Declarations
7 The ACCC submitted the modus operandi of the first respondent ('Zanok') was as follows:
(1) It both directly, and through its agent Australian Regional Employment Agencies Pty Ltd ('AREA'), placed advertisements on websites, offering members of the public employment opportunities for Information Technology ('IT') graduates;
(2) during 'interviews', the prospective employee would be informed that Zanok had an established business in providing IT services and that a period of training was required at a cost to the trainee of up to $4,700 which would prepare the trainee for employment with Zanok that was guaranteed on completion of the training, or earlier if the trainee 'proved' themselves to the company;
(3) the training in fact provided by Zanok was unstructured, disorganised and of no assistance or value to the trainees;
(4) the period set aside for the training was in fact used by Zanok to have a number of the trainees contact prospective customers of Zanok and otherwise assist Zanok to establish its business;
(5) Zanok deceived the trainees into believing they would be offered employment in return for paying a fee for the pre-employment training when in fact Zanok had no available employment opportunities and in lieu of providing the promised training, required the trainees to assist Zanok in setting up its business.
8 Zanok was incorporated on 4 March 2008. The second respondent (Mr Darley Stephen) and the third respondent (Ms Vanitha Darley) are listed as directors of Zanok. Zanok's website (www.zanokit.com) described Zanok as a 'Global Consultancy and IT Solutions Company' based in the USA, Australia, India and Malaysia. The Zanok website was registered on 15 March 2008, that is, less than two weeks after Zanok was incorporated.
9 AREA is a company based in South Australia. It was incorporated in 2007 and is engaged in the business of locating employment for students. Mr Shreyas Narayana was the National Recruitment Manager for AREA located at AREA's Melbourne office. AREA was retained by Zanok to assist with finding and interviewing applicants for employment with Zanok.
10 During the period February 2009 to May 2009, Zanok, and AREA on behalf of Zanok, placed a number of advertisements on various websites. The advertising placed by or on behalf of Zanok was directed to persons residing in Australia by reason of a temporary visa issued by the Department of Immigration and Citizenship. Most notably, it applied to persons residing in Australia by reason of a '485 visa' or skilled graduate visa. A 485 visa or skilled graduate visa permits the holder to remain in Australia for up to 18 months after completing higher education to enable the person to obtain the relevant points needed to meet the requirements of a permanent general skilled migrant visa. Points are rewarded depending on certain factors including whether the applicant has a job offer in Australia. To obtain sufficient points to attain the permanent general skilled migrant visa one option is for a person to have been employed in a skilled occupation in Australia for at least 12 of the last 24 months.
11 Many of the witness affidavits filed by the ACCC depose to similar facts. Exhibit 11 is a typical example. Mr Arora was born in India and migrated to Australia in June 2006. His native language is Hindi. He holds various degrees including a Masters of IT obtained from the Swinburne University of Technology in Melbourne. He has temporary residency in Australia expiring September 2010 at which time unless he qualifies for permanent residency will be required to return to India. One way for Ms Arora to obtain permanent residency is to complete one year of work experience in the IT field. Mr Arora has had great difficulty obtaining employment in an IT position because of his lack of experience in the Australian IT industry.
12 In January 2009, Mr Arora read an advertisement for a position as a business analyst with Zanok. There was no mention of training in the advertisement. Mr Arora attended an interview on 3 February 2009. During the interview Mr Arora was informed by representatives of Zanok that:
(1) Zanok was a big organisation in the United States;
(2) Zanok was prepared to offer him three months of training with a guaranteed job on completion of the training;
(3) the total cost of the training would be $4,250 if paid up front, $4,500 if paid in two instalments or $4,700 if paid in three instalments;
(4) when employed by Zanok he would receive a salary package of $45,000 - $50,000 per annum;
(5) because Zanok was guaranteeing jobs the positions would fill quickly and 'it is best for you to pay for the training as early as possible'.
13 Mr Arora paid the first instalment by credit card for the training program on 6 February 2009.
14 Similar evidence is given by the deponents in Exhibit 10 at paras 21 - 43 and Exhibit 4 at paras 17 - 45.
15 Zanok was aware that, at the time of paying the training fee, the trainees were at a special disadvantage, namely, concerned to obtain permanent residency by obtaining one year of skilled work experience in Australia within a relatively short period of time. The trainees were not seeking training but paid employment which Zanok promised them in return for payment of the training fee. The evidence for this is to be found in:
(1) Exhibit 3: para 8;
(2) Exhibit 4: paras 10, 11, 40;
(3) Exhibit 5: para 36;
(4) Exhibit 6: paras 9 - 10, 26, 33;
(5) Exhibit 7: paras 10 - 12, 26, 36;
(6) Exhibit 9: para 18;
(7) Exhibit 10: paras 20, 22, 36, 37, 82;
(8) Exhibit 11: para 37;
(9) Exhibit 13: paras 7 - 9, 13.
16 Section 51AA incorporates into the Act the unwritten law in relation to unconscionable conduct thereby extending the remedies available under the Act for unconscionable conduct to the extent that this concept is presently part of the common law or equitable principles recognised by the courts. Unconscionable conduct is conduct which attracts a sufficient level of judicial opprobrium to support the grant of relief based on principles set out in specific equitable doctrines established by Courts of Equity: Australian Competition & Consumer Commission v CG Berbatis Holdings Pty Limited (2003) 214 CLR 51. Unconscionability is a concept which requires a high level of moral obloquy. It is not necessary for the party who has benefited from a transaction challenged as unconscionable to itself have created the special advantage which forms the basis of the unconscionability claim. It is sufficient if that party knows, or ought to have known, of the other party's situation of special disadvantage and takes unfair advantage of the opportunity presented: Louth v Diprose (1992) 175 CLR 621. A person will be under a special disadvantage if there are circumstances seriously affecting the ability of the person to make a judgement in his or her own best interests: Berbatis Holdings per Gleeson CJ at [5]. A person is not under a special disadvantage simply because of inequality of bargaining power: Berbatis Holdings.
17 In the present circumstances, the unconscionable conduct on the part of Zanok was the promise that, in return for a fee, the applicant would receive training and thereafter guaranteed skilled employment in circumstances where Zanok knew or ought to have known that many of the applicants were temporary residents and anxious to find skilled employment to assist with their applications for permanent resident status. This conduct constituted more than simply taking advantage of a superior bargaining position but involved an unconscientious exploitation of another's inability or diminished ability to conserve his or her own interests. Dangling the 'employment carrot' in return for a fee in circumstances in which the applicant faces having to leave Australia, constitutes a high level of moral obloquy especially where the promised employment does not exist: Australian Competition & Consumer Commission v Chats House Investments (1996) 71 FCR 250.
18 In the circumstances, the ACCC submitted the Court should make a declaration in terms of para 1 of the amended application.
19 The power to make a declaration is a discretionary one and the basis upon which it should be exercised is conveniently summarised by Kenny J in Australian Competition & Consumer Commission v Henry Kaye and National Investment Institute Pty Limited [2004] FCA 1363 at [200] - [201]. In Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (1993) 41 FCR 89, Sheppard J held that the concern of the Act with the public interest supported the view that the Court may, in appropriate cases, exercise its power to grant the declaratory relief to mark its disapproval of particular conduct engaged in contravention of the Act: [1993] 41 FCR 89 at 100 see also 106 per Foster J and 107 per Hill J; Australian Competition & Consumer Commission v Goldy Motors Pty Limited (2001) ATPR 41-801 at [34] per Carr J; Australian Competition & Consumer Commission v Target Australia Pty Limited (2001) ATPR 41-840 at [18] per Lee J. In the circumstances, the ACCC submitted that the Court should make the declaratory relief sought in paras 1 - 9 of the amended application, particularly given the important public interest element involved and also having regard to the fact that the ACCC stands apart from other litigants in that its functions include the furtherance of those public interests. I agree.
20 Presumably as a means of satisfying trainees that Zanok was capable of arranging employment opportunities, it represented to them that it was a global company with offices in a number of countries including the United States. This is based on the following examples:
(1) Zanok website at p 2 of Tab 9 of Exhibit JAL-1 to Exhibit 1;
(2) Exhibit 4 at para 50;
(3) Exhibit 5 at para 11 and annexure HP-2;
(4) Exhibit 6 at para 42;
(5) Exhibit 8 at paras 14 and 24.
(6) Exhibit 10 at paras 24 - 30;
21 In fact, Zanok had no presence in the United States. The evidence disclosed that the Zanok office addresses located in America do not exist. Consequently, the evidence established Zanok had engaged in conduct that constituted a contravention of s 52 of the Act.
22 Zanok also represented that it had developed and sold functional IT software products. For example see the following affidavits:
(1) Tabs 9, 11 and 12 of Exhibit JAL-1 to Exhibit 1;
(2) Exhibit 6 at paras 23 and 49;
(3) Exhibit 7 at paras 22 and 51.
(4) Exhibit 10 at paras 31, 60 and 74;
(5) Exhibit 12 at paras 14 and 42;
23 In fact, Zanok had no functional IT software products. So much is established by:
(1) Exhibit 3 at paras 21 - 24;
(2) Exhibit 6 at paras 72 - 75;
(3) Exhibit 7 at para 79;
(4) Exhibit 10 at paras 74 and 81.
(5) Exhibit 12 at paras 56 and 57;
24 The ACCC submitted the Court should make a declaration in terms of para 2 of the amended application. For the reasons outlined above, including at [19] above, I agree.
25 From in or about February 2009 Zanok made representations in advertisements published on the website www.gumtree.com.au to the following effect:
(1) That Zanok was offering paid employment opportunities in the IT sector in Sydney and Melbourne;
(2) that Zanok was offering 'IT Scholarships via paid training courses'.
26 For examples of the advertisements on the www.gumtree.com.au website, see Tab 22 of Exhibit JAL-1 to Exhibit 1.
27 In fact, contrary to the representations, Zanok was offering IT training for which trainees were required to pay a non refundable fee of up to $4,700 rather than paid employment opportunities in the IT sector and further the 'IT Scholarships' did not exist. This is evidenced by the following:
(1) Exhibit 4 at para 27;
(2) Exhibit 6 at para 21;
(3) Exhibit 7 at para 24;
(4) Exhibit 8 at para 11.
28 In these circumstances, Zanok engaged in conduct that was misleading or deceptive in contravention of s 52 of the Act. Zanok also contravened s 53B of the Act, namely, it engaged in conduct that was liable to mislead a person seeking employment as to the availability, nature, terms or conditions or any other matter relating to the employment.
29 The ACCC submitted that the Court should make a declaration in terms of para 3 of the amended application. For the reasons outlined above, including at [19], I agree.
30 In addition to the publications on the Gumtree website, Zanok, from about April 2009, on the website www.seek.com.au and in the interviews with applicants from February 2009, made representations to the effect that Zanok offered an unqualified guarantee of paid employment in the IT sector in Sydney or Melbourne at the end of an IT training course. Examples of the advertisements placed on the website www.seek.com.au can be found at Tab 22 of Exhibit JAL-1 to Exhibit 1. Examples of the representations made during interviews include:
(1) Exhibit 4 at para 27;
(2) Exhibit 7 at para 24.
(3) Exhibit 8 at para 11;
(4) Exhibit 9 at paras 18, 35;
(5) Exhibit 10 at para 21;
(6) Exhibit 11 at paras 14 - 16;
(7) Exhibit 12 at para 15;
31 In fact, Zanok was not in a position to guarantee paid employment in the IT sector to graduates of the training course. Further, cl 8 of the Workplace Training Agreement between Zanok and the trainee provided that any guarantee of paid employment did not apply in the event of a 'Global Economic Crisis'. See Exhibit 5 at paras 24 - 33 and Exhibit 7 at paras 84 - 100.
32 As a consequence the ACCC submitted Zanok engaged in conduct that was misleading or deceptive contrary to s 52 of the Act and further engaged in conduct that was liable to mislead persons who were seeking employment as to the availability, nature, terms or conditions of the employment contrary to s 53B of the Act. In these circumstances the ACCC submitted that the Court should make a declaration in terms of para 4 of the amended application. For the reasons outlined above, including at [19] above, I agree.
33 During various interviews with applicants from in or about December 2008, Zanok represented that Zanok would pay graduates of the IT training course a salary of a minimum $45,000 per annum once employed by Zanok. The evidence of the representation is contained in the following affidavits:
(1) Exhibit 6 at para 23;
(2) Exhibit 7 at para 24;
(3) Exhibit 8 at para 11;
(4) Exhibit 9 at para 18.
34 The representation was in fact misleading or deceptive because Zanok was not in a position to pay a salary of a minimum of $45,000 per annum (or any amount) to graduates of the training courses. The evidence in respect of that matter can be located in the following affidavits:
(1) Exhibit 5 at paras 24 - 33;
(2) Exhibit 7 at paras 84 - 98.
35 In the circumstances, the ACCC submitted the representation was misleading or deceptive contrary to s 52 of the Act and Zanok engaged in conduct that was liable to mislead persons seeking employment as to availability, nature, terms or conditions of the employment contrary to s 53B of the Act. Accordingly, the ACCC submitted the Court should make a declaration in terms of para 5 of the amended application. For the reasons outlined above, including at [19] above, I agree.
36 Zanok represented to applicants that it offered a referral program whereby trainees would be paid $200 per individual they referred to Zanok that signed up for the IT training course.
37 The evidence of the representation referred to in [35] is contained in the following affidavits:
(1) Exhibit 4 at paras 54 - 55, 74 and annexure AM5;
(2) Exhibit 8 at paras 35, 42 and annexure MN6.
38 The representation was in fact misleading or deceptive because Zanok did not pay to any of the trainees the promised $200 payment in respect of trainees referred to Zanok: Exhibit 1 at para 35.26.
39 In the circumstances, the ACCC submitted the representation was misleading or deceptive contrary to s 52 of the Act and accordingly the Court should make a declaration in terms of para 6 of the amended application. For the reasons outlined above, including at [19] above, I agree.
40 From in or about February 2009 Zanok accepted payment for the training in circumstances where Zanok intended to supply training materially different to the training in respect of which the payment was accepted, alternatively, there were reasonable grounds of which Zanok was or ought to have been aware for believing that it would be unable to supply the training within the time period specified by Zanok.
41 Zanok prepared training documents which contained an outline of the training for which payment was accepted. See Exhibit 6 annexure SG4 at pages 30 - 46, SG5 at pages 48 - 55. In fact the training actually delivered to the extent that it existed was very different. See the following affidavits:
(1) Exhibit 1 at paras 35.16 - 35.29;
(2) Exhibit 3 at paras 26 - 28;
(3) Exhibit 4 at paras 58 - 75;
(4) Exhibit 6 at paras 59 - 85;
(5) Exhibit 7 at paras 58 - 82;
(6) Exhibit 8 at paras 43 - 75;
(7) Exhibit 10 at paras 63 - 81.
42 In the circumstances, Zanok engaged in conduct in trade or commerce contrary to s 58 of the Act in that it accepted payment for services where at the time of acceptance:
(1) it did not intend to supply the services or intended to supply services materially different from the services in respect of which payment was accepted; or
(2) there were reasonable grounds of which Zanok was aware or ought reasonably to have been aware that it would not be able to supply the services within the period specified by it or within a reasonable time.
43 The ACCC submitted the Court should therefore make a declaration in terms of para 7 of the amended application. For the reasons outlined above, including at [19] above, I agree.
44 Section 75B of the Act provides that a person is involved in a contravention of a provision of Part V (which includes ss 51AA, 52, 53B and 58 of the Act) where a person has been in any way, directly or indirectly, knowingly concerned in, or a party to, the contravention. The words 'party to a contravention' refer to a person who participates in, or assents to, the contravention. To be regarded as participating, a person must have knowledge of the essential elements constituting the contravention: Yorke v Lucas (1985) 158 CLR 661 at 670. The evidence establishes that Mr Darley Stephen was knowingly concerned in or a party to the contraventions which the ACCC alleges as against Zanok. That evidence is contained in the following:
(1) Exhibit 1 at paras 5 and 6 and Tab 1 of Exhibit JAL-1 to Exhibit 1;
(2) Exhibit 7 at paras 19 - 25, 26, 38, 39, 51, 52, 59, 61, 62, 64, 67, 69 - 71, 73, 76, 89, 91, 93, 98;
(3) Exhibit 8 at paras 41, 48, 52, 53, 56, 59, 63, 64, 66, 68, 70 - 71, 73;
(4) Exhibit 9 at paras 12, 18, 21, 26, 33, 34, 35, 38, 41, 43, 49, 53, 57, 59, 60;
45 In the circumstances, the ACCC submitted the Court should make a declaration in accordance with para 8 of the amended application. For the reasons outlined above, including at [19] above, I agree.
46 The ACCC also submitted the evidence establishes that Ms Vanitha Darley was a person directly or indirectly knowingly concerned in or a party to the contraventions of Zanok alleged by the ACCC. That evidence is contained in the following:
(1) Exhibit 1 at paras 5 and 6 and Tab 1 of Exhibit JAL-1 to Exhibit 1;
(2) Exhibit 3 at paras 11, 12, 14, 22, 23, 26, 32 - 34;
(3) Exhibit 5 at paras 21 - 22;
(4) Exhibit 7 at paras 91 - 93, 96, 98;
(5) Exhibit 8 at paras 52, 63.
(6) Exhibit 9 at paras 17 - 19, 59;
(7) Exhibit 10 at para 60.
(8) Exhibit 11 at paras 27 - 29, 31, 35, 40 - 41;
(9) Exhibit 13 at para 58 - 61, 64;
47 In the circumstances, the ACCC submitted the Court should make a declaration in accordance with para 9 of the amended application. For the reasons outlined above, including at [19] above, I agree.