Justice Spender of the Federal Court, Brisbane made orders declaring that Black on White Pty Ltd, trading as the Australian Early Childhood College, had breached the Trade Practices Act by engaging in misleading and deceptive conduct, and unconscionable conduct.
The Court's declaration and finding of fact follow proceedings instituted by the Australian Competition and Consumer Commission which alleged the company misled consumers about accreditation associated with courses offered in 1997; the existence of a deferred payment scheme for tuition fees; and had engaged in unconscionable conduct by signing students up to contracts without disclosing the onerous nature of some of the clauses in those contracts. The company subsequently went into liquidation and was deregistered.
The College offered courses in child care and related fields at its three campuses in Brisbane, Sydney and Melbourne. The company represented that courses it offered during 1997 were accredited with VETEC (Vocational Education Training and Employment Commission of Queensland); were accredited nationally pursuant to the National Framework for the Recognition of Training (NFROT) agreement (being an agreement between the Commonwealth and various State and Territory Governments); and that the College qualified for the use of the trade marks or logos relating to VETEC accreditation and National Accreditation in relation to those courses.
Justice Spender also found that Mr James Poteri was knowingly concerned in misleading and unconscionable conduct, and that his son, Mr Nicholas Poteri was knowingly concerned in the company's contraventions with respect to representations regarding accreditation.
The conduct of the company in not disclosing the clauses of the agreement is highlighted by the findings in respect of one witness, Ms McPherson.
The Court found: "In the case of Ms McPherson, at the time in early January 1996 when she signed the enrolment form, said: 'I am awaiting advice from QTAC as to my acceptance into university or TAFE', and was told by a female employee of the college, 'That's OK we will just hold the enrolment form until we get further notification from you'. In January, Mr McPherson telephoned the college advising of Ms McPherson's acceptance into university, and was told, 'Just write into the College and let us know that she won't be going ahead with her application', and on 17 January Mr McPherson wrote advising that his daughter had been accepted into QUT.
"There was notification from the college that the refund was outside the cancellation period without liability for total tuition payment or refund. After further correspondence, nothing further was heard until a demand on 21 May 1996 for $9,025 being the balance of the full tuition fees. In December 1996 Ms McPherson was served with a plaint and summons issued against both Ms McPherson and Mrs McPherson for recovery of that sum. I am satisfied that the conduct concerning the holding of the enrolment form and further failure to advise her on signing the enrolment form she would be immediately bound to pay the full tuition fees without a right of cancellation under the enrolment form, constituted conduct in contravention of s 52 and that the conduct in respect of Ms McPherson was unconscionable contrary to s 51AB of the Act".
"This case demonstrates the care young consumers and their guardians need to take when signing contracts, but also demonstrates that the Trade Practices Act can come to their aid when they are subjected to sharp practices", ACCC Chairman, Professor Allan Fels, said today. "Corporations dealing with young and inexperienced consumers need to take special care to explain contractual obligations. It is no longer acceptable for companies to trick people into signing onerous and disadvantageous contracts. Business must realise that the fact that a contract has been signed does not prevent the Court from finding conduct to be unconscionable in breach of the Trade Practices Act".