Competition and Consumer Law Update - Fair and Square: CCL ‘Roundup’ (2024/2025, Q1)

The High Court has granted the ACCC special leave to appeal a decision of the Full Court of the Federal Court (J Hutchinson Pty Ltd v Australian Competition and Consumer Commission (2024) 302 FCR 79), which upheld appeals by a head contractor, J Hutchinson Pty Ltd (Hutchinson), and the CFMEU against findings that they had reached an arrangement or understanding in contravention of the secondary boycott provisions in the Competition and Consumer Act 2010 (Cth) (CCA) (Australian Competition and Consumer Commission v J Hutchinson Pty Ltd (2022) 404 ALR 553 (liability judgment); Australian Competition and Consumer Commission v J Hutchinson Pty Ltd (No 2) [2022] FCA 1007 (penalty judgment)).

Hutchinson engaged a subcontractor to provide services at a construction site without consulting the CFMEU. Upon learning of the subcontractor’s engagement, among other events, a CFMEU delegate told Hutchinson’s project manager that the CFMEU would “sit the job down” if the subcontractor came back on site. The subcontractor did not perform any further work at the site and some weeks later Hutchinson terminated its contract.

The central issue at trial and on appeal was whether the facts supported an inference that Hutchinson made an arrangement, or arrived at an understanding, with the CFMEU that Hutchinson would terminate the subcontractor’s contract or no longer acquire its services.

The primary judge found that the parties had reached and given effect to such an arrangement or understanding in contravention of sections 45E(3) and 45EA of the CCA, and that the CFMEU induced and was knowingly concerned in the contraventions. The Full Court did not accept that:

• having regard to the seriousness of the allegations, the facts were capable of supporting the inferences drawn by the primary judge to the requisite standard; and
• there had been a meeting of the minds, or equivalent, necessary to establish an arrangement or understanding.

The ACCC’s appeal will provide the High Court the opportunity to clarify the requirements to establish an anti-competitive arrangement or understanding.

Roundup class action dismissed

On 25 July 2024, Justice Lee dismissed a class action brought on behalf of persons who had been diagnosed with non-Hodgkin lymphoma(NHL) by reason of the use of and/or exposure to, Roundup products, within Australia (McNickle v Huntsman Chemical Company Australia Pty Ltd (Initial Trial) [2024] FCA 807).

The issue

The original set of common questions was reduced to one determinative question (the Central Issue) of whether the lead applicant had discharged his legal onus of proving on the evidence adduced that the use of and/or exposure to Roundup products can increase an individual’s risk of developing NHL or cause an individual to develop NHL: [7]-[8].

The approach to the evidence

Justice Lee was persuaded not to adopt the process of appointing referees in relevant scientific disciplines and allowed expert evidence in the “more traditional way”: [11]-[15]. However, the Court appointed an assessor to assist the Court on scientific and technical matters, as well as an independent barrister to facilitate the expert conclave process: [16]-[24].

Evidence on the Central Issue was divided into three streams: (1) epidemiological studies; (2) long-term studies on experimental animals; and (3) mechanistic evidence: [49]. While Justice Lee accepted the use of the “weight of evidence” approach within each scientific stream and its utility, his Honour emphasised that scientific causation and the legal question of causation are different notions and the Court’s job was to determine the Central Issue having regard to “all the evidence admitted (and only the evidence admitted)”: [56].

The decision

Justice Lee concluded, on the balance of probabilities, that “viewing the evidence as a whole, and faithfully giving weight to those aspects I consider most cogent, but without giving disproportionate emphasis to any particular stream, the state of the evidence is not such as to sustain the necessary causal connexion”: [1146].

Captain Cook College appeal dismissed

On 14 August 2024 the High Court handed down its decision in Productivity Partners Pty Ltd v Australian Competition and Consumer Commission; Wills v Australian Competition and Consumer Commission [2024] HCA 27, unanimously dismissing the appeals and clarifying principles concerning systemic unconscionable conduct under section 21(4)(b) of the Australian Consumer Law (ACL) and accessorial liability.

Background

Productivity Partners Pty Ltd (the College) provided online vocational education and training (VET) which was funded through the Commonwealth’s Vocational Education and Training Fee Higher Education Loan Program (the VFH Scheme). The College received funding through the VFH Scheme in respect of a student, if the student was enrolled in a VET unit by the relevant VET unit’s census date (at which time, the student would incur a debt to the Commonwealth in the amount of the College’s VET fee plus a 20% “loan fee” (VFH debt)).

Using marketing and sales agents (known as Course Advisors), the College recruited people to enrol in the online courses the College offered. Course Advisors were strongly incentivised by commission structures to recruit students and ensure that they passed at least their first census date and incurred VFH debts.

The upshot of this arrangement was that the College received the benefit of VFH Scheme funding, but did not bear the cost of enrolling persons who did not have a proper understanding of the obligation to pay course fees or a realistic capacity to complete their chosen course.

In 2013, Site Group International Ltd (Site) acquired the College. Mr Blake Wills (Mr Wills) was the COO of Site, and between November 2015-January 2016 was acting Chief Executive Officer (CEO) of the College.

In 2015, after experiencing declining enrolments, the College’s management – including Mr Wills – adopted the following changes to its internal system controls:

1. First, the College ceased the practice of requiring administrative officers to call prospective students within 48 hours of receiving their enrolment applications. The purpose of the calls was to both ensure the applicant’s proper understanding of the obligation to pay the VFH debt, and the applicant’s realistic capacity to complete their chosen course. Instead, the College instructed Course Advisors to initiate inbound QA calls to the admissions officers, with the Course Advisor present for the duration of the call.
2. Second, the College ceased their policy of campus driven withdrawals. This involved monitoring online attendance of an enrolled person in the first weeks of study and withdrawing students before the first census date if they had not engaged online and remained uncontactable prior to the census date.

The changes had the desired outcome, with the college going from having just a few hundred students in total to a few hundred new students joining every week. The College’s financial results showed that the College’s revenue from the VFH scheme had increased by 225% from August to September 2015, and that revenue for December 2015 was more than 5000% greater than the average for July and August 2015: [38] (Gageler CJ and Jagot J).

In 2018, the ACCC initiated proceedings alleging that:

1. from 7 September 2015 – 18 December 2015 the College engaged in a system of conduct in respect of its students which was unconscionable contrary to section 21(4)(b) of the ACL, by removing the independent QA call and campus driven withdrawal procedures from its internal processes.
2. Mr Wills and therefore Site (by operation of s 139B of the CCA) were knowingly concerned in the College’s contravention of section 21 for the purposes of section 224(1)(c) of the ACL.

Decision at first instance and on appeal

At first instance in the Federal Court of Australia, Stewart J found the College had engaged in unconscionable conduct in contravention of section 21 of the ACL and that Mr Wills, and through him, Site, were knowingly concerned in the College’s systemic unconscionable conduct and therefore liable to be penalised for it.

The majority of the Full Court of the Federal Court of Australia (Wigney and O'Bryan JJ) agreed with the primary judge and concluded that the appeals should be dismissed. However, their Honours accepted that the date from which Mr Wills (and, through him, Site) was knowingly concerned in the College's contravention of section 21 of the ACL was 20 November 2015 (not 7 September 2015).

Appeal to the High Court

1. The Court granted special leave to appeal to the College (and Site) and separately to Mr Wills.
2. During the appeal, the Court considered and addressed the following issues in addressing the grounds of appeal:
3. The extent to which matters in section 22 must be addressed by a judge in determining unconscionability under section 21 of the ACL;
4. Whether increasing a risk that misconduct will not be detected can contravene section 21 of the ACL, absent there being any intention that the misconduct occur;
5. Whether accessorial liability demands that there be knowledge that the alleged conduct is “unconscionable”.
6. High Court’s conclusions
7. The High Court unanimously found in favour of the ACCC, dismissing both appeals with costs.
8. The Court also determined that the primary judge had correctly held that Mr Wills (and therefore, Site) was knowingly concerned in the contravention of section 21 of the ACL from 7 September 2015.
9. In reaching their decision, their Honours confirmed the following:

• Section 22 of the ACL does not require a court to evaluate impugned conduct by reference to the presence or absence of the circumstances in section 22 irrespective of the relevance of those circumstances to the impugned conduct or to the cases as put by the parties to the court: (Gageler CJ and Jagot J at [11], (Gleeson and Beech-Jones JJ agreeing), Gordon J at [102] (Steward J agreeing), Edelman J at [235]).
• Where a factor in section 22 of the ACL is applicable “that matter must be considered. If not applicable, the matter need not be considered” (Gageler CJ and Jagot J at [57]; Gleeson and Beech-Jones JJ agreeing, Edelman J at [235]).
• The need for all relevant matters to be considered does not require an assumption that all matters weigh in favour of a respondent unless shown otherwise (Edelman J at [235]).
• An increase in a risk of misconduct being undetected, that was reasonably foreseeable at the time of the conduct in question, can be considered in determining whether conduct is unconscionable (Gageler CJ and Jagot J at [66], (Gleeson and Beech-Jones JJ agreeing); Gordon J at [132] – [136]). There does not need to be any intention that the misconduct occur (Gageler CJ and Jagot J at [66],(Gleeson and Beech Jones JJ agreeing)).
• For accessorial liability, including liability in relation to Mr Wills and Site, it was not necessary for Mr Wills to know that the impugned conduct was unconscionable. It was only necessary that Mr Wills knew the essential matters which together made up the unconscionable conduct (Gageler CJ and Jagot J at [12]; Gordon J at [148 ] – [149], [154] (Steward J agreeing), Beech-Jones J at [339] (Gleeson J agreeing); Edelman J at [258]).
• Intention to participate in conduct that gives rise to a primary offence or contravention is a central requirement that must be satisfied before liability can be attributed to an accessory (Edelman J at [201], [258]).