Federal Court finds training college engaged in a system of unconscionable conduct

17 August 2021

On 13 August 2021, the Federal Court held that former training college, Phoenix Institute of Australia Pty Ltd, made false or misleading representations and implemented systems of unconscionable conduct in 2015 in relation to online diploma courses when marketing to students and enrolling them into those courses under the Commonwealth VET FEE-HELP loan program.

Phoenix had been paid $106 million by the Commonwealth for the relevant enrolments, relating to almost 12,000 students in more than 21,000 online vocational education and training courses in subjects such as business, management and early childhood education and care.

The Federal Court found that Phoenix's purpose in enrolling students for the courses was to maximise revenue from the Commonwealth's VET FEE-HELP scheme. Phoenix was held to have displayed a "callous indifference" as to whether students satisfied eligibility criteria for the courses, were suitable for the courses, had reasonable prospects of successfully completing them and whether course delivery was adequately resourced.

This was the ACCC’s fifth action in which the Court has found that a VET FEE-HELP provider has engaged in misleading and unconscionable conduct. Systemic unconscionability was also found in the proceedings brought by the ACCC against the VET FEE-HELP provider, Productivity Partners Pty Ltd trading as Captain Cook College.

Danielle Forrester of Banco Chambers appeared for the ACCC led by Naomi Sharp SC. Ruth Higgins SC of Banco Chambers appeared as amicus curiae as a contradictor to address the legal issues surrounding systems unconscionability (the respondents ultimately filed submitting appearances).