr Howley explained that at the colleges where he had worked as a trainer or assessor for the Diploma of Community Services Work before working with Phoenix, the trainers had provided students with: (1) a placement agreement between the student, the training organisation and the placement provider which was necessary for the placement to be recognised for the purposes of the course; and (2) a placement booklet, being a booklet that the student's placement supervisor used to record whether the student satisfied particular competencies during the placement. 398 However, during his time at Phoenix Mr Howley never saw, was never asked for, and never provided to, a student, a placement agreement or placement booklet . Nor did he see any hard copy or soft copy records that any students had started or completed a placement. 399 While Mr Howley raised the absence of procedures and documents relating to placements with Ms Bagga, these concerns were brushed aside by Ms Bagga who simply said that when students required placements, they would come up with a strategy.305

8.7 Ex-employee evidence about issues raised during telephone verification calls 400 Mr Lewis explained that each person in his team was expected to make approximately 30 verification calls a day. Issues encountered during the phone verification process would come to Mr Lewis' attention in a number of ways. First, where issues arose in the course of a telephone call, the issue would be escalated to Mr Lewis because, as Manager of the Phone Team, he would decide whether or not enrolment should proceed or, if the consumer was already enrolled, whether she or he should be withdrawn. Issues also came to Mr Lewis' attention when he listened in on his team members' calls for coaching or training purposes and during weekly meetings with the Phone Team.306 401 With respect to the calls themselves, Mr Lewis explained that: [Some calls were] pretty abrupt - mostly along the lines of "What are you calling for? Leave me alone." Hang up. They would have been the very quick ones … We would call them. Whereas the longer ones would have been the … duration of the script and then questions that they might have had about them actually wanting to study. So the longer ones were the more legitimate calls where they … felt … I really want to study this course. Or they - they listened to it all because they wanted the laptop.307 402 It was apparent to Mr Lewis and his team from the phone verification calls that many students were being enrolled in courses for which they were not suitable.308 For example, sometimes it was apparent that the consumer could not speak English well, or did not understand what they had signed up for in applying to enrol and, when it was explained to them, wished to withdraw. In some cases, the consumers did not realise that they had actually applied to be enrolled in a course at all and in many cases, they thought that they were simply getting a laptop. The issue of laptops arose multiple times a week and sometimes multiple times a day. Ms Bennett gave similar evidence referring to the fact that on a great many occasions when she contacted students who were not making progress in their course, they told her that they had only signed up to the course to get the free laptop or complained that they had not yet received their laptop.309 403 While Mr Lewis had very little contact with Mr Brown,310 Mr Lewis reported these issues to Mario Cugliandro as Head of Client Relations Management before he left, and to Nidhi Bagga, Harry Kochhar, and sometimes to Maria Spiteri, Mr Kochhar's personal assistant.311 However, despite the issues being raised, nothing changed and the Phone Team continued to receive calls from consumers raising in particular the laptop issues. 404 Initially, at a team meeting Mr Lewis told his team that if potential students said that they were interested in enrolling only for the laptop, their form should be categorised as cancelled in Podio and placed in the "cancelled" forms pile.312 He gave this direction without consulting with Mr Kochhar because he formed the view that it would not have been "a respected or a liked outcome in the - in the numbers and the success rate of our team" and Mr Kochhar in his view would instruct him not to proceed with the direction.313 In this regard, Mr Lewis explained that: … as a manager, you have to think of KPIs or key performance indicators for your team. And so for our team, given that what we were trying to achieve was more enrolments, the KPI for the team was - you know, was to focus on enrolments. We did not at that point have any solid KPIs about what they needed to achieve in terms of an X per cent or anything like that, but we were starting to form that. And the direction from Harry to Mario, Mario to me or then directly from Harry once Mario moved on was more successful applications. We needed to increase the success rate.314 (Emphasis added.) 405 Mr Lewis recalled that there was a particularly high volume of cancellations of application forms received from GG Sales, recalling that the Broker in question's name was Gagan.315 406 Mr Lewis kept Mr Kochhar up-to-date by email on the number of forms processed by the Phone Team in an Excel table broken down into the number of "confirmed" forms, "cancelled" forms, and "uncontactable" forms.316 On a couple of occasions, Mr Kochhar called Mr Lewis into his office asking about the large numbers of "cancelled" forms reported to him. On one such occasion, Mr Lewis had a conversation with Mr Kochhar along the following lines: Harry: Why do we have so many cancellations? [Mr Lewis]: A lot of them are because the potential students say they are only really interested in the laptop. Harry: You need to go easier on this. We need fewer cancellations and to put more people through. If they have agreed to everything else then just move them through the system.317 407 Mr Lewis decided not to take that feedback to his team. Instead, he told the team effectively that "if they are pushing through the questions and they are expressing that they understand, then we should be marking them accordingly, per directions. So I took a twist on what Harry's direction was and I tried not to be very specific with my team."318 408 The instructions to Mr Lewis from Mr Kochhar to press ahead with enrolments despite being advised that the consumers had no interest in undertaking the Phoenix Online Courses are demonstrative of a lack of good faith and a deliberate intention to exploit these consumers and the VET FEE-HELP system. They illustrate that this is not simply a case where "red flags", which should have caused alarm given the large numbers of cancelled enrolments and consumers who could not be contacted, were simply ignored. A similar example of a lack of good faith is evident in the instructions given by Mr Brown to Ms Mason not to withdraw consumers who had not engaged at all with the Online Courses in which they were enrolled, despite the students incurring a debt to the Commonwealth with the passing of the census date for each unit of study (see at [438] below).

8.8 Ex-employee evidence as to the failure to assess LLN tests before enrolment and to put in place the personnel to do so 409 Evidence was given by key ex-employee witnesses, including Ms Mason, about the failure by the respondents to provide for the LLN tests of the vast majority of students to be assessed properly or at all while nonetheless requiring the students to be enrolled.

8.8.1 Small percentage only of LLN tests were assessed and directions to enrol the consumers nonetheless 410 First, the evidence establishes that a small percentage only of LLN tests were assessed by properly qualified assessors. It also establishes that despite Mr Kochhar and Mr Brown being well aware of this, they failed to take action to address the situation and indeed instructed the Data Team to officially enrol the students notwithstanding the non-compliance. 411 In this regard, Ms Mason repeatedly raised the problems with enrolling students whose LLNs had not been assessed with Mr Kochhar and Mr Brown, as well as with Ms Bagga. As Ms Mason explained: We raised it continuously because people shouldn't be enrolled into courses if they're not able to complete that because their English isn't sufficient, or their literacy skills aren't sufficient. And VET FEE-HELP was very clear in the guidelines that you couldn't enrol people who didn't have sufficient English or literacy skills …319 412 Yet Mr Kochhar's and Mr Brown's response was to direct the Data Team to enter students into FinPa even though their LLN tests had not been assessed, saying words to the effect of "they were going to catch up on the LLNs."320 Indeed, as earlier mentioned, Ms Mason, who saw thousands of enrolment packs during her time at CTI, considered that at least 70% to 80% of the enrolment packs were entered into FinPa despite the LLNs not being marked by assessors beforehand.321 In this regard, Ms Mason said that, while her team would put students who were refused into the student management system in order to keep a record of the refusal, they should not have been entered into the FinPa system and the HEIMS system. However, she said that "we were instructed to do those things and we didn't want to but we followed those rules."322 413 Ms Mason's evidence that LLN tests were being checked after enrolment is acknowledged in an extraordinary email chain on 6 June 2015 between Ms Bagga and Mr Kochhar: 323 Ms Bagga first suggests that LLN tests drawn to her attention as being "below level" might be "fix[ed]" by giving them back to the Agents, given their interest in retaining payment for the enrolment of those consumers, and asking them to use erasable pens so that the assessors could "correct" the answers. This is proposed by her as a way to avoid "los[ing]" the enrolments which she suggests they obviously do not want to do: [7:55am - Ms Bagga] Harris [Faiz, who had been appointed to mark the LLN tests] came up to me yesterday and raised a concern with LLNs. He got me a small box to look at - some of them were below level. As you know LLN will need to [be] close to a 100% to be approved or else we need to put a monitoring plan and all the other stuff to ensure students with poor LLN are being catered for and we are making reasonable adjustments. I suggested to him that he takes those particular LLNs (little box) he had on him up to the CRMs and then they can get the agents to fix them - now also bearing in mind that those might be the ones they have been paid for and may be at least interested in getting done and we obv [sic] don't want to lose them.. I think an order needs to flow from your level of authority so we are not pinned during audit. I also suggest we give these agents instructions to use the pens that can be erased. Arm them with pens so before a students [sic] looks for one - they can hand them out one. Or even if the agents are filling the paperwork themselves (which they shouldn't) they at least have correct answers and again use the pen that can be erased so the person marking can at least rub off and write again to make it appropriate. That's the best solution I could think of, we will what you think is deemed appropriate [sic]. Thanks 414 Mr Kochhar does not agree with Ms Bagga's proposed solutions in the ensuing email chain, but accepts the problems which he says he will attend to: [9:43am - Mr Kochhar] I am confused. How will agent fix the form? If we give the erasable pens; who will communicate with them? And the word will get out in market fairly quick. Won't there be 2 diff [sic] handwritings if someone try [sic] to fix those forms after student has done their work? [11:13am - Ms Bagga] Agent can write new LLN and PTRs w answers - (given that we are checking them way after the enrolment) for the ones that are below level or else one of the staff will have to do so to keep it compliant. I might not have a logic behind here but a blurt! In regards to the second parah - There's a reason I share my Not so bright ideas with you so you can reflect on them and go what the !! Fair questions you have asked - I don't have answers or have the, but they are silly. This will be solved by online enrolment though but still the existing will need to be worked on. I'll try and think of more - perhaps some better solution. NB [11:19am - Mr Kochhar] None of those r real solutions. They are patch ups to create further problems. Thanks for raising. I will attend to it. Harry Kochhar (Emphasis added.)

8.8.2 Lack of sufficient course assessors 415 Secondly, it will be recalled that the course assessors were located at Broadmeadows. However, Ms Mason considered that it was bad practice for the LLN tests to be sent away to be marked by assessors because there was a risk that files would go missing. As a result, the LLN forms were not typically sent away from the Spotswood office. However, there was one occasion where two staff members on instructions from Mr Brown and Mr Kochhar took approximately 60 files away, told Ms Mason that it was better that she did not know why they were being removed, and did not inform her of the purpose.324 416 While Mr Kochhar also told Ms Mason on multiple occasions that the Data Team could mark the LLN tests, Ms Mason repeatedly explained that her team was not qualified and did not have the necessary skills to make those judgements.325 It is apparent that her assessment in this regard was correct (see at [328] above). 417 As a result, appropriately qualified assessors should have been sent to the Spotswood office to mark the LLN tests before the students were enrolled. While Ms Mason was told that assessors would be sent over on a regular basis, this occurred only twice and the backlog of LLN tests continued to increase.326 Moreover, on the two occasions when the assessors attended Spotswood to assess the LLN forms, they did not mark them correctly so that, instead of writing the results on the forms themselves, they placed post it notes on the forms which are, of course, removable. Nor did the assessors notify Ms Mason that some of the LLNs were not sufficient and did not pass, and that they had only managed to assess a small percentage of the backlog.327 418 Eventually in June and July 2015 (being the last two months that Ms Mason was employed at CTI), one assessor, Mr Harris Faiz, was appointed to the Data Team to mark the LLN tests at Spotswood.328 While he was a qualified trainer, he was engaged only for two to three days a week.329 However, no-one attempted to mark the large backlog of LLN tests, at least prior to Ms Mason's departure at the end of July 2015, and following his employment Mr Faiz reported to Ms Mason that he could not even manage to process the many new enrolment applications.330 Mr Kochhar agreed around this time to engage two more people specifically to mark the LLN tests. However, when Human Resources sent the job advertisement to Mr Kochhar for his final approval, Mr Kochhar backtracked on his decision and said effectively that "[w]e are not doing this."331

8.9 Ex-employee observations of troubling patterns in the LLN forms provided by the Brokers and Agents indicative of fraud and Mr Kochhar's and Mr Brown's responses 419 The evidence of ex-employees also points to a number of disturbing patterns in the LLN forms provided to them for verification which raised concerns about the possibility of large-scale fraud by Brokers and Agents in signing up potential students. As I later explain, their concerns are borne out by the data analysis evidence.

8.9.1 Batches of LLN/application forms completed in the same handwriting and instructions to stop checking handwriting and signatures 420 First, while the LLN forms were intended to determine whether or not someone was literate and therefore should have been completed by the consumer personally, Ms Mason observed cases where multiple LLN forms for different consumers had been completed in the same handwriting and where the signature on the consumer's identification looked completely different from the signature on the LLN test.332 Ms Mason described seeing hundreds of LLN tests from the same Broker with only three or four different handwritings. As a result, Ms Mason formed the view that forms were being forged and that the LLN tests were not being completed by the consumers, saying "we couldn't explain things like statutory declarations that are exactly the same with just names changed over. The LLNs - you know, 20 LLNs with exactly the same handwriting."333 She was concerned that the Brokers were filling out the forms on behalf of the students, in particular the LLN tests, just to get more students enrolled.334 She raised these concerns with Mr Kochhar and explained his response in the following passage of her evidence: [Ms Mason] At the start he agreed and told us to send them back and that the brokers were sent out to go and get LLN forms from the people. There was one time when he had been - he had had a tipoff and he had paid somebody that - one of the brokers that we had really big concerns over had had a sweatshop, in his terms, set up, so there was an office somewhere in Richmond where they were forging the LLNs. And so they had three or four people doing the LLNs in a - in an office overnight. He - when he was advised that, he asked myself and … after to let him know when they brought - they came in and to bring in the box that they had brought in. And we met with Harry when they came in. He said, "Come on, girls. Come in." And he said, "I want you to know if there - I want you to check these forms in front of me and tell me if there's any issues." We did. So I pulled out 10. I can't remember how many there was in a box, but it was a photocopy box, so that was enough to fill that. And he - I pulled out the first 10 and eight or nine had exactly the same handwriting on the LLN. So he called that person in and told them that he was not to do that and send them back. But later on we were instructed not to check the LLNs. [Ms Sharp SC] And who gave you that instruction?--- [Ms Mason] Harry and also Ivan. Her Honour: And when did that occur? Do you remember?--- [Ms Mason] Yes. That occurred towards the end, so I think that would have been late May or June, to the best - or perhaps July, to the best of my recollection.335 (Emphasis added.) 421 This included instructions to stop checking the handwriting on the LLN tests and, in her last week with CTI, to stop checking the signatures.336 422 Ms Mason's account is supported by contemporaneous email correspondence in which instructions were given to override quality assurance processes and ignore differences in handwriting and signatures on the enrolment forms. 423 First, on 17 June 2015 Mr Cugliandro emailed CTI's Data Team, copying in Mr Kochhar, stating that "there has been some confusion in regards to handwriting being different between enrolment and the PTR/LLN". However, Mr Cugliandro wrote that, having conferred with Mr Kochhar, "we now have clarity. The handwriting in the enrolment form can be different to the PTR/LLN form and they will still be compliant" (emphasis in the original).337 424 Secondly, an email from Mr Cugliandro to Ms Mason dated 25 June 2015, and copied to Mr Kochhar, shows direct instructions to override quality assurance processes. In the email, Mr Cugliandro wrote: I have had a chat with Harry, regarding the vast amount of enrolments being rejected due to signatures on enrolment paperwork being different to that of ID's [sic]. It has been decided by Harry that as long as the signatures on all enrolment paperwork are the same, we accept them even if they are different to the ID signatures. If you could pass this on to your quality check team and team leaders, it would be appreciated.338 425 Ms Blefari also gave evidence about her concerns that the same handwriting was appearing on many of the applications being received from Brokers and said that at any one time, 20 to 30 applications may have been completed in the same handwriting and that this would occur at least two or three times a week over the 12-month period that she was Group Compliance Manager.339 These issues were frequently drawn to her attention by Ms Mason.340 Ms Blefari raised this issue with Mr Vogel and she reinforced with him the importance of students completing their own enrolment forms and that this was something which could not be done under the RTO Standards by the recruiters.341 426 Ms Blefari referred to one occasion when she was sitting in Mr Vogel's office and two Agents delivered to him a stack of completed enrolment forms approximately 1 foot high. She referred to having previously seen these and other Agents deliver as many as three boxes at a time to Mr Vogel and the administration team.. Ms Blefari raised various issues with the Agent concerned at the time, explaining that: 29. I asked the recruitment agent, who I believe was called Hadi, if I could see some of the forms that he had delivered. I inspected a number of these forms and I saw that the answers to the PTR forms were very short and disclosed that most of the students did not have an education higher than year 10, any work experience relevant to their diplomas, or any current employment. Some of the forms I examined had not been completely filled in, and on one of the forms the student had applied to enrol into three diplomas simultaneously. I picked up one form and said to Hadi words to the following effect : This student has not filled in the forms in full. They have enrolled into two courses at the one time. Their answers on the PTR form are short, and they say here that they have not passed through to year 10 . How do you expect the students to progress through their courses? 30. Hadi said words to the effect of: I'll fix that stuff later. 31. I looked at several more forms and saw that the handwriting on some of them appeared to me to be the same. I had a conversation with Hadi to the following effect: Lesley: Who has been filling out these forms? Hadi: We help them fill the forms out. It just makes it quicker. Lesley: You do realise that it is only the student that is meant to be filling those forms out.342 427 Shortly thereafter, Ms Blefari arranged with Mr Vogel to give the compliance training presentation attended by approximately 30 to 40 Agents covering a range of VET FEE-HELP and ASQA compliance matters, to which I have earlier referred.343 However she continued thereafter to be approached by members of the Data Team showing her examples of forms which had not been completed or had handwriting which appeared to be the same across multiple forms.344 428 Thirdly, many of the complaints received by the respondents throughout the relevant period described the forms being filled out by the Agents (as I explain in the course of setting out the chronology of events in Chapter 10 below). Despite awareness of the issue from an early stage, a system was put in place only in October 2015 to deal with cases where consumers indicated that they had not completed the forms themselves during the verification process, depending upon whether they still wished to proceed with the courses. This process is described in an internal CTI email sent on 9 October 2015 by Ms Rachel McClean, client relationship manager, following discussions between Ms McClean and Mr Kochhar, to over a dozen employees at CTI including Ms Bagga, Mr Banga, Ms Arnold, Mr Mark Woodward (a client relationship manager), as well as Mr Kochhar.345 In that email, Ms McLean explained among other things that where the student indicated during verification that she or he had not completed the forms themselves, "CRM will terminate the sales agent involved and notify the client [ie Broker]". Ms McClean also advised that the process would take effect immediately because "the sales agents should never have been completing the enrolment forms on behalf of the student".

8.9.2 Patterns indicative of fraud in statutory declarations to prove identity of consumers 429 As it was not uncommon for applicants not to have a formal identification document such as a driver licence, the Data Team initially accepted statutory declarations. However, that process ceased when the Data Team identified a batch of statutory declarations which appeared to have been forged, having all been witnessed at the same chemist in Perth, Western Australia, on the same day with an identical signature in "the exact same spot". All of these statutory declarations had been submitted by the same Broker, SM Group. The problem was brought to the attention of Mr Banga and Ms Mason, who in turn raised it with Ms Arnold and Ms Jen Rafter, the liaison person for managing that "client" (ie Broker) relationship. Ms Rafter in turn spoke with one of the consumers concerned and ascertained that she could not speak English. As a result, Ms Arnold, Ms Rafter and Ms Mason met with Mr Kochhar and advised that they wanted to cancel the contract with SM Group as it looked like they were committing fraud. However, Mr Kochhar became very angry and shouted at them, saying that they were not managing the Agents properly and he was going to give the Agents a second chance.346 About two days later, Ms Mason saw Mr Brown meet with one of the Brokers from the SM Group and heard him say words to the effect of "[i]f you're going to fake it, then fake it right."347

8.9.3 Apparent targeting of consumers in disadvantaged locations 430 Ms Mason also observed patterns in the locations from which applications for enrolment emanated. For example, in one case Ms Mason saw a large number of applications from people in Broken Hill in New South Wales, many of whom lived on the same street.348 I note that Consumer D, her then partner, and her neighbour, Consumer FB, were among those from Broken Hill pressured into enrolling by one of Phoenix's Agents or Brokers.349 A number of other Indigenous consumers from Broken Hill also gave evidence of being targeted and offered free laptops, free courses and/or monetary inducements to sign up to online courses with Phoenix and/or to assist in signing up anyone else into the courses.350 As a further example, a couple of Agents/Brokers identifying themselves as from Phoenix made inquiries in connection with signing up students for VET FEE-HELP at the Euroa Community Education Centre about contacts or street names of low socio-economic areas in Euroa, Victoria. Not surprisingly, the Centre declined to assist, citing privacy concerns.351 (The Euroa Community Education Centre is a RTO with the Victorian Skills Authority which provides literacy and numeracy training, as well as pathway programs, for disadvantaged learners in the Euroa community.)352 431 Ms Mason explained in her oral evidence that the patterns which she observed raised concerns about whether particularly vulnerable people were being targeted by Brokers and Agents: … [W]e understood that the primary sales technique that the brokers used, and the agents of the brokers, was doorknocking. So we saw - we also saw that the suburbs that they targeted would tend to be known for having higher levels of poverty and unemployment. So I notice in here I've - I've mentioned "Broken Hill", but there were things like - some of the suburbs in Sydney that are really well known for high level Indigenous population and levels of poverty. Sunshine in Victoria, and I had a friend who lived in Sunshine, so was familiar with Sunshine and I knew some of the streets. Sunshine has streets that have got clearly higher levels of poverty and they were signing them up in streets. So we might see 10 people from the one street. And what they were doing - and they were targeting areas that had higher levels of unemployment, because they would be at home and they could take advantage of them by offering them the laptops. Later on, New South Wales banned the use of doorknocking as a - as a tool to sign up students. So - so, all of a sudden, that stopped, because that was their primary technique. So we did see that a lot. 353 432 Furthermore, bearing in mind that one of the questions asked of prospective students in the enrolment documentation was whether they have any medical conditions or other conditions which might impact their training, Ms Mason also saw high levels of students being enrolled with mental health issues. While, as she said, having such issues does not mean that a person is unable to undertake a course, she explained that CTI would verify those enrolments even when it was very clear that the individuals concerned would not have been able to undertake the Online Courses. Ms Mason also gave the example of a person who had been unemployed for a long period of time and had spinal injuries but was signed up to a Diploma of Early Childhood Education and Care despite that diploma being directed towards employment where he would be expected to lift children.354 433 Additional instances of students being pressured to sign up despite disabilities of such a nature as to render them incapable of being able to undertake courses at the diploma level can be found in the evidence of a number of the consumer witnesses.355 Examples included the following: (1) Consumer AE left school at the age of 13, had learning difficulties, had been on the disability support pension since the age of 18, and had poor reading and writing skills. A Broker/Agent doorknocking uninvited for Phoenix in the early afternoon offered him and his partner, Consumer JE, free online diploma level courses and free computers.356 Consumer AE explained that he and Consumer JE have a disability, that he has a problem with reading and writing, and that Consumer JE "has a bit of brain damage", to which the salesperson responded "[y]ou both are able to do the course with no worries at all."357 Consumer JE was persuaded to sign up. Consumer AE did not sign up after he rang Ms Amanda Watkins from the Euroa Community Education Centre who regularly helped Consumers AE and JE with written communications and applications. (2) Consumer JE had brain damage and was also on the disability support pension although she said that she could "read and write ok".358 She was coached by the salesperson on the answers to give to the questions on the forms and was told that she'd get "a free computer and everything if you do the course. Everything's free, the government pays for it."359 Consumer JE also remembered that her partner Consumer AE rang her caseworker because he was concerned that she was filling out a form that he did not want her to. While the caseworker was speaking on loud speaker to the salesperson, she told him that Consumer JE "has an intellectual disability. Do not get her to do the courses", to which the salesperson responded to the effect of "[d]isability is not really that bad" and hung up.360 When Consumer AE told the salesman that he should listen "because she's our case worker. [Consumer JE] and I have a disability", he responded "I'm not listening to anyone cause [sic] I feel she can do the course."361 434 There was also a very substantial number of complaints of targeting consumers who were recent migrants or from refugee backgrounds and/or had little or no English language skills. An acknowledgement of this in the context of Chinese consumers is found in an email from Mr Gagan Sachdeva to Mr Kochhar on 24 June 2015 supplying him with a spreadsheet (containing 101 students enrolled into 195 courses) and stating, "[p]lease find the attached list of all the Chinese students submitted till date [sic]".362 Mr Kochhar forwarded this email at 5:36pm to Ms Dien and Ms Bagga, with the note "[c]an ring them in chinese".363 Ms Dien responded by copying in an individual called Mr James Liu to the email thread and asking him to ring the students on that list unless they had been confirmed. As the courses were all in English, undertaking the verification calls in Chinese would, as the applicants submit, undermine the verification process. I also note that the Excel spreadsheet recorded 195 enrolments by consumers, almost all of whom were enrolled in two Business Diplomas with a couple in both of the Service Diplomas, and a very small minority enrolled in only one diploma. The evidence of one of the consumer witnesses, Consumer MN, is a further illustration of the reckless disregard of Brokers/Agents for the capacity of consumers pressured by them to sign up for online courses with Phoenix to be able to communicate orally and in writing in English.364

8.10 Ex-employees' evidence as to complaints, withdrawals, and lack of student activity in FinPa 435 While she was not supposed to have access to FinPa in order to identify the level of student activity, Ms Mason checked this data with Mr Banga around May/June 2015 and on her last day of work. On both occasions she observed that the number of students who had logged in was extremely low, as was the number who had actually commenced a unit. Thus, while Ms Mason recalled that the FinPa database disclosed that approximately 12,000 students were enrolled in Phoenix by May 2015, only 1,500 were recorded as having logged in.365 While low, that figure was still inflated given Mr Kochhar's email of 4 May 2015 noting that by that date Mr Mahak Laddha (alone) had "logged in 500-600 students so far":366 see further below regarding the "Student Log-on Project". As I later explain in these reasons, Ms Mason's estimates are broadly supported by the statistical analysis of Mr Leigh Ulpen and Mr Byron Vickers. Equally, the figures provided on 23 June 2015 by Mr Walters to Ms Bagga in a spreadsheet purportedly recording that 1,134 (or 33%) of 4,441 students enrolled had logged in,367 while also low, are unreliable for the same reason. 436 Ms Mason attributed this lack of engagement with the Online Courses to the practice of offering incentives to people to enrol. As Ms Mason explained in her evidence: At the time when I first joined, it was legal to offer incentives, such as laptops, mobile phones, cash to get people to enrol. It was actually really a common thing, which I found really disgusting. And CTI offered laptops. So there was certainly a lot of students who took the laptops, were told that they wouldn't have to pay back anything unless they ever earned over the threshold, which at the time was about $53,000. It increases each year, up until last year, when, in fact, it decreased. And so it's not unusual when you offer incentives that are free for people to take the incentive and then not actually do a single piece of study. So there were - there was no evidence that for a large - for a - well, the vast majority of the students that they ever did a single second of study.368 437 In this regard, it will be recalled the use of such incentives was subsequently prohibited under the VET Guidelines with effect from 1 April 2015 (see at [227] above). 438 Ms Mason raised this concern with Mr Brown as she explained in the following passage of her evidence: "What are we going to do about the students who are actually not studying?" And he said, "What" - he said, "What's your recommendation?" I said, "I think we should withdraw them." And he said, "Do we have to?" I said, "No, we don't, but those students are going to keep accumulating loan debt." Because the way the loan worked debt [sic], there was, I think, initially, four census dates but it might have been three. There were four - but I think there were four census dates and as each date passed, you incurred the loan. So if someone hadn't - if someone had passed their first date and hadn't done anything, I felt that we should have withdrawn them and not collected any further money from the government for those students. And that way they wouldn't incur the full loan. He asked me did we have to do that; did the regulations require us to do that or mandate that we do that. I said, "No." But I said, "Ethically, we should do that." And I was aware already that there were starting to be investigations into other providers doing VET FEE-HELP and that was one of the issues. Apart from it just being an ethical and good process that you would do that and certainly at another RTO I had worked at, that was certainly the process if people didn't study then we should push them out of the course from an ethical point of view. And he said, "Well, if we don't have to do it, we're not doing it." So they knew - so they knowingly collected money for students that they knew weren't studying.369

9.1 The trainers and assessors employed by Phoenix 439 A second strand of evidence from ex-employees relied upon by the applicants was that given by a number of ex-trainers and assessors employed by Phoenix. Trainers and assessors were variously located at myTime's Broadmeadows, Dandenong, and Spotswood offices. 440 First, Ms Mandy Bennett's evidence is contained in her affidavit affirmed on 20 August 2019370 and was supplemented by oral evidence. Before commencing her employment with Phoenix, Ms Bennett had worked at several different RTOs delivering vocational childcare courses in a face-to-face setting. She had no previous experience in conducting training for online students. 441 Ms Bennett commenced work on 17 August 2015 as a full-time trainer for the Diploma of Early Childhood Education and Care for Phoenix. She worked with five other trainers who were delivering the same diploma at the office of myTime Learning located in Broadmeadows. Ms Bennett gave evidence about her attempts to contact students by phone, the nature of her role, and her concerns about the suitability of many consumers with whom she had contact to undertake the courses in which they were enrolled. 442 Ms Bennett also gave evidence about being tasked in September 2015 to sort and mark up to 30 to 50 large boxes of student forms with another childcare trainer. Many of these forms had been completed sometime earlier and were missing information. While she was directed to backdate and "fix" incomplete LLN tests, she refused to do so. I deal with this evidence in the context of the chronology set out in Chapter 10 below. 443 Ms Bennett was dismissed after reporting her concerns about Phoenix's conduct to ASQA. 444 Secondly, Mr Michael Charles Howley371 was employed as a trainer and assessor in the Diploma of Community Services Work for Phoenix for about nine months commencing in May 2015 and departing in February 2016. He was also located at the Broadmeadows office and reported to Ms Bagga, the Operations Manager at Phoenix. He holds a Bachelor's degree in Social Science with majors in psychology and sociology from the Bendigo College of Advanced Education, and a Master of Social Work degree from La Trobe University. He has over 10 years of experience in VET. 445 Thirdly, Mr Sandro Capocchi372 was employed from around early September to 20 December 2015 as a trainer for Phoenix trading as myTime Learning and also worked at the Broadmeadows office. He was employed as a trainer for the Diploma of Business and the Diploma of Leadership and Management courses, working as part of a team of 12 other trainers teaching one or both of same, and reported to Nidhi Bagga. His team leader was called Nahla. Mr Capocchi also met trainers from Phoenix's Dandenong office from time to time when, among other things, he visited to set up video training at that office. 446 Mr Capocchi had worked in teaching diploma level business and management courses since about 2003, including for approximately five years at SWC Training and approximately eight years at Spectra Training, where he taught courses in a face-to-face format. Prior to commencing at myTime Learning, Mr Capocchi had no experience in teaching courses taught purely online. 447 In his role at Phoenix, Mr Capocchi was responsible for the following matters: (1) contacting consumers to introduce himself as their trainer and answer any questions regarding the Online Course(s) in which they were enrolled; (2) encouraging consumers to begin and progress their online work; (3) teaching the consumers, for example, through webinars, emails and online tutorials; and (4) assessing and giving feedback on any work submitted by consumers. 448 Fourthly, Mr Nipun Bhargava373 gave evidence of his experiences working for Phoenix from November 2015 to January 2016 as a trainer and assessor for the Diploma of Business course. During this period, he worked for Phoenix three to four days a week from 4:30pm to 7:00pm at the Spotswood office, while also working as a course coordinator for the Advanced Diploma of Leadership and Management at Barkly International College during the day. At Phoenix, he reported to two employees, Lauren and Maria, whose last names he could not recall. Mr Bhargava holds a Master of Engineering degree from the RMIT University. 449 Finally, Mr Brad Matton374 gave evidence about his employment as a trainer with CTI in January 2016 to undertake what was described as an "audit" but left when he formed the view that he was being involved in something dishonest and wanted no part of it. I consider his evidence in the course of considering the chronology of events in Chapter 10 of my reasons below.

9.2 Themes emerging from the evidence of the trainers and assessors

9.2.1 Volume of students assigned to each trainer and assessor 450 The evidence establishes that each of the assessors and trainers was allocated up to 1,000 so-called "students" enrolled in Phoenix Online Courses. While the task of the assessors and trainers should have been to provide training and support to these consumers, in fact their primary task was to attempt to contact them by telephone to encourage them to log on to, and commence, their online courses given that, no matter how minimal their engagement with an online course was, it would be recorded as activity on Phoenix's learning platform, FinPa. Demonstrating some level of engagement with the courses became increasingly important from the respondents' perspective as their activities came under scrutiny by various regulators and the pressure placed upon trainers by the respondents to encourage consumers to log on to FinPa increased accordingly. (In this regard, I would emphasise that in referring to enrolled consumers as so-called students, I do not imply any criticism of them. To the contrary, they were enrolled in circumstances which sought to exploit and mislead them. Rather, as a result of the circumstances in which they came to be enrolled, very few were actively engaged in their courses and in fact undertook any studies. They were not therefore genuine students in this sense.) 451 Turning to the experiences of each of the trainers, first, Ms Bennett was initially allocated approximately 200 "students" when she started work at Phoenix in August 2015 but this had increased to responsibility for training over 500 "students" four months later in December. 375 Furthermore many of these had been enrolled for some time before being allocated to Ms Bennett. Another trainer, Rana Karam, had over 1,000 "students" when Ms Bennett started.376 Ms Bennett attempted to contact each of her so-called students by phone on multiple occasions but the majority did not answer the phone or return her calls. Indeed, she gave evidence that only five of the "students" allocated to her were in regular contact by phone and email with her and regularly completed online assignments.377 452 In this regard, Ms Bennett explained that when she tried to call a "student" but received no answer, she would send an SMS message and an email advising that she had called and asking for the student to call her back. However, on most occasions she did not receive any response to those messages. Ms Bennett also said that on many occasions the telephone number was either disconnected or a wrong number, and that when this occurred, she would email myTime Learning administration notifying them that the consumer's telephone number was incorrect. On some occasions, Ms Bennett would work all day calling the numbers on her list but only make contact with two enrolled consumers.378 453 Similarly, within three weeks of commencing his employment as a trainer for the Diploma of Community Services Work in May 2015, Mr Howley had 603 "students" allocated to him. At this stage, there were only two trainers in the Diploma of Community Services Work. While the number of so-called students allocated to him decreased as more trainers were employed, reaching eight trainers during Mr Howley's employment, he was still allocated between 120 and 240 "students" at any one time.379 454 Mr Capocchi380 also gave evidence that he was allocated over 200 "students" when he commenced at myTime Learning in early September 2015 and that a large number of those were doing both the Diploma of Business and the Diploma of Leadership and Management. He sought to contact and engage with between 20 to 30 of the "students" allocated to him a day via individual text messages, monthly bulk SMS messages, group emails (which included encouraging messages, links to webinars, and videos), and phone calls. An example of an email of this kind is annexed to the affidavit of Consumer B which was sent on 23 October 2015 to approximately 150 enrolled consumers (including Consumer B) asking them to "[p]lease see below the link to begin your course, log in and get the ball rolling. Please click on this following link to view 'How to navigate our online learning system.'"381 Through each of these means, Mr Capocchi sought to encourage his "students" to engage with him and with the course. However, roughly 75% of the "students" allocated to him did not respond to the text messages and emails or answer their phones. Furthermore, of those who responded, only a couple typically demonstrated any level of engagement with, or interest in, completing the course. Many of those contacted raised concerns about not being able to do the course because they had not yet received the laptop offered as part of their enrolment or because they did not have access to the internet. During his three months at myTime Learning, Mr Capocchi estimated that fewer than 10 of his so-called students contacted him seeking assistance with their courses and only a small number of assignments (approximately 20) were submitted to him for marking. He recalled that only one student from his group of allotted "students" completed a diploma. 455 Other trainers discussed similar difficulties with him in contacting the so-called students allocated to them and as a result, he and the other trainers "brainstormed" different ways of contacting them. Subsequently, in November 2015 Mr Capocchi became aware that another team had been set up to contact certain "students" who were difficult to reach but he was not a part of that project. 456 Mr Bhargava gave evidence of similar difficulties. When he began working at Phoenix he was given a list of contact details for approximately 100 "students" enrolled in the Diploma of Business. Beginning in November 2015, he tried to call each "student" but was unable to contact about 40 of them because the listed phone number had been disconnected, his calls were not answered, or the call was answered by someone who said that they were not the student on his list. Of the 60 so-called students who he was able to contact: (1) 15 to 20 complained that they had not received the laptop they were promised and could not do the course without it; (2) approximately 10 denied being enrolled in a Diploma of Business course; (3) one consumer said words to the effect of "[h]ow did you get my number? I never enrolled in a course. I want to speak to your manager", while another consumer said effectively "[w]hich course? Where? I have no idea what you are talking about;" (4) some consumers said that they did not have the log-in details so could not do the course; (5) two consumers said they had no internet access; (6) one woman said that her daughter would be doing the assessments for her but she was at work and asked Mr Bhargava to call back later after office hours; and (7) a consumer from South Australia said he lacked internet access but his son would be doing the course for him.382 457 In short, Mr Bhargava said that he did not have a single conversation with a "student" in which the course content was discussed, none of the "students" on his list ever submitted an assessment for him to mark, and none completed a unit of study or the course.383 458 It is evident from the documentary record that some steps were taken to recruit further online trainers. In particular, Ms Bagga advised Mr Kochhar by email on 1 May 2015 that CTI had interviewed, reference checked, and shortlisted a candidate for the role of full-time permanent online trainer - Diploma of Management. In response to the question from Mr Kochhar as to whether the interview was "just a sham",384 Ms Bagga responded: Not a sham. I did interview her. I called her the very next day. And I took your suggestion of cheap labour also a desperate measure for me to have trainers and fulfil the vision of caseload per trainer etc etc. She was not too bad but she won't start till 4 weeks - bogan though but will do … 459 Ms Bagga also noted in an email on 14 May 2015 that she needed "more than 1 trainer for ECEC with the enrolments and the number that's flowing in … It's huge!! Comm serv as well… I will need more than 1 as well."385 Following that message, CTI emails were sent to all members of staff on 15 May 2015 outlining vacancies for an "Online Trainer - Diploma of Early Childhood Education and Care" and an "Online Trainer - Diploma of Community Services Work". The description of the positions explained that in each case, the successful candidate "will be managing a caseload of 200-300 students",386 consistently with the evidence of ex-employees as to the large numbers of "students" allocated to each trainer and assessor. 460 A similar trainer-to-student ratio was suggested by Ms Bagga in a draft email to a person called "Ahmed" which was sent to Mr Kochhar for his approval on 16 July 2015 setting out "the life cycle of a student's expression of interest to completion".387 The ratio referred to was "1:250-300 [ie] one trainer to 250-300 students as an online model", to which Mr Kochhar responded "Really good. Just change the ratios. Make them less."388 As such, Mr Kochhar effectively acknowledged that a trainer-to-student ratio of one to 250-300 was too high. Following that message, Ms Bagga sent the final version of the email to a person identified only as "Jas" at "aitt.edu.au" on 22 July 2015 identifying the "Student trainer ratio is 1:100 [ie] one trainer to 100 students as an online model." 461 Following notice of the short notice audit, Ms Bagga emailed Phoenix's compliance consultant, Mr Bevan, on 27 July 2015 inquiring about whether the trainer-to-student ratio of "1:400 [is] too much- given all students don't log in at the same time and work at their own pace ? Pls let me know ... Trying to tie lose [sic] ends in preparation for audit" (errors in the original).389 Mr Bevan responded shortly thereafter that there were "[n]o set rations [sic] for fee for service students", and "[i]n short - no issue with 1:400 if the students are getting the support they need - ie all enquiries are being answered promptly, students are getting feedback, all assessments are being marked promptly etc". 462 High trainer-to-student ratios continued throughout August 2015, as is apparent from an email from Ms Bagga to Mr Kochhar on 26 August 2015 which noted that "[e]ach trainer has around 300 students" and that there were 21 trainers only for the Business and Management courses.390 463 While not as high as these ratios, high trainer/assessor-to-student ratios were also noted in an email from Falak Jani, Human Resources Consultant, to Mr Brown, Mr Kochhar, Ms Bagga and others on 6 November 2015 as follows: We are expecting 4 more signed contracts on Monday, which will bring us to total of 144 T&A across all 4 quals; which will achieve the target of 1:150 overall. As far as ratio per qual is concerned, we will need 5 more for Bus/Mgmt, 3 more for Comm Serv to make it 1:150 per qual, we are 8 over for ECEC.391 464 Attached to Falak Jani's email was a spreadsheet containing a table with the following information:392 Courses Current Current Active # of T&A Signed Contracts Received New Total Active # of T&A # of T&A Req to meet target of 150 Students per T&A BSB50207 Dip Business 3713 25 62 87 96 BSB50215 Dip Business 3829 BSB51107 Dip Management 2618 BSB51915 Dip Leadership & Management 4169 CHC50113 Dip Early Childhood Education 4096 13 23 36 28 CHC50612 Dip Community Services 2885 11 6 17 20 Grand Total 21310 49 91 140 144

465 The information in this table records that, as at 6 November 2015, trainer-to-student ratios were considerably higher than the 1:150 target and the 1:90 ratio reported by Phoenix to ASQA. Specifically, if the "Current Active # of T[rainers] & A[ssessors]" is compared with the current number of enrolled consumers, the ratio of trainers to enrolled consumers averaged out to: (1) 1:573 for the Business Diplomas; (2) 1:315 for the Diploma of Early Childhood Education and Care; and (3) 1:262 for the Diploma of Community Services. 466 As the table also demonstrates, even if the number of signed contracts received is taken into account, the numbers still fall well short of the target of 1:150. Moreover, as I shortly explain, in October/November 2015, Phoenix signed up a number of trainers and assessors who never in fact undertook any training for Phoenix. As a result, the number of "Signed Contracts Received" referred to in this table cannot be taken to be demonstrative of any genuine attempt by Phoenix to ensure that appropriate trainer-to-student ratios were in fact achieved. 467 Exceptionally high ratios emerge from the documentary record for February 2016. For example, on 5 February 2016, Mr Walters emailed one of the trainers, Mr Wilkinson, allocating 556 active students to him in the Business Diplomas. On the same day, Mr Walters emailed a trainer named Ms James with a list of 2,811 students distributed between 8 trainers for the Diploma of Community Services Work, including an allocation of 877 students to one trainer and more than 500 students each to two other trainers. Later that day, Mr Walters emailed Ms James with a further list of 3,552 students allocated between 9 trainers for the Diploma of Early Childhood Education and Care in which one trainer was allocated 952 students.393 468 These extraordinary numbers need to be understood in their context. Phoenix had been desperately attempting to increase ostensible student involvement with its courses through its "never logged-in reach out" campaign, the roadshows and inducements offered to enrolled consumers to log in to FinPa and complete a unit in January and February 2016, as well as backdating and falsifying the data in its enrolment packs at an industrial level via its so-called "Rectification Project" in January 2016. Furthermore, by this stage, Phoenix's approval as a VET provider had been suspended in January 2016, although it was permitted to continue to train existing students, and its Advance Payment Determination for $40 million had been revoked. Furthermore, on 4 February 2016, McGrathNicol were appointed by the DET to undertake a formal audit of reported enrolment data provided by Phoenix to the DET. Understood in this context, the allocations at this time of these extraordinary numbers of enrolled consumers to trainers resulting in manifestly unworkable trainer-to-student ratios almost certainly formed part of Phoenix's concerted strategy to convince the relevant authorities that it was a legitimate provider of online education in circumstances where, it can be inferred, these consumers had not previously been allocated to any trainer at all.

9.2.2 Nature of the role as a trainer and assessor 469 The evidence of the trainers and assessors was consistently to the effect that their primary role was to endeavour to contact the "students" allocated to them to try to get them to log on to and commence their courses online. 470 Ms Bennett said that she was frequently directed to focus on calling "students" who had not logged in, or had not logged in for a long period (often a number of months), in order to get them to log on to the FinPa and engage in their courses.394 As Ms Bennett explained in her oral evidence: We were told to continue - keep ringing them. Ring them every day. Start from the oldest that hadn't logged on for the longest and try and get them to - yes, log on and see if we could assist them in any way and just to get them through. Whatever we had to do was - we just had to get them through. [Ms Sharp SC] When you say "log on", log on to what? --- [Ms Bennett] Log on to the FinPa, so the online FinPa platform they're able to access.395 471 She said that these directions became more frequent and insistent towards the end of her time with Phoenix.396 An example of such a direction was a group email addressed to "MTL Trainers" from Ms Bagga dated 5 August 2015 attaching a call log to be filled in and submitted weekly.397 The email further explained that: As a trainer you are required to make contact with your students and follow-up on the progress on a daily basis - more so on the slow performing students. Encourage the student to log in while you have them on the phone to you. This will also be a great tool to measure success outcome [sic] as a Trainer and for your student/s. Each trainer will create a folder under their name on the MTL drive and in that folder you will have this log saved at the end of every week (Friday by COB). It is imperative you get a hold of the NEVER LOGGED in students first off, as the ones you are marking work off [sic] are already being recorded on the LMS [(Learning Management System, ie, FinPa)].398 (Emphasis added.) 472 In line with the instructions in the email, Ms Bennett explained that she was instructed to maintain a spreadsheet recording her interactions with "students", including whether contact was made with each "student" and whether the "student" had ever logged into FinPa.399 473 Ms Bennett explained that once the "students" logged in, this would register on the FinPa platform and therefore show that the student was participating in the course.400 474 This did not accord with Ms Bennett's expectations of the role of a trainer which she had been engaged to undertake. As she explained: When I first started, I was calling the students up but nobody answered the phone and when they did answer the phone they hung up or I found that the phone numbers were the wrong numbers, emails were the wrong emails, so the contact wasn't there. So, no, it wasn't [sic] my expectations. I was not on the phone talking to the students, guiding them through their assessments and workbooks because there [were] no students answering the phones.401 475 Ms Bennett explained that her co-workers were in the same position: "That's all we did all day was ring up our students and we would get the same response: no phone number, the wrong phone number, the wrong email, go and get f'd. You know, it was just - there was no - there was no contact."402 476 The emphasis in the role as trainer upon contacting so-called students who had not logged on to commence their courses online, as opposed to providing learning support to assist genuine students to complete their courses, is highlighted by the following exchange during Ms Bennett's evidence: [Ms Sharp SC] Of all the students for whom you were responsible as a trainer at Phoenix, how many do you estimate that you actually provided training to?---[Ms Bennett] One..403 477 The experience of other trainers was similar, as I have earlier mentioned. This evidence is corroborated by the analysis of data extracted from FinPa by a number of experts which revealed an extraordinarily low level of consumer engagement with Phoenix's Online Courses, particularly when various steps taken by the respondents to hide or artificially inflate the level of consumer engagement are taken into account: see further Section [13.9] below.

9.2.3 Unsuitability of consumers engaged in courses and complaints 478 Even where Ms Bennett was able to contact her "students", Ms Bennett developed concerns that many did not seem to be eligible or suitable to undertake the Diploma of Early Childhood Education and Care on the basis of the information which they disclosed to her. She gave a number of examples of telephone calls between her and "students" which raised these concerns.404 (1) Several of the "students" to whom she spoke were aged 65 years or older and were living in aged care facilities. One of those consumers advised her that they were signed up at the supermarket. (2) In some telephone calls, when asked about how they were getting on with their study, "students" said that they could not do the course, they had not received their laptop yet, they did not sign up for the course, or they did not have the learning device that they were promised. (3) On a few occasions, she spoke to relatives of the "students" whom she was trying to contact. She remembered one telephone conversation where the "students's" carer advised her that her son who was enrolled had schizophrenia and there was no way that he could do the course. On another occasion, the father of a "student" told her that his child was in a wheelchair and could not do a childcare work placement. (4) On several occasions when she mentioned the requirement for those consumers enrolled in the Diploma of Early Childhood Education and Care to be subject to a police check and to obtain a Working with Children Check in order to obtain a work placement, the "students" advised her that they could not do so because they had a criminal record, they were charged with sexual offences, or were "up on breaking and entering". (5) On one occasion, she had a conversation with a "student" who, when asked for their address, advised that they were "living on the street". 479 Where issues such as these occurred, Ms Bennett made a note on the "student's FinPa account to notify myTime Learning's administration that she or he should be withdrawn. However, Ms Bennett observed that sometimes the "student" concerned was not withdrawn immediately, but only after multiple notifications for the withdrawal to be processed had been given.405 480 Mr Howley expressed similar concerns about the suitability of the "students" assigned to him to undertake the Diploma of Community Services.406 (1) First, he estimated that only approximately 20% of his "students" submitted an assignment for a unit of study and, of those submitted, only 20% were at or above diploma standard based upon the marking guide and example answers provided to trainers in the FinPa database. To the best of his recollection, none of his students completed the Diploma of Community Services Work.407 (2) Secondly, those "students" to whom he spoke who had not submitted any assignments gave various reasons for not doing so. Mr Howley explained that he usually began his conversations saying something like "Good morning/afternoon, I am Michael, your trainer for the Diploma of Community Services Work at myTime Learning. I see you have not commenced your course yet, how can I help you?" Typical responses which he received would along the following lines: "[t]he agent said I did not have to do any study. I was just told to sign a form for a free laptop"; "I do not have internet access"; "my computer's been stolen"; "I am the student's mother. She is not around right now"; or they were not the student.408 (3) Thirdly, Mr Howley considered that a majority of his allocated students should not have been enrolled into the Diploma of Community Services Work because he considered that their LLN level was lower than the Certificate IV level of language, literacy and numeracy required to embark upon and complete that diploma. His opinion in this regard was based on conversations he had with "students" and on the assignments he marked. Mr Howley referred by way of example, to the fact that many students' assignments had basic orthographical (spelling) and grammatical errors, suggesting a low LLN level, and used "text speak" such as using "u" in place of "you".409 (4) Finally, Mr Howley found that some of his allocated students were not native English speakers and had difficulty understanding and responding to him when he spoke with them. He gave the example of a telephone call he had received from a person identifying herself as a teacher in an introduction to English course at a TAFE in Queensland whose name he could not recall. The teacher said words to the effect of: We've had some Afghan refugees in an introduction to English course signed up to a Phoenix course in the car park after work and we want their debts cancelled and to return the laptops. I can't believe that your agent would act so unconscionably as to sign up people who cannot even put a sentence together yet.410 Mr Howley told Ms Bagga about the incident and gave her the names of the consumers concerned which had been given to him by the caller.411 481 As to the last of these points, the evidence of one of the consumer witnesses, Consumer MN from Dandenong in Victoria, is an apt illustration of the complete disregard exhibited by Agents/Brokers as to the capacity of consumers signed up to Phoenix courses to communicate in, and understand, written and spoken English.412 Consumer MN (whose evidence was translated) was born in Afghanistan and travelled to Australia when he was about 30 years of age. He could speak "a bit of English, but very simple words [and] ... understand only a few basic words written in English and numbers."413 When he was given a document which he could not understand, he would go to the Southern Migrant and Refugee Centre in Dandenong for assistance. Consumer MN was placed under significant pressure by Agents/Brokers to sign up to "free courses" with Phoenix and receive a "free laptop" and was in fact signed up, despite saying repeatedly that he did not understand what the sales Agent, Srusti, was saying and that he had no intention of doing the course. To the contrary, the Agent told him that he could "study English to improve his English".414 482 Mr Capocchi also expressed concern about the suitability of "students" allocated to him to undertake the Diplomas of Business and of Leadership and Management.415 Mr Capocchi considered that the course materials, including the course guides, student handouts, and other mature learning materials such as newspaper articles, for the Diploma of Business and the Diploma of Leadership and Management were pitched at a level appropriate to students who were already working in those fields. However, the majority of "students" to whom he spoke who were enrolled in those courses told him that they were not working right now or were not working in office jobs. As a result, he was worried that they would not be able to complete the courses and worked on making changes to the courses in an effort to make them more suitable for students with no office experience. For example, with some of his colleagues, Mr Capocchi implemented certain initiatives such as setting up webinars to provide students with some experience. 483 Mr Capocchi also recalled contacting a student who was unable to speak English and, as earlier mentioned, contacting a number of students who appeared to lack access to a computer or the internet which were necessary for the consumer to complete the course. He raised these concerns in meetings attended by his team leader and other trainers in his team, and also made recommendations that certain students should be withdrawn from his courses. While those consumers would be removed from his allocation of students, Mr Capocchi did not know whether they were subsequently withdrawn from the courses. 484 Finally, Mr Bhargava said that under his contract with Phoenix, in addition to his hourly rate of pay, he was entitled to a further payment of $10 for every student assessment undertaken where he assessed the "student" as "competent". However, there was no additional payment for marking a student assessment if the "student" was assessed as "not yet competent".416 Terms to similar effect offering a $10 additional payment per unit assessed as competent were also included in the contracts provided by Phoenix to two applicants for positions as trainers and assessors in October 2015 who gave evidence in the proceeding417 and in many of the contracts for services between Phoenix and other trainers and assessors.418 485 The evidence of the trainers as to the lack of suitability of many of the "students" contacted to undertake the Phoenix Online Courses in which they were enrolled is corroborated by the evidence of a systemic failure by the respondents to mark LLN and PTR tests prior to enrolling a consumer or at all, of incorrect marking of the LLN and PTR tests, and of Agents coaching consumers or completing the enrolment forms themselves instead of the consumers: see eg the evidence of former employees from CTI in Section [8.8] above and the data analysis evidence discussed in Section [13.7] below.

9.3 Alleged trainers for Phoenix who did not in fact work for Phoenix 486 Finally, evidence was led from two trainers who applied for positions as trainers and assessors with Phoenix. While those trainers never in fact worked for Phoenix, Phoenix held out that they had done so in its submission to ASQA in an apparent endeavour to mislead ASQA as to its trainer-to-student ratios. 487 First, Ms Sharon McDonagh gave evidence that she applied for a position as an online trainer and assessor with Phoenix in 2015 in response to an advertisement on Seek.com.au. A representative from Phoenix contacted her by phone in late October 2015 requesting documents from her including copies of her qualifications, and said that the paperwork was required urgently. On 27 October 2015, a representative from Phoenix offered her the role of "Online Trainer and Assessor" for Phoenix. Shortly thereafter, a representative from Phoenix called her and advised that the contract and paperwork were required urgently and offered to pick it up from her at home if she had trouble scanning and emailing it to Phoenix.419 Ms McDonagh withdrew her application because she became "concerned about the urgency with which Phoenix required [the] documents", the fact that they were willing to come to her house to collect the documentation which she considered was unprofessional, and upon finding adverse media articles about Phoenix.420 488 As the applicants submit, Ms McDonagh's evidence contradicts the representation made by Phoenix to ASQA in its 9 November 2015 "Response to ASQA Audit Report on Rectification Evidence" that Ms McDonagh was one of its trainers. In this regard, Phoenix attached a list of trainers/assessors per qualification (attachment 5).421 That list included "Sharon Kearney" which was Ms McDonagh's legal name prior to about 2017.422 489 Similarly, Mr Keng See Tan was held out to be a trainer in the same report to ASQA despite never undertaking any training by or for Phoenix.423 Mr Tan also applied for a position as trainer and assessor with Phoenix in 2015. He was offered the position on 28 October 2015 and signed and returned the contract from Phoenix, but never heard anything further from Phoenix.424 490 Nor can these be regarded as unique cases. For example, in response to a query from the Trainer File Coordinator for those individuals from a list of 84 trainers who were currently or would be training in 2016 and their last payment date, Ms Roks, the Client Relationship Coordinator for Via Network, responded on 8 December 2015 with an annotated list identifying some 29 trainers who had never been paid and therefore never worked for Phoenix, despite being included on the list.425

10.1 Phoenix's operations before its acquisition by ACN 491 As earlier explained, Phoenix was established in the late 1990s. It was registered as a RTO on 16 February 2005 and first approved as a VET provider on 27 October 2009, with effect from 5 November 2009.426 Mr Gale was appointed as CEO of Phoenix in December 2013, having earlier held positions on Phoenix's Advisory Board and its Corporate Governance Board.427 The Governance Board was effectively an advisory board to Mr Peake, the then owner of Phoenix Institute, on matters pertaining to the running and operation of Phoenix.428 492 Before its acquisition by ACN, Phoenix was a small VET provider offering face-to-face tuition at its campus on Queen Street, Melbourne, to approximately 400 students.429 The courses provided by Phoenix before January 2015 included the Diploma of Clinical Hypnotherapy, the Diploma of Dance Movement Therapy, the Advanced Diploma of Transpersonal Art Therapy, and the Bachelor of Holistic Counselling.430 Class sizes tended to vary from between 6 to 18 students and in any event were no larger than 20 students.431 493 At this time, Phoenix advertised its courses through a course booklet updated annually and at student information nights.432 Several information nights for prospective students were held each year at Phoenix's Queen Street premises in advance of the start of the courses and they attracted approximately 40 to 50 people.433 Ms Crittenden was responsible for the conduct of these information sessions and would obtain evidence from students to prove their VET FEE-HELP eligibility including passports, birth certificates, and citizenship certificates.434 Prospective students were interviewed subsequently in small groups in order to determine their suitability for their chosen course.435 494 In late 2014, the Commonwealth introduced a formal process for assessing prospective students' levels of literacy, numeracy, and English language skills, which Phoenix incorporated into its enrolment processes.436 Ms Crittenden completed a unit of competency in addition to her Diploma of Training and Assessment which qualified her to conduct LLN assessments.437 495 Phoenix used a student management software program called Wise.NET administered by an employee, Ms Meena Chopra, to generate reports to enter student data (including enrolments and course completion) into the Higher Education Information Management System (HEIMS).438 The Department in turn used that information to monitor and reconcile student enrolments and VET FEE-HELP payments to Phoenix.439

10.2 Formation of the ACN Group of companies and the Initial Public Offering on 26 November 2014 496 ACN was incorporated on 17 March 2014. On 30 September 2014, ACN acquired 100% of the shares in five related companies including CTI which was identified as the acquirer of the other four companies, namely, Community Employment Initiatives Pty Ltd, Consider This Training Pty Ltd, CLI Training Pty Ltd and The Community Initiatives Group Pty Ltd.440 497 In or around September or October 2014, Mr Peake and Mr Gale were approached by an agent for ACN who informed them that ACN was interested in purchasing Phoenix. A couple of weeks after that meeting, Mr Peake and Mr Gale attended a meeting with the agent, Mr Brown, CEO of ACN, and Mr Kochhar, COO of ACN. During the meeting, Mr Brown told Mr Peake and Mr Gale that if the purchase of Phoenix proceeded, he intended to grow the business quickly and introduce online courses because there was a lot of potential for growth.441 498 On 26 November 2014, ACN published a prospectus (the ACN Prospectus) for an initial public offering (IPO) which sought to raise $54.4 million and offered a share price of $1.70.442 In the prospectus (at p. 8), ACN explained the composition of the ACN Group as at that time: Australian Careers Network Group consists of three primary business units. The first, Community Training Initiatives, is an unregistered VET provider that partners with RTOs and TAFE institutes to deliver nationally recognised qualifications under partner accreditation. The second, COVE, is a leading Victorian private RTO specialising in small to large vehicle and machine operating licences linked to the construction and warehousing industries, as well as other trade-related qualifications. The third, employment division, which works to align jobseekers with employment vacancies through retraining and up-skilling. Australian Careers Network Group also includes a number of smaller RTO entities, including the Australian Management Academy, Consider This Training, SMART, Haley College, Heron Access, Loka and ITC. 499 The purpose of the offer was explained in the ACN Prospectus at p. 9 as follows: The Offer is being undertaken to provide Australian Careers Network Group with broader access to funding opportunities in order to pursue its growth strategies, to enable the founders of the business to realise a portion of the investment, to increase the liquidity of the Shares, and to enable Shareholders to take advantage of the opportunities available in the rapidly growing VET sector. Ivan Robert Brown and Prakash Charan are the founders of a number of companies in the Australian Careers Network group. Consequently, they are the major shareholders of ACN. Increasingly, the driving force between the business has been Ivan Robert Brown with the role of Prakash Charan becoming more limited over time. The Offer is seen as an opportunity for Prakash Charan to exit the business and, accordingly, Prakash Charan is selling down 21,500,000 Shares under the Offer. 500 The key role that the Brokers and Agents were to play as a part of the strategy to expand the Group was alluded to in the Prospectus and identified as one of ACN's "key strengths" (at p. 13): Sourcing students is a key strength, with Australian Careers Network Group growing since 2012 to become one of the largest private training providers in Victoria. This demonstrates the Australian Careers Network Group's relative effectiveness in growing student enrolment numbers, which is the most important driver of its business. (Emphasis added.) 501 The IPO was successfully completed in December 2014, raising $15 million of new capital ($13.8 million net of underwriting costs).443 This allowed ACN to fund the acquisition of Training Experts Australia Pty Ltd and Training Synergies Pty Ltd (TEA and TS respectively) at the time of the IPO for $4 million, and Phoenix subsequently for $2.3 million. The ACN 2015 Annual Report explained that "[t]hese acquisitions reflect the execution of the Company's stated strategy of risk mitigation and revenue diversification through interstate expansion ('TEA' and 'TS') together with its move into the higher education sector ('PI' [ie Phoenix Institute])."444 502 ACN was listed on the Australian Stock Exchange (ASX) in December 2014.445 Mr Kochhar was appointed COO of Phoenix on 6 January 2015 and Mr Brown as a director of Phoenix on 12 January 2015.446

10.3 Steps in preparation for the Online Courses taken in advance of the acquisition of Phoenix 503 While ACN completed its acquisition of Phoenix on 13 January 2015, preparations were well underway by mid-December 2014 to introduce new online courses through Phoenix. In particular, by 16 December 2014, a Trainer's & Assessor Guide for LLN for BSB & SIR (Business Services and Retail Services) and a Trainer's & Assessor Guide for LLN for CHC & HLT (Community Services and Health Industry) had been prepared under the Phoenix logo.447 Significantly, these expressly recognised the purposes to be served by LLN indicator tools including the assessment of whether a prospective learner had the appropriate skills to the level of the unit of competency or qualification that the learner proposed to undertake and the identification of those who might require assistance. As the Trainer's & Assessor Guide for LLN for BSB & SIR, for example, stated: They can: • identify learners' existing LLN skills, including their confidence in using those skills • identify learners at risk - do their identified LLN skills match the underpinning skills needed to undertake the qualification • establish learners' particular core needs (e.g. numeracy, reading and/or writing) and the level of support required • assist trainers to identify which learners will most likely need assistance during the training, thereby improving retention rates by providing a means for early targeting of learners who are at risk of withdrawing or failing • give learners an opportunity to request assistance.448 504 The Trainer's & Assessor Guide for LLN for BSB & SIR also explained that: Trainers need to identify the underpinning LLN in the units of competency when developing LLN indicator tools. LLN indicator tools [have] been: • developed in consultation with vocational trainers • contextualised to the industry for authenticity, including text types and graphics or visual clues (e.g. graphs, charts and photos) relevant to the industry • [sic] reflect the specific type of LLN required for the qualification - reading, writing and/or numeracy skills • [sic] be mapped to the Australian Core Skills Framework (ACSF).449 505 Among other things, the Guide made it plain that the "learner" (and therefore not a Broker or Agent) was to complete each of the indicator tools and that, for example, the numeracy indicator tool should take approximately 40 minutes for the learner to complete.450

10.4 The VET HELP Newsletter 2014 December edition circulated to all contacts in HITS 506 In December 2014, the Student Support Branch of the Department circulated its December edition of the HELP Newsletter.451 That newsletter (and later editions of it during the relevant period) was sent to all of the people listed as contacts in HITS, being the electronic information database used to manage information about higher education providers, including VET providers. The newsletter explained that "HITS is the only contact list utilised by the Department when sending providers important information", such as information regarding any changes to how payments were managed and therefore that all VET and higher education institutions should ensure that correct contact details are entered into HITS, including for FEE-HELP and VET FEE-HELP. As such, it can reasonably be inferred that a copy of the newsletter was sent to Phoenix and to ACN. 507 The newsletter raised serious concerns about the conduct engaged in by promotional/marketing services acting on behalf of educational providers and emphasised the educational provider's responsibility for that conduct. First, the newsletter stressed the importance of complying with the legislated requirements regarding electronic Request for Commonwealth Assistance Forms (eCAFs) "particularly where marketing agents, educational agents or partner organisations act in some instances on the provider's behalf." In particular, the newsletter highlighted at p. 2 (in line with the purpose of the CAF as explained in Chapter 6 above) that: Most importantly, persons other than the student may not submit an eCAF on behalf of the student. It is the submission of an eCAF by the actual student using their unique identifier that is the evidence that the student has signed the form by electronic means and by doing so declares they have read the relevant HELP booklet and understand their obligations. Should providers be found to be accepting eCAFs that have been populated or submitted by education agents, promotional or marketing services, partner organisations or other RTOs, using information obtained but from individuals over the phone or by other means, the Department may investigate whether a contravention (or an offence) under the Higher Education Support Act 2003 (HESA) framework or any other legal requirements has occurred and take appropriate action. (Emphasis in the original.) 508 Secondly, the newsletter stated (at p. 2) that: Unethical practices by agents acting on behalf of providers Providers are responsible for actions taken by education agents or promotional/marketing services acting on their behalf and must ensure actions taken by them are within the requirements of HESA. Providers will be held responsible for any unethical, misleading or fraudulent behaviour of agents acting on their behalf. Numerous complaints have been received from students who say they have been misled as to the identity of the institution they will be studying with, as well as some instances where marketing agents have induced students to sign up to courses without students necessarily having a commitment or intention to study, nor an understanding of the HELP debt they will incur. Complaints received indicate that this has been happening through cold calling and marketing undertaken at locations such as Centrelink offices and shopping centres. The provisions of HESA do not stop a provider (or partner organisation delivering a course on behalf of a provider) from utilising the services of an education agent or a promotional/marketing service. It is understood that many providers have relationships with organisations offering these services. Providers should ensure they are aware of practices undertaken by organisations on their behalf, and can confirm they meet legislated requirements. Further, as noted in our article regarding electronic submission of request for Commonwealth assistance forms (eCAFs), eCAFs must be submitted by the actual students themselves, after they have had an opportunity to consider the offer of enrolment with a particular institution and read the relevant HELP booklet, and the identity of the institution they are enrolling with must be clear to the student. (Emphasis in the original.)

10.5 Commencement of the Phoenix Online Courses and engagement of Brokers 509 On 13 or 14 January 2015, Mr Brown and Mr Kochhar visited the Phoenix Queen Street campus where they held a meeting attended by Mr Gale and most of the staff, and announced their plans to introduce online courses under the Phoenix brand operating out of ACN's Spotswood office.452 510 Phoenix and CLI wasted no time after the acquisition in giving effect to the strategy foreshadowed in the ACN Prospectus of engaging Brokers and Agents to recruit consumers. 511 In a letter dated 14 January 2015, the compliance team of CTI wrote to its "clients", being the Brokers, identifying certain prerequisites which students seeking to enrol in the Diploma of Community Services Work must meet, namely, a Statement of Attainment or evidence of work experience. Despite acknowledging in the letter that students who do not meet those requirements "cannot be enrolled in [the] Diploma of Community Service[s] [Work]" (emphasis added), the author candidly stated that "the reality here is that most students will not have these requirements" (emphasis in the original).453 512 The compliance team for CTI again wrote to the Brokers on 18 January 2015 making it clear that they and any Agents engaged by them would be representing Phoenix in recruiting customers. Specifically, the letter advised Brokers that "[t]o streamline and ensure we have the correct people registered with CTI representing Phoenix, a new process will be implemented where by [sic], in order to represent Phoenix for VFH, you and your sub agents will need to be registered with CTI and have a CTI produced ID". The ID was to bear the Phoenix and myTime Learning logos and websites, and the myTime Learning email and 1300 number, as well as the agent's name, number, and photograph.454 513 Between 16 January and 1 June 2015, CLI on behalf of Phoenix entered into a number of standard form contracts with Brokers. These included the agreement between CLI and Step 123 Pty Ltd made on 18 January 2015 signed by Mr Brown as the authorised officer of CTI, with a commission of 20% of the VET FEE-HELP loan scheme payments for the sourcing of students.455 514 From at least early February 2015, CTI required Brokers to complete and submit a travel schedule for the following week or month so that each Broker's client relationship manager was aware of the locations in which all sales representatives were operating and could review their proposed schedules in case there were any issues about those locations.456 However, as later became apparent, the schedules were often delivered late, if at all, or did not record the locations where the Agents marketed Phoenix Online Courses.457

10.6 Internal correspondence in late January 2015 directing non-compliance with identification requirements 515 Clear evidence of the intention to not comply with the identification requirements for VET FEE-HELP emerges from a telling email exchange on 31 January 2015.458 516 The email exchange commenced on 30 January 2015 when the Broker, Mr Anthony (Tony) Tascone, managing director, Alpha Prime Education, emailed Mr Kochhar (copied to Mr Brown) seeking his direction on issues about the identification requirements for students enrolling with Phoenix and accessing VET FEE-HELP. Mr Tascone stated that he had "10 double diplomas sitting on [his] desk from [I]ndigenous Australians all of whom don't have any of the above ID [being, a birth certificate, passport, marriage certificate or humanitarian visa]". Mr Tascone also stated that he had been alerted to the fact that the RTO Service Skills Australia in Brisbane was allegedly "not requiring any ID for their VET Fee HELP online courses" and, while not advocating "zero ID", wondered if there was some middle ground. 517 Later that day Ms Crittenden emailed Mr Kochhar and Mr Gale in relation to the matters raised by Mr Tascone above and pointed out that the VET Administrative Information for Providers which outlines eligibility requirements for VET FEE-HELP "clearly states we must confirm their identity/eligibility". She explained in unequivocal terms that the options for confirming citizenship/residency "for all applicants", such as an Australian passport or Australian full birth certificate, were detailed in a link to citizenship.gov.au, and emphasised that "[t]his is not about classroom or distance online learning. It is about eligibility for VET Fee-Help." That understanding was subsequently confirmed in writing when, on 19 February 2015 Ms Henrietta Johnson of the Department advised in response to a query from Ms Crittenden, that: If [a] person does not have a birth certificate or passport regardless of whether they are aboriginal it is up to the provider to determine by other forms of documentation the students [sic] citizenship status.459 518 However, following on from Ms Crittenden's email, on 31 January 2015 Mr Kochhar and Mr Brown exchanged several emails between themselves. Mr Brown queried "how they determine a person [is] not eligable [sic]": 1. Is it only if they audit and we dont [sic] have birth cert 2. Is it if they audit students and prove a person isnt If its 1. Then we r fucked If its 2. Then we only need birth cert off huss and faris types and aussie and abos are ok without 519 Mr Kochhar responded "Yes to point 2 option 1", to which Mr Brown concluded "Ok … So even if dont have id then no problem unless they prove they are not citizens So we can take coons and white ozzies without birth id and will be ok" (errors in the original). Not surprisingly given these instructions, Ms Crittenden's advice was not respected, as a result of which continued concerns about non-compliance with identification and citizenship eligibility requirements led Ms Crittenden and Ms Mason to conduct further investigations in late February 2015, as I shortly explain.

10.7 Renewal of Phoenix's RTO Registration on 15 February 2015 and associated documentation 520 I have already referred to Mr Brown making a Senior Authorised Officers' Statutory Declaration of Adherence to the HES Act on 11 February 2015 and associated Fit and Proper Person Requirements declaration (see at [180] above). 521 On 13 February 2015, the Department wrote seeking information in order to ensure that Phoenix continued to meet the requirements under the HES Act and provided copies of the guidelines for VET FEE-HELP and FEE-HELP variations.460 Mr Moffat, whose email signature at that time identified him as a Contracts Manager at Consider This Training (within the ACN Group), did not reply until 26 March 2015, when he stated, among other things, that "[t]he CEO and Board of Phoenix have not been changed however the board and CEO report to representatives of ACN who also control strategic direction and expansion of Phoenix".461 The email from Mr Moffat also stated that CTI is not a RTO "but aids with administrative activities including acting as a broker as well as a sales and marketing arm for many of the RTOs within the ACN group. In each case the RTO being represented is clearly identified." 522 On 15 February 2015, Phoenix was granted renewal of its RTO registration under delegation with an expiry date of 15 February 2020.462 At all material times, Phoenix was a VET provider within the meaning of cl 4 of Sch 1A of the HES Act.463

10.8 Complaints and issues arising in late January and February 2015

10.8.1 Mr Gale communicates complaints to Mr Brown and Mr Kochhar and is sidelined in favour of Mr Kochhar 523 Mr Gale only became aware that Phoenix through ACN had started to enrol students in the new Online Courses in late January 2015 when he started to receive reports of complaints about the new Online Courses being offered under the ACN brand.464 He said that "[i]t started off, you know, probably receiving two or three calls a week. It escalated over a period of time."465 These complaints included that consumers were being offered free laptops and tablets if they signed up for a course and were not being advised that they would incur a VET FEE-HELP debt if they enrolled.466 524 At this time, staff members at the Queen Street campus working at reception and in what Mr Gale called the "enrolments team", as well as Ms Crittenden, Director of Operations, Quality and Compliance, reported that the Queen Street campus was receiving a significant number of telephone complaints from consumers who had been enrolled, or approached to enrol, in Phoenix Online Courses.467 Complaints were also being received at the Queen Street campus reception from at least the start of March 2015 about people doorknocking and harassing consumers into signing up to the Phoenix Online Courses and asking them to disclose private information such as their TFN.468 525 Over the period from January to around May 2015, Mr Gale was regularly kept informed by email and telephone calls from staff of complaints of this nature.469 Mr Gale instructed Ms Crittenden and other staff to provide details of the complaints to him so that he was aware of the relevant issues and could report the complaints to ACN.470 He also instructed Ms Crittenden and the "enrolments team" staff to direct the more serious complaints and those from distraught prospective consumers directly to him when he was available.471 526 Among other complaints, Mr Gale recalled speaking with a social worker who complained that a client with an intellectual disability had been enrolled into a Phoenix course, and of receiving complaints that disadvantaged Indigenous people were being enrolled in Phoenix courses.472 As a further example, in late February 2015, Mr Gale saw a complaint sent by email to the Phoenix General Enquiries inbox dated 27 February 2015. The author complained that someone who identified as being from "Phoenix University" had knocked at her door stating that she could sign up for a free course and get a free computer for which she would not have to pay anything at all unless she earned a certain amount. The author said that the representative had been so pushy that in the end she had called the police out of fear of the incident escalating.473 Similarly, on 23 April 2015, Mr Gale received an email from a person who had received an unsolicited visit at 6:30pm that day from "a very pushy man suggesting that he was representing your organisation and pretty much demanded that my husband and I enrol in a course so we could 'benefit' from a free laptop. Totally inappropriate hour, totally inappropriate and forceful approuch [sic]!"474 Mr Gale replied, apologising for the incident, and said that he had passed the information on to those responsible to take appropriate action.475 527 When he received complaints, Mr Gale's general practice was to collect the complainant's details (name, contact details and nature of their complaint), and to pass those details on to ACN with the complainant's consent. He said that he provided these details predominantly to Mr Brown or Mr Kochhar, and increasingly to Mr Brown by telephone, email, or in face-to-face conversations. He also raised them during leadership group meetings at ACN's Spotswood office which were led by Mr Brown and attended by Mr Gale from approximately the end of January to August 2015.476 However, Mr Gale's reports of complaints were brushed aside by Mr Brown and Mr Kochhar with words such "leave that with us", "we'll handle that", or "we are putting in place policies to deal with these issues".477 528 Mr Gale also had a number of conversations with Mr Brown and Mr Kochhar between January and November 2015 in which he raised his concerns about the number and nature of consumer complaints about the Online Courses and the enrolment of consumers into multiple courses. In general, Mr Brown's response was to seek to reassure Mr Gale that the issues were being fixed and that Mr Kochhar was the one with oversight of those issues.478 Consistently with this, Mr Gale recalled that in early 2015, when he expressed concern to Mr Kochhar about the way in which consumers were being enrolled in the Online Courses, Mr Kochhar instructed him to focus on the face-to-face courses and informed him that ACN was putting policies and procedures in place to deal with the issues.479 529 Such steps to sideline Mr Gale from oversight of the Online Courses understandably lead Mr Gale to be concerned that, despite being listed as CEO of Phoenix on the RTO accreditation forms provided to ASQA, he lacked sufficient access to information about the Online Courses to discharge his obligations as CEO. As a result, he sought and received advice from Mr Nash in early March 2015, who confirmed Mr Gale's view that Mr Gale must have access to all aspects of the RTO including to student records, asking rhetorically "[h]ow else can you manage compliance."480 On multiple occasions during 2015, Mr Gale raised with Mr Brown and Mr Kochhar the importance of him knowing what was happening with the online business but on each occasion he was told that the online business was not his responsibility. This led Mr Gale to ask Mr Brown to be removed as CEO of Phoenix save for the face-to-face courses. This was eventually acted upon in August 2015 after further representations were made by Mr Gale to Mr Brown and the ACN Board, as I later explain.481 530 Furthermore, in around February 2015, Mr Brown instructed Mr Gale that no staff from the Queen Street campus were to contact the Department in relation to any complaints received by it; nor was Mr Gale to contact the Department without first informing Mr Brown.482 This instruction was confirmed in an email on 20 February 2015 from Mr Brown to Mr Gale stating: Can you please ensure that no one other than yourself, with my knowledge, contacts the department in Canberra regardless of the enquiry. Can this be strictly adhered to forthwith.483 531 At the end of February or in early March 2015, Mr Kochhar arranged for all phone calls and emails to Queen Street to be diverted directly to the Spotswood office, advising Mr Gale that direct queries about face-to-face courses would be referred back to him, but Spotswood would deal with all the other student contacts.484 An email from Mr Brown to Mr Gale and copied to Mr Kochhar on 2 March 2015 confirmed that all calls would be diverted to the CTI call centre, with any "queen st calls" being referred back.485 Following this, for an initial two-week period, all telephone calls and emails (at least, I infer, to the Phoenix General Enquiries email address) were diverted to ACN's office in Spotswood, pending the establishment thereafter of a dedicated telephone number and address for complaints to be dealt with ACN staff. That notwithstanding, the Queen Street campus continued to receive telephone and email complaints about the Online Courses.486

10.8.2 Sidelining of the Director of Operations, Quality and Compliance, Ms Crittenden, from her responsibilities vis-à-vis the Online Courses 532 Ms Crittenden was aware from the time that ACN acquired Phoenix that it intended to offer new online courses to students. As a result, she emailed Harry Kochhar on a number of occasions requesting details of the new courses because, as Director of Operations, Quality and Compliance for Phoenix, she anticipated that she would have a lot of work to do in order to prepare the courses and their associated policy and enrolment documents.487 However, she received no response to her emails, reflecting what became a familiar pattern of Mr Kochhar sidelining Ms Crittenden. Ms Crittenden finally received information from Mr Moffat on the anticipated training activity for the year which needed to be submitted to the Department in order to obtain VET FEE-HELP funding for the new online courses.488 This information included the names of the courses, the number of times that the courses would be run during the year, anticipated student numbers for each course, and projected VET FEE-HELP funding requirements.489

10.8.3 Enrolments of consumers after the Online Courses had commenced 533 Ms Chopra became aware from Wise.NET in late February 2015 that ACN had started enrolling consumers into the Phoenix Online Courses in which about 80 students were already enrolled. Ms Chopra reported this to Ms Crittenden and showed her details of the students who had been enrolled on her computer. Despite her responsibilities as Director of Operations, Quality and Compliance for Phoenix, this was the first time that Ms Crittenden became aware that consumers had already been enrolled and indeed, she had not at that stage seen or been sent any enrolment forms for them.490 At Ms Crittenden's direction, Ms Chopra continued to monitor enrolments being entered into Wise.NET for the Online Courses, logging in every one or two days. Ms Chopra reported seeing continuing increases in enrolments and also observed consumers being enrolled into courses for which the commencement date had already passed despite it appearing that there had been no extension to the census dates (cf [197]-[199] above regarding the requirements under the VET Guidelines). Ms Chopra reported these observations to Ms Crittenden who confirmed these matters for herself491 and shortly thereafter wrote to Mr Gale regarding her concerns (see at [553] below).

10.8.4 Non-compliance with identification and citizenship eligibility requirements comes to Ms Mason and Ms Crittenden's attention 534 Despite Ms Crittenden's clear advice to Mr Kochhar at the end of January 2015, many of the applications received in February 2015 by Ms Mason's team, the Data Team, did not include federal or state issued identification or proof of citizenship. As a result, she spoke in about mid-February 2015 with Mr Kochhar and Ms Arnold about the need to ensure that each of the applications provided by the Brokers had either federal or state identification because of the need for her team to confirm the identity of the students.492 Ms Mason also instructed the Data Team to ensure that every application had either federal or state issued identification or it was to be rejected,493 and created the "VET FEE-HELP checklist" (to which I have earlier referred) which the Data Team was instructed to compare against the application form and complete. 535 Continuing concerns about non-compliance with identification and citizenship requirements in enrolment forms received from Brokers led Ms Crittenden and Ms Mason to visit the ACN office at Spotswood in late February 2015 to look at completed enrolment forms of consumers enrolled in the Online Courses. A woman who said that she was in charge of enrolment documentation retrieved, at Ms Crittenden's request, a stack of enrolment forms approximately one foot high which Ms Crittenden and Ms Chopra started to check. However, before that process was completed, Mr Brown called Ms Crittenden into his office and substantially reiterated the position upon which he and Mr Kochhar had agreed not to insist on compliance. As Ms Crittenden recalled, the conversation was to the following effect: [Mr Brown]: What are you doing down at Spotswood? [Ms Crittenden]: I am having a look through the enrolment forms. As the Director of Quality and Compliance for Phoenix I need to check that all of the students have proved that they are eligible for VET FEE-HELP funding. Your enrolment forms only ask for a drivers licence or Medicare card, but this isn't enough because they need passports, birth certificates or citizenship certificates. [Mr Brown]: Don't worry too much about their citizenship documents. If they're white and their name is John Smith we do not need to worry about their citizenship documents. From my reading of the regulations, a Medicare card and drivers licence is more than enough. [Ms Crittenden]: We need to check to verify eligibility for VET FEE-HELP funding for everyone. Besides, I just saw an enrolment form for a student with a Vietnamese name who did not have any evidence of his citizenship. [Mr Brown]: We'll have a look at that one.494

10.8.5 The internal audit by Damien Nash dated 26 February 2015 536 Following her visit to Spotswood, Ms Crittenden spoke with Mr Gale raising her concerns about how ACN were running the Phoenix Online Courses and requesting that he arrange for Mr Nash to conduct an ASQA audit.495 Mr Gale agreed with this suggestion and on about 20 February 2015, Mr Peake and Mr Gale engaged Mr Nash to undertake the audit.496 537 Mr Nash had previously been engaged by Mr Peake and Mr Gale to provide compliance and audit services to Phoenix. He holds a Bachelor of Economics and Graduate Diploma in Education. His extensive experience in the education sector includes employment as a teacher, a curriculum officer, and a compliance auditor (including for the Victorian Registration and Qualifications Authority). Mr Nash had also undertaken compliance work for Commonwealth RTOs from 2010 when the Commonwealth first introduced a federal registration scheme. 538 In addition, Mr Nash was a member of Phoenix's Higher Education and VET Advisory Board from about February 2014 until it ceased to operate in early 2016 (although the Board's last meeting was held on 22 April 2015). The role of the Advisory Board was to review Phoenix's courses and their compliance with various legislative requirements, including those necessary for VET FEE-HELP accreditation.497 Shortly before he was requested to provide the audit, Mr Nash had attended a meeting of Phoenix's Higher Education and VET Advisory Board on 18 February 2015498 at which he had drawn the Board's attention to the need to evaluate the new "VET Standards" to be introduced on 1 April 2015 with respect to "Third Party Agreements". Mr Nash had also expressed concerns that "[v]olume of learning needs to be discussed, e.g. Advanced Diplomas are supposed to be 18 months in length, ours are 12 months". 539 In order to undertake the audit, Mr Nash was provided with the "Phoenix Institute Student Handbook 2015"499 (prepared only a few days earlier), Phoenix's Training and Assessment Strategies for each of its four online courses,500 and the assessment tools for one of the units from the Diploma of Early Childhood Education and Care.501 Mr Nash also accessed the Phoenix website and online marketing materials. He attended Phoenix's Queen Street campus to view documents but did not see any files on Phoenix's trainers evidencing their qualifications, any student files which under the standards should have included their enrolment forms, LLN tests, completed assessments and other information, or any third-party agreements with the Agents promoting Phoenix's courses and accepting student enrolments.502 540 Mr Nash provided his audit report (the Nash Audit Report) to Mr Gale and Mr Peake on 26 February 2015.503 Ms Crittenden also received a copy of the audit report at or about the same time.504 It is important to emphasise that Mr Nash's report was not prepared for this litigation and did not comply with the Court's Expert Evidence Practice Note. As such, it was not relied upon by the applicants as expert evidence for the purposes of s 79 of the Evidence Act. Rather, the report was relied upon as part of the factual matrix establishing Mr Brown's and Mr Kochhar's knowledge of serious issues regarding Phoenix's compliance with the RTO Standards as at this early stage, including in relation to arrangements with Brokers and Agents. Mr Nash's qualifications and experience, as well as his role on the Phoenix's advisory board, are relevant in demonstrating that his views should have been taken seriously at the corporate governance level. 541 In his audit report, Mr Nash measured Phoenix's compliance with the 2015 Standards for RTOs, which were relevantly applicable from 1 April 2015. Among other things, Mr Nash formed the view that Phoenix was non-compliant in a number of respects. In particular, he found that: (1) with respect to Standard 1.3, while TASs had been developed for the qualification, details of the processes for managing work placement requirements and of trainers and assessors were not provided; (2) with respect to Standard 1.13, details of trainers were not provided so that there was no evidence that the standard as to the skill and competency levels required of trainers and assessors was met; (3) with respect to Standard 2.3 (requiring that RTOs ensure that services provided on their behalf by a third party be the subject of a written agreement), Phoenix was unable to advise who the Agents marketing the courses were apart from one third-party agreement with Advanced Training & Careers Pty Ltd t/a Australian Training Colleges, where no details were provided of such arrangements; (4) with respect to Standard 2.4, no system or procedures had been established to monitor the services offered on behalf of Phoenix primarily because Phoenix was not aware of the arrangements made; (5) with respect to Standard 4.1(e), there was no evidence that it was made clear to all learners where a third party was recruiting prospective learners for the RTO; (6) in relation to Standard 4.1(k), it was unclear that details about any VET FEE-HELP arrangements associated with the RTO's provision of training and assessment was provided; and (7) with respect to Standard 5.1, while a student handbook had been developed, it was not known what process had been established to ensure that learners obtained a copy of the handbook before enrolment.

10.8.6 Tabling of the Nash Audit Report at the Phoenix Governance Board meeting in late February 2015 542 Shortly after receipt of the Nash Audit Report, Mr Gale attended a meeting of the Phoenix Governance Board in late February 2015. At the meeting, he informed the Board that the Queen Street campus had been receiving a number of complaints about the Online Courses and of his concern that the practices for enrolling students in these courses were not in accordance with Phoenix's usual practices and may be in breach of ASQA standards.505 Mr Nash's audit report was also presented and discussed at the Governance Board meeting.506 The Board agreed that the Chair of the Phoenix Governance Board, Mr David Davenport, would write to Mr Brown and to the Chair of the ACN Board, Mr Stephen Williams, raising the Phoenix Governance Board's concerns about student complaints and enrolment practices, as well as the other issues raised in the Nash Audit Report.507

10.8.7 The letter from the Phoenix Board to the ACN Board, dated 27 February 2015 543 In line with what was agreed at the Phoenix Governance Board meeting, Mr Davenport wrote to Mr Williams in the latter's capacity as Chair of the ACN Board stating that: As the Chair of the Phoenix Governance Advisory Board I am writing to you to raise our very serious concern regarding compliance, ethical and governance issues that were raised at our Board meeting today. It is our opinion that the Phoenix Institute is in grave and immediate danger of losing its accreditations and licences but also bringing the Phoenix name and brand into disrepute. The Board was informed today that as soon as these concerns were raised earlier this week an audit was commissioned with an external auditor to uncover the nature, extent and compliance of these practices as listed below. The audit attached has uncovered a number of non-compliance issues in regard to the new courses placed on scope under the Phoenix auspice. The most significant of these relate to third-party arrangements of which Phoenix has no detail and would result in our accreditation being revoked. We have also become aware of unethical marketing practices where prospective students have been offered laptops or tablets to enrol in these courses. One such instance was where a salesman knocking on doors offered a laptop to a mentally handicapped prospective student, took her tax file number and CVN. Her case manager (a social worker) phoned Phoenix to enquire and to object to this practice … Phoenix staff have also been advised that they can no longer speak to VET Fee Help without first speaking to the ACN Managing Director which compromises efficient and effective operations. 508 544 The letter concluded by requesting that: We ask that you and your Board come back to us within seven days with a detailed plan as to how these issues and those raised within the audit will be managed within an immediate time frame. (Emphasis in the original.) 545 A copy of this letter, together with the Nash Audit Report, were later sent by Mr Peake on 27 February 2015 to Mr Andrew Walker, the Director of KHQ Lawyers, (copied to Mr Nash) under cover of an email stating that: The attached audit outlines some serious non-compliance issues as a consequence of ACN's actions to date which suggests the Institute is not being managed responsibly and is being put at risk. I want to discuss the audit report with you and the Boards [sic] letter and my concerns re ACN's compliance management of Phoenix. I have asked the auditor to also attend the meeting so you will understand the implications of the situation.509 546 Despite the pressing and urgent request made by the Chair of the Phoenix Governance Board in his letter to Mr Williams to provide a detailed plan to address the issues raised in that letter and in Mr Nash's audit report, no plan, detailed or otherwise, to manage those issues was ever provided by ACN; nor was a plan ever formulated by the respondents and particularly Phoenix which, as the RTO, ultimately bore responsibility for ensuring compliance with the HES Act and subordinate legislation. It can only be inferred from the complete failure at this early stage to address issues of the utmost seriousness that it did not suit the respondents' (and ACN's) interests to do so. 547 The only step which ACN apparently took in response was to request Ms Vassallo to review the Nash Audit Report.510 While Ms Vassallo was critical of Mr Nash's conclusions in her review report dated March 2015 stating that it "made some wild, and at times absurd claims of non-compliance", nonetheless she did not consider that all of his report could be disregarded. In particular, she referred to: (1) the need for the ACN Training Manager to ensure that in line with the new RTO Standards, appropriately qualified trainers and assessors were available to undertake the workload posed by the online enrolments; (2) the need for ACN to review Broker monitoring procedures to ensure full compliance with all aspects of the agreements; and (3) the need for the ACN training and delivery team to update the TASs in relation to work placement guidelines. 548 There is some force in the applicants' submission that the nature of the response by Ms Vassallo raises questions about her objectivity.511 However, the critical point is that issues were clearly highlighted by Mr Nash which ought to have been taken seriously by the respondents and even Ms Vassallo did not dispute that some of those issues were properly identified. Furthermore, as Mr Nash correctly observed in an email to Mr Gale on 11 March 2015, MsVassallo's report: … really does miss the basic premise that Phoenix Institute of Australia is the RTO, not ACN. The fact that ACN has the necessary staff and documentation does not relieve Phoenix of its obligations under the Standards for RTOs. The CEO of Phoenix Institute is ultimately responsible for compliance, not the CEO of ACN.512 549 The respondents' failure to develop a plan to address the non-compliance issues identified by Mr Nash and outlined in Mr Davenport's letter is all the more reprehensible given correspondence received from the Department at around the same time regarding the need to address unethical and exploitative practices with respect to the recruitment of students in the VET sector. Specifically, on 23 and 24 February 2015, the Assistant Minister for Education and Training wrote to all RTOs, including Phoenix, advising of a significant VET reform program.513 In the letter, the Assistant Minister referred, among other things, to "[t]ough new standards that require training providers to make clear to all students what they are signing up for every time their debt level is due to increase and to be responsible for services delivered by brokers on their behalf". The Assistant Minister also stated that: In particular, I will be taking strong action to stamp out the abuse of the VET FEE-HELP scheme by people out to make a quick buck at the expense of the vulnerable and the taxpayer. Stakeholders have reported to me, and to the national regulator: • Students being signed up for "free courses" without knowing there is a loan attached, or the debt they are incurring; • Students being given inadequate information about census dates, making it harder for them to make informed decisions about the course and debt; • Students being signed up to courses despite clearly lacking the educational pre-requisites necessary to successfully complete it; and • Courses of only one unit of study, a miraculously short duration to complete a higher level diploma or advanced diploma course, which results in the full debt load for the whole qualification being levied in one go at the start of the course. 550 This letter was sent by Mailchimp, being a web-based marketing service used to send pro forma letters via email to subscribed mailing lists.514 The evidence of Ms Babic establishes that this letter was: (1) emailed to Mr Gale on 23 and 24 February 2015 and was opened on a total of nine occasions, including the first occasion on 23 February 2015; and (2) emailed to an address "systemsmanager@phoenix ..." identified as "Meena" (which I infer is Ms Chopra) which was opened on more than 20 occasions, including the first occasion on 23 February 2015.515 551 Even though Mailchimp indicates that the email sent to Mr Brown's address on 24 February 2015 was not clicked on or opened, I infer on the balance of probabilities that the letter was drawn to his attention and also to the attention of Mr Kochhar given the importance of the information contained in the letter, the fact that the letter was from the Assistant Minister whose portfolio encompassed the VET sector, the number of occasions on which the email was opened, and the governance positions held by Mr Brown and Mr Kochhar within Phoenix and CTI. 552 I therefore agree with the applicants' submission that there can be no doubt that Mr Brown and Mr Kochhar were well aware by late February 2015, if not earlier, of the need to "rein in" the misconduct of Brokers and Agents and to address other non-compliance issues.516 Yet it can only be inferred from their inaction that they chose not to do so.

10.9.1 Issues with enrolment practices including enrolments after commencement of the Online Courses without extending the census date 553 Problems continued to beset Phoenix's enrolment practices. On 2 March 2015, Ms Crittenden sent an email to Mr Gale copied to Mr Peake expressing her concerns about the practice of enrolling students after the commencement date without extending the census date. Specifically, in her email Ms Crittenden wrote: Concern regarding the Census Date for CTI Group 1 enrolments. Currently there are approx 500 enrolments entered into Wise.NET. About 420 of these were entered w.c. [ie week commencing] 23/2/15. Census Date for this Group One is 23/2/15 based on a start date of 16/1/15. If CTI did not start enrolling people until mid February then the Census Date needs to be extended to meet regulations. This can be confirmed by the date of the signatures on the enrolment forms and Application for Vet Fee-Help form. This means that students are being enrolled in the Group 1 after the Census Date is passed. The Census Date is seen as a cooling off period for the student to review their enrolment decision. It is recommended that the Enrolment period Dates for Group 1 be reviewed and a new Census Date calculated that meets the regulation requirements [(referring to VET Guidelines at [7.4.1] VET Administrative Information for Providers)].517 554 Immediately upon receipt of the email, Mr Peake wrote confidentially to Mr Nash via his Gmail account asking for his comments on the compliance, legality and seriousness of the issues raised by Ms Crittenden's email and indicating that he wished to raise the issues "with the lawyers tomorrow in terms of risk to Phoenix."518 Mr Peake asked that his Gmail account be used for all future correspondence. Mr Nash responded on 2 March 2015 advising that: If learners have not been advised of a revised census date and revised completion date, then Phoenix is clearly in breach of the VET Fee Help regulations. The information on Phoenix website indicates a census date which is also the enrolment date which is obviously in contravention of the rules.519 555 On 11 March 2015, Ms Chopra again wrote to Ms Crittenden (copied to Ms Jill Keating) setting out issues regarding CTI online enrolments as per her discussion that morning. These included online enrolments being entered into Wise.NET after the first census date of 23 February 2015. Ms Chopra also stated in the email that: • I have asked data entry staff at Spotswood a couple of times over the phone and via emails to send me the list of enrolments and the units they have been charged for, but I have not received any reply from them, therefore we cannot reconcile the number of students enrolled with Finance to work out how many students are on VFH. This reconciliation leads to the generation of the DEEWR Report as at 31/3/15. • Also in my training session with Spotswood staff I requested the data entry staff complete the Client Checklist in the Client Profile in Wise.NET. This has not been done as agreed by CTI staff. This is required so that a check of the students shows if they have applied for VFH. This checklist also indicates if the student has provided their TFN or not.520 556 She also said that many enrolments were missing some crucial data and attached two course examples. Ms Crittenden forwarded that email on 12 March 2015 to an ACN employee who worked in compliance to raise her concerns about some of the enrolments and confirmation of eligibility for VFH.521 557 On 20 March 2015, Ms Jenny Rafter, client relationship manager at CTI, emailed Ms Bagga and others about being alerted to the fact that one of the Brokers, GG Sales, was contacting students directly to "confirm their courses and iPads" and "this was ok'd by Harry [Kochhar] and Ivan [Brown]".522 Ms Rafter said that she had advised GG Sales ("the client") that "if their students do not take our calls then the students won't be processed" and asked GG Sales to contact the students in question to arrange a time for CTI to call them to confirm their enrolments.523 She also said that she would follow the process up with Mr Brown and Mr Kochhar. As the applicants point out in their Narrative Chronology at [34], this appears to be the first of many complaints identifying GG Sales by name (at least in the documentary evidence), which remained Phoenix's key Broker, bringing in the largest number of enrolment applications during the relevant period.

10.9.2 Meetings of the Phoenix Corporate Governance Board in March 2015 and report to the ACN Board on 16 March 2015 558 The Phoenix Corporate Governance Board met on 12 March 2015. Mr Brown attended the meeting for two agenda items, including agenda item 7 concerning the "Review of Auditors Reports", and the minutes record the following: • CEO advised that ACN has now responded to the audit previously undertaken by Damien Nash (tabled in the last PGAB Meeting). The response was provided through an additional audit undertaken on behalf of ACN (tabled) and a letter written by the Chair of the ACN Board, Stephen Williams (also tabled), which was sent to the current Phoenix Chair (Dr Michael Segon). • The Phoenix Chair explained that he and the ACN Chair are in agreement that the most pressing matter in need of resolution is the clarification of the legal position of both organisations (Phoenix and ACN) and an understanding of where the authority lies. • ACN CEO, Ivan Brown, addressed the Phoenix Board and: • Acknowledged that there have been issues and a "vacuum of information between parties"; • Re-inforced the need for an integration plan detailing what needs to be done and when. Mr Brown advised that this was currently underway and that the integration plan would be shared with Phoenix; • Noted that where it made sense, processes across both organisations would be streamlined; • Expressed that very little had been done in the way of progress due to time pressures …524 559 Shortly thereafter on 16 March 2015, Mr Gale provided his "CEO's Operational Report" to the ACN Board.525 The report addressed a number of issues including the Nash Audit Report and the review of that report by Ms Vasallo , as well as the complaints received by the Queen Street campus concerning enrolment practices in relation to the Online Courses.526 In particular, Mr Gale explained in the report that the Nash Audit Report was requested when it became known that ASQA was likely to conduct an audit given the introduction of a number of new courses and a significant increase in student numbers, and was not intended to be threatening. He also pointed to difficulties in the relationship between Phoenix Queen Street Management (QSM) and ACN, explaining that: The largest issue is the lack of an integration strategy between Phoenix located at 314 QSM and ACN followed by a communication void. I would like to stress that Phoenix at 314 are happy to work in concert with ACN however when directives are delivered with no consultations [as] to the likely consequences or impact that makes management difficult. On the few occasions where we have been engaged in meaningful dialogue alternative solutions to that given have been found to solve the problem at hand. There are also concerns by the Phoenix Board alluded to above as to who is responsible for compliance for those courses under the Phoenix scope at 314 QSM. 560 Mr Gale also observed in the report with respect to Brokers and Agents: As you are all no doubt aware there are many tales in the media as to inappropriate and unethical practices within the industry. I have personally made your CEO and COO aware of those matters that have been reported to us. It would appear that there is something not quite right. In particular, the engagement practices and oversight of Brokers. I had a further call last week, which involved a Broker, of inappropriate behaviour resulting in the wife of the individual concerned calling the police. She was also unhappy with the outcome when she contacted the Call Centre. This is only one of a number of complaints received that require a preventative risk management strategy. (Emphasis added.) 561 On 17 March 2015, Mr Brown attended a follow-up Phoenix Governance Board meeting.527 During the meeting, Mr Brown addressed the Board in relation to student complaints about the Online Courses. He said ACN would introduce policies to address the issues arising from student complaints and that Mr Kochhar was in charge of implementing these policies and overseeing the agents.528

10.9.3 First Request to Increase 2015 Advance Payment Determination submitted to the DET on 23 March 2015 and approval on 14 April 2015 562 On 23 March 2015, Phoenix submitted a revised estimate of expected enrolments for 2015 and requested an increase to the 2015 Advance Payment Determination, from $2,410,492 to $75,486,750 (First Request to Increase 2015 Advance Payment Determination).529 This represented a variance between the 2015 Advance Payment Determination and the requested estimate of 3,118%.530 The requested estimate was based upon an assumption of "600 enrolments every 5 weeks" for the remainder of 2015, "with a withdrawal rate after the first census date of 40%". As the applicants submit, this request corroborates the evidence of the ex-employees as to the setting of high enrolment targets for Phoenix's Online Courses and the pressure upon the employees to achieve them (Narrative Chronology at [35]). 563 As to actual enrolments as at 3 March 2015, the Request stated that Phoenix currently had: 172 enrolments in BSB50207 Diploma of Business 245 enrolments in CHC50113 Diploma of Early Childhood Education and Care 317 enrolments in CHC50612 Diploma of Community Services Work 564 The Request sought to explain the very considerable increase in the estimate on the basis that Phoenix was now part of a much larger listed company, ACN, and that: ACN planned for the possibility of this purchase for several months and had strategic and operational plans in place to rapidly increase the students taught at Phoenix. … Having online delivery has allowed us to reach potential students throughout Australia hugely increasing our potential market. 565 With respect to the sales and marketing of the courses, the Request explained that Phoenix had produced a range of flyers for use by "our business development staff and brokers" and identified ACN and the following companies as assisting Phoenix in the sale and marketing of its training courses: CTI … Provides sales and marketing support to Phoenix in Victoria with a team of business development and marketing staff which currently comprises 14 full-time staff. The sales and marketing team is expanding rapidly … CLI Training P/L (ACN 164 432 526) … Provides sales support to Phoenix nationwide with 15 full-time call centre staff. Always Seek Knowledge (ACN 603 432 526) - independent broker. Provides sales support to Phoenix in Queensland. Alpha Prime (ACN 128 362 952) - independent broker. Provides sales support to Phoenix in Western Australia. Australian Training Colleges P/L (ACN 321 68 372 38) - independent broker. Provides sales support to Phoenix in New South Wales. 566 I note that this list was manifestly incomplete. By this time, agreements had been concluded between CTI and 16 Brokers, including Step 123, GG Sales, Educational Skills Australia, Let's Upskill and Let's Get Qualified. Furthermore, all of the contracts with the Brokers had been signed by Mr Brown as company secretary and a director of CTI. 567 The request also stated that Phoenix had prepared a PowerPoint presentation: … which we go through with all new sales and marketing staff and with all brokers. It both explains what VET FEE-HELP is and what information students must be presented with prior to them agreeing to undertake training. We check that students have not been given erroneous or incomplete information by continuous random sampling feedback calls. If a student is in any doubt we rectify the situation immediately and retrain the recruitment staff involved. 568 There is no evidence to suggest that these statements in fact reflected the practice being adopted by Phoenix or any associated companies. However, they do demonstrate knowledge of practices which should have been adopted as part of ensuring compliance with the RTO Standards. 569 In response to Phoenix's Request, on or about 14 April 2015 and pursuant to cl 61 of Sch 1A to the HES Act, the DET approved an increase to the advance amount to be paid to Phoenix in 2015 from $2,410,492 to $54,168,001.00.531 While the varied advance amount was therefore approximately $20 million less than requested, the difference between the original estimate and the increase approved for the 2015 advance was extraordinary. Perhaps somewhat surprisingly, the Manager of the Provider Assurance and Systems Branch not only signed off on the recommendation to this effect, but did so on the basis that the Financial Viability Risk Rating for Phoenix was "Low".

10.9.4 Complaints in late March 2015 raised by the Department with Phoenix 570 On 24 March 2015, Mr Gale forwarded Mr Brown an email which Ms Johnson from the DET sent to him (copying in Ms Crittenden and Mr Moffat) earlier that morning regarding a complaint made by a resident of Victoria about Phoenix's marketing practices.532 The same email was also sent separately to Ms Crittenden.533 The email from the DET stated in part: [Mr D] is concerned that the door to door salesman is misrepresenting the course and loan scheme. He asked him how much the course was and was advised $18,000 and that it didn't matter because if he wasn't earning over $53,000 dollars the government would pay. He advised the information about the fee structure was on the study assist website. He was not clear on the issue of having to pay the loan back. … [Mr D] wants confirmation that he has not been enrolled in any course with Phoenix Institute and that the contract has been shredded …534 571 The email from the DET continued: In line with the recent announcement by Senator the Hon Simon Birmingham (Assistant Minister for Education and Training) regarding the unscrupulous marketing behaviour of some private training providers, you may wish to ensure that any marketers engaged by Phoenix Institute to recruit prospective students are adhering to the VET Guidelines 2013. For your information a copy of the VET reform factsheet can be found at https://docs.education.gov.au/system/files/doc/other/vet_fee_help_reforms_implementation_overview_acc.pdf. The information provided in the complaint raises concerns around Phoenix Institute's training of its marketing brokers and the practices being undertaken by marketers in recruiting students. The approved VET provider is responsible for the training and actions of its marketing brokers. 572 The announcement by the Assistant Minister referred to in the email from the DET was communicated to VET providers, including Phoenix, by letter dated 19 March 2015 explaining reforms to the VET FEE-HELP scheme and stating that "[t]hese changes have proven necessary as a result of unethical behaviour by a small number of approved registered training providers, along with agents and brokers who have been engaged to recruit potential students under the scheme".535 573 On 27 March 2015, Mr Gale responded to Ms Johnson's email regarding the complaint and attached a letter bearing the same date from Mr Brown as CEO of ACN to the DET.536 The covering email from Mr Gale relevantly stated: Since acquisition ACN have placed 4 new (on-line) courses on scope under the Phoenix Institute RTO brand. ACN have a broker network which they use across their RTO Network and as such I have asked Ivan Brown to respond to the complaint. Phoenix Institute has never engaged brokers in the past.537 574 The attached letter from Mr Brown confirmed that [Mr D's] application form had not been processed and relevantly stated: We have trained our sales agents in accurately presenting our courses and VET Fee Help. Our agreements with them stipulate how they must behave and not engage in any activities inconsistent with the guidelines and normal ethical behaviour. In the main, our sales representatives have performed very well. However, in a very small number of cases we find that they may not have fully followed the correct procedure. Given the number of enrolments we've achieved, the percentage of slip ups is indeed very small. The monitoring of and liaison with our sales representatives comes from the highest levels of management within ACN and Phoenix.538 (Emphasis added.) 575 The reference to the "highest levels of management" within ACN and Phoenix includes Mr Kochhar, who had responsibility for managing and overseeing the Brokers and Agents.

10.9.5 Complaints about Broker practices continue and include those pursued by Northern Territory Consumer Affairs on behalf of consumers 576 Despite Mr Brown's reassurances to the DET, complaints continued to be received in April 2015. 539 The following examples are indicative. (1) Ms Katelyn Campbell, myTime Learning, emailed Ms Bagga on 22 April 2015 about a complaint made by a mother in relation to her daughter who had been recently doorknocked and signed up for the Diploma of Business.540 The mother had explained that, despite being aware that her daughter had no interest in the course and no intention of completing it, the Agent told her daughter to sign up for a free laptop and said that she would not have to complete any of the work. The Agent also gave the daughter "a script of what to say when our customer services consultants ring". Ms Campbell said she had responded by advising that she would withdraw the complainant's daughter from the course. (2) On 23 April 2015, Mr Gale received a further complaint sent to the Phoenix General Enquiries inbox complaining of a "very pushy" Agent for Phoenix who "pretty much demanded that my husband and I enrol in a course so we could 'benefit' from a free laptop". Mr Gale passed this on to ACN (see at [526] above).541 577 Of particular concern were complaints relating to Broker practices in the Northern Territory which became the subject of a series of communications between the respondents and Northern Territory Consumer Affairs (NTCA) starting in April 2015. Ms Ann Holland, a Compliance and Investigations Manager at NTCA gave evidence by affidavit about her investigations into complaints lodged with NTCA about marketing practices engaged in by the Broker GG Sales on behalf of Phoenix, her discussions and correspondence with Mr Gagan Sachdeva of GG Sales and Mr Kochhar in relation to those complaints, and the adequacy of their responses.542 578 On 27 April 2015, Ms Bagga emailed Mr Henrik Hartmann at NTCA, copied to Mr Kochhar, in response to a complaint conveyed by Mr Hartmann, stating that: "[w]e are in the process of starting to consider doing business in [the] Northern Territory however I confirm that we DO NOT have any current representation in the state for now" (emphasis in the original).543 Shortly thereafter on the same day, and inconsistently with the email to Mr Hartmann, Ms Bagga emailed Mr Kochhar, with the subject heading "Issues at NT". In the email, she outlined some common concerns raised by consumers who had lodged complaints to "Consumer Affairs NT" about marketing practices being deployed in the Northern Territory, including: • Promoting techniques and the way sales are being conducted - Potential students are being given the hard sell, misleading information is being communicated across and blatant lies are being told at [the] time (This course is completely free, you will get a free laptop and even if you withdraw later on for whatever reason, the laptop is still yours) • Offering to 'help' potential students complete their paper work including photos of the answers on their phones to help them cheat and later say they filled out the form themselves when asked. • Consultants have not identified who they are (actual company they represent) in addition to the fact that they submit enrolments to Phoenix (MytimeLearning) only • Not left any follow up cards • No legitimate IDs • Some people were even asked to just sign and lured with multiple gadgets for multiple courses.544 579 On the following day, Mr Kochhar forwarded Ms Bagga's email to Mr Sachdeva of GG Sales. The clear implication is that Mr Kochhar was concerned that these practices were being engaged in by GG Sales. Consistently with this, Ms Holland, then a Senior Compliance Officer at NTCA, rang Mr Sachdeva on 29 April 2015 in relation to complaints received by NTCA about marketing activity undertaken by GG Sales.545 Ms Holland's contemporaneous notes record that during the course of that call, Mr Sachdeva confirmed that his contract jurisdiction covered the Northern Territory, as well as Victoria, New South Wales, South Australia, and Western Australia. 580 Later that day, Ms Holland telephoned Mr Kochhar regarding the reports of unsolicited sales of VET FEE-HELP training courses to Northern Territory residents and offers of a free laptop, having been given Mr Kochhar's name and telephone number by Mr Sachdeva. Ms Holland's handwritten file note of the conversation with Mr Kochhar made shortly after the conversation relevantly records the following: I advised Mr Kochhar that NTCA had received consumer reports of door to door operators selling training courses for Phoenix Institute in the Darwin region. Consumers are concerned they may have been the subject of some sort of scam because their personal details were taken eg Tax File Number, Drivers License. Consumers claim that operators are saying they can get a free laptop if they sign up for a free training course. My colleague Henrik Hartmann made enquiries by phone on 23 April 2015 to Phoenix … to establish whether it was a Phoenix campaign. Ms Nidhi Bagga, Operations Manager of Phoenix'[s] online division MyTimeLearning responded by email on Monday 27 April 2015 staing that the unsolicited activity was unauthorised as "I confirm that we DO NOT have any current representation in the state for now". I advised Mr Kochhar that through reports we established that GG Sales & Marketing had a team of 5-6 people operating in Darwin. Mr Kochhar confirmed that Phoenix had an agreement in place with GG Sales & Marketing, a broker company, to promote their business but claimed that and [sic] Nidhi did not know that there was a team operating in the NT when she sent the email. Mr Kochhar said that he called the brokers on Friday 24 April to stop sales campaign [sic] in the NT immediately. I expressed concern that consumers were vulnerable, [I]ndigenous, on benefits and were being signed up for training courses, not being properly informed, not getting any paperwork about what they were entering into but were in the expectation they would get a free laptop computer. I said that such conduct by the brokers may amount to misleading conduct under the ACL potentially exposing the company to compliance action unless the practice is rectified. Mr Kochhar said that Phoenix had a rigorous assessment and eligibility process for applications. … Mr Kochhar assured me that Phoenix was not doing pressure sales. … Mr Kochhar said that the brokers have been called to stop and will deal with brokers.546 (Emphasis added.) 581 On 12 May 2015, Ms Holland provided a letter by covering email to Mr Kochhar, noting in the letter that Mr Sachdeva of GG Sales & Marketing Pty Ltd had confirmed that "in excess of 50 applications were gathered during the [Northern Territory] campaign and the campaign was terminated on Friday 24 April 2015 at [Mr Kochhar's] instruction".547 The complaints concerned unsolicited visits to homes from marketers implying they were government employees offering free laptop computers and free training, failing to provide consumers with the paperwork they had signed, and failing to ensure that consumers were aware that they were signing up for VET FEE-HELP loans. Another example given by Ms Holland concerned an intellectually disabled man who was incapable of comprehending any documents and was asked to contact his bank to obtain his account details. Mr Kochhar was requested to provide information to NTCA by 21 May 2015, including a list of all of the applications received by Phoenix as a result of the Northern Territory campaign (NT campaign), the quality screening processes Phoenix would use to be satisfied that consumers were not misled or offered prohibited inducements, and the steps Phoenix had taken to address the alleged conduct of its marketers. 582 Nonetheless, these issues were not thereby resolved, as follow up calls made by Ms Holland to a number of the consumers in June 2015 revealed, as I later explain.

10.10 The VET Guidelines 2015 commence on 1 April 2015 and Mr Brown is appointed to the VET FEE-HELP Reform Working Group on 22 April 2015 583 On 30 March 2015, the Assistant Minister for Education and Training made the VET Guidelines 2015,548 which relevantly came into effect on 1 April 2015 and repealed the VET Guidelines 2013. As earlier explained, the new Guidelines introduced changes to proscribe the use of specific inducements, such as laptops, vouchers and cash payments, and prohibited a VET provider from enrolling a person in a VET course unless the provider was satisfied on reasonable grounds that the person was not offered a prohibited inducement. Clause [4.4.1.1] specifically stated that the purpose of these requirements was to enable prospective students to select a VET provider based on considerations of quality and price of training. 584 At the same time, in a media release entitled "Time is up for shonky VET spruikers",549 the Assistant Minister for Education and Training, Senator the Hon Simon Birmingham, explained that in addition to prohibiting the offering of inducements, the VET FEE-HELP reforms were intended to: • Protect vulnerable students by requiring providers to properly assess students for minimum prerequisite educational capabilities before enrolment. • Eliminate insidious practices like "nursing home" enrolments. • Stop marketing agents and brokers "freelancing" to sign up as many students as possible, without the training provider being held responsible for their actions. • Give students clear information that helps them understand that VET FEE-HELP loans are real debts that impact their credit rating and are expected to be repaid. 585 The Assistant Minister for Education and Training also wrote to the CEOs of all RTOs, including Mr Gale at Phoenix, advising of the new guidelines.550 These messages in turn were reinforced in the Department's April 2015 HELP Newsletter, which stated, among other things, that the "practice of offering … inducements to prospective students has resulted in many people, including disadvantaged Australians, ending up with a substantial debt with limited or no training outcomes" and that the "[g]uidelines ban inducements like offers of free IPADS, meals, vouchers and prizes".551 In addition, the Department issued its updated VET Administrative Information for Providers guide (VET AIP),552 providing information in relation to VET FEE-HELP payments (including advance payments) to VET providers. The changes to the VET AIP included updates to highlight restrictions on the use of inducements in VET enrolments in line with the VET Guidelines 2015. 586 It follows that Mr Brown and Mr Kochhar must have been well aware of the prohibition imposed by the VET Guidelines 2015. Further, presumably in response to the new Guidelines, from 1 April 2015, a laptop loan application or rejection form was included in the Phoenix enrolment forms.553 587 Ironically on 22 April 2015, Senator Birmingham wrote to Mr Brown appointing him to the VET FEE-HELP Reform Working Group. Senator Birmingham explained that the role of the Working Group was to advise him and the Department on the implementation of the recent changes to the VET FEE-HELP scheme and further explained that: As you would be aware, these changes have been necessary to help protect vulnerable students, taxpayers and the reputation of the wider VET sector, from the actions of a small number of unscrupulous VET FEE-HELP approved training providers, and/or their agents and brokers. … It will provide a vehicle for ensuring that stakeholder concerns are addressed, and that the changes I have announced are implemented in a manner that achieves their aim to protect students and taxpayers, and that restores the reputation of the VET FEE-HELP scheme and VET sector more broadly.554 588 In the letter, the Minister advised that he expected that meetings would be held monthly, with the first to be held on 30 April 2015.

10.11.1 Overview 589 As I explain below, the report of Phoenix's RTO Compliance Review issued in May 2015 highlighted areas requiring significant improvement as against all RTO Standards. The documentary record also establishes that complaints about Broker practices continued to soar, including about the apparent targeting of vulnerable communities with poor English skills and from disadvantaged socio-economic groups, and people with terminal illnesses and serious disabilities impacting upon their capacity to undertake the courses. Thousands of enrolments also continued to be pushed through.

10.11.2 Phoenix's RTO Compliance Review (15 May 2015) 590 On or about 15 May 2015, the report of Phoenix's "RTO Compliance Review" (the RTO Review Report) was issued by Mr Bevan for Phoenix.555 The summary of the report noted the following: Phoenix is currently registered for seven training package qualifications and five accredited course qualifications. As part of its compliance and continuous improvement program, Phoenix has implemented a review of its RTO against the new Standards for RTOs 2015 and other compliance requirements at a national and funding contractual level. The review focused on myTime learning branded course offerings with approximately 2,100 active participants at time of review. The review highlights that Phoenix requires significant improvement in order to demonstrate compliance against all eight of the new Standards for RTOs 2015, with thirty-eight recommendations for improvement provided."556 (Emphasis added.) 591 On 20 May 2015, Mr Bevan sent the RTO Review Report to Ms Bagga and Ms Blefari, noting that he had "presented and discussed the report with Harry [Kochhar]" earlier that day and had agreed to prepare an action plan based on the recommendations in the report for consideration.557

10.11.3 Significant escalation in complaints and action taken with respect to Brokers and Agents 592 During May 2015, ACN positioned an additional receptionist at the Phoenix office in Queen Street to deal with enquiries and complaints about the Online Courses and to redirect the calls to the Spotswood office.558 593 As earlier indicated, the number of complaints escalated further in this month and complaints continued to be drawn to Mr Kochhar's attention. 594 First, a series of complaints were made in early May 2015 to CTI from the Cambodian Association of Victoria on behalf of a number of individuals with low levels of, or no, English language skills. Internal correspondence within CTI and copied to Mr Kochhar advised that "door to door sales people" had "gone to many folks [sic] homes" and were engaging in the following conduct: • [C]reating completely fake email addresses and contact details for the student on the spot as oppose[d] to creating a legitimate email in front of the student and providing them with their login details • Claiming that they will receive a free laptop no strings attached but MUST sign contracts and provide personal information and tax file details • … [F]ollowing through on the sale knowing these individuals have low level of English and do not comprehend what is being asked of them • … [Being] very pushy and demanding of these individuals559 (Emphasis added.) 595 Ms Bagga subsequently sent an email on 11 May 2015 to, among others, Mr Sachdeva and Mr Kochhar advising that the Agent concerned "actually goes by an alias - Sophie, her real name is Phuong from GG sales under Quantum (Sandeep) as confirmed by Gagan. Gagan also confirmed that he will be getting her contract terminated effective immediately."560 Subsequently, on 13 May 2015, Ms Bagga emailed Mr Kochhar stating: "… I have built rapport with her [referring to Ms Chheang from the Cambodian Association of Victoria] so she'll definitely inform me before anything. She is on my calendar to call back tomz just with some guff if not a real resolution at this stage" (emphasis added).561 Responding with "guff" to serious complaints was, unfortunately, a common practice engaged in by the respondents.562 596 Secondly, on 5 May 2015, a number of complaints were received by email and brought to Mr Kochhar's attention, namely: (1) A complaint from the Multicultural Disability Advocacy Association of NSW that door knockers were "targeting disadvantaged areas" where applicants were "financially disadvantaged", "elderly", "coping with some form of a disability", "[had] limited English skills / comprehension", and "[were] [v]ery likely to be home during working hours".563 The Association was also concerned that: • [Agents were] [d]angling a laptop in front of them (an item most of these individuals would never be able to afford) and having them provide details like tax file number, personal information, birth certificate/passport etc … • The agents are very pushy in their sales approach • Agents are only leaving a piece of paper with their first name and sometimes a number, not disclosing where they are actually from.564 (2) A complaint in relation to an Agent who had "offered a free laptop, free lighting globes and shower heads, for enrolling into the course, he stated she could with draw [sic] straight away without completing the units and still keep the laptop".565 (3) A complaint by a consumer in relation to an incident in the Northern Territory concerning the Broker Eduskills asking to withdraw and stating that the Agent "made him sign up, said that he will get a free laptop and he doesn't have to do the course at all", in circumstances where the complainant explained that he was "in the last stage of cancer, and most of the time he is in the hospital".566 In response, Mr Kochhar said that he needed a direct email from Eduskills confirming the sub-agent had been sacked. Despite this complaint, however, Eduskills (ie Educational Skills Australia) was identified as an external Broker for Phoenix in Phoenix's "Variation (2) to the 2015 Estimation for Advance Payment - Phoenix Institute of Australia" dated 5 June 2015 to the Department.567 597 That evening following receipt of yet another complaint, Mr Kochhar emailed Mr Cugliandro (copied, among others, to Ms Bagga) saying "I think too many in one day makes me worry. It requires us re contacting [sic] all the agents. Please come and see me tomorrow morning" (emphasis added).568 598 The litany of complaints continued the following day. On 6 May 2015, Mr Gale received a further email complaint sent to Phoenix's General Enquiries inbox which Mr Gale forwarded to Mr Brown.569 The complaint referred to "sales people going door to door, getting people to sign blank forms, telling people they do not have to pay for anything unless they earn above a preset limit, offering them a free $1500.00 computer and when they get a phone call just say yes to everything and sound positive".570 On the same day Ms Bagga also received a complaint about a "very pushy" agent, again later shown to be an "Edu Skills sale". Later that day Mr Kochhar emailed Ms Bagga, Mr Cugliandro and others, stating: "I am getting tired of this. All clients need to be contacted today …".571 599 In response to the volume of complaints being received, CTI took a number of steps. 600 First, Mr Cugliandro emailed several Brokers (copying in Mr Kochhar) on 6 May 2015, stating that: It has come to or attention, that perspective [sic] students are being approached by brokers that are offering them free laptops, light globes and shower heads to entice them to enrol in a course. THIS IS UNACCEPTIBLE!! [sic] We have also been advised by students have been [sic] approached by brokers who have severe disabilities and who are terminally ill who are being coerced into enrolling into a course. AGAIN THIS IS UNACCEPTABLE!!572 601 The email referred to a release by the ACCC and advised that CTI "will not hesitate to review or cancel contracts, if it is seen that any of our brokers/clients are conducting business in this manner" (emphasis in the original). The email from Mr Cugliandro to the Brokers further advised that: The basics of enrolling are: • If a student has severe disabilities, they are not to be enrolled. • If the student is terminally ill, they are not to be enrolled. • The word FREE is not to be used at all. With the computer loan agreement is it [sic] exactly that a "LOAN" it is not free. (Emphasis in the original.) 602 The email concluded by requesting a list of all sub-agents with their full name and mobile telephone number for CTI's records. 603 The inevitable inference to be drawn from this last request is that such a list was still not available despite CTI having advised Brokers on 18 January 2015 that "you and your sub agents will need to be registered with CTI and have a CTI produced ID" (see at [512] above). As is, in turn, implicit in that requirement, Phoenix would be unable to discharge its responsibility for the conduct of Agents acting on its behalf in marketing Phoenix Online Courses in the absence of such basic information. 604 Furthermore, the threat that CTI would terminate or review contracts with Brokers if they were found to have engaged in unacceptable conduct of the kind identified in the email was an empty one. Save for the alleged termination of one Broker contract for reasons which are unknown,573 no such action was ever taken by the respondents despite persistent and escalating complaints of such inappropriate misconduct throughout the relevant period. To the contrary, the worst offenders continued to be engaged by CTI and directly by Phoenix after 1 July 2015, and were even rewarded in the case of GG Sales with a higher commission when contracts were renewed. Reprisals for such conduct went no higher than the system put in place by CTI in June 2015 of "blacklisting" individual Agents by placing them on a Rogue Agents List. 605 Secondly, following a further complaint received by CTI from the Western Australian Police Force on 7 May 2015 about a "door to door sales man" and the suggestion that this was under investigation by the police,574 Mr Kochhar requested Mr Cugliandro and the CRM Team obtain written confirmation from every client relationship manager that they had spoken with each of their agents following Mr Cugliandro's email on 6 May 2015. The email chain575 discloses that in this case, the police advised CTI that the Agent was wearing a name badge with the Phoenix logo and was allegedly engaging in "dodgy" sales techniques in Coolgardie, a small country town in Western Australia, with the locals not being too sure what they were signing up for and concerned about the disclosure of their personal information. An email from the Agent concerned, Mr Vijay Kumar, explaining his conduct in less than satisfactory terms, was forwarded to a client relationship manager, Ms Rafter, by Mr Sachdeva and copied in the ensuing email chain that day to Mr Kochhar.576 From this it can be inferred that the Agent concerned was engaged by Mr Sachdeva of GG Sales. 606 Thirdly, by a letter purportedly dated 7 May 2015, CTI issued a reminder about the submission of travel schedules by Brokers, which were "monitored" by the relevant client relationship manager. The letter identified the following issues with travel schedules: • Late travel schedule submission • Sales representatives marketing in areas that are not indicated on the travel schedule at all • Sales representatives marketing in areas when it is indicated they are in a different area for that particular date.577 607 Given the lack of a complete list of Agents marketing Phoenix's Online Courses and numerous complaints of exploitation of disadvantaged individuals in low socio-economic areas by Agents, the failure by Brokers and Agents to submit timely travel schedules and marketing in unscheduled areas should have been another "red flag" indicating that there were serious problems in exercising control over Agents in the field. It should have, but did not, prompt more effective action than merely a reminder to Brokers which effectively delegated the responsibility to them. 608 Fourthly, on 12 May 2015, Mr Cugliandro wrote to the Brokers on behalf of CTI about LLN and PTR issues, attaching "PTR & LLN Checklist Guidelines", dated 8 May 2015.578 While the Guidelines required the Agent to "ensure the STUDENT is completing their PTR and LLN and it's in the student's hand writing" and that the students sign the declarations and print their names, other aspects of the Guidelines suggest that the concern was more with the appearance of compliance than with compliance in fact. The Guidelines, for example, curiously state "[p]lease ensure that the handwriting in the enrolment form is consistent from start to end and that we don't see various hand writings that will make the form non-complaint [sic]". They also explain what should and should not be included in answers to PTR questions, namely, that they "have paragraphs containing [a] minimum of four sentences and MUST be professional language" and do "NOT" give the following answers and similar phrases: • Developing English (English is a pre-requisite) • To gain Confidence / self confidence • To get a job or better job • To get a certificate • Start a business • Good appreciation of knowledge • Improve my skills in using a computer (THIS IS AN ONLINE COURSE) • Learn more / new skills • Meet new people (THIS IS AN ONLINE COURSE) • Better future • Upgrade communication skills • Running a CASH business • Money handling skills • More peace of mind for the future Please ensure that ALL questions are filled in prior to submission. (Errors in the original.) 609 The Guidelines also advised that authorised Phoenix representatives could mark the PTR but not the LLN. 610 In the fifth place, on 20 May 2015, Mr Cugliandro emailed all "VFH clients" about new clauses to be inserted in "Agent" contracts in response to the spate of complaints about the conduct of agents and sub-agents when dealing with prospective students. In the email, he advised that Agents and sub-agents would need to "commence issuing business cards [to be supplied by CTI] to all students they come into contact with", that there would be penalties for non-compliant enrolment paperwork, and that all Agents would need to submit a list, with contact details, of all sub-agents with all sub-agents needing approval from CTI going forward.579 In spite of the last of these instructions, it is apparent that as late as 28 May 2015, Ms Bagga was still endeavouring unsuccessfully to receive a complete list of sub-agents from Mr Gagan Sachdeva, who advised that he needed more time to get the Agents' details.580 Nor was there any evidence of penalties being imposed for non-compliant enrolment documentation submitted by Agents or Brokers. To the contrary, there are numerous examples of students being enrolled in Phoenix Online Courses despite their enrolment documentation being non-compliant: see eg Section [13.7] below. 611 Importantly, none of the steps taken by CTI in response to the volume and serious nature of the complaints about unethical conduct by Agents involved any "root and branch" reconsideration of the system of marketing Online Courses through Brokers and Agents which had formed a central pillar of the business plan following Phoenix's acquisition for the rapid expansion of its student base to a national one. Yet it was that system of marketing which permitted and incentivised the Brokers and Agents' engagement in conduct of this kind. Nor did the volume and nature of the complaints prompt any attempt by the respondents to introduce systems to ensure that all Brokers and Agents were educated in their responsibilities and legal obligations. Rather, the respondents effectively sought to delegate responsibility to the Brokers for conveying their instructions to Agents about what practices were and were not acceptable, despite the Brokers being in a clear conflict of interest situation. 612 Not surprisingly, therefore, similar serious complaints about Broker/Agent conduct continued unabated, including that representations were made about a free laptops, and that applicants were given answers to the LLN test and pressured to sign up581 or told that they must sign up to two courses.582 The email trails establish that these complaints were invariably brought to the attention of Mr Kochhar and/or Mr Brown who, far from acting to stamp out such practices, routinely requested the Brokers to submit hundreds of applications for enrolment (including for "doubles"). 613 The following examples of continuing complaints are illustrative. (1) On 7 May 2015, Ms Alana Theuma, a myTime Learning trainer, emailed Ms Bagga about a student who "believed the laptop was for free upon enrolling" and was given for interactive games with her children, and was "unaware that she was enrolled in her ECEC and Business courses".583 Ms Bagga responded "I wonder why this doesn't surprise me! Its [sic] SM group", referring to one of the Brokers, and said that she would "get this withdrawn cos the student had some real naïve conversation." (2) On 13 May 2015, Ms Michelle Walker, DET, spoke to Mr Moffat, Contracts Manager at CTI, about five complaints that the DET had received in relation to conduct in NSW, WA, Victoria and South Australia.584 Mr Moffat advised Mr Brown of the complaints by email, noting that two of the consumers concerned from Victoria "have disabilities and are hardly able to read or write". Mr Moffat also wrote: "[t]he department is concerned that this appears to be happening in more than one state and with more than one broker so it may be a generic issue",585 clearly drawing the systemic nature of the issues to Mr Brown's attention. Later that afternoon, Mr Brown called Ms Walker whose file note records that she had raised concerns with Mr Moffat in relation to the provision by Brokers of "incorrect and non-complaint [sic] information being provided such as offering of free laptops, the advice the courses are free, unless earn more than $55,000 and the test answers are being given to the prospective students".586 Mr Brown stated that "they accept around 50 per cent of the prospective student enrolments forwarded to them by brokers", implying that Phoenix effectively vetted enrolment applications to ensure that applications obtained through such means did not proceed to enrolment. Yet that was manifestly not the case. For example, the vast bulk of enrolments proceeded without telephone verification and indeed pressure was placed on staff to enrol unsuitable consumers when it was perceived that there were too many cancellations (see eg Mr Kochhar's instructions to Mr Lewis to "go easier… [w]e need fewer cancellations …" at [406] above). (3) Also on 13 May 2015, Ms Janey Shoufany, CTI eLearning Coordinator, emailed Ms Bagga about a complaint concerning the sales tactics of door-to-door salespeople in Geelong, Victoria, including offers of "a free laptop" and the targeting of "low soci[o]-economic area[s]" and "vulnerable people".587 In light of Ms Shoufany's email, Ms Bagga sent an email, including to Mr Kochhar, later that night stating that: The nature of complaints aren't changing regardless of the change in the guidelines introduced on the of [sic] 1st of April.. and neither are the number of these complaints dropping. Its [sic] becoming more and more evident that there is huge gap in their training and a sheer negligence of code of conduct588 (Errors in the original.) (4) As the applicants submit, this is a clear acknowledgement by Ms Bagga (communicated to Mr Kochhar) that Phoenix did not have an acceptable level of oversight over the conduct of its Brokers and Agents. In response, Mr Kochhar wrote: "[t]hese people will be called in the office and not sacked over the phone anymore. I will have someone re train [sic] them in the back shed." 589 (5) On 20 May 2015, Ms Bagga received yet another student complaint from Ms Shoufany, this time concerning two students in Victoria who said that they were given the answers to the LLN and were told "they wouldn't have to pay for the course". Ms Bagga forwarded this to Mr Kochhar and said that she "spoke to Gagan [Sachdeva, from GG Sales]" and that he would "look into it".590 Again the response was to effectively delegate the problem notwithstanding that the responsibility clearly lay with Phoenix. (6) A similar student complaint from the Northern Territory was also forwarded on 20 May 2015 by Ms Bagga to Mr Kochhar and Mr Cugliandro where the consumer alleged that he was told by an Agent "all the answers to the LLN test" and that the course was a "fully funded course to get students back into the workforce".591 The Broker was identified by Ms Bagga once again as GG Sales.

10.11.4 Concerns about Agents on-selling enrolments to competitor VET institutions 614 The complaints did not all relate to the conduct of Brokers and Agents vis-à-vis consumers. Mr Kochhar also considered that there was a huge problem with Brokers and Agents on-selling students originally signed up to Phoenix to competing VET institutions. This concern was expressed in the following email correspondence. Advice from a Broker, Alpha Prime, that a consumer wished to cancel her enrolment with Phoenix and return her laptop because she had signed up to a double diploma with another college led Ms Bagga in an email to Mr Kochhar on 6 May 2015 to identify part of the problem as "late enrolments. Whether late data entry on system , call back for verification or any simply in transit - that's where the student constantly questions how long for laptop, or they beat us and call in when we have no info of them available either" (errors in the original). Mr Kochhar replied to Ms Bagga later that evening stating that "We do have a huge problem. I need time to fix this mess …" and "[n]eed more control over the agents".592 The suggestion that more control is needed over the Agents in the context of this email exchange is plainly directed at fixing the problem of students signing up with other colleges due to delays in information about consumers being conveyed from the Brokers and Agents to CTI, rather than addressing the multitude of complaints being received from consumers, and those representing consumers, about Brokers and Agents.

10.11.5 The "Student Log-on Project" in April and May 2015 615 Together with other corroborative evidence which is subsequently discussed, the email correspondence examined below establishes, as the applicants submit, that Mr Kochhar together with Ms Bagga oversaw the so-called "Student Log-on Project". Pursuant to that "project", Mr Mahak Laddha (or "Mac" as he was also known) and Ms Khushboo Ajmera logged on to the Phoenix learning management system, FinPa, using students' log-in details without the students' knowledge or permission. Mr Laddha and Ms Ajmera were the two directors of the Broker AMK Australia Pty Ltd (AMK)593 where they also worked as compliance marketing and administration managers. Mr Laddha was also identified as an external Broker for the ACN Group in Phoenix's Variation (2) to the 2015 Estimation for Advance Payment - Phoenix Institute of Australia dated 5 June 2015.594 In addition, Mr Laddha had a role in Information Technology Support for CTI,595 while Ms Ajmera was employed by CTI in marketing.596 616 This project commenced in April 2015 and was intended to give the appearance that consumers enrolled in Phoenix's Online Courses were actively engaged in the courses when in fact they were not. To the contrary, Mr Laddha and Ms Ajmera were given lists of enrolled consumers selected for the project on the basis of an assessment that these consumers were definitely not going to personally engage with the Online Courses and log on because the Student Log-on Project might then be discovered. 617 The first step in the implementation of the Student Log-on Project was the preparation of a report or list of "students" who had never logged in to FinPa. This step is referred to in an email on 13 April 2015 from Ms Bagga to Mr Kochhar entitled "Never logged in Report", in which she asked: Can I set that up so you, Mac and I receive it ? Or you want more people to get it too ? And you want it Monthly or fortnightly ?597 (Errors in the original.) 618 Shortly thereafter on 16 April 2015, Ms Bagga, Mr Kochhar and Mr Laddha received a "full student list" from FinPa,598 and a further "full student list" from FinPa the following day.599 In each case, the student list spans some 57 pages in small print, with each entry apparently setting out the name of a student who had not logged on to FinPa as at the date on which the list was generated, together with the student's email address and their password. 619 On 17 April 2015, Ms Bagga emailed Mr Kochhar asking whether a list sent from Mr Sunny Banga purporting to refer to "[s]tudents that couldn't be contacted" was the "report" that Mr Kochhar wanted her to "give to Mac".600 Ms Bagga then emailed Mr Kochhar (in seeking to clarify whether there was another report to send to Mr Laddha) stating: "this report is the one I told you about where the students are logging in, at least 2 that I know".601 620 By 22 April 2015, it seems that preparations were almost completed for the Student Log-on Project to be implemented. On that day, Mr Laddha emailed Ms Bagga and Ms Ajmera602 a document described as a "report for group logon spreadsheet".603 Ms Bagga replied by return email, copying in Ms Ajmera, with instructions to Ms Ajmera as follows: HI Khushboo - Can you please log in at a reasonable pace(I don't want concerns raised as to how its happened all of a sudden) and go date by date, starting from 19/1/2015 making your way uptp [sic] Feb and March. … spread out the logging over a few days - no rush…604 (Errors in the original.) 621 On 24 April 2015, Mr Kochhar sent an email to Ms Bagga attaching a list of students, stating "this should be one list who will be Mac's students". Ms Bagga forwarded that email to Mr Laddha, stating, "[p]ls see the list attached , these are the students attached to start attempting work …" (errors in the original).605 This list in turn was forwarded by Ms Bagga to Ms Ajmera on 5 May 2015.606 It is clear that the attached list of students was therefore those students in respect of whom Mr Laddha and Ms Ajmera were purportedly to log on to FinPa. 622 On 27 April 2015, Mr Kochhar forwarded an email to Ms Bagga entitled "VFH STUDENTS" apparently from Faris Advance Training Group containing another list. Ms Bagga, in turn, forwarded the email the following morning to Mr Laddha (copied to Mr Kochhar) stating, "[t]hese are the students that you can start working for ...".607 As such, it appears that lists of "dead" students (ie those never likely to log on) were compiled with the assistance of some Brokers and Agents. 623 On 28 April 2015, Ms Ajmera sent an email to Ms Bagga and Mr Laddha with the subject heading "student logon project" and stated: Please find herewith the list of students for which i have logged on to the My Time Learning. I was getting an error with few students as "INCORRECT LOGIN" please suggest me what to do in this case. Also please suggest should I increase my speed with logins per day. Currently I am aiming at 30-40 students per day. 608 (Emphasis added; errors in the original.) 624 As such, by this time the project was already well underway. By way of example, Consumer D's neighbour, Consumer FB, was one of the students who were logged in to a course for the first time pursuant to this project. Annexed to his affidavit are two screenshots showing that, despite having received his log-in details from Phoenix only on 29 July 2015, upon subsequently logging in to FinPa for the first time he discovered that his myTime learning records stated that the Diploma of Business and Diploma of Community Services had been commenced on 27 April 2015.609 625 Email correspondence exchanged on the evening of 4 May 2020 between Ms Bagga and Mr Kochhar on the subject identified as "List of "dead" students" suggests that significant numbers of consumers enrolled in Phoenix's Online Courses were logged in to FinPa pursuant to the Student Log-on Project. In the exchange, Ms Bagga states that "I don't want any student that might decide to start working and [sic] find it's already done" and asked "[d]id Gagan give us any??" (errors in the original). Mr Kochhar responded that "Mahak has logged in 500-600 students so far. What is the solution to this then?". Ms Bagga responded "Logging isn't an issue, it's the physical work and we need to be a [sic] 100% sure that the student if def dead or never going to log in" (emphasis added).610 626 Queries from trainers contacting students who denied having logged in despite FinPa recording otherwise further corroborate the existence of the Student Log-on Project. For example, on 25 August 2015, Ms Leontyne Ellis, a myTime Learning trainer, emailed Ms Bagga with the subject heading "Students who never logged in, but history shows logged in", advising that: With the calls we are making to learners , I have a concern, and it appears to be with a few learners. They say they have never logged in at all, but their history shows they have logged in and attempted units, is this an IT error or should I be concerned, because I talk to them with positive encouragement and highlight the fact that they have started and they reply back saying 'I have never logged on' …"611 (Emphasis added; errors in the original). 627 Ms Bagga emailed Mr Kochhar later that afternoon, forwarding the email from Ms Ellis and warned him that: I would like … you to be aware of this as the # of trainers increase, this will be a likely occurrence. Some of them (most of them)have verbal diarrhoea and can't help but poop out this info wherever they sit.612 (Errors in the original.) 628 The email in what might wryly be called colourful terms warns Mr Kochhar that they can expect more reports from the trainers of similar discrepancies in circumstances where students are now being called and told that, unbeknownst to them, they are recorded as having already logged in to the learning management system, FinPa. Mr Kochhar replied that evening to Ms Bagga, stating, "[w]e need our trainers (by quals) on all these students. This is the only way". However, Ms Bagga responded with her concerns that: It is really hard to manage as these students are scattered across. Each trainer has around 300 students and all I have 21 trainers only for Bus and Mgmt. You want that done across all non-loggers anyway , right? We might need to discuss - I have got the trainers calling the students mandatory and I [sic] they submit call logs. The more they call, more they know.613 (Emphasis added; errors in the original.) 629 The inference is obvious and compelling: Ms Bagga was concerned that the more enrolled consumers who were contacted by the trainers, the more likely that the trainers would be alerted to the existence of a suspicious pattern of enrolled consumers who denied ever having logged in but were recorded in the system as having done so. 630 Similarly, on 26 August 2015, a trainer emailed Ms Bagga, among others, with the following query: I talked to two students who said that they haven't logged in but there is an entry. They are very puzzled. So am I. Could there be any possible explanations?614 631 Later that day, Ms Desiree Smith, Client Services Team Leader, responded, requesting that contact be made with the students concerned. However, Ms Bagga replied directing that no contact be made with the consumers, stating, "[p]lease stop - don't call the student. I know the reason. I will be having a chat to the trainers on Friday in the meeting".615 632 Subsequently on 9 December 2015, Mr Sonny Copeland, Internal Audit & Risk Officer, Via Network, emailed Ms Bagga and Ms Helen Breguet, myTime Learning Contact Centre Manager, an Excel spreadsheet titled "Logged in but not commenced a unit" which listed 4,967 enrolments where the consumer concerned had "Logged in but not commenced a unit/content".616 I also note that the spreadsheet disclosed that the vast majority of consumers in the list were enrolled in double diplomas, with some apparently even enrolled in three, four or five courses (see eg the consumer at items 4946 to 4950 of the list). 633 The statistical analysis of the FinPa activity data by Mr Vickers demonstrating Unusual Pattern Data (see at [13.10] below) further corroborates the existence and scale of the Student Log-on Project.617 Reference should also be made here to an email from Mr Damian O'Sullivan, the managing director of FinPa Australia, on 14 May 2015 to Mr Kochhar. This email forwarded advice from FinPa's Chief Technology Officer, that there were 301 accounts in the myTime Learning site "with the same last logon IP address" and identifying the Telstra Bigpond address in question.618 As the applicants submit, the clear inference to be drawn from this evidence is that the one IP address was being used to log in to separate student accounts, further corroborating the existence of a project at this time to falsely log students into the FinPa system to inflate the appearance of student engagement with the Online Courses. 634 In short, the evidence establishes that from at least mid-April 2015, Phoenix, through Mr Kochhar, was aware that its student base was not adequately engaging with its courses, and sought to cover this up by fraudulent means. Specifically, as the applicants submit, the evidence establishes that: (1) Phoenix conspired with its Brokers and Agents to identify consumers who were recruited in the knowledge that they did not intend to study the courses in which they were enrolling (so-called "dead" students); (2) Phoenix engaged employees of a Broker to log in using those consumers' IDs and passwords to create the false impression that the consumers were actively engaged in their courses; (3) on occasion, these persons also completed work on behalf of the student in respect of whom they were logging in; and (4) the "Student Log-on Project" was co-ordinated by Ms Bagga who, under Mr Kochhar's supervision, kept close watch over the number of consumers who had never logged in to their courses from at least April 2015. 635 Furthermore, as the applicants also submit, rather than instruct trainers to ask these consumers if they wished to reconsider their enrolment, Ms Bagga gave instructions on multiple occasions that trainers should attempt to have these students log on to commence their courses. Indeed, in February 2016, Ms Bagga devised a scheme to have these students unwittingly log on and show commencement of their courses by clicking on a link sent in a text message: see further Section [10.20.2] below.

10.12.1 Phoenix's Second Request to Increase 2015 Advance Payment Determination to approximately $236 million 636 On 5 June 2015, Phoenix submitted a further revised estimate of its expected 2015 student enrolments and requested an increase to the Advance Payment Determination (Second Request to Increase 2015 Advance Payment Determination) to approximately $236 million.619 While the request in March 2015 was based upon an estimate of "600 enrolments every 5 weeks", "with a withdrawal rate after the first census date of 40%", the June 2015 request was based upon an estimate of a massive 2,000 enrolments every 5 weeks with the same withdrawal rate after the first census date. 637 By way of an explanation for the increase in the estimate, Phoenix stated that: Our first variation [in March] estimated that income for the 2015 calendar year would increase to 75 million dollars. We were conservative with this estimate because we were unsure as to how effective our sales and marketing campaign would be nationwide. Now that we have actual enrolments at census date 1 for the first four intakes and enrolments prior to the census date for the fifth intake we have updated our predictions and we are entering a second variation. We maintain our conservative approach to forward estimates. Details for our second estimate are 1. Actual enrolments as of 25 May 2015. We have uploaded our first quarter report to HEIMS of 391 enrolments in BSB50207 Diploma of Business 178 enrolments in BSB50207 Diploma of Management (1 intake) 426 enrolments in the CHC50113 Diploma of Early Childhood Education and Care 498 enrolments in CHC50612 Diploma of Community Services Work Our current enrolments in the next two groups are 1414 enrolments in BSB50207 Diploma of Business 1179 enrolments in BSB50207 Diploma of Management 1024 enrolments in the CHC50113 Diploma of Early Childhood Education and Care 960 enrolments in CHC50612 Diploma of Community Services Work 638 While the Request refers to the sales and marketing staff at CTI as rapidly expanding, the number of employees at both CTI and CLI referred to in the Request are the same as that in the First Request to Increase 2015 Advance Payment Determination submitted in March 2015. However, the Second Request from June 2015 explains that the list of companies associated with Phoenix has expanded, as has its recruitment across all states and territories. A list is provided of 30 external Brokers including Alpha Prime Pty Ltd, Educational Skills Australia, GG Sales & Marketing Pty Ltd, Let's Get Qualified, LET'S UPSKILL PTY LTD, Mahak Laddha, Step 123 Pty Ltd, and Studynet Pty Ltd. Notwithstanding overwhelming evidence to the contrary, the Request states that: Our quality and compliance team verify all enrolments by phone to ensure that brokers have explained the courses and to verify that the students understand that Vet Fee Help is a loan. We currently reject, or the students withdraw after discussion, over 40% of the applications originally received from brokers, sales and marketing. All brokers have individual contracts with us and must undergo an induction with our quality and compliance team which includes going through the powerpoint uploaded in our first variation. (Emphasis added.) 639 It is also apparent that the list of Brokers, while extensive, was not comprehensive as it did not refer, for example, to the Broker, 313. Nor did it refer to the Agents separately engaged by Brokers which included not only individuals but other corporate entities such as Oz Sales and Marketing Solutions Pty Ltd and Krish Marketing Solutions.620 640 On 19 June 2015, the DET requested Phoenix to provide confirmation of its current VET tuition assurance arrangements in response to the Second Request to Increase 2015 Advance Payment Determination.621 Sub-clause 20(1) of Sch 1A to HES Act required VET providers to comply with the tuition assurance requirements set out in Chapter 3 of the VET Guidelines. These requirements provided that, in the event a VET provider ceased to provide a VET unit of study (eg if it closed), its students must be given the option of either continuing their course with another provider or receiving a refund of their tuition fees. 641 On 13 July 2015, and in response to the Second Request to Increase 2015 Advance Payment Determination, the DET approved an increase to the advance amount to be paid to Phoenix, to $160,000,759.622 While less than that sought by Phoenix, the amount represents a staggering increase from the original 2015 Advance Payment Determination of $2,410,492 and from the increased Advance Payment approved in March 2015 in the sum of $54,168,001, in circumstances which, on their face, beggar belief given the widespread knowledge of endemic rorting of the VET FEE-HELP system reported repeatedly in the Department's own newsletters. 642 The reasons given by the Department for its partial approval of the increase sought by Phoenix were that the Financial Viability Risk Rating for Phoenix was "Low" and: • Provider has justified the increase as being due to the sale of the business to the Australian Careers Network • Provider has added 4 new courses which will accommodate the majority of students in 2015 • Requested variation is not supported by reported data and a lesser amount is recommended [to be approved] 643 The recommendation advised more generally that the total value of the July 2015 estimates and variations for approval with respect to 15 VET providers including Phoenix (and Empower) was $443,638,484, being an increase of $280,245,357 on the previously approved estimates.

10.12.2.1 Examples of complaints received in June 2015 644 The litany of complaints, particularly against GG Sales, continued unabated throughout June 2015.623 In each case, the complaints were again drawn directly to Mr Kochhar's attention. Examples of complaints include the following. (1) A complaint was made on behalf of a consumer alleging that the consumer had applied for the "business and management" course but sought to withdraw because he was not given any information about the course, did not have an email address and, as he had a learning disability and could not read or write, had no idea what he was signing up for save for the offer of a free computer.624 (2) A complainant made a complaint on behalf of a consumer who had applied for enrolment with Phoenix alleging that StudyNet was taking advantage of people on Centrelink benefits from "ethnic backgrounds". The complainant alleged that StudyNet had signed up the consumer and his wife with Phoenix and two other colleges for three different courses, offering them a laptop for one college and money for signing up with the others.625 (3) A complaint was made against an Agent for Study4Skills on behalf of a consumer seeking cancellation of his enrolment on the basis that he was "railroaded and all the paperwork was done hurriedly in [sic] the patio. We didn't get any opportunity to do any research into your school. Or any time to read the fine print."626 (4) In addition, Ms Bagga wrote on 26 June 2015 to, among others, Mr Sachdeva, Mr Cugliandro and Mr Kochhar advising that a student was being withdrawn without penalty "due to serous [sic] disability and the paperwork not being filled [sic] by him either".627 In the ensuing email chain, Mr Kochhar queried why the "shame list has not been sent to everyone", with the apparent delay being the continued failure by Mr Sachdeva to send the list of his Agents and their photographs. 645 In the case of GG Sales, complaints again related in particular to the use of inducements (free light globes, free laptops, free Online Courses, and cash payments),628 and spanned Western Australia629 and Tasmania,630 among other regions. In this regard, in an email on 3 June 2015 from Ms Bagga to Mr Kochhar and Mr Cugliandro regarding "yet again" another complaint involving GG Sales,631 Ms Bagga wrote that "GG sales is definitely not letting the students know what they need to know". The email is revealing as to the respondents' state of mind. In the email, Ms Bagga suggested that "Gagan [Sachdeva] be pulled in and actually be given a penalty for them to know its [sic] serious. GG sales has being [sic] the biggest provider , a regular trail of phone calls is a sign they are hoodwinking customers" (errors in the original). Ms Bagga also observed that Gagan had still not provided the requested information about his sub-agents. Indeed, the list had not been supplied by the end of June 2015. In an email on 26 June 2015 regarding a further complaint about a GG Sales Agent offering cash inducements to consumers to enrol, Ms Bagga reiterated to Mr Cugliandro and Mr Kochhar the need for Gagan to compile his list of sub-agents "ASAP" given the difficulties they were encountering in identifying Agents in respect of whom complaints had been received.632

10.12.2.2 Further correspondence between NTCA and Mr Kochhar with respect to Broker practices in NT and WA 646 With respect to the letter from Ms Holland at NTCA to Mr Kochhar on 12 May 2015 requesting information about the steps Phoenix took to address the complaints about Broker practices in the Northern Territory, Mr Kochhar responded by a letter dated 22 June 2015 as follows: We have made changes to the enrolment and screening process that Phoenix has in place as follows: 1. All Course Advisers will have a photo ID with unique reference number Refer attachment 1 (this will assist us to identify any Course Advisers not following our guidelines) 2. The Course Advisers will give Students a Pre-enrolment course information flyer Refer attachment two. (to be given to student prior to course discussions commencing) 3. Once we receive the paperwork, and it has been checked for accuracy and verified, our student enquiry Centre calls each student to ask if they have been given the Pre-enrolment course information flyer. If they have not been given the Pre-enrolment course information flyer at this point we will not proceed with the enrolment. If the student confirms that they did receive the flyer and been [sic] made aware of the VET Fee Help repayment obligations the enrolment will then proceed. Refer attachment 3 4. Depending on the outcome of the call, the students will be sent one of the following letters: a) Confirmation of Enrolment. Refer attachment 4 This letter has been sent to all students who have been called and are happy to proceed with their enrolment. b) Confirmation of Withdrawal. Refer attachment 5 This letter has been sent to all students who wish to withdraw from the course and have been advised in the letter that their enrolment and personal identification will be destroyed. c) Unable to make contact letter. Refer attachment 6 This letter has been sent to all students who were uncontactable and have been advised in the letter that we will not be proceeding with their enrolment and personal identification will be destroyed.633 (Emphasis in the original.) 647 However, on 19 and 25 June 2015, Ms Holland had telephoned a number of consumers whose names appeared in the spreadsheet provided by Mr Sachdeva of "'potential students' from marketing activity conducted by GG Sales in the Northern Territory."634 Copies of her handwritten notes made during those conversations were annexed to her affidavit at AH-3.635 The outcome of those telephone calls were summarised in a letter from Ms Holland to Mr Kochhar on 26 June 2015 in which she wrote about further recruitment campaigns being conducted in Western Australia and complaints to Consumer Protection WA.636 In the letter, among other things, Ms Holland explained that, despite Mr Kochhar's assurances that steps had been taken to address conduct of the kind described in her 12 May 2015 letter and that the employment of Rohan Shah, a marketer leading the NT campaign, had been terminated: (1) a campaign had subsequently been conducted in Broome in Western Australia in May 2015 in which Ronak Shah and four others were detained by the Broome Police following reports of similar allegations to those received by the NTCA in April 2015; and (2) a further campaign had been conducted in other parts of Western Australia during June 2015 generating many more complaints of a similar kind to Consumer Protection WA. 648 Ms Holland understandably concluded that (in her view) the "complaints are too numerous and similar" to be "only made by the occasional rogue marketer", or to be the result of "information misconstrued by consumers". 649 Furthermore, Ms Holland explained that to test the processes allegedly adopted by Phoenix to screen all enrolment applications, she personally called several students identified as "confirmed" in the data resulting from the NT campaign which had been provided to NTCA with the following results (as per her contemporaneous notes): • One student called was one of seven members of the same household (6 siblings and their mother), each of whom had been signed up to do two training courses each. Six of the seven had been 'confirmed'. The student said although he had been called and received phone SMSs he had not received any letter of confirmation, no laptop, an assignment purportedly sent had not arrived and no one was replying to his queries via SMS. He stated he wanted to cancel his enrolment but had received no information about the census date or how to cancel his enrolment. • Six other students contacted said • they were not aware and did not understand the VET-FEE HELP loan obligations; • they believed the laptop they were supposed to receive was 'free' with cost/loan involved; • they have not received any letter, message or email concerning enrolment; • they did not fill in the questionnaire/forms personally or were given help to answer the questions; • have not been provided information about the census date or how to cancel an enrolment; • Attempts to contact seven other students proved unsuccessful.637 (Errors in the original.) 650 In the circumstances, Ms Holland concluded that Phoenix could not be satisfied on reasonable grounds that consumers approached in the NT and WA campaigns were not offered a prohibited inducement to enrol in VET units and accordingly sought Mr Kochhar's agreement to cancel all course enrolment applications generated by these campaigns immediately. 651 Mr Kochhar responded by a letter dated 2 July 2015 which it is convenient to set out here. Mr Kochhar denied that the representations made by the Brokers concerned were authorised by Phoenix and refused to cancel the WA and NT enrolments. In doing so, Mr Kochhar also wrote in terms that were blatantly untrue that: The Company obtains students from time to time from brokers and pays the brokers commissions in respect of students procured by them. … The Company acknowledges that it has received complaints from its students arising from their enrolment under a particular VET unit. Where the Company has received such complaints, the Company has cancelled the student's enrolment and released the student from its obligations under his or her enrolment after considering the merits of their grievance. The Company is currently not aware of any other complaints from students which require its attention.638 (Emphasis added.) 652 There is, however, some evidence of CTI taking action in June 2015 in response to the flood of complaints including the "Terminated Sub-Agent List" or "Rogue Agents List", which I explain below. However, the blacklisting of particular Agents was a reactive measure, being imposed only after sufficiently serious complaints were pressed against Agents in circumstances where the Agent could be identified and the harm was already done. Furthermore, while there is some evidence of steps being taken by CTI to approve new Agents whom Brokers sought to recruit, to the extent that this occurred, there is nothing to suggest that it was applied retrospectively to review existing Agents. More fundamentally, measures of these kinds manifestly failed to grapple with the fact that it was the system itself which incentivised and facilitated this kind of unethical behaviour and that there were no systems in place whereby Phoenix directly, or CTI on its behalf, educated, monitored or controlled the Brokers and Agents marketing Phoenix's Online Courses: see also at [611] above.

10.12.2.3 The Terminated Sub-Agent (or Rogue Agent) List 653 At some point in June 2015, Mr Cugliandro compiled the "Terminated Sub-Agent List" (also described as the "shame" or "rogue agents" list), being a list of Agents who were not to undertake work for or on behalf of Phoenix. The list included (in many cases) a photograph of the Agent concerned, their contact details, the Broker/Agent for whom they worked, the region in which they operated, and their termination date639 (described in some of the internal email correspondence within CTI as "voted" or "thrown off the island").640 In some cases, the reason for their termination was also briefly noted. These reasons included "[o]ffered free things", "[u]sing their own documents with the government and phoenix logo", and in one instance, "the agent had filled in all the forms for a student, did not leave any paperwork with the student and told the student once they confirm the course with Phoenix he would then release the tracking number for the laptop using the laptop as an incentive for them to confirm", as well as simply noting "Blacklisted" in many cases. 654 The earliest termination date noted on the list of 99 terminated Agents was 24 June 2015 with the last recorded date being 26 October 2015. Of these, 33 of the Agents were from GG Sales and a further four from its later incarnation, Auz Education; 17 were from Age Group; 5 from StudyNet; 2 from Eduskills; 2 from 313; and one each from AGS, AMK, Lets Upskill, SK Education and Course Today. There were also 27 Agents in respect of whom no Broker/Agent was identified. One Agent from StudyNet and one from Age Group were also identified as being engaged by GG Sales. 655 When an Agent was identified as a Rogue Agent, on at least some occasions Mr Cugliandro circulated an email to Ms Bagga (possibly blind copied to Brokers) warning that the Agents were not to be hired and did not represent Phoenix or any of CTI's RTOs, and that any Agent known to engage any of them would have their contract terminated.641 656 With respect to approvals for new Agents, on 5 June 2015, Mr Cugliandro posed as a consumer in order to call a "new" Agent, Mr Rahul Tatikonda, who was seeking approval to join "Age Group". He described the conversation in an email to Ms Joanna Wysocki, a member of the CRM team at CTI, sent on the same day: I called him and acted like an interested student and that I was referred to him by someone. I said I was told that if I enrol with him he will give me free lights [sic] globes and he replied yes. I said I was also told that if I enrol with him I would receive a free laptop and he said yes. I asked him do I have to pay for the cause [sic] and he said no its [sic] for free I even asked him if I bring a group of people because I have a big family will I get an incentive and he said yes. I forgot to ask about the shower head Hahahah I think this guy should be voted off the island 642 657 It appears from the email chain that the Agent in question was already known to Phoenix and that Mr Cugliandro's call was to ascertain whether he was "the same Rahul". On 9 June 2015, Mr Kochhar replied to Mr Cugliandro "Ok. This is done. Please surprise me if you see him again anywhere else." 643 658 On 10 June 2015, Ms Bagga subsequently replied to Ms Wysocki: You ll be pleased to know that not only does he offer what he's promised Mario, he also offers FREE shower heads :)' He is supplying us with 100+ light globes, 7 shower heads and 20 free laptops for signing up 10 people in the family. Out of which two are disabled and are in wheelchair but can very well do ECEC and CSW. By far the smartest (not) sales guy ever!! 644 (Errors in the original.) 659 Mr Tatikonda, in turn, appears on the Rogue Agents List as "black listed [sic]".645 While the List does not refer to the precise date on which that occurred, it appears to have been compiled in chronological order on the basis of which (having regard to other entries bearing a date) it can be inferred that Mr Tatikonda was not placed on the list until mid to late July 2015. It can also be inferred that Mr Cugliandro's call was undertaken as part of a vetting process and that, in view of the call, approval was refused for Mr Tatikonda to be engaged by Age Group insofar as he sought to recruit consumers on behalf of Phoenix.

10.12.3 ASQA approves a compliance audit of Phoenix 660 On 30 June 2015, ASQA provided the DET with a copy of a letter disclosing information pursuant to s 205 of the NVETR Act in relation to a number of complaints that ASQA had received about Phoenix on the basis that the DET was suited to investigate, review or enquire into the allegations relating to VET FEE-HELP.646 The complaints all related to agents door-knocking at different locations throughout Australia offering fully paid diploma courses "paid by the Government" and offering a free smart tablet and/or laptop to students on enrolment. Furthermore, four of the complainants expressed the view that Phoenix was targeting people from low socio-economic areas and/or people with low LLN skills. In addition: (1) in one case, the salesperson also allegedly told the consumer not to worry about completing the multiple choice questions in the PTR as the salesperson would fill them out; (2) in another case, the consumer was advised that he would only have to study 20-30 minutes online per week; (3) a further complaint was made by a complainant who worked for an employment agency and said that prospective job seekers told him about being approached by salespeople promoting courses for Phoenix who said they would receive their diploma in a few months if they provided their TFN, signed a few documents and completed a few online questions. Each of the prospective job seekers were reported to be recent migrants from refugee backgrounds who had low English language and LLN skills; and (4) in another case, the complainant worked for a local community organisation in the Euroa district and had been approached by a series of consumers who were intellectually disabled, in receipt of Centrelink benefits, and required assistance to complete the enrolment forms. 661 Also on 30 June 2015, internal ASQA email correspondence reveals escalating concerns about Phoenix's operations by the regulator: Nancy, could I please get a summary of the status of the six open complaints against this provider? The attached is another that is about to arrive and there seems to be a consistent theme here of targeting people with intellectual disabilities for VET FEE-HELP courses. They are also allegedly still offering free laptops to prospective learners. I think we need to get out and have a look at this provider urgently, but want to make sure we aren't tripping over something your team are already doing.647 662 Later that day, Dr Dianne Orr, the Deputy Chief Commissioner and Commissioner Regulatory Operations, ASQA, approved a compliance audit of Phoenix.648 In the internal email recommending that approval be given, the ASQA officer noted that the behaviour alleged in the complaints already in ASQA's system "have a common theme of targeting vulnerable populations, signing people into courses with little or false information and offering incentives such as free laptops and store vouchers (all allegations are after 1 April [2015])."649 The recommendation also noted that given the referral to the DET (described at [660] above), an audit by ASQA would focus on the issues of information before enrolment, suitability of courses for learners' needs, and management of third parties, giventhat there were only five third-party arrangements registered in ASQAnet for recruitment of prospective learners. 663 I also note that earlier on 25 June 2015, Ms Bagga emailed Mr Kochhar about a telephone call that she had had with Mr Graham Alderton from Fair Trading, who stated that he would be looking into complaints they had received and was "interested in knowing [the] marketing companies involved in gathering expression[s] of interest for us".650

10.12.4 The ACN Annual Report of the Financial Year ending 30 June 2015 and Phoenix Special Purpose Financial Report dated 30 June 2015 664 Key points regarding the ACN Group's operations during the financial year ending 30 June 2015 arising from the 2015 ACN Annual Report651 and the Special Purpose Financial Report for Phoenix dated 30 June 2015 prepared by Grant Thornton (Phoenix Financial Report 2015)652 can be summarised as follows. (1) The number of employees in the ACN Group of companies had increased from 60 to over 540 (ACN 2015 Annual Report at p. 3). (2) Revenue increased 390% to $85.2 million compared to the previous financial year (ACN 2015 Annual Report at p. 17), with Phoenix accountable for $54,922,880 of that revenue (Phoenix Financial Report 2015 at pp. 6 and 15). (3) The operating result of the Group for the financial year was a net profit of $17.3 million compared to the previous financial year of $1.4 million (ACN 2015 Annual Report at pp. 17 and 32). (4) Phoenix contributed $11,383,216 to the Group's net profit after, among other things, payment of a "management fee expense" in the sum of $18,326,000. Note 1 to the Phoenix Financial Statement explains that the management fee expense constituted fees charged by "a related entity" for "management, course implementation, HR, Finance, legal services, marketing, public relations and government liason [sic] expenses". Given that this accurately describes the services provided by CTI to Phoenix, it can be inferred that the related entity is CTI (Phoenix Financial Report 2015 at pp. 6 and 14). (5) Notes 9 and 18 to the Phoenix Financial Statement explain that the dividends paid by Phoenix in the sum of $11 million, as well as the management fee expense, were paid from the VET FEE-HELP progress payments received in July 2015 (Phoenix Financial Report 2015 notes at pp. 18 and 21). (6) On 25 August 2015, the directors of CTI declared a fully franked final dividend of $10,887,341 (13c per share) to be paid on 23 September 2015 (compared to $nil in 2014) (ACN 2015 Annual Report at pp. 17 and 65); (7) 14 meetings of the Board of Directors were held which were all attended by Mr Brown as well as Mr Williams among others, and 5 meetings of the Audit and Risk Committee were held which were all attended by Mr Williams, Mr Chapman and Mr Griffiths (ACN 2015 Annual Report at p. 19); (8) Mr Brown received remuneration in excess of $3.3 million, while Mr Kochhar received income in excess of $250,000 (ACN 2015 Annual Report at p. 22).

10.12.5 The RTO Policy Manual produced by Phoenix in late June/July 2015 665 Under the branding of myTime Learning, Phoenix produced a number of versions of a Policy Manual. The first was the so-called version 3 entitled "RTO Policy Manual June 2015" which bears the version date 29 June 2015.653 In addition, Phoenix produced: (1) a second version of the Policy Manual entitled "RTO Policy Manual July 2015" dated 5 July 2015;654 and (2) a so-called version 2 entitled "Policy Manual 1 July 2015" which has the version code "V2 150728" suggesting that it was not in fact released until 28 July 2015 (the Policy Manual (1 July 2015)).655 666 I also note that in September 2015, Phoenix issued an updated "RTO Policy Manual".656 667 Each version is relevantly in essentially the same terms and presents as if it were a comprehensive statement of Phoenix's practices and policies in compliance with the RTO Standards, stating in each case under the heading "1. Scope" that it applies to all operations and personnel involved in the activities of Phoenix Institute as a RTO. In truth, however, the versions of the Policy Manual falsely represented practices and procedures (which would potentially comply with Phoenix's obligations as a RTO) as being in place and as being observed, when plainly they were not. Nor can the Policy Manual even be described as aspirational, as the evidence overwhelmingly suggests that there was never any intention to implement the practices and policies outlined. The Policy Manual is, however, an important document in that it demonstrates that the respondents were well aware of their responsibilities under the RTO Standards and otherwise at law, and of the kind of steps which should have been taken in order to comply with same. 668 Notably, the first version is dated at a time when media attention was focusing on unscrupulous practices in the VET FEE-HELP sector, the unabating flood of complaints about Brokers and Agents acting on Phoenix's behalf had continued, and there was increasing scrutiny from regulators, such as NTCA, who were refusing to be "fobbed off". These contextual matters also coincided with the coming into force of the amendments to the 2015 VET Guidelines expressly placing responsibility for the conduct of agents and brokers on RTOs (as I explain below). The surrounding circumstances render it highly likely that the Policy Manual was prepared as yet another means by which the respondents sought to mislead regulators as to Phoenix's level of compliance with its responsibilities as a RTO and under the ACL. 669 It is convenient to refer to the Policy Manual (1 July 2015) (the Policy Manual), which appears to be the latest of the three versions, in addressing three areas of particular relevance. 670 First, the section under the heading "21. Third Party Engagements" dealt with parties providing services on behalf of Phoenix and myTime Learning, including recruitment of prospective students. This part of the Policy Manual (at p. 88) correctly stated that "Phoenix Institute & myTime Learning is responsible for all services delivered under its registration, regardless of where these are conducted" and that: This responsibility applies to all RTO obligations including: • Providing data; • Cooperating with ASQA; • Complying with advertising and marketing standards; • Informing prospective Students; • Dealing with complaints and appeals; • Collecting fees; and • Recordkeeping.657 671 The Policy Manual also stated at pp. 90-91 that: 21.7 Quality Assurance Phoenix Institute ensures it has sufficient strategies and resources to systematically monitor all services delivered by third parties on its behalf, and uses these to ensure that the services delivered comply with regulatory and contractual requirements at all times. Phoenix Institute has implemented a range of quality assurance activities related to its use of third-party arrangements, including: • A Complaints policy to manage and respond to allegations involving the conduct of all personnel, including the personnel of any third parties providing services on the [sic] its behalf; • Systematic monitoring of its third-party arrangements; … 21.8 Systematic Monitoring of Third Parties Phoenix Institute has implemented strategies to systematically monitor services provided under third party agreements, to ensure that these services comply with all requirements. Monitoring activities include: • Approval of all third-party personnel conducting services under agreement, with these personnel subject to the same HR processes and records requirements as internal personnel; • Induction of all third-party personnel; • Quarterly work plan meetings which are used as a tool to undertake review and provide immediate feedback and direction to personnel regarding the services provided under agreement. • Inclusion of third-party personnel in professional development activities where relevant; and • Service reviews of all services undertaken through the agreement conducted at least annually. 672 Secondly, under the heading "25. Pre-Enrolment Information", the Policy Manual states at p. 110 that: Once a course information request, client expression of interest or course registration and application for enrolment has been received, Phoenix Institute provides further current and accurate information to prospective Students to enable them to decide if Phoenix Institute as a training organisation and the relevant course service of interest is suitable for them, taking into account their existing skills and knowledge and any specific individual needs. 673 The information to be provided included whether the training included mandatory work placements and, if so, "clear information on who will arrange this, the duration and schedule applicable and what outcomes are expected of the work placement" (at p. 110). Further to this, the Policy Manual stated at p. 153 that students are made aware of any requirement for a character check "prior to enrolment, including the process and costs to secure the relevant check" (emphasis added). 674 The Policy Manual also outlined the process by which "students" were to seek admission, including the following (at p. 112): Where Students have particular needs, these are discussed in open consultation with the Student, and where appropriate, reasonable adjustments will be made in order to facilitate the Student's enrolment. … Phoenix Institute focuses on supporting a prospective Student to understand how their options may affect their future and, ultimately, helping them to choose the right training. This includes being prepared to suggest, in some instances, that none of its offerings are right for an individual. 675 In this regard, the Policy Manual explained the PTR of students' current competencies (including LLN skills) to be conducted prior to the commencement of training for each student (at p. 113) as follows: The Pre-Training Review is designed to: • Identify any competencies previously acquired - Recognition of Prior Learning (RPL) or Credit Transfer; • Ascertain the most suitable qualification for that Student to enrol in, based on the individual's existing educational attainment, capabilities, aspirations and interests and with due consideration of the likely job outcomes from the development of new competencies and skills; and • Ascertain that the proposed learning strategies and materials are appropriate for that individual. … Phoenix Institute does not enrol a Student in a course or qualification that is at an inappropriate level for that Student. The Pre-Training Review is completed, and the outcomes known and documented, prior to acceptance of the Student's enrolment application. (Emphasis added.) 676 The Policy Manual continued to explain that the Pre-Training Review "is a comprehensive assessment where Phoenix Institute genuinely seeks to understand a Student's training needs" and is undertaken by skilled Phoenix Institute personnel. The Policy Manual emphasised the importance of all prospective students completing and providing relevant enrolment information and personally signing the enrolment application form. Part 25 included the heading "25.17. Finalising the Pre-Training Review" which stated (at pp. 122-123) As a Pre-Training Review is conducted, Phoenix Institute representatives complete the Pre-Training Review Checklist to confirm that all components of the process are completed effectively. The Pre-Training Review process encompasses: • Student identification and confirmation; • Course Information & requirements; • Identifying Students' individual needs; • Language, Literacy & Numeracy assessment; • Credit Transfer application (if relevant); • Recognition of prior learning application (if relevant; • Employer engagement (if relevant); • Government subsidy support eligibility (if relevant); and • Final planning, course confirmation and enrolment decision. As all Pre-Training Review activities above are completed, the Phoenix Institute representative clearly documents: • The overall Pre-Training Review discussion; • The final decision on which course the Student will be enrolled in; and • Reasons why this was the most suitable training option for that Student. (Emphasis added.) 677 Thirdly, with respect to students who were enrolled, the Policy Manual stated at "28.3 Training & Assessment Strategies" (at p. 144) that: 28.3.1 Guarantee Phoenix Institute has, for all of its scope of registration, and consistent with its training and assessment strategies, sufficient: • Trainers and assessors to deliver the training and assessment; • Provision of or referral to educational and support services to meet the needs of the Student cohort/s undertaking the training and assessment; … 678 Fourthly, under the heading "28.12 Practical placements" (at p. 150), the Policy Manual stated that "Phoenix Institute organises and administers practical placements to Students during course services where required…". In this regard, the Policy Manual further stated that: The following guidelines are strictly adhered to at all times, for practical placement opportunities:… • Phoenix Institute personnel hold the primary responsibility for organising practical placements, although Students may be involved in seeking and securing an appropriate host employer … • Phoenix Institute personnel monitor practical placements through regular contact and feedback process with host employers, including workplace visits with the number of visits dependent on the length of the practical placement. (Emphasis added.) 679 The Policy Manual also recognised that a written practical placement agreement is: a mandatory component of any practical placement. It is a legal agreement and must stipulate the rights, obligations and duties of the employer, Phoenix Institute and the Student. Phoenix Institute enters into an agreement in writing with the employer about the placement of each particular Student … The original of the written, signed practical placement agreement is maintained by Phoenix Institute for future reference. A copy is given to both the employer and the Student. (Policy Manual at pp. 151-152). 680 As earlier explained, despite being expressed as if these systems were in place, at best, the statements bore no relationship to reality. There is, for example, no evidence that the respondents undertook an induction of all third-party personnel or extended to them any professional development activities aside from one workshop held in around August 2015 at Ms Blefari's insistence. Nor were all third-party personnel conducting services pursuant to agreements with Brokers approved by Phoenix or CTI. To the contrary, the respondents were not even aware of the identity of all of the Agents acting on their behalf, as the efforts by Phoenix to obtain a list of the Agents engaged by GG Sales in recruiting on behalf of Phoenix illustrate. 681 By way of example, in the same month as the first version of the Policy Manual was produced, email correspondence between Ms Bagga and Mr Kochhar contradicts the Policy Manual's suggestion that all third-party personnel were given induction training. Rather, on 22 June 2015, Ms Bagga emailed Mr Kochhar, stating that: I guess we need to have a thorough discussion regarding increasing # of cancellations after CANs [ie Commonwealth Assistance Notices] The protocol? the threats! Being aware VFH and door knockers are all over media and an easy way out (what I believe) is when students start saying they ll take us to media. Also about time- about time ; we start training the agents pls !! Too much misleading info will take us where we don't want to go .. Things like work placement, WWC, PC etc needs to be clearly highlighted for the student.658 (Emphasis added; errors in the original.) 682 In the ensuing chain, Mr Kochhar responded by asking "[i]f u follow the script and have a recording at the time of qualifying?" (apparently referring to the script and recording of telephone verifications). In response, Ms Bagga agreed but identified "[i]ssue are the ones g1,2,3?", indicating that recordings of telephone verification calls may be an issue for students in Groups 1, 2 and 3 of the 2015 VET FEE-HELP Payment Schedule prepared by Phoenix.659 Mr Kochhar responded "[j]ust have to deal with them sorry" to which Ms Bagga replied that she is "[h]appy to deal - just the cancellation with no penalty when the threats start" (emphasis added).660 In this regard, I note that issues had been raised in early March 2015 with respect to Group 1 enrolments after the date on which the online course commenced without extending the census date. 683 As the applicants submit, this correspondence also acknowledges that there was no system in place to properly train the Agents that Phoenix had engaged to sign up consumers. It also suggests, as the applicants submit, that in order to maximise its enrolments, Phoenix was content to only withdraw enrolled consumers without penalty: (1) if they had sufficiently complained about the manner in which they had been enrolled (ie "when the threats start"), including where the consumer or someone on their behalf had taken the complaint to a regulator or the media, or indicated that they would do so; and (2) in respect of whom Phoenix did not possess a verification call recording.

10.13.1 Amendments to the 2015 VET Guidelines regarding agents and brokers with effect from 1 July 2015 684 As earlier explained, on 18 June 2015, the Assistant Minister for Education and Training made amendments to the VET Guidelines 2015 relevantly with effect from 1 July 2015 (the July 2015 VET Guidelines amendments). The purpose of the amendments as explained at cl (v) of the Amendment was: … to strengthen the parameters around marketing VET courses to students and the recruitment of students (who are eligible for VET FEE-HELP) to such courses. This instrument is also intended to clarify the operation of VET FEE-HELP, the rights and obligations of students and to ensure that student debt is incurred in line with course delivery and continued student participation.661 685 The July 2015 VET Guidelines amendments effected a number of important changes which impacted the way in which the respondents were required to undertake their operations. 686 First, cl 4.5 of the 2015 VET Guidelines amendments proscribed the marketing of VET courses as free and sought to ensure that consumers were provided with accurate and up-to-date information about VET FEE-HELP loans and VET courses: 4.5.1 The purpose of these VET quality and accountability requirements is to ensure that advice and information about the availability of VET FEE‑HELP assistance for a VET course of study or VET unit/s of study is marketed accurately and fairly, allowing a student to make enrolment and payment decisions with clear understanding of their rights and obligations. 4.5.2 A VET provider or its agents must not at any time including at the time of initial contact with a prospective student: a) market a VET course of study or VET unit/s of study as: i. free; or ii. without obligation to repay; or iii. in any other way which would mislead a person into believing that VET FEE‑HELP assistance is not a loan to be repaid by the person to the Commonwealth; and b) market the availability of a VET FEE‑HELP loan for a VET course of study or VET unit/s of study, the VET FEE‑HELP scheme, or VET FEE‑HELP as government funded. 4.5.3 A VET provider or its agents must not advise a person about the likelihood of their future repayments of VET FEE‑HELP loans (for example, that the person will never reach the salary threshold to pay back the loan to the Commonwealth). 4.5.4 A VET provider or its agents must ensure that any information they provide about VET FEE‑HELP is accurate and up-to-date. 687 Secondly, cl 4.5.5 expressly attributed the conduct of brokers and agents to the VET provider, stating that "[f]or the purpose of these VET Guidelines, any conduct or acts undertaken by an agent are taken to have been undertaken by the VET provider" (emphasis added). However, it will be recalled that this was not a new concept. Even prior to the acquisition of Phoenix, the December 2014 Newsletter from the Department reminded RTOs that they are responsible for marketing services acting on their behalf and of their obligation to ensure that actions taken by such services comply with the HES Act and other laws. 688 Thirdly, cl 4.6 sought to regulate the relationship between a VET provider and its brokers and agents in order to ensure proper accountability by the VET provider for the conduct of agents marketing its VET courses of study and transparency about their contractual relationships, and to ensure that Agents complied with the obligations applying to VET providers. Specifically, cl 4.6 provided that: 4.6.1 The purpose of these VET quality and accountability requirements is to ensure that VET providers are responsible for the actions of their agents. 4.6.2 For the purpose of these VET Guidelines an agent is any person who acts for financial gain or other benefit on behalf of the VET provider to: a) market or promote the VET provider's VET courses of study; b) recruit persons to apply to enrol in the VET provider's VET courses of study; ... 4.6.3 A VET provider must enter into a written agreement with its agents. 4.6.4 A VET provider must ensure that its written agreement with each agent specifies the following: a) responsibilities and requirements the agent must meet and comply with in carrying out activities for, or on behalf of, the VET provider. These responsibilities and requirements must include, but are not limited to, requiring that the agent: i. acts in a manner that is consistent with the VET provider's obligations under the Act, the VET Guidelines and other applicable legislation, and that the agent gives an undertaking to that effect; … iii. identifies himself or herself as an agent to each and every person the agent approaches on behalf of the VET provider; … v. provides full, accurate and up-to-date information about VET FEE‑HELP. b) processes the VET provider will use for monitoring the activities of the agent; c) termination conditions; and d) remuneration and/or fees to be paid to the agent by the VET provider. 4.6.5 A VET provider must publish a list of all agents with which it has, or has had, a written agreement, in a readily accessible location on its website including periods of currency of the written agreement with the agent in accordance with paragraph 4.6.6. 4.6.6 A VET provider must maintain a record of all agreements with its agent(s) for a minimum of five years. 4.6.7 A VET provider must retain all documentation required by this paragraph 4.6 including full details of the names, contact details and arrangements in place with its agent/s and must make these records available to the Minister in the time, form and manner as directed by the Minister (Emphasis added.) 689 Fourthly, cl 4.7 imposed new requirements as to the information which must be provided to prospective students to ensure that they "are fully informed of the fees that apply to any VET course of study and to ensure clarity of the responsibilities, obligations and rights of a student who requests a VET FEE-HELP loan so as not to mislead students as to the availability or nature of VET FEE-HELP" (cl 4.7.1). In particular, cl 4.7.2 required a VET provider to give certain information to a student prior to enrolment, including all information required to be given under Standard 5 of the 2015 RTO Standards, information about the VET FEE-HELP scheme, the census date, and the consequences of withdrawing before and after the census date. 690 Finally, cl 4.8 was directed to ensuring that there were no barriers imposed by a VET provider to a student withdrawing on or before the census date. 691 The July 2015 edition of the HELP Newsletter published by the Department explained these amendments. It also explained that a new version of the VET FEE-HELP loan application form was approved by the Minister to apply from 1 June 2015 which required, among other things, the provision of an estimate of the debt which students would be incurring and the estimated duration of the courses.662 692 In furtherance of these amendments, CTI wrote to its Brokers attaching a "Pre-Enrolment Course Information" flyer, outlining the "new threshold to be issued to each student by agents prior to enrolling into any VFH course through Phoenix [I]nstitute" and that enrolments would not be accepted if students advised that they had not received the flyer.663 The flyer advised, among other things, that the course was not free and the student would incur a debt once their income reached a threshold of $54,126 and the laptop was not free but provided on loan for so long as the student undertook the course with Phoenix.664 On 3 July 2015, Mr Cugliandro, CTI, also wrote to its Brokers enclosing the myTime Learning Consumer Protection and Access and Equity policies, and stating that it was the obligation of "clients" to "ensure these policies are being adhered to by all sales representatives".665

10.13.2 Entry into new agreements with 28 Brokers/Agents on 1 July 2015 for commissions between 15 to 35% 693 As a consequence of the amendments, Phoenix entered into new agreements directly with 28 Brokers and Agents on 1 July 2015, most of whom had previously been party to the earlier agreements for recruiting prospective consumers with CLI. Mr Brown personally signed all of these agreements on behalf of Phoenix. 694 The agreements in question included a new agreement with GG Sales dated 1 July 2015.666 Under that agreement, GG Sales' commission was increased from 20% of the VET FEE-HELP loan scheme payment under its earlier contracts with CLI on 25 January and 25 March 2015, to 30%,667 notwithstanding the multitude of complaints about GG Sales and its ongoing failure to provide the respondents with a list of its Agents in the face of repeated requests. The 30% commission to GG Sales was one of the highest agreed, exceeded only by the 35% commission agreed with Advanced Training and Careers Pty Ltd in its contract also dated 1 July 2015668 (save that the agreement between the related entities CTI and Phoenix provided for 100% commission).669 Other Brokers and Agents with whom agreements were also entered into on this date included Alpha Prime (20%),670 the Trustee for Rajan Family Trust ABN 30 685 618 158 trading as "Let's Get Qualified" (15%),671 Lakhmir Mahar trading as "RTO Help Victoria" (20%),672 Step 123 (20%),673 Studynet Pty Ltd (20%)674 and Let's Upskill (20%).675 695 The significance of the financial incentives which commissions at this level represent is apparent from the commissions actually paid by Phoenix to the Brokers and Agents over the period from July to September 2015 as disclosed in the Report by Administrators Pursuant to Section 439A of the Corporations Act dated 26 April 2016 (the Section 439A Report) at p. 43, namely:676 Month Payment to Brokers July 2015 $7.88m August 2015 $14.54m September 2015 $16.41m TOTAL $38.83m

696 In addition, the Section 439A Report (at p. 31) disclosed that if Phoenix received the VET FEE-HELP payments it claimed to be owed by the Commonwealth, this might crystallise a debt to the Brokers and Agents in the amount of approximately $24.6 million. 697 The desire to extend the greatest rewards to those Agents who recruited the greatest number of enrolments is evident from the email sent by Mr Kochhar on 27 July 2015 to Mr Cugliandro with respect to a so-called "Code of conduct" for dealings with Agents and Brokers.677 In the email, Mr Kochhar stated that: No sales at other colleges with or without student consent. It will impact second census payment as the student loan will be maximised by then. No poaching of other existing Phoenix sub agent. 2 payments minimum for sub agent. No advance payments. No bidding. No more than $600 per enrollment [sic] (split in 2.) Around $800-850 for the exceptionally compliant agents and the ones who provide big numbers. (Emphasis added; errors in the original.) 698 The email also demonstrates that Mr Kochhar was well aware of the practices amongst Brokers and Agents of signing up consumers with multiple colleges and re-selling enrolment applications for one college to another. Furthermore, in referring to the impact that re-selling enrolment documentation to other colleges might have on the second census payment, it is evident that Mr Kochhar was concerned about the risks that that practice entailed for Phoenix's revenue stream from VET FEE-HELP payments. That risk arose because it could result in a consumer's lifetime cap on VET-HELP assistance being achieved before the second census date which would otherwise trigger another VET FEE-HELP payment for that consumer to Phoenix. 699 Similarly, an email from Mr Kochhar on 22 July 2015 which I infer was blind copied to the Brokers, advised that an Agent "is offering to buy enrolments on behalf of Phoenix Institute from our existing agents or putting enrolments through using our existing contract channels" and that "[t]his has caused us a fair bit of grief, complaints and financial loss." As a result, Mr Kochhar directed Brokers "to refrain from indulging into [sic] any direct or indirect business activity (relating to Phoenix Institute or any other CTI or ACN subsidiaries) effective immediately."678

10.13.3 Complaints continue throughout July 2015 700 The list of complaints against Phoenix continued unrelenting throughout July 2015. Allegations that Agents were offering free laptops, describing the courses as free and not providing all relevant information about the VET FEE-HELP loan scheme, and using bullying tactics remained recurrent themes.679 It was also in July 2015 that Consumers A and B (in respect of whom specific contraventions are alleged) were signed up, along with relatives and friends, for courses with Phoenix on the basis of misrepresentations and the inducement of a free laptop, as well as cash payments in Consumer A's case: see further Chapter 12 below. 701 Examples of particularly egregious complaints included the following. (1) On 1 July 2015, Ms Bagga emailed Mr Cugliandro and Mr Kochhar advising of a "recent incident" with a student being offered free light globes and a free laptop from a Broker in Whyalla which occurred "after Harry said that they need to move out of Whyalla after a series of serious complaints".680 Ms Bagga also noted in the email that "[t]hey are writing scripts for the people they are signing up and telling them what to say" and attached a photograph of a handwritten script. Furthermore, the consumer reportedly advised that Phoenix "is all over their Buy sell swap pages of Whyalla community." (2) On 7 July 2015, the Northern Suburbs Community Legal Centre in Perth wrote a letter to Phoenix on behalf of a consumer from Somalia who was signed up to the Diploma of Business in an unsolicited door-to-door sale and subsequently sought to withdraw.681 It was said that the consumer clearly spoke limited English, with the salesperson having spoken to him through a friend who spoke English. Nor did he read English although the document which he signed was not translated for him and he was not given a copy. The consumer was withdrawn without penalty. In commenting on this complaint in an email to Mr Kochhar, Ms Bagga suggested that they type up a letter with "perhaps [the] same kind of guff we sent to Ann Holland".682 702 GG Sales in particular continued to be the subject of complaints and concern to the respondents.683 For example, in an email on 2 July 2015 from Ms Bagga TO Mr Kochhar and Mr Cugliandro, with the subject heading being a URL for a Gumtree advertisement entitled "free-laptop-for-australian-citizens",684 Ms Bagga wrote identifying the Agent concerned as working for GG Sales and 313: You will love this - GG Sales … Gagan needs to pull his head in before we are all in shit ! (Errors in the original.) 703 In another instance, Ms Bagga emailed staff on 15 July 2015 requesting them to withdraw a consumer who was "almost an 80 year old" enrolled in two courses by GG Sales.685 The complainant (the consumer's son) noted that she could not do "any online course, let alone two courses", and was at the time of writing in hospital (presumably having been admitted after being signed up). 704 In a further illustration, on 21 July 2015, Ms Jessica Portelli, Customer Service Representative at myTime Learning, emailed Ms Bagga and Ms Desiree Smith about another complaint of a "push[y]" Agent who "[s]aid courses were free Made students copy a completed enrolment form Promised a free laptop" (errors in the original). Ms Bagga responded that "[t]his is the 3rd complaint [of] the same nature for today".686 Later in the email chain then copied to Mr Kochhar, Mr Cugliandro explained that "[t]his is another case of GG sales agent using another agents ID",687 and asked whether the Agent should be "terminated" as well as the Agent who permitted him to use his identification. 705 Furthermore, even where Agents the subject of complaints were identified, their names did not necessarily appear on the Rogue Agents List. For example, Mayur Sharma from GG Sales, who was identified as being the subject of a serious complaint in July 2015, did not appear on the Rogue Agents List.688 Nor were two other Agents, Ms Navdeep Sandhu and her manager, Mr Anil Patel, from GG Sales, placed on the Rogue Agents List despite being the subject of a complaint by a consumer on the basis that he had been pressured into signing up to a diploma of "business and management" without time to think properly and despite Ms Sandhu having been "out in the field" without yet having been issued an ID. To the contrary, when Mr Cugliandro asked what he should do about the Agents concerned based upon the complaint, Mr Kochhar queried "[h]ave they done anything wrong other than signing a student,"689 demonstrating a complete indifference to the interests of the consumer and the seriousness of the alleged conduct by the Agents involved. 706 Ms Holland also emailed Mr Brown on 8 July 2015, noting that she was again receiving reports made to WA Consumer Protection from the Halls Creek Police of "marketing activity in WA" to "remote [I]ndigenous communities" on behalf of Phoenix contrary to the measures which Phoenix said it would implement.690 Ms Holland requested that Mr Brown "ensure that these marketers cease activity immediately … in WA and the NT and more broadly around Australia until the issues surrounding this form of marketing is [sic] properly dealt with".691 Consistently with Ms Holland's understanding as to the continued targeting of remote Indigenous communities, a Northern Land Council permit was issued to Mr Nisar Ahmed on the very same day under the Aboriginal Land Act 1978 (NT) to enter and remain on Aboriginal land for the stated purpose of "[p]romoting education and enrollment [sic] for online studies. From the company of Phoenix Institute of Australia, Course Advisor".692 The Agent concerned, Nisar Ahmed, was an Agent for 313 Business Group.693 707 Mr Brown immediately emailed Ms Holland to state that they would use a meeting scheduled the following day to "reiterate" these matters with Agents and Brokers, and further stating that "[w]e are also contacting all brokers to get their guys out of the field pending this review. We have also placed NT and WA on a [sic] absolute no go area for the foreseeable future".694 Later that day, in answer to a query from Ms Holland, Mr Brown said that he believed that there were four Agents there together and that "all are recalled The idiots decided since they had already booked accommodation that they would utilise it, that's why they were still there, even though they had been told in no uncertain terms".695 Not surprisingly, Ms Holland responded to Mr Brown by return email, relevantly observing It appears clear that if your marketers do not take direction from the executive of the company whom they represent that there are fundamental systemic issues of control that must be addressed. From my perspective, despite all of the claims made by Phoenix of action taken and amendments made to practices, these have been ineffective based on what has transpired since our initial reports in April. Consequently a great deal more than simply recalling and meeting with your brokers and agents needs to occur.696 (Emphasis added.) 708 Ms Holland also sought a written response with detailed data of the consumers involved, the effective date of the cancellation, evidence of the cancellation, and evidence of the correspondence with those people in relation to the cancellation. 709 The practice among some Brokers and Agents of selling enrolment documentation to multiple colleges was also the subject of complaints during July 2015. For example, Ms Bagga emailed Mr Kochhar on 12 July 2015 about a complaint from a student enrolled in about May 2015 who had only just become aware of the associated VET FEE-HELP debt. 697 Ms Bagga noted that the student had been signed up by the Brokers with the Australian Institute of Management at about the same time (with the email advising of the access details to AIM Connect being included in the email chain), and referred to her suspicions that "personal details are abused" by the Brokers who then sold the same enrolment details to other RTOs. 710 Mr Brown was also aware of the practice. He referred to it in email correspondence with Mr Dean Woodgate, Director, VET FEE-HELP Branch, DET, between 30 July 2015 to 4 August 2015, advising of students who reported receiving CANs from other colleges of which they were not aware and providing contact details for 25 agents said to be "selling student data to other rto's [sic] without student knowledge".698 711 Finally, the common themes emerging from the complaints to which I have referred also arose in those received by the DET and raised with Mr Brown by Mr Woodgate, in a telephone conversation on 28 July 2015 regarding Phoenix's marketing practices.699 In particular, Mr Woodgate raised with Mr Brown complaints received from ASQA and the state and territory fair trading offices of Brokers targeting low socio-economic areas throughout Australia. These included five student complaints received in May 2015 by the Department, six received by ASQA and forwarded to the DET at the end of June 2015, five student complaints received in June to July 2015, and advice from the WA Consumer Protection about Broker activity throughout Western Australia and the Northern Territory. As to the last of these, the DET's file note recorded that it had been advised that: … they and counterparts in NT have been in contact with Phoenix re reports of brokers targeting a number of low socio-economic areas throughout WA and NT, with reports of around 79 people signed up in Beagle Bay and Broome; Appears from information in email trail, Phoenix had advised they had left WA in June following contact by Consumer Protection. However, appears this was not the case with further reports being received for broker activity occurring in July 2015. 712 This telephone conversation had been precipitated by an email late in the afternoon on 28 July 2015 from Mr Woodgate to Mr Brown seeking to make a time to speak with Mr Brown about "some feedback we've [received] from ASQA and WA Consumer Protection".700 A short time later that afternoon, Mr Brown replied, stating with respect to the complaints referred by Ms Holland (who he described as having been "on a one woman war over the last few weeks") that he had terminated the Brokers at fault and either not enrolled or withdrawn the students concerned. Mr Brown continued: However, as we refused to shut our business down entirely she has complained to asqa on behalf of some students and contacted every known agency including yourselves and a number of others. As I have mentioned previously, any time a student raises any issue we just withdraw them without penalty immediately, we also have tape recorded conversations with every student prior to enrolment to ensure full understanding of vetfee debt and that theres no incentives, these recordings were offered to her and do ensure that any student who provides a expression of interest to a broker based on misleading information simply wouldn't be enrolled anyway, hence theres significant discouragement for any broker to engage in that behaviour.701 (Emphasis added; errors in the original.) 713 On 31 July 2015, Mr Woodgate wrote to Mr Brown regarding the meeting on 28 July, noting "your swift action to terminate your relationships with the agents in question and that you have cancelled the enrollments [sic] of approximately 300 students who were referred to you by these agents."702 However, Mr Woodgate, understandably in my view, expressed concern that: … had this serious issue not been identified by relevant authorities, the students involved might have been burdened with debt they would be unlikely to repay, for courses in which they might not be equipped to participate. I understand that you are taking further action to ensure that these types of issues do not occur in the future. 714 Contrary, however, to Mr Brown's statements to Mr Woodgate on 28 July 2015, at least 1,024 consumers were signed up over the relevant period by Agents identified by Phoenix as "rogue agents" whose enrolments were not withdrawn and in respect of whom Phoenix claimed VET FEE-HELP payments.703 Contrary also to Mr Brown's reassurances to Mr Woodgate, it is apparent from the evidence earlier referred to that many students were in fact enrolled without prior telephone verification.

10.13.4 Steps taken by Management prior to the ASQA audit

10.13.4.1 Early July 2015: an ASQA audit is expected 715 On 7 July 2015, Mr Gale reported to the Phoenix Executive Management Group meeting that an ASQA audit was "expected".704 There being nothing to suggest that such an audit would relate to the face-to-face courses, it can reasonably be inferred that Mr Gale's information about a likely ASQA audit stemmed from Mr Brown or Mr Kochhar who had responsibility for the Online Courses.705 Consistently with this, Ms Bagga emailed Mr Kochhar on 10 July 2015 clearly concerned that the respondents' practices may be coming under investigation: Just an FYI - I have a few interesting calls coming in today. People calling in with very detailed questions and digging more and more into what our process is given that people are being pressured into signing up for the courses but left with no info and all the debt, I took 3 calls today myself - all Pvt num and won't give out any names for their concern queries re individuals. We'll have to [be] careful putting people in the system without being called. Just a heads up. Something strange is going on.706 (Emphasis added.) 716 Part of Ms Bagga's concern clearly related to the enrolment of consumers with no prior verification telephone calls. 717 As earlier mentioned, the pressure to meet high enrolment targets and show evidence of engagement by consumers with the learning management system FinPa increased in line with the expectation that Phoenix may be about to be audited or investigated. For example, in an email sent on Saturday, 11 July 2015 from Mr Cugliandro to Ms Bagga and Mr Kochhar, Mr Cugliandro said: Both Nidhi and I had our guys calling like trojans yesterday trying to confirm enrolments and Nidhi's team again today. You will notice you or Ivan did not receive the numbers enrolled yesterday by Sunny Harry and the reason why is [sic] the numbers enrolled in wisent [sic] were bad. Yesterday in total there were about 320 confirmed enrolments of which…….wait for it……95 were enrolled ….Yep 95. There were 3 piles of enrolments waiting to be enrolled on the shelf … Sunny told me that they were coming in on the weekend to enter data and enrol and now apparently he is not working. There is no point in screaming we have no data to enter when they don't enter it.707 (Emphasis and errors in the original.) 718 (It will be recalled that entry into WiseNet was part of the final steps in the enrolment process prior to entry into HEPCAT and, once validated, into HEIMS, before formal enrolment by extraction of the information from WiseNet for entry into FinPa: see further [336] above.) 719 The pressure was maintained with Mr Brown emailing Mr Kochhar, Mr Cugliandro and others on 13 July 2015, warning "[l]ot of late nights required this week, every night"708 to which Mr Kochhar responded "[l]ooping in Nidhi - her staff can help with the calls." The extent of the pressure is borne out by the daily reports being given at this time by Mr Cameron Ross, CRM, to Mr Kochhar, Mr Brown and Ms Bagga among others on VET FEE-HELP Contact Centre figures namely: 709 (1) Tuesday, 14 July 2015 (total 502 calls (290 confirmed, 120 withdrawn, 1 cancelled, 91 not contactable)); (2) Wednesday, 15 July 2015 (total 516 calls (420 confirmed, 110 withdrawn, 25 cancelled, 78 not contactable)) (to which Mr Kochhar responded "Good conversion. Well done");710 (3) Thursday, 16 July 2015 (total 589 calls (390 confirmed, 117 withdrawn, 29 cancelled, 78 not contactable)); (4) Friday, 17 July 2015 (total 453 calls (340 confirmed, 142 withdrawn, 0 cancelled, 29 not contactable)); (5) Tuesday, 21 July 2015 (total 273 calls (199 confirmed, 62 withdrawn, 29 cancelled, 14 not contactable)); and (6) Wednesday, 22 July 2015 (total 264 calls (149 confirmed, 94 withdrawn, 0 cancelled, 21 not contactable)). 720 The average number of calls made per team member was also recorded as part of the daily reports and ranged from 98 calls per day on 16 July 2015, to 44 calls per day on 22 July 2015. 721 An email from Ms Bagga to employees, including Ms Dien, Mr Banga and Mr Cugliandro, on 20 July 2015 also advised of an extension to the census date to 22 July 2015 and attached the non-contactable list advising that: Everyone must call the students from this list and confirm as many as possible and update Client register. Please ensure you continue to send the Daily report to Sunny, Le and Manoj and cc myself. Sunny- from the daily report, please do the confirmation enrolments Le - From the daily report, please pull out the withdrawals.711 (Emphasis in the original.) 722 However, by extending the census date on 20 July 2015 to 22 July 2015, the effect was to deprive students of any opportunity to make an informed decision about whether they wished to proceed with the course on the basis of their experience with it because they could access the Online Courses only upon confirmation of enrolment when the log-in details were sent through to them. 723 On the following day, Ms Bagga from the Data and Quality Team emailed Mr Kochhar, stating: Spoke to Sunny, he reckons he has about 250 enrolments that need to be cancelled. Then another 230 enrolments which is another 537 enrolments from NT/WA to be cancelled (which I was under the impression that you approved to cancel straight away). So a total of about 800 odd enrolments that need to be cancelled.712 724 In a similar vein, on 15 July 2015 at 8:45pm, Mr Banga emailed Mr Brown and Mr Kochhar among others with an update that 647 students had been enrolled that day in "Group 5" and the total was 3,404 (with 62 cancelled).713 Mr Brown responded that evening, stating, "[g]ood work people. Another 2 days the same gives us 4700. Thats [sic] the goal".714 Subsequently late on Friday evening, 17 July 2015, Mr Kochhar wrote to Ms Bagga advising by way of updated instructions with respect to enrolments that: There are 4639 enrolments in the system I have decided not to enrol all and instead extend the census date by a week. There are some odd 800 enrolments or 400 students that are not confirmed (code 1). That will be too many complaints to handle and personally don't believe it won't [sic] be fair on your team. So we will start entering group 6 from Monday whilst we try to contact the Code 1's [sic] for group 5. See if there is anyone available to get on the phones over the weekend to call?715 725 Ms Bagga relevantly responded the following morning "Yes roger than [sic]". Ms Bagga also corresponded that morning with Mr Kochhar about concerns with the telephone verification process, explaining that the script would have to be changed because "I read it for the first time. And now I understand why we are getting so many cancellations."716 In the course of the email chain Ms Bagga also explained that "[m]ost cancellations actually come at the point of mentioning the laptop. Do you have a suggestion on what it should be worded as - still the gist to be out but not open worded? This generally seems to be the thing marketed as FREE and where it goes pear shaped", to which Mr Kochhar responded that he would be reviewing the whole script.717 726 A further update was sent through at the end of the day on 24 July 2015 by Mr Banga to Mr Kochhar, Mr Brown and Ms Bagga, in which Mr Banga alluded to the pressure under which he was working regarding the enrolments: Phoenix Current Cancelled Total Group 5 5229 (including 727 Code1s) 511 5740

Total Current (Confirmed): 4502 Can I please have some Chivas Regal and a good sleep??? Just Kidding 718 727 The low level of activity among enrolled students was also the subject of reports. On 22 July 2015, Mr Kurt Walters sent Ms Bagga an Excel spreadsheet entitled "never logged on".719 The spreadsheet shows 1,563 of 6,534 students had apparently logged on, while the remaining 4,965 had never logged on at that point. That spreadsheet disclosed that of those who had not logged on, Group 5 had the largest number (1,891) (which was also the group the focus of the enrolment drive referred to at [724] above), followed by Group 4 (1,508) and then Group 4.5 (874). A couple of days later on 25 July 2015, Ms Bagga advised Mr Kochhar by email that there were 12,914 "active" enrolments.720

10.13.4.2 Preparation for the audit after notice is given on 27 July 2015 728 Phoenix was formally notified that an ASQA site audit would take place on 29 and 30 July 2015 by an email sent at 2:00pm on 27 July 2015 and addressed to Mr Gale.721 Mr Gale forwarded the notification to Mr Brown, Mr Kochhar and others at 2:32pm that afternoon.722 The letter advising of the audit explained that: This audit is being conducted to assess your organisation's ongoing compliance with the VET Quality Framework. Specifically, ASQA has received complaints about your organisation. The complaints allege that your organisation is not fully compliant with the VET Quality Framework. While the audit will primarily focus on the standards relevant to the subject of the complaints, the audit scope may be broadened if required. 729 The complaints were set out in the email dated 30 June 2015 to the Deputy Chief Commissioner and Commissioner Regulatory Operations, Dr Dianne Orr, seeking her approval for the audit to take place which, it will be recalled, was given on the same day.723 730 On 27 July 2015, Ms Blefari emailed Ms Bagga with suggestions in preparation for the upcoming ASQA audit. These included arranging for the auditors to be able to log in to myTime Learning so that they could see the "resources and assessments as if a student", and arranging for one of the auditors to log in as a trainer so that they could see the assessment marking, as well as outlining the procedure followed "to establish the PTR and LLN requirements for a new student".724 731 On 28 July 2015, Ms Bagga and Mr Kochhar engaged in a lengthy email exchange about preparation for the audit. The concerns raised about the audit included that the auditors might see how few consumers enrolled in the Online Courses had actually logged in.725 In this regard, Ms Bagga stated that CTI's compliance consultant, Mr Bevan, said that it was: … a concerning issue with the very few students logging in. He suggested to keep them away from the First screen on LMS which shows total # of students logged in so far. 732 Mr Kochhar responded inquiring as to what was being done regarding pending withdrawals and what should be done about the first screen. As to the first issue, Ms Bagga advised "[w]ithdrawals - theres too many. Will you allow them to be taken off? I really think we should- incase [sic] they have a student who is wd but still active? We wont be able to tell them that its due to integration." As to the latter, Ms Bagga explained that FinPa had informed her that the logged in feature could not be removed from the home screen. She and Mr Kochhar then discussed different means by which they could prevent the ASQA auditors from seeing Phoenix's poor log-in figures, including restricting the auditors to "student access", with Ms Bagga proposing to "sit close and just navigate myself and flick through that screen very quickly". Ms Bagga then contacted FinPa again to assess alternatives, saying she would be contacted to discuss either "tak[ing] out the #'s or if we could just switch off the feature for a couple of days" (emphasis added).726 733 Phoenix ultimately spent $800 on a rushed request for FinPa to temporarily turn off this feature for the audit. Mr Damian O'Sullivan, managing director of FinPa, told Ms Bagga that it was "[n]ot an ideal scenario for us to work like this - it puts other projects behind - please … make sure Harry knows we continue to go above and beyond!!".727 Ms Bagga approved FinPa proceeding to switch off the feature for myTime Learning and, by 8pm that evening, FinPa Support wrote advising Ms Bagga that the task had been completed. 728 734 Internal correspondence also shows a flurry of activity to ensure PTR and LLN test were marked before the audit, reinforcing the evidence, among others, of Ms Mason that large numbers of students were enrolled prior to marking the tests. Specifically, in an email on 28 July 2015, Ms Bagga inquired of Ms Mason and Mr Banga as to whether the PTR and LLN tests were being marked, to which Ms Mason responded that "Harris marks as many as he can when he's here. HR have job ads posted to hire two LLN/PTR officers. But we have a massive backlog - we've focused on marking new ones, but with Harris now only two days a week, it's a challenge."729 In response to Ms Bagga's concern as to how that would be looked at by the audit the following day, Ms Mason assured Ms Bagga that: We'll check every file before we submit it to audit. We also photocopy every file and anything that is not marked, will be marked. 735 In the lead-up to the audit, there were also concerns about disclosing the ratio of trainers to students for the Online Courses. This emerges from an email chain late in the afternoon on 27 July 2015 headed "Prepare for Phoenix Audit" commencing with an inquiry by Ms Blefari, the Group Compliance Manager, in preparation for the audit to Ms Bagga asking for a list of the trainers who deliver and assess the Online Courses so that the trainers' files and matrices could be "pulled out".730 Ms Blefari also advised that "[w]e have to be careful we provide enough trainers to match the expected trainer/student ratio. Face-to-face it is 1:25 but I expect it's more for On-line delivery." Ms Bagga in reply advised Ms Blefari that there were some 18 trainers engaged already and an additional three trainers who had started that day. She further advised that: In regards to student and Trainer ratio, there is no such requirement for Fee for service (unless International or other funded models) as long as we can show support by coordinators,tutors,assessors,trainers etc. I also suggest taking out the ratio from the MTL TAS's pls so we don't get in a [sic] strife with a number that might not be correct. (Errors in the original.) 736 The reference in the email to "MTL TAS's" is a reference to myTime Learning's Training and Assessment Strategies. In this regard, as at June 2015, Phoenix's stated policy was to have a ratio of trainers/assessors to "students" of 90:1 as articulated in its TAS for the Diploma of Business BSB50215 (Version 1 June 2015) and for the Diploma of Leadership and Management BSB51915 (Version Date 26 June 2015).731 The suggestion therefore was that the reference to the ratio be removed. As the applicants submit, this figure in any event was well in excess of the appropriate ratio of trainers to students (as stated in the affidavits of the trainers filed in this matter), and evidenced in numerous Phoenix internal documents. It is also clear that the ratio was in fact significantly worse: see eg at [451] above.

10.13.5 The Notice requiring Phoenix to furnish information and produce documents from the ACCC under s 155 of the CCA 737 The pressure upon Phoenix no doubt increased with the ACCC issuing a notice under ss 155(1)(a) and (b) of the CCA on 21 July 2015 (the s 155 notice) requiring Phoenix to furnish information in answer to questions contained in Schedule 1 to the s 155 notice by 12 August 2015 and to furnish information and produce documents as required by Schedules 2 and 3 to the notice by 26 August 2015.732 The documents and information sought related to allegations that Phoenix was representing that VET FEE-HELP courses were free contrary to ss 18, 29(1)(g) and 29(1)(i) of the ACL and engaging in conduct that was unconscionable, contrary to s 21 of the ACL, with respect to the supply of VET FEE-HELP courses to disadvantaged, vulnerable and elderly consumers. 738 On 28 August 2015, the solicitors for Phoenix sent Phoenix's response to Schedules 2 and 3 to the s 155 notice.733

10.13.6 ASQA's short notice site audit on 29 and 30 July 2015 739 Ms Christine Williams, Principal Regulatory Officer, ASQA, was the lead auditor undertaking the short notice audit of Phoenix, together with Ms Madelain McCann. Ms Williams gave evidence about the conduct of the audit and her conclusions in her affidavit affirmed on 29 June 2018734 and orally. Ms Williams holds a Diploma of Quality Auditing, a Certificate IV in Training and Assessment, and a Degree in Vocational Education and Training awarded in 1994. Ms Williams has had significant experience as an auditor in the VET sector since 2000, including with the state regulator from 2001 and the federal regulator since 2012.735 740 The short notice audit was conducted on-site at Phoenix's head office at Spotswood.736 An opening meeting was held by the auditors on 29 July 2015 in order to explain the audit process. This meeting was attended by Mr Brown, Mr Gale, Mr Kochhar, Ms Spiteri, Mr Mike Berrell (Head of Quality and Risk at ACN) and Ms Blefari.737 The audit process was reiterated at the closing meeting on 30 July 2015 which was attended by the same officers and employees. In her oral evidence, Ms Williams explained the processes as follows: The individuals who are listed here [ie those who attended the opening meeting] would bring information into the room as the audit was progressing and we would ask, "How can you provide evidence that you have carried out this procedure?" - which is your own procedure - and then a staff member would go and get printed documents or evidence and bring it into the room and that staff member would explain that document or process to me. [Her Honour] so the audit did not involve you sitting down and having one-on-one interviews with key officers and the like; rather, it was a question of you looking at the documentary material and the electronic files, supplemented by people coming in with additional information to answer queries you had? --- [Ms Williams] Yes. We were in the room… the whole time. … And people brought hardcopies into the room - the printouts - and I would just discuss that and ask them questions. … I wasn't conducting an investigation.… I was conducting a compliance audit against complaints. So it was a standard audit process on short notice.738 741 In answer to questions posed by Ms Williams in the course of the audit, Ms Blefari advised, among other things, that Phoenix "has student supply agreement arrangements with 29 brokers who either, broker students and pass them onto the RTO following the Phoenix policies and procedures. No broker delivers or assesses training." 739 Furthermore, in answer to a query as to "Core clients/target groups", Ms Blefari advised that: Phoenix Institute Australia target market includes but is not limited to: persons already in said industry wishing to either gain recognition of current skills or experience or further their employment prospects, it also may include persons with minimal or nil experience wishing to gain the skills and knowledge to enter employment in a particular industry.740 742 In relation to Mr Brown's conduct during the course of the audit, Ms Williams observed that: In the opening meeting he was forthright and gave the impression that he was very prepared to cooperate with anything that we needed.… As the audit did not go the way he thought it would go - as he realised he did not have the evidence - in fact the evidence was going on the opposite direction - he became quite agitated, and he - he - he was angry.… [Her Honour] And how did Mr Brown demonstrate that he was angry? What led you to form that impression?--- At one point when something came up - and I can't remember the text around it - there was a comment I made about, "You do not want to end up on the 6 o'clock news," or, "These people might put you on the" - whatever I was saying, and I said something about, "You do not want to end up on the 6 o'clock news," and his reaction was, "Anybody who puts me on the 6 o'clock news will end up in the Yarra with concrete boots," and that was an angry reaction that he had.741

10.14.1 The ASQA Short Notice Audit Report 743 On or about 10 August 2015, ASQA sent Phoenix its audit report dated 30 July 2015 (ASQA Short Notice Audit Report) authored by Ms Williams and Ms McCann.742 The ASQA Short Notice Audit Report noted that Phoenix's "fee revenue sources" were 4% "fees for service" and that the remaining 96% came from VET FEE-HELP.743 The Audit Report also noted that the total number of enrolments as at the audit date was 12,370.744 The ASQA Short Notice Audit Report found that Phoenix was critically non-compliant, given non-compliance with 2015 RTO Standards 1, 2, 4, 5, and 8 (being all of the Standards the subject of the audit). Accordingly, Phoenix was issued with a Notice of Non-Compliance and required to provide evidence of rectification of these non-compliances on or before 7 September 2015 (the Notice of Non-Compliance).745 744 The level of non-compliance assessed relates to the potential for an adverse impact on the quality of training and assessment outcomes for students. The finding of critical non-compliance by Phoenix was reached ultimately in the exercise of Ms Williams' independent judgment but having regard to a recommendation given as a result of information entered on an Excel spreadsheet addressing certain factors. These factors included such matters as the impact of the non-compliance on the industry and the number of students impacted.746 Ms Williams found that the non-compliance in this case was critical because "it impacted greatly on the industry, particularly childcare - that is considered to be a high-risk qualification - and it also impacted greatly on over 12,000 students, whether they had valid qualifications or not. They're probably the bigger indicators…".747 745 The findings of non-compliance in the ASQA Short Notice Audit Report included: (1) a failure to establish that Phoenix's entry requirements for each of the Business and Service Diplomas offered by it were being addressed, particularly in the recruitment process (cf RTO Standard 1, cl 1.1, see also cl 1.2) (ASQA Short Notice Audit Report at pp. 4-5 and p. 6); (2) the RTO's trainer/assessor-to-student ratio of 90:1 did not evidence how a trainer/assessor would be able to provide the quality support required, given that students were generally enrolled in two qualifications online for which four units of competency from each unit qualification (8 units) were simultaneously released in each census (cf RTO Standard 1, cl 1.7) (ASQA Short Notice Audit Report at p. 8); (3) the evidence identified that Phoenix had third-party service agreements in place with 29 Brokers but it was unable to evidence sufficient strategies and resources to systematically monitor the services delivered on its behalf (cf RTO Standard 2, cl 2.4) (ASQA Short Notice Audit Report at p. 16); and (4) Phoenix was unable to provide evidence that before enrolment or commencement of training and assessment, it provided advice to the prospective learner about the training product appropriate to meeting the learner's needs, taking into account the individual's existing skills and competencies having regard, among other things, to its recruitment processes through third parties (cf RTO Standard 5, cl 5.1) (ASQA Short Notice Audit Report at pp. 20-21). 746 The evidence plainly establishes the validity of each of these areas of concern. Furthermore, Phoenix was found to be non-compliant in these (and other) respects in the ASQA Final Audit Report in September 2015, following consideration of Phoenix's rectification evidence (see Section [10.15.1] below).

10.14.2 The restructure of Phoenix into "two divisions" 747 I have earlier referred to Mr Gale's concerns about being the relevant CEO for the purpose of Phoenix's RTO accreditation, but having no access to information that would enable him to oversee the conduct of the Online Courses.748 As I also mentioned, this eventually led to a restructure of Phoenix in August 2015 into "two divisions", being (a) the Phoenix Institute of Higher Education, of which Mr Gale became CEO (face-to-face courses); and (b) myTime Learning, of which Mr Brown became CEO (Online Courses).749 In this regard, Mr Gale explained: I think that was early August, from memory, or July/August, and I was in - becoming increasingly concerned, and wanted it to be, you know, made abundantly clear that I was only looking after the face to face, and if this is what you're referring to, is that there was a delineation between the online and the face to face, and Ivan became CEO, as it were, even though he was managing director of ACN, would become CEO of - I think it was Mytime Learning. That was subsequently ratified by the ACN board.750 748 It was also around this time that the leadership team meetings at the Spotswood office ceased.751 These meetings had been led by Mr Brown and attended by Mr Gale and senior staff within ACN, including Mr Kochhar.752 Mr Brown's reports on Phoenix and the other RTOs within the ACN Group at these meetings included updates on their enrolment numbers. 749 The Governance Board of the Phoenix Institute of Higher Education (in relation to the division of Phoenix offering face-to-face courses) met for the first time on 27 August 2015.753 One of the matters discussed at the meeting was that "the difference between Phoenix Institute of Higher Education and myTime Learning needs to be clearer and this should be reflected on the website".

10.14.3 Conclusion of new contracts with Brokers on 14 August 2015 750 Phoenix entered into a new round of contracts with 20 Brokers on 14 August 2015, each of which were again signed by Mr Brown.754 Again, the incentives given to Brokers for signing up consumers were considerable. For example, in the case of the contract with Infoglobal Group, a payment of $4,500 per qualification would be paid in instalments of $1,500 over three census dates. By way of further examples, the commission payable under the new contracts to Advanced Training Group was 35%, to Mr Mahar (trading as RTO Help Victoria), Step 123, Let's Upskill, and Alpha Prime was 20%, and to Sai Marketing Group and Whiz Australia was 15%. GG Sales continued to receive one of the highest commissions, being 30% under the contract of 14 August 2015 signed personally by Mr Sachdeva on behalf of GG Sales.755

10.14.4 Continuing complaints about the Brokers 751 First, the multitude of complaints received during August 2015 continued unabated in relation to Brokers' conduct in the field (ie pushy Agents representing that the courses were free, offering free laptops, and taking advantage of vulnerable and disadvantaged people).756 Examples included the following. (1) A long-term unemployed former truck driver living in a block of 900 units in Elizabeth, South Australia, was pressured by an Agent door-knocking in the block to sign up for the Diploma of Community Services Work and Diploma of Early Childhood Education and Care with Phoenix. The Agent offered the consumer a free laptop and assured him that he did not need to start the course, despite the consumer telling the Agent he could not use a computer and had no capacity to pay for internet.757 (2) In a written complaint dated 3 August 2015,758 the individual concerned complained of being offered a free laptop by an Agent who claimed to be "from the Government". The complainant explained that she had told the Agent who had attended her home in Horsham, Victoria, that she had "learning difficulties, memory loss and had only completed grade 4 of schooling".759 It emerges from email correspondence that the Agent responsible had been included in the Rogue Agents List at the start of July 2015, and in answer to Mr Kochhar's query, client relationship manager Mr Cameron Ross confirmed that he should therefore have been sacked by GG Sales.760 That notwithstanding, it is evident that he had not been dismissed, highlighting Phoenix's incapacity to monitor compliance with directions to Brokers not to permit certain salespeople to market courses on its behalf. (3) Nor was the last example of a blacklisted Agent still marketing Phoenix's Online Courses an isolated incident. On 27 August 2015, a complaint was made by a student about an Agent engaged by GG Sales that "ha[d] been going around offering everyone in his area money to sign up to the courses and said that that they get to keep the laptop and then they can cancel the courses wop and can sell the laptop if they want. He also said that he tells you what you write on the forms and what to say on the verification call …".761 This complaint was made some two months after Ms Bagga had required termination of the Agent's services. (4) On 14 August 2015, Mr Cugliandro and Ms Bagga were advised by email of a complaint about the conduct of an Agent operating in Christies Beach, South Australia, who was engaged by GG Sales and was using a false name. The email also explained with respect to the complaint: 3) Agent abuse student to have the enrolment form being signed and dated through all the paper works and not explaining about the VET FEE HELP 4) Agent told student to keep just saying "yes" when contact centre do the outbound call to verify students' course enrolments It would be great to let GG (client) know so this won't be happening again to our future students.762 (Errors in the original.) (5) On 20 August 2015, Ms Bagga was notified by Ms Breguet of a complaint received in relation to conduct in Mildura, Victoria, as follows: I just spoke to a concerned citizen (Leo) from the Mildura area that works within the disability sector. He said there is an agent offering our courses to people with disabilities who have no ability or intent to complete the diplomas and are being told to 'not worry about it because they will never earn the amount needed to repay the debt and they will get a free laptop without needing to do any study'. Leo is about to go to the police with his concerns. I'm not sure if our clients 'own' specific areas and we can investigate from there? 763 752 Secondly, a number of the complaints in August 2015 concerned marketing practices undertaken by Agents in Toowoomba, Queensland and harassment by Agents of consumers whose enrolments had been cancelled. Ms Bagga emailed Mr Kochhar and Ms Rachel McClean about one such complaint on 3 August 2015, stating in part [sic]: The student cancelled from the course as she was misled and didn't fill no forms,PTR LLN and was told FREE laptop etc.. Nirav has been sacked following more complaint/s (I believe) but went back to tell the student to call us back and let us know it wasn't his fault. They are harassing students once they have cancelled and Julie said there's a whole heap of people they have done this to and plenty complaints are with police. She also mentioned a few people that are going through the same issue and they all talk about it on Facebook and giving whole business and name.764 (Errors in the original.) 753 Ms Bagga received a further complaint on 14 August 2015 about marketing practices in Toowoomba which she reported to Mr Kochhar in an email that day as follows: I had a very interesting conversation with a rather genuine sounding gentleman from Toowoomba today. He expressed grave concerns in the marketing methods and the cohort targeted by Jasmine. He knew details of people she has been in touch with and has requested us to contact them ,which [sic] I explained our process to him before enrolment. This gentleman raised the following concerns : • The cohort targeted is from low socio economic background • No LLN skills at all • No spoken or written comprehensive English • Refugees being targeted as potential clients • Courses marketed as FREE • Inducements offered- not at all explained as a loan but FREE • Islamic schools in particular being targeted and underage students being talked into it • no information regarding VFH provided at all Also what surprised me was that Jasmine claims to be the only VFH rep for the state. She has mentioned in large gatherings to not sign up for Phoenix with anyone else but her. The gentleman mentioned about her saying to people that she is a 50% shareholder with the business. He very clearly mentioned, either this stops or he is taking all these details along with witnesses to ASQA asap. I asked him what is his vested interest in making this complaint and he said it's the welfare of the already vulnerable people. And as a member of society and someone who has gone through hardship, he feels as though its [sic] his responsibility to make us aware and put a stop to this dubious practice before he takes it further. He was very clear in his communication and mentioned ASQA and the Dept of Education as [sic] few times. So definitely someone knows what they are talking about and takes the welfare of the above mention [sic] target group very seriously. I am not sure how you would like to proceed. I have informed them that we do not condone such behaviour at all and this will cause termination effective immediately. Let me know if you have any questions re this,765 (Emphasis and errors in the original.) 754 Mr Kochhar forwarded the email from Ms Bagga to Jasmine and copied in Ms McClean. Ms McClean subsequently spoke with Jasmine and reported back to Mr Kochhar by email on 15 August 2015 . In her email, Ms McClean said that Jasmine had denied that she had marketed in Toowoomba and among other things had said that "Rupinder is the only guy marketing for Phoenix in Toowoomba" for which he received a commission of $4,000 per sale.766 755 Thirdly, given the continual flow of complaints against GG Sales, on 17 August 2015, Mr Cugliandro emailed GG Sales and, after referring to the unacceptable conduct of brokers approaching prospective consumers offering free laptops, light globes and shower heads to entice them to enrol, stated that: We have also been advised by students have been approached by brokers who have disabilities and who are terminally ill who are being coerced into enrolling into a course. AGAIN THIS IS UNACCEPTABLE!! ... CTI will not hesitate to review or cancel contracts, if it is seen that any of our brokers/clients are conducting business in this manner. … The basics of enrolling are: • If a student has severe disabilities, they are not to be engaged. • If the student is terminally ill, they are not to be engaged. • The word FREE is not to be used at all.767 (Emphasis and errors in the original.) 756 The email is substantially the same as that sent on 6 May 2015 by Mr Cugliandro to the Brokers, which proved ineffective then in terms of changing Broker and Agent conduct, as did this email: see at [600]-[604] above. 757 Finally, the extent of complaints against GG Sales is apparent from Phoenix's Complaints Register as at 21 August 2015, being the date of the last registered complaint. In this regard, 1,486 complaints were recorded on Phoenix's Complaints Register, with 888 of those complaints concerning GG Sales.768 In each case, the complaint is recorded in the table as having been resolved by the person's enrolment being cancelled or as the person having withdrawn.

10.14.5 Steps taken by the respondents in response to complaints and low activity on FinPa 758 A number of steps were taken by the respondents in response to complaints. 759 First, as earlier mentioned, Ms Blefari and Ms Mason decided to send back to the Brokers and Agents student enrolment bundles that were not compliant with the RTO Standards. However, upon Mr Kochhar becoming aware of this, he advised that they lacked authority to do so.769 It will also be recalled that later in August 2015, Mr Marco Grandi replaced Ms Blefari as the Group Compliance Manager, at which point Ms Blefari ceased to undertake compliance work for Phoenix.770 760 Secondly, Agents continued to be added to the Rogue Agents List from GG Sales and other Brokers.771 For example, on 3 August 2015, Ms McClean sent an email to the Brokers, copied to Ms Bagga and Mr Cugliandro, concerning a so-called rogue agent. The email advised that the rogue agent, "is not to be hired / represent Phoenix Institute of Australia or any of CTI's RTO's [sic] … Any Agent known to have this person working for them, will have their contract terminated immediately" (emphasis in the original). 772 The email also repeated concerns raised in July 2015 about the impact on Phoenix's revenue stream of sales by Agents of enrolments to multiple RTOs, stating that: It has been brought to our attention that Phoenix students enrolment are being sold to multiple RTO's [sic] by agents. In this instance we have had a student enrolled by the above agent contact us telling us he is in jail and only filled in the form with the agent but never agreed to enrol. The student also informed us that he discovered that he was enrolled in a dual qualification with another college of which he has never heard of [sic]. … We again ask you to assist us in ensuring our agents are following Phoenix Institute's procedures and to reinforce a zero tolerance policy. Can I please remind you of the following Phoenix Institute code of conduct procedures: • A student's enrolment should not be used for re-sale at another college without a student's consent. Some of the other colleges are enrolling the same students without qualifying them and/or claiming all debt on students [sic] behalf as of the first census date. This will impact the second census payment at our end as the student loan will be maximised and neither parties [sic] will be paid especially if the student is enrolled in 4-5 courses. • Phoenix Institute's existing agents or sub agents should not be approached to jump ship by offering more money. • To ensure that the enrolment and sales procedures are compliant, Agents should be paid a minimum of two instalments per enrolment. This will assist in preventing any further rogue behaviour, quick shortcuts or sales tactics. Agents should also not be offering any advance payments for the sales and payments are to be made after the census dates once the students have commenced and incurred debt. • Students enrolment should not be made for "bidding" between RTO's [sic] or the existing channel partners. (Emphasis added.) 761 Finally, the email stated that: • So far we have gathered information to suggest that a sub agent usually gets paid no more than $600 per enrolment (payment is split in two). For exceptionally compliant and long standing sub agents the industry benchmark is $800-$850 per enrolment.773 762 The clear implication from this paragraph is that Phoenix was unaware, and not in control of, the commissions which the Brokers paid to the Agents for enrolments. 763 This email appears to have been drafted, or at least approved, by Mr Kochhar.774 As the applicants submit, the email strongly suggests that Phoenix's primary concern was not the ability of consumers to complete their courses or their suitability for enrolment, but rather ensuring that Phoenix would be able to claim the VET FEE-HELP payments for as many consumers as possible.775 764 Thirdly, on 5 August 2015, Mr Moffat, Contracts Manager at CTI, emailed the DET (copied to Mr Brown) in response to a specific complaint relayed by the DET to Phoenix from a consumer from Kalgoorlie in WA. Mr Moffat advised that the consumer was contacted and not enrolled as she did not wish to proceed. Mr Moffat also advised that, because of "previous complaints" Phoenix had "updated" its "induction and procedures" and attached the "final three slides from [the] current induction to brokers", which "was updated last month".776 765 Fourthly, as earlier explained, at Ms Blefari's insistence a compliance workshop was held for Brokers and Agents in Melbourne attended by about 30 to 40 of those who were invited. However, this was the only such workshop that Ms Blefari was aware had been held during her time at CTI: see at [353] above. 766 Finally, the continuing low levels of student activity were a subject of concern to FinPa, as is evident from an email on 4 August 2015 from Mr Damian O'Sullivan at FinPa to Ms Bagga. Bearing in mind that the figures quoted by Mr O'Sullivan would have been inflated due to the Student Log-on Project of which Mr O'Sullivan was unaware, Mr O'Sullivan relevantly stated that: As you know FinPa and the publisher get paid on students commencing units - this is not happening with nearly 80% of students. I am eager to discuss why this is the case and how we can support you in activating the learning process … Students: 7,513 Students commenced any courses: 1,791 - 23.8% Students without any learning activity: 5,722 - 76.2% Total units consumed from FinPa to date: 2,141777 767 This apparently prompted Ms Bagga to group email the "MTL Trainers" under the subject "Recording Call log-5.8.15", attaching a call log and directing the trainer among other things to encourage "students" to log in while on the phone and advising that it was "imperative you get a hold of the NEVER LOGGED in students first off" (emphasis in the original) (see at [468] above). As such, the email focused upon the importance of trainers persuading enrolled consumers to engage in at least some level of activity on FinPa, even if it involved only logging in to the learning management system, rather than engaging in training and providing support to enrolled consumers in their studies. This, it will be recalled, was a consistent theme in the evidence of the trainers themselves. Furthermore, by focusing upon the "NEVER LOGGED in students first", this reduced the risk that trainers would detect false activity recorded in FinPa as a result of the Student Log-on Project in April and May 2015 (see Section [10.11.5] above).

10.15.1 Phoenix's response to the Notice of Non-Compliance and preparation of ASQA's Final (post-natural justice) Audit Report 768 Mr Marco Grandi, the then new Head of Compliance for Phoenix, emailed Ms Williams on 7 September 2015 attaching Phoenix's response to the Notice of Non-Compliance, being a document titled "Phoenix Institute Audit rectification report V04" (the Audit Rectification Report) which contained hyperlinks to the supporting documents stored in a Dropbox folder.778 The email was said to be "written on behalf of Bill Gale (CEO) and Harry Kochhar (COO)". 769 Upon receipt of Mr Grandi's email, Ms Williams uploaded the documents provided by Mr Grandi to ASQA's document repository "Objective".779 Ms Williams' colleagues, Mr Anthony Barkey, Acting Principal Regulatory Operations Officer, and Mr Anthony Sheppard, Acting Principal Regulatory Operations Officer, then undertook an analysis of the rectification evidence received from Phoenix and updated the audit report to refer to this evidence. Mr Barkey and Mr Sheppard found that Phoenix remained critically non-compliant against the RTO Standards, specifically Standards 1.1, 1.2, 1.7, 2.1, 2.4, 5.1 and 8.2 (the Final ASQA Audit Report).780 A copy of the Final ASQA Audit Report is reproduced at tab 14 of Exhibit CW-1 to Ms Williams' affidavit.781 770 Ms Williams described the rigorous process undertaken in the preparation of this Audit Report. She explained that when the additional evidence was provided by Phoenix, it was sent to another Principal Regulatory Officer in order to be fair to the auditee before being sent to her to finalise. She said that the task of finalising the Final ASQA Audit Report was "painstaking",782 particularly where the finding may be (as in this case) that the organisation was not compliant: So I then go back, possibly on several occasions. And I might put it aside and go back again on several occasions, because I have to make sure (a) that I've not been biased (b) that I haven't missed something or interpreted something incorrectly. That if I'm going to say that somebody's organisation should be cancelled, then I need to be 100 per cent comfortable in myself that I have made a valid decision based on the facts, and that sometimes takes a long time.783

10.15.2 DET notice of overpayment on 15 September 2015 and Phoenix's request for an increase in advance payments to $300 million on 30 September 2015 771 On 15 September 2015, the DET wrote to Mr Gale as CEO of Phoenix advising that it had reconciled the VET FEE-HELP advance payments for 2015 made to Phoenix as against actual student liabilities reports by Phoenix via HEIMS. 784 As a result, the DET had determined that Phoenix had been overpaid an amount of $33,252,277, reducing the HITS schedule from $160,000,759 to $146,667,482. By this time, the amount that the DET had paid to Phoenix in advance VET FEE-HELP assistance payments totalled $106,667,172, while the reported data on HEIMS indicated actual student liabilities of only $73,414,895.785 The attached Notice of Determination dated 15 September 2015 stated that the amount of the overpayment would be deducted from future payments to Phoenix until the excess was recovered. (I note that by this time, the $11 million net profit which Phoenix had contributed to the ACN Group's profit from VET FEE-HELP progress payments in July 2015 had already been distributed in dividends: see at [664] above.) 772 On the following day, the DET sent a letter to VET providers including Phoenix detailing reforms announced earlier on 12 March 2015 which were intended to strengthen the requirements as to the information to be supplied to the Department when submitting an estimate of VET FEE-HELP advance payments or a variation to an existing estimate.786 The letter enclosed information detailing the changes around the provision of tuition assurance details, confirmation of reforms being incorporated into providers' business models, third-party agreements and timing of estimates processing. 773 Finally, on 30 September 2015, Phoenix requested a further increase to the advance amount to be paid to it, to $300,182,692.00.787 In its online request form, Phoenix claimed that "[a]ctual student data already uploaded to HEIMS now justifies over $175M of payments" and also stated that, while one contract had been terminated, "[t]o date, we have had 25 companies broking for us in 2015".

10.15.3 Complaints during September 2015 and targeting of low socio-economic areas and Aboriginal communities 774 Complaints of the same nature as those earlier described continued in September 2015,788 including with respect to GG Sales.789 Three matters of particular concern occurred over this month. 775 First, in an email from Ms Helen Breguet, myTime Learning Contact Centre Manager, to Ms Bagga on 10 September 2015, Ms Breguet advised that she had withdrawn certain consumers signed up by an Agent from Alpha Prime for the following reasons: As per our discussions, I have withdrawn the following students who were all signed up by Mark Koolmatrie from Alpha Prime (apart from [G], who was signed up by Steven from Alpha Prime). All the below [eight] students live on an Aboriginal Community and had little to no understanding of the contract they were entering into. As confirmed by [C] who works in this Community, the LLN skills of these people would not be at a level that would allow them to undertake our courses or understand the contract they entered into.790 (Errors in the original.) 776 Furthermore, the list of eight consumers which followed disclosed that six of the consumers had been enrolled despite the fact that they were "not confirmed" and that in two of those cases, their enrolment had been noted as approved by Harry (Kochhar). 777 Secondly, a lack of concern for students enrolled in courses not appropriate for them is revealed by the following email exchange. On 26 September 2015, Mr Sachdeva forwarded to Mr Kochhar a complaint made by one of his Agents that a consumer was "stopped from verifying her details as the phone agent [at Phoenix] told her that she is not capable of doing the course" and that the courses for which she had applied were not suitable for the job prospects she had in mind (working at a supermarket). With respect to the incident, Mr Sachdeva asked Mr Kochhar to look into it and said that "[t]his is really concerning thing [sic] and it's making the whole field in a situation where they are thinking whether to continue work [sic] with us or not. I hope you understand the situation and act accordingly." 791 The effect of this email is that Mr Sachdeva was expressing concerns that Agents were questioning whether to work with GG Sales and/or the respondents because enrolments might be refused on the ground that the consumers were assessed as being incapable of undertaking the online courses in question and therefore Mr Kochhar needed to do something to stop the vetting. Mr Kochhar's response is even more extraordinary, as he replied to Mr Sachdeva stating, "[i]f this is true; I will sack someone!!!" 778 Thirdly, an intention to target consumers in low socio-economic areas is evident from an email sent on 14 September 2015 from Ms Bagga to Mr Kochhar. It related to an email from Marprop Pty Ltd which, among other things, advised as to a list of suburbs across Brisbane, Sydney, and Melbourne which Marprop "believe[s] fit into the target demographic" in line with CTI/ACN's requirements for the lease of additional office premises.792 With respect to the areas listed by Marprop, Ms Bagga suggested in her email to Mr Kochhar that "[l]ooking at the Low socio economic areas , we could perhaps look at the following (in yellow)for our next sites from James's identified list" (errors in the original).793 Those areas identified in yellow were Campbelltown, Blacktown, Merrylands, Bankstown, Liverpool, Mt Druitt and Penrith in NSW, Beenleigh and Browns Plains in Queensland, and Epping in Victoria. 779 Finally, on 9 September 2015, Ms Samantha Williams, Phoenix Student Support Officer, emailed Ms Bagga about an amendment to a verification call script for the Diploma of Community Services Work that contained a question about past work experience. In relation to this question, Ms Bagga responded in a revealing manner that: … the trainer shouldn't be discussing this with the student. Our cohort - it will be 1 in a million who will have the relevant amount of experience. … Just to keep it compliant , I have added some guff to the question re experience though.794 (Emphasis added; errors in the original.)

10.15.4 Verification of enrolments by certain Brokers 780 Concerns were raised by Ms Breguet by email on 2 September 2015 that GG Sales (in its later incarnation as "Auz Education") was undertaking its own verification of enrolment applications via a call centre in India. As Ms Breguet recognised in an email copied, among others, to Mr Kochhar,795 this practice necessarily gave rise to a conflict of interest. Ms Breguet's concerns were confirmed by Mr Woodward, client relationship manager at Via Network (formerly CTI), in an email sent later that day and copied to Ms Bagga and Mr Cugliandro.796 In response to Ms Breguet's concerns to obtain the verification script being used and their call recordings in order "to handle disputes and do quality checks", on 16 September 2015 Mr Woodward sent Ms Breguet a Dropbox link to access the MIS call recordings together with an Excel spreadsheet (referred to as the MIS list).797 781 The MIS list recorded the names, dates of birth, and contact details of 1,064 consumers whose enrolments were verified over the period 1 to 18 August 2015 by the Broker. Of these, the vast majority were marked as "verified" and only a very small number as "cancelled". Furthermore, all of the consumers were identified as having applied for dual diplomas, and at least 16 of those enrolled in dual Business Diplomas were aged between 60 and 65 years of age: see also eg at [478(1)] above. As to the latter, two consumers are identified as having been born in 1950 (item nos. 459 and 837), four in 1951 (item nos. 6, 360, 441 and 507), four in 1952 (item nos. 331, 384, 751, and 866), one in 1953 (item no. 255), two in 1954 (item nos. 708 and 736), and three in 1955 (item nos. 177, 593, and 613). At the other end of the spectrum, 13 of the consumers were aged between 16 to17 years of age (or early 18), having been born in 1999 (item no. 529) or 1998 (item nos. 154, 268, 316, 335, 379, 388, 406, 591, 625, 786, 809, and 856). The MIS list also reveals that the consumers were signed up across the country, and frequently from the same country town. For example, there were 73 entries for Dubbo in NSW with many on the same street and some at the same address who, it can be inferred, were in the same family unit: see eg item nos 112, 113 and 114. Other examples include 20 entries for Port Augusta in South Australia, including an address for a caravan park, and 14 for Morwell in Victoria. The list also refers to four other consumers living at the same address in Margate as Consumers B and C: see item nos 249, 994, 1004 and 1015.

10.15.5 Ms Bennett's evidence about the project to "fix", "backdate", and "mark" LLN forms 782 It will be recalled that Ms Bennett was a full-time trainer with Phoenix who commenced in mid-August 2015 to deliver the Diploma of Early Childhood Education and Care. She gave evidence about a project which she was directed to undertake to "fix" and "backdate" the marking of PTR and LLN forms. This is described in detail in Ms Bennett's affidavit at [28]-[44] and was addressed by her in her oral evidence on 8 November 2019 at pp. 333.10-335.15. 783 Ms Bennett explained that in about late September 2015, the person then in charge of trainers at the Broadmeadows office, Mr Vijay Dasam, gave instructions to Ms Bennett and a group of other trainers to the following effect: We've got a lot of LLN forms in that room there. They have just been backlogged because nobody's had the chance to do them. We need some of you trainers to go and sign off on them and date that sign off to before the students were enrolled because they are already in the system.798 784 Initially, Ms Bennett and another Diploma of Early Childhood Education and Care trainer, Ms Harleen Kaur, were tasked with sorting through and marking the files in the room. Ms Bennett spent a couple of hours a day working through the files on most days over the course of the week. The task was a substantial one, with there being between 30 and 50 large boxes of student forms in the room and each box containing manila folders which grouped together the enrolment documentation for each student. Ms Bennett said that a lot of the forms had been completed sometime earlier, often months previously. 785 Instructions were given to sort the forms into three piles as follows: (1) The first pile comprised forms that were fully completed and signed. Ms Bennett and Ms Kaur were instructed to mark and sign the forms and then inserted a date prior to the student's enrolment date in the space assigned for the date next to their signatures. (2) The second pile comprised forms which were missing some pieces of information or required answers to questions. (3) The third pile of forms comprised those which were almost completely blank.799 786 Ms Bennett looked through several of those folders of student forms before sorting them and saw that many of the questions posed in the PTR and LLN forms had not been answered at all and many forms were missing the signatures of students in places where they were meant to be signed. On at least one form she saw that the student had written "get fucked" as the answer to a question. The forms in question related not only to the Diploma of Early Childhood Education and Care, but were for "all types of students from all degrees. Some of them had dual degrees. So some of them were doing child care qualifications as well as community services qualifications."800 787 At the end of the first week, Ms Bennett had a conversation with Mr Dasam to the following effect: [Ms Bennett]: These people are all enrolled already. How are we supposed to sign off now on their LLNs? Vijay: You'll need to back date the sign off to sometime before they started. [Ms Bennett]: It's not just that, a lot of them are incomplete, or not even signed by the students. How are we supposed to mark off on people who have failed the LLN? Vijay: Just fix them up so we can sign off on them. They are already in the system. [Ms Bennett]: I'm not going to do that.801 788 As Ms Bennett explained in her oral evidence, they were asked to complete answers in the LLN forms and to mark them.802 Ms Bennett did not mark any more PTR/LLN forms and returned to her regular duties of calling students on her list. However, Ms Bennett's place was taken by another employee, Roshni, who began marking PTR/LLN forms. About a week later, Ms Bennett saw that another employee, Joanne, had also been moved away from her regular duties calling students and was assigned to the PTR/LLN marking room.803 789 Ms Bennett walked past that room frequently and saw them writing on PTR and LLN forms. On at least one occasion, she knocked on the window to that room and waved her finger at the employees writing on the forms. Shortly thereafter, curtains were installed on the windows and the door was kept shut.804 790 In late October 2015, Ms Bennett spoke with Roshni, saying that she was falsifying the LLN forms and that this was wrong. Shortly thereafter on 30 October 2015, Ms Bennett was called to a meeting with the other Diploma of Early Childhood Education and Care trainers and Ms Bagga. Ms Bennett agreed that minutes of that meeting prepared by Alison James, myTime Learning trainer, and sent to Ms Bagga on the same day were largely correct. They recorded that: Alison brought up that it had been brought to her attention that Mandy had said she had spoken to an outside person about marking the LLN and falsifying documents. Nidhi asked Mandy if she had signed and read our confidentiality agreement. Mandy agreed that she had signed it but did not feel she had broken confidentiality because she didn't use our company name. Roshni then explained that Mandy had asked why she was falsifying documents and that made her feel like she was doing something wrong and felt attacked by Mandy. Mandy said that it was not a personal attack and she was just having a conversation. Nidhi reminded Mandy about confidentiality and gossip within the work place [sic].805 791 In addition, Ms Bennett said at the meeting that she had spoken to someone about what was going on, that none of it was compliant, and that she was not going to falsify documents to say that people had passed the LLN test when they had not. When reminded by Ms Bagga that she had signed a confidentiality agreement, Ms Bennett responded that she did not agree not to tell people about falsifying forms.

10.16.1 Issues arising from Broker/Agent conduct 792 First, complaints about Broker/Agent conduct continued to be received during October 2015, including against Auz Education (formerly GG Sales). Mr Cugliandro described one of the complaints in an email on 4 October 2015, which was forwarded to Mr Sachdeva and then to Mr Kochhar as follows: I have just had a student who I have spoken with for almost an hour who has been in tears as she is in fear of the group of men who went to her property to sign her up. The Broker Zain was one of at least 3 who went to her house and forced the lady to sign up. They were very intimidating and advised the caller [sic] the following: • Laptop is hers to keep and hock at her own will • Course is free • She must say yes to all questions • Agent looked up her tax file number somehow on her devise [sic] as she didn't have one on her at the time • They would be to "see" her if they get wind that she has not confirmed her enrolment • 1 of them [sic] men who went to her house was a well known dangerous drug dealer who was getting money for every sales [sic] the broker got806 (Errors in the original.) 793 The Broker Zain was identified in a subsequent email from Mr Kochhar to Mr Sachdeva and others as "a direct employee/contractor for Gagan" who was "currently" travelling with Mr Sachdeva.807 794 As a further example, on 16 October 2015 Mr Kochhar was advised of a consumer who had been allegedly signed up by Step 123 in Group 4.5 in Diplomas of Early Childhood Education and Care and Community Services Work in circumstances where the consumer had very poor English and required the use of interpreter, had not been verified or made aware of the VET FEE-HELP obligations and, aside from signing "some paperwork", had not otherwise completed any part of the enrolment documentation.808 795 Secondly, Mr Woodward advised Mr Kochhar on 9 October 2015 that sales representatives in South Australia were having their IDs checked by police and were being asked to "leave the area [a]s the police think it's a scam and vulnerable people are being targeted."809 796 Thirdly, the prevalence of cases where the same TFN was given for different students is referred to in an email from Mr Banga on 7 October 2015 to CTI staff, copied to Mr Kochhar. That email advised that "the total number of students with Duplicate TFN is 47 (as of today) and this is increasing every time we do an Upload to the Department" (emphasis in the original).810 It is apparent from the previous email chain that this problem had come to light from at least 15 September 2015. The lists of students with duplicate TFNs circulated through the email chain also reveal that this issue was arising from enrolments sourced by many different Brokers including (most frequently) GG Sales/Auz Education. Other offenders included Let's Upskill, AMK, Qualify Aus, Shantey, Study Net, 313, AT, Edu Skills, and Age Group. As such, it is evident that the problem was a systemic one.

10.16.2 Changes to Phoenix's enrolment process 797 On 2 October 2015, Mr Kochhar emailed CTI staff, including Ms Bagga, about Phoenix's enrolment process, and stated in part: The personal [sic] making the calls will have 4 piles of data with them at the end of each day: 1 will be confirmed students and data will be handed straight to the data team to be entered in the system; reducing the time spent in looking for the files if Broadmeadows to make the calls. This will also allow us to hold the personal [sic] accountable who made the actual call to the student; if the file goes missing. 2 will be cancelled/withdrawn and it can go straight for filing. 3 will be data with quality issues; which will be handed straight to CRM's [sic] to be handed to the clients for fixing. 4 will be non confirmed and will go back in the queue. Further to clarify - we will move to the original process of quality checking the student enrolment once the data is received prior to handing over to the call centre. Now that we have plenty of staff to make the phone calls. We will have dedicated staff who will do the quality checks. Aim will be to receive the data, quality check and make the first verification call within 24-48 hrs of receiving the data. If the small issues are identified during the quality check which can be rectified over the phone via students; the data will still move to the verification stage and the call centre staff will rectify those issues over the phone with the student.811 (Emphasis added; errors in the original.) 798 The respondents invariably referred to their Brokers as "clients" who were managed by their allocated client relationship manager (hence the reference to "CRM's") within the CRM Team in CTI. As such, the proposal at paragraph 3 above was that where there were "quality issues" with the data in the enrolment documentation, the forms would be returned to the Broker concerned "for fixing", creating a clear risk that Brokers, who would not wish to miss out on their commissions, would personally "alter" such documentation so as to make it compliant before resubmitting it to Phoenix. Furthermore, the suggestion in the final paragraph set out a policy for handling new enrolment documentation only.

10.16.3 ASQA's notice of intention to cancel registration, DET notification of intention to suspend Phoenix's approval, and other steps taken by the regulators in October 2015 799 The regulators finally moved to act decisively against the respondents in October 2015. 800 First, on 5 October 2015, the Australian Council for Private Education and Training (the ACPET) advised CTI that Phoenix urgently needed to provide a bank guarantee of $22 million to cover existing activity and that it currently had a critical lack of cover.812 (I note that on 24 June 2015, the ACPET notified the DET that Phoenix was a member of its Australian Student Tuition Assurance Scheme (ASTAS) (an approved VET tuition assurance scheme for the purposes of the VET Guidelines.)813 The attached statement of Phoenix's VET courses of study covered by ASTAS until 31 May 2016 included Phoenix's Online Courses. 801 Secondly, on 1 October 2015, Mr Christopher Robinson, then Chief Commissioner of ASQA, accepted a recommendation from Mr Barkey to give Phoenix notice of ASQA's intention to cancel its registration under the NVETR Act and the Education Services for Overseas Students Act 2000 (Cth) (the ESOS Act).814 802 The decision to give notice of ASQA's intention to cancel Phoenix's registration was based on the findings in the Final ASQA Audit Report: see the Audit Outcome Decision Record signed by Mr Robinson dated 1 October 2015 at p. 3.815 In addition, Mr Robinson found that a further 11 complaints had been lodged since the site audit, all of which related to "marketing, student information and enrolment, dishonest conduct or behaviour of third parties (recruiters/brokers)" and therefore gave details of those complaints so as to afford Phoenix an opportunity to respond.816 803 Thirdly, on 12 October 2015, ASQA sent an email to Mr Brown giving notice under s 37(1)(a) of the NVETR Act of its intention to make a decision to impose a sanction upon Phoenix, based on critical non-compliance with the relevant regulatory requirements.817 804 Finally, and also on 12 October 2015, the DET issued the following notices to Phoenix: (1) a notice of intention to make a decision under cl 36(1) of Sch 1A to the HES Act to suspend Phoenix's approval as a VET provider together with the reasons of the Minister's delegate dated 12 October 2015 for considering suspension; (2) a combined notice of intention: (a) to revoke under cl 61(1A) of Sch 1A to the HES Act, the advance payment determination; and (b) to determine under cl 60(1) of Sch 1A to the HES Act that Phoenix be paid in arrears on a quarterly basis; and (3) a notice of deferral of payment of the advance amount in the sum of $13,333,277 scheduled to be paid to Phoenix on 15 October 2015 until 30 October 2015.818 805 Phoenix was afforded until 26 October 2015 to make written submissions in response to the combined notices of intention.

10.16.4 ACN announces trading halt on 13 October 2015 806 On 13 October 2015, ACN was placed in a Trading Halt Session State and suspended from operation, with immediate effect.819

10.16.5 Phoenix responds to the notice of intention to suspend approval 807 On 16 October 2015, the Interim Academic Board of the Phoenix Institute of Higher Education met. The draft minutes of that meeting record that the following occurred: A meeting of the Interim Academic Board of PIHEd was called given media reporting of ACN and Phoenix Institute of Australia Pty Ltd and their use of brokers for online programs. The external members of the Academic Board, Dr Marianne Gloet and Dr Peter Schmidt, have been asked to stand aside by their respective managers at Melbourne University and Holmes Institute respectively, pending resolution of the above matter hence the constitution of the Interim Academic Board. The CEO PIHEd also reported that ASQA had been notified that Ivan Brown had become CEO of Phoenix Institute of Australia Pty Ltd to replace Bill Gale who had become CEO of PIHEd.820 808 On 19 October 2015, Ms Susan Briggs, a consultant for Phoenix, emailed Mr Grandi, Mr Kochhar and Mr Brown, identifying from her review of "the report" (which is not otherwise identified), two key issues for Phoenix, namely: the lack of trainers for the number and types of consumers; and the lack of evidence demonstrating that Phoenix's policies and procedures were in fact implemented.821 As a result, Ms Briggs advised that there was a need to obtain reports, computer screenshots and the like to show what had happened. 809 On Tuesday, 20 October 2015, an email chain demonstrates the urgent steps that were being taken to mark LLN assessments by the end of the week as required by Ms Bagga, with Phoenix's response to the notice of intention to suspend approval due on the following Monday.822 The scale of the task is evident from the response of one of the trainers, Mr Reet Virk, to the request who explained that: There are still 3 more full boxes left and I don't think 5-6 trainers can finish it till Friday. I think every trainer should get 15-20 forms each, which they should mark sitting on their desks. It's a big task marking these as the dates are all different and we need to check the dates in each form.823 810 Similarly another trainer responded that "[c]onsidering the number of papers that needs [sic] to be marked and finished by the weekend, realistically many more trainers should be allocated."824 Ms Bagga's response to the trainers' concerns was that: I don't want the whole team in that little room and NO PAPERWORK to leave that room - period! I want the dates etc done properly and more people I have on the task , more chance I run for error. I am happy at the pace they are currently going and looks like they will be done soon.825 (Errors in the original.) 811 On 26 October 2015, Mr Brown, as CEO of the ACN Group, responded to the notices issued by the DET on 12 October 2015.826 Mr Brown contended that the notices should be withdrawn, submitting among other things that: (1) "all Agents are formally inducted and trained in Phoenix company policies and procedures prior to commencement";827 (2) Phoenix "constantly monitors the performance of its Agents'" and "maintains detailed records of its third party training activities";828 (3) Phoenix terminates the contract of an Agent "found to have engaged in inappropriate behaviour", or advises the Agent that an individual employee has been designated as a "Rogue Agent";829 and (4) "Phoenix does not enrol a person in a VET unit of study unless it is satisfied that the person was not offered a Prohibited inducement".830 812 While it is true that at least some Agents found to have engaged in misconduct were blacklisted and put on the Rogue Agents List, otherwise each of these representations was plainly untrue, as Mr Brown must have been aware. 813 In addition, Mr Brown submitted that: (1) Phoenix had "suspended all brokers" pending an independent review from the ACPET;831 and (2) there were 21,245 students currently enrolled in the Phoenix Online Courses, and Phoenix had 268 employees across "Administration, Data, Management & Contact Centre".832

10.16.6 Subsequent steps taken by Phoenix 814 On 27 October 2015, Mr Grandi emailed Ms Bagga a template "Support Plan - Online Students" which he said had been supplied by the consultant, Ms Briggs. Mr Grandi stated that "[t]he date on the version control is August 2015. I have done that so that you can date the evidence starting from September".833 The attached template was backdated to read "V1 150831" as described in the email, and required the trainer to complete details relevant to the student concerned, including the "Reason for Support Plan" and the support "strategies agreed to" such as attending one-on-one tutorials, LLN support, alternative delivery methods (such as hard copies), and/or mentoring and coaching. 815 Similarly, on 28 October 2015, Mr Copeland sent an email to Ms Bagga with the subject heading "Student Welfare Procedure" and stated: This is my first cut of the student welfare (can't remember the exact name) procedure to identify struggling students and provide assistance.834 816 The clear implication is that neither of these initiatives had been done prior to the end of October 2015 and that the intention was to create paperwork which had been backdated so as to convey that the support plans had in fact been in place at an earlier date. A project to this effect was ultimately implemented in February 2016: see at [890] below.

10.16.7 Further notice by the DET on 30 October 2015 of an intention to suspend Phoenix's approval as a VET provider 817 On 30 October 2015, the DET issued Phoenix with a further notice of intention to suspend Phoenix's approval as a VET provider under the HES Act.835 This notice also: (1) contained a decision to further defer Phoenix's scheduled payments which were due to be paid on 15 October 2015 until the next VET FEE-HELP payment then scheduled for 15 November 2015; (2) requested further information in relation to Phoenix's current tuition assurance arrangements; and (3) indicated that the DET was in the process of reviewing the extensive materials provided to the DET under cover of Phoenix's letter of 26 October 2015. 818 In this notice, the DET also notified Phoenix that it intended to suspend its approval as a VET provider unless it was able to provide the information requested by 13 November 2015.

10.17.1 9 November 2015: Phoenix's "Response to ASQA Audit Report on Rectification Evidence" 819 On 9 November 2015, Phoenix submitted its "Response to ASQA Audit Report on Rectification Evidence" (ie the Final ASQA Audit Report) under cover of an email from Mr Brown, and included a DropBox link to access additional documents provided by Phoenix.836 Among other things, in its response Phoenix alleged first that it had undertaken a full review of all students enrolled as at 20 October 2015 which highlighted the following student demographics: (1) 87% were born in Australia (2) 91% listed English as their first language (3) 90% had completed Year 10 or above (4) 55% had completed Year 11 or above (5) 42% had completed Year 12 or above (6) 16% had completed a tertiary or Higher Education qualification.837 820 Phoenix also alleged that evidence of the implementation of its screening process was demonstrated by the statistics that 49% of applications received in 2015 were refused, 26,281 enrolments (51%) were accepted and enrolled, and 4,973 students who were initially enrolled were subsequently cancelled or withdrawn.838 In Phoenix's submission, "[o]nly those who appear to have a reasonable chance of succeeding in online study are enrolled in accordance with the criteria in the Pre-Training Review (PTR)".839

10.17.2 10 November 2015: meeting between ACN and the DET 821 On 10 November 2015, a meeting was held between the DET and ACN at ACN's request.840 ACN was represented at the meeting, by among others, Mr Williams, the Non-Executive Chairman, Mr Brown, and Mr Wayne Treeby, the CFO. At the meeting, ACN advised the DET that: (1) there were 22,000 enrolments (as opposed to students) in Phoenix courses at that time, with 13,500 to 14,000 "bums on seats"; (2) from 13 to 19 October 2015, Phoenix had suspended the services of all Agents and was not now using Agents to recruit students; (3) ACN now had strict enrolment screenings in place; (4) "Phoenix had received no significant complaints about the quality of its courses"; (5) 550 full-time and part-time staff were directly involved with Phoenix in teaching, marketing and administration; and (6) 80 to 90% of ACN revenue was derived from Phoenix.841 822 Phoenix's "Response to ASQA Audit Report on Rectification Evidence" was also provided to the DET following this meeting.842

10.17.3 The VET Quality Framework Report and the decision to cancel Phoenix's registration on 23 November 2015 823 On 11 November 2015, Ms Williams and Ms McCann from ASQA conducted a review of the documents provided by Phoenix on 9 November 2015 which were accessed from ASQA's document repository, "Objective", and drafted a report titled "Evidence analysis - VET Quality Framework" (the VET Quality Framework Report).843 The VET Quality Framework Report identified outstanding critical non-compliance as at 11 November 2015, with outstanding non-compliance found in relation to RTO Standards 1.1, 1.2, 1.7, 2.1, 2.4, 5.1 and 8.2. 824 Among other things, the VET Quality Framework Report found that it was clear from the evidence reviewed that Phoenix's training and assessment practices were not consistent with its TASs and that the relevant training packages would not enable each learner to meet the requirements for each unit of competency given the volume of consumers enrolled and the learning support provided.844 As to the latter, the Report referred, for example, to trainer/assessor-to-student ratios of around 142:1 for the Diploma of Business, and of around 298:1 for the Diploma of Early Childhood Education and Care, and found that "[c]learly, such training and assessment practices cannot enable each learner to meet competency requirements due to having insufficient human resources (trainers/assessors) to provide adequate learning support."845 825 The VET Quality Framework Report also concluded that the information provided indicated that Phoenix had continued enrolling consumers since the ASQA Short Notice Audit Report dated 30 July 2015, despite the failure to identify how Phoenix could provide access to educational support services to its large volume of students, given in particular the "extreme rapid growth in numbers throughout the year."846 826 Finally, the Report found there was "no evidence to support" that the asserted suspension of Broker agreements had "actually occurred".847 827 On 23 November 2015, ASQA cancelled Phoenix's registration as a RTO under the NVETR Act and as a registered provider under the ESOS Act with effect from 6 January 2016 (the ASQA Decision).848 The reasons for this decision included that ASQA was not satisfied that Phoenix had demonstrated its compliance with the 2015 RTO Standards. While this decision was later stayed by the Administrative Appeals Tribunal (AAT) on 18 December 2015 on the condition that Phoenix not enrol students after 16 December 2015 or engage in any marketing or advertising activities, Phoenix withdrew this proceeding shortly thereafter on 22 December 2016.849 In this regard, the ACN Board had earlier on 5 December 2015 at an ACN Board Meeting, "re-affirmed that the Company would no longer deal with brokers as part of its operating model."850

10.17.4 Commencement of this proceeding on 23 November 2015 828 Also on 23 November 2015, the ACCC and the Commonwealth commenced the present proceeding in this Court.

10.17.5 Phoenix's problems continue and "scramble" to "paper over" non-compliance issues 829 First, during November 2015, complaints of the same nature as those earlier described continued to be received by Phoenix,851 such as the two complaints received from Legal Aid NSW with respect to students seeking to immediately withdraw.852 830 Secondly, internal correspondence acknowledged the failure by the respondents to implement their policies and procedures with respect to assessing consumers' levels of competency to complete a course and the particular needs of individual students. For example, an email exchange between Mr Copeland, Ms Bagga and Ms Briggs on 2 November 2015 suggests that only at this late stage were the respondents considering contacting those with learning and other disabilities in order to put in place appropriate supports to address their special needs.853 In this regard, Mr Copeland sent Ms Bagga a list of consumers having learning or intellectual disabilities, inquiring as to whether there is "a learning plan or any other correspondence with these students demonstrating that we have accessed there [sic] extra needs. If we do great, we can use as evidence, if not we don't". In response Ms Briggs advised: We need to ensure we have contacted as a minimum, those with learning difficulties and vision impaired - Easier to address ie hard copies. For learning difficulties, face2face or coaching, maybe For those with intellectual impairments - we could probably try and encourage them to withdraw and do another certificate (what on earth were they doing being enrolled for online learning?) Even if these are all last minute, still better than nothing, and can demonstrate we have started. 831 As a further example, in an email exchange on 17 November 2015 between Ms Bagga, Ms McClean and Mr Grandi regarding the "marking guide for new LLN and whole pack" to be included in the enrolment pack, Mr Grandi explained that the new documents were necessary because "[w]e (Phoenix) failed into [sic] evaluating existing skills and knowledge of prospective students at time of sign up and consecutively we did not take existing skills and knowledge in considerations [sic] when evaluating the level of support."854 As such, Mr Grandi explained that the documents "should be completed by the prospective student at time of application to give us an indication of what they already know about the topics included in the course", effectively acknowledging that this had not been the practice in the past. Further, when Ms McClean, a client relationship manager, inquired as to whether Mr Kochhar was happy for her to communicate Mr Grandi's email internally and to "clients", Mr Kochhar responded, effectively acknowledging that the Brokers had not been trained to ensure that applications should be completed this way, saying: Not that easy. I think we need to have a plan on how we will train the clients, execute. Does anyone disagree? Don't want it to be just another form which gets rolled out and then I am sitting at the office figuring out why none of the clients are using it. 855 832 Thirdly, email correspondence in November 2015 reveals what the applicants rightly described as a "mad rush" to sign up more trainers and assessors so as to improve the ratios between trainers/assessors and enrolled consumers. An email from Human Resources at Spotswood to Mr Brown, Mr Kochhar, Mr Brett Dunstone (who was a general manager in Human Resources), Ms Bagga and Mr Copeland on 6 November 2015 attached details of the statistics and names of trainers and assessors for each qualification which, with four additional signed contracts due the following Monday, would achieve the trainer-to-student ratio of 1:150 overall.856 833 Shortly thereafter on 12 November 2015, Human Resources advised that contracts for in excess of 75 trainers had been issued in the previous two weeks.857 However, as I have earlier found, there were a number of trainers signed up with Phoenix who never in fact performed any work for Phoenix. The drive to sign them up appears to have been motivated by a desire to present better trainer/assessor-to-student ratios on paper, rather than a desire to provide the training and support necessary to guide genuine students through their courses to completion. Consistently with this, in response to a query from Ms Bagga regarding induction for new trainers, Mr Kochhar directed that "[n]ot everyone needs induction."858 834 Fourthly, in line with the evidence of Ms Mason, Ms Blefari and Mr Howley, internal correspondence reveals that the number of work placement agreements secured fell well short of the number of students undertaking the Service Diplomas for whom work placements were a requirement. Specifically, on 24 November 2015, Ms Nelly Kaltak, Work Placement Coordinator for CTI, emailed Mr Dasam and Ms Bagga a summary of the work placement host agreements CTI had secured for Phoenix students, and the number of students then on placement.859 In her email, Ms Kaltak noted that there were "16 signed Host agreements" for the Diploma of Community Services, and "25 signed Host Agreements" for the Diploma of Early Childhood Education and Care. Only four students were then on placement across the two courses. 835 In the fifth place, on 24 November 2015 Mr Sean Dignum, a media spokesperson for Phoenix and CTI,860 sent an email inquiring as to whether Phoenix had "any other solid figures re completion rates or timing of future completion that we can use as ammo for media and govt?" following an invitation to comment on figures obtained by the Daily Telegraph.861 Mr Kochhar forwarded the email chain to Mr Brown stating, "[m]ate does he know that in reality numbers won't be good anyway", acknowledging the impossibility of refuting the figures from the Daily Telegraph. 862 836 Sixthly, figures sent by Mr Copeland on 27 November 2015 to Mr Brown confirmed the vast number of students enrolled in double diplomas with Phoenix, stating that the total number of Phoenix enrolments and consumers was 21,869 current enrolments corresponding to 11,809 current consumers.863 837 Finally, at the ACN Board meeting on 30 November 2015, Mr Brown updated the Board on Mr Kochhar's resignation, noting that he would be made a consultant for ACN on a $10,000 per month retainer with a $20,000 monthly incentive. The minutes show that the KPIs against which Mr Kochhar's monthly incentive would be assessed going forward included "Broker Liaison - maintaining current students" and "[m]anage brokers - keeping them quiet and dragging them out".864 However, by this time, ACN had advised the DET that it was no longer using Agents to recruit students and had suspended their services from 13 to 19 October 2015. That being so, the question arises as to what exactly Mr Kochhar was being engaged to do, and what would warrant such a high monthly incentive. The minutes suggest that, among other things, he would be liasing with the Brokers to retain enrolled consumers so that the Brokers would still receive their commissions going forward. However, it is difficult to draw any firm inferences from such a spare description of Mr Kochhar's role as a consultant.

10.18.1 Face-to-face courses cease 838 On 2 December 2015, Mr Brown emailed students and staff to advise them that Phoenix would "cease delivery of courses at Queen Street".865 A week later on 9 December 2015, the ACN Group issued an ASX announcement that Phoenix's facility in Queen Street, Melbourne would close on 18 December 2015 and that this closure would affect approximately 260 students.866

10.18.2 Complaints continue against GG Sales 839 Complaints continued to be received against GG Sales/Auz Education in particular during December 2015. In an email to Mr Kochhar and Ms Bagga, Ms Breguet described a particularly serious complaint made against GG Sales by the sister of a consumer as follows: Her sister and nephew were signed up by … Auz Education. The issues with this are:  They have no internet  [G] has cancer and her husband just died  Her son has schizophrenia  Agent forced his way into their home and pressured them  Told them they did not need to study and would get a free laptop  Held flash cards up when they were doing their confirmation call  Was 'confirmed' by MIS [(the Indian call centre used by GG Sales)]867 (Errors in the original.) 840 By way of a further example, a complaint against GG Sales was made on 10 December 2015 by Mr [V] on behalf of his mother, father and uncle who were retired pensioners over 65 years of age.868 Mr [V] alleged that his parents and uncle had been falsely told by an Agent from GG Sales that the course was free and taught English. Mr [V] also said that their English was inadequate to enable them to complete the course. Yet all three consumers had been "confirmed", ie enrolled, in May and June 2015, although one had apparently already cancelled before Mr [V]'s complaint was made.

10.18.3 GG Sales collects forms relating to students who had been cancelled or could not be contacted 841 Mr Lewis gave evidence of an incident in which Mr Kochhar instructed him to remain after work one day and collect forms for Gagan (Sachdeva) of GG Sales for students who had either been cancelled or could not be contacted.869 Mr Lewis explained that two days before he heard that Mr Kochhar was leaving, Mr Kochhar approached him and asked him to stay back but declined to explain the reasons simply saying something along the lines of, "I just need you to pack up all cancelled and uncontactable forms you have lying around in this office for Gagan. Don't ask any more questions. Just do as you are told."870 Mr Kochhar's personal assistant, Ms Spiteri, Mr Lewis and a couple of the members of Mr Lewis's team gathered together all of the cancelled and uncontactable forms from the Phone Team's office and the storage room where they were stored. In the end, they compiled approximately 15 to 20 boxes (some Reflex paper ream boxes but mostly larger archive boxes) of the forms which they took down to the garage/loading dock area of the Spotswood office. Mr Lewis was worried about why they were asked to collate the forms for Gagan and, as Mr Kochhar had refused to answer questions about the reason, told Mr Dunstone, the HR manager, about it and said that he was worried that Mr Kochhar might be trying to sell the forms to Gagan. When Mr Lewis returned to the garage, Mr Kochhar told him that he was no longer needed and Mr Lewis returned to his office upstairs. However when he was leaving work about an hour later, he saw Gagan drive up to the open garage door. While the episode gives rise to a suspicion that the enrolment forms were being sold to Mr Sachdeva to onsell them to other educational institutions, the evidence rises no further than suspicion and does not suffice to establish that this was what was occurring on the balance of probabilities.

10.18.4 The "never logged-in reach out" campaign 842 The "never logged-in reach out" campaign, as initially conceived, was explained in emails sent on 4 December 2015 from the Contact (Phone) Centre Manager, Mr Lewis, to Mr Dunstone (and forwarded to Mr Brown and Ms Bagga). Mr Lewis explained that they had started working on the action plan and sought guidance as to whether anything had been missed.871 Key aspects of the action plan outlined in the email from Mr Lewis were as follows: (1) The "[a]rea of Opportunity" was to "[h]ave as many students as possibly [sic], who have been identified as having never logged in, start and/or complete at least one unit." (2) The objective was to "[c]ontact as many students who have been identified as having never logged in, to gauge an understanding of who wishes to proceed with study, and subsequently ensure they have they [sic] the appropriate information and knowledge to do so, or capture reasons as to why not." (3) A script was to be provided to Contact Centre staff and SMS and email templates were to be developed to "ensure the right message [was] being delivered/explained to applicants with the right 'call to action'". (4) "Establish the withdrawal (with Penalty) process for Spotswood to assist with withdrawals". 843 The draft script prepared by Mr Lewis was also forwarded to Mr Brown. 844 On Sunday, 6 December 2015, Mr Brown emailed Ms Bagga a "script" to be used in calling consumers to encourage them to start their assessments. Ms Bagga responded later that evening that the script could also be used to call consumers who had started their assessments, but not yet completed them.872 845 Ms Bagga called a meeting on 8 December 2015 attended by Ms Bennett and the other trainers at Broadmeadows regarding the "never logged-on reach out" campaign.873 Ms Bennett gave evidence about the meeting, explaining that Ms Bagga told the trainers that: We are currently being investigated. We have done nothing wrong. We need to show, however, that students are getting through their courses, and the numbers to prove it. You will need to guide the student through the units, just get them done anyway you can. If we can get enough unit completions will be able to get the money the government is refusing to pay us, and then we can start over with a new RTO.874 846 The minutes of that meeting bear out Ms Bennett's recollection, recording that: Due to complaints made, VFH, ACCC and ASQA have combined to take action against us. • VFH are withholding money from us. Management are going to take legal action to have this money released. • ACCC are wanting us to prove that our students are legitimate (due to the marketing practices of Agents, to recruit our students). We are required to have assessed as either Competent or Not Yet Competent at least one unit for each student, for each course they are enrolled in. This means that the students need to not just submit an assessment for a unit, but they need to submit all required assessments for a unit. … A selection of units from each course needs to be made. These can be the easier/shorter units, to enable the process of assessing competency to be time efficient. • ECEC and CSW should not select units that involve placement. … A Rectification Project is being considered. If we can last the next few months and get the money owing to us released, we can look at buying another RTO and start again. … It was reiterated that anything and everything to do with a student MUST be recorded on Finpa. No Excuses!875 847 It was also confirmed at the meeting that the Phoenix Institute at the Queen Street campus would close on 18 December 2015.876 The minutes record, however, that the meeting was advised that it was "business as usual" for myTime Learning.877 The minutes also note that working hours for trainers would change and that trainers were required to "work from 10am to 6pm each day", and recorded the following matters in relation to "[w]orking from Spotswood": There will be twenty trainers (from both Broadmeadows and Dandenong) that will be required to work from Spotswood for the foreseeable future. Nidhi will make her selection of trainers today. These twenty trainers will assist in calling students. They will be motivating and encouraging students to start submitting assessments. The aim is to get students to realise that they have someone who will assist and guide them through their courses. That if they need help, there is someone there for them. The rest of the trainers will stay at Broadmeadows and continue with the existing pool of students that are already submitting work.878 848 On the following day, Ms Bagga sent an email to Mr Dasam as part of a longer email chain about assisting a student to log on, and stated, "[c]an be part of the special project. Fuck they need answers- we ll give em answers w/o giving them answers;) to complete units!!" (errors in the original).879 849 By 11 December 2015, the campaign was in operation. Mr Manoj Jacob, Student Enquiry Support Officer, Via Network, circulated by email the "Never Logged In" spreadsheet and directed staff to "send the list back to [him] by cob daily" after making their calls.880 There were 6,911 consumers on the spreadsheet which gave the email addresses and contact telephone numbers for each consumer as extracted from FinPa and Wisenet. 850 Later that evening, Mr Brown approved a script for an email to be sent to consumers comprising a further limb of the campaign whereby they would be offered inducements to complete a unit.881 851 Shortly thereafter on 14 December 2015, trainers were instructed to send SMS text messages offering inducements to students to participate in workshops to assist them with completing a unit to the following effect: Dear student, as we are nearing the end of 2015, we would like you to finish it with a bang!!!. We are running a workshop at [venue] (day and Time) in order to assist you with your course completion. We will be running [unit] making it fun yet informative. Not only will you have a chance to complete a unit, we will also provide you with refreshments and lunch. Each student to complete a unit at the venue will also receive a $50 Officeworks gift voucher…Yay!. Reply YES for more details. Spots wont last!!882 (Errors in the original.) 852 On 15 December 2015, Ms Bagga emailed approximately 50 myTime trainers regarding the "Rectification Project" which involved sending trainers on "roadshows" to various locations in January 2016 to assist consumers with completing units, and not merely assessments. 883 The focus was upon "getting the easier units out of the way ,ie that do not require work placement and / or observation (unless [sic] can be done in simulated environment [sic])" (errors in the original). Both consumers and trainers were to be given $50 vouchers for each consumer who completed a unit of study. Consumers were also to be given laptops and internet to use if required, as well as meals. Ms Bagga also made reference to the "special project team" who had been relocated to the Spotswood office. In the email, she asked the trainers for their support, explaining that there would be a change in work hours from 10am to 6pm "to get maximum students answering the phones", noting that there were trainers working from 12pm to 9pm as well. 853 This evidence is corroborated by Mr Vickers' review of the FinPa data administration notes which established that over 1,000 emails and/or SMS messages were sent to consumers advising that those who successfully completed their first unit of competencyover the course of a weekend would receive a $50 Coles/Myer voucher.884

10.19.1 Regulatory action 854 On 14 January 2016, the DET decided to revoke Phoenix's 2015 Advance Payment Determination in the sum of $40,000,000. The ACN Group made an ASX announcement on 18 January 2016, notifying of the DET's decision and also reported that Phoenix continued to "train and assist around 21,000 enrolled students".885 855 On 29 January 2016, the Minister's delegate suspended Phoenix's approval as a VET provider.886 Pursuant to cl 29(b) of Sch 1A to the HES Act, a body ceases to be approved as a VET provider while the body's approval is suspended with the consequence that its students are no longer able to access VET FEE-HELP assistance. However, at the time of Phoenix's suspension, the Minister's delegate also made a determination under cl 37(1) of Sch 1A of the HES Act,887 which enabled VET FEE-HELP assistance to continue to be available to existing students of Phoenix, allowing those persons to continue their courses.

10.19.2 The "roadshows" in January 2016 to increase the number of consumers completing a unit of competency 856 Phoenix continued in its efforts to encourage and assist students to log in to FinPa and complete a unit of competency in January 2016. One measure adopted was the "roadshow" in NSW, Victoria and South Australia,888 which had been the subject of email correspondence in December 2015 (as discussed at [852]-[854], see also at [376] above (Mr Lewis)). The roadshow, as implemented, had a number of key features. 857 First, it is apparent from an email chain commencing on 8 January 2016 between Ms Alison James and Ms Bagga that the intention was to ensure that students entered the correct answers and therefore were recorded as passing the unit. 889 Ms James suggested there were three options for assessing the assessments, namely: Trainers will print them, assess them and upload them again. OR We assess them as we go. Yes extra work for us- will be quicker to do it as we go. I would also hate for someone back at the office to mark the assessment as NS. OR We can physically put a tick next to each question. Trainers in the office can just add their electronic signature, and leave feedback in the feedback box, not on the assessment. We will be checking as we go to ensure the students are putting the correct answers. So its [sic] no extra work for us to tick the question and leave some basic feedback now and again ( they wont be able to leave till they had all the correct answers!) (Emphasis added; errors in the original.) 858 Ms Bagga advised that the third option "will be the best", saying that "[y]ou ll def have retards that ll mark the work NS cos they know better. Regardless of even if you leave notes which they wont [sic] read" (errors in the original). It is apparent that the reference in these emails to "NS" is to a mark that an assessment is "not satisfactory". As such, it is apparent that the intention was to adopt a system of marking which would minimise the risk that enrolled consumers were recorded as not having passed a unit. 859 In line with this, trainers were instructed not to assess, give feedback or fail students who completed units on the NSW roadshow. Specifically, on 17 January 2016 (at 9:14 pm), Ms James instructed the myTime learning trainers as follows: Please DO NOT ASSESS these units!!!! it takes on average 30 - 40 minutes per student to type in the necessary wording and submit the assessment on the students [sic] behalf. Anyone who assess [sic] these units will have to explain to myself why they made this mistake! If you open a unit and it clearly has - see uploaded assessment to every question, it was completed on the NSW road show and we will deal with it. Please do not, [sic] leave feedback and mark it as Not Satisfactory. If you can see that one student has submitted every assessment to a whole unit, you can guarantee it was done on the road show and you don't need to open it to check.890 (Emphasis and errors in the original.) 860 Secondly and in line with the plans discussed for the roadshow in December 2015, eligible consumers were to receive vouchers for successfully completing a unit. As Ms Bagga explained in a group email to "MTL Trainers" attaching a schedule for the roadshow: You can encourage learners to join in on these face to face training session being held at these venues. Eligible student [sic] may receive a $50 voucher for successfully completing a unit of competency on the day.891 861 Thirdly, enrolled consumers completing assignments via the roadshow were allowed paper assessments to help ensure that at least one unit was completed despite the courses offered being online. Thus, in response to an email request for confirmation that paper-based assessments were only to be printed for the roadshow (and not for "everyday students") from Ms Nahla Fayad, Ms Bagga advised that: It has proven really hard to upload the student work once they have hand written it. It is getting us by for now as we have no other choice but to do this in attempt [sic] of getting the students to complete at least a unit. There is a list of units I sent earlier on that we could use on/at roadshow but if there are units we need to do outside of the commencement ones; we need to create them in word docs from Finpa. Speak to me when you get this, 892 (Errors in the original.) 862 Fourthly, an email on 21 January 2016 from Ms James to Ms Bagga reveals the very large numbers of student assessments completed even on the first day, stating that "[j]ust had a quick look on FinPa. Since we started the road show till today 749 assessments have been submitted! That's great ".893 Ms James also proposed that she complete some assessments with consumers over the phone and that assessments be marked by Huss (Husdedaz) and not other trainers: I don't want lots of business trainers seeing the assessments as I have put Huss as the trainer on the assessments. I want to make sure Kurt fully understands this. … I have 4 students that I can phone and do a competency based assessment over the phone as they do not have their laptops. I can ask the questions and type the answers in the feedback. I will leave notes to explain they do not have their laptops but wanted to start the course ect. [sic] Are you happy for me to do this tomorrow? It would be another 4 units if so. I can get Hannah to do it via the phone for me, or another trainer (if I have any left )

10.19.3 The "Rectification Project" or so-called "audit" of PTR and LLN forms at the CTI office at Spotswood 863 Preparation for the so-called "audit" at the CTI office at Spotswood was underway by late December 2015. On 21 December 2015, Ms Nelly Anala (Data Entry Officer) forwarded an email to Ms Bagga about the process to be adopted in reviewing PTR and LLN forms. Ms Anala stated in her email that "we are making sure all dates on all forms will be before wisenet enrolment date", referring to the enrolment forms, VFH forms, acknowledgement forms, CLAs (which were not defined), and fee statements. The email also detailed a staged process for assessing and signing the PTR and LLN forms from a list of "all student [sic] from group 1 to group 10 from wisenet" and that by "the time we handover all files to Lorriane [sic], each file will be fixed 100%" (errors in the original).894 It was also noted that any form "below 50%" would be set aside for Ms Bagga. 864 On 24 December 2015, Mr Copeland circulated to Ms Bagga and others an email entitled "Scanning Project Production Line Plan". The email advised that it attached a "draft production line plan for completing student files and scanning them" (emphasis added).895 The attached flow chart is reproduced at Figure A below:896 Figure A: STB vol 27 tab 1222 865 Similarly, in what appears to be an earlier draft of the project steps, a handwritten note seized in the course of the search warrant later executed by the Australian Federal Police entitled "PROJECT RECTIFICATION" sets out a series of tasks for completion between December 2015 and March 2016. These include in the week commencing 7 December 2015, "repair enrollment [sic] [date or dates] - mark LLN/PTR - [illegible] dates - correct signatures"; in the week commencing 21 December 2015, "[c]ommence scanning complete enrollment [sic] form"; in January 2016 "continue scanning"; and in the week commencing 1 February 2016 "project completion target (100% of enrollment [sic] forms digitised, 'cleaned')".897 Another seized document headed "9/1/16" identifies two "Lines" with various staff names including "Brad" and "Marco", while an email sent from Ms Spiteri under the subject heading "Filing/Archiving/Project staff" lists details about some 20 staff members including Mr Brad Matton and Mr Marco Grandi.898 866 It is evident in particular from the flowchart reproduced above that the steps envisaged for the project involved the completion of the answers on the PTR and LLN forms where they were incomplete, backdating of PTR and LLN forms so that it appeared that they had been assessed only one day after Phoenix had received them, backdating of the enrolment forms including the VFH forms by 7 to 10 days before the received date, scanning of the "reworked" forms, and disposal of the original forms. The so-called audit was therefore intended to be a breathtakingly blatant attempt to create evidence that Phoenix had complied with its VET FEE-HELP obligations and internal policies contrary to the facts. It is apparent from the evidence of the ex-employee Mr Matton that that is precisely what in fact occurred. This evidence is also consistent with anomalies in the forms contained in enrolment packs described by Mr Voller (a Senior Investigator at the ACCC) in his affidavit affirmed on 18 September 2019 at [97]-[104] and [122]-[124].899 867 Mr Matton was deployed to work on this "project" at the CTI office in Spotswood in January 2016, being moved across from his usual employment with Cove, another RTO within the ACN suite of subsidiaries.900 As the applicants submit, Mr Matton gave "candid and forthright evidence … which confirm[ed] widespread document alteration and fabrication".901 It is important again to acknowledge that he and other witnesses who came forward to give evidence about these and other practices engaged in by Phoenix and its related companies demonstrated considerable courage in doing so and to acknowledge the value of their evidence. I accept Mr Matton's detailed and convincing account of what occurred. I also accept that he was misled into believing that he was undertaking a proper audit of the PTR/LLN assessment process and that he left because of his increasing concerns about the propriety of what was being undertaken, the personal stress that these concerns placed him under, and because he wanted to be no part of such an enterprise. Mr Matton's evidence was supported by contemporaneous documents and by a complaint made by an ex-employee to Senator the Hon Scott Ryan, Minister for Vocational Education and Skills, on 23 February 2016.902 While the latter was a hearsay account, it contained a number of strikingly similar features to Mr Matton's evidence, including the employees being asked to "drive to a 'secret' location in a convoy of cars as they were not given the exact address. They were told not to tell anyone where they had been. They were told that they were to assist with an audit being conducted on the Phoenix Institute …". 868 Mr Matton was told that he was being asked to work on an audit for approximately three to four weeks.903 The so-called audit was initially undertaken at the back of a large warehouse space in a freestanding glass-walled room at Spotswood. Within that room, there were four or five tables set up like a "production line", and Mr Matton was allocated to one of the tables together with four other people.904 There were approximately 30 office staff working with him at this stage of the "audit" although none of the staff wore name tags, uniforms, or badging which identified the organisation for which they worked. The staff were also directed not to use their mobile phones during the project, and had to sign in and out of the office.905 The audit was overseen by Mr Brown who visited the audit team in the glass-walled room at Spotswood between three to five times, "walking around it observing what we were doing."906 869 Different tasks were allocated to each of the office staff including: (1) using erasable pens (with an eraser on the end) to mark the PTR and LLN forms; (2) using white out tape to change the course version control numbers located at the bottom of the PTR/LLN forms which involve erasing the dates on the course version numbers on the form; and (3) changing other information on the forms, although Mr Matton could not then recall what that information was.907 870 There seems to have been a degree of urgency or pressure to get the job done, with Mr Matton describing "everyone [as] running around like 'headless chooks'."908 871 Mr Matton was instructed to check and sign the PTR forms and to mark the answers in the LLN form by reference to a marking guide for the LLN quiz.909 In most cases, the PTR/LLN forms which he reviewed did not appear to have been marked before. Mr Matton estimated that he marked or cross-checked and signed off approximately 40 to 50 forms a day and completed a few hundred forms in his first week on the project.910 872 Initially, as he had been told, Mr Matton understood that his task was to mark student PTR forms by cross-checking the original marking to make sure it had been properly marked or to mark them for the first time. He said that from his experience in the training industry, such audits were quite common practice.911 873 Mr Matton made several key observations whilst working on this project which no doubt contributed to his increasing concerns about the propriety of the audit, including that: (1) most of the forms were black and white photocopies rather than handwritten originals;912 (2) many of the forms had been completed "many months" prior to January 2016, when the project was being undertaken;913 (3) among those checked by Mr Matton, many of the forms exhibited two distinctive types of handwriting, which he explained as follows:914 I noticed a series of forms in which the dot in the letter "i" frequently appeared as a round circle like this "o". I did not know whose handwriting it was. There were maybe about 30 forms in this handwriting that I noticed. The other distinctive style of writing that I noticed was quite rushed in its appearance. I cannot now recall how many forms in this handwriting I noticed.915 (4) one name (which he could not recall save that he thought it was an Indian name) appeared regularly on the PTR/LLN forms checked by Mr Matton.916 874 Examples of the PTR and LLN forms reviewed by Mr Matton are contained in Exhibit A-14. I note that some of these forms predate the time at which Mr Matton worked on the "audit". However, I draw no adverse inferences from this against Mr Matton given that he gave candid evidence against his own interests and that he was supplied only with erasable pens and white out tape so that someone else could have changed the dates. Furthermore, there was evidence of Mr Matton's signature having been forged on some of the forms. In this regard, Mr Matton explained that he became aware during the audit of a young staff member forging his signature onto the PTR/LLM forms when she told him that she had "basically got your signature down pat now" and gave him a form which she had signed with his signature. He reported this to his supervisor.917 875 At the end of the first week of the "audit", Mr Brown addressed the staff members working on the project saying that they had all done a really good job on this and gave them Subway sandwiches for lunch.918 Mr Brown also described how the process was to be undertaken going forward, and that work would now be conducted in the larger factory floor area where they were gathered. The number of staff members working on the project at this time increased to about 70 people. Mr Matton explained that: In the new process, each table was given a different aspect of the form to check, and was required to place a different coloured sticky dot on the corner of the paper forms to indicate that stage of the process that had been completed. One table had red dots, another table had greens [sic] dots, and another table had yellow dots, and then the final stage was to have black dots. I cannot now remember what each colour meant. The forms would get picked up and moved onto another table.919 876 The staff members working on the project were also directed "to tally points for responses to LLN questions and assess whether students met the requirements for the course. This included ensuring that all the ticks that were needed appeared on the enrolment representative checklist document, and ticking those that were absent."920 They also had to write comments on student forms as to whether students would require assistance with their courses based on their PTR/LLM forms.921 877 After about two weeks of working on the audit, the staff were told to stop working on the PTR and LLM forms because they were going to another location in Spotswood for a new project. The location was described as "secret"922 and staff were forbidden from texting or calling anyone or telling anyone about what they were doing or where they were going.923 They then followed a person who Mr Matton believed was Mr Brown's personal assistant "driving in single file, in our own cars to a small warehouse on Champion Road in Williamstown North, behind Tumbles Playhouse".924 Mr Matton explained the process undertaken at this new location as follows: When I arrived at the Spotswood factory, there were at least 30 audit staff who were processing the Request for VET FEE-HELP forms and categorising student's names in alphabetical order. There appeared to me to be a shoulder high pile of VET FEE-HELP forms. I also observed a number of photocopiers and five "industrial -type" printers. … The staff including me placed the VET FEE-HELP forms in piles and checked the version control numbers on the forms. … the basic aim was to update the version control number that appeared on the forms. To do this various methods were used … as follows: (a) we were asked to scan the documents, then make redactions and then change the version control number on the scanned documents, and then print them off; or (b) sometimes, new forms were used and information from old forms was copied over to them and the student signature was forged (although I personally never forged signatures).925 878 He further explained that: … we were told to take the original VET FEE-HELP forms and then transfer the details across to another version control, so basically - basically writing all of the original information, which appeared original or scanned, into a fresh VET FEE-HELP form, which was a - which was another version control as well. [Ms Sharp SC] And when you say you transferred the information over, do you mean that you wrote out the information that you observed on the old form into a new form? [Mr Matton] --- Yes. Yes. Yes, I did.926 879 The staff were allowed to work for as many hours as they wished in order to finish the "audit" and luncheon barbecues were provided to the staff on a daily basis.927 880 Mr Matton felt increasingly uncomfortable and stressed by being asked to undertake this work, feeling that it was wrong and that he wanted to be no part of it. That disquiet was confirmed when he looked up Mr Brown and Phoenix Institute on Google on his phone. Consequently, after about a week of working at the new location he could no longer cope and quit his employment with Cove.928 This pattern of honest people being exploited and misled (as well as bullied) is a common pattern which emerged from the evidence about practices at Phoenix.

10.20.1 Regulatory action 881 On 4 February 2016, the DET appointed McGrathNicol in accordance with cl 26(2) of Sch 1A to the HES Act to perform a formal audit of the reported enrolment data that Phoenix had provided to the DET for the 2015 calendar year. The audit was subsequently extended to cover consumers enrolled in a course of study with Phoenix during 2016.929 The purpose of the audit was to determine Phoenix's entitlement to payments under the HES Act, including to consider the veracity of the enrolments that had been obtained.930 882 On 17 February 2016, the McGrathNicol team arrived at the Phoenix office in Spotswood at 10:00am to commence the audit. However, Phoenix resisted the commencement of the audit through its lawyers.931 Rather than the audit commencing, a meeting was held discussing how the audit may be structured. It was agreed that the McGrathNicol team would return at noon the following day. The next day, Mr Shane O'Keefe, who was part of the McGrathNicol audit team, and Mr Brown met at the Phoenix office in Spotswood to begin discussions relevant to the audit process about the nature of enrolments.932 On 19 February 2016, Mr Dunnett emailed Mr Brown and others about a meeting to be held that afternoon and requesting information required to conduct the audit.933

10.20.2 Ongoing strategies to convince authorities that Phoenix was a legitimate provider of online education services 883 Phoenix continued in its desperate attempts to convince the authorities that it was a legitimate provider of online education services. 884 First, I have earlier referred to the allocation of an extraordinarily large number of consumers (6,976) on 5 February 2016 among 19 trainers with trainer-to-student ratios which were plainly unworkable. 885 Secondly, on 4 February 2016, a decision was made to proceed with a project that would cause consumers to log in and commence (or become "active") by clicking on a link sent to them via SMS, thereby bypassing the log-in process.934 The purpose of the scheme was to encourage consumers to activate their enrolment via SMS with a view to increasing the number of consumers ostensibly engaging with the Online Courses in which they were enrolled. 886 On 11 February 2016, Ms Bagga sent an email to a "Chris" at Via Network, copied to Mr Brown, stating: Just had an epiphany! Can we try and send hyperlink for units frm Finpa?? It ll be gold if theres no issue relating mode , student clicks on it- it becomes commencement on SMS!! Ivan- if this is possible , do you see any issues??? Logging in alone doesn't show it as commencement.935 (Errors in the original.) 887 Mr Brown replied, with the straightforward direction, "[d]o it today".936 In accordance with this direction, on 16 February 2016, Mr O'Sullivan from FinPa emailed Mr Brown noting that Mr Brown had "commissioned a piece of work to attract never logged in students to become active". 937 He explained that they were "building a unique link for every student that enables them to skip the log in process and … will take them to the units available" but cautioned that this would "still not guarantee activation as there are still some steps to go through to access content". On 19 February 2016, FinPa commenced "intense development on both student direct logon and student direct commencement projects" and by 21 February 2016 emailed Via Network with "2 demo accounts" to demonstrate the functions which "are live".938 The email attached an Excel file showing "current 5,749 never logon participants" containing a "unique address for each participant to logon and commence the first unit immediately on the click." 888 By 24 February 2016, there was correspondence about the text of the SMS to send consumers, with a proposal that the SMS read, "[t]hrough your study with myTime Learning, access high quality online resources as you work towards a nationally accredited qualification. In order to get started, we have made your initial log-in process easier. Click the following link to begin your journey____reply STOP to opt out".939 The initial SMS was sent out as part of the project to increase student commencement rates on 26 February 2016.940 The forensic analysis by Mr Dunnett conducted subsequently found that there was a small peak in log-ins on 27 February 2016 and, as the applicants submit, whilst the increase was only 40, it was still the largest number to occur outside a period in August 2015.941 889 On 29 February 2016, Ms Bagga sent an email again in relation to the project to increase student commencement rates, suggesting that URLs should also be created for those consumers who had "logged in not commenced",942 and stating that "[t]his should be good even if we can get 10% commencement as a result of this then the trainers can push further." 890 Thirdly, Phoenix engaged in a project of creating backdated student support plans. Specifically, in an email dated 11 February 2016, Ms Fayad, myTime Learning BSB E-Learning Coordinator, emailed Ms Bagga about the progress with creating "student support plans", explaining, "[w]e've completed over 40 plans and have not even gone through half of our lists that we filtered from completed assessments".943 She also asked Ms Bagga to create a folder for the plans and said that she would "save them EACH INDIVIDUALLY under the students [sic] full name." It is apparent from the attached plans that they were backdated and fabricated again in order to persuade the authorities that Phoenix had complied with its VET provider obligations and its own internal policies. For example, in one of the attached student support plans (V1 150831) for a student enrolled in a Diploma of Business ostensibly signed by a trainer and dated 16 July 2015: (1) handwritten comments in the section marked "Reason for Support Plan" stated "support with acheiving [sic] competence in producing business documents"; (2) among different options, "Attending one-on-one tutorials" was ticked as a strategy agreed to; (3) handwritten observations in the section marked "Next meeting: Please provide specific details of next monitoring meeting or stage" read, "[s]tudent will contact weekly or fortnightly for phone support or through email"; and (4) in the section marked "Authorisation", ticked boxes stated that "This matter has been agreed on and all parties involved have been informed of any actions when necessary" and "The student is aware of the consequences of not complying with this plan".944

10.21 Subsequent events in 2016 891 Subsequent events in 2016 may be shortly summarised as follows. (1) On 17 March 2016, the ACPET issued a media release indicating it had terminated Phoenix's tuition assurance membership.945 (2) On 21 March 2016, Mr John Lindholm and Mr George Georges from Ferrier Hodgson were appointed as Voluntary Administrators of ACN and its subsidiaries within the ACN Group pursuant to a resolution of the Board of Directors. 946 (3) On or around 23 March 2016, the delegate of the Minister revoked Phoenix's status as a VET provider under cl 33(1) of Sch 1A to the HES Act with effect from 31 March 2016.947 At the same time, the Minister's delegate made a determination under cl 35(1) of Sch 1A enabling existing students of Phoenix to have access to VET FEE-HELP assistance to complete their courses of study. (4) On 12 April 2016, the Australian Federal Police (AFP) executed a search warrant (the Warrant) issued under s 3E of the Crimes Act 1914 (Cth) on Melbourne premises believed to be linked to Phoenix.948 The Warrant was issued at the request of the Department pursuant to its investigations into Phoenix for possible breaches of the Criminal Code Act 1995 (Cth). The investigation was conducted pursuant to the Department's responsibilities under the Public Governance, Performance and Accountability Act 2013 (Cth). The fact of the AFP executing the Warrant for the purpose of an agency investigating offences is known as an "agency assist". A representative of the Deed Administrators for the respondents was present during the execution of the Warrant. Officers of the Department assisted the AFP with the seizure under the Warrant. On 12 April 2016, the AFP provided the material seized pursuant to the Warrant to the Department.949 (5) On 27 April 2016, Ferrier Hodgson wrote to all of Phoenix's enrolled consumers advising that due to the withdrawal of funding, Phoenix had ceased to trade.950 (6) On 4 May 2016, Phoenix became subject to a Deed of Company Arrangement.951 (7) The MGN Audit Report was produced on 16 September 2016.952 (8) On 22 December 2016, Phoenix was formally deregistered as a RTO.953

11. ATTRIBUTION OF THE CONDUCT OF THE BROKERS AND AGENTS TO PHOENIX

11.1 Introduction 892 As earlier explained, before ACN's acquisition of Phoenix, there had been no use of third-party recruiters for the courses offered by Phoenix. It will also be recalled that the Brokers and Agents were third parties who recruited consumers to apply for enrolment in Online Courses offered by Phoenix only following its acquisition by ACN in January 2015, and comprised an essential part of its business model from the outset.954 Pursuant to standard form contracts entered into between 16 January and June 2015, CLI engaged at least 28 Brokers directly to "source" potential students for Phoenix's Online Courses, while between 1 July 2015 and 23 November 2015, Phoenix entered directly into contracts with at least 29 Brokers for the same purpose. A list of the contracts, including the parties to the contracts and dates on which each contract was entered into, together with particulars of each contract, are set out at Annexure A to the ASOC and is reproduced in Appendix 2 to these reasons. In turn over this period, the Brokers entered into contracts with at least 548 Agents, being other entities and individuals, to recruit consumers into the Phoenix Online Courses. A list of the Agents engaged by each Broker, the dates on which the Agents entered into contracts with each Broker (the Agent Contracts), and particulars of the Agent Contracts are set out at Annexure B to the ASOC and reproduced in Appendix 3 to these reasons. In effect, a veritable army of sales representatives was rolled out without any effective training, monitoring or control in furtherance of Phoenix's object of growing at an exponential rate the number of consumers enrolled in its Online Courses and in respect of whom Phoenix could claim VET FEE-HELP payments or retain payments made in advance based on estimated enrolments. 893 The high level of commissions, payable to Brokers and Agents only after the census date for each unit in which consumers were enrolled had passed, created a strong financial incentive for the Brokers and Agents to engage in high pressure sales tactics and to deliberately target consumers who would be unlikely to ever engage with the Online Courses but were likely to remain enrolled until the census date had passed in ignorance of the debt which they would then incur (see also by analogy AIPE (No 3) at [167]). These were known risks in the industry even before the acquisition of Phoenix when ACN was formulating the business model for Phoenix's operations post-acquisition. Furthermore, key officers of the respondents, Mr Brown and Mr Kochhar, were alerted from early 2015 to the fact that those risks were being realised by the ever-escalating stream of complaints made to Phoenix by consumers and consumer advocates, and of the need to take preventative, proactive steps to address it which the respondents manifestly failed to do. 894 For the reasons set out below, the conduct of the Brokers and Agents is plainly attributable to Phoenix under s 139B(2) of the CCA on the ground that they were acting as agents of Phoenix within the scope of their actual or apparent authority and/or they acted at the direction of a director, employee or agent of Phoenix, or with their consent or agreement. In short, as was the case with the agents and sub-agents selling and promoting courses considered by Gleeson J in Empower (at [301]), the Brokers' and Agents' conduct in selling and promoting the Online Courses provided by Phoenix was conduct engaged in on behalf of Phoenix because it occurred: (1) in the course of their respective agency relationships with Phoenix; (2) when the Brokers and Agents were acting as representatives of Phoenix; and (3) for the benefit of Phoenix, that is, to build its business.

11.2 The legal principles relevant to s 139B(2) of the CCA

11.2.1 Section 139B(2) 895 Section 139B(2) of the CCA deals with the attribution of conduct by another person to a body corporate, providing that: Any conduct engaged in on behalf of a body corporate: (a) by a director, employee or agent of the body corporate within the scope of the actual or apparent authority of the director, employee or agent; or (b) by any other person: (i) at the direction of a director, employee or agent of the body corporate; or (ii) with the consent or agreement (whether express or implied) of such a director, employee or agent; if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, employee or agent; is taken, for the purposes of this Part or the Australian Consumer Law, to have been engaged in also by the body corporate. 896 The applicants contend that the Agents and Brokers marketed Phoenix's Online Courses and recruited consumers and, in so doing, acted: (1) as agents of Phoenix within the scope of their actual or apparent authority; and/or (2) at the direction, or with the consent or agreement, of a director, employee or agent of Phoenix in circumstances where the giving of the direction, consent or agreement fell within the scope of the actual or apparent authority of the director, employee or agent. 897 As such, the applicants submit that the Agents and Brokers satisfy the elements specified in ss 139B(2)(a) and/or (b) of the CCA. 898 The phrase "conduct engaged in" is defined in s 4(2) of the CCA which provided at the relevant time that: (2) In this Act: (a) a reference to engaging in conduct shall be read as a reference to doing or refusing to do any act, including the making of, or the giving effect to a provision of, a contract or arrangement, the arriving at, or the giving effect to a provision of, an understanding or the requiring of the giving of, or the giving of, a covenant; … (c) a reference to refusing to do an act includes a reference to: (i) refraining (otherwise than inadvertently) from doing that act; or (ii) making it known that that act will not be done; … 899 Section 139B(2) is relevantly in the same terms as s 84(2) of the CCA which originally applied to contraventions of both the restrictive trade practices and consumer protection provisions of the CCA. When s 139B was inserted into the CCA as part of the ACL reforms by the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth), the Explanatory Memorandum accompanying the Bill stated, at [18.35], that s 139B "reflects section 84" of the CCA. In turn, s 84(2) of the CCA is in the same terms as s 84(2) of the TPA which was repealed when the CCA was enacted. It follows that judicial consideration of the meaning and scope of s 84(2) of the CCA equally provides guidance regarding the meaning and scope of s 139B(2) as Gleeson J pointed out in Empower at [280], as does judicial consideration of s 84(2) of the TPA. 900 It is well established that ss 84(2) and 139B(2) were intended to extend, rather than limit, the liability of corporations for the conduct of others. As Gleeson J helpfully explained in Empower in referring to relevant authority: 281. The applicants noted that the authorities have discerned in s 84(2) a legislative intention to attribute to a company conduct of persons which, under the general law, would not be attributable to the corporation. For example, in Walplan Pty Ltd v Wallace [1985] FCA 619; (1985) 8 FCR 27 ("Walplan"), Lockhart J (with whom Sweeney and Neaves JJ agreed) said, at 37, of s 84(2): It is a statutory provision designed to facilitate proof of the responsibility of a corporation for the acts of its directors, servants, agents and others. It is designed to attribute to a corporation conduct of others for which the corporation would not necessarily be otherwise responsible. In Trade Practices Commission v Queensland Aggregates Pty Ltd (No 3) [1982] FCA 329; (1982) 61 FLR 52, at 66, Morling J similarly said "… the language of s. 84(2) appears to disclose a legislative intention to extend, rather than limit, the liability of corporations for the actions of others". Lindgren J's statement in NMFM Property Pty Ltd v Citibank Ltd (No 10) [2000] FCA 1558; (2000) 107 FCR 270 ("NMFM") at [1236] also goes to this point. 901 Thus Stewart J explained in Captain Cook College with respect to s 139B of the CCA that: 112. … the state of mind (s-s (1)) and the conduct (s-s (2)) of a director, employee or agent of a company will be attributed to the company if the person engaged in the impugned conduct on behalf of the corporation within the scope of their actual or apparent authority. Thus, contrary to the position in the general law that the conduct and state of mind of a person will not be attributed to the company unless the person was the "directing mind and will" of the company (as explained in, for example, Tesco Supermarkets Ltd v Nattrass [1972] AC 153 and Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500), for the purposes of contraventions of the ACL, it is sufficient if the person was the agent of the company acting within the scope of their actual or apparent authority: Walplan Pty Ltd v Wallace [1985] FCA 479; 8 FCR 27 at 36-37 per Lockhart J, Sweeney and Neaves JJ agreeing.

11.2.2 "on behalf of" 902 In line with the intention to expand corporate liability, Lockhart J (with whom Sweeney and Neaves JJ agreed) in Walplan Pty Ltd v Wallace (1985) 8 FCR 27 (Walplan) at 37 explained with respect to the words "on behalf of" in the umbrella to s 84(2) of the TPA that: The phrase "on behalf of" is not one with a strict legal meaning and it is used in a wide range of relationships. The words are not used in any definitive sense capable of general application to all circumstances which may arise and to which the subsection has application. This must depend upon the circumstances of the particular case, but some statements as to the meaning and operation of the subsection may be made. In the context of s 84(2) the phrase suggests some involvement by the person concerned with the activities of the company. The words convey a meaning similar to the phrase "in the course of the body corporate's affairs or activities". The words "on behalf of" also encompass acts done by a corporation's servants in the course of their employment, but those words are not confined to the notion of the master/servant relationship. Section 84(2) refers to conduct by directors and agents of a body corporate as well as its servants. Also, the second limb of the subsection extends the corporation's responsibility to the conduct of other persons who act at the behest of a director, agent or servant of the corporation. Hence the phrase "on behalf of" casts a much wider net than conduct by servants in the course of their employment, although it includes it. (Emphasis added.) 903 Thus it is not necessary that the acts in question were done by an employee in the course of her or his employment; it suffices if the acts are done "for" the company: Captain Cook College at [113] (Stewart J) and the authorities there cited. 904 Similarly, Lindgren J explained in NMFM Property Pty Ltd v Citibank Ltd [2000] FCA 1558; (2000) 107 FCR 270 (NMFM) that it was neither necessary nor sufficient that the person intended their conduct to be for the benefit of the corporation in order to satisfy the requirement that the act be on behalf of the corporation. Rather, his Honour considered at [1244] that "an act is done "on behalf of" a corporation for the purpose of s 84(2) [of the TPA] if either one of two conditions is satisfied: that the actor engaged in the conduct intending to do so 'as representative of' or 'for' the corporation, or that the actor engaged in the conduct in the course of the corporation's business, affairs or activities'" (citing with approval Lisciandro v Official Trustee in Bankruptcy [1995] ATPR ¶41-436 at 40,903-40,904 (Kiefel J (as her Honour then was))).

11.2.3 Section 139B(2)(a): "agent of the body corporate" 905 The applicants' principal submission is that the relevant type of role played by the Brokers and Agents in this case was as "agents" of Phoenix for the purposes of s 139B(2)(a). While the term "agent" is not defined in the CCA, Gleeson J correctly explained in Empower: 284. The key feature of an agency relationship is that the agent acts on behalf of the principal. That this is the key characteristic of agency explains why, in Australian Competition and Consumer Commission v Maritime Union of Australia [2001] FCA 1549; (2001) 114 FCR 472, Hill J at [81] observed that s 84(2) appeared - by its reference to "on behalf of" in addition to "agent" - to have a "double requirement" of agency. 906 In Tonto Home Loans, Allsop P (as his Honour then was) (with whose reasons Bathurst CJ and Campbell JA agreed) further explained: 177. … Not every independent contractor performing a task for, or for the benefit of, a party will be an agent, and so identified as it, or as representing it, and its interests. Agency is a consensual relationship, generally (if not always) bearing a fiduciary character, in which by its terms A acts on behalf of (and in the interests of) P and with a necessary degree of control requisite for the purpose of the role. Central is the conception of identity or representation of the principal … the word "agent" has a potentially wide and varying meaning in life and business and that, on some occasions, the business description will be given to someone who is not a fiduciary. … It is sufficient to recognise that the essential characteristic is that one party (A) acts on the other's (P's) behalf, and that this will generally be in circumstances of a requirement or duty not to act otherwise than in the interests of P in the performance of the consensual arrangement. (Citations omitted.) 907 Importantly, as Allsop P continued to explain at [178]: "[t]hat the concept of agency may properly extend to canvassers and those seeking to bring business to another party should not be controversial". In citing with approval the following discussion on Art 1(4) of Bowstead and Reynolds on Agency (19th ed) about "incomplete agency" directed in particular to the "canvassing" or "introducing agent", Allsop P stated that: Article 1(4) seeks to achieve completeness by taking in a well-established type of intermediary who makes no contracts and disposes of no property, but is simply hired, whether as an employee or independent contractor, to introduce parties desirous of contracting and leaves them to contract between themselves. In effecting such introductions he is remunerated by commission, which he may sometimes take from both parties. Such a person is a common figure in most western legal systems and may well be referred to as an agent. The most obvious example of such an intermediary in the English cases is the estate agent, who introduces purchasers to vendors and tenants to lessors of houses and vice versa ... Canvassing agents are on the fringe of the central agency principles used by the common law, since their powers to alter their principals' legal relations are at best extremely limited. They often, however, have authority to receive and communicate information on their principals' behalf, and in so doing have the capacity to alter their principals' legal position. They also usually act in a capacity which may involve the repose of trust and confidence, and hence may be subject in some respects to the fiduciary duties of agents towards their principals. (Footnotes omitted.) 908 Similarly, in Australian Competition and Consumer Commission v Australian Power & Gas Co Ltd [2013] FCA 1358, Logan J held that, by virtue of s 139B(2), the respondent, APG, was responsible for the conduct of the third-party marketing companies with which it had contracted to sell its electricity services door-to-door (at [7]).

11.2.4 S 139B(2)(a): "within the scope of the actual or apparent authority of the … agent" 909 It is also necessary to establish that the conduct by the agent was within the agent's "actual" or "apparent authority". These expressions are not defined in the CCA or ACL. Rather, as a matter of interpretation, they pick up concepts developed by the common law: Empower at [305]-[306] (Gleeson J) and the authorities there cited. 910 As Gleeson J explained in Empower at [304], at common law "the principal is civilly liable for an agent's torts committed by the agent while acting within the scope of his or her actual or apparent (also called 'ostensible') authority: Ex parte Colonial Petroleum Oil Pty Ltd (1944) 44 SR (NSW) 306 at 308." Thus the principal may be liable even if the agent acts outside their actual authority if it falls within the agent's ostensible authority. As to the difference between the two concepts, Jordan CJ explained in Ex parte Colonial Petroleum Oil Pty Ltd (1944) 44 SR (NSW) 306 at 308 (in dissent but not on the issue of principle): If a principal expressly procures the doing of a wrongful act, his liability is clear. There can be no doubt as to his civil liability, and he is liable criminally as an accomplice. Where there is no such procurement, his liability depends upon the circumstances. So far as civil responsibility is concerned, "If an agent is authorised to do a particular class of acts, the principal is liable if the agent does an act of the class authorised notwithstanding that it is done mistakenly, negligently or wrongfully; and a principal cannot escape liability by expressly prohibiting his agent from making mistakes or being careless in carrying out his duties:" Bonette v Woolworths Ltd (1937) 37 SR (NSW) 142 at 151 … 911 On the other hand, Jordan CJ said at 308 that: A principal is not, of course, responsible, either civilly or criminally, for anything done by a person who is in fact his agent, if it is done by that person on his own behalf and not in the course of the performance of his duties as agent or within the scope of his general authority as agent. 912 As the applicants submit, the decision in Colonial Mutual Life Assurance Society Ltd v The Producers and Citizens Co-operative Assurance Company of Australia Ltd (1931) 46 CLR 41 (Colonial Mutual) affords a useful illustration of the operation of the concept of actual authority in relation to an agent who is a "canvasser" as was the role of the Brokers and Agents in the present case. In that case, the Co-operative sued Colonial Mutual for slander, based on defamatory statements made by a "canvasser", Mr Ridley, who had been engaged by Colonial Mutual to "visit members of the public and persuade them … to effect insurance" with Colonial Mutual (Colonial Mutual at 46 (Gavan Duffy CJ and Starke J)). However, the contract between Mr Ridley and Colonial Mutual provided that Mr Ridley would "not in any circumstances whatsoever use language or write anything respecting any person or institution which may have the effect or reflecting upon the character, integrity or conduct of such person or institution, or which may tend to bring the same into disrepute or discredit" (ibid). 913 Gavan Duffy CJ and Starke J held that Colonial Mutual were nonetheless liable for Mr Ridley's defamatory statements because they fell within the scope of his authority as agent for Colonial Mutual. In so holding, their Honours held that it is not necessary that the particular act in question was authorised; it sufficed if the agent was "put in a position to do the class of acts complained of" (at 46). Colonial Mutual was therefore liable notwithstanding the direction in his contract because the class of acts that Mr Ridley was authorised to do "involved the use of arguments and statements for the purpose of persuading the public to effect policies of insurance with [Colonial Mutual], and in pursuing that purpose, he was authorized to speak, and in fact spoke, with the voice of the defendant" (at 47). 914 Dixon J (as his Honour then was) (with whom Rich J agreed at 47) contrasted the situation of an independent contractor with a case "when the function entrusted is that of representing the person who requests its performance in a transaction with others, so that the very service to be performed consists in standing in his place and assuming to act in his right and not in an independent capacity." With respect to the latter, Dixon J held at 49 that: … the "agent" has authority to obtain proposals for and on behalf of [Colonial Mutual]; and he has, I have no doubt, authority to accept premiums. When a proposal is made and a premium paid to him, the Company then and there receives them, because it has put him in its place for the purpose. This does not mean that he may conclude a contract of insurance which binds the Company. … but I think that in performing these services for the Company, he does not act independently, but as a representative of the Company, which accordingly must be considered as itself conducting the negotiation in his person. 915 Thus, Dixon J held at 50 that: If the view be right which I have already expressed, that the "agent" represented the Company in soliciting proposals so that he was acting in right of the Company with its authority, it follows that the Company in confiding to his judgment, within the limits of relevance and of reasonableness, the choice of inducements and arguments, authorized him on its behalf to address to prospective proponents such observations as appeared to him to be appropriate. The undertaking contained in his contract not to disparage other institutions is not a limitation of his authority but a promise as to the manner of his exercise. In these circumstances, I do not think it is an extension of principle to hold the Company liable for the slanders which he thought proper to include in his apparatus of persuasion. The wrong committed arose from the mistaken or erroneous manner in which the actual authority committed to him was exercised when acting as a true agent representing his principal in dealing with third persons. 916 Similarly, principals have been found liable for the misleading or deceptive conduct of their agents (eg Aliotta v Broadmeadows Bus Service Pty Ltd (1988) 65 LGRA 362; and Havyn Pty Ltd v Webster [2005] NSWCA 182) and for their agents' unconscionable conduct (eg Empower; AIPE (No 3)).

11.3 Is the conduct of the Brokers and Agents attributable to the Phoenix? 917 For the reasons I explain below, the Brokers were plainly acting "on behalf of" Phoenix for the purposes of s 139B(2) of the CCA. As the concept of representation of the principal is central to the agency relationship, equally it follows that they were "agents" of Phoenix for the purposes of s 139B(2)(a) as the applicants submit at ACS [479]. It is therefore convenient to consider these issues together.

11.3.1 Were the Brokers under the CLI Broker Contracts acting on behalf of Phoenix in marketing the courses to consumers in an agency relationship? 918 In the period from 16 January to 30 June 2015, CLI entered into standard form contracts with 28 Brokers to recruit consumers into online courses with Phoenix immediately following the acquisition of Phoenix by ACN (the CLI Broker Contracts). Taking the contract between CLI and Step 123 which commenced on 18 January 2015 (the Step 123 contract) as an example,955 Step 123 was engaged on a non-exclusive basis to provide the "Services" as defined, namely, "the sourcing of individuals to participate in government subsidised training courses and/or assessment provided by CLI TRAINING" (cl 4(a)), and was authorised to "source students" to participate in such courses and assessment services (cl 7(a)). However, while the contract refers to CLI providing the training courses, it is apparent that the RTO or "relevant RTO" referred to in the standard form contracts for whom students were to be recruited was Phoenix and that the Brokers were representing Phoenix. 919 First, CLI was not a RTO. Rather, as a wholly-owned subsidiary of ACN, CLI provided sales and marketing support to Phoenix in respect of its Online Courses and acted on its behalf.956 Thus, the ACN Prospectus dated 26 November 2014957 noted that CLI was a non-registered training provider that sub-contracts VET services to public and private third-party RTOs (at p. 47). Similarly, the Section 439A Report described CLI as "a non trading entity which was historically utilised to hold contracts with external brokers" and stated that it had no assets.958 Equally, the s 155 response dated 2 September 2015 sent on behalf of Phoenix by its legal representatives advised that: We deliver with this letter copies of all agreements currently in place with each of the Phoenix sales representatives identified in response to paragraph 3 of Schedule 1 to [the] Section 155 Notice together with copies of any other earlier agreement (now superseded) in place between any of the Phoenix sales representatives and CLI Training Pty Ltd. We are instructed CLI Training Pty Ltd is an internal ACN marketing entity which conducted marketing activities on behalf of Phoenix up to 30 June 2015.959 920 Secondly, cl 5(e) of the Step 123 contract imposed an obligation on the Broker/Agent to ensure that consumers were aware that they would be enrolled with "the relevant RTO" and not the Broker/Agent, thereby making it clear not only that Phoenix would be providing the courses and assessment, but also that the Broker/Agent was being engaged to act as a representative for "the relevant RTO". CLI also agreed to ensure that the relevant RTO would "[c]onduct all pre training reviews, contact all students prior to enrolment to ensure suitability for enrolment, appoint appropriate suitably qualified trainers to conduct the training … and at all times ensure the welfare and enjoyment of the students experience [sic]" and would "[a]udit each student through the qualifying calls process prior to enrolling the student into the specified course" (cl 6, Step 123 contract). 921 Thirdly, subject to compliance with the terms of the agreement, CLI agreed to pay Step 123 a commission being 20% of the VET FEE-HELP loan scheme payments paid by the RTO to CLI "as per census dates" for the "sourcing of students" (cl 8 and the Schedule to the contract). As such, CLI was effectively a conduit for the payment of commissions to Step 123 on monies earned by the RTO through payments made under the VET FEE-HELP loan scheme with respect to consumers recruited by Step 123. (I note that while not all commissions in the CLI Broker Contracts were expressed as a percentage, payment was still tied to the census dates. For example, the Agreement between CLI and Infoglobal Group Pty Ltd dated 30 January 2015 specified a payment of "$4,500 per qualification to be paid over 3 census dates of $1500 per census date".)960 922 Fourthly, while not a defined term in the contract, the relevant RTO was plainly Phoenix. This was made clear in a letter dated 18 January 2015 from the compliance team for CTI (which assisted Phoenix and other ACN RTOs with administrative activities)961 to the Brokers ("clients") advising them that they and any Agents engaged by them would be representing Phoenix in recruiting consumers.962 Importantly, the letter also explained that the Brokers and their "sub agents" representing Phoenix must be registered with CTI and have an ID prepared by CTI which bore the Phoenix and myTime logos and contact details. Phoenix also explained in its s 155 response dated 28 August 2015 that each Phoenix sales representative who attended induction training was provided with an identification badge and a Phoenix business card, copies of which were attached:963 see also the undated PowerPoint presentation prepared for the Brokers and Agents by Phoenix and CTI which refers to the requirement that all Brokers wear a Phoenix Institute provided polo shirt branded with the Phoenix, myTime Learning and CTI logos as part of their uniform.964 923 While the evidence does not establish that induction training was in fact provided to the Brokers and Agents, the evidence establishes that at least some Agents operating in the field showed identification bearing the Phoenix logo (at least when asked to show it). For example, Consumer H gave evidence of being shown identification bearing the Phoenix logo by Agents door-knocking to sell Phoenix courses.965 Reference is also made to Agents carrying or wearing Phoenix identification in some of the complaints.966 However, it cannot be inferred that all Agents complied with Phoenix's identification requirements.967 924 Fifthly, cl 5 of the contract required the Brokers/Agents to comply with requirements imposed by CLI, namely: (1) participate in an induction to be provided by CLI; (2) use only pre-enrolment, PTR and LLN forms provided or approved by CLI; (3) ensure that all sales and marketing collateral had been approved by CLI before distribution; (4) ensure compliance with CLI's policies and procedures; (5) participate in CLI's quality and compliance monitoring activities as directed; and (6) provide all necessary assistance, documentation and information to CLI as requested by CLI. 925 In the sixth place, while not embodied into a formal agreement until July 2015, CTI in fact managed marketing and enrolments into Phoenix's Online Courses via its CRM Team from the outset. For example, it will be recalled that from early February 2015, CTI required Brokers to submit a travel schedule for review by the Broker's client relationship manager, each of whom were part of CTI's CRM Team.968 Consistently with this, Phoenix explained in its s 155 response dated 28 August 2015 that the identification and selection of geographic areas to be visited by Phoenix sales representatives were coordinated between the CRMs and the Agents and attached a copy of the travel schedule template.969 It further explained that: Each Phoenix Sales Representative submits a proposed travel schedule one week in advance of visiting particular geographic areas. Phoenix CRMs review the proposed travel schedule and provide any necessary guidance to the Phoenix Sales Representatives as to whether or not any changes are necessary to the travel schedule. In respect of areas where a permit is required, the Phoenix Sales Representative is instructed to obtain the necessary permit. An example of a Northern Land Council permit allowing a Phoenix Sales Representative to enter and remain on Aboriginal land for the purpose of promoting education and enrolment for online studies for Phoenix in July 2015 is attached with this response …970 926 Similarly, in its s 155 response, the Broker StudyNet explained that "the geographical areas are selected in accordance between StudyNet's management and our RTO's partnership/relationship managers".971 It also said that "[w]e try to give our selected geographic areas to the RTOs one week before going to those areas to allow for some time in case we need to process to [sic] changes in accordance with the RTOs."972 927 Directions were also issued by the CRM Team at CTI to the Brokers which were applicable to them and their Agents regarding, for example: (1) the completion of LLN and PTR forms by students, with CTI issuing "PTR & LLN Checklist Guidelines" to the Brokers and Agents with which their sub-agents were to comply (see at [608]-[609] above); (2) the need for Agents to submit a list with contact details of all sub-agents, with sub-agents to be approved by CTI (see at [610] and [602] above); and (3) the need for unacceptable conduct by Brokers and Agents in offering inducements and coercing students suffering from a disability into enrolling to cease or CTI would review or cancel contracts with the Brokers concerned (see at [600]-[601] above). 928 Furthermore, Phoenix and its parent company, ACN, consistently represented to the Department that the Agents/Brokers acted on its behalf and that they exercised control and supervision over their activities. For example, in response to an email from Ms Johnson from the DET regarding complaints about third-party marketing practices, Mr Brown as CEO of ACN confirmed in a letter to the DET on 27 March 2015 that "[t]he monitoring of and liaison with our sales representatives comes from the highest levels of management within ACN and Phoenix".973 He also advised that "Sales Representatives" had been provided with VFH professional training,974 despite contemporaneous evidence from which it is properly to be inferred that the Brokers and Agents were not afforded any training over this period.975 As a further example, in its Request to Increase 2015 Advance Payment Determination dated 23 March 2015, Phoenix represented that it had produced flyers for use by "our … brokers" and identified "[t]he list of companies associated with Phoenix in regards [sic] to helping sell and market its training courses". Those identified were ACN, CTI, CLI, and three "independent" Brokers described as "provid[ing] sales support to Phoenix" in Queensland, Western Australia and New South Wales respectively (albeit that the list of Brokers was manifestly incomplete).976 929 It is true that cl 10 of the Step 123 contract and the other CLI Broker Contracts stated that the relationship between the Broker/Agent and CLI "is that of principal and independent contractor" and that nothing in the agreement created a relationship of employer and employee or agency between the Broker/Agent and CLI. However, those clauses do not address the relationship between the Broker/Agent and Phoenix. Further and in any event, as Gleeson J held in Empower: 286. It is well established that where a question arises as to whether two persons have a relationship of agency, the label they apply to the relationship, or expressly disclaim, is not determinative of the nature of their relationship. As a result, a term in a written contract between the persons that their relationship is not one of agency will not determine the matter, although such a term must be given proper weight: South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 1541; (2000) 177 ALR 611 at [134]-[135] per Finn J. 930 Thus her Honour held that marketers authorised by contract with Empower to act for Empower, or at its direction to market its courses and recruit students, were agents of Empower authorised to act accordingly (at [79]-[90] and [288]). Justice Gleeson also held that clauses in the contracts purporting to exclude an agency relationship, if read literally, would negate the appointment to be Empower's "authorised non-exclusive independent representative to sell and promote" Empower's services "because that appointment, given with the consent of the agent, itself creates an agency relationship" (at [92]). As such, her Honour held that the clauses did not have that operation and effect (at [92]). Equally in this case, the disclaimer could not be read as excluding the agency relationship created by the express authorisation given by CLI on Phoenix's behalf to the Brokers with their consent to source consumers to participate in Phoenix's Online Courses.

11.3.2 Were the Brokers under the Phoenix Direct Broker Contracts acting on behalf of Phoenix in an agency relationship? 931 It will be recalled that, following the July 2015 VET Guidelines amendments, Phoenix entered into contracts directly with the Brokers, as opposed to doing so through the agency of CLI over the period from 1 July to November 2015 (the Phoenix Direct Broker Contracts). These contracts were concluded following the July 2015 VET Guidelines amendments. Those amendments: (1) prohibited the marketing of VET courses as free; (2) attributed the conduct of brokers and agents to the VET provider; (3) required VET providers to include a list on their website of all of their agents; (4) required agents to disclose to consumers the identity of the VET provider to whom the consumer would be referred and that the agent would receive a commission; and (5) regulated the relationship between a VET provider and its brokers and agents in order to ensure proper accountability by the VET provider for the conduct of agents marketing its courses of VET study, including by requiring VET providers to enter into written agreements with agents. (See Section [10.13.1] above.) 932 As was the case with the CLI Broker Contracts, the Phoenix Direct Broker Contracts were also standard form contracts save that the specific commissions payable to the Brokers again varied between different Brokers. An example of one such contract is that between Phoenix and Advanced Training Group Pty Ltd executed on 14 August 2015.977 933 By cl 4.1 of the Phoenix Direct Broker Contracts, the Broker was appointed by Phoenix on a non-exclusive basis to provide the "Services" as defined in cl 2, namely, the tasks and obligations of the Broker specified in item 1 of the Schedule to the contract. Those tasks, which conveniently describe the scope of authority conferred on the Brokers, were as follows: (a) market or promote the RTO's VET courses of study; (b) recruit persons to apply to enrol in the RTO's VET courses of study; (c) provide information and/or advice on the RTO's VET courses of study; (d) provide information and/or advice on the VET FEE-HELP scheme; (e) accept an application to enrol from, or enrol, any person on the RTO's behalf; (f) refer a person to the RTO for the purposes of enrolling in a VET course of study or VET unit/s of study; and (g) provide career counselling to a person on the RTO's behalf. 934 Consistently with this, cl 7(a) authorised the Broker to "source Students to participate in and be provided with the RTO's training courses and/or assessment services subject to the Policies and Procedures". 935 The expressed intention was not only for the Brokers to act on Phoenix's behalf as commissioned agents, but they were also required to communicate that to consumers approached by them. Thus cl 5 required the Brokers to: (1) "identify themselves as an agent to each and every person [the Broker] approaches on behalf of the RTO"; (2) provide the name of the RTO (defined as Phoenix) to which the prospective student would be referred; (3) use only pre-enrolment, pre-training review and LLN forms provided or approved in writing by the RTO; (4) ensure that all sales and marketing collateral had been approved in writing by the RTO prior to distribution/use, including all brochures, email content, website, SMS and direct marketing materials; and (5) ensure that consumers were aware that they were enrolled with Phoenix, and not with the Broker. 936 Furthermore, the Phoenix Direct Broker Contracts provided for Phoenix to exercise a high degree of control over the Brokers. Thus, cl 5.1 of each of the Phoenix Direct Broker Contracts also required the Broker to: (b) participate in an induction provided by the RTO prior to commencement of the delivery of Services pursuant to this Agreement; … (g) ensure that its employees act lawfully and in good faith at all times and are fully informed of and observe the Policies and Procedures and the RTO's practices for delivering the RTO's training courses and/or assessment; (h) observe and comply with the RTO's processes and procedures when delivering the Services; (i) participate in the RTO's quality and compliance monitoring activities as directed by the RTO; (j) provide all necessary assistance, documentation (including Records) and information to the RTO as requested by the RTO from time to time; … (o) provide full, accurate and up-to-date information about VET FEE-HELP to each and every person [the Broker] approaches on behalf of the RTO. 937 In all cases, Brokers were remunerated by Phoenix by way of commission payable in respect of each consumer in respect of whom Phoenix received a funding payment from the Commonwealth. However, it will be recalled that the commission payable by Phoenix differed from Broker to Broker. 938 It is plain that the relationship between Phoenix and the Brokers was one of principal and agent respectively. First, it is apparent from the terms of the Phoenix Direct Broker Contracts that Brokers were engaged to promote and sell Phoenix's services to prospective students, their role being to "source" applicants for enrolment in Phoenix's Online Courses. When engaging with potential students, the Brokers were not therefore selling a service which they supplied, but courses "on behalf of" Phoenix which Phoenix supplied (as the applicants submit (ACS at [483])). As such, it was a classic relationship of agency, given the centrality of the concept of representation to a relationship of that nature. 939 Secondly, to infer otherwise would be directly inconsistent with the obligations imposed upon Brokers by cl 5 of the Phoenix Direct Broker Contracts, including that the Brokers identify themselves as an agent to those approached on behalf of Phoenix. Thirdly, in the undated PowerPoint presentation prepared for the training of Brokers and Agents by Phoenix and CTI,978 Phoenix stated that "Brokers must identify as an agent of Phoenix to all prospective students".979 Fourthly, in its s 155 response dated 13 August 2015, Phoenix explained that it "employs Phoenix Sales Representatives on a contract basis who are referred to as agents/brokers/third parties".980 Finally, there are numerous examples in the contemporaneous correspondence and other documentation such as the "Rogue Agents List" sent by Mr Brown to the DET on 5 August 2015, in which Phoenix described its Brokers and Agents as "agents" and "sub-agents": see eg the List of Agents identified as "Rogue" by Phoenix which conveniently summarises a number of internal communications between senior Phoenix staff demonstrating their use of the terms "agent" and "sub-agent" at Annexure PZ-10 of Ms Paula Zylstra's affidavit affirmed on 10 September 2019.981 940 It follows that the evidence overwhelmingly establishes that Phoenix itself characterised its relationship with the Brokers and Agents as one of agency in its external and internal communications consistently with the nature of the substantive obligations contained in the Phoenix Direct Broker Contracts. 941 Finally, the Phoenix Direct Broker Contracts defined the relationship between Phoenix and the Broker as "that of principal and independent contractor" and provided that nothing in the contract "is to be treated as creating a relationship of employer and employee, partnership, joint venture or fiduciary relationship" between the Broker and Phoenix: see eg cl 10 of the agreement between GG Sales and Phoenix dated 14 August 2015.982 However, there is no disclaimer of the relationship of agency between them. Indeed, to have included such a provision in a contract with a Broker on or after 1 July 2015 would have been contrary to the VET Guidelines as amended at and from that date which the terms of the Phoenix Direct Broker Contracts were intended to reflect. Nor does the description of the Broker as an "independent contractor" suggest otherwise. In line with the passage earlier quoted from Allsop P (as his Honour then was) in Tonto Home Loans at [178], it is well established that an independent contractor engaged by a party to introduce her or him to others desirous of contracting may be an agent for that party.

11.3.3 Were the Agents acting as agents for Phoenix for the purposes of s 139B(2)(a) of the CCA? 942 As earlier explained, the Brokers in turn engaged at least 548 Agents to recruit consumers over the relevant period.983 GG Sales alone entered into at least 210 standard form agreements with Agents. The majority of those Agents were individuals. Some, however, were corporate entities such as Oz Sales and Marketing Solutions Pty Ltd, Magnetic Marketing Group Pty Ltd, Education Wizard Pty Ltd, and Krish Marketing Solutions. In each case, the agreements between Brokers and Agents typically specified that the Agent's task was to counsel and recruit students for the VET FEE-HELP funded programs promoted by the Broker's partner RTO, identified as, or including, Phoenix.984 The Agents were also typically paid by commission for each course in which a consumer was enrolled, with payments falling due after the relevant census date and the Broker received its payment from the partner RTO.985 For example, the "Door to Door Sales Marketing Contract" between Krish Marketing Solutions (a sub-agent of GG Sales & Marketing)986 and JD Marketing Pty Ltd dated 18 May 2015 provided for payments of $2,250 for single diploma enrolments and $4,500 for dual diploma enrolments.987 As a further example, the "Door to Door Sales Marketing Contract" between Krish Marketing Solutions and the sub-agent Punit Gajra (dated 14 May 2015) provided for payments of $2,000 for each single and $4,000 for each dual diploma enrolment facilitated by the Agent.988 943 As submitted by the applicants, the evidence overwhelmingly establishes that Mr Brown and Mr Kochhar were aware of the Brokers' use of Agents (commonly referred to as "sub-agents" in the documentation) to recruit consumers into Phoenix courses as is apparent from the contemporaneous documentation. 944 First and fundamentally, the use of "sub-agents" by the Brokers to represent Phoenix was an intentional part of the Phoenix business model from the outset. Thus, the letter dated 18 January 2015 from the compliance team for CTI to the Brokers to which I have earlier referred advised that: CTI cannot take responsibility for any agents out in the field that are not registered with CTI with a valid Phoenix ID. To streamline and ensure we have the correct people registered with CTI representing Phoenix, a new process will be implemented where by [sic], in order to represent Phoenix for VFH, you and your sub agents will need to be registered with CTI and have a CTI produced ID. This ID will have the following information: 1. Phoenix Logo & Website 2. MyTime Learning Logo, Website & Email 3. MyTime Learning 1300 number 4. The agents [sic] name and title 5. The agents [sic] number allocated by CTI 6. An image of the agent. Without this ID, an agent will not be able to represent Phoenix for VFH. In order for this to happen, I will need and complete and up to date sub agent list with the following: • A face image of the agent. • Current Email address. • Current mobile phone number. We require the above information immediately. Please forward the information to your relevant Client Relationship Manager. (Underlining and italicisation in the original; emphasis otherwise added.) 945 As this evidence also suggests, the Brokers and Agents were not in fact treated differently by Phoenix in terms of their authority to canvass on Phoenix's behalf. 946 Additional evidence establishing that the Agents acted throughout the relevant period as representatives of Phoenix in seeking to sign up prospective students for Phoenix's Online Courses via the VET FEE-HELP assistance scheme includes the following: (1) the requirement for Brokers to provide a list of the Agents they engaged to sell Phoenix's courses and their contact details (Phoenix kept the list of Agents on a "Sub-Agent Register" and/or Podio);989 (2) the email from Mr Cugliandro, Senior Manager - Client Relationships at CTI, dated 6 May 2015, to Brokers and copied to Mr Kochhar requesting a "list of all sub agents with their full name and mobile for our records" and also requiring the names and contact details of "new sub agents that you are intending to bring on board … as we would like to run a check on them prior to commencing";990 (3) the email from Mr Cugliandro to the Brokers on 20 May 2015 and copied to Mr Kochhar regarding complaints about "Agents & Sub Agents when dealing with prospective students" and amendments to Broker contracts "effective immediatley, [sic] to ensure that Agents & Sub Agents are forth coming [sic] with information relayed to prospective students"; 991 (4) the "Terminated Sub-Agent List" (or Rogue Agents List) compiled by Mr Cugliandro in June 2015;992 (5) the Excel spreadsheet entitled "VET FEE help-Agent/Sub Agent List" sent via email on 9 November 2015 by Phoenix to the DET in response to the Final ASQA Audit report, and copied to Mr Brown and Mr Kochhar, which identified Agents and sub-agents said to be banned from enrolling students in Phoenix courses;993 and (6) internal correspondence regarding complaints about so-called sub-agents such as the email dated 26 June 2015 from Ms Bagga to Mr Kochhar and Mr Cugliandro requesting information about a "sub agent" called Mr Vikram Sondhi who was an Agent engaged by GG Sales and the subject of a consumer complaint.994 947 As the applicants submit (ACS at [476]), the evidence of the consumer witnesses discussed in Chapter 12 of these reasons illustrates that the Agents played the same role with respect to prospective students as that for which the Brokers were engaged by: locating potential students; seeking to persuade them to sign up for Phoenix's Online Courses and to the VET FEE-HELP assistance scheme; facilitating the process of consumers completing and compiling the necessary documentation in the Phoenix enrolment packs in order to enrol and apply for VET FEE-HELP assistance; and accepting the completed documentation in the Phoenix enrolment packs from prospective students on behalf of Phoenix. The Agents also identified themselves as being from or with Phoenix.995 948 As the applicants also submit (ACS at [477]), in common with the Brokers, the Agents represented Phoenix, and their conduct in seeking to sign up consumers to enrol in Phoenix's courses and apply for VET FEE-HELP assistance was done in the course of Phoenix's business. It follows by analogy with the decisions in Walplan and NMFM that the Agents in this case engaged in the conduct of signing up consumers to the Online Courses "on behalf of" Phoenix for the purposes of s 139B(2) of the CCA.

11.3.4 Were the Brokers and Agents acting within the scope of their actual or apparent authority? 949 The class of acts in which the Brokers and Agents were engaged throughout the relevant period can be characterised broadly as sourcing consumers to apply for enrolment in Phoenix's Online Courses under the Commonwealth's VET FEE-HELP assistance scheme on Phoenix's behalf as Phoenix's representative. In particular, they were authorised: (1) to provide the enrolment packs including LLN and PTR forms provided by CLI as agent for Phoenix and information about the VET FEE-HELP scheme to consumers; (2) to communicate information to consumers about Phoenix's Online Courses and their eligibility to undertake same and induce consumers to sign up to Phoenix's Online Courses; (3) to facilitate on behalf of Phoenix the completion of enrolment documentation from prospective students; and (4) to accept completed enrolment documentation on behalf of Phoenix. 950 To adapt the language of Dixon J in Colonial Mutual, Phoenix authorised the Brokers and Agents to address on its behalf such observations to consumers as appeared to them to be appropriate in order to persuade them to enrol in online courses with Phoenix and apply for VET FEE-HELP assistance. 951 The conduct of the Brokers and Agents plainly fell within the parameters of this ostensible authority. Indeed, as the applicants submit, the evidence establishes that Mr Brown and Mr Kochhar condoned, encouraged and, on occasion, orchestrated misconduct on the part of Phoenix's Brokers and Agents (ACS at [496]). 952 First, the evidence makes it clear that the Brokers and Agents had Phoenix's authority to take whatever steps they considered necessary to persuade consumers to enrol in multiple courses despite being aware that they had no interest in taking the courses and irrespective of whether the courses were suitable for them and they had any reasonable prospects of successfully completing them (as the applicants submit at ACS at [496]). For example, in March 2015, Mr Brown directed Ms Mason to enrol a group of consumers signed up by Brokers and Agents despite describing them as a group of elderly Chinese people from a Chinese community centre who only wanted the free laptop and did not intend to study: see at [372] above. As a further example, from mid-April 2015, the respondents through Mr Kochhar conspired with Brokers to identify consumers who had been recruited by Brokers and Agents in the knowledge that they did not intend to study the courses in which they were enrolling (so-called "dead" students). It will be recalled that the purpose of identifying these students was not to ensure that they were withdrawn and their enrolments cancelled. Rather it was the first step in implementing the "Student Log-on Project" to mask the lack of student engagement with the Phoenix Online Courses in which they were enrolled: see Section [10.11.5] above, especially at [621], [624] and [634(1)]. Moreover, from the outset, Mr Brown and Mr Kochhar actively encouraged Brokers to submit applications for enrolment by consumers in multiple courses in reckless disregard of consumers' ability to successfully complete them: see eg at [384]-[385] above. The way in which the commissions were structured in the contracts with Brokers meant that a Broker would receive twice the commission where "doubles" (as they were described by Mr Brown) were submitted, thereby also rewarding such conduct. It will be recalled that the vast majority of consumers enrolled in Phoenix's Online Courses were enrolled in two diploma courses. 953 Secondly, as the applicants also submit, Mr Brown's direction to one of the Agents from SM Group that "if you are going to fake it, then fake it right" encapsulates Phoenix's attitude to the false completion of PTR and LLN forms by Brokers and Agents (ACS at [496]; see at [429] above). In line with this, it can be inferred from the PTR and LLN Checklist Guidelines circulated by CTI to Brokers on 8 May 2015 giving directions as to the way that the PTR/LLN forms should be completed and as to the content of acceptable and non-acceptable answers that: (1) Phoenix's intention was to ensure that the LLN and PTR forms at least appeared to be compliant rather than requiring that the consumers in fact complete the forms with their own answers; and (2) as long as the Brokers and Agents submitted forms to Phoenix which appeared to be compliant, they would be processed by Phoenix for enrolment and the Brokers would receive their commissions. (ACS at [496]; see at [608] above.) 954 The appropriateness of drawing these inferences is further supported, for example, by Mr Kochhar's deliberate dismantling of processes put in place by Ms Mason to address concerns about possible fraud in light of the number of LLN/PTR forms apparently being completed in the same handwriting and discrepancies between the signatures on enrolment forms and students' identification documentation. Rather than investigating these matters further after repeated concerns were raised about these issues, his instructions to Ms Mason and staff were not to check the handwriting and signatures on such forms: see Section [8.9.1] above. 955 In short, as the applicants submit: This evidence clearly demonstrates that Mr Brown and Mr Kochhar knew of problems with students' forms which tended to indicate that Brokers and Agents had manipulated student enrolment documentation, and facilitated this manipulation both through explicit encouragement of the behaviour, and the prevention of its further detection by Phoenix employees. (ACS at [496].) 956 Thirdly, from the outset Mr Brown and Mr Kochhar were aware of the type of high-pressure conduct in which Brokers and Agents were engaged in order to sign up consumers to Phoenix's Online Courses and encouraged the Brokers and Agents to enrol as many consumers as possible. Furthermore, they did so in circumstances where they knew that the Brokers' and Agents' conduct was leading to the applications for enrolment from large numbers of unsuitable students and consumers who did not engage or intend to engage with the Online Courses and in respect of whom Phoenix lacked the resources or capacity to assess and educate. For example, Phoenix enrolled 518 consumers recruited by Brokers and Agents despite their LLN tests containing answers which were very similar to those contained in the Phoenix Model Answers: see at [1120] below. GG Sales and its successor Auz Education also submitted 275 PTR/LLN forms which contained similar or very similar answers to the simplistic answers contained in their Sample Answers Document: see at [1123] below. 957 Fourthly, as the applicants submit (ACS at [497]), while ultimately in late June 2015 Phoenix started to terminate the services of a number of Agents after receiving complaints, there is no evidence that Phoenix took any steps to verify whether those Agents' conduct had affected other consumers who had also been signed up by them. To the contrary, Phoenix continued to claim VET FEE-HELP payments for at least 1,024 students signed up by Agents who were identified as "rogue" by Phoenix and failed to withdraw the students: see at [714] above. 958 Fifthly, Phoenix's resistance to investigating and addressing the scale and impact of Agent misconduct is starkly illustrated by Phoenix's belated and inadequate response to what Mr Brown described as the "one woman war" undertaken by Ms Holland regarding complaints lodged with NTCA about marketing practices by GG Sales for Phoenix in the Northern Territory: see at Section [10.12.2.2], [706]-[708] and [711]-[714] above. Further, there is no evidence that Phoenix investigated whether consumers enrolled by the same Agents elsewhere should also be withdrawn or, more crucially, responded to what Ms Holland understandably described as "fundamental systemic issues of control [over Phoenix's marketers] that must be addressed" (see at [707] above). To the contrary, while the applicants accept (ACS at [497]) that Phoenix eventually terminated the services of the Broker StudyNet (who was described by Mr Brown as "the worst offender", although the reasons for termination of the contract are not disclosed on the evidence),996 what is revealing are the Brokers whose services were never terminated. As the applicants contend, while StudyNet had provided only 219 diploma enrolments for Phoenix, Phoenix did not terminate the services of GG Sales and its later incarnation, Auz Education (ACS at [497]). In this regard, I note that of 1,486 complaints recorded on Phoenix's Complaints Register at 21 August 2015 (being the date of the last registered complaint), 888 complaints concerned GG Sales.997 Rather, despite attracting the greatest number of complaints, GG Sales not only continued to be the largest provider of Phoenix's students but also received one of the highest commissions for sourcing consumers in comparison with the other Brokers engaged by Phoenix after renewal of its contract in July 2015 (see at [694] above). Furthermore, that such misconduct was rewarded where it sounded in high enrolment numbers was consistent with Mr Kochhar's email to Mr Cugliandro on 27 July 2015 advising of higher commissions per enrolment "for the exceptionally compliant agents and the ones who provide big numbers" (see at [697] above). 959 In this regard, I note that the CLI Broker Contracts, such as that concluded with Step 123, provided that the Broker/Agent must not make any misrepresentation concerning CLI's courses, offer any incentives to consumers to undertake vocational education and training through the VET FEE-HELP scheme, or advertise any laptops, iPads, or other devices as free (cl 5). Furthermore, cl 5.2 of the Phoenix Direct Broker Contracts provided that the Broker must not, among other things, pay or offer incentives to consumers to undertake vocational education and training through the VET FEE-HELP loan scheme such as advertising laptops or other devices as free, and fail to advise consumers about the likelihood of their future repayments of VET FEE-HELP loans. However, by analogy with the decision in Colonial Mutual, these clauses did not limit the Brokers' authority but rather amounted to a promise with respect to the manner in which that authority would be exercised. As such, Phoenix cannot rely upon such clauses to avoid responsibility for the conduct of the Brokers and Agents. 960 It follows, in my view, that the applicants have established that the Brokers and Agents were authorised to take whatever steps were considered necessary by them in order to achieve as many enrolments as possible into Phoenix's Online Courses.

11.3.5 In the alternative, were the Brokers and Agents acting within the scope of their apparent authority? 961 In the alternative, even if I had not held that the evidence establishes that the Brokers and Agents were acting within their actual authority, I would have found that they were acting with the scope of their apparent authority. This can arise through a representation by conduct where the principal permits the agent to act in a particular way in the conduct of the principal's business and thereby represents that the agent has authority: Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Company Pty Ltd (1975) 133 CLR 72 at 80-81 (Gibbs, Mason and Jacobs JJ). I accept the applicants' submission that the evidence to which I have referred in addressing the question of whether the Brokers and Agents were acting within the scope of their actual authority establishes in the alternative that: … Phoenix permitted both Brokers and Agents to engage in the conduct they did, in that Phoenix was aware of the kinds of conduct they were engaging in, and it permitted that conduct to continue. Phoenix did not merely permit Brokers and Agents to recruit students into its courses, but it permitted them to engage in the kinds [sic] conduct in the course of recruiting that was the subject of the numerous complaints Phoenix received. By not taking any, or sufficient, action to prevent that kind of conduct, Phoenix permitted its recruiters to act in the ways they did. Phoenix thereby represented to anyone who came into contact with its recruiters that recruiters had Phoenix's authority to act in the ways they did. (ACS at [501].)

11.3.6 In the further alternative, does s 139B(2)(b) of the CCA apply? 962 Finally and in any event, the conduct of the Brokers and Agents is attributable to Phoenix on the ground that s 139B(2)(b) applies. 963 As earlier explained, pursuant to s 139B(2)(b) of the CCA, the conduct of a person is taken to be the conduct of Phoenix if: (1) the person was acting with the express or implied consent or agreement of a director, employee or agent of Phoenix; and (2) the director, employee or agent was acting within the scope of their authority in so consenting or agreeing. 964 It will be recalled that at all relevant times, Mr Brown was a director of Phoenix, while Mr Kochhar, as the COO of Phoenix, was an employee. Further, by virtue of their senior roles within Phoenix and as the evidence in fact establishes, both were persons with authority within Phoenix to deal with Brokers and Agents. As to the latter, Mr Brown for example, signed all of the contracts with the Brokers and Agents on behalf of Phoenix, while Mr Kochhar was in charge of overseeing the Brokers and Agents (see at [561] above). Furthermore and not surprisingly given the centrality of the role of the Brokers and Agents to Phoenix's core business model, from the outset both were kept appraised of complaints about Agents and Brokers from various sources and assumed responsibility for responding (or not, as the case may be) to misconduct by Brokers and Agents including with respect to the formulation of policies and procedures (see eg at [527]-[531] and [697] above). They also actively encouraged Brokers and Agents to recruit as many consumers as possible and were aware of the large numbers of consumers who were being recruited and enrolled (including in multiple diplomas), that many unsuitable students had been enrolled, and that the engagement rates of the consumers who were enrolled in the Online Courses was extremely low. Given their knowledge of these matters and the fact that they continued to permit recruitment of potential students by Brokers and Agents in the same fashion, Mr Brown and Mr Kochhar must be taken to have impliedly consented to the Brokers and Agents behaving as they did in order to recruit as many consumers as possible. Accordingly and quite apart from s 139B(2)(a), the Brokers and Agents' conduct is taken to be the conduct of Phoenix pursuant to s 139B(2)(b) of the CCA.

12.1 Patterns evident from documentary and statistical evidence illustrated by consumer witnesses 965 As I explained at the outset, a further strand of evidence upon which the applicants rely is the evidence of 24 consumer witnesses who were enrolled in Phoenix's Online Courses in 2015. Each of these witnesses gave evidence of their dealings with Phoenix's Brokers and Agents, and, in some cases, of their subsequent enrolment in the Online Courses and the incurring of debts to the Commonwealth without any or adequate prior disclosure. Their evidence is consistent with the themes running through the other strands of the evidence as to the nature of complaints consistently and persistently received about Broker/Agent conduct during Phoenix's operations following its acquisition by ACN. I have referred to some of their evidence earlier in various contexts as illustrative of these themes, including in the context of deliberate targeting of disadvantaged socio-economic groups and in the context of signing up consumers with disabilities of such a nature as to render them unsuitable to embark upon a course at the level of a diploma or the specific diploma in which they were enrolled. 966 As I earlier explained, the applicants accept that the evidence of the consumer witnesses alone could not prove the Phoenix Marketing System or the Phoenix Enrolment System.998 In particular, they accept that the 24 consumer witnesses are not a representative sample of the consumers given that the total student cohort exceeded 11,000 students. Rather, the applicants rely upon the experiences of these particular consumers to illustrate how the Phoenix Marketing and Enrolment Systems operated in practice, explaining that "[i]t is evidence drawn from the ex-employee witnesses, the data analysis, and the documentary evidence which proves that the experiences of these particular consumers are representative of the impugned systems."999 A further illustration is found in the evidence of Mr Simon Winwood-Smith, a Consumer Protection Officer with the NSW Department of Fair Trading, in the course of an undercover investigation in which he posed as a consumer. 967 Four of the consumer witnesses (Consumers A, B, C and D) are the subject of specific allegations of contraventions of the ACL. It is alleged in each case that Phoenix engaged in misleading conduct in marketing the Online Courses contrary to ss 18 and 29(1)(i) of the ACL and engaged in unconscionable conduct towards each consumer in contravention of s 21 of the ACL on the basis that the conduct of the agent in question is to be attributed to Phoenix pursuant s 139B(2) of the Act, as is the conduct of the broker who engaged the agent. The respondents have made no admissions with respect to these allegations. However, it follows for the reasons set out in Chapter 11 above that the conduct of the agents in relation to individual Consumers A to D is also attributable to Phoenix. Consumers A, B, C and D were each recruited by sales agents identifying themselves as representing Phoenix and it can be inferred that they were in fact doing so. As a result, each of the contraventions of ss 18, 21 and 29 of the ACL in respect of these individual consumers which I find have been established for the reasons given below, are taken to be contraventions of the ACL by Phoenix. 968 I note that Consumers A, B, and C received telephone verification calls (as I explain below), unlike the bulk of consumers enrolled in Phoenix's Online Courses. However, it is probable that the telephone verification calls, at least in the case of consumers B and C, were made for GG Sales/Auz Education from the call centre in India known as "MIS", despite the obvious conflict of interest which that created - the "fox guarding the chicken coop", as senior counsel for the applicants described it (see at [1289] below). 969 I also note that while Consumer D did not give oral evidence, Consumers A, B and C did so. I also accept the evidence of Consumers A, B, and C1000 that the events in relation to which they gave evidence were fresher in their memories at the time that each of them made their affidavits as opposed to when they gave oral evidence. In this regard, I note that: (1) Consumer A's affidavit was sworn on 5 February 2016 and the events to which she deposed took place in early July 2015; (2) Consumer B's affidavit was affirmed on 26 February 2016 and that the events to which he deposed took place only seven months earlier in July 2015; and (3) Consumer C's affidavit was affirmed on 2 March 2016 and related to events which also took place in July 2015. 970 Consumers B and C were partners. Consumer B's sister, Consumer TW,1001 who was only 18 at the time, gave evidence of the same visit by the sales agent during which she was also signed up to online courses with Phoenix which was consistent with that of Consumers B and C. As the oral evidence of Consumers A, B and C was given some years later in November 2019, not surprisingly there were some matters which these three Consumers could no longer recall or about which they were more vague. 971 Nonetheless, it was of very great assistance to hear the oral evidence of Consumers A, B and C given the disconnect between, on the one hand, the high level of language and literacy skills apparent from their affidavits reflecting the skills of the lawyer who drafted the affidavits on their instructions, and on the other hand, the applicants' case that these Consumers lacked the LLN skills to have any realistic prospect of successfully completing the courses in which they were enrolled at Phoenix and that this must have been apparent to those who signed them up and enrolled them. In so saying, I am not intending to be critical of the legal representatives for the applicant. However, an affidavit should be expressed in the deponent's own words with advice from the legal representatives only as to structure and admissibility, including relevance. 972 These three consumers gave clear and convincing oral testimony about the essential features of the Agents' conduct in persuading them to sign up for courses with Phoenix and the telephone "verifications". Their evidence, as well as the evidence of Consumer D, is also consistent with the patterns of behaviour engaged in by Agents described in thousands of complaints, the evidence of ex-employees, the other consumer witnesses,1002 and the documentary evidence. Those patterns, it will be recalled, include: (1) the making of offers of inducements including free laptops and monetary payments, to sign up to Phoenix Online Courses;1003 (2) completing the enrolment forms on behalf of consumers or telling them what to write on the forms;1004 (3) signing up consumers without advising them about their rights and liabilities under the VET FEE-HELP scheme; (4) misrepresenting the Phoenix Online Courses as free or free unless the consumer earns an amount which the consumer was unlikely to earn on completion of the Online Courses; (5) delays in sending out laptops or not sending them out at all;1005 (6) enrolling consumers in two full-time diplomas, including in circumstances where the consumer had been led to believe that she or he was enrolling in only one course; and (7) signing up consumers who had completed only year 10 or less and had limited work experience or no relevant work experience. 973 While Consumer D did not give oral evidence, her recollection as recorded in her affidavit of the meeting with the salesperson representing Phoenix in July 2015 was corroborated in all relevant respects by the affidavit evidence of her neighbour, Consumer FB.1006 Consumer D's affidavit was also prepared just over a year after the visit by a salesperson in late January 2015 to which her evidence was primarily directed. 974 A further example of Agents from GG Sales engaging in the kind of sales techniques to which I have referred is found in the evidence of Mr Winwood-Smith from the NSW Department of Fair Trading.1007 Mr Winwood-Smith's role as a Consumer Protection Officer included investigating complaints and conducting routine inspections to ensure compliance with various laws (including the ACL). He was tasked with investigating a complaint from the NSW Department of Fair Trading and arranged to meet two sales agents (who it later became evident were supervised by "Gagandeep")1008 by posing as a consumer interested in receiving a free laptop, together with a colleague posing as his aunt. At the meeting at a KFC in Grafton, the sales agents who identified as being from Phoenix: (1) offered him and his "aunt" a free laptop; (2) recommended that his aunt do the Diploma of Community Services Work because she worked part-time as a babysitter; (3) despite Mr Winwood-Smith saying that he was not a business person, recommended that he sign up for a Diploma of Business and Diploma of Leadership and Management "[b]ecause this is the easier course for you to apply [sic]"; (4) when Mr Winwood-Smith asked whether a document titled "PTR & LLN, ACSF Level 3" was a test and said that he was not good at reading and writing, supplied him with a document which contained completed answers to certain questions for Mr Winwood-Smith to copy (this is the Sample Answers Document relied upon by the expert witness, Mr Samuel Voller in the Voller PTR/LLN Affidavit: see at [1076] below); (5) reassured him that he did not need to worry about how much the VET FEE-HELP loan was "because your income is under $53,345 you don't have to pay it back" and even then it would only be eight to nine hundred dollars a year; and (6) signed Mr Winwood-Smith up despite him saying that he was not going to do the course but was only signing up to get the free laptop.1009

12.2 False, misleading or deceptive conduct: Relevant principles 975 I have earlier summarised the relevant principles relating to unconscionable conduct under s 21 of the ACL. These are relevant both to the applicants' systems case and to the alleged contraventions of s 21 with respect to Consumers A, B, C and D, save for those principles in Section [5.5] which bear only upon the applicants' systems case. In addition, the applicants allege that Phoenix engaged in false, misleading or deceptive conduct contrary to ss 18 and 29(1) of the ACL with respect to Consumers A, B, C and D. 976 Section 18(1) provides that: A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. 977 In turn, s 29(1) of the ACL relevantly provides that: A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services: (i) make a false or misleading representation with respect to the price of goods or services … 978 The legal principles pertaining to ss 18 and 29 of the ACL were helpfully summarised by Gleeson J in Empower at [556]-[565] (and adopted by Bromwich J in AIPE (No 3) at [176]) as follows: 556. Conduct is misleading or deceptive if it induces or is capable of inducing error: Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 ("TPG") at 39; Parkdale Custom Built Furniture Proprietary Ltd v Puxu Proprietary Ltd [1982] HCA 44; (1982) 149 CLR 191 ("Parkdale") at 199. 557. It is not necessary to show actual deception to establish a contravention of s 18 of the ACL: Google Inc v Australian Competition and Consumer Commission [2013] HCA 1; (2013) 249 CLR 435 ("Google") at [6]. Conduct will be likely to mislead or deceive if there is a "real and not remote chance or possibility" of misleading or deception regardless of whether it is more than fifty per cent: Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682; (2009) APTR 42-290 ("Dukemaster") at [14]. Whether conduct (including representations) is misleading or deceptive is a question of fact to be determined in the context of the evidence as to the alleged conduct and as to all of the relevant surrounding facts and circumstances: Taco Co of Australia v Taco Bell Pty Ltd [1982] FCA 170; (1982) 42 ALR 177 at 200; Parkdale at 199; Google at [89], [102], [118]; Australian Competition and Consumer Commission v Coles Supermarkets Pty Ltd [2014] FCA 634; (2014) 317 ALR 73 ("Coles") at [38]. 558. It is well established that silence can amount to misleading or deceptive conduct. Silence is to be assessed as a circumstance like any other, and the question is "whether in the light of all relevant circumstances constituted by acts, omissions, statements or silence, there has been conduct which is or is likely to be misleading or deceptive.": Demagogue Pty Ltd v Ramensky [1992] FCA 851; (1992) 39 FCR 31 ("Demagogue") at 32, 41; Rafferty v Madgwicks [2012] FCAFC 37; (2012) 203 FCR 1 ("Rafferty") at [277]. 559. In s 29, the word "representation" is interpreted broadly and includes a statement, made orally or in writing or by implication from words: Given v Pryor (1979) 39 FLR 437 at 441. A half-truth may be a false or misleading representation. In Australian Competition and Consumer Commission v LG Electronics Australia Pty Ltd [2017] FCA 1047 at [53], in considering the possible application of s 29(1)(m) of the ACL, Middleton J said: It can readily be accepted that a half a truth may be worse than a blatant lie. A half-truth may beguile the receiver of the half-truth into a false sense that he or she is receiving the whole truth and nothing but the truth - and hence is under the understanding, and reasonable and legitimate expectation, that the person giving the information is presenting all the information necessary for the recipient to act accordingly. 560. There is no material difference between the terms "misleading or deceptive" (in s 18) and "false or misleading" (in s 29): Dukemaster at [14]; Coles at [40]. 561. There are numerous authorities which emphasise that the word "free" has a particularly strong attraction and unless adequately qualified it can readily produce a wrong understanding: see, for example, TPC v Optus Communications Pty Ltd (1996) 64 FCR 326. When marketing goods or services, qualifications need to be prominently and clearly spelled out so that the "magnetism" of the word "free" may be properly understood by a consumer: see Nationwide News Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 215 at 228. 562. In Fraser v NRMA Holdings Ltd (1995) 55 FCR 452, the question for the Full Court was whether an offer in a prospectus of "free" shares was misleading given that it was to members of a mutual association which proposed to convert to a company limited by shares and the offer was to its members. The Full Court said at 483: Although it is no doubt true that in some contexts, such as in the expression "buy one, get one free", the word "free" may be understood as meaning "without additional or marginal outlay over what is obviously being paid", this is not invariably so. "Free" can easily be misleading or deceptive, depending on the context… We agree with the trial judge that in the present context of a document that strongly argued in favour of voting for the proposed changes, the persistent use of the expression "Free Shares" was in fact likely to engender the notion that the shares might be acquired without significant loss or outgoing and it was in this respect misleading or deceptive, or likely to mislead or deceive, to use that phrase.

12.3.1 Vulnerability of Consumer A 979 The allegations of contraventions relating to an Aboriginal woman, Consumer A, are made in the ASOC at [93] to [122]. Consumer A gave evidence by affidavit and orally.1010 At the time of the alleged contraventions in early July 2015, she was 40 years old and living in Dubbo, New South Wales, having moved there from Bourke where she had spent most of her life. As the applicants contend, she was in a position of vulnerability vis-à-vis Phoenix having regard among other things to the fact that: (1) she left high school in year 9; (2) she was a single parent of four children; (3) she was unemployed and receiving the family payment and sole parenting pension from Centrelink; (4) she worked for the dole for about two years under the Community Development Enterprise Program; (5) she found it difficult to pronounce and understand certain words she perceived to be difficult; and (6) while she had a computer at home, she did not have internet on that computer and had only basic knowledge of how to use a computer.1011

12.3.2 Marketing to, and enrolment of, Consumer A 980 In early July 2015, Consumer A was invited by a local Aboriginal woman to go over to her house to sign up for a course and get a free laptop. Consumer A went over and stayed about an hour. It was a casual gathering with her friend handing out barbeque sausage sandwiches and drinks to people. There were about four Agents (whom I will describe generically as "sales agents") there with "stacks of paperwork on the tables".1012 During the hour that she was there, she saw about 15 to 20 Aboriginal people sign up with four sales agents, including a male sales agent (Agent A),1013 and explained that people were "all coming and going … Because you had sit down the side - wait for them to sign up for a course, and then when they finish, another one will do it."1014 Agent A identified himself as being "from Phoenix".1015 Consumer A did not see any logos, identification cards or uniforms which otherwise verified that Agent A was from Phoenix.1016 She also said that the sales agents were also offering courses from other organisations and that "[w]e would sign up with a few of them. Like, there was Phoenix I know, and a couple other ones."1017 981 Agent A asked Consumer A if she wanted to enrol in a Diploma of Business or Management or childcare course and said that it was free to sign up and that "[i]f you don't earn more than $54,000 a year, it's free".1018 She said that she was interested and "I don't earn more than $54,000 a year".1019 Consumer A was clearly led to believe that the courses were free as a result and was not informed that she would incur a debt for the courses. As she explained: Did you ever have any discussions with the person selling you the Phoenix course about whether you would end up with a debt to the Commonwealth?---They just said the courses were free. And did they say anything else about how the course would be paid for?---I can't recall. Did you at any time become aware that you had a debt to the Commonwealth because of one of these courses?---No, I didn't know I had a debt. Do you know that now?---Yes. And how did you first become aware of that?---I had some fellow - I think my cousin was working - saying that we was in debt from signing up to them courses through tax or something. 1020 982 Agent A also told Consumer A that she would "receive a free laptop" if she signed up to one of the courses,1021 explaining that: Did you ever - did you ever receive a laptop?---Yes, we got a laptop. How many laptops did you receive?---One of each course we signed up for. So how many laptops in total?---I ended up with about four or five. 1022 983 Consumer A was also offered $50 for signing up to a course and that she was told she could keep the laptop: And - and what did they tell you?---They said, "Just sign up for a course. You'll get a laptop and $50 cash." Did - did they say anything about what the laptop would cost?---They just said, "The course was free." And what about the laptop?---You will receive the laptop in the mail, they said. And - and was it your understanding you would be allowed to keep the laptop?---Yes. We thought we could. Well, we kept them. What did they tell you about the courses?---They just said, "The courses were free".1023 984 Consumer A said that based on what Agent A had told her, "I thought the courses were free and was interested in doing a course. As part of my Centrelink payments, I have to study a course to continue to receive those payments as my kids are of school age."1024 She also explained that she was "broke on the day" and that the $50 helped "just to get some things".1025 985 During oral evidence, Consumer A explained that Agent A mentioned the course he was going to sign her up to, but that she could not recall the name of the course. As to completing the forms, Consumer A explained that: The salesman put a few forms in front of me on the table. I filled out my name, address and phone number. I did not read the forms and the salesman did not read them out to me and did not explain the forms to me. The salesman directed me where to sign on the forms and I signed a few times.1026 986 In these circumstances, there can be no doubt that Agent A knew that Consumer A had not read the enrolment forms before signing them and did not complete the enrolment forms herself. Nor was she given a copy of the paperwork which she had signed or any other information or brochures.1027 987 Agent A then told her that she would get a call from the college to verify her enrolment and took a photograph of her photo ID, TFN, and Medicare card. 988 The Agent also created an email account for her as part of the signing up process: And did they ask you whether you had an email address?---Yes. I said we didn't have one, and they ..... make one for us. Did you see them make one for you?---Yes. How did they do that?---On a little computer - little iPad thing they had.1028 989 Significantly, Agent A did not tell Consumer A: (1) the location of the college where her course would take place; (2) the cost of the online course she had enrolled in; (3) that remaining enrolled in an online course after the census date had passed would leave her with a debt to the Commonwealth; (4) that she had to cancel her enrolment in an online course before the census date for the course in order to avoid incurring a debt;1029 or (5) that she was signing up for more than one Phoenix course.1030 990 Nor did Agent A provide Consumer A with written documentation about VET FEE-HELP, written documentation about the online course she had enrolled in, or a copy of her completed enrolment forms.1031 991 Consumer A's evidence that she was offered money and a free laptop by the sales agent to sign up for the online course was corroborated by the evidence of Consumer JE, who also gave evidence of other Aboriginal people in the community signed up on the same basis and in similar circumstances.1032 Consumer JE was an Aboriginal woman living in Dubbo who left school in year 8 and at the time was unemployed receiving a disability support pension. She declined to sign up with Agent A because she was already doing a Community Service Certificate at TAFE and did not wish to do another course.1033 992 Given the representations which Agent A made, the information that he failed to give Consumer A, and the failure to provide the documents to which I have referred above, I accept the applicants' submission that Agent A represented to Consumer A that: (1) the Online Courses were free if she earned less than $54,000 a year; (2) enrolling in Online Courses entitled her to a free laptop; and (3) she would not incur a debt by enrolling in one or more of the Online Courses.1034 993 Furthermore, Agent A encouraged Consumer A to apply for enrolment in an online course even though, in answering questions asked of her by Agent A, Consumer A stated that "I never had an email address", and that she had internet access "only on my phone".1035 Nor did Agent A take any steps to ascertain whether Consumer A was suited to any of the Online Courses available to her, or whether she was reasonably capable of completing the online course for which she was applying. He also manifestly failed to give Consumer A sufficient time within which to make a considered decision as to whether to apply to enrol in an online course. He simply asked Consumer A, "[w]hich course do you want to do?" and accepted Consumer A's response that "[a]ny is okay" without asking further questions. 994 Shortly after Consumer A had signed the enrolment forms and had her personal details taken by Agent A, Consumer A explained that: The salesman [Agent A] called a man on the mobile phone and put him on loud speaker. The man introduced himself [Telephone Verifier A] and said he was from a college but I do not recall his name or the name of the college. The man asked a few questions, but I do not recall what they were. The salesman was beside and nodded at me and put his thumbs up to the questions the man was asking me. I replied yes to each question as the salesman was prompting me to do so. When we were done with the questions, the salesman hung up the phone.1036 995 Consumer A replied affirmatively to the questions asked by Telephone Verifier A, and was consequently enrolled in an online course.

12.3.3 Second enrolment application by Consumer A 996 The ASOC pleads a second approach to Consumer A by a different sales agent, Agent A1, who did not identify himself as being related to Phoenix any way (ASOC at [111]-[112]). No contraventions of the ACL are pleaded by reason of A1's conduct but it would appear to have been pleaded in order to explain Consumer A's enrolment in a second Phoenix online course (ASOC at [113]). Consumer A also gave evidence about this second approach, as I explain below, which illustrates the extensive rorting which was occurring among remote communities in relation to the marketing of courses, such as those offered by Phoenix. 997 While she was still at her friend's home, Consumer A's cousin rang her and also invited her to another friend's home "to sign up to a course".1037 Consumer A was approached by Agent A1 upon her arrival at the second residential premises, and completed the enrolment forms at his direction (the second enrolment application). Agent A1 mentioned to Consumer A that he was from a college, but she did not see any logos, identification cards or uniforms which otherwise verified Agent A1's employment.1038 998 Agent A1 asked Consumer A whether she was interested in a course, saying that "[i]t's online and free. You get a free laptop … It's free. If you earn over $54,000 a year, then you have to pay for the course. You'll get the laptop in a couple of weeks."1039 999 After providing her Medicare card, photo ID and TFN, which were photographed by Agent A1, Agent A1 told Consumer A where to sign on a form without explaining what she was signing or reading the form to her. Consumer A signed the form where she was told and did not read it. Nor did Agent A1 leave a copy of that form or any other paperwork or brochures with her.1040 Agent A1 signed up three other friends at the same time in the same circumstances and gave each of them $30, saying that he would give them another $20 in a few days when they had completed their confirmation call over the phone. At no time was Consumer A told: (1) the address of the college providing the course; (2) the cost of the online course; (3) that remaining enrolled in an online course after the census date had passed would leave her with a debt to the Commonwealth; or (4) that she had to cancel her enrolment in an online course before the census date for the course in order to avoid incurring a debt.1041 1000 A few days after completing the second enrolment application, Consumer A received a verification telephone call from a person purporting to be a Phoenix representative.1042 After confirming her name, address, telephone number and email address, he congratulated her on her enrolment and said that she would receive her laptop in the mail in the next two or three weeks. He also mentioned the date on which the course commenced and the name of the course. A few days later, Agent A1 came to her home and gave her $20 for confirming her enrolment.1043 Consumer A was consequently enrolled in a second online course and received no contact from Phoenix or the Agents or Brokers thereafter.1044 1001 Consumer A remained enrolled after the census date for two Phoenix online courses, being a Diploma of Management (BSB51107) and a Diploma of Business (BSB50207). In early September 2015, she received the Commonwealth Assistance Notices issued on 20 and 21 August 2020 for the courses advising of loan debts in the sum of $10,800 for each course.1045 1002 Consumer A did not complete either of the online courses. To the contrary, when asked if she ever attempted to undertake the course, said that "[w]ell, we couldn't get into the laptops and there was no things on the laptops - internet for us to get into it."1046 She never had a genuine interest in undertaking the Diploma of Business or the Diploma of Management online, and signed up because she was told that the laptops were "for free. That's why we signed up with them. We didn't think we would end up with a debt."1047

12.3.4 Alleged false, misleading and deceptive conduct contrary to ss 18 and 29, ACL, with respect to Consumer A 1003 The representations in paragraph [992] above made by Agent A were plainly made in trade or commerce. Furthermore, I agree with the applicants' submissions that the representations were misleading or deceptive, or likely to mislead or deceive, and were false, because: (1) contrary to the representation that the laptop was free, in fact: (a) Consumer A obtained the laptop in circumstances where, if she remained enrolled in the VET units of study for the online courses after the census date had passed, she accrued a debt to the Commonwealth; (b) the laptop did not become the property of Consumer A, but remained at all times the property of Phoenix under the laptop loan scheme; and (c) the laptop was given to Consumer A only for the duration of the period that she was ostensibly undertaking the online courses; (2) contrary to the representation that the Online Courses were free, in fact if Consumer A remained enrolled in the VET units of study for the online courses after the census date had passed, she accrued a debt and became liable to repay that debt to the Commonwealth if her income exceeded the minimum repayment income outlined in paragraph [200] above; and (3) contrary to the representation that Consumer A would not incur a debt by enrolling in one or more of the Online Courses, in fact if Consumer A remained enrolled in the VET units of study for the Online Courses after the census date had passed, she accrued a debt.1048 1004 It follows that the applicants have established that Phoenix: (1) engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18(1) of the ACL; and (2) in connection with the supply or possible supply of its Online Courses, made a false or misleading representation with respect to the price of the Online Courses, in contravention of s 29(1)(i) of the ACL. 1005 While each case must turn on its own facts, I note that Perram J in Unique also upheld the alleged contraventions of s 18 of the ACL in relation to a number of consumers, in that Unique: (a) failed to advise consumers that they were enrolling in a course; (b) did not advise consumers that they would have to pay for the course; (c) did not inform consumers about the cost of the course; and (d) did not tell consumers that enrolling in a course would leave them with a debt to the Commonwealth if they did not cancel by the relevant census date. The failure to inform consumers that they would have to pay for the course and about the cost of the course was also found to contravene s 29(1)(i) of the ACL. These findings were not the subject of the appeal from his Honour's decision or otherwise affected by the Full Court decision, as Bromwich J observed in AIPE (No 3) at [176]. Similarly, Gleeson J in Empower, who cited Unique with approval on this issue, found that that it was false and misleading to offer "free" courses and "free" laptops on the basis that a consumer signs up to a VET FEE-HELP course without explaining to them that they will thereby incur a significant debt (Empower at [565]). 1006 Furthermore, the false, misleading and deceptive conduct is particularly egregious because of the use of the word "free" to describe the offer of a laptop and the Online Courses, given the strong attraction engendered by the use of that word and its capacity, unless adequately qualified, to produce a wrong understanding, as in fact occurred in the case of Consumer A. The need for a clear and plain explanation is heightened where the consumer, as here, could not have been expected to be aware of the true facts, had limited education and experience, and was an unemployed single parent on social welfare. As Perram J said in Unique, and as is equally applicable here: [725] The debt created by the VET FEE-HELP scheme was readily able to be understood by people who had no expectation of earning more than $50,000 as being the same as free. But free it was not. It reduced their ability to enrol in future vocational training courses. Such a scheme, when combined with the attractive offer of a free laptop, created a powerful impression of a very good deal. That powerful impression was incorrect, however. Having engendered such an impression with the laptops, it was misleading not to explain in the clearest terms precisely how the VET FEE-HELP scheme worked and the fact that it would leave each person who took the laptop with a lifetime debt as well as a reduced ability to access the VET FEE-HELP system in the future. And, the kind of explanation which was called for was one which was tailored to the audience which had been persuaded to attend the sign-up sessions by the lure of a free laptop in the first place. The cohort involved, even on Unique's case, was a cohort in which disadvantaged persons featured. Such a group was even more exposed to the lure of the laptop than the general community. Thus, an even clearer explanation was called for. [726] Perhaps put a little less formally, it was misleading to offer free laptops to groups of poorly educated and/or illiterate people on the basis that they sign up to VET FEE-HELP courses without explaining in the plainest of terms what the ramifications of this would be.

12.3.5 Alleged unconscionable conduct contrary to s 21, ACL, with respect to Consumer A 1007 In all of the circumstances set out in the sections above pertaining to Consumer A, the conduct of and attributed to Phoenix which was in trade or commerce in connection with the supply or possible supply of its Online Courses to Consumer A, was unconscionable and consequently a contravention of s 21 of the ACL. In particular: (1) by reason of the matters set out at Section [12.3.1] above, Consumer A was: (a) a vulnerable person; and (b) in a substantially weaker bargaining position than Phoenix (s 22(1)(a), ACL). (2) the conduct of Agent A on behalf of, and attributable to, Phoenix involved: (a) exploitation of and predation upon the vulnerability and disadvantage of Consumer A, including her lack of understanding of the documents relating to the supply of the Online Courses and the undisclosed VET FEE-HELP debt which she would incur on enrolment once the census date had passed (s 22(1)(c), ACL); (b) the use of unfair tactics and pressure exerted on Consumer A (s 22(1)(d), ACL) which were designed to entice her to enrol in online courses for which she was unsuitable and which were unsuitable to her, for undisclosed financial gain; (c) knowledge that Consumer A had not read the forms disclosing vital information about the courses, the debt she would incur, and the circumstances in which she could cancel without incurring a debt, and indeed encouragement to her simply to sign where she was told; (d) misleading and deceptive conduct in breach of the ACL which was rendered particularly egregious for the reasons earlier explained; (e) reckless disregard for whether Consumer A was suitable for the online courses in question and whether they were suitable for her; (f) conduct in breach of key obligations upon Phoenix as a VET provider, including by reason of the offer of prohibited inducements, the failure to ensure that accurate information was given about VET FEE-HELP arrangements and the Commonwealth Assistance Form, and the failure to ensure that services delivered on Phoenix's behalf complied with the RTO Standards;1049 (g) a dishonest lack of good faith (s 22(1)(l), ACL); and (h) financial consequences for Consumer A about which she was not informed (s 22(1)(i), ACL). (3) Phoenix enrolled Consumer A in online courses for which Consumer A was not suited and for which she lacked the skills or work experience necessary to successfully complete.

12.4.1 Vulnerability of Consumer B 1008 The allegations of contraventions relating to Consumer B are made in the ASOC at [123] to [149]. Consumer B is an Aboriginal man who was 23 years old when he signed up to courses with Phoenix. At this time, he was living in public housing in Margate, Queensland, with his then partner, Consumer C who was expecting their third child, as well as his mother, sister, son, two younger brothers and niece.1050 His other son, who was then three months old, had been born prematurely and was still in hospital. Consumer B was expelled from high school in year 9 after two weeks and he did not return to school thereafter.1051 Consumer B also explained that "I did the year of getting my year 10 certificate through TAFE after the year 9" but "finished two days before I was meant to get my certificate because of domestic violence with the family".1052 He had been unemployed and on "Centrelink" since "before 2011".1053 It follows that I agree with the applicants' submission that Consumer B was in a position of vulnerability vis-à-vis Phoenix when he was approached by the agent marketing Phoenix's Online Courses.

12.4.2 Marketing to, and enrolment of, Consumer B 1009 In July 2015, Consumer B was sitting on the front verandah of his home with his then partner Consumer C, his sister Consumer TW,1054 and a friend, when two sales agents pulled up into the driveway in a silver car.1055 The male agent parked the car around the corner.1056 The female sales agent had a folder full of paperwork and wore an ID tag on a lanyard around her neck. She introduced herself to Consumer B and the others as "Yashma" (Yashma). It is likely that she was an agent contracted by GG Sales: see the contract between GG Sales and Ms Yashma Gill dated 3 April 2015.1057 Consumer B explained that "they didn't knock on every door; they knocked on people's doors that would be out the front or people that looked like they were actually home".1058 1010 Yashma identified herself as being "from Phoenix", and explained to Consumer B and the three other people present (in Consumer B's words) that she was there "[t]o try and help young ones and, at the time, like, people trying to get into courses and stuff, to better our lives, that way we had something to do in our future, having a certificate to say, "We've done this," can get us a better job in our future and stuff".1059 As Consumer B said: [Yashma] told us who she was, where she was from, gave us an opportunity that we felt like was a great opportunity, and that's how we ended up signing up to a course. So--- … And what did she tell you about the course? - We would get a free laptop and would get a full diploma out of it. The government pays for it, and we wouldn't have to pay anything back on it. So I figured, well, if the government is paying for a course, I can do a course. It's not going to break my money up and leave me - put without, having to pay for something.1060 1011 Yashma also said to Consumer B words to the effect of: • There is a diploma of business and management costing $34,000 and the government pays for it to help people like you guys out. … If you have a job in the future and start earning $53,000 then you have to start paying it back. You can pay back anything you want like a dollar a week or two dollars a week;1061 • You can … get a laptop to do the course you don't have to pay for;1062 • It goes under VET FEE-HELP so the government pays for it;1063 • You can keep the laptop at the end of the course;1064 and • When it comes to paying for the laptop it's VET FEE-HELP. If you're doing this, you don't have to pay for it.1065 1012 However, Yashma did not tell Consumer B anything about incurring a debt1066 and said that he "wouldn't have to pay it back".1067 Nor did Yashma tell Consumer B that remaining enrolled in an online course after the census date had passed would leave him with a debt to the Commonwealth or that he had to cancel his enrolment in an online course before the census date for the course in order to avoid incurring such a debt.1068 1013 As a result of these statements and omissions, I agree with the applicants' submission that Yashma represented to Consumer B that: (1) the Online Courses were free and paid for in full by the Government; (2) enrolling in Online Courses entitled him to a free laptop, which he was permitted to keep after the conclusion of those courses; and (3) he would not incur a debt by enrolling in one or more of the Online Courses offered to him.1069 1014 Yashma encouraged Consumer B to apply for enrolment, despite Consumer B saying words to the effect of "I'm going through a court case right now, and I've got no time to look for a job or go to TAFE".1070 Consumer B explained that Yashma: … offered everyone more than one course, but I took one course. … She said, "If you do two courses you get two laptops" and stuff like that, but I still took the one course. I didn't want to - like, I was having hard enough time in life as it was. I wanted to do something with my life, but I didn't want to do too much, so I done one course. She said, "If you do two courses you get two laptops," and stuff like that, but I still took the one course.1071 1015 He also said that he told her that he only wished to take one course.1072 1016 In deciding to sign up, Consumer B said that at the time, he "was pretty down in my life at that time" given among other things that his second son was in an incubator and might not survive,1073 but that "[g]oing through a hard time, going through troubles, you can still do something, go somewhere with your life, instead of always going downhill and thinking everything's a problem. So I was trying to - I thought it was a good opportunity."1074 He also saw other people being signed up on the same day: "[f]amily members, friends, a few people down our street got signed up.… Two doors down from us got signed up because we introduced them and thought it was all good. Like, we just thought - we thought it was a great thing …".1075 1017 Yashma did not explain the content of the enrolment forms to Consumer B and instructed him as to how to fill out the enrolment forms and where to sign his name.1076 Consumer B followed her instructions. In oral evidence, Consumer B explained that he "didn't finish the piece of paper" but that Yashma said "she would finish off the bits that needed to be finished off that she didn't need me for. She just needed me to sign it and date it".1077 Consumer B also said that he completed "a small test on a … like it reminds of the white card test. … to get your white card you do a test that tells you about different fire extinguishers, or personal protective wear and gear, and stuff like that. So I answered a few of those questions".1078 A white card enables the holder to work on construction sites and the like.1079 As such, he knew some of the answers from other courses he had completed in the past, but "[s]ome I didn't know, which she helped me with … She just told me what to write there."1080 1018 It follows from Consumer B's evidence, which I accept, that Yashma did not ascertain whether Consumer B was suited to any of the Online Courses she offered to him, nor whether Consumer B was reasonably capable of completing more than one online course at any given time (as ultimately occurred against his wishes). To the contrary, her conduct showed a callous disregard for his suitability to undertake the courses. It also follows that Yashma did not give Consumer B sufficient time to make a considered decision about whether to apply to enrol in an online course. 1019 About 10 minutes later, Consumer B received a telephone call from a person who said that they were from Phoenix (Telephone Verifier B).1081 Yashma coached Consumer B through the call with Telephone Verifier B. As Consumer B explained: Yashma made a phone call. I got a phone call back. When I got the phone call back, before I answered the phone call, Yashma had said to me, "Stick it on speaker. If she puts thumbs up, say yes. Put thumbs down, say no. Just yes or no. Just answer the questions." And that's what I did. So before you answered a question, did you look to Yashma for guidance in - as to how you should answer it? --- She just said to - I sat with her at the table and said, "Thumbs up, say yes. Thumbs down, say no. What she says. Just say 'yes'." That way I could get into the course and get a laptop. … did you follow those instructions ---? --- Yes, I did.1082 1020 Consumer B did not understand a lot of what Telephone Verifier B said but only that the gist of the call was to confirm his personal details and whether he had internet.1083 At the hearing, he gave the following oral evidence: Just back to that telephone call, could you understand what the person on the telephone was saying to you?---Not the whole time, no. Okay?---Some bits I could, some bits I didn't. If I didn't understand it, I would look at Yashma and she would help me. And why was it that you didn't understand?---I just - I'm not being racist or anything. I just don't understand those type of people too well. So did the person you were speaking to have an accent?---She just kind of - they just sounded all the same. Like Yashma - they just sound all the same. So it was a different accent to your accent?---Yes.1084 1021 It is likely that Telephone Verifier B was from the call centre in India for Auz Education, given that the MIS list (Excel spreadsheet) referred to at [780] above recorded that verification calls were made from this call centre to four consumers (albeit not Consumer B) at the same address in Margate as Consumers B and C in August 2015: see items 249, 994, 1004 and 1015.1085 In addition, this would explain why a second verification phone call was made subsequently by myTime Learning as I explain below. 1022 At the end of the phone call with Telephone Verifier B, Consumer B thought that he had applied to enrol in only one course.1086 However, shortly after this call, Consumer B was in fact enrolled in two Phoenix online courses, the Diploma of Business (BSB50215) and Diploma of Leadership and Management (BSB51915). Consumer B remained enrolled after the census date for both online courses but did not complete either course, and was left with a debt to the Commonwealth.1087 On 19 February 2016, he received emails from myTime Learning attaching invoices for two courses, the Diploma of Business (BSB50215) and the Diploma of Leadership and Management (BSB51915) dated 20 February 2016 each in the sum of $10,800.1088 I accept Consumer B's evidence that he did not fully appreciate the importance of that correspondence until the hearing and that he wanted to do "business" only, while his former brother-in-law wanted to do "leadership and management".1089 1023 Yashma told Consumer B and the others that that they would receive laptops within four weeks. He contacted Yashma after four weeks when they had not arrived and was told that they would arrive in two weeks. Consumer B messaged Yashma that he would "go to the cops" and not long thereafter, he received a laptop.1090 Consumer B received another call from an individual called Shivani from Phoenix when the laptop was being delivered, which was recorded. The recording and a transcript of the recording were in evidence.1091 Consumer B explained that Yashma told him not to disclose to Phoenix that she had assisted him with completing the enrolment forms. As he explained, when he was asked in the telephone call whether he had filled in the enrolment forms completely by himself or had been helped by someone: I was helped with doing all that. I was not allowed to tell the people from the Phoenix that called me back that Yashma helped. Otherwise I could have got in trouble and Yashma would have got in trouble and lost her job, she said. So just tell us a little bit more - who would not allow you to do this? --- As in to say I got help -Yashma. And when did she tell you not to say that? --- The moment the phone calls started. And---? --- I was not allowed to say I had help from anyone. I was to tell the Phoenix people over the phone that I did it by myself and that I understood it all. And that's what I did. And just to confirm, it was Yashma who told you that?--- Yes, it was.1092 1024 I accept Consumer B's explanation and consider that it is illustrative of how the sales agent sought to take advantage of Consumer B to his detriment, given the importance attributed both by the legislative scheme and Phoenix's own policies to consumers completing the forms personally, including the LLN and PTR forms. 1025 I also note that in the second telephone call, Shivani said that Consumer B would receive his laptop within six weeks of his census date which was identified as 5 November 2016, although the census date was actually 5 October 2016.1093

12.4.3 Alleged false, misleading and deceptive conduct contrary to ss 18 and 29, ACL, with respect to Consumer B 1026 The representations described at paragraph [1013] above were plainly made in trade or commerce for the purposes of the ACL. These representations were misleading and deceptive, or likely to mislead or deceive, and were false, for the same reasons as were set out in respect of Consumer A at paragraph [1003] above. It follows that by reason of these matters, the applicants have established that Phoenix: (1) engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18(1) of the ACL; and (2) in connection with the supply or possible supply of its Online Courses, made a false or misleading representation with respect to the price of the Online Courses, in contravention of s 29(1)(i) of the ACL. 1027 The representations again were especially serious given the use of the word "free" to describe the offer of a laptop and the Online Courses for the reasons earlier given.

12.4.4 Alleged unconscionable conduct contrary to s 21, ACL, with respect to Consumer B 1028 In the circumstances outlined above pertaining to Consumer B, the conduct of and attributed to Phoenix, which was in trade or commerce in connection with the supply or possible supply of its Online Courses to Consumer B, was unconscionable and consequently a contravention of s 21 of the ACL. In particular, (1) by reason of the matters set out at Section [12.4.1] above, Consumer B was: (a) a vulnerable person; and (b) in a substantially weaker bargaining position than Phoenix (s 22(1)(a), ACL). (2) the conduct of the Agent Yashma on behalf of, and attributable to, Phoenix involved: (a) exploitation of and predation upon the vulnerability and disadvantage of Consumer B, including his lack of understanding of the documents relating to the supply of the Online Courses and the undisclosed VET FEE-HELP debt which he would incur on enrolment once the census date had passed, and the false holding out of hope that this would help him and others to get a better life and a job (s 22(1)(c), ACL), constituting a cruel hoax of the kind described by Bromwich J in AIPE (No 3); (b) the use of unfair tactics and pressure exerted on Consumer B (s 22(1)(d), ACL) designed to entice him to enrol in online courses for which he was unsuitable and which were unsuitable to him, for undisclosed financial gain; (c) pressuring and assisting Consumer B to apply for enrolment and submitting his forms for enrolment despite knowledge that Consumer B had no time to undertake the course, and that he had not read the forms disclosing vital information about the courses, the debt he would incur, and the circumstances in which he could cancel without incurring a debt; (d) assisting Consumer B to complete the forms which he was required to complete personally; (e) coaching Consumer B through the telephone verification call from a person allegedly from Phoenix but who was likely on the balance of probabilities to have been from the call centre for Auz Education; (f) completing enrolment forms for Consumer B for two online courses with Phoenix despite his insistence that he only wanted to be enrolled in one online course; (g) misleading and deceptive conduct in breach of the ACL which was rendered particularly egregious for the reasons earlier explained; (h) reckless disregard for whether Consumer B was suitable for the online courses in question and whether they were suitable for him; (i) conduct in breach of key obligations upon Phoenix as a VET provider, including by reason of the offer of prohibited inducements, the failure to ensure that accurate information was given about VET FEE-HELP arrangements and the Commonwealth Assistance Form, and the failure to ensure that services delivered on Phoenix's behalf complied with the RTO Standards; 1094 (j) a dishonest lack of good faith (s 22(1)(l), ACL); and (k) financial consequences for Consumer B about which he was not informed (s 22(1)(i), ACL). (3) Phoenix enrolled Consumer B in online courses for which Consumer B was not suited and for which he did not have the skills or work experience necessary to successfully complete. (4) Phoenix enrolled Consumer B in two online courses despite his insistence that he only wanted to be enrolled in one course.

12.5.1 Vulnerability of Consumer C 1029 The allegations of contraventions relating to Consumer C are set out in the ASOC at [150] to [182]. Consumer C gave evidence on the second day of the hearing.1095 Consumer C was 24 years old when she was approached about enrolling in courses in Phoenix. At that time, she was living in public housing in a three-bedroom duplex in Margate in the Redcliffe area in Queensland - a neighbourhood which she said was "[n]ot really that great".1096 Consumer C said that she was also living at the same home as her ex-mother-in-law, Consumer B (who was her then boyfriend), his two sisters and two younger brothers, and Consumer C's three young children.1097 The evidence establishes that she was in a position of vulnerability vis-à-vis Phoenix when she was enrolled. Specifically: (1) Consumer C left school at the end of year 10;1098 (2) Consumer C had three children and was pregnant with her fourth child, with her youngest child at the time being "not even one";1099 (3) she had worked at Hungry Jack's in 2009 but had no other experience in the workforce;1100 (4) she had not undertaken any further study since leaving high school;1101 and (5) she had internet access only on her mobile phone.1102

12.5.2 Marketing to, and enrolment of, Consumer C 1030 In line with Consumer B's account, Consumer C described how in July 2015 she, Consumer B, and two other people were sitting on the front verandah of the home in Margate when Yashma pulled up in the driveway in a silver car.1103 She said that she thought Yashma had someone else in the car but "they were down the road."1104 Yashma told Consumer C that she was representing Phoenix1105 and that: (1) there were courses offered in business management and childcare which take about 6 months to two years to study online;1106 (2) the course was about $35,000 and that "VET FEE-HELP pays for the courses";1107 (3) she would "get a loan from the government";1108 and (4) "[y]ou pay it back once the course is done and you get a job and earn over a thousand dollars a week".1109 1031 Before Yashma's visit to the Margate home, Consumer C had not been thinking about doing an online course and said that she was "not really" interested in the courses being offered by Yashma.1110 1032 Yashma also said to Consumer C, words to the effect of "[y]ou'll be given a laptop to use and you don't have to give it back".1111 Consistently with this, in her oral evidence, Consumer C said of the laptops that "I thought we could keep them" and that Yashma encouraged her to sign up to the course "[s]aying that there would be a free laptop included", which she also offered to everyone else who was prepared to study.1112 1033 I infer from Consumer C's evidence that "the majority" of people there signed up to an online course "[b]ecause there was kids there as well",1113 that she meant that all of the adults present at her Margate home signed up on that day with Yashma to online courses with Phoenix. This is consistent with the MIS list of consumers at the same address who received verification calls from the Auz Education call centre referred to at [780]-[781] above. 1034 Yashma did not explain to Consumer C how VET FEE-HELP operated.1114 In particular, Yashma did not tell Consumer C that: (1) remaining enrolled in an online course after the census date had passed would leave her with a debt to the Commonwealth; and (2) she had to cancel her enrolment in an online course before the census date in order to avoid incurring such a debt.1115 1035 Furthermore, Yashma did not provide Consumer C with written documentation about VET FEE-HELP.1116 To the contrary, when asked whether she had received a copy of "any of the forms" she filled out, Consumer C answered "no".1117 1036 I accept the applicants' submission that, in the context of having told Consumer C the matters described in paragraphs [1030]-[1032] above and by failing to tell Consumer C the matters outlined in paragraph [1034] above or to provide the documents referred to in paragraph [1035] above, Yashma represented to Consumer C that: (1) the Online Courses were free and paid for in full by the Government; (2) enrolling in Online Courses entitled her to a free laptop, which she could keep after the conclusion of those courses; and (3) she would not incur a debt by enrolling in one or more of the Online Courses offered to her. 1037 In addition to the "free" laptop, Yashma also offered Consumer C money to encourage others to apply for enrolment, telling her that "[w]hoever gets signed up by someone else, they get $50".1118 Not surprisingly, Consumer C understood as a result that she would get $50, as well as "a laptop to keep", if she signed up to an online course as part of a group.1119 1038 It is also significant that Yashma encouraged Consumer C to apply for enrolment, even though Consumer C told her that: (1) she only had internet on her phone; (2) $35,000 was "a lot of money"; (3) she had finished school at the end of year 10 and had not undertaken any further study; and (4) she had only worked at Hungry Jack's in 2009.1120 1039 As to the first of these points, while Yashma said that she would "sort" out the internet for Consumer C, when asked if that had occurred Consumer C said, "I have no idea. I don't think so." Consistently with this, Consumer C said that after she received the computer roughly ten weeks later,1121 she had just used her phone internet by hooking up the phone to the computer.1122 1040 Yashma also failed to explain the content of the enrolment forms to Consumer C,1123 and directed her how to fill in the enrolment forms and where to sign her name.1124 In particular, Consumer C remembered that one question was "what is PPE?" and that Yashma had simply said "[j]ust write down on the form what I tell you".1125 Consumer C complied with Yashma's instructions about how to fill in the enrolment forms and where to sign her name and, again not surprisingly, did so without appreciating the implications of what she was doing: Did you understand what the forms were that you were completing?---Not really, no. And do you understand what you signed? Why you were asked to sign a form?---No.1126 1041 Nor did Yashma take any steps to ascertain whether Consumer C was suited to any of the Online Courses, let alone whether she was reasonably capable of completing two online courses at the same time. Yashma also failed to give Consumer C sufficient time to make a considered decision about whether to apply to enrol in an online course. 1042 Shortly thereafter on the same day and while Yashma was still present, Consumer C received a phone call from an officer of CTI (Telephone Verifier C), who spoke with Consumer C.1127 In common with her approach to enrolling Consumer B, Yashma had her mobile phone on loudspeaker and coached Consumer C through the phone call, by shaking her head when Consumer C should say "no" and nodding her head when Consumer C should say "yes".1128 Consumer C did not, however, understand a lot of what the person on the other end of the call was saying to her.1129 1043 She did, however, recall that Telephone Verifer C said, "I am confirming you are enrolled in a Diploma of Business and Diploma of Management", to which Consumer C replied "I only wanted to do the business course."1130 The phone call then "cut out" and Yashma had a conversation with someone which Consumer C did not hear.1131 Consumer C then asked Yashma what course it was, to which Yashma said that the course was "a Diploma of business and management and leadership" - that is, it was one course which included business and management (and leadership) aspects.1132 As a result, Consumer C thought that she was enrolled in only one course.1133 1044 In light of the matters outlined in paragraph [1043] above, Yashma represented to Consumer C that Consumer C was only being enrolled in one online course and not two online courses.1134 However, shortly after the conversation with Telephone Verifier C, Consumer C was in fact enrolled into the Diploma of Leadership and Management (BSB51915) and the Diploma of Business (BSB50215), with associated VET FEE-HELP debts for each course.1135

12.5.3 Alleged false, misleading and deceptive conduct contrary to ss 18 and 29, ACL, with respect to Consumer C 1045 The representations in paragraphs [1036] above were made in trade or commerce and were misleading or deceptive, or likely to mislead or deceive, and were false, for the same reasons as were set out in respect of Consumer A at paragraph [1003] above. 1046 By reason of the matters described in the preceding paragraph, Phoenix; (1) engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18(1) of the ACL; and (2) in connection with the supply or possible supply of its Online Courses, made a false or misleading representation with respect to the price of the Online Courses, in contravention of s 29(1)(i) of the ACL. 1047 As was the case with Consumers A and B, the representations were especially serious given the use of the word "free" for the reasons earlier given.

12.5.4 Alleged unconscionable conduct contrary to s 21, ACL, with respect to Consumer C 1048 In all of the circumstances set out in the sections above pertaining to Consumer C, the conduct of and attributed to Phoenix which was in trade or commerce in connection with the supply or possible supply of its Online Courses to Consumer C, was unconscionable and consequently a contravention of s 21 of the ACL. In particular: (1) by reason of the matters set out at Section [1029] above, Consumer C was: (a) a vulnerable person; and (b) in a substantially weaker bargaining position than Phoenix (s 22(1)(a), ACL). (2) the conduct by the Agent Yashma on behalf of, and attributable to, Phoenix involved: (a) exploitation of and predation upon the vulnerability and disadvantage of Consumer C, including her lack of understanding of the documents relating to the supply of the Online Courses and the undisclosed VET FEE-HELP debt which she would incur on enrolment once the census date had passed (s 22(1)(c), ACL); (b) the use of unfair tactics and pressure exerted on Consumer C (s 22(1)(d), ACL) designed to entice her to enrol in online courses for which she was unsuitable and which were unsuitable to her, for undisclosed financial gain; (c) knowledge that Consumer C had not read the forms disclosing vital information about the courses, the debt she would incur, and the circumstances in which she could cancel without incurring a debt, and indeed encouragement to her simply to sign where she was told; (d) misleading and deceptive conduct in breach of the ACL which was rendered particularly egregious for the reasons earlier explained; (e) reckless disregard for whether Consumer C was suitable for the online courses in question and whether they were suitable for her, despite Consumer C advising Yashma of matters disclosing her limited internet accesss, her limited education, and her lack of relevant work experience, and despite Consumer C's inability to answer some of the questions on the enrolment forms; (f) providing the answers to some of the questions in the enrolment forms despite those answers being intended to test Consumer C's capacity to successfully undertake the online courses and to identify any need for particular support; (g) coaching Consumer C on the answers to give during the telephone verification call; (h) dishonestly representing to Consumer C that she was being enrolled in only one online course; (i) conduct in breach of key obligations upon Phoenix as a VET provider, including by reason of the offer of prohibited inducements, the failure to ensure that accurate information was given about VET FEE-HELP arrangements and the Commonwealth Assistance Form, and the failure to ensure that services delivered on Phoenix's behalf complied with the RTO Standards; 1136 (j) a dishonest lack of good faith (s 22(1)(l), ACL); and (k) financial consequences for Consumer A about which she was not informed (s 22(1)(i), ACL). (3) Phoenix enrolled Consumer C in online courses for which Consumer A was not suited and for which she lacked the skills or work experience necessary to successfully complete. (4) Phoenix enrolled Consumer C in two Phoenix online courses despite her stating that she only wanted "to do the business course" and the Agent Yashma deliberately misleading her into thinking that she was enrolling into a single course being "a Diploma of business and management and leadership".

12.6.1 Vulnerability of Consumer D 1049 The allegations of contraventions relating to Consumer D are made in the ASOC at [183] to [204]. As earlier explained, Consumer D gave evidence only by affidavit. 1050 Consumer D was 21 years old and living in Broken Hill, New South Wales, when she met with a sales agent from Phoenix around the end of January 2015 at her mother's suggestion.1137 Her mother told her that she had just had a visit from salespeople offering free laptops and courses and thought she might be interested because everything was free. 1051 The evidence establishes that Consumer D was in a position of vulnerability vis-à-vis Phoenix at this time. Specifically, she: (1) was the parent of a child under the age of twelve months; (2) had a brain disorder; (3) left high school during year 10 in 2009; (4) had worked at KFC but stopped when she sustained a hip injury in 2011; and (5) was unemployed.1138

12.6.2 Marketing to, and enrolment of, Consumer D 1052 In late January 2015, Consumer D, together with her neighbour (Consumer FB) and her partner at that time, were cleaning the verandah of Consumer D's home, when a man walked up to the front door (Agent D).1139 Agent D identified himself as being "a sponsor from the Phoenix Institute".1140 As I have earlier mentioned, Consumer D's recollection of the ensuing meeting accords in all significant respects with that of Consumer FB, who was present throughout the meeting and was also signed up by Agent D at the same time.1141 1053 Agent D told Consumer D words to the effect of, "[t]here are a couple of online courses running as a government incentive scheme where you can get a free laptop per course if you apply. So if you sign up for two courses, you get two laptops".1142 He was invited inside and Consumer D heard Consumer FB explain that he did not have internet, to which Agent D responded that he would be given internet as well, that "if you start the course, then the course will be free as well as the laptop" and that "[f]or each course you do you get a free laptop."1143 1054 Agent D then pulled out a list of about six to eight courses which he showed to Consumer D. She told Agent D that she thought she would be interested in the childcare course to which Agent D said "[y]ou should do another course as well; otherwise you won't get two laptops."1144 Agent D took out a form from his bag which had the Phoenix name and a logo of a bird at the top of the page and, after taking a photograph of her Medicare card and her then partner's driving licence: The salesman started filling out the forms for all of us, himself. He did not ask me to write anything on the form. He did not read out or explain the form to me. At no time did he explain to me the content of the form. He did not ask me any questions about my literacy or numeracy abilities.1145 1055 Consumer D, her then partner, and Consumer FB then signed the forms where Agent D indicated. Agent D immediately pulled out three more forms and asked them to "choose another one please". Even though Consumer D said that she only wanted to do the childcare course, Agent D told her words to the effect of, "[i]f you do two courses, you get two laptops. What about the business course, it is really simple."1146 She then agreed and explained that: [Agent D] then filled out this form again while looking at the first form I signed. [Agent D] did not ask me any questions when filling this form in. After [Agent D] finished filling out the form for me, he presented it to me. [Agent D] then asked me to sign the form again. Again, at no time did [Agent D] explain to me why I was signing this, or explain the form or read it out to me. It looked exactly like the previous form. I signed the form where he had indicated.1147 1056 After advising Consumer D, her then partner and Consumer FB that they should see their laptops in the next couple of weeks or a month, Agent D left. The whole meeting took about 40 to 60 minutes.1148 As the applicants submit, it is clear in the circumstances that Agent D knew that Consumer D had not read the enrolment forms.1149 1057 Nor did Agent D advise Consumer D: (1) about the cost of the Online Courses, the length of the courses, or what kind of background knowledge was required;1150 (2) that remaining enrolled in an online course after the census date had passed would leave her with a debt to the Commonwealth;1151 and (3) that she had to cancel her enrolment in an online course before the census date for the course in order to avoid incurring such a debt. 1058 Furthermore, Agent D did not provide Consumer D with written documentation about the Online Courses, nor a copy of her completed enrolment forms.1152 1059 In the context of having told Consumer D's friend, Consumer FB, in Consumer D's presence the matters outlined at paragraph [1053] above, by failing to tell Consumer D the matters outlined in paragraph [1057] or to provide the documents referred to in paragraph [1058] above, Agent D represented to Consumer D that: (1) the Online Courses were free and paid for in full by the Government; (2) enrolling in Online Courses entitled her to a free laptop, which she was permitted to keep after the conclusion of those courses; and (3) she would not incur a debt by enrolling in one or more of the Online Courses offered to her. 1060 Nor did Agent D ask Consumer D about her education, qualifications, or employment history,1153 or give her sufficient time within which to make a considered decision about whether or not to apply to enrol in an online course. 1061 Neither Consumer D or her then partner ever received the laptops and Consumer D did not receive any further emails or phone calls from Agent D or Phoenix.1154 1062 The evidence establishes that Consumer D was enrolled in a Diploma of Business (BSB50207) and remained enrolled in the course after the census date had passed. 1155 As Consumer D did not receive any communications from Phoenix or Agent D after the initial meeting with Agent D, plainly she did not receive any kind of verification telephone call from the respondents and did not commence the online course, despite incurring a debt to the Commonwealth in respect of the course as advised in the Commonwealth Assistance Notice dated 5 October 2015.1156

12.6.3 Alleged false, misleading and deceptive conduct contrary to ss 18 and 29, ACL, with respect to Consumer D 1063 The representations in paragraph [1059] above were made in trade or commerce. They were misleading or deceptive, or likely to mislead or deceive, and were false, for the same reasons as were set out in respect of Consumer A at paragraph [1003] above. 1064 By reason of the matters set out in the preceding paragraph, Phoenix; (1) engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18(1) of the ACL; and (2) in connection with the supply or possible supply of its Online Courses, made a false or misleading representation with respect to the price of the Online Courses, in contravention of s 29(1)(i) of the ACL. 1065 Again, as was the case with Consumers A, B, and C, the representations were especially serious given the use of the word "free" for the reasons earlier given.

12.6.4 Alleged unconscionable conduct contrary to s 21, ACL, with respect to Consumer D 1066 In all of the circumstances set out in the sections above pertaining to Consumer D, the conduct of and attributed to Phoenix which was in trade or commerce, in connection with the supply or possible supply of its Online Courses to Consumer D, was unconscionable and consequently a contravention of s 21 of the ACL. In particular: (1) by reason of the matters set out at Section [1051] above, Consumer D was: (a) a vulnerable person; and (b) in a substantially weaker bargaining position than Phoenix (s 22(1)(a), ACL). (2) the conduct by Agent D on behalf of, and attributable to, Phoenix involved: (a) exploitation of and predation upon the vulnerability and disadvantage of Consumer D, including her lack of understanding of the documents relating to the supply of the Online Courses and the undisclosed VET FEE-HELP debt which she would incur on enrolment once the census date had passed (s 22(1)(c), ACL); (b) the use of unfair tactics and pressure exerted on Consumer D (s 22(1)(d), ACL) designed to entice her to enrol in online courses for which she was unsuitable and which were unsuitable to her, for undisclosed financial gain; (c) knowledge that Consumer D had not read the forms disclosing vital information about the courses, the debt she would incur, and circumstances in which she could cancel without incurring a debt, and indeed encouragement to her simply to simply sign where she was told; (d) misleading and deceptive conduct in breach of the ACL which was rendered particularly egregious for the reasons earlier explained; (e) reckless disregard for whether Consumer D was suitable for either of the two online courses in which she was pressured to enrol and whether they were were suitable for her, even though she was ultimately only enrolled in one of those courses; (f) completing the enrolment forms "for" Consumer D despite the forms being required to be completed by Consumer D personally and the LLN and PTR forms being intended to test Consumer D's suitability to undertake the Online Courses and to identify any need for particular support; (g) conduct in breach of key obligations upon Phoenix as a VET provider, including by reason of the offer of prohibited inducements, the failure to ensure that accurate information was given about VET FEE-HELP arrangements and the Commonwealth Assistance Form, and the failure to ensure that services delivered on Phoenix's behalf complied with the RTO Standards;1157 (h) a dishonest lack of good faith (s 22(1)(l), ACL); and (i) financial consequences for Consumer D about which she was not informed (s 22(1)(i), ACL). (3) Phoenix enrolled Consumer D in an online course for which she was not suited and for which she lacked the skills or work experience necessary to successfully complete. (4) Phoenix failed to comply with its own telephone verification procedures, being a safeguard against enrolling consumers in such circumstances.

13.1 Overview 1067 A further important source of evidence relied upon by the applicants was evidence analysing data extracted from various datasets including HEIMS and FinPa. This evidence was relied upon in particular in order to establish the systemic nature of the impugned conduct. As I earlier explained, in some instances the data analysis covered the entire cohort of students, while in other cases random but representative data samples were relied upon. 1068 The data analysis evidence corroborates evidence about key themes which emerged from Phoenix's internal documentary records and the evidence of lay witnesses, including ex-employees, and demonstrates that those themes permeated Phoenix's manner of operation in a systemic way. Those themes include: (1) the enrolment of students in multiple courses; (2) the existence of unusual patterns in the data consistent with evidence about the creation of false records of student activity in FinPa; (3) the absence of workplace agreements for the Service Diplomas; (4) the failure to properly verify enrolments; (5) the extraordinarily low level of course completions; and (6) the lack of student activity in the Online Courses. 1069 In turn, the applicants relied upon the data analysis evidence to assist in establishing the Profit Maximising Purpose, the Callous Indifference, the Phoenix Marketing System, and the Phoenix Enrolment System. 1070 It is helpful first to summarise the datasets the subject of this evidence (at the risk of some repetition) and to identify the primary witnesses and the subjects to which their evidence was addressed, before turning to consider the results of their analysis of the data.

13.2 The available datasets 1071 The expert witnesses had a number of datasets available to them. Those obtained from Phoenix were as follows and their role has already been described to some extent in the evidence of the ex-employees, in particular. (1) Wise.NET data: This data was drawn from CTI and Phoenix's student management software program. Wise.NET was a learning relationship management platform used by a number of RTOs and contained data collection fields and reporting mechanisms intended to enable RTOs to maintain compliance with VET FEE-HELP regulations. The data collected by Wise.NET included enrolment details such as student name, student number, date of birth, highest school level attained, and contact details; course code and title; course requirements and prerequisites; course start date and duration; and student results and completion.1158 (2) FinPa data: FinPa was Phoenix's learning management system. It was an online database by which students could access their learning materials and submit assignments.1159 As earlier explained, it is important to emphasise that all log-in history and student course completion progress was automatically recorded and managed through FinPa. (3) Enrolment forms: The enrolment forms submitted on behalf of consumers to Phoenix also form part of the available datasets. The enrolment packs contained the forms and information described at [98] above. (Cumulatively the Phoenix databases.) 1072 The Wise.NET and FinPa datasets, as well as the enrolment forms, were provided to McGrathNicol by the respondents and later by their Administrator. McGrathNicol in turn provided them to the DET and ACCC. As earlier explained, McGrathNicol were appointed on 4 February 2016 to conduct an audit of Phoenix on behalf of the DET and produced its report on 16 September 2016.1160 The various dates on which the data were provided to McGrathNicol are identified in the applicants' Narrative Chronology document, and the MGN Audit Report.1161 1073 In addition, the Department maintained two databases which were drawn upon and analysed by the expert witnesses (the Departmental databases) as follows. (1) HEIMS data: the Higher Education Information Management System is maintained by the DET and contains all data required to be reported by VET providers about students and their courses, including the commencement and census dates for units of study and completion status.1162 However, HEIMS does not record the date of enrolment.1163 HEIMS data will not necessarily match data from the VET provider's own IT systems as it is dependent upon the provider providing accurate data to the Department.1164 Ms Crittenden explained that Phoenix used Wise.NET to generate reports to enter student data (including enrolments and course completions) into HEIMS.1165 (2) HITS: the HELP Information Technology System is an electronic information database used to manage information about higher education providers, including VET providers, such as contact details and and payment information.1166

13.3 Witnesses giving evidence based upon data analysis and expert and other reports 1074 It is convenient to briefly introduce the primary witnesses giving evidence of their findings based upon their analysis of data extracted from some or all of the available databases. 1075 First, a number of witnesses from the DET gave evidence, namely: (1) Mr Geoffrey Koochew,1167 who had been the Director of the Data and Reporting Team in the VET Student Loans Branch (previously known as the VET FEE-HELP Branch), Skills and Training Group at the Commonwealth Department of Employment, Skills, Small and Family Business since 6 August 2018. Prior to 25 July 2019, the Skills and Training Group formed part of the DET. Mr Koochew gave evidence about VET FEE-HELP payments and reporting in 2015 generally. He also gave evidence based on data extracted from the HEIMS and HITS databases specifically in relation to Phoenix, including as to the number of consumers enrolled in each course, Phoenix's practice of enrolling students in multiple courses with multiple census dates, and the highest education levels of consumers enrolled in Online Courses with Phoenix. Mr Koochew gave evidence orally, as well as by affidavit. (2) Ms Haley Jones,1168 Director of the Data and IT Section in the VET Student Loans Branch of the Department, gave evidence based upon data extracted from the HEIMS database in relation to Phoenix, including as to the unit of study completion rate at Phoenix as compared with other VET providers, and Phoenix's practice of enrolling consumers in multiple courses. Ms Jones' evidence addressed, among other things, the lack of successful course completion by Phoenix's enrolled consumers and the enrolment of consumers in multiple diplomas. (3) Mr Byron Vickers has been a data analyst in the Data and Reporting Team in the VET Student Loans Branch (formerly VET FEE-HELP Branch) in the Skills Programs (Compliance) Group at the Commonwealth Department of Employment, Skills, Small and Family Business (formerly the DET) since 30 October 2017. At the time of affirming his affidavit on 17 September 2019,1169 he had worked in data and programming-related roles for over 8 years, including as a system analyst at the Australian National University, building software systems. He has also completed a Masters in Statistics at Princeton University, New Jersey, USA. Mr Vickers gave evidence about student activity or lack thereof in the online courses in which they were enrolled with Phoenix, as well as the extent and timing of consumer requests for withdrawal from Phoenix's Online Courses, and Phoenix's response following such requests. (4) Since 10 December 2018, Ms Paula Zylstra has been the Director of the VET FEE-HELP Compliance Team in the Skills Programs Compliance Branch also with the Skills and Training Group at the Commonwealth Department of Employment, Skills, Small and Family Business (formerly the DET). Before assuming that position, Ms Zylstra worked for more than 18 years in program management and policy positions at the Department of Health. In her affidavit affirmed on 17 September 2019,1170 Ms Zylstra explains that she instructed members of the Department whose responsibilities related to VET FEE-HELP compliance to review the FinPa Withdrawal and FinPa Cancel Spreadsheets prepared by Mr Vickers and to record various categories applying to each consumer. Ms Zylstra also explains each of the categories and gives examples of consumers falling within the categories. In addition, in her affidavit affirmed on 10 September 2019, Ms Zylstra gave evidence about: (a) the metholodology employed in, and results of, an analysis of data emanating from the respondents with respect to the execution (or lack thereof) of work placement agreements for enrolled consumers; and (b) the preparation of a list of Agents which Phoenix identified as "rogue agents" in communications produced in answer to a search warrant. 1076 Secondly, evidence was given by a number of investigators for the ACCC. In particular, Mr Samuel Voller, who was then an ACCC Senior Investigator, reviewed a vast number of documents sourced from the s 155 documents, the McGrathNicol materials, the warrant materials and the ASQA materials. Mr Voller was the lead investigator for this litigation. Among other things, the Voller PTR/LLN Affidavit affirmed 18 September 2019:1171 identifies different versions of the PTR/LLN forms and Phoenix marketing guides; identifies similarities in answers among a sample of PTR/LLN forms; finds that a large number of identity forms were verified the by same Perth pharmacy; identifies instances of marking by assessors of LLN/PTR forms bearing dates which pre-date the commencement of their employment with Phoenix; analyses 47 VET FEE-HELP eligibility checklists; identifies PTR/LLN forms and statements of fees signed before the versions of those documents came into existence; sets out emails concerning issues with CAFs being out of date; and highlights discrepancies in student enrolment forms indicating such forms were manipulated after completion dates. I note that some of these aspects of his evidence have already been addressed earlier in these reasons. 1077 Thirdly, the DET appointed McGrathNicol on 4 February 2016 to perform a formal audit in accordance with cl 26(2) of Sch 1A to the HES Act of the reported enrolment data that Phoenix had provided to the DET for the 2015 calendar year. The audit was subsequently extended to cover consumers enrolled in an online course with Phoenix during 2016.1172 The purpose of the audit was to determine Phoenix's entitlement to payments under the HES Act, including the veracity of student enrolments in Phoenix Online Courses. As noted in Chapter 1, McGrathNicol produced the MGN Audit Report on 16 September 2016.1173 This audit report, together with a number of other reports that were "inputs" into the MGN Audit Report, were relied upon by the applicants as an important source of evidence in establishing unconscionability on a system-wide basis. Such reports include a draft report by ORIMA Research dated 27 May 2016 to undertake Computer Assisted Telephone Interviews of a random sample of 500 Phoenix consumers (the ORIMA student survey) for enrolment documentation testing.1174 That report was finalised after delivery of the MGN Audit Report although the final version was not in evidence.1175 1078 Mr Matthew Dunnett is an expert accountant and a partner of McGrathNicol. He was the director responsible for undertaking the forensic audit and drafting the MGN Audit Report,1176 and gave evidence across four affidavits, as well as oral evidence. Mr Dunnett's affidavit sworn on 12 September 2019 annexed the MGN Audit Report (the Dunnett Audit Affidavit)1177 and, as I later explain, provided an essential foundation for the admissibility of the opinions expressed by him in the audit report. Mr Dunnett's affidavit evidence was supplemented by oral evidence. 1079 Mr Dunnett has extensive experience in undertaking forensic and compliance audits in relation to the veracity of VET FEE-HELP providers, as well as assessing the financial viability of educational institutions and investigating the alleged misuse of Commonwealth funds by educational institutions. Mr Dunnett holds a Bachelor of Commerce (Accounting), Graduate Diploma of Applied Finance and Investment, and a Certificate IV in Government (Fraud Investigation) (Fraud Prevention & Detention). He is also a fellow of Chartered Accountants Australia and New Zealand, and of the Financial Institute of Australasia. I am satisfied that he has the specialised knowledge required to express expert opinions on the matters covered by the MGN Audit Report. 1080 In addition to the Dunnett Audit Affidavit, the applicants rely upon a number of other affidavits affirmed by Mr Dunnett as follows: (1) In the Dunnett Census Date Affidavit sworn on 30 August 2019,1178 Mr Dunnett annexed his independent expert report dated 29 August 2019 in which he analysed the relationship between enrolment date, census date, and when log-in details were provided for the whole of the consumer cohort, and determined the number of consumers enrolled each month. (2) In the Dunnett PTR/LLN Affidavit sworn on 30 August 2019,1179 Mr Dunnett annexed his independent expert report dated 22 July 2019 in which he analysed a random sample of 630 consumers enrolled in Phoenix Online Courses on the basis of which he concluded that: there were no PTR/LLN documents for 111 consumers; there were three different versions of the PTR/LLN forms; many of the LLN/PTR forms were incorrectly marked or altered; and there were material differences in over 100 cases between signatures on the LLN/PTR documents on the one hand, and proof of identity documents on the other hand. (3) Finally, in the Dunnett Chain of Custody Affidavit sworn on 12 September 2019,1180 Mr Dunnett explained the source of the data informing the MGN audit and to whom he provided that data. 1081 Fourthly, expert evidence was led from Mr Leigh Ulpen, a senior manager at McGrathNicol and part of the Forensics Team.1181 In that role, he led the data analytics capability providing specialist data analysis, forensic and advisory services. Mr Ulpen holds a Bachelor of Applied Science majoring in Information Technology from the RMIT University, Melbourne, and a Data Analytics (Proficient) credential issued by DeakinCo. He has more than eleven years' experience in performing data consulting services. Mr Ulpen prepared a report dated 29 June 2018 for the purposes of this proceeding and in so doing, complied with the Federal Court's (then) Practice Note CM 7 ("Expert witnesses in proceedings in the Federal Court of Australia"). His report is Annexure "LMU-1" to his affidavit affirmed on 29 June 2018. In his report, Mr Ulpen addresses two issues: (1) course completion rates of VET FEE-HELP consumers enrolled in Phoenix courses in 2015 and 2016 as recorded in Phoenix's Wise.NET data; and (2) the level of engagement of VET FEE-HELP consumers enrolled in Phoenix courses in 2015 and 2016 as measured by the level of student activity in Phoenix's learning management system, FinPa (the FinPa data). 1082 Finally, on 8 November 2016, the Commonwealth engaged Clayton Utz to analyse documentation for the purpose of investigating representations by Phoenix that it was entitled to VET FEE-HELP assistance in respect of 11,688 consumers for units of study undertaken in 2015 and 2016. Throughout 2017 and 2018, Forensic and Technology Services (FTS) (formerly Legal Technology Services) at Clayton Utz were provided with approximately 100,000 documents (the FTS student enrolment documents). FTS is a practice group which provides forensic services, including accounting, technology, investigations, transaction services, and analysis. FTS was instructed to review the FTS student enrolment documents and to enter information into a database to form the foundation of the analysis of Phoenix's alleged entitlement to VET FEE-HELP assistance payments. Mr Jonathan Prideaux, a Director of FTS, affirmed an affidavit on 13 September 2019, in which he explained that he devised and managed the coding process, and was assisted in that process by a team of FTS consultants and paralegals (the FTS Team).1182 I explain that process later below. 1083 After completion of the coding process described in Mr Prideaux's affidavit, Mr Deepak Pillai performed data analysis on the coding output to identify consumers meeting certain conditions, assisted by a team of FTS staff. Mr Pillai is also a Director of FTS at Clayton Utz. At the time of affirming his affidavit on 13 September 2019,1183 Mr Pillai had over 13 years of experience in the data analytics industry providing technical implementation and advisory services.

13.4 The application to adduce summaries of evidence pursuant to leave granted under s 50 of the Evidence Act 1084 By an application filed on 4 November 2019, the applicants sought leave pursuant to s 50 of the Evidence Act to adduce summaries of evidence as follows: (1) a summary in relation to approximately 800 PTR/LLN forms in the form of an Excel spreadsheet (the PTR/LLN Forms Analysis Spreadsheet); and (2) a summary of over 3,000 withdrawal forms completed by consumers enrolled in Phoenix courses in the form of: (a) an Excel spreadsheet (the Withdrawal Forms Spreadsheet) contained on the USB marked Exhibit SV-1 to the Voller PTR/LLN Affidavit; and (b) a simplified Excel table categorising the reasons for withdrawal as stated on a subset of those forms (the Withdrawal Forms Word Summary).1184 1085 That application was supported by the affidavit of Samuel Voller, Acting Assistant Director, ACCC, affirmed on 4 November 2019 (the third Voller affidavit). Mr Voller had been an ACCC Senior Investigator when his earlier affidavits of 17 and 18 September 2019 were deposed. 1086 Section 50 of the Evidence Act relevantly provides that: (1) The court may, on the application of a party, direct that the party may adduce evidence of the contents of 2 or more documents in question in the form of a summary if the court is satisfied that it would not otherwise be possible conveniently to examine the evidence because of the volume or complexity of the documents in question. (2) The court may only make such a direction if the party seeking to adduce the evidence in the form of a summary has: (a) served on each other party a copy of the summary that discloses the name and address of the person who prepared the summary; and (b) given each other party a reasonable opportunity to examine or copy the documents in question. (3) The opinion rule does not apply to evidence adduced in accordance with a direction under this section. 1087 I was satisfied that the requirements of s 50 of the Evidence Act were met and the summaries should be admitted, given the volume and complexity of the documents summarised in the PTR/LLN Forms Analysis Spreadsheet, the Withdrawal Forms Spreadsheet, and the Withdrawal Forms Word Summary. As such, I made orders on 5 November 2019 granting leave for the summaries to be adduced pursuant to s 50 of the Evidence Act.

13.5.1 Principles governing admissibility 1088 The applicants also sought to rely upon the MGN Audit Report, the survey of consumers conducted by ORIMA at the Department's request which was also taken into account in the MGN Audit Report, and the survey of students undertaken by Ernst & Young at the instigation of the Department. 1089 I raised concerns in arguendo that some of the material sought to be relied upon was remote hearsay. In this regard, s 59 of the Evidence Act relevantly provides that: (1) Evidence of a previous representation made by a person is not admissible to prove the existence of a fact that it can reasonably be supposed that the person intended to assert by the representation. (2) Such a fact is in this Part referred to as an asserted fact. 1090 The statutory exceptions to the hearsay rule in s 59(1) do not apply to second-hand or remote hearsay: see s 62, Evidence Act. That notwithstanding, as the NSW Court of Appeal held in Perish v The Queen [2016] NSWCCA 89; (2016) 92 NSWLR 161 (Perish): 261. There has been a consistent line of authority that the words "not admissible" where they appear in the Act, mean "not admissible over objection". (Emphasis added.) 1091 This is also the conclusion reached by the Full Court of the Federal Court in Federal Commissioner of Taxation v SNF (Australia) Pty Ltd [2011] FCAFC 74; (2011) 193 FCR 149 at [25], as the NSW Court of Appeal observed at [264] in Perish. The NSW Court of Appeal concluded that it was not persuaded that these authorities were plainly wrong and indeed, that the better view was that they were correct (at [270]). In reaching that view, their Honours had regard in particular to the fact that the Evidence Act applies in an adversarial context and to the overriding obligation of the trial judge to ensure a fair trial according to law. With respect to the second of these factors, their Honours further explained that "[t]o the extent necessary, this obligation would extend to requiring the trial judge on his or her own motion to exclude inadmissible evidence, the effect of which would deny a fair trial …" (at [272]). 1092 As to the second concern to which I have referred, neither the MGN Audit Report nor the surveys were prepared for the purposes of this litigation and as such, did not comply with the expert evidence rules in the FCR. The relevant expert evidence rules are as follows: 23.11 Calling expert evidence at trial A party may call an expert to give expert evidence at a trial only if the party has: (a) delivered an expert report that complies with rule 23.13 to all other parties; and (b) otherwise complied with this Division. Note: Expert and expert report are defined in the Dictionary. 23.12 Provision of guidelines to an expert If a party intends to retain an expert to give an expert report or to give expert evidence, the party must first give the expert any practice note dealing with guidelines for expert witnesses in proceedings in the Court (the Practice Note). … 23.13 Contents of an expert report (1) An expert report must: (a) be signed by the expert who prepared the report; and (b) contain an acknowledgement at the beginning of the report that the expert has read, understood and complied with the Practice Note; and (c) contain particulars of the training, study or experience by which the expert has acquired specialised knowledge; and (d) identify the questions that the expert was asked to address; and (e) set out separately each of the factual findings or assumptions on which the expert's opinion is based; and (f) set out separately from the factual findings or assumptions each of the expert's opinions; and (g) set out the reasons for each of the expert's opinions; and (ga) contain an acknowledgement that the expert's opinions are based wholly or substantially on the specialised knowledge mentioned in paragraph (c); and (h) comply with the Practice Note. … 1093 However, the Court has power to dispense with compliance with the FCR. As Bromwich J explained in Australian Competition and Consumer Commission v Australian Institute of Professional Education (in liq) (No 2) [2018] FCA 1459 (AIPE (No 2)) with respect to the general powers of the Court in Division 1.3 of the FCR: 45. … The key rules allow the Court to make any order considered appropriate in the interests of justice, including dispensing with compliance with any of the Rules upon any condition considered appropriate, and extending any time for compliance fixed by the Rules or by an order of the Court. It is an essentially unfettered discretion, albeit to be exercised judicially. The Court is not precluded from independently having regard to the considerations of the kind that are listed in s 192(2) of the Evidence Act. While the Court is not required to have regard to those considerations, that section provides a useful guide to the exercise of the discretion in this case. 1094 The non-exhaustive list of considerations in s 192(2) of the Evidence Act to which the Court may have regard in giving leave include the extent to which the grant of leave may impact on the length of the hearing or be unfair to a party or witness, the importance of the evidence in question, and the nature of the proceeding.

13.5.2 Admissibility of the MGN audit and the ASQA audit 1095 In support of its submission that the MGN Audit Report was admissible, the ACCC relied upon the decision in AIPE (No 2). In that case, the ACCC also sought to rely upon an audit by ASQA, a forensic audit by McGrathNicol on behalf of the DET to address concerns about the validity of AIPE student enrolments and the entitlement to VET FEE-HELP payments, and a market survey of AIPE students conducted by ORIMA Research to obtain responses relevant to compliance with VET FEE-HELP requirements and enrolments. As in the present case, none of these audits or the survey were conducted for the purposes of the proceeding. Rather, the ACCC sought to rely upon them as a business record of the federal government agency for whom each audit or survey was conducted, being ASQA or the Department. Justice Bromwich ruled that the evidence was admissible as a business record. In particular, his Honour found the MGN audit report in that case "has the conventional appearance of an expert report prepared by any of the major forensic accounting firms and provides more than enough information to readily draw the inference that it is a business record of the Department who commissioned it" (AIPE (No 2) at [41]). However, his Honour held that the affidavit of Mr Dunnett (who was also the lead author of the MGN audit report in AIPE (No 2)) was necessary to establish the admissibility of the expert opinions ostensibly expressed in the MGN Audit Report. As Bromwich J held: 42. The real issue to which the Dunnett affidavit went was not the business record status of the McGrathNicol audit report, but, rather, the second requirement attaching to expert opinions within a business record, being that they need to be proven to have that expert quality: see Tyneside Property Management Pty Ltd v Hammersmith Management Pty Ltd [2011] NSWSC 395 at [4]; Eddie Michael Awad v Twin Creek Properties Pty Ltd [2011] NSWSC 922 at [3]; but cf C7 at [25]. That is not so readily done by way of inference, but nor is it conceptually impossible to do. Read holistically, the McGrathNicol audit report goes a substantial way towards indicating that it has been prepared by a person or persons appropriately qualified to furnish the conclusions reached. However, a conclusive view in that regard ultimately entailed an assumption based on the way in which the report was written, rather than only inferential reasoning. It might have been different if the report, or annexures to the report, had contained the information identifying and qualifying the author or lead author, but the McGrathNicol audit report did not contain this information. In those circumstances, such inferential reasoning, on the face of this particular report, did not go far enough to meet the requirements of s 79 of the Evidence Act. It followed that the Dunnett affidavit was indispensable in establishing the necessary expert quality that was required for the McGrathNicol audit report to be admissible. (Emphasis added.) 1096 Mr Dunnett's affidavit in the present case sought to remedy the same deficiencies as the equivalent affidavit in AIPE (No 2). Mr Dunnett explained at [16] of the Dunnett Audit Affidavit in the present case that he was not briefed with the Federal Court's Expert Evidence Practice Note when he prepared the MGN Audit Report but was familiar at that time with the requirements of that Practice Note as a result of prior experience preparing expert reports for other clients. Mr Dunnett also explained in his affidavit that he had read the Expert Evidence Practice Note (GPN-EXPT) for the purposes of preparing the Dunnett Audit Affidavit and explained that in preparing the report: (1) he made all inquiries that he believed were desirable and appropriate, within the confines of the allocated budget; (2) the opinions expressed in the report were his own impartial opinions and were based wholly or substantially on his specialised knowledge arising from his training, study and experience; (3) the findings in the report were supported by evidence gathered during the course of the audit; and (4) he had made various assumptions in preparing the report which were not identified in the report itself, but were identified by him in the Dunnett Audit Affidavit at [20], including that: 20.7 A number of our findings in the enrolment documentation testing in the 2016 audit are based on a review of a sample of students. This sample is a randomly selected statistically relevant sample, that we have assumed is representative of the population of students. 1097 Mr Dunnett elaborated upon the assumption at [20.7] of the Dunnett Audit Affidavit in his oral evidence and the Dunnett PTR/LLN Affidavit as follows. (1) A list of the 11,681 consumers named as enrolled with Phoenix, together with their student numbers and courses, were extracted from the HEIMS data into a Microsoft Excel spreadsheet. Using the random number generator tool in Microsoft Excel, each consumer in the list was allocated a random number and ordered from top to bottom to produce a random sample of 500 consumers.1185 (2) In auditing, it is often necessary to select a sample with a view to drawing conclusions about the whole population from the sample because to test all of the incidences would be too time consuming and expensive. In this regard, it is generally accepted auditing practice to select a sufficient sample size to give a 95% level of confidence with a 5% margin of error. Where a very high level of confidence is required, the level of confidence may be increased to 99% meaning that "you have a confidence that 99 times out of 100 that the results you get will fall within a certain margin of error".1186 (3) In order to reach the desired level of confidence, Mr Dunnett explained that: [W]hat we do is - and we do use a calculation tool that is available on the net as a - as a sample size selector tool. So we enter in the population size, the level of confidence which we desire, the margin for error that we desire and the tool spits out a number which is - which is the number that needs to be selected to represent that level of confidence. So if the case of 500 is - comes out, that means that we would need to select 500 of the 11,000-odd students to have a representative sample. … it is really just what we do is, we look up a sampling size selector on - on the internet and look for a tool that is producing the right results. I usually test them against a couple of the different tools to make sure that they're right. From running the tests a number of times I've usually got a reasonable idea of what the output is likely to spit out.1187 1098 Mr Dunnett then explained that, using this tool, it could be said with confidence that what was detected in a sample size of 500 consumers was representative of the whole cohort of enrolled consumers with an error rate of plus or minus 5%: … the 500 was originally selected. Whilst - whilst aiming to be a good sample size, it was more - originally we were asked to - to test 200 documents and then after the testing was done on the 200, just with discussing with - with our client it - the discussion was that that wouldn't necessarily represent a statistically relevant sample, so … we elected to increase the sample size to 500. 500 itself is not the perfect number that spits out through the calculator. It was - it was partly considered to be, at the time of the audit, a nice round number, to some degree. But … from going back, I can see that for - for that sort of basic level of confidence, or once - the minimum, I guess, acceptable standard to get a good level of confidence would be 95 per cent with a five per cent margin of error would have required 370 … selections. … … from a sample size of 500. If we identified there were 50 per cent error rate and a five per cent margin of error, we - we would have confidence that 99 times out of 100, that that - if we were to extrapolate for the full population that the error rate would remain plus or minus five per cent within 50 per cent. So we would have that 99 per cent confidence that the total errors would be between 45 per cent and 55 per cent.1188 1099 I accept that the Dunnett Audit Affidavit, together with Mr Dunnett's oral evidence, complies with the substantive requirements of the Expert Evidence Practice Note and provides a proper basis on which to admit the annexed MGN Audit Report under s 79 of the Evidence Act. As Bromwich J held in AIPE (No 2) at [50] with respect to an affidavit of Mr Dunnett to similar effect in that case, "[t]he Dunnett affidavit was facilitative in nature in relation to the expert opinion exception to the opinion rule, insofar as it applied to such an opinion within a business record." I also accept that the evidence established the assumption made by Mr Dunnett at [20.7] of the Dunnett Audit Affidavit. Furthermore, the evidence is potentially significant to the applicants' systems case and as in AIPE (No 2), the proceeding is of considerable importance to the applicants and the community as they involve "the payment of very large sums of public money that may or may not ultimately be shown to be unconscionable" (AIPE (No 2) at [50]). On balance therefore the interests of justice are best served by allowing the applicants to rely upon the Dunnett Audit Affidavit and the MGN Audit Report as expert evidence.

13.5.3 Admissibility of the Ernst & Young surveys and the ORIMA survey of statistically relevant consumers 1100 For the reasons set out below in Section [13.13.1], I accept that the Ernst & Young surveys are admissible. While I consider that the ORIMA survey is also admissible, standing alone it would be of limited assistance for reasons I explain below in Section [13.13.2]. However, the findings made in the survey align with the trends otherwise established by the evidence. As such, they are corroborated by the other evidence.

13.6 Analysis of a random sample of telephone verification calls as part of the enrolment process (the Voller Telephone Verification Affidavit) 1101 A total of 5,164 separate recordings of telephone verification calls were produced by the respondents to the applicants which, when duplicate recordings were removed, reduced to recordings of calls with 4,255 different consumers.1189 Subsequently, a further 386 folders of consumer recordings were located and provided by the respondents' solicitors as a result of which Mr Voller ascertained that, removing duplicates, voice recordings for a total of 4,641 consumers were provided by the respondents.1190 As these recordings were produced in answer to a notice to produce seeking all recordings meeting this description,1191 I infer that there were recordings for only 4,641 consumers (ACS at [388]). Furthermore, while Mr Brown's statement to Ms Holland that there were tape-recorded conversations with every student before enrolment was not true, I infer from that evidence that where telephone verification calls were in fact made to consumers, the practice was for those calls to be recorded. Added to this, the evidence of ex-employees, amother other evidence, established that very large numbers of students were enrolled without telephone verification, often at the direction of Mr Brown or Mr Kochhar: see eg Section [8.6.3] above. Accordingly, it can properly be inferred that the figure of 4,641 represents the total number of telephone verification calls made on behalf of Phoenix in relation to the enrolment of consumers in its Online Courses. 1102 Mr Voller generated a random selection of 500 of these recordings in the manner which he described in his affidavit affirmed 17 September 2019 (the Voller Telephone Verification Affidavit).1192 Mr Voller then selected the first 15 of these recordings from the list of 500 random recordings which he listened to and transcribed.1193 The recordings of these 15 calls were also in evidence.1194 Mr Voller coded the calls against the following 16 queries:1195 (1) the consumer's name; (2) the date of the call; (3) the length of the call; (4) whether the call was an ingoing or outgoing call; (5) whether the names of the courses in which the consumer was enrolling were mentioned in the course of the call; (6) where applicable, whether the work placement requirement for the online course or courses into which the consumer was enrolling was disclosed to the consumer; (7) whether the consumer's citizenship status was discussed; (8) whether the consumer's level of education was discussed; (9) whether the consumer's work history was discussed; (10) whether the consumer's access to the internet was discussed; (11) whether the consumer's level of computer literacy and ability to complete an online course was discussed; (12) whether the consumer's ability to speak and understand English was discussed; (13) whether the consumer was asked whether she or he had completed the PTR and LLN tests without assistance; (14) if the consumer was being enrolled in more than one online course, whether it was discussed how the consumer was planning to complete the courses simultaneously; (15) whether the consumer was asked if she or he understood the operation of the VET FEE-HELP scheme, and had it explained on the call; (16) whether the consumer was asked if she or he understood the total cost of enrolling in the online course or courses; and (17) whether the consumer was informed of the expected date of delivery of their laptop. 1103 The results of Mr Voller's coding are set out in a table appearing in Annexure SV-11 to the Voller Telephone Verification Affidavit, and show that many of these topics were not covered in any or only in some of the 15 telephone calls to which he listened. For example, only one of the 15 consumers was asked about their prior work history, none of the 15 consumers were asked whether they had Australian citizenship despite citizenship documents having been provided in only two of the 15 cases with the enrolment forms, only two were asked whether they had internet access and whether they had sufficient "computer knowledge", and none were asked about how they planned to complete the dual diplomas for which they had applied for enrolment. Mr Voller also sets out his observations about the 15 calls he listened to, including cases where the consumer appeared confused by the questions or where English did not appear to be the consumer's first language but no inquiries were made as to the relevant consumer's ability to communicate in spoken or written English at the diploma level.1196 There is, however, no evidence that the 15 calls constitute a statistically significant number. As such, I have treated this evidence in the same way as the evidence of the consumer witnesses, namely, as illustrative of the Phoenix Enrolment System as established by other evidence.

13.7.1 The enrolment forms and how they were analysed 1104 It will be recalled from the evidence of the ex-employees that, in practice, in many cases the enrolment forms were not marked before consumers were enrolled and no telephone verification took place. As I have earlier explained, the enrolment forms comprised:1197 (1) Online Course enrolment application forms; (2) Request for VET-FEE HELP assistance forms (or CAFs); (3) LLN test sheets; (4) PTR forms; (5) federal or state-issued identification and proof of citizenship or of permanent humanitarian residency status; (6) completed Agreement to Tuition Fees forms; and (7) after 1 April 2015, a computer loan agreement. 1105 The MGN audit included an analysis of the completeness of Phoenix's student enrolment forms, as well as their content.1198 These had been provided by the respondents, and later by their Administrators, to Mr Dunnett for the purposes of performing the MGN audit.1199 As the applicants explained in their closing submissions with respect to the approach adopted to analysing the enrolment forms (ACS at [358]-[360]): 358. In turn, the Forensic Technology Services team at Clayton Utz ("FTS") was provided by McGrathNicol with hard drives and USB sticks containing around 100,000 student enrolment documents, being the Enrolment Forms.1200 After a process of de-duplication of these documents, 40,433 unique documents were entered into a database called "Delium", and later these documents together with a further 10,187 unique documents were migrated into a database called "Relativity".1201 Once in the databases, the documents were coded firstly to identify individual students by name, and secondly, to create a student folder for each document containing all Enrolment Forms that related to them, and thirdly, to interrogate Enrolment Forms with specific queries1202 (for example, "does the student folder include a Request for a VET FEE-Help Loan", "Did the student complete the LLN" and whether there was variation on a student's signatures across different documents).1203 A spreadsheet was created which set out the results of the coding undertaking by FTS ("Coding Output Spreadsheet").1204 359. The Coding Output Spreadsheet was then analysed by a team supervised by Deepak Pillai, the Director of FTS.1205 As Mr Pillai explains, the Coding Output Spreadsheet, together with an extract of data from HEIMS, a list obtained from the Respondents called the "Rogue Agents List", and an extract of date from WiseNet were uploaded onto a computer program called the "Microsoft SQL Server".1206 360. Mr Pillai caused a number of preliminary checks to be done on the Coding Output Spreadsheet by cross-checking it against the HEIMS data on the Microsoft SQL Server, using student ID, student name and date of birth to match the data. As a result, he matched 11,688 students in the Coding Output Spreadsheet to the HEIMS dataset, and called this matched data the "Final Coding Output".1207 1106 I use the descriptors "Coding Output Spreadsheet" and "Final Coding Output" in these reasons in the sense explained in the passages quoted above from the ACS. I also note that the Rogue Agents List referred to at ACS [359] is the same list to which I have already referred in Section [10.12.2.3] above.1208

13.7.2 The PTR/LLN assessments 1107 As is apparent from the evidence of the ex-employees, the PTR component of the form required a consumer to explain their reasons for undertaking the course and what they hoped to gain from it, their previous work experience and qualifications, and their preferred learning methods. The LLN component of the form was designed to assess the ability of the student to learn, communicate, and complete basic analysis. As Ms Scomazzon explained: … a characteristic of a valid and reliable LLN assessment tool is that it actually measures what it's meant to measure, and that is, that the person has the skills needed for that particular context and that particular qualification to enrol.1209 1108 Self-evidently this assessment was designed to occur before a consumer was enrolled in a course and in any event, well before the census date had passed and the student became indebted to the Commonwealth for a VET FEE-HELP loan. 1109 There were three different versions of the PTR/LLN forms during the relevant period, namely:1210 (1) the CHC & HLT version of the forms, which Phoenix used from January 2015 to about the end of May 2015 with a small number of exceptions; (2) the BSB & SIR version of the forms, which Phoenix used over the same period as the CHC & HLT version; and (3) the ACSF Level 3 version of the forms, which Phoenix used from about early May 2015 until the end of the relevant period. 1110 Both the CHC & HLT version and the BSB & SIR version had the same questions in the PTR section, but different questions in the LLN section.1211 1111 As I have earlier explained, it was Phoenix's responsibility to mark the LLN and PTR tests in order to assess a consumer's suitability and eligibility for enrolment in the course or courses for which she or he had applied prior to enrolment. This was to have been undertaken by course trainers employed by CTI on Phoenix's behalf after the enrolment forms passed the checklist: see at [8.4.2] above.1212 However, the evidence of the ex-employees and documentary evidence establishes that there was a huge and ever-growing backlog of LLN and PTR tests which were assessed long after consumers had been enrolled and the census date had passed, were falsely marked as having been assessed and backdated, or were never assessed at all. The analysis of the enrolment forms by Mr Dunnett and Mr Voller is further evidence of the respondents' extensive failure to discharge this responsibility. 1112 Mr Dunnett prepared an independent expert report dated 22 July 2019 on the PTR forms and LLN assessments for the purposes of litigation based upon a random and representative sample of PTR/LLN forms (the Dunnett PTR/LLN report). Mr Dunnett estimated that as a result of information collected during the 2016 audit, he had access to enrolment forms for between 80% and 90% of the 11,681 consumers who were enrolled in one or more Phoenix Online Courses in 2015 or 2016.1213 He randomly selected 630 consumers enrolled in a course of study with Phoenix in 2015 or 2016. Specifically, he extracted the listing of 11,681 consumer names, student numbers and courses from the HEIMS data into a Microsoft Excel spreadsheet. He then used a Python script to select a random sample of 630 of the consumers in the spreadsheet. Python is a high-level programming language with built-in random number generators.1214 1113 Mr Dunnett selected 630 enrolled consumers because that number represented a high confidence level of 99% with a 5% margin of error, based on the population of 11,681 consumers enrolled with Phoenix who were recorded in the DET's HEIMS system in 2015 and 2016.1215 Of these, he located PTR/LLN forms for 519 enrolled consumers (82.4%), and, as 14 enrolled consumers in the sample had completed two such forms, he reviewed a total of 533 forms.1216 1114 Mr Dunnett's findings in relation to the 533 PTR/LLN forms can be summarised as follows:1217 Test Number of instances Instances as a percentage of the 533 samples Instances where the LLN assessment test grade was incorrectly marked or altered [when checked against the Phoenix answer guide and recording a total score inconsistent with the total of correct answers] 257 48.2% Instances where the student did not achieve Phoenix's required LLN assessment test score [according to the Phoenix answer guide] 175 32.8% Instances where an LLN was marked as a pass, but if correctly marked the student would have failed to meet Phoenix's LLN requirements 84 15.8% Students who were not assessed as requiring LLN assistance despite not meeting Phoenix's LLN requirements 113 21.2%

1115 Mr Dunnett concluded that: Based upon my audit testing and analysis, there is a high level of confidence that the following is prevalent in the population of 11,681 students a) LLN assessments were incorrectly marked resulting in students being assessed as meeting Phoenix's LLN requirements, when if correctly marked, the students would have been assessed as not meeting LLN's requirements.1218 1116 As the applicants submit, this is compelling evidence of the respondents' callous indifference as to whether consumers met eligibility requirements (ACS at [368]). 1117 Mr Dunnett also analysed whether the consumers' signatures on the PTR/LLN forms matched their signatures on their proof of identity documents. He explained that, as neither the audit testing team nor he were handwriting experts, they sought to identify differences only "where there appeared to be a clear and significant difference, based on our non-expert judgment" between: (1) the consumer's alleged signature on the PTR/LLN forms, on the one hand; and (2) the consumer's signature on the proof of identity documentation included in the enrolment forms, being a drivers licence, Medicare card, passport identification, or proof of age card, on the other hand.1219 1118 The documents necessary for this comparison existed in the case of 338 consumers among the 630 consumers included in the sample and Mr Dunnett found that there were material differences between the signatures on 100 documents in this subset of enrolment forms.1220 While Mr Dunnett acknowledged that some of these differences could be attributable to normal changes in a person's signature over time, "for some students, the difference between the proof of identity signature and the PTR and LLN signature is so significant that it appears questionable that they were signed by the same person."1221 The differences in the 20 examples of such cases included at Appendix E to the Dunnett PTR/LLN report are indeed stark. This evidence lends further support to the evidence of the ex-employees as to the apparent doctoring of student documentation by Brokers and Agents, as the applicants submit. 1119 Mr Voller (who it will be recalled was then an ACCC Senior Investigator) also analysed about 5,700 of the ACSF Level 3 version of the PTR/LLN forms, with the assistance of other ACCC officers under his direction.1222 He compared the answers in those forms with: (1) a set of model answers located in the Phoenix Trainer and Assessor Guide with respect to the ACSF Level 3 version of the PTR/LLN Form (the Phoenix Model Answers); and (2) the sample set of answers with respect to the ACSF Level 3 version of the PTR/LLN Form given to Mr Winwood-Smith in his undercover meeting with an Agent (the Sample Answers Document) described at [974] above.1223 1120 The answers recorded on a subset of the PTR/LLN forms comprised of those identified as containing similar answers to the Phoenix Model Answers and the Sample Answers Document, were transcribed in the individual entries for each consumer entered into the PTR/LLN Forms Analysis Spreadsheet. The date on which the consumer purportedly signed the form and the name of the Broker or Agent with whom she or he had engaged were also included in the entries for each of these consumers.1224 Mr Voller and his team found that of the 5,700 forms, 518 had very similar answers to the Phoenix Model Answers, whilst 275 had very similar answers to the Sample Answers.1225 An examination of the information recorded in the spreadsheet confirms the extent of the similarity of the answers. 1121 Mr Voller then reviewed the PTR/LLN Forms Analysis spreadsheet and coded it for answers that were "identical or substantially identical" (as defined at [39] of the Voller PTR/LLN Affidavit) to the Phoenix Model Answers or Sample Answers Documents.1226 The results of that exercise are set out in tables under [40] and [45] of his affidavit and show identical or substantially identical answers in respect of each question in large numbers of cases as follows: Table 1: Comparison of answers given to Phoenix PTR and LLN questions with the Sample Answers Document Question number Question Answer in the Sample Answers Document "Identical or substantially identical' answer in the PTR/LLN Form Analysis Spreadsheet Percentage of transcribed forms PTR 3 What are your career goals? To get the better job, experience and knowledge 44 16% PTR 4 What skills would you like to develop? Good skill about the knowledge and ideas 131 47.6% PTR 5 This question is only applicable, if you are enrolling in dual courses: If you have chosen into enrol into more than one course with us, what will be the benefits to you? To help me improve my knowledge 55 20% PTR 6 How do you like to learn or normally learn new things? I always want to learn new things 132 48% PTR 7 What do you hope to achieve from this training program? I hope to get the good knowledge and skill 46 16.7% LLN 2(a) Why do you think the following PPE items need to be worn: Safety vests To protect the head, legs and hands 160 58% LLN 2(b) Why do you think the following PPE items need to be worn: Eye protection The goggles help to protect the eyes 69 25% LLN 3 What do you think the site induction might include? All visitors report to the site office 169 61.5% LLN 4(a) Explain what the following terms mean: All personnel All the products must be wear worn by people 160 58.2% LLN 4(b) Explain what the following terms mean: No unauthorised access No access to the visitors 137 49.8%

(Emphasis and errors in the original.) Table 2: Comparison of answers given to Phoenix LLN questions with the Phoenix Model Answers Question number Question Answer in the Phoenix Model Answers "Identical or substantially identical' answer in the PTR/LLN Form Analysis Spreadsheet Percentage of transcribed forms LLN 2(a) Why do you think the following PPE items need to be worn: Safety vests To ensure that all individuals on site are clearly visible 272 52.5% LLN 2(b) Why do you think the following PPE items need to be worn: Eye protection To ensure that all individuals on site have protected their eyes from debris and other airborne hazards 207 40.0% LLN 3 What do you think the site induction might include? Answers may include information on site hazards, PPE, location of first aid, location of facilities, fire evacuation procedures, who to report issues to, etc 99 19.1% LLN 4(a) Explain what the following terms mean: All personnel All individuals entering the site regardless of status 444 85.7% LLN 4(b) Explain what the following terms mean: No unauthorised access Entry is only permitted to individuals who have Been appropriately authorised to enter the site 173 33.4%

1122 Furthermore, 80 of the PTR/LLN forms contained answers that were identical to one another, being the answers set out in table 3 below. All of the students whose PTR answers followed the pattern in table 3 for whom a broker was identifiable were signed up by either Eduskills or Qualify Australia.1227 Table 3: Comparison of answers given to Phoenix PTR questions with the Phoenix Model Answers Question Number Question Answer 3 What are your career goals? Want to become volunteer 4 What skills would you like to develop? I hope to gain knowledge and skillset from this course. Moreover this course will help me to deal with relative problems more easily 5 This question is only applicable, if you are enrolling in dual courses: If you have chosen into enrol into more than one course with us, what will be the benefits to you? This course will help me to reach my career goals. Moreover this course will teach me a lot and help me to grow personally 6 How do you like to learn or normally learn new things? I would like to make notes, mindmaps, revision videos, make a factlists, watch youtube clips to learn new things 7 What do you hope to achieve from this training program? Skill knowledge, certification and better opportunity to grow in carrierside

(Emphasis and errors in the original.) 1123 As the applicants submit, the volume of forms exhibiting such striking similarities in, or identical, answers is indicative of the widespread coaching of consumers by Agents and Brokers in how to complete the forms or of the Agents and Brokers having completed the forms in whole or in part instead of the consumers. This practice is illustrated by, for example, the evidence of Consumers A and D who were simply directed where to sign the enrolment forms by the Agent concerned with the Agent presumably completing the answers in due course, while Consumers B and C were told the answers by the Agent to questions in their enrolment forms when they did not know the answers. As a further example, it will be recalled that Mr Winwood-Smith, the Consumer Protection Officer who masqueraded as a prospective student, was given sample answers to copy in order to complete the LLN and PTR tests by two Agents supervised by Mr Sachdeva from GG Sales.1228 The extent of such practices by Agents engaged by GG Sales is illustrated by the fact that of the 275 PTR/LLN forms which were similar or very similar to the Sample Answers Document, GG Sales was the Broker identified in 89 forms, and its later iteration, Auz Education, was the Broker identified in 144 forms.1229

13.7.3 The results of analysing the enrolment forms 1124 The data analysis process undertaken by Mr Pillai described earlier at [1105] above included only the 11,688 matched students described in that paragraph (the Final Coding Output). The matched students were then interrogated by reference to 13 questions, identified by Mr Pillai as categories A to M.1230 Mr Pillai explains the SQL scripts he wrote to interrogate the Final Coding Output to answer the 13 questions.1231 The results of Mr Pillai's analysis based on the data available to him of consumers recorded in HEIMS are set out in Part D (pp. 14-15) to his affidavit as follows: Category No of Students A Students signed up by an agent identified by Phoenix as bring [sic] a "rogue" agent1232 1,024 B Students who had not completed a request for VET FEE-HELP form (also known as a Commonwealth Assistance Form) but were still present in HEIMS. 1,174 C Students whose withdrawal forms contains notations from Phoenix staff suggesting students were not entitled to VET FEE-HELP but were still present in HEIMS 14 D Student who withdrew prior to the census date for a unit of study but Phoenix claimed VET FEE-HELP for subsequent units of study 474 E Students whose withdrawal forms indicate they were to be withdrawn without penalty but are still present in HEIMS. 361 F Student whose enrolment documentation indicates they have not completed Year 12, or whether they had completed Year 12 was indeterminable. 6,325 G Students for whom there are enrolment documents, but who have not completed a Language, Literacy and Numeracy test 31 H Students who withdrew within 6 months of when an unsolicited consumer agreement was made 1,149 I Student listed in HEIMS for whom the Second Applicant was not able to identify any enrolment documentation from the sourced documentation 1,849 J Students who appear in the HEIMS database as enrolled in the Diploma of Management, but whose enrolment documentation indicates that they have not completed year 12 1,240 K Students whose withdrawal forms indicated they were to be withdrawn with penalty with notations from Phoenix staff suggesting the student should not have been enrolled 255 L Students who appear in the HEIMS database as enrolled in the Diploma of Business (BSB 50215), but whose enrolment documentation indicates that they have not completed year 12 2,562 M Students who appear in the HEIMS database as enrolled in the Diploma of Leadership and Marketing, but whose enrolment documentation indicates that they have not completed year 12 2,772

1125 While I consider the significance of these findings later in these reasons, I note the following points: (1) with respect to category A, the evidence of Mr Pillai is consistent, for example, with the evidence of Ms Holland from NTCA as to the inadequacy of Phoenix's responses to "rogue agents" (see eg at [707] above); (2) with respect to categories B, C, D, E and I, it is apparent that Phoenix inappropriately claimed VET FEE-HELP payments with respect to large numbers of consumers; and (3) with respect to Mr Pillai's categories F, J, L and M, it is apparent that very large numbers of consumers were enrolled in Online Courses despite not having satisfied Phoenix's eligibility requirements for those courses.

13.8 The enrolment of consumers in multiple courses: data analysis by Ms Jones and Mr Koochew 1126 The observations of ex-employees as to the systematic enrolment of consumers in multiple courses was also corroborated by the analysis of HEIMS data by Ms Jones1233 and Mr Koochew. 1127 First, Ms Jones analysed the total number of consumers enrolled in the Phoenix's Online Courses with census dates between 1 January and 31 October 2015 in order to identify the number of consumers enrolled in multiple courses over that period.1234 The results of her analysis were that there were 10,309 unique consumers enrolled in the courses over this period with three consumers enrolled in four courses, three consumers enrolled in three courses, 8,803 consumers enrolled in two courses, and 1,500 consumers enrolled in one course. As she also observed, each of these courses had an EFTSL of one (1.0). 1128 Similarly, based on data extracted from the HEIMS and HITS databases for the period from 13 January 2015 to 22 March 2016, Mr Koochew found that: (1) from a total 11,678 consumers enrolled with Phoenix, 10,013 (85.8%) were enrolled in two courses, three consumers were enrolled in three courses and four consumers were enrolled in four courses; and (2) Phoenix's average of 1.86 enrolments per consumer was the highest of all of the 264 VET providers recorded in HEIMS and HITS for the period from 13 January 2015 to 22 March 2016.1235 1129 This evidence also accords with the MGN Audit Report which relevantly found that: (1) a total of 11,681 consumers enrolled in courses with Phoenix in 2015 and 2016 were identified from HEIMS data as at 7 July 2016 (bearing in mind that all of these appear to have commenced their courses in 2015, as Phoenix did not enrol new consumers in 2016);1236 (2) the overall level of matching between consumers in HEIMS and FinPa respectively showed that, of the 11,681 consumers enrolled in 21,719 courses in HEIMS, 11,393 consumers were matched to FinPa; and (3) these 11,393 consumers were enrolled in 21,413 courses because most consumers were enrolled in two VET FEE-HELP courses concurrently.1237 1130 (In this regard, I note that Mr Koochew speaks of 11,678 consumers while Mr Ulpen speaks of 11,393 consumers. This apparent anomaly arises because Mr Koochew considered only the HEIMS data, whereas Mr Ulpen matched the HEIMS data with the FinPa and Wise.NET data resulting in a small reduction in the number of consumers.)

13.9 The absence of consumer activity in FinPa 1131 A striking feature of this case is the absence of consumer engagement on a widespread basis and across a large consumer cohort, as the applicants submit.1238 I have earlier explained that FinPa was Phoenix's online learning management system being the platform by which Phoenix delivered its Online Courses. Significantly, as I have earlier mentioned, FinPa recorded the totality of each consumer's engagement with the Phoenix Online Courses in which she or he was enrolled, however minimal. As such, an analysis of student log-ins to FinPa should provide a good indication of the level of consumer participation in the Online Courses in which they were enrolled subject to an important caveat. That caveat is that the extent of student engagement recorded in FinPa was materially inflated because false records of student log-ins were created pursuant to the Student Log-on Project and as a result of other steps taken by the respondents to hide or artificially inflate the low level of student engagement: see eg Sections [10.11.5], [10.13.4.2], [10.14.5], [10.18.4], and [10.20.2] above. 1132 Mr Vickers (a Departmental data analyst)1239 explained that he had extracted data from tables in FinPa data which captured, among other things, historical records of student activity including the date and time of this activity (the Activity Data). He then reviewed the Activity Data for 11,391 Phoenix consumers, being the number of consumers matched between FinPa and HEIMS data (the matched consumers).1240 He found that more than half of the matched students had never logged in to FinPa at all, indicating that they had not engaged in the Online Courses. Mr Vickers further found that 23% had logged in only on one particular day, from which I infer that there was no real engagement by these consumers with the Online Courses in which they were enrolled. His log-in findings were summarised in the following table:1241 Number of days of distinct activity Matched Students Percentage (x/11,391) 0 6594 57.9% 1 day 2621 23% 2 days 600 5.3% 3 days 319 2.8% 4 days 200 1.8% 5 days 151 1.3% 6 or more days 906 8.0%

1133 The FinPa analysis undertaken by MGN and Mr Ulpen supports Mr Vickers' findings as to the extraordinarily low level of student engagement with the Phoenix Online Courses. Specifically, in the MGN Audit Report, Mr Dunnett found that: (1) 57.57% of consumers in the Phoenix Online Courses who were matched to the HEIMS and FinPa databases had no student activity; (2) the VET FEE-HELP debt associated with the consumers in respect of whom there was no evidence of activity in FinPa was $205,756,172; (3) while the 4,834 (41%) of consumers who had activity recorded in FinPa were enrolled in 118,680 units of study, 114,465 of these units of study had no evidence of activity; and (4) overall the level of VET FEE-HELP debt in HEIMS that could be linked to a consumer with evidence of activity at the unit of study level was $6,690,163 out of the total $360,231,301 debt in HEIMS.1242 1134 Although Mr Ulpen found that 78.5% of Phoenix consumers had no student activity (as I have earlier explained), this was because he categorised 2,385 consumers who had no activity other than the population of the "Last logon date" field as having no evidence of activity.1243 As the applicants submit,1244 if these consumers are categorised instead as having engaged in some activity, Mr Ulpen's analysis results in the same figures as those calculated by Mr Dunnett. As the applicants submit, the slight difference in consumer totals is to be explained by minor movement in the HEIMS data (which has marginally moved over the years), given that Mr Vickers accessed the HEIMS data list more recently than Mr Ulpen and Mr Dunnett.

13.10 The Unusual Pattern Data corroborating evidence of fraudulent attempts to mask the extent of the lack of consumer engagement 1135 Mr Vickers also observed the particular activity or activities undertaken by a consumer who logged in from the FinPa data, which he described as an "interaction". FinPa recorded the date and time for each interaction. Examples of interactions recorded in FinPa included whether a user had accessed a user agreement or an item in a course or unit while logged in to FinPa.1245 Mr Vickers isolated the Activity Data from which he extracted data following a particular pattern described by him as follows: 14.1 where the data records the user as only ever logged into [sic] FinPa on one day; 14.2 on that one day, the user account had 3 or more Interactions; and 14.3 all Interactions under the account occurred on that one day and within a 3 minute period (in this regard, [Mr Vickers] hypothesised that it would be most unusual for a genuine user (particularly a student) to engage in 3 or more Interactions within a 3 minute period and not engage again outside of this period), (collectively the Unusual Pattern Data).1246 1136 Mr Vickers found that the interactions of 1,783 consumers fell within the Unusual Pattern Data. This in turn correlated with 68% of the 2,621 consumers shown in the table above who had logged in on only one day.1247 Mr Vickers referred, by way of illustration, to student ID […] who engaged in 13 interactions on the same day, spending a total of 32 seconds between first logging in and their last interaction recorded on FinPa (student identifier number omitted).1248 Despite this, Phoenix claimed $36,000 in VET FEE-HELP payments for that consumer.1249 1137 I accept the applicants' submission (at ACS at [380]) that the Unusual Pattern Data is evidence that a person other than the consumer whose account was accessed, logged in to FinPa in order to create the impression that that consumer had engaged with Phoenix's learning management system whereas in fact there was no such engagement. This inference accords with the internal correspondence regarding the Student Log-on Project in April and May 2015 which I have already discussed: see Section [10.11.5] above. It is further corroborated by the following evidence. (1) By a series of emails sent between 16 April to 29 May 2015 and 7 August to 15 September 2015, FinPa provided the respondents with details of consumers' FinPa usernames and passwords (the FinPa Address List).1250 While I do not suggest that FinPa did so knowingly, it thereby equipped the respondents with the information they required in order to enable employees to log in to consumer accounts masquerading as the consumers concerned. (2) Mr Damian O'Sullivan, the Chief Technology Officer at FinPa, sent an email Mr Kochhar on 14 May 2015 advising of his concerns that 301 user accounts had logged in with the same IP address and attaching an Excel spreadsheet of the 301 user accounts in question.1251 It can reasonably be inferred from the fact that the same IP address was used with respect to these consumer log-ins that all of the log-ins emanated from the same computer or device, as the applicants submit.1252 1138 In turn, Mr Vickers matched the consumers in the FinPa Address List to the consumers in the Unusual Pattern Data and found that 210 consumers were common to both and that Phoenix had claimed VET FEE-HELP payments for 152 of these 210 consumers.1253 1139 The MGN Audit Report further corroborates the other evidence as to the implementation of a project to falsely log consumers in to FinPa.1254 First, the analysis undertaken by McGrathNicol revealed a significant spike in the dates on which a segment of consumers all last logged on to FinPa in August 2015. As Mr Dunnett explained, "the anomaly for us and the unusual observation - was that on 25 August 2015 there was 296 log-ins on - on a single day, and before that there was also another spike on August - around August 11. … those two days were - were far higher than the - the number of last log-in dates for any particular day."1255 Secondly, the MGN Audit Report found that an analysis of the last IP addresses recorded in FinPa from which users logged in revealed that one IP address which was geo-located to the Melbourne CBD (where Phoenix was located) accounted for 90 different consumers with contact addresses across Australia.1256 An IP address normally indicates the physical location of the computer and is as unique as a fingerprint.1257 As such, it can be inferred that someone was logging in to FinPa from a computer in Melbourne in order to create a false record of activity by consumers located all around the country.

13.11 The lack of successful course and unit completion: data analysis by Mr Ulpen, Ms Jones and Mr Koochew 1140 The data analysis also establishes that the number of consumers who successfully completed the Online Courses was extremely low. 1141 Mr Ulpen made the following findings in his report based on his review of the data sourced from the Departmental and Phoenix databases. (1) First, through matching the HEIMS, Wise.Net and FinPa student and course data, Mr Ulpen found that 11,393 consumers were enrolled in 21,413 Online Courses.1258 (2) Secondly, of the 21,413 Online Courses in which VET FEE-HELP consumers were enrolled with Phoenix, only 9 consumers completed the courses, with the majority of course enrolments in Wise.Net having either a status of "Current" or "Cancelled - Penalty".1259 As the applicants submit,1260 this finding is consistent with an internal Phoenix spreadsheet which identifies only 9 consumers who completed its Online Courses as at 24 March 2016. The Phoenix spreadsheet also shows a very considerable number of consumers in respect of whom the entry is "Current - No activity" and that the vast bulk of consumers were enrolled in multiple courses.1261 (3) Thirdly, 8,944 of 11,393 consumers (that is, 78.5%) showed no evidence of any activity in FinPa, while in the case of 16,956 courses out of 21,413 courses (that is, 79%) there was no evidence of activity in FinPa1262 (with activity being measured using FinPa metrics such as the number of log-ins; the number of content pages completed; the number of assessment pages completed; the number of courses completed; the number of units completed, and the number of marking notifications).1263 In this regard, Mr Ulpen adopted a conservative approach to measuring evidence of activity and therefore counted even a single act of activity, such as simply logging in to FinPa, as evidence of activity.1264 (4) Fourthly, when examining evidence of activity recorded at the unit of study level (ie unit completion, content completion, marking notifications, and assessment completions as opposed to merely logging in), there were 52,547 units enrolled in by 2,449 consumers but FinPa recorded evidence of activity in only 4,215 of those units. Mr Ulpen concluded that "[a]ltogether, only 1.77% of all units of study the 11,393 students were enrolled in had any evidence of activity in FinPa".1265 (I note that the data reported by Mr Ulpen differs slightly from that reported by Mr Pillai because Mr Ulpen matched the data to Wise.Net data, while Mr Pillai did not.) 1142 Similarly, the MGN Audit Report found extraordinarily low completion rates, namely, that less than 0.5% of Phoenix consumers had completed a course.1266 1143 As the applicants submit, the analysis of the HEIMS data by Ms Jones and Mr Koochew is also telling. They analysed completion rates at the unit level, in contrast to Mr Ulpen who analysed completion rates at the course level (bearing in mind that each course is comprised of a number of units). 1144 Ms Jones analysed HEIMS data with respect to unit completion rates for the Phoenix Online Courses with census dates between 1 January 2015 and 31 October 2015, being data which were verified and published, and found that not a single unit of study was completed by a student in any of the Online Courses.1267 Ms Jones compared this to verified, published data extracted from HEIMS of VET providers in Victoria and New South Wales offering some or all of the same courses in the following table:1268 Course code Course name Unit of study completion rate at Phoenix (%) Average unit of study completion rate at other VET providers (%) BSB50207 Diploma of Business 0 22.6% BSB50215 Diploma of Business 0 28.7% CHC50612 Diploma of Community Services Work 0 61.6% CHC50113 Diploma of Early Childhood Education and Care 0 79.8% BSB51915 Diploma of Leadership and Management 0 17.0% BSB51107 Diploma of Management 0 19.7%

1145 As is evident from this table, Phoenix was an "outlier" when compared with unit of study completion rates for consumers enrolled in the same courses at other VET providers in NSW and Victoria over the same period of time, as the applicants submit.1269 1146 Also based upon HEIMS data, Mr Koochew found that of the 11,417 consumers enrolled in Online Courses with census dates between 13 January 2015 and 22 March 2016, 11,291 consumers (ie 99%) did not complete any unit of study in a course. The remaining 126 consumers are recorded as having completed at least one unit of study.1270 Mr Koochew's finding that only 126 consumers completed at least one unit of study is consistent with Mr Ulpen's finding that only 9 consumers completed courses. 1147 As the applicants submit, the slight variations in the course completion rates identified by Ms Jones and Mr Koochew can be explained as follows. (1) Ms Jones' analysis relied on "verified and published HEIMS data" rather than "current HEIMS data", being "current' as at the date on which the data were extracted.1271 Verified data are used for external reporting and are appropriate to use in comparing completion rates among VET providers at a particular point in time. More specifically, 10 June 2016 was the date of verification for Phoenix data for 2015 and 14 March 2017 was the date of verification for Phoenix data in 2016. Any changes to the 2015 or 2016 data subsequent to those verification dates would not be reflected in the verified data but would be reflected in the current data.1272 (2) The analysis by Ms Jones and Mr Koochew was based on the HEIMS data, the accuracy of which is dependent on the accuracy of the material submitted by the VET provider, as earlier explained.1273 1148 The findings by Ms Jones and Mr Koochew also accord with the finding in the MGN Audit Report of low levels of student activity in FinPa.

13.12 The analysis of FinPa withdrawal notes and cancellation notes 1149 The applicants also rely upon evidence drawn from Phoenix's learning management system, FinPa, as to how and when the respondents responded to consumers' requests for cancellations and withdrawals. 1150 This evidence drew first upon an Excel spreadsheet recording communications extracted from FinPa about consumers' requests for withdrawal from Phoenix's Online Courses (the FinPa Withdrawal Spreadsheet) prepared by Mr Vickers.1274 The applicants conveniently summarise Mr Vickers' evidence as to the creation of the FinPa Withdrawal Spreadsheet as follows: Mr Vickers also gives evidence that FinPa data included a table called "useradminnote" which appeared to record communications between Phoenix representatives and students. He filtered the data using the word "withdraw", which the Court should infer contained entries by Phoenix representatives who discussed course withdrawal with students.1275 Mr Vickers saved these withdrawal notes into a separate excel spreadsheet, which recorded in respect of each note the student ID, the date of the note and the name of the representative who apparently took the note, and then removed what appeared to be bulk messages.1276 He then matched the students to HEIMS data, removed any students for whom there was no census date recorded in HEIMS after the last date of the withdrawal notes (thus excluding students for whom Phoenix has not claimed VET FEE-HELP payments post the withdrawal notes) and created the "FinPa Withdrawal Spreadsheet".1277 This excel spreadsheet is contained in Exhibit BV-5 to Mr Vicker's [sic] affidavit and includes the course codes, the number of units of study with census dates after the last date of the withdrawal notes, and the amount of VET FEE-HELP relevant to these units. The spreadsheet also contains a cell setting out the notation made by the Phoenix representative following the communication with the student.1278 1151 I adopt that summary. I also accept, as the applicants submit, that it is appropriate to infer that: (1) the notations included in FinPa were made by Phoenix or CTI staff and/or trainers; and (2) the notations which use the word "withdraw" refer to communications between Phoenix or CTI representatives and consumers about the consumer withdrawing from a course or courses in which she or he was enrolled with Phoenix. 1152 Mr Vickers performed a similar exercise so as to create the FinPa Cancel Spreadsheet, being the Excel spreadsheet contained in Exhibit BV-6.1279 In this case, the extracts from FinPa set out in the spreadsheet include notations against 155 consumer names relating to cancellations which, it can reasonably be inferred, were made by Phoenix or CTI staff or trainers following communication with the consumer about cancelling the course (the Cancel Notes). The spreadsheet also contains HEIMS data including the course code and title relevant to each consumer, the number of units of study with census dates after the last date of the Cancel Notes, the first and last census dates for these units, and the VET FEE-HELP amount relevant to these units of study. 1153 As I have earlier mentioned, the FinPa Withdrawal Spreadsheet and the FinPa Cancel Spreadsheet were analysed by officers of the VET FEE-HELP Compliance Team (the reviewers) under the direction of Ms Zylstra. Ms Zylstra instructed the reviewers to ensure that a second person reviewed the first person's assessment, and that the first and second reviewers consulted with each other in order to ensure consistency in categorising the withdrawal notes.1280 1154 The results of this analysis with respect to the 673 consumers set out in the FinPa Withdrawal Spreadsheet are summarised in the table below:1281 Category Description of Category Number of Students A Students with request for withdrawal and Phoenix claims VFH for units of study with census dates post the date of the Withdrawal Notes 381 B Students indicating withdrawal but request not clear and Phoenix claims VFH for units of study with census dates post the date of the Withdrawal Notes 117 C Students with barriers to study 79 D Students were unaware of enrolment 29 E Students misled or induced by agent 51 F Students previously withdrew from course 61 G Students not received laptop or laptop did not work 43

1155 I note that first, I omitted the last column from this table which included the percentage of consumers in each category out of the 673 consumers relating to withdrawals because that percentage calculation was ultimately not helpful. This is because, as Ms Sharp SC for the applicants explained, the real comparator is the total consumer cohort in HEIMS cross-checked with FinPa.1282 Secondly, I note that categories B, C, D, E, and G do not purport to identify all consumers within the total consumer cohort who had, for example, barriers to study, but a subset only of the 673 consumers in respect of whom notations were made in FinPa in connection with withdrawals. Thirdly, the the FinPa Withdrawal Spreadsheet shows that Phoenix nonetheless claimed VET FEE-HELP payments with respect to all of these 673 consumers. 1156 Categories B to G were helpfully explained and illustrated by Ms Zylstra as follows: 7.2 Category B - students for whom there is an indication that withdrawal from a course was being contemplated but the request for the withdrawal is less clear [than in the case of Category A], or where withdrawal is recommended by a Phoenix trainer, prior to the census date for a unit of study but in respect of whom Phoenix claimed VET FEE-HELP for that unit of study and/or subsequent units of study. A student was not included in Category B if the indication regarding withdrawal clearly only related to one course and Phoenix claimed VET FEE-HELP payments for subsequent units of study that were in another course. Examples of students in Category B include the following Withdrawal Notes: (i) for student with ID […], the notes state "Tried calling student on number […] she said she can't speak English then hung up. Should be withdrawn. Sent text to student. 27/11"; (ii) for student with ID […] the notes for 22/09/15 state "25/08/2015 22/09/2015 two calls no answer withdraw student" and for 25/09/15 state "NO ANSWER OR VM, EMAIL INVALID, STUDENT UNCONTACTABLE, IF STUDENT CALLS UP ASSIST AND ADVISE PEN APPLIES IF WITHDRAWS"; and (iii) for student with ID […] the notes state "Student contacted to discuss course progress in Dip of Business and Dip of ECEC. Student is considering withdrawing from her courses due to other commitments. She won't have the time to focus on her studies. I have advised student that she'll be withdrawn with penalty - $18,000. She has asked for time to think about withdrawing and will call back to confirm". 7.3 Category C - students who indicated they had barriers to study. Students in this category include students who may have not had the skills or the facilities to undertake the study, for example, due to lack of education, no access to computer or internet, intellectual disability, [being] elderly or [being] incarcerated. This category does not include students who became ill subsequent to their enrolment in the course or courses. An example of a student in category C is student ID […] where the notes state "Students carer [N] has called in after she had reviewed and checked his phone and emails, seeing that he was receiving communication from us. He gave his permission for myself to speak to her. She had informed me that he has an intellectual disability, learning and mental barriers. She adamantly believes that her patient was grossly misled by the agents signing him up, and that he has not worked a day in his life and would not be able to pay for his courses, or comprehend monetary processes. He will be withdrawn WOP pending a medical certificate being sent to us." 7.4 Category D - students who were unaware of their enrolment. An example is student ID […] where the notes state "Called student to offer support with studies. She said that she was never enrolled in any courses as she just got out of jail. Student didn't have time to talk at the moment. I will call back later today to complete withdrawal process." 7.5 Category E - students who indicated they were misled by an agent or offered an inducement. An example is student ID […] where the notes state "Student is suffering from a brain injury and explained that the agents who signed him up took adv of him. An email has been sent to admin to rectify withdrawal of student. See below Hi there. Could you please withdraw the following student from the enrolled. He explained that he has a brain injury and that the agents took adv of him. Can someone please call him to discuss". 7.6 Category F - students who had previously tried to withdraw from the course. An example is student ID […] where the notes record an email from the student which state "i pulled myself out of the course about a week after i signed up because i found out i was pregnant and can no longer do it and im still receiving emails about the course can you make sure i am canceled out please!" 7.7 Category G - students who had not received their laptop/learning device from Phoenix or the laptop/learning device received from Phoenix did not work. An example is student ID […] where the notes state "Student has called in to enquire about her course and to withdraw as she says she hadnt received login details to begin her studies, or her laptop. I explained to her that the VET FEE HELP debt will apply as it is past her October/2015 census date, and explained that to her that she would incur a penalty. She wasnt happy about that outcome, but was adamant she wanted to withdraw. She will be withdrawn WP". (Student identifier numbers and contact details omitted; errors in the original.) 1157 The results of the analysis with respect to the 155 consumers set out in the FinPa Cancel Spreadsheet are also summarised in the table below:1283 Category Description of Category Number of Students A Students with request for cancel and Phoenix claims VFH for units of study with census dates post the date of the Cancel Notes 75 B Notes indicate cancel but request not clear and Phoenix claims VFH for units of study with census dates post the date of the Cancel Notes 26 C Students with barriers to study 11 D Students were unaware of enrolment 4 E Students misled or induced by agent 16 F Students previously withdrew from course 21 G Students not received laptop or laptop did not work 15

1158 My observations at [1155] above apply equally to this table. In particular, I have omitted the last column containing percentages from this table for the same reasons that I omitted the last column in the table summarising the analysis of the FinPa Withdrawal Spreadsheet. Furthermore, Phoenix also claimed VET FEE-HELP payments with respect to all of these consumers.

13.13.1 Ernst & Young telephone surveys of Phoenix consumers 1159 Mr Daniel Rudd, Director at PricewaterhouseCoopers, gave evidence regarding two reports prepared by his former employer Ernst & Young of telephone surveys of consumers enrolled in Phoenix Online Courses, namely: (1) a report to the DET dated 24 December 2015 following a telephone survey of a random sample of 500 consumers about enrolment and training with Phoenix (the first E&Y telephone survey report);1284 and (2) a report dated 25 January 2016 on a survey of the same 500 consumers regarding compliance with elements of the VET FEE-HELP reforms (the second E&Y telephone survey report).1285 1160 At the time that these reports were produced, Mr Rudd was employed by Ernst & Young in Melbourne as a Director in the Risk team. He holds Bachelor degrees in Business (Accounting) and Computing (Information Systems) from Monash University, and is a Chartered Accountant, Chartered Accountants Australia and New Zealand. He also holds a Certificate IV Training and Assessment from the RMIT University. His area of expertise is auditing. 1161 While Mr Rudd did not prepare the surveys for the purposes of litigation and was not provided at the time of designing the surveys and preparing the reports with the Federal Court Survey Evidence Practice Note (GPN-SURV) (the Survey Practice Note), his further affidavit affirmed on 15 November 2019 establishes that nonetheless he complied with the Survey Practice Note in terms of his substantive approach in designing the surveys. The sampling methodology adopted was explained in detail in the first E&Y telephone survey report. It follows that the surveys are admissible. 1162 With respect to the first E&Y telephone survey report, the 500 interviewees comprised those who had completed the survey out of the 4,841 consumers whom the interviewers attempted to contact.1286 In this regard, the difficulties in contacting consumers enrolled in Phoenix's Online Courses included no answer or reply in the case of attempts to contact 2,493 of the consumers, an answering machine only in the case of 1,337, a refusal by 213 consumers to participate, language difficulties in 39 cases, and the wrong number recorded in the case of 37 consumers.1287 As Ms Sharp SC submitted on behalf of the applicants, the scale of difficulties in contacting Phoenix's enrolled consumers suggested that "something has gone terribly wrong with telephone verification".1288 1163 The survey was undertaken by a team experienced in conducting telephone-based market research.1289 I also accept that the results were statistically valid. Specifically, given a consumer cohort enrolled in Phoenix's Online Courses since 1 July 2015 of 9,211 consumers, and assuming a confidence level of 95% and a margin of error of 5% in the results, the required sample size calculated was 369 individuals.1290 The total number of consumers surveyed was in fact greater than this, being 500, thereby further reducing the margin of error and enhancing the confidence level in the responses. 1164 In summary, the first E&Y telephone survey report found that: (1) 127 interviewees stated they were not currently enrolled with Phoenix and had never been enrolled with Phoenix; (2) 97 interviewees said they were currently enrolled in training but could not remember the name of their training provider; (3) 255 interviewees stated that they were, or had been, enrolled with Phoenix; and (4) 168 of the 255 interviewees referred to at (3) above stated that Phoenix did not inform them about their enrolment and VET FEE-HELP obligations, and reported that one or more of the following applied to them: (a) they did not sign the VET FEE-HELP assistance form or did not recall having done so (108 individuals); (b) while they recalled signing the VET FEE-HELP assistance form, they did not understand that they were receiving a loan from the Commonwealth Government (43 individuals) or that they would be required to repay the loan (25 individuals); or (c) they were not notified of the course fees and charges (100 individuals).1291 1165 In this regard it will be recalled that one of eligibility requirements for the VET FEE-HELP loan assistance is that the student personally complete and sign the Commonwealth Assistance Form (CAF) in relation to the course of study: see Section [6.2.6], and the DET Newsletter in December 2014 at [507]-[508] above. 1166 On 25 January 2016, Ernst & Young provided the second E&Y telephone survey report on a further survey of the same 500 consumers.1292 This report related to Phoenix's compliance with the VET FEE-HELP reforms and, in particular, the banning of inducements, the requirement for providers to give clear and accurate information about VFH fees, and the removal of barriers to withdrawals. A summary of the findings highlighted the following issues: (1) 351 of the 500 interviewees stated that they were provided with something of value, either as a loan or to keep, as an incentive for enrolling or for signing up friends, including a laptop in the case of 339 interviewees, an iPad in the case of seven interviewees, money in the case of six interviewees, and/or another inducement in the case of 20 individuals; (2) the interviewers followed up a subset of 123 individuals in order to understand whether they believed that the item provided to them was a loan item for use while they were enrolled, or whether the item was theirs to keep with the result that: (a) 49 individuals stated that the item provided for enrolling was theirs to keep; (b) 22 did not know whether the item was a loan or theirs to keep although three recalled signing a loan agreement form; and (c) 52 stated that the item was provided as a loan to use while they were enrolled, with only 23 recalling having signed a loan agreement form; and (3) 330 of the 500 interviewees who said they were currently enrolled with Phoenix indicated they were not given clear information about VET FEE-HELP or course fees and/or did not sign a VET FEE-HELP form.1293

13.13.2 The ORIMA telephone interviews 1167 One of the inputs into the MGN Audit Report was a draft report dated 27 May 2016 of the results of a survey conducted by ORIMA Research.1294 This report was finalised by ORIMA after the delivery of the MGN Audit Report on 16 September 2016.1295 As the final version of the ORIMA report was not in evidence, little weight could be given to the draft report standing alone. However, the results of the survey are consistent with the trends overwhelmingly established by other evidence. Furthermore, given Mr Dunnett's compliance with the Expert Witness Practice Note as deposed by him in the Dunnett Audit Affidavit annexing the MGN Audit Report and draft Orima report, it can reasonably be inferred that if the final ORIMA report had departed in any material respect from the draft report, Mr Dunnett would have identified this in his Audit Affidavit. 1168 On 27 May 2016, ORIMA published its draft report of interviews with 500 individuals enrolled in units of study with Phoenix in 2015 who had been randomly selected by McGrathNicol.1296 Of those interviewed, the draft report recorded that 279 (56%) were unable to be contacted, 221 (44%) were able to be contacted, and 115 (52%) completed the interview.1297 1169 Focusing upon the 107 interviewees who agreed that they were enrolled with Phoenix (the Phoenix interviewees),1298 key findings from the draft ORIMA report may be summarised as follows. 1170 First, with respect to the reasons why the Phoenix interviewees had chosen to enrol with Phoenix: (1) approximately half said that they enrolled following or during a visit from a door-to-door salesperson who in some cases used inducements to encourage them to enrol or put them under pressure to do so; (2) 30 (28%) reported that they were told that if they did the course, they would get a job; (3) 35 (33%) said that they were told the course was easy and they would not have to do anything; (4) 13 (12%) said that they were told that if they did the course they would get paid; and (5) 15 (14%) reported that they were told that if they took the course, they would not have to look for a job to claim Centrelink benefits.1299 1171 Secondly, on the question of whether they had been required to sit a written test to enrol with Phoenix: (1) 51% of the Phoenix interviewees reported that they were not required to sit a written test (ie PTR and LLN); (2) 48 (45%) said that Phoenix made them sit a written test to enrol in the course; and (3) 19% of those required to sit a written test reported that they were assisted with the test.1300 1172 Thirdly, 58% of the Phoenix interviewees reported they had participated in a telephone interview with Phoenix, with 32% reporting that someone had told them what answers they should give. 1173 Fourthly, with respect to their highest level of schooling, 22 (21%) reported that their highest level was less than Year 10, 46 (43%) reported that it was Year 10, 11 (10%) reported that it was Year 11, while 22 (21%) reported that their highest level of schooling was Year 12.1301 1174 Finally, 72 Phoenix interviewees reported that they had not participated in the Phoenix Online Courses in which they were enrolled. Reasons for not doing so included the following: (1) personal reasons such as ill health, carer and family responsibilities (about 25%); (2) failure by Phoenix to supply the laptop promised to them (about 20%); (3) work and/or family commitments (about 20%); (4) failure by Phoenix to provide the information or log-in details to start the course or otherwise communicate with the consumer (about 20%); and (5) other reasons including technical issues such as lack of internet connection, finding the course too difficult given their educational background, or only enrolling to get the free laptop.1302

14. THE PROFIT MAXIMISING PURPOSE 1175 The evidence overwhelmingly establishes what is described in the ASOC as the Profit Maximising Purpose, that is: throughout the relevant period, Phoenix and CTI in marketing the Online Courses to consumers, eliciting enrolment applications from them, and enrolling them in Phoenix's Online Courses, had the purpose of maximising the number of consumers who received VET FEE-HELP so as to maximise Phoenix's revenue from the Commonwealth through the VET FEE-HELP assistance scheme. 1176 First, after Phoenix was acquired by ACN there was an exponential increase in the number of VET FEE-HELP consumers enrolled in 2015 and in Commonwealth funding sought and obtained by Phoenix under the VET FEE-HELP assistance scheme: see especially Sections [10.9.3], [10.12.1] above. This provided a clear motive for Phoenix to engage in exploitative practices (as Gleeson J also found in factually similar circumstances in Empower at [42]) and is itself important evidence of the existence of the Profit Maximising Purpose. 1177 Secondly, as alleged by the applicants, throughout the relevant period Mr Brown and Mr Kochhar set high weekly targets for Brokers and Agents to obtain completed enrolment forms from consumers for its Online Courses and actively encouraged Brokers and Agents to obtain applications from consumers to enrol in more than one online course.1303 Ms Mason's evidence as to the so-called "magic boxes" provided at the request of Mr Brown and Mr Kochhar by Brokers, and in particular GG Sales, containing up to 3,000 files within a week is particularly telling.1304 The high commissions earned by Brokers for each enrolment under their contracts originally with CLI as Phoenix's agent and subsequently directly with Phoenix, provided strong motivation for Brokers to achieve these high targets. For example, it will be recalled that despite the many complaints made against GG Sales, not only did GG Sales continue to be the largest source of Phoenix's consumers but its commission was increased from 20% to 30% of the VET FEE-HELP loan scheme payment to Phoenix after renewal of its contact in July 2015.1305 By way of further examples, StudyNet developed a 20 Week Sales Plan to sign up 1,275 consumers,1306 while another Broker, BG Direct, emailed CTI on 10 June 2015 advising of its aim of achieving "at least 200 new enrolments for current Group 6 census and … double this volume in Group 7".1307 1178 Moreover, as the applicants submit, Phoenix's "paramount focus … on the maximisation of VET FEE-HELP revenue from each student, in complete disregard of the capability of students to undertake or complete any course into which they were enrolled" is reflected Ms McClean's email to Phoenix's Brokers1308 on 3 August 2015 which was drafted or approved by Mr Kochhar.1309 Specifically, in that email Ms McClean, a client relationship manager, warned Brokers not to "re-sell" student enrolments to other colleges because, "if the student is enrolled in 4-5 courses" for which other RTOs had claimed VET FEE-HELP payments, "[t]his will impact the second census payment at our end as the student loan will be maximised". The existence of this practice among Brokers and Agents is illustrated by the evidence of Consumer A who said that at the casual gathering at her friend's home, the sales agents offered courses from a couple of other organisations as well as Phoenix so that she and her friends "would sign up with a few of them."1310 Consumer A said that she and her friends received a laptop for each course they signed up for, and that she "ended up with about four or five."1311 1179 Furthermore, Mr Brown and Mr Kochhar actively encouraged Brokers and Agents to obtain applications by consumers for enrolment in multiple courses with Phoenix concurrently, despite the fact that each of the Phoenix Online Courses had an EFTSL of 1.0.1312 Indeed, not only did the submission of large numbers of dual diploma enrolment applications meet with praise from Mr Kochhar and Mr Brown, but commissions under the contracts between CLI and later Phoenix with the Brokers were structured in such a way that a Broker would receive double the commission where "doubles" were submitted, thereby incentivising such conduct. The success of this strategy is apparent from the fact that the vast majority of consumers enrolled in Phoenix's Online Courses were enrolled in two full-time diploma courses as, for example, Ms Mason's evidence and the data analysis undertaken by Ms Jones, Mr Koochew and in the MGN Audit Report establishes.1313 It was also acknowledged, for example, in an email sent from Mr Copeland on 27 November 2015 to Mr Brown stating that there were 11,809 consumers currently enrolled in 21,869 Phoenix Online Courses.1314 Yet there was scant reason for consumers to enrol in the types of dual diplomas in which they were typically enrolled. In particular, despite over 2,000 consumers being enrolled in both the Diploma of Early Childhood Education and Care and the Diploma of Community Services Work, the industry sectors to which the qualifications related were different, as were the employment pathways into and from the two qualifications.1315 In these circumstances, it can readily be inferred that the extraordinarily high rates of dual diploma enrolments were the direct result of the system of encouragement, praise, and incentivisation implemented by Mr Brown and Mr Kochhar.1316 1180 Thirdly, the evidence of Ms Mason in particular and Phoenix's internal correspondence considered at Section [8.6.1] above establishes that during the relevant period Mr Brown and Mr Kochhar set exceptionally high weekly targets for CTI staff to enrol the consumers recruited by the Brokers and Agents into Phoenix's Online Courses. The targets were at times set as high as 2,000 to 5,000 new enrolments into Phoenix's Online Courses within a single week.1317 Achieving these targets imposed considerable pressure on staff tasked with enrolling consumers to work exceptionally long hours - "[l]iterally burning the mid night [sic] oil", as Ms Bagga put it in one email in August 2015 following the enrolment of over 1,200 students by the Data Team over a two-day period.1318 1181 These high targets were also reflected in Phoenix's revised estimate in March 2015 of expected enrolments that year in support of its request for an increase to the 2015 Advance Payment Determination from $2,410,492 to $75,486,750.00, representing a variance between the 2015 Advance Payment Determination and the requested estimate of 3,118%.1319 They were also reflected in the further revised estimate submitted by Phoenix to the DET on 5 June 2015. This requested an increase to the Advance Payment Determination to approximately $236 million based upon an estimate of a massive 2,000 enrolments every 5 weeks with a 40% withdrawal rate after the first census date.1320 Finally, on 30 September 2015, Phoenix requested yet another increase to the advance amount to be paid to it, to an amount in excess of $300 million, claiming that student data already uploaded to HEIMS justified over $175 million (see at [773] above). 1182 Fourthly, CTI staff lacked the capacity to achieve the enrolment targets set by Mr Brown and Mr Kochhar without departing from CTI enrolment processes and procedures, such as the requirement to telephone consumers to verify their applications for enrolment and their suitability to undertake the online course or courses in question before enrolling them, as alleged by the applicants: see Section [8.6.2] above.1321 Indeed, it was impossible for CTI to enrol several thousand consumers within a week if it were to comply with the respondents' verification and checking procedures. As a result, Mr Brown and Mr Kochhar directed CTI staff not to conduct telephone verification of consumers before enrolling them in Phoenix's Online Courses. For example, when Ms Mason raised these difficulties with Mr Brown when first asked to enrol thousands of consumers in a week, she was instructed to "[j]ust enrol the students. The phone verification can come later".1322 The same instructions were given by Mr Brown and Mr Kochhar to Ms Dien, the Student Support & Enquiry Team Leader in the Phone Team.1323 Equally when, for example, concerns were raised by Mr Lewis, the CTI Contact (Phone) Centre Manager from August 2015, about the practice of enrolling consumers without telephone verification, he was told by Mr Kochhar to "[j]ust fucking do it".1324 That evidence is corroborated by the fact that there were telephone verification recordings for only 4,641 consumers, despite the number of consumers enrolled in Phoenix's Online Courses far exceeding that number.1325 1183 Furthermore, it will be recalled that, despite the fact that the PTR and LLN forms should have been marked by course trainers, they were never sent for marking to the Broadmeadows office where the course trainers were located. Nor did course trainers attend Spotswood to mark LLN tests aside from a couple of occasions, leading to a huge backlog of unmarked tests. Even when Mr Harris Faiz was finally employed in mid-2015 at Spotswood as the Data Team's designated trainer for marking the LLN tests, he worked only two to three days per week and had other responsibilities. As a result, many LLN tests were never checked or marked despite consumers being enrolled.1326 Ms Mason described the backlog in marking LLN and PTR forms as "massive" in an email to Ms Bagga on 28 July 2015 during the flurry of activity to mark the tests which took place once the respondents had notice of the ASQA audit and highlighted the challenges in catching up on the marking.1327 Ultimately, in order to cover up the backlog, the respondents implemented a project to "fix" and "backdate" the marking of PTR and LLN forms in late September 2015 despite the students already having been enrolled, and a "rectification" project in January 2016 to "repair enrollment [sic] [date or dates] - mark LLN/PTR [and] … correct signatures" (see Sections [10.15.5] and [10.19.3] respectively above). The evidence which I have earlier described establishes that both of these projects were concerned with the large-scale falsification of records in order to cover up massive compliance failures by the respondents. 1184 Similarly, as alleged by the applicants,1328 Mr Brown and Mr Kochhar directed CTI staff not to check whether consumers had completed the enrolment forms themselves, despite clear indications that the forms may have been completed by Agents. For example, when Ms Mason raised concerns about multiple LLN forms for different consumers being completed in the same handwriting and discrepancies between signatures on LLN forms and the consumer's identification documents, she was instructed to stop checking the signatures and handwriting.1329 Evidence of instructions to this effect is corroborated by contemporaneous email correspondence directing staff to override quality assurance processes and to ignore differences in signatures and similarities in handwriting.1330 Further, those instructions were given in circumstances where multiple complaints received by the respondents and brought to Mr Kochhar's and Mr Brown's attention during the relevant period referred to the forms being completed by Agents instead of the prospective students.1331 1185 In this regard, in his analysis of a sample of 500 Phoenix consumer enrolments, Mr Dunnett found that there was no evidence that 69% of the sample had completed enrolment documents in accordance with Phoenix's policies and that anomalies existed in the enrolment documents with respect to a further 41% of consumer enrolments.1332 Furthermore, Mr Pillai's data analysis establishes that there was no enrolment documentation for 1,849 consumers and that 1,174 consumers were present in HEIMS despite having not completed a request for Commonwealth Assistance Form.1333 1186 In the fifth place, as the applicants contend, the emphasis upon achieving high targets is illustrated by Phoenix's failure to withdraw a significant number of consumers who sought to cancel their enrolment in, or to withdraw from, Phoenix's Online Courses and in its continued claims for VET FEE-HELP payments with respect to such consumers.1334 As the applicants submit (ACS at [373]), Mr Pillai's data analysis of student withdrawal forms identified large numbers of consumers in respect of whom Phoenix had inappropriately claimed VET FEE-HELP payments, including 474 consumers who withdrew prior to the census date for a unit of study but in respect of whom Phoenix claimed VET FEE-HELP for subsequent units of study.1335 In addition, Phoenix continued to claim VET FEE-HELP payments for 1,024 consumers despite being aware that they had been recruited by Agents which it had blacklisted as "rogue agents".1336 Moreover, even in late February and early March 2015, staff were concerned that consumers were being enrolled in courses after the commencement date despite there being no extension to the census date, or indeed even after the census date, further illustrating the emphasis on enrolments to the detriment of consumers.1337 1187 Finally, the evidence clearly establishes that at all relevant times, Mr Brown and Mr Kochhar had knowledge of each of the matters the subject of my findings above. In particular, as the applicants submit, Mr Brown and Mr Kochhar: (a) set high weekly targets of between 2000 and 5000 student enrolments; (b) directed CTI staff to enrol students without first verifying them by telephone; (c) directed CTI staff to overlook any handwriting and signature inconsistencies on the Enrolment Forms, including on the LLN tests; (d) did not direct CTI staff to check whether consumers had completed the Enrolment Forms, including the LLN tests, themselves; (e) encouraged Brokers to enrol students in more than one Online Course and praised high enrolment numbers in dual degrees; (f) did not direct CTI staff to reject applications because they were applications for dual diplomas; and (g) encouraged CTI staff to depart from standard CTI enrolment processes and procedures by setting weekly enrolment targets that were otherwise unachievable.1338 (Footnotes omitted.) 1188 It follows that, as controlling minds of both Phoenix and CTI, this knowledge is properly to be imputed to the respondents (s 139B(2), CCA).

15.1 The applicants' callous indifference case 1189 In holding that Empower engaged in unconscionable conduct, Gleeson J took into account Empower's "callous indifference to considerations of consumer protection, including whether its recruiters complied with the ACL or whether they duped consumers into enrolling in an online course and incurring a VET FEE-HELP debt, for the purpose of deriving income from VET FEE-HELP" (Empower at [750]). Her Honour then concluded on the issue of unconscionability that: 751. … at least in the period June to mid-December 2014 Empower conducted a system or engaged in a pattern of behaviour 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 the Google Chromebooks; and (c) making unsolicited consumer agreements with no process for ensuring compliance with the relevant provisions of the ACL. These features of Empower's system, when coupled with cursory verification of students' bona fides by telephone and no LLN testing, meant that 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. The system enabled Empower to receive substantial income pursuant to a government funded scheme intended to improve the lives of members of the community by providing them with education and, consequently, improved employment prospects. In my view, where the system was directed to enrolling students from a disadvantaged sector of the community - who were vulnerable to being misled or deceived - in order to accrue very substantial financial benefits to Empower, and where the system reflected a callous indifference to the consumer protection considerations I have identified above, a conclusion that, by its operation of that system, Empower engaged in conduct that was, in all the circumstances, unconscionable is justified. 1190 Similarly, the applicants here contend that throughout the relevant period, a finding of unconscionable conduct is justified having regard, among other things, to the callous indifference exhibited by Phoenix and CTI in eliciting enrolment for Phoenix's Online Courses from consumers and in enrolling them in the Online Courses. The elements of the alleged Callous Indifference, as pleaded by the applicants, were set out earlier at [94] above1339 and I address each of those elements in turn below. 1191 Bearing in mind that the various elements of the alleged Callous Indifference overlap to varying extents, the evidence overwhelmingly establishes each of these components in the applicants' unconscionability case for the reasons set out below.

15.2 General observations 1192 It is helpful to begin with some general observations relevant to the applicants' Callous Indifference case. First, the data analysis evidence highlights the incredibly poor educational outcomes achieved by all but a handful of the many thousands of consumers enrolled in Phoenix's Online Courses, This is itself indicative of callous indifference by Phoenix and CTI to each of the pleaded Callous Indifference components. At the risk of repetition, the evidence establishes that: (1) of the 21,413 Online Courses in which 11,393 VET FEE-HELP consumers were enrolled, only 9 consumers completed the courses; (2) 8,944 of 11,393 consumers (ie 78.5%) showed no evidence of any activity in FinPa, while in the case of 16,956 courses out of 21,413 courses (ie 79%), there was no evidence of activity in FinPa; and (3) there was evidence of activity in FinPa in only 1.77% of all of the units of study in which the 11,393 consumers were enrolled. (See at [1141] above.) 1193 As the applicants submit, these results are even more stark when it is considered that much of the evidence of consumer activity in FinPa was falsely generated by staff and agents of Phoenix and CTI at the direction of the respondents, as opposed to the consumers themselves: see eg Section [10.11.5] above with respect to the "Student Log-on Project in April and March 2015". 1194 Secondly, the fact that the vast majority of consumers were enrolled concurrently in more than one online course with an EFTSL of 1.0 is a further important indicium of the Callous Indifference. In this regard, it will be recalled that 10,013 of the 11,678 consumers enrolled with Phoenix (85.8%) were enrolled in two full-time courses, while three consumers were enrolled in three full-time courses, and four consumers were enrolled in four.1340 These figures for multiple enrolments were the highest of all of the 264 VET providers over the relevant period. Nor was there any apparent benefit to be gained by consumers by enrolling in both the Diploma of Early Childhood Education and Care (CHC50113) and Diploma of Community Services Work (CHC50612).1341 Yet, as I have earlier found at [259] above, of the 3,110 consumers enrolled in Phoenix's Diploma of Early Childhood Education and Care and the 3,497 consumers enrolled in its Diploma of Community Services Work where the first census date fell between 1 January and 11 November 2015, 2,226 consumers were enrolled in one or more units of study for both diplomas. 1195 Moreover, the respondents were on clear notice following the tabling of the Nash Audit Report at a meeting of the Phoenix Governance Board at the end of February 2015 of non-compliance with the RTO Standards, as was ACN, following the letter from the Phoenix Governance Board to the ACN Board regarding its "very serious concern regarding compliance, ethical and governance issues" (see Sections [10.8.5]-[10.8.7] above). Following receipt of the ASQA Short Notice Audit Report in early August 2015, the respondents were also on notice of critical non-compliance with the RTO Standards in multiple respects, several of which correlate with the Callous Indifference components listed above: see Section [10.14.1] above.

15.3 Consumers not within the target cohorts for the Online Courses in which they were enrolled 1196 The first element of the Callous Indifference alleged by the applicants is that the respondents were callously indifferent as to whether consumers were within the target cohort of the particular online course or online courses in which they were enrolled. The target cohorts for Phoenix's Online Courses under the Packaging Rules and mandatory Phoenix admission requirements in its Training and Assessment Strategies (or TASs) were explained at Section [7.4] above. However, Phoenix's descriptions of the target participants for the Business Diplomas fell well short of the target cohorts specified in the Packaging Rules, being people with substantial experience or sound relevant theoretical skills and knowledge. For example, Ms Scomazzon explained that: … Phoenix's descriptions of target learners [for the Diploma of Business BSB50207] as 'The Target participants for this course are recent migrants, unemployed workers, those wishing to enter into a different industry sector, those wishing to upskill in an existing industry sector' is at odds with the training package qualification information relating to preferred pathways into this qualification (e.g. 'Candidates considering this qualification should preferably … have vocational experience in a range of work environments in senior support roles').1342 (Footnotes omitted.) 1197 There was also a substantial divergence between the qualification description of target learners as opposed to the target learner profiles set out in Phoenix's admission requirements for all of the other Phoenix Online Courses.1343 As such, Ms Scomazzon opined that: … the course admission requirements set out in Phoenix's documentation did not adequately represent the skills, knowledge and experience required to undertake each of the six VET Diplomas. Further … if the learner cohort for any of the six Diploma courses had a skill and knowledge profile corresponding to the requirements set out in Phoenix's documentation, it is unlikely they would be in a position to successfully complete the course and demonstrate competency in the job role associated with the course.1344 1198 Mr Capocchi also held concerns during his time as a trainer with myTime Learning from September to December 2015 that consumers had been enrolled in the online Business Diplomas despite their inability to complete such courses because they had not worked in relevant roles, although it was apparent from the course materials that they were written for students with previous management experience.1345 1199 Furthermore, while the Final ASQA Audit Report found that Phoenix's TASs were consistent with the relevant training package requirements, the Audit Report also found that Phoenix's actual training and assessment practices were not consistent with its own strategies, and the target groups identified within the strategies did not align with the target groups who had been approached at their homes to sign up.1346 It further found that Phoenix was not confirming that prospective learners met its own requirements before enrolment was offered, demonstrating an inconsistency between its documented TASs and its actual practice.1347 This divergence between Phoenix's TASs and its actual practices (which was correctly identified by ASQA) is not surprising because, as the applicants submit,1348 the TASs provided by Phoenix as part of its Audit Rectification Report in September 2015 were in fact "new versions"1349 evidently produced as a result of the audit, given that there were glaring issues with what Phoenix described as the "out-dated"1350 versions. The latter contemplated that the target student cohort would primarily be employed already in the relevant sector. As the applicants submit, a recurring theme in relation to the findings of the ASQA audit is that there was an absence of evidence that Phoenix implemented what it represented in writing.1351 The same theme is equally evident from a consideration of the evidence in this case.

15.4 Consumers did not satisfy the eligibility criteria for the particular online course or online courses in which they were enrolled 1200 The second element of the Callous Indifference is that the respondents were callously indifferent to whether the consumers satisfied the eligibility criteria for the particular online course or online courses in which they were enrolled. It will be recalled that eligibility criteria were also prescribed for each of the Phoenix Online Courses by the Packaging Rules published on the National VET Register and by mandatory Phoenix admission requirements.1352 For example, Phoenix's mandatory admissions requirements for the Business Diplomas included digital literacy, completion of Year 12 in the case of the Diploma of Management or Year 10 in the case of the Diploma of Business (although the expectation was completion to at least Year 12), and LLN skills at ACSF Level 3. 1201 Yet many consumers did not satisfy the eligibility criteria for the particular online courses in which they were enrolled. 1202 First, Mr Dunnett's analysis demonstrates that, of the statistically significant, random sample of 630 consumers who were enrolled in Phoenix's Online Courses, 533 consumers had completed LLN tests with 32.8% of these consumers failing to meet Phoenix's required LLN assessment test score and 15.8% wrongly marked as having passed Phoenix's LLN requirements.1353 Moreover, that finding must be understood in a context where there was a practice among Agents of giving consumers pro forma answers or otherwise assisting them to complete the PTR/LLN tests,1354 as was illustrated by the experience of some of the consumer witnesses.1355 Further and in any event, the ACSF Level 3 requirement specified by Phoenix was below the standard required for diploma courses.1356 1203 Secondly, leaving aside inconsistencies between Phoenix's admission requirements in the Course Overviews as compared with the TASs and the different versions of these documents, completion of year 12 or equivalent was a Phoenix mandatory admission requirement for the Business Diplomas during at least part of the relevant period.1357 However, as the evidence of Mr Pillai established:1358 (1) 1,240 consumers enrolled in the Diploma of Management had enrolment documentation indicating they had not completed year 12; (2) 2,562 consumers enrolled in the Diploma of Business (BSB50215) did not complete year 12; and (3) 2,772 students enrolled in the Diploma of Leadership and Marketing did not complete year 12. (See items J, L and M of the Table extracted at [1124] above.) 1204 Thirdly, it was a mandatory requirement for all Phoenix Online Courses that the consumers had general digital literacy skills and access to the relevant equipment for online study.1359 However, Ms Scomazzon found that, based on the Phoenix documentation before her, there was no indication that these skills were identified or supported.1360 Moreover, consumers were frequently precluded from being afforded a reasonable (or any) opportunity to commence their courses before the census date passed because of delays by the respondents in sending consumers the necessary log-in details. There were also common complaints from consumers to the trainers that they could not begin a course in which they were enrolled because they had not received their laptop or log-in details, or they lacked a computer or internet access.1361 Nor, despite it being a mandatory requirement, was any inquiry generally made during the telephone verification process as to a consumer's computer literacy or internet access, as the analysis of a random survey of telephone verification calls by Mr Voller at [1103] above demonstrates. 1205 Furthermore, the analysis of the FinPa Withdrawal Spreadsheet explained at [1153]-[1154] above establishes that 79 of the 673 consumers with notations in FinPa made by Phoenix staff or trainers and relating to withdrawals indicated that the consumers withdrew due to barriers to study. Ms Zylstra explained that this category included students "who may have not had the skills or the facilities to undertake the study, for example, due to lack of education, no access to computer or internet, intellectual disability, [being] elderly or [being] incarcerated".1362 1206 Fourthly, it will be recalled that it was a Phoenix mandatory requirement for the Diploma of Early Childhood Education and Care that the consumer had a current Working with Children Check until 1 September 2015, when the requirement was amended to a willingness to undertake such a check. However, no question was asked of consumers about this requirement in the standard enrolment forms.1363 Indeed, Ms Bennett explained that on a number of occasions she requested that a consumer be withdrawn from enrolment in the Diploma of Early Childhood Education and Care on being advised by the consumer that they had a criminal record or were charged with sexual offences.1364 Furthermore, while the question was included in the telephone verification script, Phoenix lacked the capacity to verify the extraordinary number of applications for enrolment for the Online Courses being received from Brokers and Agents. That, coupled with instructions on occasions from Mr Brown and Mr Kochhar not to undertake telephone verifications when advised of the difficulties or in relation to particular Brokers, meant that a very great number of consumers were enrolled without telephone verification processes having been complied with prior to the passing of the census date or at all (see eg Sections [8.6.2] and [8.6.3] above; see also Section [10.15.4] in relation to certain Brokers undertaking their own verification of consumers). 1207 In the fifth place, it was a National Register mandatory requirement for the Diploma of Community Services Work for consumers to have completed two units in Certificate IV or alternatively to have sufficient relevant experience. However, neither Phoenix's PTR form nor its VET FEE-HELP checklist contained fields to ensure that these prerequisites were met.1365 1208 Furthermore, as the applicants submit: In early September 2015, Phoenix changed its procedures to enrol applicants for the Diploma of Community Services Work into the two required pre-requisite units, rather than into the Diploma of Community Services Work directly, where those students did not possess Statements of Attainment for those units Ms Bagga noted there was little point in trying to establish that students met the alternate sufficient work experience requirement, acknowledging that, in Phoenix's applicant cohort, "it will be 1 in a million who will have the relevant amount of experience". Ms Bagga said that she expected that, as a result of this change, "you will see minimal CSW enrolments coming through". This was prescient, with an enrolment report from 16 December 2015 showing that only 10 students were enrolled into the Diploma of Community Services Work courses starting 1 September 2015 or later, as against 2,605 from January 2015 to August 2015. … As indicated by a student in a request to cancel her enrolment, "I have done some research and generally you need to have some prior experience…and usually needing to have passed at least two units in the Certificate IV…..So yeah maybe selling this course to people who don't have the prior skills maybe [sic] your way of getting funding dollars but sorry I'm a bit more clued on than that….". (ACS at [561]-[562]; footnotes omitted.) 1209 In particular, I agree with the applicants that it can be inferred from the dramatic reduction in student enrolments in Phoenix's online course for the Diploma of Community Services Work after 1 September 2015 that very few, if any, of the 2,605 enrolments into that course prior to the policy change actually met the mandatory pre-requisites for enrolment.1366 This is consistent with the finding by the Final ASQA Audit Report of a lack of evidence to establish that the majority of prospective Phoenix students satisfied either of the prerequisites for this course on the basis of its review of the consumer files.1367

15.5 Online Courses not suitable for consumers 1210 The third element of the Callous Indifference alleged by the applicants is that the respondents were callously indifferent to whether the Online Courses were suitable for the enrolled consumers. The evidence, including some of that discussed earlier in this Chapter, bears out the proposition that the vast majority of consumers were enrolled in Phoenix Online Courses which were unsuitable for them having regard to the level of formal education which they had attained, their previous work experience, and/or their literacy, numeracy and computer skills, as well as by reason of their age, limited or lack of facility in English, and/or incapacity due to a particular disability or illness. Indeed, overall the evidence establishing this proposition was overwhelming. The following circumstances make plain that the vast numbers of unsuitable consumers enrolled in the Phoenix Online Courses came about by reason of the respondents' callous indifference to their suitability. 1211 First, no LLN tests were administered at all for many consumers. Thus, Mr Dunnett found that of the 630 consumers sampled, no PTR and LLN documentation was available for 111 of them (17.6%).1368 In turn, Mr Pillai was unable to identify any enrolment documentation for 1,849 consumers listed in HEIMS.1369 1212 Secondly, even where LLN tests were ostensibly completed by consumers, many were not marked before their enrolment.1370 Indeed, many were never marked.1371 Throughout the relevant period, the respondents lacked the human resources necessary to mark the huge volume of enrolment forms being actively sought by, and received from, Agents and Brokers and to assess any special needs of particular consumers. Ms Mason, for example, estimated that some 70 to 80% of LLN tests were not marked prior to the consumer being enrolled.1372 Ultimately it will be recalled that, rather than address these difficulties, the respondents took steps to cover up the huge backlog of unmarked tests by the project to "fix", "backdate" and "mark" LLN forms in September 2015 and the so-called "Rectification Project" or "audit" in January 2016 (see Sections [10.15.5] and [10.19.3] respectively above). The respondents also, as the applicants submit (ACS at [569]), attempted to falsely create the impression that it had been making necessary adjustments for those consumers requiring support in compliance with its VET provider obligations and internal policies by manufacturing backdated "Student Support Plan" forms in around October 2015 and February 2016.1373 Similarly, only in early November 2015 after Phoenix's registration had been suspended did the respondents attempt to contact those with learning and other disabilities in order to put appropriate supports in place to address their special needs, although such attempts appear to have been prompted again by a desire to generate evidence of compliance.1374 1213 Thirdly, of those consumers enrolled in Phoenix courses after ostensibly completing the LLN forms, a significant number failed to meet Phoenix's requisite standard or were wrongly marked as having passed when they should have been failed.1375 1214 Fourthly, the content of Phoenix's enrolment forms, including its PTR and LLN forms, were insufficiently detailed in any event to provide a basis on which consumers' existing skills, knowledge and experience could be identified and tested relative to the Online Courses and were therefore inadequate in terms of affording "a measure of whether the prospective learner stands a reasonable chance of participating in [the] learning experience and actually successfully completing the qualification". 1376 Nor did the documentation consistently capture course requirements or use suitable means by which to identify the needs of individual consumers for support services.1377 As the examples drawn from Phoenix's enrolment documentation given by Ms Scomazzon in her report at [80] illustrate: … Phoenix's processes for identifying students' existing skills, knowledge and experience and required support services were not sufficiently customised in the course content or the intended online method of course delivery to allow Phoenix to collect information that would allow it to accurately identify the ability of the student to undertake the course. It is my opinion that neither the PTR Form nor the LLN Assessment contained sufficiently detailed or gradated stimulus items to provide an accurate indication of the nature and level of a student's existing skills, knowledge and experience.1378 (See further the examples in Ms Scomazzon's report at [82]-[90].) 1215 Furthermore, Ms Scomazzon explained that ACSF Levels 4 to 5 were required to undertake the diploma courses offered by Phoenix and not Level 3, which was the indicator used by Phoenix.1379 Indeed, Ms Scomazzon considered that even those consumers who fitted the target learner profile described in Phoenix's documentation may not be at Level 3 and would therefore require a considerable amount of support from specialist LLN trainers in order to have any reasonable chance of completing one course successfully (let alone two simultaneous full-time courses).1380 Indeed, Ms Scomazzon further explained that: … if they don't come into the course with a certain level, they can't be expected to learn those skills within the training, because the training isn't intended to teach them to write. Right?---It's intended to teach them business skills and they need writing. And if the training organisation identifies a particular person enrolling doesn't have those writing skills then they're not meant to - they're nowhere near the level they need. They're not meant to enrol them. (Emphasis added.) 1216 In the fifth place, as the applicants submit,1381 the callous indifference exhibited by Phoenix and CTI as to whether the education levels of enrolled consumers were sufficient for diploma level courses is demonstrated by the fact that the highest educational attainment of approximately half of its student population was year 10 or below. Thus Mr Koochew's analysis of the WiseNet data revealed that: (1) 3.22% of Phoenix students' highest school level was year 8 or below; (2) 6.81% was year 9; (3) 39.59% was year 10; (4) 16.4% was year 11; and (5) only 33.15% was year 12.1382 (See also the responses of Phoenix interviewees in the draft ORIMA report at [1173] above; cf Phoenix's response to the ASQA Audit Report on Rectification Evidence at [819] above.) 1217 It is therefore not surprising that Ms Blefari could not recall seeing any enrolment applications from Agents and Brokers where the consumer's level of educational attainment exceeded year 10, despite seeing enrolment applications almost every day; nor is it surprising that she recalled seeing forms where the highest level of education attained by the consumer was only years 8 or 9.1383 However, despite Mr Kochhar being aware that Agents were presenting enrolment forms which did not comply with the RTO Standards, nothing was done and non-compliant forms continued to be received.1384 1218 Sixthly, Phoenix and CTI also demonstrated a callous indifference to the age appropriateness of the enrolled consumers, with some consumers over 60 or 70 years of age being enrolled.1385 Furthermore, as part of its forensic audit of Phoenix for the DET dated 16 September 2016, McGrathNicol found that in 21% of a sample of 446 enrolled consumers, there was an inconsistency in the enrolment form between the year of the consumer's date of birth and the graduation year for the consumer's highest level of schooling.1386 For example, the information provided on one consumer's enrolment form was that she was born in January 1992 but achieved Year 12 or equivalent in 2000 when she would have been a mere 8 years of age.1387 1219 In the seventh place, there are multiple instances of consumers being signed up for Phoenix Online Courses to which they were not personally suited by reason of a number of different factors, including poor English literary skills, intellectual or physical disabilities of such a nature as to render the consumer incapable of being able to undertake the course,1388 lack of computer skills and literacy,1389 and/or lack of any prior work experience.1390 For example, Afghan refugees undertaking an introduction to English course were signed up for a Phoenix course in a carpark after work.1391 In many cases, the consumers in question were placed under considerable pressure from Agents and Brokers to sign up,1392 and staff were directed to enrol them, despite knowledge of the factors demonstrating their lack of suitability.1393 Concerns about consumers' lack of suitability of were raised on multiple occasions by employees with their superiors including Mr Kochhar.1394 1220 Furthermore, the Final ASQA Audit Report found "given that [Phoenix] predominantly recruits learners for online learning, it is clear that for the purposes of Clause 1.1 [of RTO Standard 1], the RTO's practices do not provide a mode of delivery that supports the characteristics and needs of such a learner cohort [having predominantly low education level, ESL and low socio-economic characteristics]."1395 While, following the ASQA audit, Phoenix claimed to have developed an online learning and digital literacy assessment to determine whether online learning was a sustainable option for the prospective participant or was sustainable with additional support and/or reasonable adjustments, 1396 ASQA still assessed Phoenix as non-compliant.1397 That conclusion was plainly correct. 1221 Finally, the lack of suitability for enrolment is reflected in the high withdrawal rates. The unconscionability of recruiting consumers who plainly did not meet the eligibility requirements or were enrolled in courses for which they were not suited is apparent from the 40% withdrawal rate after the census date had passed.1398

15.6 Consumers did not genuinely wish to undertake the Online Courses 1222 The fourth element of the alleged Callous Indifference is that the respondents were callously indifferent to whether the consumers genuinely wished to undertake the online course or online courses in which they had applied to be enrolled. The evidence clearly established that many consumers did not genuinely wish to undertake the online courses with Phoenix in which they applied for enrolment. 1223 First, many consumers only signed up for a free laptop or monetary inducements which they were promised, were otherwise pressured into signing up, and/or made it clear that they did not intend to undertake any study.1399 The example of Consumer MN discussed at [481] above eloquently illustrates the point. Indeed, some consumers were apparently not even aware that they had been enrolled until they received the Commonwealth Assistance Notice(s) whereupon in many cases they sought to withdraw.1400 Again, the egregiousness of the respondents' conduct is highlighted by the data analysis of student withdrawal forms by Mr Pillai. That identified large numbers of consumers in respect of whom Phoenix had inappropriately claimed VET FEE-HELP payments, including 474 consumers who withdrew prior to the census date for a unit of study but in respect of whom Phoenix claimed VET FEE-HELP for subsequent units of study.1401 1224 Secondly, the inference that consumers were enrolled despite having no genuine desire to study is supported by the extraordinarily low rates of successful completion of the Online Courses and of consumer engagement with the courses, to which I have already referred.1402 As to the latter, it is relevant that Phoenix and CTI failed to take any steps to invite consumers whose records in FinPa revealed that they had not engaged with the courses in which they were enrolled, to withdraw or defer prior to the second or subsequent dates so as to avoid incurring further liability under the VET FEE-HELP scheme. Rather, when in about May 2015 Ms Mason raised concerns about consumers passing the census date (especially their second or third census date) without having started a course, Mr Brown gave a direction not to withdraw the consumers saying "we'll take the risk" that the money may have to be repaid.1403 In this regard, the extent of student engagement with Phoenix's Online Courses was readily observable by the respondents at any given point in time. This is because the home screen on FinPa (as it presented when opened by the respondents but not, I infer, by students) automatically displayed the total number of enrolled consumers who had logged in to the Phoenix Online Courses as at that time.1404 As such, it cannot be the case that the respondents were unaware at any given point in time over the relevant period of the extraordinarily low level of student engagement with the Online Courses. To the contrary, it will be recalled that the respondents required FinPa to temporarily and urgently turn off this feature immediately before the ASQA audit in July 2015 so that these statistics would not be disclosed to the auditors.1405 1225 The validity of Ms Mason's concerns about students remaining enrolled despite passing the first census date without engaging with their online courses was subsequently borne out by the analysis of the HEIMS data by Mr Koochew. This established that out of a cohort of 11,417 enrolled consumers in the Phoenix Online Courses, 11,291 (ie 99%) had not completed a single VET unit of study.1406 The finding is even more significant when it is recalled that the vast majority of these consumers were enrolled in multiple Phoenix Online Courses with multiple census dates and that Phoenix claimed VET FEE-HELP payments for subsequent VET units of study on behalf of these consumers. Nor did Phoenix give credit for common units which comprised part of two courses in which consumers were enrolled, with the result that consumers were charged twice for the same substantive units.1407 1226 Further support for the inference that consumers were enrolled despite having no desire to participate in the Online Courses is found in the substantial number of consumers who could not be contacted. For example, in order to undertake a telephone survey of a sample of 500 consumers, Ernst & Young had difficulties contacting or communicating with 3,935 of the 4,841 Phoenix consumers whom they endeavoured to contact.1408 This is consistent with the evidence of the trainers and assessors who also described the extreme difficulties they had in contacting the majority of consumers assigned to them.1409 Moreover, typical responses from those consumers who were able to be contacted by the telephone verification team or trainers indicated no interest in undertaking the courses.1410

15.7 Consumers did not have reasonable prospects of successfully completing the Online Courses 1227 In the fifth place, the applicants alleged that the respondents were callously indifferent to whether the consumers had reasonable prospects of successfully completing the online course(s) in which they had applied to be enrolled. The inference that the vast majority of consumers lacked any reasonable prospects of successfully completing the Phoenix Online Courses is established, among other things, by the following matters: (1) the incredibly poor engagement with Phoenix Online Courses, and educational outcomes achieved, by consumers enrolled in Phoenix Online Courses (as explained at [1192] above and by the trainers in their evidence described at Section [9.2.1] above); (2) the final findings of the ASQA audit (amply borne out by the evidence in this case) that, while Phoenix's training and assessment strategies if appropriately implemented might comply with relevant requirements, its practices were not consistent with its training and assessment strategies and "would not enable each learner to meet the requirements for each unit of competency or module in which they were enrolled purely on the volume of students enrolled and the learning support provided";1411 (3) the failure by Phoenix either directly or through CTI to implement any student intervention program until October 2015; (4) the fact that the Phoenix target consumer participants did not align with the National Register target cohorts (see at [1196]-[1197] above); and (5) the adoption by Phoenix of a level of LLN skills well below that expected for courses at the diploma level (see at [1202] above).

15.8 Inappropriate trainer-to-student ratios 1228 The sixth element of the Callous Indifference alleged by the applicants is that Phoenix and CTI were callously indifferent as to whether Phoenix had appropriate trainer-to-student ratios for its Online Courses and did not at any time over the relevant period have appropriate trainer-to-student ratios for any of its Online Courses. As an aspect of this, it is alleged that the respondents exhibited callous indifference to the insufficient support and training being afforded to consumers, especially those enrolled in multiple Online Courses. These aspects of this element of the Callous Indifference are also made out. 1229 First, by way of example, as at June 2015 Phoenix's policy as articulated in its TASs for the Diploma of Business (BSB50215) and the Diploma of Leadership and Management (BSB51915) was to have a trainer-to-student ratio of 90:1.1412 However, that ratio was well in excess of the appropriate ratio. Rather, Ms Scomazzon considered that, based on Phoenix's targeted consumer profile, a trainer-to-student ratio of 15:1 to 30:1 would appear reasonable.1413 The following examples given by her illustrate the point. Example 1 116. Using the BSB50215 Diploma of Business as an example. The qualification description states that 'it applies to individuals with various job titles including executive officers, program consultants and program coordinators'. Using one of the units of competency in that qualification that Phoenix would have assessed learners in as an example: BSBHRM506 Manage recruitment selection and induction processes. 117. The unit requires someone to 'manage all aspects of recruitment selection and induction processes according to organisational policies and procedures.' Consider the demands evident in both the qualification and its unit against the target student that Phoenix set out in its Course Overview: 'Be at least 17 years of age and have completed year 12 or equivalent' and the need for support becomes evident. In my opinion, a 17 year old having just completed year 12 would require significant support to successfully undertake the key requirement of the unit of competency. Namely: Develop recruitment, selection and induction policies and procedures; recruit and select staff; and manage staff induction. Example 2 118. Using the CHC50612 Diploma of Community Services Work as a further example, the qualification description states that it 'addresses work in roles that usually involve service delivery, either direct client work and/or community education or development projects. Workers at this level operate at an advanced skill level and may also have responsibility for the supervision of other staff and volunteers'. 119. Looking at one of the 11 mandatory ('core') units in this qualification: CHCLD415A Confirm client developmental status, among many other things, the unit requires someone to: 119.1 observe and question a community services client to obtain information about the client's developmental status, applying knowledge of human development and lifespan development theories in the process; 119.2 consult with others to clarify the implications and significance of the client's developmental status; 119.3 use industry-standard methods and protocols to identify signs in the client of developmental issues; and 119.4 clarify the suitability of the community services being delivered in relation to the client's developmental status. 120. Considering the demand inherent in the above in relation to Phoenix's course overview for this Diploma qualification, which states the admission requirements to be that the student must be at least 18 years old and have completed Year 10 or equivalent. 121. In my opinion, given the job roles associated with this CHC50612 qualification (e.g. a family support worker, an early intervention worker, a welfare worker), it is highly likely that an 18 year old who had just completed Year 10 would require intensive and sustained support to successfully complete the work tasks required in this qualification.1414 (Citations omitted.) 1230 In oral evidence, Ms Scomazzon indicated that if the consumer cohort met the Level 4 requirements (which would be higher than Phoenix's target cohort), the ratio might be 1:50. However, she considered that the adequacy of this would depend upon a number of variables including: how the provider structured the course; the course delivery; and what activities were built into the course.1415 She also considered that the ratio would be affected by whether (as was often the case in other training organisations) a specialist LLN trainer or other additional support were arranged to assist learners at levels lower than those required to undertake the course.1416 1231 ASQA was also critical of the adequacy of the 90:1 trainer-to-student ratio nominated by Phoenix in its TASs. It found that this ratio "does not evidence how a trainer/assessor is able to provide the quality support required, given that students are generally involved in two qualifications online for which four units of competency from each qualification (8 units) are simultaneously released in each census."1417 As a result, ASQA understandably found that Phoenix was not compliant with cl 1.7 of the 2015 RTO Standards requiring that RTOs provide tailored support services and access to educational resources to every student under their supervision. Following receipt of Phoenix's written response and rectification evidence, ASQA found that Phoenix was still non-compliant with cl 1.7.1418 Indeed it found that "[r]ather than allaying the auditor's concerns with a ratio of 90 learners to one trainer/assessor, the evidence provided as rectification confirms that the actual ratios based on the RTO's current staffing matrix and the enrolment figures noted at audit from the enrolment numbers provided by the RTO" were in excess of that ratio, namely: 142:1, 298:1, and 253:1 for each of the online courses BSB50207, CHC50113, and CHC50612 respectively. In this regard, Phoenix had generated a list of trainers which it had purportedly engaged as part of its "Response to ASQA Audit Report on Rectification Evidence" given on 9 November 2015 when some of the trainers on that list did not in fact ever work for Phoenix (see Section [9.3] above). 1232 Secondly, it is clear that the trainer-to-student ratio was significantly worse than the 90:1 ratio nominated by Phoenix or indeed, the ratios referred to by ASQA in light of Phoenix's rectification evidence. Consumer numbers allocated to trainers ranged, for example, from approximately 200-500 (Ms Bennett), over 1,000 (Rana Karam), between 120-600 (Mr Howley), over 200 (Mr Capocchi), and approximately 100 (Mr Bhargava).1419 Thus, when Mr Howley commenced as a trainer for the Diploma of Community Services Work in May 2015, there were only two trainers for the diploma which eventually increased to eight.1420 Similarly, for example, when Ms Bennett was employed as a trainer in August 2015, she was initially one of only six trainers at Phoenix for the Diploma of Early Childhood Education and Care.1421 Moreover, the sheer number of enrolled consumers allocated to the trainers, the difficulties encountered by trainers in contacting most of these consumers, and the instructions given to the trainers to get as many consumers as possible to log on to assist the respondents to show at least some activity as regulatory scrutiny increased, meant that the focus of the trainers and assessors was almost exclusively upon attempting to contact consumers and encouraging them to log on; it was not upon actually providing the consumers with training and support to assist them successfully to complete the courses in which they were enrolled (see Section [9.2.2] above). 1233 Thirdly, Phoenix's internal documentation corroborates the trainers' and assessors' evidence as to the existence of inappropriately high trainer-to-student ratios. For example, in May 2015, CTI advertised internally for trainers for the Service Diplomas and stated that, in each case, the successful candidate would be managing a caseload of 200-300 students. Before then, there was only one trainer for the Diploma of Early Childhood Education and Care. High trainer-to-student ratios were also referred to in internal correspondence to which Mr Kochhar was privy.1422 1234 Fourthly, following regulatory action in October 2015, including the Final ASQA Audit Report and notices by ASQA of its intention to cancel Phoenix's registration under the NVETR Act and impose sanctions and by the DET to suspend Phoenix's approval as a VET provider, defer advance payments and revoke the advance payment determination,1423 Phoenix employed a number of strategies to artificially inflate the appearance of the number of trainers/assessors, among other responses. As the applicants contend (ACS at [591]), these strategies included identifying CTI staff ostensibly qualified to conduct training in late October 2015,1424 and subsequently representing to ASQA that they were trainers/assessors on 9 November 2015 in Phoenix's Response to ASQA Audit Report on Rectification Evidence.1425 That list of 153 purported trainers included individuals who were not engaged as trainers, such as Mr Kochhar (also known, it will be recalled, as Harpreet Singh), Mr Grandi (Head of Compliance), Mr Tanmeet (Sunny) Banga (Team Leader - Data & Quality), Mr Dilshan Dharmapala (a client relations manager), Mr Melvin Rich (HR Officer), and Ms Nelly Anala (Data Entry Officer), as well as Mr Peter Barclay and Mr Adam Nicholson, who were Business Development Managers. 1235 In addition, Phoenix entered into casual employment contracts with a number of new trainers/assessors including Keng See Tan (who gave evidence)1426 in respect of whom, it may properly be inferred, Phoenix intended to create the impression of improved trainer-to-student ratios in response to the ASQA audit, as opposed to necessarily assigning any training to them.1427 An internal analysis conducted by Phoenix in October 2015 demonstrated that as a result of its drive to conclude the on-invoice/casual contracts, Phoenix ostensibly increased the number of trainers/assessors as follows: (1) for the Business Diplomas, from 26 to 97 trainers/assessors to give the appearance of an improved ratio from 551:1 to 147:1; (2) for the Diploma of Early Childhood Education and Care, from 13 to 36 trainers/assessors to give the appearance of an improved ratio from 315:1 to 113:1; and (3) for the Diploma of Community Services Work, from 11 to 20 trainers/assessors to give the appearance of an improved ratio from 262:1 to 144:1.1428

15.9 Work placement problems 1236 Finally, the applicants allege that Phoenix was callously indifferent as to whether there was a reasonable prospect that a consumer enrolled in an online course which required a work placement could secure one and whether Phoenix was capable of inspecting those work placement venues. In this regard, it will be recalled that under the Packaging Rules, there was a requirement for students enrolled in the Diploma of Community Services Work and the Diploma of Early Childhood Education and Care to complete a 240-hour work placement. The myTime Learning course overview for the Diploma of Community Services Work also made it clear that the work placement was to be undertaken during the 46 weeks over which the course took place. Further, it was necessary for students enrolled in the Diploma of Early Childhood Education and Care to commence their work placement early within the diploma in order to meet the required 240 hours within the 12-month timeframe for the course, given that placements were generally only undertaken over one or two days a week.1429 It can be inferred that the same pressure to commence a work placement early was present for those students undertaking the Diploma of Community Services Work. 1237 Ms Scomazzon gave evidence that where workplace experience is required and outsourced to a third party, a range of compliance requirements are usually put in place (see at [286] above). Consistently with this evidence, Phoenix expressly accepted responsibility for work placements in its July 2015 Policy Manual, which specified that: (1) Phoenix and myTime Learning "organises and administers work placements to Participants during course services where required"; (2) "Phoenix Institute and myTime Learning personnel hold the primary responsibility for organising work placements"; and (3) "Phoenix Institute and myTime Learning personnel monitor work placements through regular contact and feedback process with host employers, including workplace visits with the number of visits dependent on the length of the work placement".1430 1238 The Policy Manual also stated that: A written practical placement agreement is a mandatory component of any work placement. It is a legal agreement and must stipulate the rights, obligations and duties of the employer, Phoenix Institute & myTime Learning and the Participant. Phoenix Institute & myTime Learning enters into an agreement in writing with the employer about the placement of each particular Participant.1431 (Emphasis added.) 1239 In addition, the Policy Manual specified the responsibilities of the Participant, the Employer and Phoenix to be included in each mandatory placement agreement.1432 1240 These requirements were also specified in the other versions of the Phoenix Policy Manual.1433 1241 However, concerns about whether Phoenix and CTI's actual practices (as opposed to policies) for managing work placement requirements complied with the 2015 RTO Standards were raised as early as February 2015 in the Nash Audit Report.1434 It will be recalled that this audit was provided to Mr Gale and Mr Peake on 26 February 2015. Mr Nash's report was tabled at the Phoenix Governance Board Meeting in late 2015. As a consequence, a letter dated 27 February 2015 was sent to Mr Stephen Williams, then Chair of the ACN Board, and to Mr Brown emphasising the Board's "very serious concern regarding compliance, ethical and governance issues" and attaching a copy of the Nash Audit Report (see Section [10.8.7] above). Ms Vassallo in her review of the Nash Audit Report in March 2015 agreed that the issue of work placements could not be disregarded.1435 1242 These early warnings about non-compliance were unheeded by Phoenix and CTI. Notwithstanding repeated concerns being raised with Mr Kochhar and other management, thousands of consumers were enrolled in the Service Diplomas over the relevant period despite the impossibility of finding work placements for all of the enrolled consumers (see Section [8.6.5] above). Thus, only a minimal number of work placements were ever secured for consumers. Indeed, an analysis of the small number of work placement agreements in fact entered into, found that work placements were available over the relevant period for approximately: (1) 35 of the 2,915 consumers enrolled in the Diploma of Community Services Work; and (2) for 86 of the 4,104 consumers enrolled in the Diploma of Early Childhood Education and Care.1436 1243 Consistently with this, none of the enrolled consumers allocated to Ms Bennett with respect to the Diploma of Early Childhood Education and Care or to Mr Howley with respect to the Diploma of Community Services Work ever undertook a placement.1437 Nor did Mr Howley ever see a work placement agreement during his time at Phoenix.1438 To the contrary, when he raised the lack of procedures and documents relating to placements with Ms Bagga, she responded that they would come up with a strategy when the placements were required. Similarly, in response to Ms Mason's concerns, Mr Kochhar "pretty much told me to keep my nose out of it" (as I have earlier explained at [389] above). 1244 The impossibility of finding work placements for enrolled consumers was compounded where multiple consumers were recruited from remote country areas. For example, Ms Mason described a batch of applications for enrolment in dual Service Diplomas being received from a single Broker from 180 individuals in Kalgoorlie despite there being only three childcare centres and one community service centre in the Kalgoorlie region.1439 1245 Not surprisingly, the two staff members ultimately tasked with finding childcare centre placements reported having difficulties in finding sufficient placements for the volume of consumers being enrolled.1440 1246 It follows that there was generally no reasonable possibility that a consumer enrolled in a Phoenix online course requiring a work placement would be able to secure one and certainly no possibility that all of those enrolled would be able to do so. Nor was there any reasonable prospect that Phoenix was capable of visiting and inspecting all of the work placement venues required. Given the number of consumers enrolled in the Service Diplomas and the fact that they were located across the country (including in remote rural areas), Phoenix manifestly lacked a sufficient number of staff to undertake that task.

16. THE TARGET COMMUNITIES AND THEIR LIKELY ATTRIBUTES 1247 It will be recalled that the amendments to the VET FEE-HELP scheme enacted in late 2012 and early 2013 were directed at improving student uptake by certain demographic groups which traditionally had lower participation rates in vocational education and training by removing the need for a course to count towards a course at a higher education institution: see Section [6.2.1] above. The groups to which the amendments were directed included Indigenous Australians, and people from a non-English speaking background, with a disability, from regional and remote areas, from low socio-economic backgrounds, and/or not currently engaged in employment (described, as earlier explained, as the Target Communities).1441 1248 Phoenix's business model relied upon these amendments to the VET FEE-HELP scheme. The targeting of consumers who fell within the demographic groups to which the amendments were directed was reflected in the target cohorts as described by Phoenix. For example, Phoenix's target cohort for the Diploma of Business (BSB50207) was identified by Phoenix as "recent migrants, unemployed workers" as well as "those wishing to enter into a different industry sector [or] wishing to upskill in an existing industry sector" (see Section [15.3] above). In its response to ASQA's Notice of Non-Compliance, Phoenix also acknowledged that it had a diverse target cohort including unemployed persons, persons from different cultural backgrounds, low socio-economic backgrounds and other disadvantaged student cohorts.1442 Furthermore, Phoenix and CTI were aware that the consumers to whom the Brokers and Agents marketed the Online Courses and who were enrolled by CTI were likely to include the Target Communities and to have low LLN results, low levels of formal education, and low levels of computer literacy (the Likely Attributes) and, as such, were vulnerable consumers. In line with this, the highest educational attainment of approximately half of the consumers enrolled in Phoenix's Online Courses was year 10 or below (see at [1216] above). Furthermore, CTI required Brokers to submit travel schedules in advance identifying the areas to be visited by Phoenix sales representatives for review by the Broker's client relationship manager at CTI.1443 As such, CTI and Phoenix were aware of, and approved, the marketing of the Online Courses by door-knocking in, among other places, remote Indigenous communities in the Northern Territory and Western Australia and other remote communities (such as Broken Hill) with high levels of unemployment where consumers were likely to be at home during the day.1444 There was also telling evidence of the specific targeting of low socio-economic areas across Brisbane, Sydney and Melbourne in a revealing email in mid-September 2015 from Ms Bagga to Mr Kochhar in relation to the identification of additional premises for CTI.1445 1249 In this regard, the applicants did not contend that every Phoenix consumer was vulnerable or at a special disadvantage. However, they correctly contended that Phoenix and CTI would have appreciated that, at the least, a not insignificant proportion of its consumers were vulnerable and, therefore, should have developed their marketing and enrolment strategies with this firmly in mind (ACS at [605]). As Ms Scomazzon said in explaining the roles of the PTR and the LLN forms: … the thing about vocational education and training is that the learner cohort is recognised to often have a form of disadvantage or one or more. And the government has long recognised that. It has formed councils around the - an equity council recognising that learners in vocational education and training are often disadvantaged, so that we can try - and that's why the legislation for the standards for RTOs actually builds in that an RTO that's registered to deliver as part of its obligations put - identify the support needs of learners. And so these - this PTR is the way the RTO does that, because to be able to recognise support needs you need to be able to identify - you need to have a good idea of what the demand is of the course and then a good idea of where the learner will - how the learner will - the position the learner is in to be able to meet those demands.1446 (Emphasis added.) 1250 While in itself the targeting of consumers within the Target Communities was not necessarily unconscionable, a not insignificant proportion of those within these communities were likely to be vulnerable for the reasons I have explained. Conscionable marketing and enrolment systems therefore needed to incorporate measures to mitigate the inherently higher risk that the members of such groups may be unsuitable to be enrolled in an online diploma in the sense of being less able to understand and interrogate information (or misinformation) which they were given about the courses and the VET FEE-HELP assistance scheme and less able to resist pressure and unfair tactics such as inducements to enrol (see by analogy AIPE (No 3) at [151] and [692] (Bromwich J)). Conscionable marketing and enrolment systems also needed to ensure that where suitable consumers were enrolled from these groups, the support and assistance that the consumers may have required in order to have a reasonable opportunity of successfully completing their studies was identified and discussed at the outset and made available during the course of their studies.

17. THE PHOENIX MARKETING SYSTEM 1251 As earlier explained at [98], the applicants plead eight essential features of the Phoenix Marketing System utilised by Phoenix directly, and indirectly via CTI and CLI. I address each of these features in turn below, finding that each is amply made out on the evidence.

17.1 Engaging Brokers and Agents to market its Online Courses to consumers as its agents, by way of unsolicited, "face-to-face" marketing 1252 The evidence earlier discussed clearly establishes the first feature of the Phoenix Marketing System, namely, that Phoenix/CTI engaged Brokers and Agents to market its Online Courses to consumers as its agents, including by way of unsolicited, "face-to-face" marketing. The evidence of the individual consumers illustrates consumers being approached by Brokers and Agents in this way.

17.2 Engaging Brokers and Agents to obtain the enrolment forms 1253 The second feature of the Marketing System also plainly established by the evidence is that Phoenix/CTI engaged Brokers and Agents to obtain enrolment forms, comprising (as earlier explained) the completed enrolment application forms, CAFs, LLN tests, PTR forms, identity documents and proof of citizenship/permanent humanitarian residency status, and completed Agreement to Tuition Fees forms.

17.3 Engaging Brokers and Agents to make representations of a free laptop and/or the Online Courses were free 1254 The third feature of the Phoenix Marketing System alleged is that Phoenix/CTI engaged Brokers and Agents to represent to consumers that in order to receive a free laptop, the customers need only sign up to a Phoenix/myTime online course and/or the Online Courses were free, or free unless the consumer's income exceeded an amount which they were unlikely to earn on completion, or at all. This is also established by the evidence. 1255 First, I have earlier referred to Mr Brown's instructions to Ms Mason not to verify a group of elderly Chinese people despite the fact that they only wanted free laptops.1447 Furthermore, on numerous occasions during telephone verification calls and calls between consumers and trainers (Ms Bennett and Mr Howley), consumers reported that they had signed up to a Phoenix online course only to receive a free laptop (see eg at [402], [480] above). Despite these issues being reported to Mr Cugliandro as head of Client Relations Management, Ms Bagga, Mr Kochhar, and sometimes Mr Kochhar's personal assistant, Ms Spiteri, nothing changed and the Phone Team continued to receive consumer calls raising in particular the laptop issues. Indeed, when Mr Lewis as the manager of the Phone Team advised Mr Kochhar that the large number of "cancelled" forms was because of the number of consumers only interested in enrolling for the laptop, Mr Kochhar instructed him to "go easier on this. We need fewer cancellations …" (see at [406] above). Similarly, Mr Kochhar responded that he would review the telephone verification script after Ms Bagga drew his attention to the fact that most cancellations were occuring at the point that the laptop was mentioned in the call, saying, "[t]his generally seems to be the thing marketed as FREE and where it goes pear shaped" (see at [725] above). 1256 Secondly, there were numerous complaints throughout the relevant period in which consumers (or others on their behalf) complained of being offered free laptops or free courses by door-to-door sales representatives to sign up to Online Courses with Phoenix.1448 An advertisement was also apparently placed on Gumtree by GG Sales in July 2015 advertising a free laptop for Australian citizens, prompting Ms Bagga to email Mr Kochhar and Mr Cugliandro recommending that "Gagan [Sachdeva] needs to pull his head in before we are all in shit !" (error in the original).1449 1257 Details of complaints against Agents representing Phoenix, including of practices of these kinds, were drawn to the attention of Mr Brown or Mr Kochhar by Mr Gale from the outset, but were brushed aside by them on the basis that they would handle those matters (see at [525]-[528] above). Similarly, when Ms Holland, a Compliance and Investigations Manager at NTCA, pursued complaints lodged with that body about marketing practices engaged in by GG Sales on behalf of Phoenix including the offering of free laptops with Mr Kochhar and Mr Brown during the course of her investigations between April and July 2015,1450 Mr Kochhar responded in correspondence by describing steps allegedly taken in response to the complaints which were simply untrue.1451 1258 Further, despite CTI writing to Brokers on 6 May 2016 and specifically to GG Sales on 17 August 2015 to admonish them for offering free laptops and other inducements to prospective students and advising that it would not hesitate to review or cancel contracts if it learnt of any Brokers conducting business in that way,1452 it appears that at best only one contract with a Broker (StudyNet) was terminated for reasons that were not disclosed on the evidence1453 and the litany of complaints about these practices continued unabated. Indeed, far from being cancelled, new contracts were concluded with GG Sales on 1 July 20151454 and 14 August 2015,1455 with GG Sales earning among the highest level of commission of any of Phoenix's stable of Brokers after 1 July 20151456 despite being subject to the greatest number of complaints. At best, individual Agents were blacklisted by Phoenix on the Terminated Sub-Agent or Rogue Agents List which was commenced only in June 20151457 - a measure which proved ineffective in terms of deterring Agents from offering inducements or otherwise engaging in misconduct. 1259 Thirdly, the evidence of consumer witnesses is illustrative of these tactics being engaged in by Agents on behalf of Phoenix.1458 Similarly, when Mr Winwood-Smith, Consumer Protection Officer, posed as a prospective student, Agents for Phoenix advised that he (and his "aunt", if she also enrolled) would be given a "free" laptop and that he did not "need to worry" about the VET FEE-HELP loan, saying that "because your income is under $54,345 you don't have to pay it back".1459 1260 Further, the analysis of Phoenix's withdrawal forms also establishes that there were 76 cases in which consumers cited misrepresentations by Agents from a variety of Phoenix's Brokers about a laptop as at least part of the reason for their withdrawal from their courses. In each of these cases, the students said that they were informed that the laptop was "free" and/or would be theirs to keep, when in fact the laptops were only intended to be provided on loan pursuant to a loan agreement.1460 Auz Education/GG Sales was the worst offender, being identified as the Broker involved in 34 of these instances. Phoenix's withdrawal forms also refer to 37 cases in which Agents actively represented that the courses were free, and another 192 cases in which the consumers alleged that the costs of the course or the VET FEE-HELP system were not adequately explained to them.

17.4 Engaging Brokers and Agents to obtain completed enrolment forms for more than one EFTSL online course 1261 The fourth feature of the Phoenix Marketing System was the engagement of Brokers and Agents to obtain completed enrolment forms from the vast majority of consumers for enrolment in more than one online course, despite each of Phoenix's Online Courses having an EFTSL of 1.0. In particular, as I have earlier held, 10,013 of the 11,678 consumers enrolled with Phoenix (85.8%) were enrolled in two full-time courses. The evidence establishes that throughout the relevant period, Mr Brown and Mr Kochhar actively encouraged Brokers to submit applications for enrolment by consumers in multiple courses. Further, they did so in reckless disregard of consumers' ability to undertake two full-time courses simultaneously and despite being specifically warned about pressure that this may place upon consumers from a volume of learning perspective early in 2015 by Mr Gale and subsequently by an external compliance consultant, Mr Bevan, in early June 2015: see at [528] and [384]-[386] respectively above. The manner in which commissions were structured under the contracts with Brokers also rewarded such conduct, providing an incentive for Brokers to engage in these practices.

17.5 Providing financial incentives to the Brokers and Agents to maximise the number of completed enrolment forms for Online Courses 1262 Fifthly, the Phoenix Marketing System relied upon the payment of financial incentives to the Brokers and Agents in order to maximise the number of completed enrolment forms for Online Courses. As earlier held, under the agreements with the Brokers, the commissions payable ranged between 15 to 35% of the loan amount for each course in which a consumer was ultimately enrolled, while other agreements specified a substantial fixed sum per course to be paid over three census dates.1461 As to the former, the significance of the incentives is apparent when it is borne in mind that Phoenix charged fees of between $18,000 to $21,000 for its Online Courses.1462 The end result is that Phoenix paid to the Brokers the sum of $38.83 million over the period from July to September 2015, with an alleged further debt owed to the Broker of approximately $24.6 million if Phoenix were to receive the VET FEE-HELP payments claimed to have been owed to it by the Commonwealth.1463 Agents (both individuals and corporate entities) were also typically paid by commission for each course in which a consumer was enrolled, with incentives for dual diploma enrolments.1464

17.6 Inadequate training of Brokers and Agents 1263 The sixth feature of the Phoenix Marketing System alleged is that the respondents failed to: 73.6.1 train or adequately train the Brokers and Agents in their obligations under the ACL; 73.6.2 train or adequately train the Brokers and Agents in their obligations to comply with the RTOs Standards; and 73.6.3 instruct or require the Brokers and Agents to ascertain whether the consumer was suited to the Online Course and the Online Course to the consumer. 1264 From mid-December 2014 when ACN was preparing for its acquisition of Phoenix and throughout the relevant period, the DET corresponded with educational providers alerting them to unethical practices being undertaken by education agents and promotional marketing services on behalf of educational providers and to the latter's responsibility for unethical, misleading, or fraudulent behaviour by agents on their behalf.1465 It will be recalled that the extent of these unethical practices led to amendments to the VET Guidelines commencing on 1 April 2015 expressly prohibiting the use of inducements and prohibiting a VET provider from enrolling a person unless positively satisfied on reasonable grounds that no prohibited inducement had been offered. They also led to further amendments to the 2015 VET Guidelines which took effect on 1 July 2015 formalising the attribution of responsibility for the conduct of agents and brokers to the relevant VET provider. Indeed, Mr Brown was appointed to the VET FEE-HELP Reform Working Group on 22 April 2015 charged with responsibility for advising the Department on implementation of the amendments. These matters, together with the constant stream of complaints about unethical conduct by Agents marketing Phoenix's Online Courses and signing up potential consumers for Phoenix's Online Courses, mean that Mr Brown and Mr Kochhar, as key officers of Phoenix and CTI, cannot at any point during the relevant period have been unaware of the risk, duly realised, of serious and widespread unethical behaviour by its Brokers and Agents. They also mean that Phoenix directly or through CTI should have had, but did not have, effective measures in place from the start to address that risk or adopted a different business model. 1265 Phoenix recognised that responsibility for training and induction of Brokers and Agents lay with it in repeatedly representing to the DET and the regulators that induction training was provided to all Brokers and Agents. For example, on 23 March 2015, Phoenix stated in its First Request to Increase 2015 Advance Payment Determination (for an increase of 3,118%) that: (1) it provided training to all new sales and marketing staff and Brokers explaining what information consumers must be presented with before they agree to undertake training; (2) it checked that consumers had not been given erroneous or incomplete information by continuous random sampling feedback calls; and (3) if any consumer was in doubt, the situation was rectified immediately and the recruitment staff involved retrained.1466 1266 However, there was no evidence to suggest that those statements reflected the practice actually adopted by Phoenix or CTI (as I found at [568]); nor the statements that all Brokers and Agents were formally inducted and trained in the Second Request to Increase 2015 Advance Payment Determination on 5 June 2015,1467 in the letter from Mr Brown to the DET dated 27 March 2015 in response to complaints about third-party marketing practices,1468 or in Mr Brown's response as CEO of the ACN Group dated 26 October 2015 to the notices issued by the DET on 12 October 2015.1469 Equally untrue were similar statements in Phoenix's 2015 Policy Manual issued in June and July 2015.1470 1267 To the contrary, the respondents were not even aware of the identity of all of the Agents representing them in the field until at least 26 June 2015 and in all probability at no point during the relevant period (as the difficulties in obtaining a list of the Agents working for GG Sales/Auz Education illustrate). It must also be borne in mind that there were at least 548 Agents involved in marketing Phoenix's Online Courses over the relevant period and some of these were sub-agents engaged by corporate Agents who had in turn been engaged by Brokers, with CTI/Phoenix only concluding contracts directly with the Brokers. The difficulties in identifying Agents in such circumstances were highlighted by Ms Bagga in an email on 26 June 2015 to Mr Kochhar regarding tracing an Agent the subject of a complaint, explaining that "[t]he flow of hierarchy is as follows: GG sales Sandeep Sood … Sadi Karim … Mahfouz. It always makes it a task and a half to find who they work for .!" (errors in the original).1471 Furthermore in a telling email on 22 June 2015 to Mr Kochhar, Ms Bagga suggests it is "about time ; we start training the agents pls !!" (errors in the original). In line with this, it will be recalled that Ms Blefari, Group Compliance Manager, was aware of just one compliance workshop having been held for Brokers and Agents in Melbourne attended by only approximately 30 to 40 Agents during her time at CTI which was done at her insistence: see at [353]-[354] above. 1268 The respondents' response was at best an attempt to outsource the training of Agents to the Brokers when complaints continued to escalate in May 2015. For example, on 12 May 2015, Mr Cugliandro wrote to the Brokers advising of problems which "need to [sic] actioned immediately" and advised that: To ensure that all documentation submitted is compliant, we ask that you ensure that the above is adhered to and that all sub agents are aware of the expectations.1472 1269 He also attached the "PTR & LLN Checklist Guidelines" which he "encourage[d]" the Brokers "to pass onto [sic] your sub agents to follow".

17.7 Failing to ascertain whether consumers were suited to the online course and the online course to the consumer 1270 The seventh feature of the Phoenix Marketing System relied upon by the applicants was the failure to ascertain whether the consumer was suited to the course and the course to the consumer. In this regard, as the applicants submit, the nature of the marketing and the manner in which it was carried out "exemplifie[d] the [r]espondents' disregard for the question of suitability of prospective students, and its single-minded focus on student numbers. The Phoenix Marketing System was designed to maximise enrolments, not to attract suitable candidates" (ACS at [631]). 1271 In this regard, it will be recalled that there was a correlation between the disadvantaged demographic groups for whose benefit the amendments to the VET FEE-HELP scheme in 2012 and 2013 were made (the Target Communities), and Phoenix's target cohorts for its Online Courses.1473 As such, they were vulnerable consumers given their Likely Attributes (as earlier defined).1474 However, it was no part of the VET FEE-HELP scheme for persons from these or any other demographics to be enrolled in courses irrespective of whether they were capable of successfully completing them and/or had any intention of attempting to do so. Yet that is precisely the business model adopted by Phoenix which it pursued ruthlessly through the Marketing System and, as I later explain, also through the Phoenix Enrolment System. So much may be inferred from the fact that at no time during the relevant period did the respondents have anything like the resources necessary to provide training and assessments and in the case of the Service Diplomas, work placements, for the volume of consumers being recruited. 1272 Added to this, the Online Courses offered by Phoenix were diploma courses and therefore required consumers to possess higher skill levels.1475 Furthermore, each of Phoenix's Online Courses required a significant commitment from consumers in terms of their time, amounting to a full-time load over an academic year. Moreover, as the courses were online, it was necessary for students to have access to the internet and the necessary computer hardware and software, as well as sufficient digital skills to navigate the online assessment requirements and participate in online learning.1476 1273 The findings already made in the context of upholding the Callous Indifference alleged against Phoenix and CTI in eliciting enrolments through the Brokers and Agents for the Online Courses equally make good the applicants' claim that, by reason of the nature and manner in which the Online Courses were marketed, the respondents failed to ascertain the suitability of consumers to the courses for which they applied. In particular, I would refer in this regard to: (1) the Callous Indifference to whether consumers were within the target cohorts for the Online Courses in which they were enrolled; (2) the enrolment of consumers who did not satisfy the course eligibility criteria from which, as the applicants contend, it can be inferred that those consumers' applications were elicited by Brokers and Agents without regard to whether the consumers satisfied the eligibility criteria; (3) the Callous Indifference to whether the courses were suitable for the particular consumers, including whether enrolment in two or more full-time courses was suitable for the consumer and whether qualifying in both Service Diplomas could be of benefit to a consumer; and (4) the fact that many consumers did not genuinely wish to undertake the course or courses in which they applied to enrol. (See Sections [15.3] to [15.6] above.) 1274 With respect to the last to these matters, the "Student Log-on Project" overseen by Mr Kochhar with Ms Bagga in April and May 2015 is particularly damning. It will be recalled that that project was undertaken in order to give the appearance that a large number of consumers enrolled in Phoenix's Online Courses were actively engaged in those courses by impersonating online activity by them. The first step in the project was to compile a list of almost 5,000 "dead students" with the assistance of some Brokers and Agents, the reference to "dead students" being (it will be recalled) a reference to consumers who were enrolled in Phoenix's Online Courses despite being regarded as definitely not going to engage in those courses. The inevitable inference to be drawn from this evidence is that: (1) those Brokers and Agents had signed up consumers knowing that they had no intention to engage in the courses or were unable to do so, and the Brokers and Agents were therefore in a position to identify "dead students"; (2) the respondents through Mr Kochhar were aware that consumers had been signed up by Agents and Brokers in such circumstances, as they had requested the assistance of the Brokers/Agents to identify the "dead students"; and (3) while the identity of some or all of the "dead students" may not have been known to the respondents without the assistance of the Brokers and Agents concerned (given, among other things, the endemic failure by the respondents to undertake telephone verifications), it was known by the respondents through Mr Kochhar that there were consumers who had been enrolled by CTI despite having been recruited by Agents and Brokers in the knowledge that such consumers had no intention of undertaking the Online Courses. 1275 Furthermore, the primary means of marketing the Online Courses involved so-called "door-knocking", that is, the Agents approached people at their homes in an unsolicited fashion. As the applicants submit, by its very nature this method of marketing targeted particular locations and, more particularly in this case, remote or low socio-economic areas, as opposed to targeting candidates having particular skills and experience. As the applicants also submit: The evils of this focus on location were succinctly summarised by Mr Brown in his interview of [sic] ABC's Background Briefing radio program [on 10 April 2016]: "… the brokers, I suppose, are rewarded for enrolling as many students as possible, and the way the legislation was written, it was targeted at the lower socioeconomic area. You know, earn under $54,000, you don't pay it back til you're earning that amount."1477 1276 Finally, the respondents' disregard for the suitability of consumers to undertake the Online Courses at the marketing stage is highlighted by the evidence of the widespread practice of Agents completing, or assisting consumers to complete, the PTR and LLN tests.

17.8 Practice among Brokers and Agents of providing answers to consumers to questions on the LLN and PTR assessment forms 1277 Finally, the evidence clearly establishes that Brokers and/or Agents routinely completed the LLN and PTR forms themselves or coached the consumers on how to complete the forms despite the purpose of the forms being to provide a basis on which to assess the consumer's capacity to undertake a particular course and their suitability for it. Evidence establishing this pattern of conduct includes the following. (1) Two Agents from GG Sales provided a document containing sample answers (the Sample Answers Document) to the investigator, Mr Winwood-Smith, during a meeting in which he impersonated a consumer interested in receiving a free laptop. The Sample Answers Document was given to Mr Winwood-Smith to assist him in completing the PTR/LLN forms when he explained that his reading and writing skills were poor.1478 (2) Out of a sample of 5,700 PTR/LLN forms, 275 of the forms had very similar answers to those given in the Sample Answers Document and 518 of the forms had very similar answers to those given in Phoenix's Model Answers.1479 GG Sales was the Broker identified in many of these forms.1480 (3) Ms Blefari and Ms Mason frequently observed multiple, even hundreds, of LLN and PTR forms submitted by Brokers which appeared to be in the same handwriting and contained the same or similar answers, as well as observing discrepancies between the signatures on forms and consumers' identification documents.1481 When these and other compliance issues were raised with Mr Kochhar, Mr Kochhar generally became aggressive and critical of them for raising these issues. Eventually, Mr Kochhar instructed Ms Mason to stop checking the handwriting on the completed LLN tests and the signatures.1482 This evidence is supported by contemporaneous internal email correspondence in which instructions were given by Mr Kochhar to ignore differences in handwriting and signatures on the enrolment forms.1483 (4) The practice among Brokers and Agents of assisting consumers to complete the PTR/LLN forms or even completing them for the consumers was also illustrated by the evidence of particular consumers.1484 Similarly, key findings from the telephone interviews undertaken by ORIMA in its student survey (as set out in its draft report) included that, among the 107 interviewees who were able to be contacted, 19% of those required to sit a written test reported that they were assisted with the test.1485 (5) Such practices were also commonly raised in complaints by consumers or others on their behalf.1486 In one example, the trainer, Mr Howley, reported a complaint to Ms Bagga, from a long-term unemployed former truck driver in Elizabeth, South Australia, about an Agent. The Agent was said to have "begged [the consumer] to sign up for [the Service Diplomas] with Phoenix" despite the consumer explaining that he could not use a computer and had no capacity to pay for the internet. Mr Howley reported that the consumer also said that when he did the LLN test, the Agent "produced a book with answers written in what he described as Indian English." (6) The scale of the practice among Agents was effectively acknowledged in an email on 12 May 2015 from Mr Cugliandro (head of Client Relations Management) to Phoenix's Brokers attaching "PTR & LLN Checklist Guidelines".1487 Among other things, the email directed the Brokers to ensure that handwriting in enrolment forms was consistent. The Guidelines also stated that Agents should "ensure the STUDENT is completing their PTR and LLN and it's in the student's handwriting" and that, if "[t]he Handwriting in the PTR & LLN are different - this will not pass compliance". The Guidelines also stated that the PTR questions must "have paragraphs containing [a] minimum of four sentences and MUST be professional language" and that "[o]ne word answers in the PTR/LLN are not acceptable. At least 1-2 sentences are required". The Guidelines also gave directions as to answers and similar phrases not to be used as responses. In effect, the "PTR & LLN Checklist Guidelines" advised the Agents about what should be included in PTR and LLN tests in order to be "compliant", which undermined the purpose of the PTR and LLN tests. 1278 Finally, the scale of the practice among Agents and Brokers throughout the relevant period which this evidence establishes also demonstrates that the practice was not simply attributable to a handful of "rogue agents" but was systemic, as Ms Holland from NTCA pointed out in correspondence with Mr Brown. The failure to effectively address the issues coupled with the evidence of instructions to overlook the problems and proceed nonetheless with enrolment establishes that these practices were endorsed, or at the very least tolerated, by the respondents, which were concerned with appearances rather than compliance in fact, as the applicants submit (ACS at [644(b) and (c)]).

18. THE PHOENIX ENROLMENT SYSTEM 1279 As earlier explained, the applicants plead nine essential features of the Phoenix Enrolment System. I address each of these features in turn below, finding that each is made out on the evidence.

18.1 Enrolling consumers without verifying them 1280 The first feature of the Phoenix Enrolment System is that large numbers of consumers, whose applications had been procured by Agents and Brokers in Phoenix's Online Courses, were enrolled by CTI without CTI first contacting the consumers. As a result, CTI was unable to verify critical matters pertaining to the enrolment process and the VET FEE-HELP scheme. These matters included: (a) the consumer's identity and citizenship status; (b) that the consumer intended to enrol in the online course or courses; (c) whether the online course or courses were suitable for the consumer and the consumer was suited to the online course; (d) the consumer's capacity to speak and understand English; (e) that the consumer had completed the LLN and PTR forms without improper assistance from the Broker or Agent; (f) in instances where the consumer had purportedly applied for more than one simultaneous full-time online course, how the consumer was planning on being able to complete all of those online courses; (g) where the consumer was an Eligible Student or Purported Eligible Student, that she or he understood: (i) the nature of the VET FEE-HELP assistance scheme; and (ii) the amount of debt or likely debt she or he would incur to Phoenix and the Commonwealth respectively. 1281 These features were clearly established by the evidence. 1282 First, as I have earlier found in Section [8.6.2] above, the sheer volume of student enrolments rendered it impossible for the Phone Team to make all of the verification calls within the specified timeframes for the consumers to be enrolled. Mr Brown and Mr Kochhar were well aware of this but continued to set targets for hundreds and even thousands of enrolments to be entered within a week and to direct staff to enrol the consumers despite their applications not being verified (see Sections [8.6.1] to [8.6.3] above). While in some cases, staff were told that the telephone verifications "can come later",1488 directions were given by Mr Brown and Mr Kochhar on occasion not to undertake telephone verifications at all with respect to enrolment applications from particular Brokers, including 1-2-3, 313 Services and GG Sales. It is apparent that in at least some cases, the consumers concerned would not have been enrolled if the verifications had taken place. For example, Mr Kochhar approved the enrolment of at least two consumers in a batch of enrolment forms from Alpha Prime despite the fact that they were "not confirmed". These consumers were later described in an email from Ms Breguet to Ms Bagga as being from an Aboriginal community, having "little to no understanding of the contract they were entering into", and lacking the LLN skills to undertake the courses.1489 If the telephone verifications had taken place, it can be inferred that the consumers' unsuitability to undertake the courses would have been discovered before their enrolment and the appropriate decision would have been to not enrol them. On other occasions, an explanation was given for the instructions not to verify the applications which revealed that if verification had occurred, it is likely that a decision would have been made that the consumers should not have been enrolled.1490 1283 Secondly, internal correspondence acknowledged that consumers were enrolled on Mr Kochhar's instructions despite being "uncontactable".1491 1284 Thirdly, even after Phoenix lost its accreditation and the Phone Team was directed to cease telephone verifications, the Data Team was required to continue to enrol piles of unverified applications.1492 1285 Fourthly, the evidence of the ex-employees and emerging from the internal correspondence as summarised above is corroborated by the results of the evidence analysing the respondents' data. For example: (1) in response to a notice to produce, the respondents were only able to produce verification call recordings for 4,641 consumers out of the 11,393 consumers entered in FinPa from which I inferred that there were no other telephone verification calls made;1493 (2) Phoenix's withdrawal forms show 250 cases in which the consumer's withdrawal form noted that they did not receive any verification calls;1494 and (3) the ORIMA student survey (as set out in its draft report) found that 45 of the 107 consumers interviewed did not participate in any telephone interview with Phoenix.1495

18.2 Enrolling consumers without adequate verification 1286 The second feature of the Phoenix Enrolment System relied upon by the applicants was that, even where CTI did contact consumers before enrolling them, it often failed to verify critical matters set out at [1280] above relevant to the enrolment process and the VET FEE-HELP scheme. 1287 First, the Phone (Contact) Centre Manager, Mr Lewis, explained that the verification process entailed members of the Phone Team asking a series of "yes or no" questions from a script, including whether the consumer had internet access, whether the consumer had completed the enrolment forms themselves, and whether the consumer wished to proceed to enrol in the courses for which they had applied. He also explained that if the consumer responded "yes" to each of the questions, they were updated on Podio to "confirmed" for each course for which they had applied.1496 However, given the large number of cancellations by consumers on the ground that they only wanted a laptop, Mr Kochhar gave instructions for the Phone Team to "go easier" and reduce the number of cancellations, saying that "[i]f they have agreed to everything else then just move them through the system". While as I have earlier found, Mr Lewis did not take those instructions back to his team, he instructed them instead that "[w]e can try and make sure that students understand what they are signing up for but if they say yes to the questions then we have to mark them as confirmed and pass them along" (emphasis added).1497 1288 Secondly, the pro forma script used by the Phone Team1498 did not seek to verify a number of the matters set out in paragraph [1280] above. In particular, the script did not include questions as to a consumer's citizenship status, which might have assisted in determining whether the course(s) were suitable for the consumer and the consumer suited the course, or how the consumer planned to complete more than one full-time course simultaneously. Further, while the script included a question as to whether the consumer had internet access, no questions were posed regarding the consumer's computer literacy. The analysis by the then ACCC Senior Investigator, Mr Voller, of 15 transcribed telephone verification recordings (randomly selected but not statistically significant) is illustrative of the lack of discussion with these consumers about their citizenship, level of education, ability to communicate in writing or orally in English where English did not appear to be the consumer's first language, computer literacy, internet access, or prior work history.1499 Indeed, when it was suggested that the verification call script for the Diploma of Community Services Work should be amended to contain a question about past work experience, it will be recalled that Ms Bagga took the view that the issue should not be discussed with the consumer apparently because "it will be 1 in a million who will have the relevant amount of experience", but she "added some guff to the question re experience" to keep it compliant.1500 1289 Thirdly, Mr Kochhar knew by at least early September 2015 that Auz Education (formerly GG Sales) had undertaken its own telephone verification of over 1,000 students via a call centre in India known as "MIS", being consumers who had been signed up for enrolment in multiple Phoenix courses by Auz Education.1501 Mr Kochhar was also aware that this gave rise to a conflict of interest.1502 Not surprisingly, given the conflict, the vast bulk of the consumers on the so-called "MIS list" were marked as "verified". Furthermore, a Phoenix "audit call report for end of 4 February 2016" found that verification call records could not be located for the vast majority of enrolled consumers comprised within a pool of approximately 1,500 enrolled consumers. The reason for the absence of any record of a verification call given in many of these cases was "MIS confirmation", ie confirmation by the Indian call centre used by GG Sales.1503 Yet despite the absence of a verification call by CTI on behalf of Phoenix contrary to the respondents' policies, these consumers had all been enrolled. 1290 Indeed, as the applicants submit (ACS at [653]), proper verification appears to have been antithetical to Phoenix's verification system, as the directions given by Mr Kochhar to Mr Lewis in response to the number of cancellations at the telephone verification stage illustrate.1504 As a further example, Mr Kochhar's response to a complaint by an Agent of GG Sales that a consumer was precluded from verifying her details because she was not capable of undertaking the course, was to say that the phone agent involved would be sacked if the allegation was true.1505

18.3 Failure to confirm LLN test results 1291 The third feature of the Phoenix Enrolment System on which the applicants rely is the failure by CTI on numerous occasions throughout the relevant period to ensure that a qualified trainer or assessor had marked consumers' LLN tests. This issue falls to be considered having regard to the lack of any enrolment documents identified by Mr Pillai for 1,849 students of the 11,688 students enrolled in Phoenix courses and entered in HEIMS, and a further 31 students for whom there was enrolment documentation but no completed LLN test.1506 As the applicants submit, this evidence suggests that the results of the data analysis in all likelihood understate the true position (ACS at [655]). 1292 First, as I have earlier found, the evidence of ex-employees, internal correspondence, and audit testing of LLN (and PTR) forms by Mr Dunnett establish that only a small percentage of LLN tests were assessed by properly qualified assessors.1507 Despite the mounting backlog of unmarked LLN tests, only twice in Ms Mason's time with Phoenix did assessors attend Spotswood to mark the completed LLN forms1508 and there was an acute shortage of qualified staff to mark the tests. There was only one part-time trainer engaged to mark the LLN tests in June and July 2015 who was unable to keep up with new applications, let alone address the backlog (as acknowledged in internal correspondence).1509 Yet in July 2015, Mr Kochhar reversed his earlier decision to advertise two positions for additional trainers to mark the LLN forms.1510 1293 Secondly, Mr Brown and Mr Kochhar directed CTI staff not to check the handwriting or signatures on LLN tests when their attention was drawn to suspicious patterns in the handwriting and signatures on LLN forms received in batches from particular Brokers and Agents.1511 1294 Thirdly, internal correspondence in early June 2015 acknowledged that the LLN and PTR forms were being checked long after enrolment.1512 The scale of the problem is evident from the urgent steps taken to cover up the huge backlog of unmarked tests by the project to "fix", "backdate" and "mark" LLN forms in September and October 2015 in the context of the Final ASQA Audit Report and impending response to the notice of intention to suspend approval.1513 That also lead to the creation of backdated support plans to reinforce the impression that the needs of enrolled consumers had been properly assessed and considered at an appropriate time.1514 The scale of the backlog of unmarked LLN and PTR forms is also evident from the industrial-scale efforts in January 2016 to backdate and falsify Phoenix's enrolment forms (including the PTR and LLN forms), referred to internally as the "Rectification Project" or "audit", which was conducted offsite in a secret location.1515 As I have earlier found, these "projects" amounted to a large-scale falsification of records in order to cover up massive compliance failures by Phoenix,1516 which were also exposed in Mr Voller's extensive analysis of the PTR/LLN forms, as the applicants submit (ACS at [658]). For example, Mr Voller observed 93 instances in which PTR/LLN forms were purportedly marked by trainers before the trainers in question commenced working for Phoenix,1517 and 40 examples of student enrolment packs containing a form purportedly signed before that version of the form was ostensibly created.1518

18.4 Failure to ensure consumers were within the target cohorts and satisfied eligibility criteria 1295 The fourth feature of the Phoenix Enrolment System was that CTI often enrolled consumers without ascertaining whether: (1) the consumers were within the target cohort for the particular online course or courses; and (2) the consumers satisfied the eligibility criteria for the particular online course or courses. 1296 This is established for the reasons given in Chapter 16 above (The Target Communities and their Likely Attributes).

18.5 Failure to consider work placements 1297 The fifth feature of the Phoenix Enrolment System was that CTI enrolled consumers in the Diploma of Community Services and the Diploma of Early Childhood Education and Care without regard to whether: (1) the consumer would be able to secure a workplace placement which was an essential aspect of each course; and (2) Phoenix or CTI had the capacity to inspect each such workplace and/or observe the consumer in the workplace. 1298 This feature of the Phoenix Enrolment System is established on the basis explained in Section [15.9] above (The Callous Indifference: Work Placement Problems).

18.6 Extensive enrolments in more than one course 1299 Sixthly, the applicants rely upon the feature that CTI usually enrolled consumers in more than one Phoenix online course despite each course having an EFTSL of 1.0. This feature is established, inter alia, by the evidence considered in Section [13.8] (Data Analysis: The enrolment of consumers in multiple courses: data analysis by Ms Jones and Mr Koochew) and the evidence of ex-employees considered in Section [8.6.4] (Applications for multiple courses) above.

18.7 Extensive charging for unnecessary units of study 1300 The seventh feature of the Phoenix Enrolment System is that CTI often charged enrolled consumers duplicated and unnecessary fees for particular units of study. In fact, as the applicants contend (ACS at [665]), the evidence establishes that there was widespread "double charging" of consumers who were enrolled in more than one diploma where both diplomas involved a common unit. Further, consumers undertaking more than one diploma simultaneously did not receive credit for units in one diploma that could count towards the other diploma. The example given by the applicants (ACS at [666]-[667]) referring to Mr Dunnett's evidence as follows is illustrative of the feature: One example is that three subjects were common to the Diploma of Community Services Work course CHC50612 and the Diploma of Early Childhood Education and Care course CHC50113, being: (a) HLTHIR404D: Work effectively with Aboriginal and/or Torres Strait Islander people; (b) CHCORG428A: Reflect on and improve own professional practice; and (c) CHCORG506E: Coordinate the work environment. Consumers who were enrolled in both courses were charged for these subjects twice. In this regard, Mr Dunnett analysed the HEIMS, Wisenet and FinPa data and found that there were 2,063 students who were enrolled in both of these diplomas at once. Of those students, 1,588 (77%) had duplicated units.1519 1301 The crossover between the courses referred to in the passage quoted above was recognised by Phoenix in the table entitled "CHC50612_CHC50113 Comparison" set out in Attachment 44 to Phoenix's Audit Rectification Report dated 7 September 2015.1520 1302 Similarly, the Packaging Rules for the Diplomas of Business (BSB50207)1521 and Management (BSB51107)1522 included a requirement that the eight subjects required for completion of each diploma course be selected from set lists. These included a number of subjects common to each diploma course, namely: BSBINM501A (Manage an information or knowledge management system); BSBINN501A (Establish systems that support innovation); BSBINN502A (Build and sustain an innovative work environment); BSBIPR501A (Manage intellectual property to protect and grow business); BSBPMG522A (Undertake project work); BSBRSK501B (Manage risk); BSBSUS501A (Develop workplace policy and procedures for sustainability); and BSBWOR501B (Manage personal work priorities and professional development). In addition, the Diploma of Business allowed for 2 elective units to be selected from "any current accredited course or endorsed Training Package at this qualification level". As the applicants submit (ACS at [668] and footnote 957), Phoenix's Diploma of Business program1523 contained the units BSBRSK501B and BSBWOR501B, which could have counted as progress toward a Diploma of Management. Equally, Phoenix's Diploma of Management1524 contained the unit BSBPMG522A, which could have counted as progress toward a Diploma of Business. As such, students enrolled into dual Diplomas of Business BSB50207 and Management BSB51107 could potentially utilise this commonality to qualify for both diplomas by enrolling in fewer subjects, as was the practice adopted by at least some other educational providers.1525 However, Phoenix continued to enrol consumers into all 8 units of competency for both the Diploma of Business and Diploma of Management when consumers applied for enrolment in both programs concurrently. As such, as the applicants submit, Phoenix failed to reduce the total number of subject enrolments for consumers enrolled in both the Diploma of Business and the Diploma of Management, instead charging consumers for four more subjects than were required for completion of their courses.

18.8 Enrolments too close to census date 1303 The eighth feature of the Phoenix Enrolment System was that CTI often enrolled a consumer in an online course: (1) after the commencement date, without extending the census date; (2) on or shortly before the census date, without extending the census date; or (3) after the census date. 1304 As earlier explained, the census date was the date after which VET students incurred a debt to the Commonwealth for the unit of study in which they were enrolled following a mandated "cooling off" period intended to afford them an opportunity to try out the course and see whether it was suitable for them without incurring any debt: see Section [6.2.4] above. 1305 Furthermore: (1) by virtue of cl 67 of Sch 1A to the HES Act, a VET provider was not permitted to vary the census date for a unit of study except in accordance with the VET Guidelines or with the written approval of the Minister; and (2) under cl [7.5.1] of the VET Guidelines, the census date could be varied only if the variation: (a) occurred before the published census date for the unit of study; (b) did not disadvantage the student; and (c) was necessary to correct the published census date due to administrative error or circumstances that did not apply when the census date was determined. 1306 The expert report of Mr Dunnett establishes, however, that out of a total of 11,681 students entered as enrolled in Phoenix's Online Courses in HEIMS: (1) 43 consumers were enrolled after the census date; (2) 2,272 consumers (19%) were enrolled in a course on the census date or fewer than 7 days before the census date; and (3) 6,737 consumers (58%) were enrolled in a course 7 days or more before the census date but after the commencement date of their course.1526 1307 This may be an underestimate of the number of consumers enrolled in such circumstances, given that there were a further 2,466 (21%) of enrolled consumers in respect of whom there were no useable records of an enrolment date.1527 As such, at best, evidence existed of approximately 1% of consumers having been enrolled 7 or more days before the census date. It follows, as the applicants submit (ACS at [673]), that the figures "are indicative of a cavalier disregard for the student's opportunity to audit a course before becoming financially liable for it." Indeed, that inference is inescapable. 1308 Added to this, concerns about the practice of enrolling consumers after the commencement date without extending that date were raised at least as early as 2 March 2015 by Ms Crittenden to Mr Gale and were one of the factors which prompted Mr Gale to seek advice confidentially from Mr Nash.1528 That verification calls were being made to enrolled consumers despite the census dates being "way past [sic]" was also acknowledged in an email from Ms Bagga to Ms Dien and others also in March 2015.1529 However, the issue was not addressed as Mr Dunnett's evidence establishes. For example, in an email dated 17 July 2015, Mr Kochhar acknowledged that 400 non-confirmed consumers were already enrolled in courses, and proposed extending their census date for a week because there would be too many consumer complaints if the census date was allowed to lapse before they were contacted.1530

18.9 Provision of log-in details or laptop shortly before or after census dates 1309 The ninth feature of the Phoenix Enrolment System relied upon by the applicants is that CTI often sent a consumer: (1) her or his log-in details for the online course, which were necessary in order to enable the consumer to access the materials for the course, less than 7 days before their census date or on or after the census date; and (2) a laptop around 4 to 6 weeks after the census date had passed, as a result of which the consumer was deprived of a reasonable opportunity, between her or his enrolment date and the census date, to review the online course and determine whether or not to withdraw before the census date. 1310 With respect to the first of these features, in the Dunnett Census Date Affidavit, Mr Dunnett was instructed, among other things, to provide an opinion on when consumers "received" their log-in details relative to the census date for, and commencement date of, their course or courses. In order to undertake this task, Mr Dunnett explained that he reviewed the records in FinPa of emails "issued to" to each of the 11,681 consumers enrolled in Phoenix's Online Courses containing their log-in details. Mr Dunnett also explained that he had assumed "the date students received their login details to be the date of the first email to students from Phoenix advising the student of their login details, as recorded in FinPa" (emphasis added).1531 Proof that an email has been sent, however, does not amount to proof that the email was received. There is no evidence that each of these emails was in fact received by each of the consumers enrolled in Phoenix's Online Courses to whom they were sent. Indeed, there was evidence of multiple complaints that, for example, consumers enrolled in Phoenix courses did not ever receive any communication from Phoenix or in some cases even know that they were enrolled,1532 and that Agents were creating fake email addresses and contact details for consumers.1533 As such, Mr Dunnett's evidence should be understood as comparing the date on which emails were sent by Phoenix to the email addresses set out in each consumer's enrolment application as against the census and commencement dates for the course or courses in which each consumer was enrolled. In so saying, I imply no criticism of Mr Dunnett. He was simply endeavouring to answer the question posed by the applicants' legal representatives and properly identifying the assumption which he had had to make in order to do so. 1311 In addition, I note that Mr Dunnett explained that "[i]n cases where units completed by students had different census dates, as instructed the first date was used for my analysis of these students."1534 Mr Dunnett separately summarised the census dates by month from January 2015 to March 2016 in his affidavit.1535 1312 Bearing these matters in mind, Mr Dunnett relevantly found that: (1) 781 enrolled consumers (7%) "received" their log-in details only after the census date had passed; (2) 1,118 enrolled consumers (10%) "received" their log-in details only on the census date; and (3) 3,013 enrolled consumers (26%) "received" their log-in details fewer than 7 days before the census date.1536 1313 It follows, as the applicants submit (ACS at [677]) that at least 43% of all consumers were deprived of the reasonable opportunity to audit the course in which they were enrolled before becoming financially indebted to the Commonwealth for a loan under the VET FEE-HELP assistance scheme.1537 1314 Furthermore, while 6,346 consumers (54%) were issued their log-in details 7 days or more before the census date, this was only after the course had commenced. Only 1% of all consumers were issued their log-in details 7 days or more before the census date and before the commencement date of the course or courses in question. 1315 I also note that Mr Dunnett was unable to find a record in FinPa of 288 consumers having been issued log-in details.1538 The reason for this in the case of 261 of these consumers is that they were enrolled in face-to-face courses with Phoenix, although no reason is known as to why the remaining 27 consumers were recorded in HEIMS but not in FinPa.1539 1316 The second feature set out above (ie the receipt of a laptop 4 to 6 weeks after the census date), is also established by the cumulative weight of the evidence as follows: (1) the consistent pattern of complaints made to trainers by those enrolled consumers whom they were able to contact, that they were unable to start the course or courses in question because they had not received their laptops;1540 (2) the reasons recorded by Phoenix employees for 43 of the 673 enrolled consumers who requested withdrawal from its Online Courses were that they had not received their laptop or it was not working (Category G of the analysis of the FinPa withdrawal notes);1541 (3) the same reasons recorded by Phoenix employees for 15 of the 155 enrolled consumers who requested cancellation of their enrolment, as summarised in the FinPa Cancel Spreadsheet;1542 and (4) the ORIMA student survey finding (as set out in its draft report) that about 20% of the 72 interviewees who reported that they had not participated in the Phoenix Online Courses in which they were enrolled, cited the failure by Phoenix to provide a promised laptop as a reason for not having done so.1543 1317 This feature is also illustrated by the recording of a telephone verification call in which the Phoenix representative advised the consumer that "you should be receiving your laptop within 6 weeks from your census date…".1544 1318 Consistently with this evidence, ASQA's VET Quality Framework Report dated 9 November 2015 found non-compliance with cl 5.1 of the 2015 RTO Standards, on the basis that: It is unclear how learners without a computer and/or internet access are able to access the Student Handbook and 'Course Overviews' on the myTime Learning website prior to enrolment if they are unable to receive the Laptop for studies until enrolment is confirmed.1545

19. FINDINGS ON THE SYSTEMS UNCONSCIONABILITY CASE 1319 I accept the applicants' submission that the Phoenix Marketing System and the Phoenix Enrolment System constituted systems of conduct that were in all the circumstances unconscionable in contravention of s 21 of the ACL for the reasons I explain below.

19.1 Two systems of conduct 1320 There is some force in the proposition that there was only one system at play as opposed to two separate systems, viz the Phoenix Marketing System and the Phoenix Enrolment System. The reason for that is that ultimately both systems worked in tandem with the apparent intention of maximising Phoenix's profit by ensuring the enrolment of as many consumers as possible who were unlikely to engage with the Online Courses and unlikely to appreciate the consequences of their enrolment such that they would withdraw prior to the census date. However, on balance, I consider that the better characterisation is that the Phoenix Marketing System and the Phoenix Enrolment System were two systems of conduct, notwithstanding that they overlap, for the following reasons. 1321 On the one hand, the Phoenix Marketing System focused upon the direct, unsolicited approaches made by Agents to consumers to elicit enrolment forms from them for enrolment in Phoenix Online Courses in furtherance of the Profit Maximising purpose, with a Callous Indifference to their suitability for the courses, on the basis of misleading representations, and using high pressure and unfair tactics. In effect, this first aspect of the applicants' systems case might loosely be described as focused upon "recruiting students" and "capturing them in the [Phoenix] net". In respect of the Phoenix Marketing System, the conduct of the Agents and of the Brokers who engaged them is attributed to Phoenix, which contracted with the Brokers initially through CLI acting on its behalf and subsequently directly. The applicants also allege that CTI was directly or indirectly knowingly concerned in that system and/or aided, abetted, counselled or procured the contraventions by Phoenix. 1322 On the other hand, while also pursued in furtherance of the Profit Maximising Purpose and with the Callous Indifference, the Phoenix Enrolment System was concerned with what happened after submission of the enrolment forms by the Brokers to CTI. This aspect of the applicants' systems case focused upon the processing of the enrolment forms and enrolling of consumers in Phoenix's Online Courses, including in multiple full-time courses, in circumstances where, among other things there was systemic non-compliance with the safeguards mandated by the VET FEE-HELP legislative scheme and by Phoenix's policies for ensuring that students had an opportunity to make informed decisions about whether courses were suitable for them, for vetting unsuitable candidates, and for ensuring that consumers who were enrolled would have the support they required to undertake the courses. This system also included charging enrolled consumers duplicated and unnecessary fees for particular units of study. The applicants' primary case is that Phoenix and CTI (which acted on behalf of Phoenix in enrolling consumers) contravened s 21 of the ACL.

19.2 The circumstances in which the Phoenix Marketing System was deployed 1323 It will be recalled that the statutory question posed by s 21(1) of the ACL is whether the Phoenix Marketing and Enrolment Systems are objectively characterised as "unconscionable" in the sense that they are "so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience": Kobelt at [92] (Gageler J): see Chapter 5 above (Legal Principles). This assessment is informed by the considerations identified in s 22(1) of the ACL and turns upon all of the circumstances. In order to undertake this assessment, therefore, it is necessary to view the whole episode of conduct, rather than by reference to isolated integers. 1324 Having regard to all of the circumstances, key aspects of which are summarised below, the Phoenix Marketing system deployed by Phoenix throughout the Relevant Period directly and indirectly through CTI and CLI on consumers was manifestly unconscionable contrary to s 21(1) of the ACL. 1325 First, VET providers were on regular notice from mid-2014 of the prevalence in the sector of unethical practices by some marketing agents and brokers taking advantage of vulnerable consumers and that VET providers were responsible for their conduct. Phoenix and CTI through its key officers, Mr Brown (a director of both respondents and, from August 2015, CEO of the myTime Learning division of Phoenix, as well as CEO and managing director of ACN) and Mr Kochhar (COO of both companies, as well as ACN), must have known of these risks and of Phoenix's responsibilities as a VET provider from the commencement of the relevant period. Indeed, on 22 April 2015, Mr Brown was appointed to the VET FEE-HELP Reform Working Group established to advise the Department on implementation of the changes to the VET FEE-HELP scheme which were designed to protect vulnerable students and the reputation of the VET sector from the actions of unscrupulous VET providers and/or their agents and brokers. No doubt, this appointment, though ill-conceived, was based upon Mr Brown's knowledge of, and experience in, the sector. 1326 Secondly, following its acquisition by ACN, Phoenix radically changed its mode of operation: (1) from a VET provider offering face-to-face information nights to prospective students and tuition in small classes at its Queen Street Campus in Melbourne; (2) to a VET provider offering online courses to thousands of consumers across Australia. 1327 Thirdly, these changes were implemented immediately upon the acquisition of Phoenix by ACN pursuant to a strategy whereby, in the first instance and critically: (1) contracts were entered into with multiple Brokers by CLI initially on Phoenix's behalf and from 1 July 2015 by Phoenix directly; (2) contracts with the Brokers were signed by Mr Brown initially as the authorised officer for CLI and subsequently on behalf of Phoenix; (3) the Brokers in turn would contract with other Brokers and Agents to mobilise multiple Agents to grow the number of students applying for enrolment in Phoenix's new online courses exponentially by unsolicited marketing including door-to-door sales; (4) Brokers were highly incentivised to obtain enrolment applications from as many students as possible in multiple courses who were unlikely to withdraw before the census date, by reason of the substantial commissions to be earned for each successful enrolment in each Phoenix online course once the census date was past; and (5) the respondents relied upon Brokers to similarly incentivise Agents to do likewise. 1328 Fourthly, these changes were driven by Phoenix's Profit Maximising Purpose, that is, to maximise the number of consumers enrolled in its online VET courses and hence the number of consumers enrolled in its Online Courses who received VET FEE-HELP and thereby maximise the amount of revenue to Phoenix from the Commonwealth via the VET FEE-HELP assistance scheme. 1329 These changes were also made in circumstances where the respondents had the Callous Indifference including, among other aspects, a callous indifference to students' eligibility and suitability to undertake the Online Courses, whether they had any reasonable prospects of completing them, whether Phoenix had appropriate trainer-to-student ratios and adequate support in place for the students, and whether work placement requirements for the Service Diplomas could be met. 1330 In the fifth place, consumers were likely to be Vulnerable Consumers, that is, they were likely to include the Target Communities and have low LLN results, low levels of formal education, and low levels of computer literacy (earlier defined as the Likely Attributes).1546 Indeed, this was the case with respect to the vast bulk of consumers solicited for enrolment, notwithstanding the high levels of literacy, skills and experience required for the Online Courses being marketed for Phoenix which were all at the diploma level of difficulty. In this regard, while a VET provider was entitled to target disadvantaged consumers in keeping with the 2012 amendments to the VET FEE-HELP scheme, they were required, as Bromwich J held in AIPE (No 3) at [90], "to take such consumers as they found them and therefore to proceed upon the basis of their greater vulnerability." Thus, as his Honour held at [91]: Though the VET FEE-HELP scheme was targeted at disadvantaged groups, service providers and their agents were not permitted to seize upon these vulnerabilities such that consumers were incurring liabilities without their eyes wide open. It is clear that the scheme was only meant to be made available to consumers who were aware of its essential features … 1331 Yet the individuals targeted by Brokers and Agents included vulnerable consumers who: (1) were considered unlikely to understand and interrogate the consequences of applying for enrolment in the Phoenix Online Courses in terms of the obligations incurred by them under the VET FEE-HELP scheme and their corresponding rights; (2) were resident in low socio-economic and in remote rural areas, including remote Indigenous communities, and who were frequently unemployed and therefore at home during the day to whom offers about free courses, free laptops, small cash payments and other inducements would likely have had particularly strong appeal; (3) made it clear at the time their enrolment applications were solicited that they had no desire to embark upon the Phoenix Online Courses (so-called "dead students") but were motivated only by offers by the Agents of a free laptop and/or other inducements in circumstances where they were told that the Online Courses were free or free until the consumers earned an amount they were unlikely to earn; (4) lacked the skills, experience, internet access, computer literacy, and/or proficiency in English, to be able to engage with the Phoenix Online Courses; and/or (5) otherwise by reason of age, illness or disability were obviously not suited to the courses or likely to derive any benefit from them. 1332 Sixthly, there was an incentive for Brokers and Agents to target consumers lacking the capacity to look after their own interests and who were unlikely to understand the debts they would incur if enrolled and their rights to withdraw before the census date, because this enhanced the likelihood that such consumers would become enrolled in a Phoenix online course at least until the census date when commissions to Brokers (and Agents) would crystallise (as Bromwich J pointed out in AIPE (No 3) at [89]). This was also in the respondents' interests. As Bromwich J concluded in AIPE (No 3): "… it was in the simultaneous interests of the VET provider and the agents and their recruiters to make sure that as many consumers as possible were signed up as students and remained signed up until the census date" (at [93]; emphasis added). 1333 In the seventh place, Phoenix (through Mr Brown and Mr Kochhar) were on notice from the high volume of complaints being received throughout the relevant period of unethical, predatory, dishonest, and unfair practices being employed by Brokers and Agents selling Phoenix's Online Courses. These complaints, which related to conduct throughout Australia and were therefore widespread, tended to have common elements, including one or more of the following aspects: (1) unsolicited approaches to consumers at their homes; (2) targeting of vulnerable and remote communities, including remote Indigenous communities; (3) the use of high pressure tactics including with respect to consumers with severe disabilities or a terminal illness; (4) offers of inducements for enrolment including "free" laptops, cash, and other "free" inducements such as lightglobes and shower heads; (5) pressure to apply for enrolment in multiple, concurrent full-time courses; and/or (6) representations to consumers that they did not need to undertake the course despite being enrolled. 1334 Phoenix (through Mr Brown and Mr Kochhar) also knew that numerous complaints were being received of: (1) false and misleading statements by Brokers and Agents to consumers including that the Phoenix Online Courses were free, or free unless the consumer's income reached a certain level which they were unlikely to earn on completion of the course or ever, and that the laptops were free; and (2) consistent failures to inform consumers that they would incur VET FEE-HELP debts if they enrolled in Phoenix Online Courses and remained enrolled after the census date and as to the circumstances in which the debts would have to be repaid to the Commonwealth. 1335 Phoenix further knew through Mr Brown and Mr Kochhar that the tactics the subject of complaints included Agents completing consumers' enrolment documents and coaching consumers during the course of verification calls. Yet, Phoenix (through Mr Brown and Mr Kochhar) was aware: (1) that the completion of enrolment forms by the consumer personally, including the LLN and PTR tests and the CAF, was a necessary precursor to a consumer being enrolled in a Phoenix online course and being exposed to a debt to the Commonwealth should they not withdraw before the census date; (2) of the purposes to be served by the LLN and PTR indicator tools, including to assess student suitability and competency to be able to undertake the courses and to identify those who might require assistance, as reflected for example in "Trainer's and Assessor Guides" prepared as early as December 2014 in anticipation of the acquisition of Phoenix by ACN. 1336 Thus, as Bromwich J held in AIPE (No 3): 92. … Self-evidently, no provider should have been enrolling consumers as students if they did not have the minimum threshold of language, literacy and numeracy skills required to have any realistic possibility of participating in, and completing, a course. To do so would be a cruel hoax to perpetrate on disadvantaged consumers by giving them a false hope of this being a means of improving their lives, because even a remote possibility of success would likely be illusory in these circumstances. 1337 Eighthly, despite the known risks posed by the use of Brokers and Agents and the Nash Audit Report in February 2015 identifying a lack of information about the Agents marketing the Online Courses, the arrangements with them, and the apparent absence of systems to monitor them, complaints about the Brokers and Agents conduct escalated throughout the relevant period without any structural changes being made to the respondents' mode of operation (as, for example, Ms Holland from the NTCA made clear was necessary). Nor did the respondents otherwise take proactive, preventative steps to guard against these risks, whether through the provision of adequate or any training of the Brokers and Agents in their obligations under the ACL and RTO Standards or otherwise. To the contrary, Phoenix/CTI continued to expand the number of Brokers and Agents selling Phoenix Online Courses, rewarded some of the worst offending Brokers (including GG Sales) by increased commissions when contracts were renegotiated, and actively encouraged the Brokers to sign up consumers in multiple, full-time Online Courses in massive numbers, and rewarded them for the same. 1338 As in AIPE (No 3), the approach of senior management when complaints were drawn to their attention is a cogent indicator of the attitude prevailing at Phoenix and CTI. The reluctance exhibited to act on complaints and the failure to put in place measures to address systemic issues repeatedly raised in complaints is telling evidence that the outcome complained of was an accepted feature of Phoenix and CTI's way of "doing business" or indeed a desired or intended outcome (AIPE (No 3) at [83] by analogy). When the complaints about unethical conduct by Brokers and Agents were brought to Mr Brown and Mr Kochhar's attention by employees, they sought to brush them aside, bullied staff for raising their concerns, and sidelined staff including senior management such as Mr Gale, then CEO of Phoenix, and Ms Crittenden, the Director of Operations, Quality and Compliance. As a further example, Ms Blefari, Group Compliance Manager, was instructed to make her reports to the ACN Board "much shorter and more general" following a number of compliance reports submitted by her to the Board setting out, in detail, her concerns about compliance issues relevantly with respect to Phoenix. 1339 Furthermore, when complaints of serious misconduct by Brokers and Agents on behalf of Phoenix came to the attention of various regulators, a reactive approach was adopted by Phoenix/CTI. This primarily involved denying that there were problems, responding with "guff", cancelling some enrolments the subject of complaints but often only where threats were made of taking the complaints to the police or a regulator, blacklisting individual "rogue agents" reactively, and attempting to delegate Phoenix's responsibility for the conduct of Agents to the Brokers. Otherwise, the active encouragement by Mr Brown and Mr Kochhar to Brokers to supply up to thousands of enrolment applications each week continued, and Phoenix and CTI took steps to endeavour to conceal, through dishonest means, what was actually occurring. These steps included: (1) falsely representing that Phoenix/CTI ensured that all Brokers and Agents were given induction training; (2) falsely representing the action taken in response to complaints against Agents and Brokers, and the safeguards allegedly in place to vet Brokers and Agents and protect the interests of consumers; (3) directing employees of CTI to ignore suspicious patterns in enrolment documentation submitted by Brokers; and (4) falsifying and backdating enrolment documents submitted by Brokers and student support plans on an industrial scale. 1340 Phoenix was in breach of multiple obligations under the HES Act, the VET Guidelines and the AIP Manual including ensuring that the Commonwealth Assistance Form was brought to the attention of prospective students, that its contents were understood, and that a declaration was meaningfully given by the consumer personally (see Section [6.2.6] above; see also AIPE (No 3) at [81]). 1341 Phoenix was also in breach of its own policies, as set out in its Policy Manual from time to time. 1342 In reaching the conclusion that Phoenix's conduct in deploying the Phoenix Marketing System was unconscionable for the purposes of s 21 of the ACL, I have had regard to all of the circumstances. These included the following relevant non-exhaustive factors specified in s 22 of the ACL: (1) Phoenix was in a superior bargaining position compared to consumers in the way that it recruited students through its Brokers and Agents (s 22(1)(a), ACL); (2) contrary to the intended operation of the VET FEE-HELP scheme, many consumers were left without an understanding of the enrolment documents relating to the supply of services by Phoenix and loans under the VET FEE-HELP scheme, including the number of courses in which they had been enrolled, the existence or nature of the debt owed to the Commonwealth if they were enrolled once the census date had passed, and their right to withdraw prior to the census date (s 22(1)(c), ACL); (3) consumers were subjected to undue influence, pressure and unfair tactics through the unscrupulous behaviour of the Brokers and Agents acting on Phoenix's behalf (s 22(1)(d), ACL); (4) Phoenix (through the Brokers and Agents) unreasonably failed to disclose to consumers the risks to them arising from their intended conduct in terms of the debts which they would incur and the lifetime cap on the amount which each student could claim in FEE-HELP assistance (s 22(1)(i), ACL); and (5) there was an absence of good faith in multiple respects (s 22(1)(l), ACL).

19.3 Contravention by CTI: Phoenix Marketing System 1343 I also accept that CTI aided, abetted, counselled, or procured essential elements of the contraventions and/or was directly or indirectly knowingly concerned in them for the purposes of s 224 of the ACL, given CTI's role, including the actual knowledge of its officers, Mr Brown and Mr Kochhar, of the matters comprising the essential elements of the systemic conduct and its involvement in the Phoenix Marketing System. 1344 Section 224 of the ACL sets out the circumstances in which a court may order persons to pay pecuniary penalties, and relevantly provides that: (1) If a court is satisfied that a person: (a) has contravened any of the following provisions: (i) a provision of Part 2-2 (which is about unconscionable conduct [and includes s 21]); … (c) has aided, abetted, counselled or procured a person to contravene such a provision; or … (e) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; … the court may order the person to pay to the Commonwealth, State or Territory, as the case may be, such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the court determines to be appropriate. 1345 The applicants rely on ss 224(1)(c) and (e) in contending that CTI is liable with Phoenix for the contraventions comprising the Phoenix Marketing System.1547 1346 In Captain Cook College, Stewart J helpfully summarised the relevant principles with respect to s 224(1)(e) as follows. 98 There are two requirements that must be established before it can be concluded that a person was knowingly concerned in, or party to, a contravention. 99 First, the person must have had actual knowledge of all the essential facts constituting the contravention: Yorke v Lucas [[1985] HCA 65; (1985) 158 CLR 661] at 669-670. That is not imputed or constructive knowledge but, rather, actual knowledge: Young Investments Group Pty Ltd v Mann [2012] FCAFC 107; 293 ALR 537 at [11] per Emmett, Bennett and McKerracher JJ. However, it is not necessary that the person knew that those matters constituted a contravention: Rafferty v Madgwicks [2012] FCAFC 37; 203 FCR 1 at [254] per Kenny, Stone and Logan JJ. The requisite actual knowledge must be present at the time of the contravention; a later acquisition of knowledge of the essential matters is not sufficient: ASIC v Australian Investors Forum Pty Ltd (No 2) [2005] NSWSC 267; 53 ACSR 305 at [113]-[118] per Palmer J; ASIC v ActiveSuper Pty Ltd (in liq) [2015] FCA 342; 235 FCR 181 at [405] per White J. 100 Actual knowledge may be inferred from "a combination of suspicious circumstances and a failure to make an inquiry" - which is sometimes referred to as "wilful blindness", but "knowledge must be the only rational inference available": Pereira v Director of Public Prosecutions [1988] HCA 57; 82 ALR 217 at 220 per Mason CJ, Dean[e], Dawson, Toohey and Gaudron JJ. It has also been said that "actual knowledge may be inferred from ignorance dishonestly and deliberately maintained or wilful blindness": Lloyd v Belconnen Lakeview Pty Ltd [2019] FCA 2177; 377 ALR 234 at [321] per Lee J. 101 In a case such as the present which, relevantly, involves a case asserting knowing concern in unconscionable conduct, it is necessary to show that the person said to be knowingly concerned knew of all the circumstances by which the conduct is ultimately found to have been unconscionable in contravention of the statutory norm: Stefanovski v Digital Central Australia (Assets) Pty Ltd [2018] FCAFC 31; 368 ALR 607 at [71] per McKerracher, Robertson and Derrington JJ. 102 Secondly, the person must have engaged in conduct (by act or omission) which can properly be said to "implicate" them in the contravention or which shows a "practical connection" between them and the contravention: ActiveSuper at [407]-[410]; Ashbury v Reid [1961] WAR 49 at 51; Trade Practices Commission v Australia Meat Holdings Pty Ltd [1988] FCA 338; 83 ALR 299 at 357 per Wilcox J. It is not necessary that the person physically do anything to further the contravention; it is sufficient if the person, by what they said and agreed to do, in fact became associated with and thus involved, in the relevant sense, in the conduct constituting the contravention: R v Tannous (1988) 10 NSWLR 303 at 308 per Lee J, Street CJ and Finlay J agreeing; Leighton Contractors Pty Ltd v CFMEU [2006] WASC 144; 154 IR 228 at [29] per Le Miere J; Qantas Airways Ltd v TWUA [2011] FCA 470; 280 ALR 503 at [324]-[325] per Moore J; Fair Work Ombudsman v Priority Matters Pty Ltd [2017] FCA 833 at [118]-[119] per Flick J; Termite Resources NL (in liq) v Meadows [2019] FCA 354; 370 ALR 191 at [717] per White J. (Emphasis added.) 1347 However, Stewart J correctly rejected the submission that for a person to be knowingly concerned in the contravention of another, it must be shown that they participated in the essential elements constituting the contravention: Captain Cook College at [108]. 1348 In the present case, the evidence establishes that CTI was knowingly involved in the Phoenix Marketing System unconscionability contraventions. Further or in the alternative, I accept that CTI aided and/or abetted these contraventions. Specifically: (1) CTI's CRM Team monitored, liased and engaged directly with the Brokers selling or marketing the Phoenix Online Courses, including approving the geographic locations which the Brokers and Agents would target, and had responsibility "for making sure they were doing the right thing" (as Ms Mason explained).1548 (2) CTI's Data and Quality Team was responsible for receiving and processing the enrolments, while its Phone Team had responsibility for conducting the student verification calls. (3) The Manager of the CRM Team reported directly to Mr Kochhar who in turn reported directly to Mr Brown, as did the Phone Centre Manager. The Data and Quality Manager overseeing the Data and Quality Team also reported directly to Mr Kochhar, and occasionally to Mr Brown. (4) Mr Brown and Mr Kochhar had actual knowledge of all of the circumstances pertaining to the Phoenix Marketing System unconscionability contraventions. (5) During the relevant period, Mr Brown and Mr Kochhar held the positions in CTI described at [1325] above and their knowledge is therefore to be attributed to CTI. (6) During the relevant period, CTI had the Profit Maximising Purpose and the Callous Indifference.

19.4 Contraventions of s 21, ACL: the Phoenix Enrolment System 1349 It will be recalled that CTI performed the function of considering enrolment applications and enrolling consumers in Phoenix's Online Courses. As a result, CTI itself directly contravened s 21 of the ACL.1549 However, as CTI's conduct was engaged in on behalf of Phoenix and CTI acted within the scope of its actual or apparent authority as Phoenix's agent, CTI's conduct is also attributed to Phoenix such that Phoenix engaged in the contraventions by virtue of s 139B(2) of the CCA.1550 1350 The Phoenix Enrolment System was deployed on consumers applying for enrolment in Phoenix Online Courses in all of the circumstances, key aspects of which may be summarised as follows. (1) Phoenix and CTI had the Profit Maximising Purpose throughout the relevant period with Phoenix claiming and retaining VET FEE-HELP revenue with respect to enrolled consumers subject to the risk, if not the likelihood, that they had been enrolled as a consequence of misconduct and sharp practices by Brokers and Agents and despite it being known that many were unsuitable for enrolment. (2) Phoenix and CTI had the Callous Indifference. (3) Phoenix and CTI knew that many consumers were likely to be Vulnerable Consumers. (4) The Phoenix Marketing System existed in all of the circumstances outlined earlier. (5) Eligible Students and Purported Eligible Students were often deprived of the reasonable opportunity to withdraw from the online course or courses in which they were enrolled before the census date had passed and therefore the opportunity to avoid incurring the debt or likely debt to the Commonwealth. (6) Under the FinPa system, Phoenix and CTI knew how many students were logging in to their courses and were aware throughout the relevant period of the extraordinarily low ratio of students engaging at all with their online courses. (7) The overwhelming majority of consumers derived no benefit from their enrolment in courses that were unsuitable for them or for which they were unsuitable, despite incurring a substantial debt to the Commonwealth and a reduction in the lifetime cap which applied to limit their access to VET FEE-HELP loans in the future. (8) Phoenix stood to gain windfall profits if the numbers of consumers enrolled in its Online Courses never engaged in the courses unless this resulted in the VET FEE-HELP debt later being cancelled despite the census date having passed (see by analogy AIPE (No 3) at [93]). (9) Phoenix took steps to endeavour to conceal, through dishonest means, what was actually occurring from the regulators. These steps included: (a) falsely representing that Phoenix had in place and was observing appropriate practices and systems to the regulators which it was not in fact observing, including creating backdated student "support" plans; (b) falsifying enrolment documents on an industrial scale so as to "validate" enrolments, including by marking PTR and LLN forms long after the consumers concerned had been enrolled and the census date had passed, and correcting and altering PTR and LLN forms relating to large numbers of enrolled students; (c) inflating the extent of engagement by enrolled consumers with their courses, including by directing employees to log in to, and undertake activity on, FinPa so as to impersonate so-called "dead students", and separately sending text message and emails with a "one click" hyperlink to FinPa which automatically activated the course for an enrolled consumer; (d) as part of the so-called "Rectification Project", sending trainers on roadshow to various locations to assist enrolled consumers to complete a unit, with some students and trainers each being offered a $50 voucher for each unit completed; (e) holding out persons as trainers employed with Phoenix who never undertook any training for it so as to attempt to improve the trainer-to-student ratios; and (f) incentivising trainers to assess students as "competent" by offering an amount in addition to the hourly rate of pay where a positive assessment was made. (10) Phoenix failed to withdraw a significant number of consumers who sought to cancel their enrolment, while it continued to claim VET FEE-HELP payments in respect of those consumers. (11) Phoenix was in breach of multiple obligations under the HES Act, the VET Guidelines and the AIP Manual and of its own policies. 1351 In holding that Phoenix's conduct in deploying the Enrolment System was unconscionable for the purposes of s 21 of the ACL, I have had regard to all of the circumstances. These included the following relevant non-exhaustive factors specified in s 22 of the ACL: (1) Phoenix and CTI were in a superior bargaining position compared to consumers (s 22(1)(a), ACL); (2) many consumers did not understand the documents relating to the supply of services by Phoenix and loans under the VET FEE-HELP scheme, including the number of courses in which they had been enrolled, the existence or nature of the debt owed to the Commonwealth, and their right to withdraw prior to the census date (s 22(1)(c), ACL); (3) by virtue of the nature of the enrolment process, Phoenix and CTI enrolled consumers in often unwanted and unnecessary courses and units and frequently deprived them of a reasonable opportunity to withdraw without incurring a debt (s 22(1)(d), ACL); (4) Phoenix and CTI unreasonably failed to disclose to consumers the risks to them of enrolling in the Online Courses and applying for assistance under the VET FEE-HELP loan scheme in terms of the debt which they would incur to the Commonwealth and the reduction in the lifetime cap on the amount which they could claim in FEE-HELP assistance (s 22(1)(i), ACL); and (5) Phoenix and CTI did not act in good faith in multiple respects (s 22(1)(l), ACL).

19.5 Conclusion on the applicants' systems unconscionability case 1352 The Phoenix Marketing and Enrolment Systems were the product of calculated design borne out of sheer avariciousness (viz the Profit Maximising Purpose) and callous disregard of the interests of consumers enrolled in Phoenix Online Courses (viz the Callous Indifference). It is no exaggeration to describe the respondents' conduct as grossly exploitative and at times dishonest, and as lacking in any respect for the dignity and autonomy of the vulnerable consumers who were targeted (Kobelt at [93] (Gageler J)). It is conduct that, when assessed according to values prevailing within Australian society, is self-evidently well outside societal norms of acceptable commercial behaviour and is properly to be condemned as conduct offensive to conscience. Since the conduct in respect of both the Phoenix Marketing and Enrolment Systems by Phoenix and CTI were undertaken in trade or commerce in connection with the supply or possible supply of services (ie education), it follows that the contraventions of s 21 of the ACL alleged by the applicants are established against both Phoenix and CTI. 1353 As the applicants submit, both the Phoenix Marketing and Enrolment Systems touched and operated upon all of the consumers enrolled in Phoenix Online Courses and in respect of whom Phoenix claimed VET FEE-HELP payments. As earlier explained, it is not necessary to establish that all or any of the enrolled consumers in fact suffered disadvantage, although it is apparent that many did. With respect to the number of enrolled consumers, I accept Mr Ulpen's evidence that there were 11,393 students in Phoenix Online Courses for whom Phoenix claimed an entitlement to VET FEE-HELP assistance, that number being calculated by matching HEIMS data to Wise.Net and FinPa data.1551 It follows that there were 22,786 contraventions of s 21 of the ACL, being two contraventions in respect of each of the 11,393 enrolled consumers for whom VET FEE-HELP payments were made.1552 1354 In those circumstances, it is appropriate to make the declarations sought at paragraphs [1A] and [1B] of the second further amended originating application that Phoenix has contravened s 21 of the ACL by the Phoenix Marketing and Enrolment Systems respectively in respect of each consumer. It is also appropriate to make the declarations sought in paragraphs [2] and [2A] of the SFAOA that Phoenix has, by the conduct of its Brokers and Agents, engaged in conduct that was false or misleading or deceptive in breach of ss 18 and 29(1)(i) of the ACL and in conduct that was unconscionable thereby contravening s 21 of the ACL with respect to Consumers A, B, C, and D. Declaratory relief should also be granted to the effect that the second respondent, CTI, aided, abetted or procured Phoenix's contraventions of s 21 of the ACL in connection with the Phoenix Marketing System and that it has contravened s 21 of the ACL with respect to each consumer by its conduct, being the Phoenix Enrolment System, as sought in paragraphs [9A] and [9B] of the ASOC. I will hear the parties as to the further orders to be made, including with respect to the setting of a timetable for the determination of the civil penalties to be imposed and any further relief. I certify that the preceding one thousand three hundred and fifty-four (1354) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Perry.

APPENDIX 1: GLOSSARY ACCC Australian Competition and Consumer Commission ACSF Australian Core Skills Framework AIP Manual VET Administrative Information for Providers ACL Australian Consumer Law ACN Group Australian Careers Network Limited and its subsidiaries, including Phoenix, CTI and CLI ACSF Australian Core Skills Framework AIPE Australian Institute of Professional Education Pty Ltd AQF Australian Qualifications Framework ACS Applicants' Closing Submissions filed 22 November 2019 ASOC Amended Statement of Claim filed 6 November 2019 ASQA Australian Skills Quality Authority ASX Australian Stock Exchange CAN Commonwealth Assistance Notice CCA Competition and Consumer Act 2010 (Cth) CAF Commonwealth Assistance Form CRM Team Client Relationship Management Team, CTI CLI CLI Training Pty Ltd CTI Community Training Initiatives Pty Ltd DET or Department Department of Education and Training DOCA Deed of Company Arrangement EFTSL Equivalent full-time student load ESOS Act Education Services for Overseas Students Act 2000 (Cth) FCR Federal Court Rules 2011 (Cth) FinPa Phoenix's electronic learning management system FTS Forensic Technology Services team, Clayton Utz HEIMS Higher Education Information Management System HELP Higher Education Loan Program HES Act Higher Education Support Act 2003 (Cth) HITS HELP Information and Technology System LLN Language, literacy and numeracy MGN McGrathNicol NTCA Northern Territory Consumer Affairs NVETR Act National Vocational Education and Training Regulator Act 2011 (Cth) Packaging Rules Training Package Qualification Rules Phoenix Phoenix Institute of Australia Pty Ltd PTR Pre-Training Review relevant period Around 13 January 2015 to around 23 November 2015 RTO Registered training organisation SFAOA Second Further Amended Originating Application filed 5 March 2019 SOC Statement of Claim filed 5 March 2019 STB Supplementary Tender Bundle TAS Training and Assessment Strategy TB Tender Bundle TFN Tax File Number VET Vocational Education and Training Wise.NET Student management software program used by Phoenix and CTI

APPENDIX 2: LIST OF CONTRACTS ENTERED INTO BETWEEN CLI/PHOENIX AND BROKERS (ASOC, ANNEXURE A)

APPENDIX 3: LIST OF CONTRACTS ENTERED INTO BETWEEN BROKERS AND AGENTS (ASOC, ANNEXURE B)

APPENDIX 4: COMPREHENSIVE TABLE OF CONTENTS 1 INTRODUCTION [1] 1.1 Overview of the issues [1] 1.2 Summary of key aspects of this decision [7] 1.3 The applicants' multipronged approach to proof of the alleged contraventions of the ACL [19] 1.4 The structure of these reasons [22] 2 THE RESPONDENTS AND RELATED COMPANIES [37] 2.1 Phoenix, ACN and CTI [37] 2.2 Key officers/controlling minds of Phoenix, CTI and the ACN Group [43] 3 PROCEDURAL HISTORY [57] 3.1 Initial pleadings [57] 3.2 The DOCA and leave to proceed [58] 3.3 Amendments to the pleadings [61] 3.4 The respondents' submitting notice and issues raised by the respondents' counsel prior to withdrawing from the matter [67] 3.5 The appointment of the amicus curiae [71] 3.6 The grant of leave to amend the statement of claim [73] 3.7 A preliminary issue of procedural fairness [76] 3.8 Suppression and non-publication orders under s 37AF, FCA Act [82] 3.9 Evidence initially omitted from the Court Book [87] 4 OVERVIEW OF THE APPLICANTS' PLEADED CASE [88] 4.1 The radical changes effected to Phoenix's operations following its acquisition by ACN [88] 4.2 Brokers and Agents marketing the Phoenix Online Courses [89] 4.3 Target Communities and Vulnerable Consumers [93] 4.4 The Profit Maximising Purpose and Callous Indifference [94] 4.5 The Phoenix Marketing System [98] 4.6 The Phoenix Enrolment System [101] 4.7 The four individual consumer witnesses [104] 5 STATUTORY UNCONSCIONABILITY: LEGAL PRINCIPLES [106] 5.1 Introduction [106] 5.2 Unwritten law of unconscionability (s 20, ACL) [108] 5.3 Statutory unconscionability (ss 21 and 22, ACL) [111] 5.4 What is meant by unconscionable conduct for the purposes of s 21, ACL [121] 5.5 System or pattern of behaviour [138] 5.5.1 Characterisation of a system or pattern as unconscionable [138] 5.5.2 Proof of a "system of conduct or pattern of behaviour" [153] 6 VET FEE-HELP AND THE REGULATORY FRAMEWORK [176] 6.1 Importance of the regulatory framework [176] 6.2 The Commonwealth VET FEE-HELP assistance scheme [183] 6.2.1 Enactment of the VET FEE-HELP assistance scheme and the target communities [186] 6.2.2 Overview of the VET FEE-HELP assistance scheme [192] 6.2.3 Student eligibility requirements for VET FEE-HELP assistance and the lifetime cap upon FEE-HELP assistance [195] 6.2.4 The census date [197] 6.2.5 Repayment of VET FEE-HELP loans by Eligible Students [200] 6.2.6 A key component in the VET FEE-HELP scheme: the Commonwealth Assistance Form or CAF [201] 6.2.7 Payment of funds by the Commonwealth to a VET provider in respect of VET FEE-HELP loans [211] 6.2.8 The potential for abuse of the VET FEE-HELP assistance scheme [214] 6.3 Requirements with which RTOs and VET providers must comply [224] 6.3.1 Requirements imposed upon a VET provider by the HES Act [224] 6.3.2 The RTO standards with which a VET provider, as a RTO, must comply [228] 6.3.3 The Australian Qualifications Framework and the specifications for diploma level courses [238] 7 THE PHOENIX ONLINE COURSES [247] 7.1 Introduction [247] 7.2 The expert evidence of Ms Scomazzon (VET/educational expert) [252] 7.3 Learning outcomes specified for diploma level courses under the AQF [260] 7.4 Target cohorts for the Phoenix Online Courses under the Packaging Rules and mandatory Phoenix admission requirements [266] 7.4.1 Preliminary [266] 7.4.2 General skills requirements [267] 7.4.3 The target cohorts for the Diplomas of Business, Management, and Leadership and Management [270] 7.4.4 The Phoenix mandatory admission requirements for the Diplomas of Business, Management, and Leadership and Management [276] 7.4.5 The target cohorts for the Diplomas in Early Childhood Education and Care and in Community Services Work, and mandatory requirements [281] 8 EVIDENCE OF EX-EMPLOYEES AS TO ENROLMENT PRACTICES UNDERTAKEN FOR THE PHOENIX ONLINE COURSES [287] 8.1 Primary ex-employee witnesses [287] 8.1.1 General observations [287] 8.1.2 Mr Bill Gale (CEO, Phoenix) [292] 8.1.3 Ms Janice Crittenden (Director of Operations, Quality and Compliance at Phoenix) (employed at Phoenix from 2010 to June 2015) [295] 8.1.4 Ms Jennifer Mason (Data and Quality Manager, CTI, 13 February to 31 July 2015) [298] 8.1.5 Ms (Susan) Lesley Blefari (compliance consultant from July 2014 and subsequently Group Compliance Manager) [301] 8.1.6 Mr Shaun Lewis (Phone Centre Manager, CTI, August 2015 to February 2016) [309] 8.2 The toxic working environment at CTI [312] 8.3 The groups within CTI undertaking enrolments (the CRM Team, the Data Team, the Phone Team, and the Course Trainers) [318] 8.4 The tasks undertaken by each group within CTI [325] 8.4.1 Receipt of the enrolment packs and verification of student enrolment data by the Data Team [325] 8.4.2 Assessment and marking of LLN tests by the course trainers at Broadmeadows [329] 8.4.3 Phone Group to call individual consumers [331] 8.4.4 The final steps in the enrolment process by the Data Team [336] 8.5 Ms Blefari's evidence about non-compliance with RTO standards [338] 8.5.1 Non-compliance with RTO standards in recruitment practices and completion of enrolment forms [338] 8.5.2 Ms Blefari required to restrict information in her compliance reports to the ACN Board [351] 8.5.3 The lack of training for Brokers and Agents [353] 8.6 Ex-employees' evidence as to the volume of enrolments, multiple enrolments, enrolment targets and instructions to defer phone verification, and work placements [355] 8.6.1 Weekly targets for enrolment [356] 8.6.2 Inability to process and verify all of the applications and instructions nonetheless to enrol the consumers [368] 8.6.3 Instructions not to verify applications from particular Brokers [372] 8.6.4 Applications for multiple diplomas [384] 8.6.5 High enrolments in the Diplomas of Community Services and Early Childhood Education and Care despite the impossibility of providing work placements [388] 8.7 Ex-employee evidence about issues raised during telephone verification calls [400] 8.8 Ex-employee evidence as to the failure to assess LLN tests before enrolment and to put in place the personnel to do so [409] 8.8.1 Small percentage only of LLN tests were assessed and directions to enrol the consumers nonetheless [410] 8.8.2 Lack of sufficient course assessors [415] 8.9 Ex-employee observations of troubling patterns in the LLN forms provided by the Brokers and Agents indicative of fraud and Mr Kochhar's and Mr Brown's responses [419] 8.9.1 Batches of LLN/application forms completed in the same handwriting and instructions to stop checking handwriting and signatures [420] 8.9.2 Patterns indicative of fraud in statutory declarations to prove identity of consumers [429] 8.9.3 Apparent targeting of consumers in disadvantaged locations [430] 8.10 Ex-employees' evidence as to complaints, withdrawals, and lack of student activity in FinPa [435] 9 EVIDENCE OF TRAINERS AND ASSESSORS [439] 9.1 The trainers and assessors employed by Phoenix [439] 9.2 Themes emerging from the evidence of the trainers and assessors [450] 9.2.1 Volume of students assigned to each trainer and assessor [450] 9.2.2 Nature of the role as a trainer and assessor [469] 9.2.3 Unsuitability of consumers engaged in courses and complaints [478] 9.3 Alleged trainers for Phoenix who did not in fact work for Phoenix [486] 10 THE COURSE OF EVENTS IN 2015 AND 2016 [491] 10.1 Phoenix's operations before its acquisition by ACN [491] 10.2 Formation of the ACN Group of companies and the Initial Public Offering on 26 November 2014 [496] 10.3 Steps in preparation for the Online Courses taken in advance of the acquisition of Phoenix [503] 10.4 The VET HELP Newsletter 2014 December edition circulated to all contacts in HITS [506] 10.5 Commencement of the Phoenix Online Courses and engagement of Brokers [509] 10.6 Internal correspondence in late January 2015 directing non-compliance with identification requirements [515] 10.7 Renewal of Phoenix's RTO Registration on 15 February 2015 and associated documentation [520] 10.8 Complaints and issues arising in late January and February 2015 [523] 10.8.1 Mr Gale communicates complaints to Mr Brown and Mr Kochhar and is sidelined in favour of Mr Kochhar [523] 10.8.2 Sidelining of the Director of Operations, Quality and Compliance, Ms Crittenden, from her responsibilities vis-à-vis the Online Courses [532] 10.8.3 Enrolments of consumers after the Online Courses had commenced [533] 10.8.4 Non-compliance with identification and citizenship eligibility requirements comes to Ms Mason and Ms Crittenden's attention [534] 10.8.5 The internal audit by Damien Nash dated 26 February 2015 [536] 10.8.6 Tabling of the Nash Audit Report at the Phoenix Governance Board meeting in late February 2015 [542] 10.8.7 The letter from the Phoenix Board to the ACN Board, dated 27 February 2015 [543] 10.9 Events in March and April 2015: [553] 10.9.1 Issues with enrolment practices including enrolments after commencement of the Online Courses without extending the census date [553] 10.9.2 Meetings of the Phoenix Corporate Governance Board in March 2015 and report to the ACN Board on 16 March 2015 [558] 10.9.3 First Request to Increase 2015 Advance Payment Determination submitted to the DET on 23 March 2015 and approval on 14 April 2015 [562] 10.9.4 Complaints in late March 2015 raised by the Department with Phoenix [570] 10.9.5 Complaints about Broker practices continue and include those pursued by Northern Territory Consumer Affairs on behalf of consumers [576] 10.10 The VET Guidelines 2015 commence on 1 April 2015 and Mr Brown is appointed to the VET FEE-HELP Reform Working Group on 22 April 2015 [583] 10.11 Events in May 2015 [589] 10.11.1 Overview [589] 10.11.2 Phoenix's RTO Compliance Review (15 May 2015) [590] 10.11.3 Significant escalation in complaints and action taken with respect to Brokers and Agents [592] 10.11.4 Concerns about Agents on-selling enrolments to competitor VET institutions [614] 10.11.5 The "Student Log-on Project" in April and May 2015 [615] 10.12 Events in June 2015 [636] 10.12.1 Phoenix's Second Request to Increase 2015 Advance Payment Determination to approximately $236 million [636] 10.12.2 Complaints and the List of Rogue Agents [644] 10.12.2.1 Examples of complaints received in June 2015 [644] 10.12.2.2 Further correspondence between NTCA and Mr Kochhar with respect to Broker practices in NT and WA [646] 10.12.2.3 The Terminated Sub-Agent (or Rogue Agent) List [653] 10.12.3 ASQA approves a compliance audit of Phoenix [660] 10.12.4 The ACN Annual Report of the Financial Year ending 30 June 2015 and Phoenix Special Purpose Financial Report dated 30 June 2015 [664] 10.12.5 The RTO Policy Manual produced by Phoenix in late June/July 2015 [665] 10.13 Events in July 2015 [684] 10.13.1 Amendments to the 2015 VET Guidelines regarding agents and brokers with effect from 1 July 2015 [684] 10.13.2 Entry into new agreements with 28 Brokers/Agents on 1 July 2015 for commissions between 15 to 35% [693] 10.13.3 Complaints continue throughout July 2015 [700] 10.13.4 Steps taken by Management prior to the ASQA audit [715] 10.13.4.1 Early July 2015: an ASQA audit is expected [715] 10.13.4.2 Preparation for the audit after notice is given on 27 July 2015 [728] 10.13.5 The Notice requiring Phoenix to furnish information and produce documents from the ACCC under s 155 of the CCA [737] 10.13.6 ASQA's short notice site audit on 29 and 30 July 2015 [739] 10.14 Events in August 2015 [743] 10.14.1 The ASQA Short Notice Audit Report [743] 10.14.2 The restructure of Phoenix into "two divisions" [747] 10.14.3 Conclusion of new contracts with Brokers on 14 August 2015 [750] 10.14.4 Continuing complaints about the Brokers [751] 10.14.5 Steps taken by the respondents in response to complaints and low activity on FinPa [758] 10.15 Events in September 2015 [768] 10.15.1 Phoenix's response to the Notice of Non-Compliance and preparation of ASQA's Final (post-natural justice) Audit Report [768] 10.15.2 DET notice of overpayment on 15 September 2015 and Phoenix's request for an increase in advance payments to $300 million on 30 September 2015 [771] 10.15.3 Complaints during September 2015 and targeting of low socio-economic areas and Aboriginal communities [774] 10.15.4 Verification of enrolments by certain Brokers [780] 10.15.5 Ms Bennett's evidence about the project to "fix", "backdate", and "mark" LLN forms [782] 10.16 Events in October 2015 [792] 10.16.1 Issues arising from Broker/Agent conduct [792] 10.16.2 Changes to Phoenix's enrolment process [797] 10.16.3 ASQA's notice of intention to cancel registration, DET notification of intention to suspend Phoenix's approval, and other steps taken by the regulators in October 2015 [799] 10.16.4 ACN announces trading halt on 13 October 2015 [806] 10.16.5 Phoenix responds to the notice of intention to suspend approval [807] 10.16.6 Subsequent steps taken by Phoenix [814] 10.16.7 Further notice by the DET on 30 October 2015 of an intention to suspend Phoenix's approval as a VET provider [817] 10.17 Events in November 2015 [819] 10.17.1 9 November 2015: Phoenix's "Response to ASQA Audit Report on Rectification Evidence" [819] 10.17.2 10 November 2015: meeting between ACN and the DET [821] 10.17.3 The VET Quality Framework Report and the decision to cancel Phoenix's registration on 23 November 2015 [823] 10.17.4 Commencement of this proceeding on 23 November 2015 [828] 10.17.5 Phoenix's problems continue and "scramble" to "paper over" non-compliance issues [829] 10.18 Events in December 2015 [838] 10.18.1 Face-to-face courses cease [838] 10.18.2 Complaints continue against GG Sales [839] 10.18.3 GG Sales collects forms relating to students who had been cancelled or could not be contacted [841] 10.18.4 The "never logged-in reach out" campaign [842] 10.19 Events in January 2016 [854] 10.19.1 Regulatory action [854] 10.19.2 The "roadshows" in January 2016 to increase the number of consumers completing a unit of competency [856] 10.19.3 The "Rectification Project" or so-called "audit" of PTR and LLN forms at the CTI office at Spotswood [863] 10.20 Events in February 2016 [881] 10.20.1 Regulatory action [881] 10.20.2 Ongoing strategies to convince authorities that Phoenix was a legitimate provider of online education services [883] 10.21 Subsequent events in 2016 [891] 11 ATTRIBUTION OF THE CONDUCT OF THE BROKERS AND AGENTS TO PHOENIX [892] 11.1 Introduction [892] 11.2 The legal principles relevant to s 139B(2) of the CCA [895] 11.2.1 Section 139B(2) [895] 11.2.2 "on behalf of" [902] 11.2.3 Section 139B(2)(a): "agent of the body corporate" [905] 11.2.4 S 139B(2)(a): "within the scope of the actual or apparent authority of the … agent" [909] 11.3 Is the conduct of the Brokers and Agents attributable to the Phoenix? [917] 11.3.1 Were the Brokers under the CLI Broker Contracts acting on behalf of Phoenix in marketing the courses to consumers in an agency relationship? [918] 11.3.2 Were the Brokers under the Phoenix Direct Broker Contracts acting on behalf of Phoenix in an agency relationship? [931] 11.3.3 Were the Agents acting as agents for Phoenix for the purposes of s 139B(2)(a) of the CCA? [942] 11.3.4 Were the Brokers and Agents acting within the scope of their actual or apparent authority? [949] 11.3.5 In the alternative, were the Brokers and Agents acting within the scope of their apparent authority? [961] 11.3.6 In the further alternative, does s 139B(2)(b) of the CCA apply? [962] 12 THE CONSUMER WITNESSES [965] 12.1 Patterns evident from documentary and statistical evidence illustrated by consumer witnesses [965] 12.2 False, misleading or deceptive conduct: Relevant principles [975] 12.3 Contraventions in relation to Consumer A [979] 12.3.1 Vulnerability of Consumer A [979] 12.3.2 Marketing to, and enrolment of, Consumer A [980] 12.3.3 Second enrolment application by Consumer A [996] 12.3.4 Alleged false, misleading and deceptive conduct contrary to ss 18 and 29, ACL, with respect to Consumer A [1003] 12.3.5 Alleged unconscionable conduct contrary to s 21, ACL, with respect to Consumer A [1007] 12.4 Contraventions in relation to Consumer B [1008] 12.4.1 Vulnerability of Consumer B [1008] 12.4.2 Marketing to, and enrolment of, Consumer B [1009] 12.4.3 Alleged false, misleading and deceptive conduct contrary to ss 18 and 29, ACL, with respect to Consumer B [1026] 12.4.4 Alleged unconscionable conduct contrary to s 21, ACL, with respect to Consumer B [1028] 12.5 Contraventions relating to Consumer C [1029] 12.5.1 Vulnerability of Consumer C [1029] 12.5.2 Marketing to, and enrolment of, Consumer C [1030] 12.5.3 Alleged false, misleading and deceptive conduct contrary to ss 18 and 29, ACL, with respect to Consumer C [1045] 12.5.4 Alleged unconscionable conduct contrary to s 21, ACL, with respect to Consumer C [1048] 12.6 Contraventions relating to Consumer D [1049] 12.6.1 Vulnerability of Consumer D [1049] 12.6.2 Marketing to, and enrolment of, Consumer D [1052] 12.6.3 Alleged false, misleading and deceptive conduct contrary to ss 18 and 29, ACL, with respect to Consumer D [1063] 12.6.4 Alleged unconscionable conduct contrary to s 21, ACL, with respect to Consumer D [1066] 13 DATA ANALYSIS [1067] 13.1 Overview [1067] 13.2 The available datasets [1071] 13.3 Witnesses giving evidence based upon data analysis and expert and other reports [1074] 13.4 The application to adduce summaries of evidence pursuant to leave granted under s 50 of the Evidence Act [1084] 13.5 Admissibility of audit reports and surveys [1088] 13.5.1 Principles governing admissibility [1088] 13.5.2 Admissibility of the MGN audit and the ASQA audit [1095] 13.5.3 Admissibility of the Ernst & Young surveys and the ORIMA survey of statistically relevant consumers [1100] 13.6 Analysis of a random sample of telephone verification calls as part of the enrolment process (the Voller Telephone Verification Affidavit) [1101] 13.7 PTR/LLN assessments and their discrepancies [1104] 13.7.1 The enrolment forms and how they were analysed [1104] 13.7.2 The PTR/LLN assessments [1107] 13.7.3 The results of analysing the enrolment forms [1124] 13.8 The enrolment of consumers in multiple courses: data analysis by Ms Jones and Mr Koochew [1126] 13.9 The absence of consumer activity in FinPa [1131] 13.10 The Unusual Pattern Data corroborating evidence of fraudulent attempts to mask the extent of the lack of consumer engagement [1135] 13.11 The lack of successful course and unit completion: data analysis by Mr Ulpen, Ms Jones and Mr Koochew [1140] 13.12 The analysis of FinPa withdrawal notes and cancellation notes [1149] 13.13 Evidence from consumer surveys [1159] 13.13.1 Ernst & Young telephone surveys of Phoenix consumers [1159] 13.13.2 The ORIMA telephone interviews [1167] 14 THE PROFIT MAXIMISING PURPOSE [1175] 15 THE CALLOUS INDIFFERENCE [1189] 15.1 The applicants' callous indifference case [1189] 15.2 General observations [1192] 15.3 Consumers not within the target cohorts for the Online Courses in which they were enrolled [1196] 15.4 Consumers did not satisfy the eligibility criteria for the particular online course or online courses in which they were enrolled [1200] 15.5 Online Courses not suitable for consumers [1210] 15.6 Consumers did not genuinely wish to undertake the Online Courses [1222] 15.7 Consumers did not have reasonable prospects of successfully completing the Online Courses [1227] 15.8 Inappropriate trainer-to-student ratios [1228] 15.9 Work placement problems [1236] 16 THE TARGET COMMUNITIES AND THEIR LIKELY ATTRIBUTES [1247] 17 THE PHOENIX MARKETING SYSTEM [1251] 17.1 Engaging Brokers and Agents to market its Online Courses to consumers as its agents, by way of unsolicited, "face-to-face" marketing [1252] 17.2 Engaging Brokers and Agents to obtain the enrolment forms [1253] 17.3 Engaging Brokers and Agents to make representations of a free laptop and/or the Online Courses were free [1254] 17.4 Engaging Brokers and Agents to obtain completed enrolment forms for more than one EFTSL online course [1261] 17.5 Providing financial incentives to the Brokers and Agents to maximise the number of completed enrolment forms for Online Courses [1262] 17.6 Inadequate training of Brokers and Agents [1263] 17.7 Failing to ascertain whether consumers were suited to the online course and the online course to the consumer [1270] 17.8 Practice among Brokers and Agents of providing answers to consumers to questions on the LLN and PTR assessment forms [1277] 18 THE PHOENIX ENROLMENT SYSTEM [1279] 18.1 Enrolling consumers without verifying them [1280] 18.2 Enrolling consumers without adequate verification [1286] 18.3 Failure to confirm LLN test results [1291] 18.4 Failure to ensure consumers were within the target cohorts and satisfied eligibility criteria [1295] 18.5 Failure to consider work placements [1297] 18.6 Extensive enrolments in more than one course [1299] 18.7 Extensive charging for unnecessary units of study [1300] 18.8 Enrolments too close to census date [1303] 18.9 Provision of log-in details or laptop shortly before or after census dates [1309] 19 FINDINGS ON THE SYSTEMS UNCONSCIONABILITY CASE [1319] 19.1 Two systems of conduct [1320] 19.2 The circumstances in which the Phoenix Marketing System was deployed [1323] 19.3 Contravention by CTI: Phoenix Marketing System [1343] 19.4 Contraventions of s 21, ACL: the Phoenix Enrolment System [1349] 19.5 Conclusion on the applicants' systems unconscionability case [1352]

1. Court Book (Exhibit A-2) (CB) vol 1 tab 3.
2. CB vol 1 tab 2.
3. The MGN Audit Report appears at Annexure MJD-7 to the Affidavit of Michael James Dunnett sworn on 12 September 2019 (Dunnett Audit Affidavit) (CB vol 1 tab 7).
4. MGN Audit Report dated 16 September 2016 at p. 4 (CB vol 1 tab 7, Annexure MJD-7).
5. SOC/ASOC at [4.1]; Defence at [1] (admitted).
6. SOC/ASOC at [4.2]; Defence at [1] (admitted).
7. Company Report for ACN dated 7 November 2019 (Exhibit A-7).
8. SOC/ASOC at [4.3]; Defence at [1] (admitted); ACN 2015 Annual Report at p. 59 (1000648.003.001.0159) (TB vol 16 tab 595).
9. SOC/ASOC at [7.2]; Defence at [4] (admitted).
10. SOC/ASOC at [4.7]; Defence at [1] (admitted).
11. CTI company search dated 23 October 2019 (Exhibit A-8).
12. NIM.001.008869 (TB vol 17 tab 647A).
13. SOC/ASOC at [6.2]; Defence at [2] (admitted).
14. Item 1 of the Schedule to the Agreement for Provision of VET FEE-HELP made on 1 July 2015 between Phoenix and CTI (TB vol 9 tab 314), see also cl 4.1 (together with the definition of "services" in cl 2).
15. Affidavit of Susan Lesley Blefari affirmed 14 June 2018 (the Blefari Affidavit) at [12] (CB vol 5 tab 39); Affidavit of Janice Crittenden affirmed 24 April 2018 (the Crittenden Affidavit) at [28] (CB vol 4 tab 35).
16. SOC at [4.10], [10.2], [10.4], [10.7] and [10.8]; Defence at [1] and [4] (admitted).
17. ACN, Second Replacement Prospectus dated 26 November 2014 at p. 9 (1000648.005.001.0039) (TB vol 1 tab 27).
18. SOC/ASOC at [8]-[10]; Defence at [4] (admitted).
19. Company Report for ACN dated 7 November 2019 (Exhibit A-7).
20. ACN 2015 Annual Report at p. 71 (1000648.003.001.0159) (TB vol 16 tab 595).
21. Phoenix company search dated 23 October 2019 (Exhibit A-9); SOC/ASOC at [10]; Defence at [4] (admitted).
22. Phoenix company search dated 23 October 2019 (Exhibit A-9); SOC/ASOC at [10]; Defence at [4] (admitted).
23. CTI company search dated 23 October 2019 (Exhibit A-8).
24. SOC/ASOC at [8]-[10]; Defence at [4] (admitted).
25. ACN 2015 Annual Report at p. 10 (1000648.003.001.0159) (TB vol 16 tab 595).
26. CTI company search dated 23 October 2019 (Exhibit A-8).
27. ACN 2015 Annual Report at pp. 10-11 (1000648.003.001.0159) (TB vol 16 tab 595); ACN company search dated 7 November 2019 (Exhibit A-7).
28. ACN 2015 Annual Report at p. 12 (1000648.003.001.0159) (TB vol 16 tab 595).
29. ACN, Second Replacement Prospectus dated 26 November 2014 at p. 4 (1000648.005.001.0039) (TB vol 1 tab 27).
30. ACN 2015 Annual Report at p. 10 (1000648.003.001.0159) (TB vol 16 tab 595).
31. ACN 2015 Annual Report at p. 10 (1000648.003.001.0159) (TB vol 16 tab 595).
32. ACN company search dated 7 November 2019 at p. 7 (Exhibit A-7).
33. T, 8/11/19, 298.29-40 (Ms Blefari); T, 7/11/19, 267.26-32 (Mr Lewis).
34. SOC/ASOC at [9.1]; Defence at [4] (admitted).
35. SOC/ASOC at [9]; Defence at [4] (admitted); see also ACN 2015 Annual Report (1000648.003.001.0159) (TB vol 16 tab 595).
36. ACN 2015 Annual Report at p. 12 (1000648.003.001.0159) (TB vol 16 tab 595 at p. 12).
37. NIM.001.244302 (TB vol 19 tab 768).
38. NIM.001.000093_0002 (TB vol 19 tab 754); see also at [837] below.
39. T, 31/07/19, 10-15.
40. T, 31/07/19, 10.2.
41. T, 31/07/19, 10.25-28.
42. T, 14/08/19, 3.
43. T, 14/08/19, 5.37-7.15.
44. T, 28/10/19, 21.20.
45. T, 28/10/19, 18.10-23; see also applicants' note concerning procedural fairness dated 4 November 2019 at [2].
46. T, 5/11/19, 33.30-33
47. See eg ASOC at [86.6(b)].
48. ASOC at [34.2] and [34.5A].
49. ASOC at [37.1].
50. ASOC at [42].
51. Applicants' note concerning procedural fairness dated 4 November 2019 at [15].
52. Applicants' note concerning procedural fairness dated 4 November 2019 at [3], [8]; 1000648.010.001.0114 (STB vol 28 tab 1260).
53. Applicants' note concerning procedural fairness dated 4 November 2019 at [4].
54. Amicus curiae's submissions on a question of procedural fairness dated 4 November 2019 at [21].
55. T, 5/11/19, 9.37-39.
56. T, 5/11/19, 41.22-28.
57. T, 13/11/19, 593.40
58. SOC/ASOC at [59]; Defence at [26] (admitted).
59. SOC/ASOC at [61].
60. SOC/ASOC at [68]-[70].
61. SOC/ASOC at [71].
62. SOC/ASOC at [72].
63. ACS at [24].
64. SOC/ASOC at [82].
65. SOC/ASOC at [85].
66. ASOC at [86], where SOC at [86] is substantially identical.
67. SOC/ASOC at [87].
68. SOC/ASOC at [88].
69. SOC/ASOC at [89]-[91].
70. SOC/ASOC at [92B].
71. SOC/ASOC at [92C].
72. ACS at [56].
73. 1000648.005.001.1391 (TB vol 4 tab 124).
74. 1000648.005.001.1402 (TB vol 4 tab 124).
75. Affidavit of Geoffrey Koochew affirmed 23 August 2019 (the Koochew Affidavit) at [8] and Annexure GK-1, p. 10 (CB vol 6 tab 52).
76. Koochew Affidavit at [9] and Annexure GK-2, p. 109 (CB vol 6 tab 52).
77. 1000648.003.001.0407 (TB vol 14 tab 529).
78. 57158.009.002.0058 (TB vol 2 tab 34).
79. See also AIP Manual at [7.1], Koochew Affidavit, Annexure GK-1, p. 45 (CB vol 6 tab 52).
80. See also AIP Manual at [7.2], Koochew Affidavit, Annexure GK-1, p. 47 (CB vol 6 tab 52).
81. AIP Manual at [3.4], Koochew Affidavit, Annexure GK-1, p. 25 (CB vol 6 tab 52).
82. AIP Manual at [3.4], Koochew Affidavit, Annexure GK-1, p. 27 (CB vol 6 tab 52).
83. HES Act s 137-18(2).
84. HES Act s 154-1.
85. 57158.038.001.0177 (TB vol 2 tab 47).
86. AIP Manual at [7.4], Koochew Affidavit, Annexure GK-1, pp. 50-52 (CB vol 6 tab 52).
87. Koochew Affidavit at [10] (CB vol 6 tab 52).
88. See eg Crittenden Affidavit at [30] and affidavit of Jennifer Mason affirmed 4 May 2016 (the Mason Affidavit) at [16] and [88]-[89] (CB vol 4 tabs 35 and 34 respectively).
89. Affidavit of Deepak Pradeep Pillai affirmed on 13 September 2019 (the Pillai Affidavit) at Part D, p. 14 (CB vol 8 tab 56).
90. 1000648.008.001.0008 (TB vol 22 tab 949A).
91. See 1000648.001.001.0786 at p. 20 (TB vol 4 tab 128).
92. 1000648.003.001.0530 (TB vol 1 tab 5).
93. See Affidavit of Jana Scomazzon affirmed 11 September 2019 (the Scomazzon Affidavit), Exhibit JS-2, p. 1426 (CB vols 1-3 tab 8); see also 1000648.001.001.0001 (TB vol 1 tab 22).
94. Scomazzon Affidavit, Exhibit JS-2, p. 1431 (CB vols 1-3 tab 8).
95. Scomazzon Affidavit, Exhibit JS-2, p. 1431 (CB vols 1-3 tab 8).
96. Scomazzon Affidavit, Exhibit JS-2, p. 1438 (CB vols 1-3 tab 8)
97. Scomazzon Affidavit, Exhibit JS-2, p. 1437 (CB vols 1-3 tab 8)
98. Scomazzon Affidavit, Exhibit JS-2, p. 1437 (CB vols 1-3 tab 8)
99. Scomazzon Affidavit, Exhibit JS-2, p. 1437 (CB vols 1-3 tab 8)
100. Scomazzon Affidavit, Exhibit JS-2, p. 1432 (CB vols 1-3 tab 8)
101. 1000648.010.001.0002 at p. 9 (STB vol 26 tab 1139).
102. 1000648.010.001.0002 at p. 9 (STB vol 26 tab 1139).
103. Report by Jana Scomazzon dated 10 September 2019 (Ms Scomazzon's report) at p. 11 (CB vols 1-3 tab 8). Ms Scomazzon's report is Annexure JS-1 to the Scomazzon Affidavit.
104. Ms Scomazzon's report at [88] (CB vols 1-3 tab 8, Annexure JS-1).
105. SOC/ASOC at [29]; Defence at [8] (admitted).
106. Phoenix Institute VIC Schedule of VET Tuition Fees 2015 (57158.009.006.1642) (TB vol 13 tab 496A); SOC/ASOC at [29.4]-[29.6], [30.8], [31.5], [32.8], [33.6] and [34.6]-[34.8]; Defence at [8]-[13] inclusive (admitted).
107. 57158.009.002.0379 (TB vol 10 tab 359).
108. CB vols 1-3 tab 8.
109. Ms Scomazzon's report at p. i (CB vols 1-3 tab 8, Annexure JS-1). Ms Scomazzon's curriculum vitae is attachment 1 to her report.
110. Ms Scomazzon's report at [10] (CB vols 1-3 tab 8, Annexure JS-1).
111. Ms Scomazzon's report at [10] (CB vols 1-3 tab 8, Annexure JS-1).
112. Affidavit of Maureen Angela Wood sworn 4 April 2016 at [11]-[13] (CB vol 5 tab 45).
113. SOC/ASOC at [36]; Defence at [15] (admitted).
114. AQF (2nd ed) at p. 38 (STB vol 26 tab 1139).
115. AQF (2nd ed) at p. 38 (STB vol 26 tab 1139).
116. AQF (2nd ed) at p. 38 (STB vol 26 tab 1139).
117. AQF (2nd ed) at p. 39 (STB vol 26 tab 1139).
118. Ms Scomazzon's report at [14], [15] (CB vols 1-3 tab 8, Annexure JS-1).
119. Ms Scomazzon's report at footnote 11 and [12] (CB vols 1-3 tab 8, Annexure JS-1).
120. AQF (2nd ed) at p. 40 (STB vol 26 tab 1139).
121. CB vols 1-3 tab 8.
122. SOC/ASOC at [29]-[34]; Defence at [8]-[13].
123. Ms Scomazzon's report at [7] and [70]-[76] (CB vols 1-3 tab 8, Annexure JS-1).
124. Ms Scomazzon's report at [71] (CB vols 1-3 tab 8, Annexure JS-1).
125. Ms Scomazzon's report at [71] (CB vols 1-3 tab 8, Annexure JS-1).
126. Ms Scomazzon's report at [72] (CB vols 1-3 tab 8, Annexure JS-1).
127. SOC/ASOC at [29.2]; Defence at [8] (admitted).
128. Phoenix, Training and Assessment Strategy (Diploma of Business, BSB50207), January 2015 to January 2016 at p. 5 (57158.009.006.0876) (TB vol 2 tab 44); see also at p. 6. See also Phoenix myTime, Training and Assessment Strategy (Diploma of Business, BSB50207), version dated 1/09/15, at p. 1 (57158.009.006.2839) (TB vol 14 tab 534).
129. SOC/ASOC at [30.4]; Defence at [9] (admitted).
130. SOC/ASOC at [31.2]; Defence at [10] (admitted).
131. SOC/ASOC at [32.4]; Defence at [11] (admitted).
132. Phoenix, Training and Assessment Strategy (Diploma of Business, BSB50207), January 2015 to January 2016 (57158.009.006.0876) (TB vol 2 tab 44); Phoenix, Training and Assessment Strategy (Diploma of Business, BSB50215), version dated 1/06/15 (57158.009.006.0894) (TB vol 7 tab 264); Phoenix myTime, Training and Assessment Strategy (Diploma of Business, BSB50207), version dated 1/09/15 (57158.009.006.2839) (TB vol 14 tab 534); Phoenix, Training and Assessment Strategy (Diploma of Management, BSB51107), February 2015 to September 2015 (57158.009.006.0910) (TB vol 3 tab 64); Phoenix, Training and Assessment Strategy (Diploma of Leadership and Management, BSB51915), version dated 26/06/15 (57158.009.006.0926) (TB vol 7 tab 289).
133. Phoenix, Training and Assessment Strategy (Diploma of Leadership and Management, BSB51915), version dated 26/06/15 at p. 3 (57158.009.006.0926) (TB vol 7 tab 289).
134. Phoenix, Training and Assessment Strategy (Diploma of Business, BSB50215), version dated 01/06/15 at p. 3 (57158.009.006.0894) (TB vol 7 tab 264).
135. Ms Scomazzon's report at p. 11 (CB vols 1-3 tab 8, Annexure JS-1).
136. Ms Scomazzon's report at [95] (CB vols 1-3 tab 8, Annexure JS-1).
137. Ms Scomazzon's report at [95] (CB vols 1-3 tab 8, Annexure JS-1).
138. Ms Scomazzon's report at [123]-[126] (CB vols 1-3 tab 8, Annexure JS-1); see SOC/ASOC at [33.5]; Defence at [12] (admitted) regarding the Diploma of Early Childhood Education and Care (CHC50113); see also Phoenix, Training and Assessment Strategy (Diploma of Community Service[s] Work, CHC50612), 2015 to 2016 at p. 3 (1000648.003.001.0245) (TB vol 2 tab 36) and Phoenix myTime, Training and Assessment Strategy (Diploma of Community Services Work, CHC50612), version dated 01/09/15 at p. 6 (57158.009.006.2724) (TB vol 14 tab 533).
139. SOC/ASOC at [33.2]; Defence at [12] (admitted).
140. 57158.009.006.2724 (TB vol 14 tab 533). See also Ms Scomazzon's report at pp. 34, 45, 46 (CB vols 1-3 tab 8, Annexure JS-1).
141. SOC/ASOC at [34.3]; Defence at [13] (not admitted).
142. Phoenix, Training and Assessment Strategy (Diploma of Early Childhood Education and Care, CHC50113), 2015 to 2016 (57158.009.006.0944) (TB vol 2 tab 45); Phoenix myTime, Training and Assessment Strategy (Diploma of Early Childhood Education and Care, CHC50113), version dated 1/09/15 (57158.009.006.4731) (TB vol 14 tab 538); Phoenix, Training and Assessment Strategy (Diploma of Community Service[s] Work, CHC50612), version dated 15/07/15 (57158.009.006.0972) (TB vol 11 tab 379); Phoenix myTime, Training and Assessment Strategy (Diploma of Community Services Work, CHC50612), version dated 1/09/15 (57158.009.006.4766) (TB vol 14 tab 539).
143. Ms Scomazzon's report at [126] (CB vols 1-3 tab 8, Annexure JS-1). See also the evidence of ex-employees below at Section [8.6.5]
144. Affidavit of William Douglas Gale affirmed 15 June 2018 (the Gale Affidavit) at [39]-[40] and Annexure WG-18 (CB vol 5 tab 40).
145. Crittenden Affidavit at [4] (CB vol 4 tab 35).
146. Crittenden Affidavit at [5] (CB vol 4 tab 35).
147. Crittenden Affidavit at [38] (CB vol 4 tab 35).
148. T, 7/11/19, 199.39 (Ms Mason).
149. Mason Affidavit at [4] (CB vol 4 tab 34).
150. T, 7/11/19, 199.2 (Ms Mason).
151. T, 7/11/19, 220.2-7 (Ms Mason).
152. Blefari Affidavit at [1] (CB vol 5 tab 39).
153. Blefari Affidavit at [3] (CB vol 5 tab 39).
154. Blefari Affidavit at [4]-[7], [11] (CB vol 5 tab 39).
155. Blefari Affidavit at [12] (CB vol 5 tab 39).
156. Blefari Affidavit at [10] (CB vol 5 tab 39).
157. T, 7/11/19, 317.40-318.24 (Ms Blefari).
158. Blefari Affidavit at [48]-[51] (CB vol 5 tab 39).
159. Lewis Affidavit at [1] (CB vol 5 tab 41A); T, 7/11/19, 244.24-34.
160. Lewis Affidavit at [36] (CB vol 5 tab 41A).
161. Lewis Affidavit at [5] (CB vol 5 tab 41A); T, 7/11/19, 73.7-9.
162. Lewis Affidavit at [13] (CB vol 5 tab 41A).
163. Lewis Affidavit at [2] (CB vol 5 tab 41A).
164. T, 7/11/19, 219.38-220.1 (Ms Mason).
165. T, 7/11/19, 304.18-20 (Ms Blefari).
166. T, 7/11/19, 306.43-45 (Ms Blefari).
167. T, 7/11/19, 304.40-305.3 (Ms Blefari).
168. T, 7/11/19, 305.27-30 (Ms Blefari).
169. T, 7/11/19, 306.8-10 (Ms Blefari).
170. T, 7/11/19, 265.47-266.17 (Mr Lewis).
171. T, 7/11/19, 266.27-267.2 (Mr Lewis).
172. Mason Affidavit at [6] (CB vol 4 tab 34).
173. T, 7/11/19, 200.31-32 (Ms Mason).
174. T, 7/11/19, 200.34-37 (Ms Mason)
175. Mason Affidavit at [7] (CB vol 4 tab 34).
176. Mason Affidavit at [10] (CB vol 4 tab 34).
177. Mason Affidavit at [10] (CB vol 4 tab 34).
178. Mason Affidavit at [8] (CB vol 4 tab 34).
179. T, 7/11/19, 211.40-42 (Ms Mason).
180. Mason Affidavit at [11] (CB vol 4 tab 34); T, 7/11/19, 210.11-14 and 211.40-42 (Ms Mason).
181. Lewis Affidavit at [4] (CB vol 5 tab 41A).
182. T, 7/11/19, 244.35-46 (Mr Lewis).
183. T, 7/11/19, 210.6-9 (Ms Mason).
184. Mason Affidavit at [12] (CB vol 4 tab 34).
185. T, 7/11/19, 207.9-12.
186. Mason Affidavit at [13] (CB vol 4 tab 34).
187. Mason Affidavit at [14] (CB vol 4 tab 34).
188. Mason Affidavit at [14] (CB vol 4 tab 34).
189. Mason Affidavit at [14] (CB vol 4 tab 34).
190. Mason Affidavit at [15] (CB vol 4 tab 34).
191. Mason Affidavit at [20] (CB vol 4 tab 34).
192. Mason Affidavit at [20] (CB vol 4 tab 34). See eg VET FEE-HELP checklist completed on 17 April 2015 (1000648.006.001.0095) (TB vol 5 tab 147).
193. Mason Affidavit at [21] (CB vol 4 tab 34).
194. T, 7/11/19, 205.1-19 (Ms Mason).
195. Mason Affidavit at [22] (CB vol 4 tab 34).
196. Mason Affidavit at [22] (CB vol 4 tab 34); T, 7/11/19, 205.20-42 (Ms Mason).
197. Mason Affidavit at [72]-[74], see also [78]-[81] (CB vol 4 tab 34).
198. Mason Affidavit at [23] (CB vol 4 tab 34).
199. Mason Affidavit at [23] (CB vol 4 tab 34).
200. T, 7/11/19, 207.9-12.
201. Mason Affidavit at [24] (CB vol 4 tab 34).
202. T, 7/11/19, 201.33-34 (Ms Mason).
203. T, 7/11/19, 201.30-32 (Ms Mason).
204. Lewis Affidavit at [6]-[8] (CB vol 5 tab 41A).
205. T, 7/11/19, 250.1-10 (Mr Lewis).
206. T, 7/11/19, 246.24-31 (Mr Lewis).
207. Lewis Affidavit at [11] (CB vol 5 tab 41A).
208. Lewis Affidavit at [12]. See also T, 7/11/19, 246.1-20 (Mr Lewis).
209. Mason affidavit at [25]-[30] (CB vol 4 tab 34).
210. T, 7/11/19, 202.9-10 (Ms Mason).
211. T, 7/11/19, 206.24-25 (Ms Mason).
212. T, 7/11/19, 202.29-34 (Ms Mason).
213. Blefari Affidavit at [14] (CB vol 5 tab 39).
214. T, 7/11/19, 248.17-19 (Mr Lewis).
215. T, 7/11/19, 299.39-41 (Ms Blefari).
216. T, 7/11/19, 300.6-7 (Ms Blefari).
217. T, 7/11/19, 300.10-27 (Ms Blefari).
218. T, 7/11/19, 316.45-317.29 (Ms Blefari).
219. Blefari Affidavit at [17] (CB vol 5 tab 39).
220. Blefari Affidavit at [19]-[24] (CB vol 5 tab 39).
221. T, 7/11/19, 318.37-46 (Ms Blefari).
222. T, 7/11/19, 319.8-11 (Ms Blefari).
223. NIM.001.042416 (TB vol 15 tab 567).
224. NIM.001.042417 (TB vol 12 tab 454).
225. Blefari Affidavit at [40] (CB vol 5 tab 39).
226. Blefari Affidavit at [34] (CB vol 5 tab 39).
227. T, 7/11/19, 308.37-309.27 (Ms Blefari).
228. Blefari Affidavit at [41] (CB vol 5 tab 39); T, 7/11/19, 310.20-45 (Ms Blefari).
229. Blefari Affidavit at [35] (CB vol 5 tab 39).
230. Blefari Affidavit at [45] (CB vol 5 tab 39).
231. Blefari Affidavit at [36]-[37] (CB vol 5 tab 39).
232. T, 7/11/19, 314.1-315.14 (Ms Blefari).
233. Blefari Affidavit at [38] (CB vol 5 tab 39); T, 7/11/19, 316.5 (Ms Blefari).
234. Blefari Affidavit at [39] (CB vol 5 tab 39).
235. T, 7/11/19, 320.5-12 (Ms Blefari).
236. T, 7/11/19, 320.22-28 (Ms Blefari).
237. 1000648.001.001.0910 (STB vol 28 tab 1259).
238. 1000648.001.001.0910 (STB vol 28 tab 1259).
239. 1000648.001.001.0910 (STB vol 28 tab 1259).
240. Affidavit of Consumer JE affirmed 5 February 2016 at [58] (CB vol 4 tab 12).
241. Blefari Affidavit at [46] (CB vol 5 tab 39).
242. Blefari Affidavit at [47] (CB vol 5 tab 39).
243. T, 7/11/19, 303.14-38 (Ms Blefari).
244. T, 7/11/19, 306.16-19 (Ms Blefari).
245. Blefari Affidavit at [32] (CB vol 5 tab 39); T, 7/11/19, 320.34-322.24 (Ms Blefari).
246. See further at Chapter 10 below.
247. Mason Affidavit at [26], [28], [41] (CB vol 4 tab 34).
248. Mason Affidavit at [31]-[33] (CB vol 4 tab 34).
249. T, 7/11/19, 207.31-45 (Ms Mason).
250. T, 7/11/19, 207.47-208.1 and 210.16-31 (Ms Mason).
251. T, 7/11/19, 210.39-44 (Ms Mason).
252. T, 7/11/19, 208.5-18 (Ms Mason).
253. Mason Affidavit at [43] (CB vol 4 tab 34).
254. NIM.001.240107 (TB vol 4 tab 110).
255. NIM.001.239894 (TB vol 4 tab 114).
256. NIM.001.029905 (STB vol 26 tab 1151).
257. NIM.002.036594 (TB vol 6 tab 243).
258. NIM.001.018704 (TB vol 15 tab 541).
259. NIM.001.018704 (TB vol 15 tab 541).
260. 1000648.009.001.0474 (STB vol 28 tab 1265).
261. Mason Affidavit at [35] (CB vol 4 tab 34).
262. Mason Affidavit at [36] (CB vol 4 tab 34).
263. Mason Affidavit at [37]-[38] (CB vol 4 tab 34); T, 7/11/19, 209.19-47 (Ms Mason).
264. T, 7/11/19, 209.19-34 (Ms Mason).
265. T, 7/11/19, 209.45-47(Ms Mason).
266. Mason Affidavit at [39]-[41] (CB vol 4 tab 34); T, 7/11/19, 208.31-209.21 (Ms Mason).
267. Mason Affidavit at [101]-[103] (CB vol 4 tab 34).
268. Lewis Affidavit at [20]-[23] (CB vol 5 tab 41A); see also T, 7/11/19, 259.19-38 (Mr Lewis).
269. Lewis Affidavit at [23] (CB vol 5 tab 41A).
270. T, 7/11/19, 260.39-42 (Mr Lewis).
271. T, 7/11/19, 261.23 (Mr Lewis).
272. T, 7/11/19, 261.44-45 (Mr Lewis).
273. Lewis Affidavit at [33] (CB vol 5 tab 41A).
274. NIM.001.033567 (TB vol 4 tab 140).
275. NIM.001.033555 (TB vol 6 tab 223A).
276. See 57158.009.001.0006.0007 (TB vol 24 tab 1065).
277. NIM.001.033481 (TB vol 4 tab 138).
278. NIM.001.028934 (TB vol 7 tab 273).
279. Mason Affidavit at [56]-[65] (CB vol 4 tab 34); Blefari Affidavit at [18] (CB vol 5 tab 39).
280. Mason Affidavit at [62]-[64] (CB vol 4 tab 34).
281. Mason Affidavit at [65] (CB vol 4 tab 34).
282. T, 7/11/19, 211.5-12.
283. T, 7/11/19, 211.10-32 (Ms Mason).
284. Mason Affidavit at [60]-[61] (CB vol 4 tab 34).
285. NIM.001.028963 (TB vol 7 tab 270).
286. NIM.001.041604 (TB vol 13 tab 514).
287. Mason Affidavit at [84] (CB vol 4 tab 34).
288. Mason Affidavit at [84] (CB vol 4 tab 34).
289. Mason Affidavit at [86] (CB vol 4 tab 34).
290. Mason Affidavit at [87] (CB vol 4 tab 34).
291. T, 7/11/19, 215.45-46 (Ms Mason).
292. T, 7/11/19, 215.47-216.44 (Ms Mason).
293. Mason Affidavit at [85] (CB vol 4 tab 34).
294. T, 7/11/19, 214.45-215.40 (Ms Mason).
295. T, 7/11/19, 217.13-14 (Ms Mason).
296. T, 7/11/19, 217.1-16 (Ms Mason).
297. Blefari Affidavit at [43] (CB vol 5 tab 39).
298. NIM.001.026933 (TB vol 8 tab 291).
299. Blefari Affidavit at [44] (CB vol 5 tab 39).
300. T, 7/11/19, 311.35-312.44 (Ms Blefari).
301. T, 7/11/19, 313.9-20 (Ms Blefari).
302. Affidavit of Mandy Bennett affirmed 20 August 2019 (the Bennett Affidavit) at [9] (CB vol 5 tab 42); T, 8/11/19, 328.4-5 (Ms Bennett).
303. Bennett Affidavit at [10] (CB vol 5 tab 42).
304. Affidavit of Michael Charles Howley sworn 26 June 2018 (the Howley Affidavit) at [15]-[17] (CB vol 5 tab 41).
305. Howley Affidavit at [17] (CB vol 5 tab 41).
306. T, 7/11/19, 250.37-251.36 (Mr Lewis).
307. T, 7/11/19, 254.31-42 (Mr Lewis).
308. T, 7/11/19, 250.30-252.15 (Mr Lewis).
309. Bennett Affidavit at [26]-[27] (CB vol 5 tab 42).
310. T, 7/11/19, 267.10 (Mr Lewis).
311. T, 7/11/19, 252.22-26 (Mr Lewis).
312. Lewis Affidavit at [16] (CB vol 5 tab 41A); T, 7/11/19, 255.11-43 (Mr Lewis).
313. T, 7/11/19, 256.1-24 (Mr Lewis).
314. T, 7/11/19, 256.28-35 (Mr Lewis).
315. T, 7/11/19, 258.37-259.15 (Mr Lewis).
316. Lewis Affidavit at [17] (CB vol 5 tab 41A); T, 7/11/19, 257.35-258.14 (Mr Lewis).
317. Lewis Affidavit at [18] (CB vol 5 tab 41A).
318. T, 7/11/19, 257.30-34. See also Lewis Affidavit at [19] (CB vol 5 tab 41A).
319. T, 7/11/19, 206.37-41 (Ms Mason).
320. T, 7/11/19, 206.20-31 (Ms Mason).
321. T, 7/11/19, 207.9-15 (Ms Mason).
322. T, 7/11/19, 207.24-25 (Ms Mason).
323. NIM.001.028947 (TB vol 7 tab 271).
324. T, 7/11/19, 206.1-8 (Ms Mason).
325. Mason Affidavit at [75], [80]-[81], [83] (CB vol 4 tab 34); T, 7/11/19, 207.2-4 (Ms Mason).
326. Mason Affidavit at [78] (CB vol 4 tab 34).
327. Mason Affidavit at [79] (CB vol 4 tab 34); T, 7/11/19, 205.23-38 (Ms Mason).
328. Mason Affidavit at [73] (CB vol 4 tab 34); T, 7/11/19, 206.10-18 (Ms Mason).
329. T, 7/11/19, 206.11 (Ms Mason).
330. Mason Affidavit at [73] (CB vol 4 tab 34).
331. Mason Affidavit at [82] (CB vol 4 tab 34).
332. Mason Affidavit at [45]-[46] (CB vol 4 tab 34); T, 7/11/19, 203.14-28 (Ms Mason); Blefari Affidavit at [25] (CB vol 5 tab 39).
333. T, 7/11/19, 204.13-16.
334. Mason Affidavit at [46] (CB vol 4 tab 34).
335. T, 7/11/19, 212.15-36 (Ms Mason).
336. Mason Affidavit at [50]-[51] (CB vol 4 tab 34).
337. NIM.002.035627 (STB vol 26 tab 1154).
338. NIM.002.034993 (TB vol 7 tab 287).
339. T, 7/11/19, 300.10-27 (Ms Blefari).
340. Blefari Affidavit at [25] (CB vol 5 tab 39).
341. Blefari Affidavit at [27] (CB vol 5 tab 39).
342. Blefari Affidavit at [29]-[31] (CB vol 5 tab 39).
343. T, 7/11/19, 320.30-322.24 (Ms Blefari).
344. Blefari Affidavit at [32]-[33] (CB vol 5 tab 39).
345. NIM.001.015335 (TB vol 16 tab 637).
346. Mason Affidavit at [88]-[95] (CB vol 4 tab 34); T, 7/11/19, 203.29-39 and 217.33-218.35 (Ms Mason).
347. Mason Affidavit at [96] (CB vol 4 tab 34); T, 7/11/19, 210.44-211.3 (Ms Mason).
348. Mason Affidavit at [44] (CB vol 4 tab 34).
349. Affidavit of Consumer D affirmed 29 February 2016 (CB vol 4 tab 28); and the affidavit of her neighbour affirmed 29 January 2016 (CB vol 4 tab 10).
350. Affidavit of MD affirmed 29 January 2016 (CB vol 4 tab 11); affidavit of Martha Gouniai, volunteer worker with the Baha'i Faith Community Building Process program, affirmed 24 February 2016 (CB vol 4 tab 21) regarding the conduct of sales agents in signing up one of the young people, Consumer GT, with whom she was engaged under the program, into the Diploma of Early Childhood Care and Diploma of Community Services Work with Phoenix; and the affidavit of Consumer GT sworn 4 April 2016 (CB vol 4 tab 32).
351. Affidavit of Sherryn Hill, then Executive Officer of the Euroa Community Education Centre, affirmed 8 February 2016 (the Hill Affidavit) at [20]-[22] (CB vol 4 tab 20); affidavit of Amanda Watkins, trainee administration officer, Euroa Community Education Centre, affirmed 9 February 2016 (the Watkins Affidavit) at [6]-[11] (CB vol 4 tab 17).
352. Hill Affidavit at [1] (CB vol 4 tab 20).
353. T, 7/11/19, 219.2-15.
354. T, 7/11/19, 219.19-35 (Ms Mason).
355. See also eg affidavit of Consumer LB sworn 10 February 2016 (CB vol 4 tab 18); affidavit of Consumer JB affirmed 18 April 2018 (CB vol 4 tab 33).
356. Affidavit of Consumer AE sworn 9 February 2016 at [2], [9], [11], [13] (CB vol 4 tab 15).
357. Affidavit of Consumer AE sworn 9 February 2016 at [24] (CB vol 4 tab 15).
358. Affidavit of Consumer JE sworn 9 February 2016 at [8] (CB vol 4 tab 16).
359. Affidavit of Consumer JE sworn 9 February 2016 at [14] (CB vol 4 tab 16), see also at [22].
360. Affidavit of Consumer JE sworn 9 February 2016 at [19] (CB vol 4 tab 16).
361. Affidavit of Consumer JE sworn 9 February 2016 at [20] (CB vol 4 tab 16).
362. NIM.001.027194 and attached Excel spreadsheet at NIM.001.027195 (TB vol 7 tab 285A).
363. NIM.001.027194 (TB vol 7 tab 285A).
364. See at [481] below.
365. Mason Affidavit at [55] (CB vol 4 tab 34).
366. NIM.001.031919 (TB vol 5 tab 180).
367. NIM.001.027454 (STB vol 26 tab 1155); NIM.001.027455 (STB vol 26 tab 1156).
368. T, 7/11/19, 213.22-31 (Ms Mason).
369. T, 7/11/19, 214.10-28 (Ms Mason).
370. CB vol 5 tab 42.
371. Howley Affidavit (CB vol 5 tab 41).
372. Affidavit of Sandro Capocchi affirmed 24 March 2018 (the Capocchi affidavit) (CB vol 5 tab 38).
373. Affidavit of Nipun Bhargava affirmed 3 May 2018 (the Bhargava affidavit) (CB vol 4 tab 36).
374. Affidavit of Brad Matton affirmed 13 September 2019 (the Matton affidavit) (CB vol 5 tab 43).
375. Bennett Affidavit at [4]-[6] (CB vol 5 tab 42); T, 8/11/19, 326.18-24 (Ms Bennett).
376. Bennett Affidavit at [6] (CB vol 5 tab 42).
377. Bennett Affidavit at [7]-[8] (CB vol 5 tab 42); T, 8/11/19, 327.30 (Ms Bennett).
378. Bennett Affidavit at [17]-[18] (CB vol 5 tab 42).
379. Howley Affidavit at [4]-[6] (CB vol 5 tab 41).
380. Capocchi Affidavit (CB vol 5 tab 38).
381. Affidavit of Consumer B affirmed 26 February 2016 at [36] and Annexure BJ-2 (CB vol 4 tab 26).
382. Bhargava Affidavit at [6]-[14] (CB vol 4 tab 36).
383. Bhargava Affidavit at [15]-[16] (CB vol 4 tab 36).
384. NIM.001.036060 (TB vol 5 tab 179).
385. NIM.001.030969 (TB vol 6 tab 230).
386. 57158.009.007.4207 and 57158.009.007.4222 (TB vol 6 tabs 227 and 228).
387. NIM.001.024832_0002 (TB vol 11 tab 386).
388. NIM.001.024832_0001 (TB vol 11 tab 386).
389. NIM.001.039941 (STB vol 26 tab 1158).
390. NIM.001.007098 (TB vol 13 tab 508).
391. NIM.001.003201 (TB vol 17 tab 683).
392. NIM.001.003202 (TB vol 17 tab 683).
393. NIM.001.193973, NIM.001.193980, NIM.001.033916 (STB vol 27 tabs 1239-1241).
394. Bennett Affidavit at [14]-[15] (CB vol 5 tab 42).
395. T, 8/11/19, 328.6-15 (Ms Bennett).
396. Bennett Affidavit at [14] (CB vol 5 tab 42).
397. Bennett Affidavit at [11] (CB vol 5 tab 42).
398. Bennett Affidavit at [11] and Annexure MB-01 (CB vol 5 tab 42).
399. T, 8/11/19, 331.20-42 (Ms Bennett).
400. T, 8/11/19, 329.16-39 (Ms Bennett).
401. T, 8/11/19, 327.19-25 (Ms Bennett).
402. T, 8/11/19, 327.31-34 (Ms Bennett).
403. T, 8/11/19, 335.34-35 (Ms Bennett).
404. Bennett Affidavit at [19]-[24] (CB vol 5 tab 42); T, 8/11/19, 332.5-15 (Ms Bennett).
405. Bennett Affidavit at [25] (CB vol 5 tab 42).
406. Howley Affidavit at [8]-[14] (CB vol 5 tab 41).
407. Howley Affidavit at [9], [14] (CB vol 5 tab 41).
408. Howley Affidavit at [10]-[11] (CB vol 5 tab 41).
409. Howley Affidavit at [12] (CB vol 5 tab 41).
410. Howley Affidavit at [18] (CB vol 5 tab 41).
411. Howley Affidavit at [19] (CB vol 5 tab 41).
412. Affidavit of Consumer MN affirmed 8 February 2016 (CB vol 4 tab 14).
413. Affidavit of Consumer MN affirmed 8 February 2016 at [6] (CB vol 4 tab 14).
414. Affidavit of Consumer MN affirmed 8 February 2016 at [16] (CB vol 4 tab 14).
415. Capocchi Affidavit at [12]-[15] (CB vol 5 tab 38).
416. Bhargava Affidavit at [19] (CB vol 4 tab 36).
417. Affidavit of Sharon McDonagh sworn 18 July 2019 (the McDonagh affidavit) at [7] and Annexure SM-2, p. 7 (NIM.001.013271_000) (CB vol 6 tab 51); Affidavit of Keng See Tan sworn 26 June 2019 (the Tan Affidavit) at [5]-[6] and Annexures KST-2, p. 8 and KST-3, p. 14.
418. See eg 57158.009.007.4686, 57158.009.007.4748, 57158.009.007.4824 and 57158.009.007.4920 (STB vol 26 tabs 1183-1186).
419. McDonagh Affidavit at [7]-[8] (CB vol 6 tab 51).
420. McDonagh Affidavit at [11]-[12] (CB vol 6 tab 51).
421. 57158.009.007.5025 (STB vol 27 tab 1210).
422. McDonagh Affidavit at [1] (CB vol 6 tab 51).
423. 57158.009.007.5025 (STB vol 27 tab 1210).
424. See Tan Affidavit at [2]-[7] (CB vol 6 tab 49).
425. NIM.002.025629 (TB vol 19 tab 776).
426. SOC/ASOC at [4.1],[4.2]; Defence at [1] (admitted).
427. Gale Affidavit at [3] (CB vol 5 tab 40).
428. T, 7/11/19, 223.28-29.
429. MGN Audit Report dated 16 September 2016 at p. 11 (CB vol 1 tab 7, Annexure MJD-7); Koochew Affidavit at [16.3] (CB vol 6 tab 52); Crittenden Affidavit at [13] (CB vol 4 tab 35).
430. Gale Affidavit at [5] (CB vol 5 tab 40); Koochew Affidavit at [16] (CB vol 6 tab 52).
431. Crittenden Affidavit at [6] (CB vol 4 tab 35).
432. Crittenden Affidavit at [8] (CB vol 4 tab 35).
433. Crittenden Affidavit at [8] (CB vol 4 tab 35).
434. Crittenden Affidavit at [9] (CB vol 4 tab 35).
435. Crittenden Affidavit at [10] (CB vol 4 tab 35).
436. Crittenden Affidavit at [11] (CB vol 4 tab 35).
437. Crittenden Affidavit at [11] (CB vol 4 tab 35).
438. Crittenden Affidavit at [15] (CB vol 4 tab 35).
439. Crittenden Affidavit at [16] (CB vol 4 tab 35).
440. ACN 2015 Annual Report at pp. 36 and 57 (1000648.003.001.0159) (TB vol 16 tab 595).
441. Gale Affidavit at [7] (CB vol 5 tab 40); T, 7/11/19, 224.8-10 (Mr Gale).
442. ACN, Second Replacement Prospectus dated 26 November 2014 at pp. 2, 8 (1000648.005.001.0039) (TB vol 1 tab 27).
443. ACN 2015 Annual Report at p. 17 (1000648.003.001.0159) (TB vol 16 tab 595).
444. ACN 2015 Annual Report at p. 17 (1000648.003.001.0159) (TB vol 16 tab 595).
445. ACN 2015 Annual Report at p. 3 (1000648.003.001.0159) (TB vol 16 tab 595).
446. SOC/ASOC at [9.3], [10.4]; Defence at [4] (admitted).
447. 57158.009.007.0811, 57158.009.007.0829 (TB vol 2 tabs 31-32).
448. 57158.009.007.0811.0814 (TB vol 2 tab 31).
449. 57158.009.007.0811.0815 (TB vol 2 tab 31).
450. 57158.009.007.0811.0817 (TB vol 2 tab 31).
451. 1000648.003.001.0348 at p. 2 (TB vol 2 tab 33).
452. Gale Affidavit at [8] (CB vol 5 tab 40); T, 7/11/19, 224.15 (Mr Gale).
453. 57158.009.002.0394 (TB vol 2 tab 50).
454. 57158.009.002.0377 (TB vol 2 tab 52).
455. 57158.009.003.0058 at p. 20 (TB vol 2 tab 53).
456. Letter dated 2 February 2015 from Karlie Arnold, Senior Manager - Client Relationships, CTI, to "Clients": 57158.009.002.0822 (TB vol 3 tab 65).
457. See eg at [606] below.
458. NIM.001.003633.0001 to .0005 (TB vol 3 tab 60).
459. 1000648.004.001.1312 (TB vol 3 tab 75).
460. 1000648.005.001.0943, 1000648.005.001.0945, 1000648.005.001.0948 (TB vol 3 tab 73).
461. 1000648.005.001.1389 (TB vol 4 tab 124).
462. SOC/ASOC at [4.4]; Defence at [1] (admitted).
463. SOC/ASOC at [4.5]; Defence at [1] (admitted).
464. Gale Affidavit at [8]-[9] (CB vol 5 tab 40).
465. T, 7/11/19, 224.39-40 (Mr Gale).
466. Gale Affidavit at [10] (CB vol 5 tab 40).
467. Gale Affidavit at [9] (CB vol 5 tab 40).
468. Crittenden Affidavit at [35] (CB vol 4 tab 35).
469. Gale Affidavit at [19] (CB vol 5 tab 40).
470. Gale Affidavit at [20] (CB vol 5 tab 40).
471. Gale Affidavit at [21] (CB vol 5 tab 40).
472. Gale Affidavit at [21] (CB vol 5 tab 40).
473. Gale Affidavit at [22] and Annexure WG-06, p. 58 (CB vol 5 tab 40).
474. Gale Affidavit at [22] and Annexure WG-07, pp. 60-61 (CB vol 5 tab 40).
475. Gale Affidavit at [22] and Annexure WG-07, pp. 60-61 (CB vol 5 tab 40).
476. Gale Affidavit at [18] and [23] (CB vol 5 tab 40).
477. Gale Affidavit at [32] (CB vol 5 tab 40).
478. Gale Affidavit at [24]-[25] (CB vol 5 tab 40).
479. Gale Affidavit at [26] (CB vol 5 tab 40).
480. Gale Affidavit at [34] and Annexure WG-15, pp. 87-88 (CB vol 5 tab 40).
481. Gale Affidavit at [34]-[38] (CB vol 5 tab 40).
482. Gale Affidavit at [27] (CB vol 5 tab 40).
483. Gale Affidavit at [27] and Annexure WG-10, p. 69 (CB vol 5 tab 40).
484. Gale Affidavit at [29] (CB vol 5 tab 40).
485. Gale Affidavit at [30] and Annexure WG-12, p. 75 (CB vol 5 tab 40).
486. Gale Affidavit at [31] (CB vol 5 tab 40).
487. Crittenden Affidavit at [17] (CB vol 4 tab 35).
488. Crittenden Affidavit at [19] (CB vol 4 tab 35).
489. Crittenden Affidavit at [19] (CB vol 4 tab 35).
490. Crittenden Affidavit at [20]-[22] (CB vol 4 tab 35).
491. Crittenden Affidavit at [23]-[24] (CB vol 4 tab 35).
492. Mason Affidavit at [16]-[17] (CB vol 4 tab 34).
493. Mason Affidavit at [18] (CB vol 4 tab 34).
494. Crittenden Affidavit at [30] (CB vol 4 tab 35).
495. Crittenden Affidavit at [31]-[33] (CB vol 4 tab 35).
496. Gale Affidavit at [11] (CB vol 5 tab 40); Affidavit of Damien Nash affirmed 24 May 2018 (the Nash affidavit) at [8] (CB vol 4 tab 37).
497. Nash Affidavit at [1]-[6] (CB vol 4 tab 37).
498. Minutes of the Meeting of the Phoenix Advisory Board on 18 February 2015 (NIM.003.116574_0001 and _0005) (TB vol 3 tab 74).
499. Nash Affidavit, Annexure DN-1, p. 7 (CB vol 4 tab 37).
500. Nash Affidavit, Annexure DN-1, pp. 24ff (CB vol 4 tab 37).
501. Nash Affidavit at [9]-[10] (CB vol 4 tab 37).
502. Nash Affidavit at [13] (CB vol 4 tab 37).
503. Nash Affidavit at [15] and Annexure DN-3, pp. 121ff (CB vol 4 tab 37).
504. Crittenden Affidavit at [34] (CB vol 4 tab 35).
505. Gale Affidavit at [12] (CB vol 5 tab 40).
506. Gale Affidavit at [13] (CB vol 5 tab 40).
507. Gale Affidavit at [13] and Annexure WG-02, p. 24 (CB vol 5 tab 40).
508. Gale Affidavit, Annexure WG-02, p. 24 (CB vol 5 tab 40).
509. 1000648.003.001.0143 (TB vol 3 tab 83).
510. Gale Affidavit, Annexure WG-03, p. 38 (CB vol 5 tab 40).
511. ACS at [403(a)].
512. Gale Affidavit at [15] and Annexure WG-04, p. 52 (CB vol 5 tab 40); Nash Affidavit at [17]-[18] and Annexure DN-6, p. 164 (CB vol 4 tab 37).
513. Affidavit of Jennifer Babic affirmed 17 September 2019 (the Babic affidavit) at [5]-[9], especially at [9.2], and Annexure JJB-1, p. 8 (CB vol 8 tab 60).
514. Babic Affidavit at [5] (CB vol 8 tab 60).
515. Babic Affidavit at [6]-[8] (CB vol 8 tab 60).
516. Applicants' Closing Narrative Chronology dated 21 November 2019 (the Applicants' Narrative Chronology) at [15].
517. Crittenden Affidavit at [24] and Annexure JC-01, p. 9 (CB vol 4 tab 35).
518. Crittenden Affidavit at [24] and Annexure JC-01, p. 9 (CB vol 4 tab 35).
519. Nash Affidavit at [19] and Annexure DN-7, p. 169 (CB vol 4 tab 37).
520. Crittenden Affidavit at [25] and Annexure JC-02, pp. 12-13 (CB vol 4 tab 35).
521. Crittenden Affidavit at [25] and Annexure JC-02, pp.12-13 (CB vol 4 tab 35).
522. NIM.001.239918 (TB vol 4 tab 113).
523. NIM.001.239918 (TB vol 4 tab 113).
524. NIM.003.071615_0007 to _0008 (TB vol 4 tab 104).
525. Gale Affidavit, Annexure WG-05, p. 55 (CB vol 5 tab 40). See also 1000648.003.001.0838 (TB vol 4 tab 108).
526. Gale Affidavit at [17] (CB vol 5 tab 40).
527. Gale Affidavit at [16] (CB vol 5 tab 40).
528. Gale Affidavit at [16] (CB vol 5 tab 40).
529. 1000648.001.002.9234 (TB vol 3 tab 99).
530. 1000648.001.002.9201 (STB vol 27 tab 1213).
531. 1000648.001.002.9201 (STB vol 27 tab 1213).
532. Gale Affidavit at [28] and Annexure WG-11, p. 70 (CB vol 5 tab 40); 1000648.003.001.0823 (TB vol 4 tab 118).
533. 57158.009.008.0001 (TB vol 4 tab 116).
534. Gale Affidavit, Annexure WG-11, p. 72 (CB vol 5 tab 40); 1000648.003.001.0824 (TB vol 4 tab 118).
535. Babic Affidavit at [10]-[11] and Annexure JJB-2 (CB vol 8 tab 60).
536. 1000648.005.001.0001 (email) and 1000648.005.001.0002 (letter) (TB vol 4 tab 126).
537. 1000648.005.001.0001 (TB vol 4 tab 126).
538. 1000648.005.001.0002 at p. 3 (TB vol 4 tab 126).
539. See also eg NIM.001.035715 (TB vol 5 tab 158).
540. NIM.001.035717 (TB vol 5 tab 159).
541. Gale Affidavit at [22(b)] and Annexure WG-07 (CB vol 5 tab 40).
542. Affidavit of Ann Holland affirmed 30 August 2019 (the Holland affidavit) (CB vol 6 tab 53).
543. NIM.001.035805 (TB vol 5 tab 166)
544. NIM.002.023096 (TB vol 13 tab 518).
545. Holland Affidavit at [3] and Annexure AH-1, p. 7 (CB vol 6 tab 53).
546. Holland Affidavit at [5] and Annexure AH-2, p. 9 (CB vol 6 tab 53); 57158.009.012.0013 (TB vol 5 tab 172).
547. Holland Affidavit at [6] and Exhibit AH-5 (CB vol 6 tab 53); see also 57158.009.012.0021 (TB vol 6 tab 212).
548. 1000648.001.001.0786 (TB vol 4 tab 128).
549. 1000648.005.001.2634 (TB vol 4 tab 132).
550. Babic Affidavit at [12] (CB vol 8 tab 60); 1000648.007.001.0514 (TB vol 3 tab 77).
551. 1000648.003.001.0354 at p. 2 (TB vol 4 tab 130).
552. Koochew Affidavit, Annexure GK-1, pp. 10-107 (CB vol 6 tab 52).
553. Mason Affidavit at [14.4] (CB vol 4 tab 34).
554. 1000648.009.001.0336 (STB vol 26 tab 1140).
555. 57158.009.002.0265 (STB vol 26 tab 1150).
556. 57158.009.002.0265 at p. 3 (STB vol 26 tab 1150).
557. NIM.001.030559 (TB vol 6 tab 244).
558. Crittenden Affidavit at [36]-[37] (CB vol 4 tab 35).
559. NIM.001.032177_0002 (TB vol 5 tab 176). See also NIM.001.036488_003 (TB vol 6 tab 223); NIM.001.032177 (TB vol 5 tab 176); NIM.001.036039 (TB vol 5 tab 178); and NIM.001.036488 (TB vol 6 tab 223).
560. NIM.001.036488 (TB vol 6 tab 223).
561. NIM.001.036488 (TB vol 6 tab 223).
562. See eg at [701(2)] below.
563. NIM.001.031832 (TB vol 5 tab 190).
564. NIM.001.031832 (TB vol 5 tab 190).
565. NIM.001.036196_0002 (TB vol 5 tab 192).
566. NIM.001.031816_0002 (TB vol 5 tab 189).
567. 1000648.001.002.9244 (TB vol 7 tab 269).
568. NIM.001.031788 (TB vol 5 tab 188).
569. Gale Affidavit at [32(a)] and Annexure WG-13, p. 76 (CB vol 5 tab 40).
570. Gale Affidavit, Annexure WG-13, p. 78 (CB vol 5 tab 40); see also NIM.001.036232_0002 (TB vol 6 tab 198).
571. NIM.001.031699 (TB vol 6 tab 197).
572. NIM.001.031689_0002 to 0003 (TB vol 6 tab 196).
573. See at [773] below.
574. NIM.001.0362295_0004 (TB vol 6 tab 201).
575. NIM.001.0362295_0001 to 0004 (TB vol 6 tab 201).
576. NIM.001.0362295 (TB vol 6 tab 201).
577. 57158.009.002.0823 (TB vol 5 tab 200).
578. 57158.009.002.0390, 57158.009.002.0399 (TB vol 6 tab 210).
579. NIM.002.022967 (TB vol 6 tab 248).
580. NIM.001.029596_0001 (STB vol 27 tab 1274).
581. Gale Affidavit at [22(c)] and Annexure WG-08 (CB vol 5 tab 40) and 1000648.003.001.0842 (TB vol 6 tab 254); NIM.001.036522 (TB vol 6 tab 226).
582. NIM.001.030674_0002 to 0003 (TB vol 6 tab 239).
583. NIM.001.036296_0001 (TB vol 6 tab 202).
584. 1000648.001.002.9355 (TB vol 6 tab 218).
585. NIM.001.036576 (TB vol 6 tab 236).
586. 1000648.001.002.9355 (TB vol 6 tab 218).
587. NIM.001.031121 (TB vol 6 tab 222).
588. NIM.001.031121 (TB vol 6 tab 222).
589. NIM.001.031121 (TB vol 6 tab 222).
590. NIM.001.030494 (TB vol 6 tab 246).
591. NIM.001.036754 (TB vol 6 tab 251).
592. NIM.001.006264 (TB vol 6 tab 195).
593. 57158.046.002.0506 at [1.4] (TB vol 15 tab 577).
594. 1000648.001.002.9244 (TB vol 7 tab 269).
595. NIM.001.042181 (STB vol 26 tab 1179).
596. NIM.001.030512 (TB vol 6 tab 247).
597. NIM.001.035415 (TB vol 4 tab 136).
598. NIM.001.033275 and NIM.001.033276_0001 to 0057 (TB vol 5 tabs 145 and 146).
599. NIM.001.033212 and NIM.001.033212_0001 to 0057 (TB vol 5 tabs 149 and 150).
600. NIM.001.035589 (TB vol 5 tab 151).
601. NIM.001.035671 (TB vol 5 tab 153).
602. NIM.001.032952 (TB vol 5 tab 154).
603. NIM.001.035713 (TB vol 4 tab 157).
604. NIM.001.035713 (TB vol 4 tab 157).
605. NIM.001.006243 (TB vol 5 tab 186).
606. NIM.001.006243_0001 (TB vol 5 tab 186).
607. NIM.001.035844 (STB vol 26 tab 1148).
608. NIM.001.032572 (TB vol 5 tab 170).
609. Affidavit of Consumer FB affirmed 29 January 2016 at [48]-[49] (CB vol 4 tab 10).
610. NIM.001.031919 (TB vol 5 tab 180).
611. NIM.001.041464 (TB vol 13 tab 505).
612. NIM.001.041464 (TB vol 13 tab 505).
613. NIM.001.007098 (TB vol 13 tab 508).
614. NIM.001.041575 (TB vol 13 tab 511).
615. NIM.001.041575 (TB vol 13 tab 511).
616. NIM.001.010967 (TB vol 19 tab 778).
617. Affidavit of Byron Vickers affirmed 17 September 2019 (the Vickers Affidavit) at [13]-[23] (CB vol 8 tab 59).
618. NIM.001.030924 (TB vol 6 tab 235).
619. 1000648.001.002.9245 (TB vol 7 tab 269).
620. See at [942] below.
621. 1000648.001.001.1341 (TB vol 7 tab 281).
622. 1000648.001.002.9196 (STB vol 27 tab 1212).
623. See eg NIM.001.006530 (TB vol 10 tab 353).
624. NIM.001.037684 (TB vol 7 tab 278).
625. Gale Affidavit at [32(b)] and Annexure WG-14, pp. 80-84; NIM.002.034950 (TB vol 7 tab 288).
626. NIM.002.034952 (TB vol 8 tab 297).
627. NIM.001.026995_0001 (TB vol 8 tab 292).
628. See eg NIM.001.037204 (TB vol 7 tab 266); NIM.001.037232 (TB vol 7 tab 267); NIM.001.019291 (TB vol 7 tab 279); NIM.001.027840 (TB vol 7 tab 280); NIM.001.038219 (TB vol 8 tab 293).
629. NIM.001.037559 (TB vol 7 tab 276)
630. NIM.001.044470 (TB vol 18 tab 734).
631. NIM.001.037232 (TB vol 7 tab 267).
632. NIM.001.038219 (TB vol 8 tab 293).
633. 1000648.001.001.0120 (TB vol 7 tab 282).
634. Holland Affidavit at [7] (CB vol 6 tab 53)
635. Holland Affidavit at [7] and Annexure AH-3 (CB vol 6 tab 53).
636. Holland Affidavit at [9] and Exhibit AH-5, tab 5 (CB vol 6 tab 53).
637. Holland Affidavit at [9] and Exhibit AH-5, tab 5 (CB vol 6 tab 53).
638. 57158.009.012.0070 (TB vol 10 tab 346).
639. Exhibit A-18.
640. See eg NIM.001.024511 (TB vol 11 tab 392).
641. See eg NIM.001.012355 (TB vol 10 tab 347); NIM.001.012359 (vol 11 tab 362).
642. NIM.001.028790 (TB vol 7 tab 272).
643. NIM.001.028790 (TB vol 7 tab 272).
644. NIM.001.028786 (TB vol 7 tab 274).
645. Exhibit A-18.
646. 1000648.005.001.0021, 1000648.005.001.0023 (TB vol 8 tab 303).
647. Exhibit A-11.
648. Affidavit of Christine Williams affirmed 29 June 2018 (the Williams Affidavit) at [4] and Exhibit CW-1, tab 1 (CB vols 5-5A tab 46); 100648.05.001.1954 (TB vol 8 tab 304).
649. 1000648.005.001.1954 (TB vol 8 tab 304).
650. NIM.001.038169 (TB vol 7 tab 286).
651. ACN 2015 Annual Report (1000648.003.001.0159) (TB vol 16 tab 595).
652. NIM.001.003405_0001 (TB vol 17 tab 672).
653. 1000648.006.001.0376 at p. 15 (TB vol 7 tab 262).
654. 57158.009.006.1991 (TB vol 10 tab 352).
655. 1000648.006.001.0171 (TB vol 8 tab 308).
656. 57158.009.006.2307 (TB vol 14 tab 531).
657. 1000648.006.001.0171 (TB vol 8 tab 308).
658. NIM.001.027518 (STB vol 28 tab 1275).
659. See at [251] above.
660. NIM.001.027518 (STB vol 28 tab 1275).
661. Amendment No. 1 to the VET Guidelines 2015, p. 2, cl (v) (MFI A-11).
662. 1000648.003.001.0370 (STB vol 28 tab 1266).
663. 57158.009.002.0397 (TB vol 8 tab 310); see also Exhibit A-24.
664. 57158.009.002.0016 (TB vol 8 tab 310).
665. 57158.009.002.0825 (TB vol 10 tab 351).
666. 57158.038.001.0107 (TB vol 10 tab 341).
667. 57158.038.001.0107 (TB vol 10 tab 341).
668. 57158.038.003.0681 (TB vol 9 tab 313).
669. 57158.009.003.0705 (TB vol 9 tab 314).
670. 57158.009.003.0658 (TB vol 9 tab 312).
671. 57158.038.003.0728 (TB vol 9 tab 315).
672. 57158.038.003.0844 (TB vol 9 tab 320).
673. 57158.038.003.0983 (TB vol 9 tab 326).
674. 57158.038.003.1029 (TB vol 9 tab 328).
675. 57158.009.003.1238 (TB vol 10 tab 337).
676. 1000648.001.001.0442 (TB vol 22 tab 954).
677. NIM.002.033288 (STB vol 26 tab 1167).
678. NIM.001.023997 (TB vol 11 tab 402).
679. See eg NIM.001.038525 (TB vol 10 tab 348); NIM.001.039313 (TB vol 11 tab 388).
680. NIM.001.038493 (TB vol 10 tab 345).
681. NIM.001.038775 (TB vol 10 tab 356).
682. NIM.001.038774 (TB vol 10 tab 356).
683. See eg NIM.001.025313 (TB vol 11 tab 369); NIM.001.039114 (TB vol 11 tab 378); NIM.001.039313 (TB vol 11 tab 388); NIM.001.024511 (TB vol 11 tab 392).
684. NIM.001.038535) (STB vol 26 tab 1159).
685. NIM.001.024891 (TB vol 11 tab 382).
686. NIM.001.024313 (TB vol 11 tab 400).
687. NIM.001.024313 (TB vol 11 tab 400).
688. NIM.001.039313 (TB vol 11 tab 388); Exhibit A-18.
689. NIM.001.023810 (TB vol 11 tab 408).
690. 57158.009.012.0008 (TB vol 10 tab 360).
691. 57158.009.012.0009 (TB vol 10 tab 360).
692. 1000648.003.001.0158 (TB vol 10 tab 357).
693. NIM.001.024012 (TB vol 11 tab 404).
694. 57158.009.012.0009 (TB vol 10 tab 360).
695. 57158.009.012.0006 (TB vol 10 tab 360).
696. 57158.009.012.0005 (TB vol 10 tab 360).
697. NIM.001.025303 (TB vol 11 tab 371).
698. 1000648.001.001.1346 to .1347 (TB vol 12 tab 436); 1000648.01.001.0035 (TB vol 11 tab 421).
699. 1000648.001.002.9352 (TB vol 11 tab 415).
700. 1000648.001.001.1348 (TB vol 12 tab 436).
701. 1000648.001.001.1347 (TB vol 12 tab 436).
702. 1000648.001.001.0044 (TB vol 11 tab 423).
703. Pillai Affidavit at [19], Part D, pp. 14-15 (CB vol 8 tab 56).
704. NIM.003.117229 (TB vol 6 tab 204).
705. Gale Affidavit at [33] (CB vol 5 tab 40).
706. NIM.001.038943 (TB vol 11 tab 366).
707. NIM.001.025314 (TB vol 11 tab 370).
708. NIM.001.025204 (TB vol 11 tab 373).
709. NIM.001.025054 (TB vol 11 tab 377); NIM.001.024876 (TB vol 11 tab 381); NIM.001.024876 (TB vol 11 tab 381); Exhibit A-18; NIM.001.024528 (TB vol 11 tab 389); NIM.001.024184 (TB vol 11 tab 399); NIM.001.039644 (TB vol 11 tab 405).
710. NIM.001.024876 (TB vol 11 tab 381).
711. NIM.001.039443 (TB vol 11 tab 395).
712. NIM.001.006683 (TB vol 11 tab 398).
713. NIM.001.024869 (TB vol 11 tab 380).
714. NIM.001.024869 (TB vol 11 tab 380).
715. NIM.001.039422_0001 (TB vol 11 tab 394).
716. NIM.001.024514_0001 (TB vol 11 tab 393).
717. NIM.001.024514_0001 (TB vol 11 tab 393).
718. NIM.001.023534_0001 (TB vol 11 tab 409).
719. NIM.001.024002 (email) (STB vol 26 tab 1164); NIM.001.024003 (attached Excel spreadsheet) (TB vol 11 tab 403).
720. NIM.001.039881 (TB vol 11 tab 410).
721. Williams Affidavit at [7] and Exhibit CW-1, tab 3, p. 42 (CB vols 5-5A tab 46); 1000648.005.001.2262 (TB vol 11 tab 411).
722. NIM.001.023387 (TB vol 11 tab 413).
723. Williams Affidavit, Exhibit CW-1, tab 1, p. 7 (CB vol 5-5A tab 46).
724. NIM.001.039942 (STB vol 26 tab 1165).
725. NIM.001.039980 (TB vol 11 tab 418).
726. NIM.001.039980 (TB vol 11 tab 418).
727. NIM.001.040066 (STB vol 26 tab 1166).
728. NIM.001.040066 (STB vol 26 tab 1166).
729. NIM.001.023182 (TB vol 11 tab 417).
730. NIM.001.039942 (STB vol 26 tab 1165).
731. 57158.009.006.0901 (TB vol 7 tab 264) and 57158.009.006.0934 (TB vol 7 tab 289) respectively.
732. NIM.002.045647 (TB vol 11 tab 396).
733. 57158.009.002.0015 (TB vol 13 tab 516).
734. CB vols 5-5A tab 46.
735. T, 11/11/19, 426.45-427.11 (Ms Williams).
736. T, 11/11/19, 427.20-35 (Ms Williams).
737. Williams Affidavit at [15] and Exhibit CW-1, tab 10 (CB vols 5-5A tab 46).
738. T, 11/11/19, 429.24-45 (Ms Williams).
739. Williams Affidavit at [14] and Exhibit CW-1, tab 9, p. 318 (CB vols 5-5A tab 46).
740. Williams Affidavit at [14] and Exhibit CW-1, tab 9, p. 319 (CB vols 5-5A tab 46).
741. T, 11/11/19, 428.34-45 (Ms Williams).
742. Williams Affidavit at [18] and Exhibit CW-1, tab 11 (CB vols 5-5A tab 46).
743. 1000648.005.001.1992 (TB vol 12 tab 457).
744. 1000648.005.001.1992 (TB vol 12 tab 457).
745. Williams Affidavit at [18] and Exhibit CW-1, tab 12 (CB vols 5-5A tab 46).
746. T, 11/11/19, 431.6-31 (Ms Williams).
747. T, 11/11/19, 431.15-18 (Ms Williams).
748. Gale Affidavit at [34]-[35] and Anneuxre WG-15 (CB vol 5 tab 40).
749. Gale Affidavit at [37]-[38] and Annexure WG-16 (CB vol 5 tab 40); CEO's Operational Report, Phoenix @ 314 Queen Street Melbourne, 17 August 2015 (1000648.003.001.0836) (TB vol 12 tab 455).
750. T, 7/11/19, 232.19-25.
751. Gale Affidavit at [18] (CB vol 5 tab 40).
752. Gale Affidavit at [18] (CB vol 5 tab 40).
753. NIM.003.118555 (TB vol 13 tab 515), see also NIM.003.118042 (TB vol 15 tab 546).
754. 57158.009.007.3662 to .4205 (TB vol 12 tab 464 to vol 13 tab 484).
755. 57158.009.007.4159 (TB vol 13 tab 483).
756. See eg NIM.001.022158 (TB vol 12 tab 451).
757. NIM.001.041057 (TB vol 13 tab 493).
758. Gale Affidavit at [22(d)] and Annexure WG-09, pp. 65-67 (CB vol 5 tab 40).
759. Gale Affidavit at [22(d)] and Annexure WG-09, pp. 65-67 (CB vol 5 tab 40).
760. NIM.001.022431 (TB vol 12 tab 439).
761. NIM.001.019152 (TB vol 13 tab 513).
762. NIM.001.020931 (TB vol 13 tab 487).
763. NIM.001.020208 (TB vol 13 tab 497).
764. NIM.001.040296 (TB vol 12 tab 434).
765. NIM.001.020877_0002 to 0003 (TB vol 13 tab 485).
766. NIM.001.020877_0001 (TB vol 13 tab 485).
767. 57158.009.006.2834 (TB vol 13 tab 488).
768. NIM.001.018145 (TB vol 15 tab 549).
769. Blefari Affidavit at [36] and [38] (CB vol 5 tab 39).
770. Blefari Affidavit at [48]-[49] (CB vol 5 tab 39).
771. 1000648.001.001.1346, 1000648.001.001.1350 (TB vol 12 tab 436); NIM.001.020834 (TB vol 13 tab 489).
772. NIM.001.012346 (TB vol 12 tab 433).
773. NIM.001.012346 (TB vol 12 tab 433).
774. NIM.002.033080 (TB vol 12 tab 435); NIM.002.033288 (STB vol 26 tab 1167).
775. Applicants' Narrative Chronology at [193].
776. 1000648.005.001.0819 (TB vol 12 tab 443).
777. NIM.001.040320 (TB vol 12 tab 440).
778. Williams Affidavit at [19] and Exhibit CW-1, tab 13 (CB vols 5-5A tab 46); 1000648.005.001.2021 (TB vol 15 tab 557).
779. Williams Affidavit at [20] (CB vols 5-5A tab 46).
780. Williams Affidavit at [20] and Exhibit CW-1, tab 13 (CB vols 5-5A tab 46).
781. Williams Affidavit at [20] (CB vols 5-5A tab 46).
782. T, 11/11/19, 433.41-44 (Ms Williams).
783. T, 11/11/19, 433.45-434.3 (Ms Williams).
784. 1000648.003.001.0631 (TB vol 16 tab 565).
785. 1000648.003.001.0631 (TB vol 16 tab 565).
786. NIM.002.045634 (email) (STB vol 27 tab 1196), NIM.002.045635 (attached letter) (STB vol 27 tab 1197), NIM.002.045636 (STB vol 27 tab 1198) (attached "Assessment of VET FEE-HELP Estimates" document).
787. 1000648.009.001.0002 (STB vol 27 tab 1189).
788. See eg NIM.001.016588 (TB vol 15 tab 579).
789. See eg NIM.001.017697 (TB vol 15 tab 559).
790. NIM.001.017535 (STB vol 26 tab 1180).
791. NIM.001.016161 (TB vol 16 tab 594).
792. NIM.001.017254 (TB vol 15 tab 566).
793. NIM.001.017254 (TB vol 15 tab 566).
794. NIM.001.042223 (STB vol 28 tab 1270).
795. See also eg NIM.001.017697 (TB vol 15 tab 559).
796. NIM.002.023216 (TB vol 21 tab 859).
797. NIM.002.023217 (TB vol 21 tab 859).
798. Bennett Affidavit at [28] (CB vol 5 tab 42).
799. Bennett Affidavit at [31] (CB vol 5 tab 42).
800. T, 8/11/19, 334.41-43 (Ms Bennett).
801. Bennett Affidavit at [34] (CB vol 5 tab 42).
802. T, 8/11/19, 334.28-39 (Ms Bennett).
803. Bennett Affidavit at [35]-[38].
804. Bennett Affidavit at [39].
805. Bennett Affidavit at [42] and Annexure MB-04, p. 37 (NIM.001.012824_0001) (CB vol 5 tab 42).
806. NIM.002.030183 (TB vol 16 tab 615). See also eg NIM.001.015738 (TB vol 16 tab 618); NIM.001.042951 (TB vol 16 tab 620); NIM.002.040789 (TB vol 16 tab 622); and NIM.002.040791 (TB vol 16 tab 623).
807. NIM.002.030183 (TB vol 16 tab 615).
808. NIM.001.043397 (TB vol 17 tab 652).
809. NIM.002.029548 (TB vol 16 tab 639).
810. NIM.002.029924 (TB vol 16 tab 632).
811. NIM.001.015763 (TB vol 16 tab 612).
812. 1000648.009.001.0344 at p. 51 (STB vol 28 tab 1268).
813. 1000648.010.001.0132 (STB vol 26 tab 1157).
814. Williams Affidavit at [21] and Exhibit CW-1, tab 15 (CB vols 5-5A tab 46).
815. Williams Affidavit, Exhibit CW-1, tab 15, p. 478 (CB vols 5-5A tab 46).
816. Williams Affidavit, Exhibit CW-1, tab 15, pp. 478-479 (CB vols 5-5A tab 46).
817. Williams Affidavit, Exhibit CW-1, tab 16 (CB vols 5-5A tab 46). See also NIM.001.014739 (STB vol 27 tab 1194).
818. 1000648.001.001.1160 (TB vol 16 tab 640).
819. Exhibit A-20.
820. NIM.003.118551 (TB vol 17 tab 659).
821. NIM.001.014742 (TB vol 17 tab 654).
822. NIM.001.210137 (TB vol 16 tab 658).
823. NIM.001.210137_0002 (TB vol 16 tab 658).
824. NIM.001.210137_0002 (TB vol 16 tab 658).
825. NIM.001.210137_0001 (TB vol 16 tab 658).
826. 1000648.003.001.0635 (TB vol 17 tab 663).
827. 1000648.003.001.0642 at [36] (TB vol 17 tab 663).
828. 1000648.003.001.0642 at [38] (TB vol 17 tab 663).
829. 1000648.003.001.0642 at [39] (TB vol 17 tab 663).
830. 1000648.003.001.0643 at [46] (TB vol 17 tab 663).
831. 1000648.003.001.0643 at [40] (TB vol 17 tab 663).
832. 1000648.003.001.0647 at [72]-[73] (TB vol 17 tab 663).
833. NIM.001.013352, NIM.001.013353 (TB vol 17 tab 666).
834. NIM.001.013198 (STB vol 28 tab 1280).
835. 1000648.010.001.0129 (STB vol 27 tab 1199).
836. Williams Affidavit at [23], Exhibit CW-1, tab 17 (CB vols 5-5A tab 46).
837. Williams Affidavit at [23], Exhibit CW-1, tab 17, p. 531 (CB vols 5-5A tab 46).
838. Williams Affidavit at [23], Exhibit CW-1, tab 17, p. 534 (CB vols 5-5A tab 46).
839. Williams Affidavit at [23], Exhibit CW-1, tab 17, p. 535 (CB vols 5-5A tab 46).
840. 1000648.005.001.0850 (TB vol 18 tab 695).
841. 1000648.005.001.0850 (TB vol 18 tab 695).
842. 1000648.005.001.0850 at [3] (TB vol 17 tab 695).
843. Williams Affidavit at [24] and Exhibit CW-1, tab 18 (CB vols 5-5A tab 46); 1000648.005.001.2177 (TB vol 18 tab 698).
844. 1000648.005.001.2181 (TB vol 18 tab 698).
845. 1000648.005.001.2178 (TB vol 18 tab 698).
846. 1000648.005.001.2184 (TB vol 18 tab 698).
847. 1000648.005.001.2189 (TB vol 18 tab 698).
848. SOC and ASOC at [4.7] (CB vol 1 tab 2); admitted in Defence at [1]; Williams Affidavit at [26] and Exhibit CW-1, tabs 21 and 22, pp. 570, 573 (CB vols 5-5A tab 46).
849. Letter from AAT to ASQA dated 4 January 2017 (1000648.010.001.0136) (STB vol 28 tab 1284).
850. NIM.001.000094 (TB vol 19 tab 770).
851. See eg NIM.001.0944597 (vol 19 tab 756).
852. NIM.001.012014, NIM.001.012015 and NIM.001.012016 (TB vol 17 tab 712).
853. NIM.001.008153 (TB vol 17 tab 673).
854. NIM.001.244560 (STB vol 27 tab 1215).
855. NIM.001.244560 (STB vol 27 tab 1215).
856. NIM.001.003201 (TB vol 17 tab 683) (quoted at [463]).
857. NIM.001.012127 (TB vol 18 tab 704).
858. NIM.001.012127 (TB vol 18 tab 704).
859. NIM.001.011513, NIM.001.011514 (TB vol 18 tab 738).
860. NIM.003.118975 (STB vol 27 tab 1216).
861. NIM.001.244485 (TB vol 18 tab 739).
862. NIM.001.244485 (TB vol 18 tab 739).
863. NIM.001.001825 (TB vol 19 tab 780).
864. NIM.001.000093 (TB vol 19 tab 754).
865. 1000648.005.001.0940 (TB vol 19 tab 766).
866. Exhibit A-18.
867. NIM.001.244324 (TB vol 19 tab 761).
868. NIM.001.001768 (TB vol 19 tabs 784-785).
869. Lewis Affidavit at [26]-[32]; T, 7/11/19, 263.36-265.42.
870. Lewis Affidavit at [27], see also at [26].
871. NIM.001.011084 (TB vol 19 tab 769).
872. NIM.001.011074 (TB vol 19 tab 774).
873. Bennett Affidavit at [50] (CB vol 5 tab 42).
874. Bennett Affidavit at [50]-[51] (CB vol 5 tab 42).
875. Bennett Affidavit at [50] and Annexure MB-06, p. 41 (CB vol 5 tab 42).
876. Bennett Affidavit at MB-06 (CB vol 5 tab 42).
877. Bennett Affidavit at MB-06 (CB vol 5 tab 42).
878. Bennett Affidavit at MB-06 (CB vol 5 tab 42).
879. NIM.001.044949 (TB vol 19 tab 781).
880. NIM.001.219020 (TB vol 19 tab 790).
881. NIM.001.010801, NIM.001.044912 (TB vol 19 tabs 786, 788).
882. Capocchi Affidavit at [30] (CB vol 5 tab 38).
883. NIM.001.010537 (TB vol 19 tab 798).
884. Vickers Affidavit at [27] and Exhibit BV-5 (CB vol 8 tab 59).
885. NIM.002.045450 (STB vol 27 tab 1234).
886. 1000648.005.001.1208 (TB vol 20 tab 841).
887. 1000648.005.001.1213 (TB vol 20 tab 841).
888. NIM.001.009929 (STB vol 27 tab 1230).
889. NIM.001.045333 (STB vol 27 tab 1229).
890. NIM.001.009488 (STB vol 27 tab 1232).
891. NIM.001.009891 (STB vol 27 tab 1227).
892. NIM.001.045657 (STB vol 27 tab 1237).
893. NIM.001.198861 (STB vol 27 tab 1235).
894. NIM.001.010345 (TB vol 20 tab 815).
895. NIM.001.010167 (STB vol 27 tab 1221).
896. NIM.001.010167 (STB vol 27 tab 1222).
897. NIM.005.00138_0020 (STB vol 28 tab 1258).
898. NIM.005.00138_0023 to 0025 (STB vol 28 tab 1258).
899. Affidavit of Samuel Voller affirmed 18 September 2019 (the Voller PTR/LLN Affidavit) (CB vols 8-9 tab 62).
900. Matton Affidavit at [5] (CB vol 5 tab 43).
901. ACS at [246].
902. 1000648.005.001.1249 (TB vol 21 tab 901).
903. Matton Affidavit at [5] (CB vol 5 tab 43).
904. Matton Affidavit at [16]-[17] (CB vol 5 tab 43); T, 7/11/19, 440.35-46 (Mr Matton).
905. Matton Affidavit at [12] (CB vol 5 tab 43).
906. Matton Affidavit at [37]-[39] (CB vol 5 tab 43); T, 7/11/19, 441.30 (Mr Matton).
907. Matton Affidavit at [14], [24]-[30] (CB vol 5 tab 43).
908. Matton Affidavit at [42] (CB vol 5 tab 43).
909. Matton Affidavit at [15] (CB vol 5 tab 43).
910. Matton Affidavit at [22] (CB vol 5 tab 43).
911. T, 7/11/19, 451.11-28 (Mr Matton).
912. Matton Affidavit at [23(a)] (CB vol 5 tab 43).
913. Matton Affidavit at [23(b)] (CB vol 5 tab 43).
914. Matton Affidavit at [23(c)] (CB vol 5 tab 43).
915. Matton Affidavit at [23(c)] (CB vol 5 tab 43).
916. Matton Affidavit at [23(d)] (CB vol 5 tab 43).
917. Matton Affidavit at [31]-[35] (CB vol 5 tab 43).
918. Matton Affidavit at [44]-[45] (CB vol 5 tab 43).
919. Matton Affidavit at [46] (CB vol 5 tab 43).
920. Matton Affidavit at [49] (CB vol 5 tab 43).
921. Matton Affidavit at [50] (CB vol 5 tab 43).
922. Matton Affidavit at [54] (CB vol 5 tab 43).
923. Matton Affidavit at [51]-[53] (CB vol 5 tab 43).
924. Matton Affidavit at [55] (CB vol 5 tab 43); T, 7/11/19, 447.25-39 (Mr Matton).
925. Matton Affidavit at [56], [58] (CB vol 5 tab 43); T, 7/11/19, 447.42-448.10 (Mr Matton).
926. T, 7/11/19, 447.3-10 (Mr Matton).
927. Matton Affidavit at [59], [60] (CB vol 5 tab 43).
928. Matton Affidavit at [61] (CB vol 5 tab 43); T, 7/11/19, 447.12-36 (Mr Matton).

929. MGN Audit Report dated 16 September 2016 at pp. 30-31 (CB vol 1 tab 7, Annexure MJD-7); see also 1000648.001.003.7955 at pp. 12-13 (TB vol 23 tab 1005).
930. Dunnett Audit Affidavit, Annexure MJD-6, p. 11 (CB vol 1 tab 7).
931. 1000648.001.002.9187 (TB vol 21 tab 884).
932. 1000648.001.002.9169 (TB vol 21 tab 885).
933. 1000648.001.002.9076 (TB vol 21 tab 886).
934. NIM.001.033870 (STB vol 27 tab 1238).
935. NIM.001.034231 (TB vol 21 tab 879).
936. NIM.001.034231 (TB vol 21 tab 879).
937. NIM.001.004910 (TB vol 21 tab 881).
938. NIM.001.034648 (STB vol 27 tab 1248). See also NIM.001.046188 (STB vol 27 tab 1251).
939. NIM.001.034598 (STB vol 27 tab 1250).
940. NIM.001.034478 (STB vol 27 tab 1252).
941. MGN Audit Report dated 16 September 2016 at [6.9.1] (CB vol 1 tab 7, Annexure MJD-7); ACS at [336].
942. NIM.001.034478 (STB vol 27 tab 1252).
943. NIM.001.208865_0001 (TB vol 21 tab 877).
944. NIM.001.208866_0001 (TB vol 21 tab 877). See also the other plans at NIM.001.208867 to NIM.001.208907 (TB vol 21 tab 877).
945. NIM.001.004337, NIM.001.004338 (STB vol 28 tabs 1282-1283).
946. SOC [10]; admitted Defence [4].
947. 1000648.001.001.1300 (TB vol 22 tab 940); ASOC/SOC at [4.9] and Defence at [1] (admitted).
948. Affidavit of Sarah Tormey affirmed 27 March 2019 (the Tormey Affidavit) at [8] at [3] (CB vol 9 tab 62A).
949. Tormey Affidavit at [4]-[8] (CB vol 9 tab 62A).
950. 1000648.009.001.0006 (STB vol 27 tab 1254).
951. SOC/ASOC at [4.11]; Defence at [1] (admitted).
952. 1000648.001.003.7955 (TB vol 23 tab 1005).
953. SOC/ASOC at [4.11]; Defence at [1] (admitted).
954. See eg 1000648.005.001.0001 (TB vol 4 tab 126).
955. 57158.009.003.0058 (TB vol 2 tab 53)
956. 1000648.001.002.9234 (TB vol 3 tab 99).
957. 1000648.005.001.0039 (TB vol 1 tab 27).
958. 1000648.001.001.0395 at p. 10 (TB vol 22 tab 954).
959. 57158.009.003.0001 (TB vol 15 tab 542).
960. 57158.009.003.0549 (TB vol 3 tab 59).
961. See at [512] above.
962. See at [512] above.
963. 57158.009.002.0005 (TB vol 13 tab 516). See also the consumer satisfaction survey script provided by GG Sales in its s 155 response (57158.038.001.0110) (TB vol 15 tab 548).
964. 57158.009.002.0179 and 57158.009.002.0180 (TB vol 2 tab 40).
965. Affidavit of Consumer H affirmed 10 February 2016 at [9] (CB vol 4 tab 19); see also the Watkins Affidavit at [6]-[11] (CB vol 4 tab 17).
966. See eg at [605] above; see also eg the evidence of Consumer D at [1054] below.
967. See eg the evidence of Consumer A at [980] and [996] below.
968. See at [514] and [606] above; see also the undated PowerPoint presentation prepared for the Brokers and Agents by Phoenix and CTI: 57158.009.002.0179 (TB vol 2 tab 40). As to the CRM Team, see at [319]-[320] above.
969. 57158.009.002.0008 (TB vol 13 tab 516).
970. 57158.009.002.0008 (TB vol 13 tab 516).
971. 57158.053.001.1081] (TB vol 14 tab 528).
972. 57158.053.001.1081] (TB vol 14 tab 528).
973. 1000648.005.001.0004 (TB vol 4 tab 126); see also at [10.9.4] above: "Complaints in late March raised by the Department with Phoenix".
974. 1000648.005.001.0002 (TB vol 4 tab 126); see also the representations made in the Request to Increase 2015 Advance Payment Determination dated 23 March 2015 discussed at [567] above.
975. See eg the email from Ms Bagga to Mr Kochhar on 22 June 2015 at NIM.001.027518 (STB vol 28 tab 1275); see also at [681]-[683] above.
976. 1000648.001.002.9234 (TB vol 3 tab 99).
977. 57158.009.001.0002 (TB vol 12 tab 464).
978. 57158.009.002.0160 (TB vol 2 tab 40).
979. 57158.009.002.0178 (TB vol 2 tab 40).
980. 57158.009.001.0002 at [3.1] (TB vol 12 tab 463).
981. CB vol 6 tab 54 at pp. 82-93.
982. 57158.009.007.4170 (TB vol 13 tab 483).
983. 57158.009.006.0328 (STB vol 26 tab 1168).
984. See eg Agreement between Shantey Pty Ltd and Green Home Pty Ltd (57158.051.001.00053) (TB vol 6 tab 205); Agreement between Krish Marketing Solution Pty Ltd and Punit Gajra dated 14 May 2015 (57158.048.001.0045) (TB vol 6 tab 224).
985. 57158.051.001.0054 (TB vol 6 tab 205) and 57158.048.001.0045 (TB vol 6 tab 224).
986. 57158.048.001.0003 (TB vol 16 tab 582).
987. 57158.048.001.0040 (TB vol 6 tab 234).
988. 57158.048.001.0046 (TB vol 6 tab 224).
989. NIM.002.027401 (TB vol 18 tab 693).
990. NIM.001.031689 at .0002-.0003 (TB vol 6 tab 196). See also eg the email from Mr Cugliandro to Gagan at GG Sales (NIM.001.037232 at .0001) (TB vol 7 tab 267)).
991. NIM.002.022967 (TB vol 6 tab 248), discussed at [610] above.
992. See at [653] above.
993. NIM.002.021709 (TB vol 18 tab 691).
994. NIM.001.006530 at .0001 (TB vol 10 tab 353); see also FASC, Annexure B, Particulars of Agent Contracts at item 79.
995. See eg Consumer A at [980], Consumer B at [1010], Consumer C at [1030], and Consumer D at [1052] ("a sponsor from the Phoenix Institute").
996. NIM.001.00159 (TB vol 21 tab 902).
997. NIM.001.018145 (TB vol 15 tab 549).
998. ACS at [249].
999. ACS at [249].
1000. T, 14/11/19, 751.40-762.34 (Consumer A); T, 18/11/19, 992.45-1004.7 (Consumer B); T, 6/11/19, 164.39-176.5 (Consumer C).
1001. Affidavit of Consumer TW (CB vol 4 tab 30).
1002. See the affidavits of the other consumer witnesses at CB vol 4 tabs 10, 11, 12, 14-25, 27, 30-33.
1003. Affidavit of Consumer FB affirmed 29 January 2016 at [9] (CB vol 4 tab 10); affidavit of Consumer MD affirmed 29 January 2016 at [4] (CB vol 4 tab 11).
1004. Affidavit of Consumer FB affirmed 29 January 2016 at [19]-[21] and [26]-[27] (CB vol 4 tab 10).
1005. Affidavit of Consumer FB affirmed 29 January 2016 at [38]-[45] (CB vol 4 tab 10).
1006. Affidavit of Consumer FB affirmed 29 January 2016 at [7]-[36] (CB vol 4 tab 10).
1007. Affidavit of Simon Winwood-Smith affirmed 1 July 2019 (the Winwood-Smith Affidavit) (CB vol 6 tab 50).
1008. Winwood-Smith Affidavit at [30] (CB vol 6 tab 50).
1009. Winwood-Smith Affidavit at [3]-[20] (CB vol 6 tab 50).
1010. T, 14/11/19, 751-762; affidavit of Consumer A sworn 5 February 2016 (CB vol 4 tab 13).
1011. Affidavit of Consumer A sworn 5 February 2016 at [3]-[5] (CB vol 4 tab 13); T, 14/11/19, 752.15-44.
1012. Affidavit of Consumer A sworn 5 February 2016 at [11] (CB vol 4 tab 13).
1013. Affidavit of Consumer A sworn 5 February 2016 at [6]-[9] (CB vol 4 tab 13).
1014. T, 14/11/19, 753.45-754.2 (Consumer A).
1015. Affidavit of Consumer A sworn 5 February 2016 at [12] (CB vol 4 tab 13).
1016. Affidavit of Consumer A sworn 5 February 2016 at [8] (CB vol 4 tab 13).
1017. T, 14/11/19, 754.36-44 (Consumer A).
1018. Affidavit of Consumer A sworn 5 February 2016 at [12] (CB vol 4 tab 13).
1019. Affidavit of Consumer A sworn 5 February 2016 at [14] (CB vol 4 tab 13).
1020. T, 14/11/19, 757.33-47.
1021. Affidavit of Consumer A sworn 5 February 2016 at [12] (CB vol 4 tab 13).
1022. T, 14/11/19, 757.20-25.
1023. T, 14/11/19, 754.11-22.
1024. Affidavit of Consumer A sworn 5 February 2016 at [13] (CB vol 4 tab 13).
1025. T, 14/11/19, 754.43-44.
1026. Affidavit of Consumer A sworn 5 February 2016 at [16] (CB vol 4 tab 13).
1027. Affidavit of Consumer A sworn 5 February 2016 at [17] (CB vol 4 tab 13).
1028. T, 14/11/19, 756.30-35 (Consumer A).
1029. Affidavit of Consumer A sworn 5 February 2016 at [25]-[26] (CB vol 4 tab 13).
1030. T, 14/11/19, 757.31 (Consumer A).
1031. Affidavit of Consumer A sworn 5 February 2016 at [17] (CB vol 4 tab 13).
1032. Affidavit of Consumer JE affirmed 5 February 2016 at [17]-[27] (CB vol 4 tab 12).
1033. Affidavit of Consumer JE affirmed 5 February 2016 at [12]-[14] (CB vol 4 tab 12).
1034. ACS at [259].
1035. Affidavit of Consumer A sworn 5 February 2016 at [20]-[21] (CB vol 4 tab 13).
1036. Affidavit of Consumer A sworn 5 February 2016 at [22]-[23] (CB vol 4 tab 13).
1037. Affidavit of Consumer A sworn 5 February 2016 at [27] (CB vol 4 tab 13).
1038. Affidavit of Consumer A sworn 5 February 2016 at [29], [36] (CB vol 4 tab 13).
1039. Affidavit of Consumer A sworn 5 February 2016 at [30] (CB vol 4 tab 13).
1040. Affidavit of Consumer A sworn 5 February 2016 at [36] (CB vol 4 tab 13).
1041. Affidavit of Consumer A sworn 5 February 2016 at [39]-[40] (CB vol 4 tab 13).
1042. Affidavit of Consumer A sworn 5 February 2016 at [41]-[43] (CB vol 4 tab 13).
1043. Affidavit of Consumer A sworn 5 February 2016 at [44]-[45] (CB vol 4 tab 13).
1044. Affidavit of Consumer A sworn 5 February 2016 at [47] (CB vol 4 tab 13).
1045. Affidavit of Consumer A sworn 5 February 2016 at [46] and Annexure BE-1 (CB vol 4 tab 13).
1046. T, 14/11/19, 759.37-39 (Consumer A); see also T, 14/11/19, 760.19.
1047. T, 14/11/19, 761.30-762.2 (Consumer A).
1048. ACS at [274].
1049. See at [227], [235]-[236] and Section [6.2.6] above.
1050. T, 18/11/19, 993.18 (Consumer B).
1051. T, 18/11/19, 993.25-28 (Consumer B).
1052. T, 18/11/19, 1001.26-28 (Consumer B).
1053. T, 18/11/19, 993.45-994.4 and 997.22 (Consumer B).
1054. Affidavit of Consumer TW affirmed 16 March 2016 (CB vol 4 tab 30).
1055. Affidavit of Consumer B affirmed 26 February 2016 at [10] (CB vol 4 tab 26).
1056. T, 18/11/19, 994.40 (Consumer B).
1057. Electronic Supplementary Broker Bundle (57158.038.002.0060) (Exhibit A-5).
1058. T, 18/11/19, 994.19-21 (Consumer B).
1059. T, 18/11/19, 995.4-7 (Consumer B). See also Affidavit of Consumer B affirmed 26 February 2016 at [11] (CB vol 4 tab 26).
1060. T, 18/11/19, 994.18-995.13 (Consumer B).
1061. Affidavit of Consumer B affirmed 26 February 2016 at [13] and [15] (CB vol 4 tab 26).
1062. Affidavit of Consumer B affirmed 26 February 2016 at [11] (CB vol 4 tab 26).
1063. Affidavit of Consumer B affirmed 26 February 2016 at [11] (CB vol 4 tab 26).
1064. Affidavit of Consumer B affirmed 26 February 2016 at [11] (CB vol 4 tab 26).
1065. Affidavit of Consumer B affirmed 26 February 2016 at [25] (CB vol 4 tab 26).
1066. T, 18/11/19, 995.24-25 (Consumer B).
1067. T, 18/11/19, 996.27 (Consumer B).
1068. Affidavit of Consumer B affirmed 26 February 2016 at [37] (CB vol 4 tab 26).
1069. ACS at [285].
1070. Affidavit of Consumer B affirmed 26 February 2016 at [12] (CB vol 4 tab 26).
1071. T, 18/11/19, 995.44-996.2 (Consumer B).
1072. T, 18/11/19, 996.4 (Consumer B).
1073. T, 18/11/19, 994.5-12 (Consumer B).
1074. T, 18/11/19, 1002.3-12 (Consumer B).
1075. T, 18/11/19, 1002.14-30 (Consumer B).
1076. Affidavit of Consumer B affirmed 26 February 2016 at [17], [24] (CB vol 4 tab 26).
1077. T, 18/11/19, 996.7-9 (Consumer B).
1078. T, 18/11/19, 996.39-44 (Consumer B).
1079. T, 18/11/19, 1003.20-35 (Consumer B).
1080. T, 18/11/19, 997.5-10 (Consumer B).
1081. T, 18/11/19, 997.31-39 (Consumer B).
1082. T, 18/11/19, 997.43-998.7 (Consumer B). See also affidavit of Consumer B affirmed 26 February 2016 at [27] (CB vol 4 tab 26).
1083. Affidavit of Consumer B affirmed 26 February 2016 at [27] (CB vol 4 tab 26).
1084. T, 18/11/19, 998.46-999.10.
1085. NIM.002.023217 (TB vol 21 tab 859).
1086. T, 18/11/19, 998.20.
1087. Affidavit of Consumer B affirmed 26 February 2016 at [35] (CB vol 4 tab 26); T, 18/11/19, 1001.33-44 (Consumer B).
1088. Affidavit of Consumer B affirmed 26 February 2016 at [35] and Annexure BJ-1 (CB vol 4 tab 26).
1089. T, 18/11/19, 1001.32-44 (Consumer B).
1090. Affidavit of Consumer B affirmed 26 February 2016 at [30]-[33] (CB vol 4 tab 26); T, 18/11/19, 998.27-31 and 999.12-19 (Consumer B)
1091. Exhibits A-21 (transcript) and A-22 (USB); T, 18/11/19, 1000.9-1001.30 (Consumer B).
1092. T, 18/11/19, 1001.5-19 (Consumer B).
1093. NIM.001.003016 (TB vol 18 tab 702); Exhibit A-23.
1094. See at [227], [235]-[236] and Section [6.2.6] above.
1095. T, 6/11/19, 164-177 (Consumer C).
1096. T, 6/11/19, 165.34 (Consumer C).
1097. T, 6/11/19, 165.15-166.2 (Consumer C).
1098. Affidavit of Consumer C affirmed 2 March 2016 at [4] (CB vol 4 tab 29); T, 6/11/19, 166.14-15 (Consumer C).
1099. Affidavit of Consumer C at [3] (CB vol 4 tab 29); T, 6/11/19, 165.45 and 166.2 (Consumer C).
1100. T, 6/11/19, 166.30-31 (Consumer C).
1101. T, 6/11/19, 169.17-20 (Consumer C).
1102. Affidavit of Consumer C affirmed 2 March 2016 at [7] (CB vol 4 tab 29); T, 6/11/19, 169.34-35 (Consumer C).
1103. Affidavit of Consumer C affirmed 2 March 2016 at [6] (CB vol 4 tab 29); affidavit of Consumer B affirmed 26 February 2016 at [10] (CB vol 4 tab 26).
1104. T, 6/11/19, 167.13-15 (Consumer C).
1105. T, 6/11/19, 167.38 (Consumer C).
1106. Affidavit of Consumer C affirmed 2 March 2016 at [7] (CB vol 4 tab 29).
1107. Affidavit of Consumer C affirmed 2 March 2016 at [7] (CB vol 4 tab 29).
1108. Affidavit of Consumer C affirmed 2 March 2016 at [7] (CB vol 4 tab 29).
1109. Affidavit of Consumer C affirmed 2 March 2016 at [7] (CB vol 4 tab 29).
1110. T, 6/11/19, 167.7-11 (Consumer C).
1111. Affidavit of Consumer C affirmed 2 March 2016 at [7] (CB vol 4 tab 29).
1112. T, 6/11/19, 169.7, 168.2-3 and 168.31 (Consumer C).
1113. T, 6/11/19, 167.25-33 (Consumer C).
1114. T, 6/11/19, 173.17-18 (Consumer C).
1115. Affidavit of Consumer C affirmed 2 March 2016 at [8] (CB vol 4 tab 29); T, 6/11/19, 173.16-47 (Consumer C).
1116. Affidavit of Consumer C affirmed 2 March 2016 at [8] (CB vol 4 tab 29).
1117. T, 6/11/19, 170.45 (Consumer C).
1118. Affidavit of Consumer C affirmed 2 March 2016 at [9] (CB vol 4 tab 29); T, 6/11/19, 168.42-46 (Consumer C).
1119. Affidavit of Consumer C affirmed 2 March 2016 at [10] (CB vol 4 tab 29).
1120. Affidavit of Consumer C affirmed 2 March 2016 at [7], [11] (CB vol 4 tab 29); T, 6/11/19, 169.17-39 (Consumer C).
1121. T, 6/11/19, 174.10 (Consumer C).
1122. T, 6/11/19, 176.18-22 (Consumer C).
1123. Affidavit of Consumer C affirmed 2 March 2016 at [19] (CB vol 4 tab 29).
1124. Affidavit of Consumer C affirmed 2 March 2016 at [18]-[19] (CB vol 4 tab 29).
1125. Affidavit of Consumer C affirmed 2 March 2016 at [17] (CB vol 4 tab 29).
1126. T, 6/11/19, 170.47-171.2 (Consumer C).
1127. Affidavit of Consumer C affirmed 2 March 2016 at [21] (CB vol 4 tab 29).
1128. Affidavit of Consumer C affirmed 2 March 2016 at [20], [24] (CB vol 4 tab 29); T, 6/11/19, 172.5 (Consumer C).
1129. Affidavit of Consumer C affirmed 2 March 2016 at [21], [24] (CB vol 4 tab 29).
1130. Affidavit of Consumer C affirmed 2 March 2016 at [21].
1131. Affidavit of Consumer C affirmed 2 March 2016 at [22] (CB vol 4 tab 2).
1132. Affidavit of Consumer C affirmed 2 March 2016 at [21], [23] (CB vol 4 tab 29).
1133. Affidavit of Consumer C affirmed 2 March 2016 at [24].
1134. Affidavit of Consumer C affirmed 2 March 2016 at [23], [24] (CB vol 4 tab 29).
1135. Affidavit of Consumer C affirmed 2 March 2016 at [27] and Annexure KT-1 (CB vol 4 tab 29).
1136. See at [227], [235]-[236] and Section [6.2.6] above.
1137. Affidavit of Consumer D affirmed 29 February 2016 at [1], [7] (CB vol 4 tab 28).
1138. Affidavit of Consumer D affirmed 29 February 2016 at [3]-[6] (CB vol 4 tab 28).
1139. Affidavit of Consumer D affirmed 29 February 2016 at [7]-[8] (CB vol 4 tab 28).
1140. Affidavit of Consumer D affirmed 29 February 2016 at [9] (CB vol 4 tab 28).
1141. Affidavit of Consumer FB affirmed 29 January 2016 at [7]-[36] (CB vol 4 tab 10).
1142. Affidavit of Consumer D affirmed 29 February 2016 at [9] (CB vol 4 tab 28).
1143. Affidavit of Consumer D affirmed 29 February 2016 at [11] (CB vol 4 tab 28).
1144. Affidavit of Consumer D affirmed 29 February 2016 at [14] (CB vol 4 tab 28).
1145. Affidavit of Consumer D affirmed 29 February 2016 at [18] (CB vol 4 tab 28).
1146. Affidavit of Consumer D affirmed 29 February 2016 at [21] (CB vol 4 tab 28).
1147. Affidavit of Consumer D affirmed 29 February 2016 at [22] (CB vol 4 tab 28).
1148. Affidavit of Consumer D affirmed 29 February 2016 at [23]-[24] (CB vol 4 tab 28).
1149. ACS at [327(c)].
1150. Affidavit of Consumer D affirmed 29 February 2016 at [15] (CB vol 4 tab 28).
1151. Affidavit of Consumer D affirmed 29 February 2016 at [25] (CB vol 4 tab 28).
1152. Affidavit of Consumer D affirmed 29 February 2016 at [20] (CB vol 4 tab 28).
1153. Affidavit of Consumer D affirmed 29 February 2016 at [27] (CB vol 4 tab 28).
1154. Affidavit of Consumer D affirmed 29 February 2016 at [28]-[29] (CB vol 4 tab 28).
1155. Affidavit of Consumer D affirmed 29 February 2016 at [30] and Annexure GS-1 (CB vol 4 tab 28).
1156. Affidavit of Consumer D affirmed 29 February 2016 at [30] and Annexure GS-1 (CB vol 4 tab 28).
1157. See at [227], [235]-[236] and Section [6.2.6] above.
1158. MGN Audit Report dated 16 September 2016 at [4.1.1] (CB vol 1 tab 7, Annexure MJD-7). See also the Affidavit of Michael James Dunnett sworn 30 August 2019 (the Dunnett Census Date Affidavit), Annexure MD-3, [3.1.2(c)] (CB vol 1 tab 5); Koochew Affidavit at [21]-[22] (CB vol 6 tab 52).
1159. Dunnett Census Date Affidavit, Annexure MD-3, [3.1.2(b)] (CB vol 1 tab 5); MGN Audit Report dated 16 September 2016 at [4.1.2] (CB vol 1 tab 7, Annexure MJD-7).
1160. See at [881]-[882] and [891] above. See further Vickers Affidavit at [5] (CB vol 8 tab 59); MGN Audit Report dated 16 September 2016, Appendix A (CB vol 1 tab 7, Annexure MJD-7).
1161. Dunnett Audit Affidavit at [10] (CB vol 1 tab 7). The MGN Audit Report appears at Annexure MJD-7 (CB vol 1 tab 7). A detailed summary of MGN's information requests and the material provided to MGN appears at pp. 59-76 of Annexure MJD-7.
1162. Affidavit of Haley Marlene Jones affirmed 29 June 2018 (the Jones Affidavit) at [2]-[4] (CB vol 6 tab 47); Koochew Affidavit at [5]-[10] (CB vol 6 tab 52); Vickers Affidavit at [4] (CB vol 8 tab 59); Crittenden Affidavit at [16] (CB vol 4 tab 35); Affidavit of Leigh Matthew Ulpen affirmed on 29 June 2018 (the Ulpen Affidavit), Annexure LMU-1, [3.1.2(a)] (CB vol 1 tab 4); Dunnett Census Date Affidavit, Annexure MD-3, [3.1.2(a)] (CB vol 1 tab 5).
1163. Jones Affidavit at [4] (CB vol 6 tab 47).
1164. Jones Affidavit at [4] (CB vol 6 tab 47).
1165. Crittenden Affidavit at [16] (CB vol 4 tab 35).
1166. Koochew Affidavit at [6] (CB vol 6 tab 52).
1167. Koochew Affidavit (CB vol 6 tab 52).
1168. Jones Affidavit (CB vol 6 tab 47).
1169. CB vol 8 tab 59. See also the affidavit of Mr Vickers affirmed 21 October 2019 (CB vol 8 tab 59A), which makes a small number of corrections to his earlier affidavit.
1170. CB vol 8 tab 58.
1171. CB vol 8 tab 62.
1172. MGN Audit Report dated 16 September 2016 at pp. 12-13 (CB vol 1 tab 7, Annexure MJD-7).
1173. MGN Audit Report dated 16 September 2016 (CB vol 1 tab 7, Annexure MJD-7). The MGN Audit Report is also at 1000648.001.003.7955 (TB vol 23 tab 1005).
1174. MGN Audit Report dated 16 September 2016, Appendix F, p. 89 (CB vol 1 tab 7).
1175. Dunnett Audit Affidavit at [22] (CB vol 1 tab 7).
1176. Dunnett Audit Affidavit at [12] (CB vol 1 tab 7).
1177. CB vol 1 tab 7.
1178. CB vol 1 tab 5.
1179. CB vol 1 tab 6.
1180. Affidavit of Michael James Dunnett sworn 12 September 2019 (the Dunnett Chain of Custody Affidavit) (CB vol 8 tab 55).
1181. Ulpen Affidavit at [1] and Exhibit LMU-2, pp. 8 and 83 (CB vol 1 tab 4).
1182. CB vol 8 tab 57.
1183. CB vol 8 tab 56.
1184. 1000648.10.001.0001 (STB vol 28 tab 1262).
1185. T, 12/11/19, 528.14-28 (Mr Dunnett).
1186. T, 12/11/19, 529.10-11 (Mr Dunnett).
1187. T, 12/11/19, 529.13-28 (Mr Dunnett).
1188. T, 12/11/19, 529.33-530.29 (Mr Dunnett).
1189. Affidavit of Samuel Voller affirmed 17 September 2019 (the Voller Telephone Verification Affidavit) at [2]-[5], [12], [49]-[57] (CB vol 8 tab 61).
1190. Voller Telephone Verification Affidavit at [2]-[5], [12], [49]-[57] (CB vol 8 tab 61).
1191. Voller Telephone Verification Affidavit at [2] and Annexure SV-01 (CB vol 8 tab 61).
1192. Voller Telephone Verification Affidavit at [14]-[19] (CB vol 8 tab 61).
1193. Voller Telephone Verification Affidavit at [23]-[24] (CB vol 8 tab 61). The transcripts appear at Annexure SV-10, pp. 36-105.
1194. The recordings are .wav files and are located in Exhibit SV-10A. See Voller Telephone Verification Affidavit at [24] (CB vol 8 tab 61).
1195. The recordings are .wav files and are located in Exhibit SV-10A. See Voller Telephone Verification Affidavit at [26] (CB vol 8 tab 61).
1196. Voller Telephone Verification Affidavit at [29]-[48] (CB vol 8 tab 61).
1197. Voller PTR/LLN Affidavit at [14] and Exhibit SV-1, tab 1 (CB vols 8-9 tab 62); Training slides for enrolment process v1 (57158.009.002.0125) (TB vol 2 tab 39); Training slides for enrolment process v2 (57158.009.002.0160) (TB vol 2 tab 40); see also the affidavit of Jonathan Prideaux (the Prideaux Affidavit) at [17] (CB vol 8 tab 57). These forms are described in the detail in the coding protocol in Annexure JP-11 to the Prideaux affidavit (pp. 80-112).
1198. MGN Audit Report dated 16 September 2016 at pp. 5-6 (CB vol 1 tab 7, Annexure MJD-7).
1199. Dunnett Chain of Custody Affidavit at [5], [10] (CB vol 8 tab 55); MGN Audit Report dated 16 September 2016, Appendix A (CB vol 1 tab 7, Annexure MJD-7).
1200. Prideaux Affidavit at [7]-[18] (CB vol 8 tab 57); Dunnett Chain of Custody Affidavit at [3], [6]-[10] (CB vol 8 tab 55).
1201. Prideaux Affidavit at [19]-[25], [29] (CB vol 8 tab 57).
1202. Prideaux Affidavit at [26], [27] and [30] and the coding protocols at Annexures JP-10 to JP-13 (pp. 54-135) (CB vol 8 tab 57).
1203. Prideaux Affidavit at [27] and the coding protocols at Annexure JP-11 (pp. 78-79) (CB vol 8 tab 57).
1204. Prideaux Affidavit at [31] (CB vol 8 tab 57).The Coding Output Spreadsheet is Annexure JP-15 to the Prideaux Affidavit, being an Excel spreadsheet in electronic form.
1205. Pillai Affidavit at [6] (CB vol 8 tab 56). Note the Coding Output Spreadsheet is referred to by Mr Pillai as the "Coding Output" at [10(a)] of his affidavit.
1206. Pillai Affidavit at [10]-[11] (CB vol 8 tab 56).
1207. Pillai Affidavit at [12], [14]-[17] (CB vol 8 tab 56).
1208. Exhibit A-18.
1209. T, 13/11/19, 640.30-33.
1210. Voller PTR/LLN Affidavit at [16]-[19] (CB vols 8-9 tab 62); affidavit of Michael Dunnett sworn 30 August 2019 (the Dunnett PTR/LLN Affidavit), Annexure MD-1 at [2.2.3] (CB vol 1 tab 6).
1211. Voller PTR/LLN Affidavit at [18] (CB vols 8-9 tab 62).
1212. See also Voller PTR/LLN Affidavit at [15] (CB vols 8-9 tab 62).
1213. Dunnett PTR/LLN Affidavit, Annexure MD-1, [3.2.2] (CB vol 1 tab 6).
1214. Dunnett PTR/LLN Affidavit, Annexure MD-1, [1.2.2], [3.1.3]-[3.1.4] and footnotes 1 and 10 (CB vol 1 tab 6).
1215. Dunnett PTR/LLN Affidavit, Annexure MD-1, [1.2.2] and footnote 1 (CB vol 1 tab 6).
1216. Dunnett PTR/LLN Affidavit, Annexure MD-1, [2.2.1]-[2.2.2] (CB vol 1 tab 6).
1217. Dunnett PTR/LLN Affidavit, Annexure MD-1, [2.2.4] and [4.11]-[4.12] (CB vol 1 tab 6).
1218. Dunnett PTR/LLN Affidavit, Annexure MD-1, [2.2.5] (CB vol 1 tab 6).
1219. Dunnett PTR/LLN Affidavit, Annexure MD-1, [4.10.1]-[4.10.4] (CB vol 1 tab 6).
1220. Dunnett PTR/LLN Affidavit, Annexure MD-1, [4.10.5]-[4.10.6] (CB vol 1 tab 6).
1221. Dunnett PTR/LLN Affidavit, Annexure MD-1, [4.10.7] (CB vol 1 tab 6).
1222. Voller PTR/LLN Affidavit at [30] (CB vols 8-9 tab 62).
1223. Voller PTR/LLN Affidavit at [21]-[22], [31] (CB vols 8-9 tab 62). The Phoenix Model Answers appear at Exhibit SV-1, tab 2, while the Sample Answers Document appears at Exhibit SV-1, tab 3.
1224. Voller PTR/LLN Affidavit at [31], [38] (CB vols 8-9 tab 62).
1225. Voller PTR/LLN Affidavit at [37] (CB vols 8-9 tab 62).
1226. Voller PTR/LLN Affidavit at [37]-[48] (CB vols 8-9 tab 62).
1227. Voller PTR/LLN Affidavit at [52] (CB vol 8-9 tab 62).
1228. See at [974] above.
1229. Voller PTR/LLN Affidavit at [43] (CB vols 8-9 tab 62).
1230. Pillai Affidavit at [13], [17]-[18] (CB vol 8 tab 56).
1231. Pillai Affidavit at [18]-[19] (CB vol 8 tab 56).
1232. The Rogue Agents List is at Annexure DPP3 to the Pillai affidavit (CB vol 8 tab 56).
1233. Jones Affidavit (CB vol 6 tab 47)
1234. Jones Affidavit at [17] (CB vol 6 tab 47).
1235. Koochew Affidavit at [11]-[14] and Annexure GK-3 (CB vol 6 tab 52).
1236. MGN Audit Report dated 16 September 2016 at [1.3.1] (CB vol 1 tab 7, Annexure MJD-7).
1237. MGN Audit Report dated 16 September 2016 at [1.3.2] (CB vol 1 tab 7, Annexure MJD-7).
1238. ACS at [375].
1239. See at [1075(3)] above.
1240. Vickers Affidavit at [12] (CB vol 8 tab 59).
1241. Vickers Affidavit at [12], Table 1 (CB vol 8 tab 59).
1242. See MGN Audit Report dated 16 September 2016 at p. 9 (CB vol 1 tab 7, Annexure MJD-7).
1243. Ulpen Affidavit, Annexure LMU-1, [2.4.3(d)] (CB vol 1 tab 4) and Dunnett Audit Affidavit at [25]-[27] (CB vol 1 tab 7).
1244. ACS at [377].
1245. Vickers Affidavit at [13] (CB vol 8 tab 59).
1246. Vickers Affidavit at [13]-[14] (CB vol 8 tab 59).
1247. Vickers Affidavit at [15]-[26] (CB vol 8 tab 59).
1248. Vickers Affidavit, Exhibit BV-1, item 12.
1249. Vickers Affidavit at [19] (CB vol 8 tab 59).
1250. Vickers Affidavit at [20] (CB vol 8 tab 59).
1251. Vickers Affidavit at [22], Exhibits BV-3 and BV-4 (CB vol 8 tab 59).
1252. ACS at [380].
1253. Vickers Affidavit at [22]-[23] (CB vol 8 tab 59).
1254. MGN Audit Report dated 16 September 2016 at pp. 33-34 (CB vol 1 tab 7, Annexure MJD-7); T, 12/11/19, 545-547 (Mr Dunnett).
1255. T, 12/11/19, 545.40-45 (Mr Dunnett).
1256. MGN Audit Report dated 16 September 2016 at pp. 33-34 (CB vol 1 tab 7, Annexure MJD-7).
1257. T, 12/11/19, 547.23-31 (Mr Dunnett).
1258. Ulpen Affidavit, Annexure LMU-1, [2.2], [3.1.6]-[3.1.7] (CB vol 1 tab 4).
1259. Ulpen Affidavit, Annexure LMU-1, [2.3] (CB vol 1 tab 4).
1260. ACS at [344(b)].
1261. NIM.002.021669 (TB vol 22 tab 944). See the "Summary" sheet, setting out the combined number of students in the "completed" column for the Online Courses offered by Phoenix as follows: BSB50207 (4 students), BSB50215 (2 students), BSB51107 (1 student), BSB51915 (1 student), CHC50113 (1 student), CHC50612 (0 completions).
1262. Ulpen Affidavit, Annexure LMU-1, [2.4], [3.3.9]-[3.3.13] (CB vol 1 tab 4).
1263. Ulpen Affidavit, Annexure LMU-1, [2.1.4], [2.4.3(b)], [3.3.14] (CB vol 1 tab 4).
1264. Ulpen Affidavit, Annexure LMU-1, [2.4.3(c)] (CB vol 1 tab 4).
1265. Ulpen Affidavit, Annexure LMU-1, [2.4.3(b)] (CB vol 1 tab 4).
1266. MGN Audit Report dated 16 September 2016 at [4.2.4] (CB vol 1 tab 7, Annexure MJD-7).
1267. Jones Affidavit at [5]-[10] (CB vol 6 tab 47). The Koochew Affidavit at [27] (CB vol 6 tab 52) explains the reason for the marginal difference in unit of study completion rates between his and the Jones Affidavits.
1268. Jones Affidavit at [15] (CB vol 6 tab 47).
1269. ACS at [346].
1270. Koochew Affidavit at [26] (CB vol 6 tab 52).
1271. Koochew Affidavit at [27] (CB vol 6 tab 52).
1272. ACS at [348(a)].
1273. Jones Affidavit at [4] (CB vol 6 tab 47); see also ACS [348(c)].
1274. Vickers Affidavit, Exhibit BV-5 (CB vol 8 tab 59).
1275. Vickers Affidavit at [24]-[26] (CB vol 8 tab 59).
1276. Vickers Affidavit at [26]-[27] (CB vol 8 tab 59).
1277. Vickers Affidavit at [28]-[29] (CB vol 8 tab 59).
1278. ACS at [383].
1279. Vickers Affidavit at [30]-[34] (CB vol 8 tab 59).
1280. Zylstra Affidavit at [5], [8] (CB vol 8 tab 58).
1281. Zylstra Affidavit at [9] (CB vol 8 tab 58).
1282. T, 15/11/19, 810.37-811.4.
1283. Zylstra Affidavit at [13] (CB vol 8 tab 58).
1284. Affidavit of Daniel Rudd affirmed 13 September 2019 (the Rudd Affidavit) at [11] and Annexures DR-1 to DR-7 (including attachments to the report) (CB vol 4 tab 9).
1285. Rudd Affidavit at [12] and Annexures DR-8, DR-9 and DR-10 (including attachments to the report) (CB vol 4 tab 9).
1286. Rudd Affidavit at [19] (CB vol 4 tab 9).
1287. Rudd Affidavit at [19] and Annexure DR-1, p. 14 (CB vol 4 tab 9).
1288. T, 19/11/19, 1023.6-7.
1289. Rudd Affidavit at [17], Annexure DR-1, p. 14 (CB vol 4 tab 9).
1290. Rudd Affidavit at [14]-[15] and Annexure DR-1, pp. 15-16 (CB vol 4 tab 9).
1291. Rudd Affidavit at [26] (CB vol 4 tab 9).
1292. Rudd Affidavit at [27]-[28] and Annexures DR-8 and DR-9 (CB vol 4 tab 9).
1293. See also the draft ORIMA Report annexed to the Dunnett Audit Affidavit, Annexure MJD-7, Appendix F, p. 104 (CB vol 1 tab 7).
1294. Dunnett Audit Affidavit, Annexure MJD-7, Appendix F, p. 117 (CB vol 1 tab 7).
1295. Dunnett Audit Affidavit at [21]-[22] (CB vol 1 tab 7).
1296. Dunnett Audit Affidavit, Annexure MJD-7, Appendix F, p. 89 (CB vol 1 tab 7).
1297. Dunnett Audit Affidavit, Annexure MJD-7, Appendix F, pp. 91-93 (CB vol 1 tab 7); T, 12/11/19, 538.35-45 (Mr Dunnett).
1298. Dunnett Audit Affidavit, Annexure MJD-7, Appendix F, p. 94 (CB vol 1 tab 7).
1299. Dunnett Audit Affidavit, Annexure MJD-7, Appendix F, pp. 94-97 (CB vol 1 tab 7). See also at pp. 103-105.
1300. Dunnett Audit Affidavit, Annexure MJD-7, Appendix F, pp. 98-99 (CB vol 1 tab 7).
1301. Dunnett Audit Affidavit, Annexure MJD-7, Appendix F, p. 98 (CB vol 1 tab 7).
1302. Dunnett Audit Affidavit, Annexure MJD-7, Appendix F, pp. 100-101 (CB vol 1 tab 7).
1303. ASOC/SOC at [39]; ACS at [514(a)].
1304. See at [356]-[358] above.
1305. See at [694] above.
1306. 1000648.009.001.0474 (STB vol 28 tab 1265).
1307. NIM.002.035745 (STB vol 26 tab 1152).
1308. NIM.001.012346 (TB vol 12 tab 433).
1309. See at [760]-[762] above; NIM.002.033080 (TB vol 12 tab 435); NIM.002.033288 (STB vol 26 tab 1167).
1310. See at [980] above.
1311. See at [982] above.
1312. See eg at [384]-[385] above.
1313. See Sections [8.6.4] and [13.8] above.
1314. See at [836] above.
1315. See the evidence of Ms Scomazzon at [259] and Ms Mason at [391] above.
1316. ACS at [524].
1317. See eg Section [8.6.1] and [724] above.
1318. See at [366] above.
1319. See at [562] above.
1320. See at [636] above.
1321. See also ASOC/SOC at [41]; ACS at [514(b)].
1322. See at [368] above.
1323. See at [369] above.
1324. See at [374] above.
1325. See at [1101] above.
1326. See at [329]-[330] above.
1327. See at [734] above.
1328. ASOC/SOC at [40]; ACS at [514(b)].
1329. See at [420]-[421] above.
1330. See at [422]-[427] above.
1331. See eg at [428] above.
1332. MGN Audit Report dated 16 September 2016 at [1.4.4] (CB vol 1 tab 7, Annexure MJD-7).
1333. See at [1124] above.
1334. ASOC at [42]; ACS at [514(d)].
1335. See at [1124] above.
1336. See at [714] above; Pillai Affidavit at [19], Part D (pp. 14-15) (CB vol 8 tab 56).
1337. See at [10.8.3] and [10.9.1] above.
1338. ACS [536].
1339. SOC/ASOC at [58] (CB vol 1 tab 2).
1340. See at [1128] above.
1341. See at [1179] above.
1342. Ms Scomazzon's report at pp. 38-39 (CB vols 1-3 tab 8, Annexure JS-1).
1343. Ms Scomazzon's report, Table 8 (pp. 39-46) (CB vols 1-3 tab 8, Annexure JS-1).
1344. Ms Scomazzon's report at p. 39 (CB vols 1-3 tab 8, Annexure JS-1).
1345. Capocchi Affidavit at [12]-[15] (CB vol 5 tab 38).
1346. Williams Affidavit, Exhibit CW-1, tab 16, pp. 489-491 (CB vols 5-5A tab 46).
1347. Williams Affidavit, Exhibit CW-1, tab 16, p. 490 (CB vols 5-5A tab 46).
1348. ACS at [552].
1349. Williams Affidavit, Exhibit CW-1, tab 16, p. 404 (CB vols 5-5A tab 46).
1350. Williams Affidavit, Exhibit CW-1, tab 16, pp. 400, 404 (CB vols 5-5A tab 46).
1351. T, 11/11/19, 414.30-35, 416.28-35, and 425.40-46; ACS at [552].
1352. See at [263]-[265] and Sections [7.4.4] and [7.4.5] above.
1353. Dunnett PTR/LLN Affidavit, Annexure MD-1, [2.2.4], [4.12] and Tables 1 and 3 (pp. 6, 14) (CB vol 1 tab 6); see at [1114]-[1115] above.
1354. See eg Section [8.9.1] and the evidence of Mr Voller at [1119]-[1123] above.
1355. See eg at [1023] (Consumer B) and at [974] (Mr Winwood-Smith) above.
1356. See at [278] above.
1357. Ms Scomazzon's report at pp. 50, 52, 53 (CB vols 1-3 tab 8, Annexure JS-1).
1358. Pillai Affidavit at [13(l)-(m)], Part D (pp. 14-15) (CB vol 8 tab 56).
1359. See also Ms Scomazzon's evidence at [267] above.
1360. See at [269] above.
1361. See eg the evidence of Mr Capocchi at [454] above, Mr Bhargava at [456] above; see also Ms Bennett at [478(2)] above; see also eg the complaints of Indigenous consumers from whom the DET obtained statutory declarations at [349] above; and the analysis of the FinPa Withdrawal Spreadsheet at [1156]-[1157] above.
1362. See at [1156] above.
1363. Scomazzon Affidavit, Exhibit JS-2, pp. 439-447 (CB vols 1-3 tab 8).
1364. See at [478]-[479] above.
1365. Ms Scomazzon's report at [59], [82]-[83] (CB vols 1-3 tab 8, Annexure JS-1).
1366. ACS at [561].
1367. Williams Affidavit, Exhibit CW-1, tab 16, p. 490 (CB vols 5-5A tab 46).
1368. Dunnett PTR/LLN Affidavit, Annexure MD-1, [2.2.1] (CB vol 1 tab 6).
1369. Pillai Affidavit at p. 14 (CB vol 8 tab 56).
1370. See eg Mason Affidavit at [23] (CB vol 4 tab 54).
1371. See eg at [1111] above.
1372. See at [329]-[330] above; see also eg at [1183] above.
1373. See at [890] and Section [10.16.6] above.
1374. See at [830]-[831] above.
1375. See at [1202] above.
1376. T, 13/11/19, 634.19-25. See also Ms Scomazzon's evidence at [1050] above as to the necessary characteristics of a valid and reliable LLN assessment tool.
1377. Ms Scomazzon's report at [9], [80] (CB vols 1-3 tab 8, Annexure JS-1).
1378. Ms Scomazzon's report at [80] (CB vols 1-3 tab 8, Annexure JS-1).
1379. Ms Scomazzon's report at [106] (CB vols 1-3 tab 8, Annexure JS-1).
1380. T, 13/11/19, 646.41-647.34 (Ms Scomazzon).
1381. ACS at [565].
1382. Koochew Affidavit at [24] (CB vol 6 tab 52).
1383. See at [343] above. See also eg the declarations from Indigenous consumers in the Kimberley Region of Western Australia at [349] above; and the evidence of Consumer A at [979] and Consumer B at [1008].
1384. See at [346]-[347] above.
1385. See eg Ms Blefari's evidence at [342] above.
1386. MGN Audit Report dated 16 September 2016, Table 21 (p. 24) (CB vol 1 tab 7, Annexure MJD-7).
1387. MGN Audit Report dated 16 September 2016, Appendix D (CB vol 1 tab 7, Annexure MJD-7).
1388. Cf Ms Scomazzon's evidence at [268]-[269] above.
1389. Cf Ms Scomazzon's evidence at [267] and [269] above.
1390. See eg Section [9.2.3] (evidence of trainers and assessors), [342] and [431] (Ms Blefari), [432]-[433] above. Illustrative examples are given in the Voller Telephone Verification Affidavit at [32], [39]-[40], [48] (CB vol 8 tab 61).
1391. See [480(4)] above.
1392. See eg Consumer MN at [481] above.
1393. See eg at [434], [511], [779], [972(6)], and [1184] above.
1394. See eg at [402]-[403] above.
1395. Williams Affidavit, Exhibit CW-1, tab 14, p. 448 (CB vols 5-5A tab 46).
1396. Williams Affidavit, Exhibit CW-1, tab 13, p. 412 (CB vols 5-5A tab 46).
1397. Williams Affidavit, Exhibit CW-1, tab 18, pp. 545-549, 551-552 (CB vols 5-5A tab 46).
1398. See at [1080] above.
1399. See eg at [372], [401]-[402] (Mr Lewis), [430] (Ms Mason), [480] (Mr Howley), [526] (Mr Gale) above. See also eg [576], [596], [611], [645], [700]-[701], [751] (examples of complaints) and the evidence of Mr Cugliandro posing as a student at [656] above.
1400. Eg Mason affidavit at [52]-[53] (CB vol 4 tab 34). See also eg at [611(1)] above and [1154] to [1157].
1401. See [1124] and [1186] above.
1402. See at [1192] and Section [13.11] above.
1403. Mason Affidavit at [66] (CB vol 4 tab 34).
1404. See at [731]-[732] above.
1405. See at [733] above.
1406. See at [1143]-[1146] above.
1407. See at [1302] below.
1408. See at [1162] above.
1409. See eg at [454] (Mr Capocchi), [456] (Mr Bhargava), [452] (Ms Bennett) above.
1410. See eg at [401] (Mr Lewis) and [480(2)] (Mr Howley) above.
1411. Williams Affidavit, Exhibit CW-1, tab 18, p. 546 (CB vol 5 tab 46).
1412. Phoenix, Training and Assessment Strategy (Diploma of Business, BSB50215), version dated 1/06/15 at p. 8 (57158.009.006.0894) (TB vol 7 tab 264); Phoenix, Training and Assessment Strategy (Diploma of Leadership and Management, BSB51915), version dated 26/06/15 at p. 9 (57158.009.006.0926) (TB vol 7 tab 289).
1413. Ms Scomazzon's report at [114] (CB vols 1-3 tab 8, Annexure JS-1).
1414. Ms Scomazzon's report at [116]-[121] (CB vols 1-3 tab 8, Annexure JS-1).
1415. T, 13/11/19, 646.21-37.
1416. T, 13/11/19, 646.41 to 647.2.
1417. Williams Affidavit, Exhibit CW-1, tab 11, p. 333 (CB vols 5-5A tab 46).
1418. Williams Affidavit, Exhibit CW-1, tab 14, p. 451 (CB vols 5-5A tab 46).
1419. See Section [9.2.1] above; see also at [736] above.
1420. See [453] above.
1421. Bennett Affidavit at [1], [3] (CB vol 5 tab 42).
1422. See eg at [460]-[465] above.
1423. See Section [10.16.3] above.
1424. NIM.001.014522 and its attachment, NIM.001.014523 (TB vol 17 tab 657).
1425. 57158.009.007.5025 (STB vol 27 tab 1210).
1426. See Section [8.3] above.
1427. See email chain between Falak Jani and (among others) Mr Kochhar on 20 October 2015 (NIM.001.014522) (TB vol 17 tab 657) from Falak Jani to (among others) Mr Brown, Mr Kochhar and Ms Bagga dated 6 November 2015 (NIM.001.003201) (TB vol 17 tab 683); email dated 9 November 2015 from Falak Jani to Mr Copeland, copied among others to Mr Kochhar and Mr Brown and attached table of revised ratios (NIM.001.003153 and NIM.001.003154 respectively) (TB vol 17 tab 689).
1428. NIM.001.003154 (TB vol 17 tab 689); NIM.001.014122 and its attachment NIM.001.014125 (TB vol 17 tab 660).
1429. See at [396] above.
1430. See at [678] above.
1431. See at [679] above.
1432. See at [679] above.
1433. As to the different versions of the RTO Policy Manual produced by Phoenix, see Section [10.12.5] above.
1434. See at [540] to [541] above.
1435. See at [547] above.
1436. Zylstra Affidavit, Annexure PZ-07, pp. 63-68 (CB vol 6 tab 54) and Jones Affidavit at [9] (CB vol 6 tab 47).
1437. See at [396]-[397] above.
1438. See at [398] above.
1439. See at [391] above
1440. See at [394] above.
1441. See at [187] above.
1442. Williams Affidavit, Exhibit CW-1, tab 13, p. 426 (CB vols 5-5A tab 46).
1443. See eg at [514], [606] above.
1444. See eg at [430]-[431] above.
1445. See at [778] above.
1446. T, 13/11/19, 635.33-44 (Ms Scomazzon).
1447. See at [372] above.
1448. See at [430], [433], [576], [594]-[598], [611], [644]-[645], [660], [700]-[701], [704], [751]-[755], [792], and [839]-[840] above.
1449. See at [702] above.
1450. Section [10.9.5] above.
1451. See at [646] and [651] above.
1452. See at [599]-[602] and [755] above.
1453. See at [773] above.
1454. Section [10.13.2] above.
1455. See at [750] above.
1456. See at [694] and [750] above.
1457. Section [10.12.2] above.
1458. See eg at [430], [481] (Consumer MN) and Sections [12.3.2], [12.5.2] and [12.6.2] above.
1459. See at [974] above.
1460. 1000648.010.001.0001 (STB vol 28 tab 1262).
1461. See at [513], Section [10.13.2] and [750] above.
1462. See at [250] above.
1463. See at [695]-[696] above.
1464. See at [942] above.
1465. See the newsletter dated December 2014 discussed Section [10.4] above.
1466. See at [567] above.
1467. See at [638] above.
1468. See at [574] above.
1469. See at [811] above.
1470. See at [671] above.
1471. NIM.001.038219 (TB vol 8 tab 293).
1472. 57158.009.002.0390 (TB vol 6 tab 210). See also at [607]-[609] above.
1473. See Chapter 17 (The Target Communities and their Likely Attributes) above.
1474. See Chapter 17 (The Target Communities and their Likely Attributes) above.
1475. See the evidence of Ms Scomazzon at [268] above.
1476. See the evidence of Ms Scomazzon explained at [267] above.
1477. ACS at [634]. See also at [217] above.
1478. See at [974] above.
1479. See at [1119]-[1123] above.
1480. See at [1123] above.
1481. See at [314]-[315] and Section [8.9.1] above. See also Dunnett PTR/LLN Affidavit, Annexure MD-1, [4.10] (CB vol 1 tab 6).
1482. See at [421] above.
1483. See at [422]-[424] above.
1484. See eg [1017] (Consumer B), [1040] (Consumer C).
1485. See Section [13.13.2], especially at [1171].
1486. See eg at [428] above; see also eg NIM.001.041057 (TB vol 13 tab 62).
1487. See at [607] above.
1488. See at [368] above.
1489. See at [775]-[776] above.
1490. See eg at [372] above.
1491. See at [383] above.
1492. See at [376] above.
1493. Voller Telephone Verification Affidavit at [57] (CB vol 8 tab 61).
1494. 1000648.010.001.0001 (STB vol 28 tab 1262).
1495. Dunnett Audit Affidavit, Annexure MJD-7, Appendix F, p. 99 (CB vol 1 tab 7).
1496. Lewis Affidavit at [7] (CB vol 5 tab 41A).
1497. See Section [8.7] above; Lewis Affidavit at [19] (CB vol 5 tab 41A).
1498. 57158.009.006.0403 (TB vol 25 tab 1095).
1499. See at [1103] above.
1500. See at [779] above.
1501. See Section [10.15.4].
1502. See at [780] above.
1503. NIM.002.023199 (TB vol 21 tab 865).
1504. See at [1287] above.
1505. See at [777] above.
1506. See at [1124] above.
1507. See Sections [8.4.2], [8.8] and [13.7.2] above.
1508. See at [417] above.
1509. See eg at [734] above.
1510. See at [418] above.
1511. See Section [7.8.1] above.
1512. See eg at [413] above.
1513. See Section [10.15.5], [809]-[810] and [1183].
1514. See at [814]-[816] and [890] above.
1515. See Section [10.19.3] above.
1516. See at [1183] above.
1517. Voller PTR/LLN Affidavit at [64]-[82] (CB vol 8 tab 62).
1518. Voller PTR/LLN Affidavit at [95] (CB vol 8 tab 62).
1519. Dunnett Census Date Affidavit, Annexure MD-3, [2.2.4] and Table 3 (CB vol 1 tab 5).
1520. 57158.009.006.2673 (TB vol 25 tab 1099).
1521. 1000648.006.001.0001 (TB vol 1 tab 6).
1522. 1000.006.001.0012 (TB vol 1 tab 7).
1523. 57158.009.006.0876 (TB vol 2 tab 44).
1524. 57158.009.006.0910 (TB vol 3 tab 64).
1525. See eg AIPE brochure for "Dual Diploma of Business (BSB50207) & Management (BSB51107)" (57158.001.001.0043) (TB vol 1 tab 13A); Ivy College brochure for "Double Diploma - Business & Management (BSB50207 & BSB51107)" (57158.029.002.0216) (TB vol 2 tab 33A); Australian Vocational Learning Institute brochure for "BSB50207 Diploma of Business BSB51107 Diploma of Management" (57158.016.002.0495) (TB vol 25 tab 1135).
1526. Dunnett Census Date Affidavit, Annexure MD-3, [2.2.3] and Table 2 (CB vol 1 tab 5).
1527. Dunnett Census Date Affidavit, Annexure MD-3, [2.2.3] and Table 2 (CB vol 1 tab 5).
1528. See at [553]-[554] above.
1529. See at [363] above.
1530. See at [724] above.
1531. Dunnett Census Date Affidavit, Annexure MD-3, [3.2.1] (CB vol 1 tab 5).
1532. See eg at [1154] and [1157] above.
1533. See at [594] above.
1534. Dunnett Census Date Affidavit, Annexure MD-3, [3.2.3] (CB vol 1 tab 5).
1535. Dunnett Census Date Affidavit, Annexure MD-3, [4.6] and Table 10 (CB vol 1 tab 5).
1536. Dunnett Census Date Affidavit, Annexure MD-3, [2.2.2], Table 1 and [4.2] (CB vol 1 tab 5).
1537. See also eg [722] above.
1538. Dunnett Census Date Affidavit, Annexure MD-3, [2.2.2], Table 1 and [3.1.3] (CB vol 1 tab 5).
1539. Ulpen Affidavit, Annexure LMU-1, [3.3.4] and [3.3.5] (CB vol 1 tab 4).
1540. See at [478(2)] (Ms Bennett); Bhargava Affidavit at [7] (CB vol 4 tab 36); Capocchi Affidavit at [25] to [26] (CB vol 5 tab 38) above.
1541. See at [1154]-[1156] above.
1542. See at [1157] above.
1543. See at [1174] above.
1544. Voller Telephone Verification Affidavit at p. 81 (CB vol 8 tab 61).
1545. Williams Affidavit, Exhibit CW-1, tab 18, p. 555 (CB vols 5-5A tab 46).
1546. See Chapter 16 above (The Target Communities and their Likely Attributes).
1547. SOC/ASOC at [82].
1548. See at [320] above.
1549. SOC/ASOC at [88]
1550. SOC/ASOC at [89]-[91].
1551. Ulpen Affidavit, Annexure LMU-1, [2.2.2] (CB vol 1 tab 4).
1552. As alleged in the SOC/ASOC at [75], [88].