Monetary compensation, including interest, has been ordered to be paid to victims of misleading and unconscionable conduct by Black on White Pty Limited trading as the Australian Early Childhood College, after Federal Court orders.
The court made findings and declarations in April 2001* that the company had breached the Trade Practices Act 1974 by engaging in misleading and deceptive conduct, and unconscionable conduct towards students enrolled in its child care and related training courses.
Justice Spender of the Federal Court 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 about accreditation of the college's courses.
Justice Spender ordered on 22 November 2001 that Mr James Poteri compensate a number of individuals after representative action was taken by the Australian Competition and Consumer Commission.
The ACCC had also sought orders that Mr James Poteri and Mr Nicholas Poteri compensate individuals who suffered loss due to the company's accreditation representations.
On 12 June 2002 Justice Spender ordered that compensation be paid to those individuals.
The ACCC's case had focussed on a number of allegations including the company's failure to disclose a key clause concerning enrollees' right to cancel their enrolment. The action the company took to enforce that clause caused great financial hardship and stress for many of the victims in the ACCC's proceedings.
Student applicants were also led to believe that by paying a deposit and filling in an application form they could secure a place with the college but could cancel the application by notifying the college in writing. They were not told that they could not cancel their enrolment less than 60 days before the starting date of the preferred course. Some applicants were told that the most they may lose would be their deposit or that they would have to pay a small administration fee. Many were awaiting examination results to determine whether they would be accepted by universities or other institutions which offered courses in childcare and related fields. Many were applying to a number of institutions in an effort to secure their educational futures.
The company asserted that these enrollees were bound to pay the full tuition fee regardless of whether the course was undertaken or not. In some cases the liability for the tuition fee was in excess of $9,000. Student victims and some parents were served with a plaint and summons for recovery of unpaid fees and incurred additional loss paying lawyers to defend the action. One victim had to take out a bank loan in order to defend the action.
Other victims to benefit from the ACCC's action come from predominantly non-English speaking backgrounds and had a very limited understanding of contractual matters.
Some were told that they would qualify for a deferred payment plan (which would operate like HECS) which would be introduced by the college shortly after they began their courses. The company did not provide the promised deferred payment plan and after initially permitting some enrollees to pay by instalment, demanded that they pay the balance of the outstanding tuition fees.
One victim enrolled to undertake a course at the college's Sydney Campus. She moved from New Zealand to attend the course and was told when she arrived in Sydney that the course had been cancelled. The college refused to refund the tuition fee.
"The earlier orders obtained against Mr James Poteri highlight the need for both business and consumers to be aware of their contractual rights and obligations", ACCC Chairman, Professor Allan Fels, said today. "This case serves as a reminder to business that the ACCC will take action to protect those members of the community who have been the victims of unconscionable conduct.
"The non-disclosure of key clauses in contracts or the onerous nature of those clauses may leave business at risk of contravening the Act. It is certainly unacceptable for business to simply say that once a contract is signed, the consumer loses legitimate rights of cancellation. That is especially the case if the business is dealing with young and inexperienced consumers".
Professor Fels said the ACCC welcomes the orders made by Justice Spender in this case.
"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 Act".
*Refer to previous Media Release MR 77/01 Federal Court Finds Against Black on White Pty Limited trading as Australian Early Childhood College issued on 6 April 2001 and available on www.accc.gov.au under media releases.