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Productivity Partners Pty Ltd (trading as Captain Cook College) ACN 085 570 547 & Anor v Australian Competition and Consumer Commission & Anor; Wills v Australian Competition and Consumer Commission & Ors [ 2024] HCATrans 6  (8 February 2024)

Last Updated: 12 February 2024

[2024] HCATrans 006

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S118 of 2023

B e t w e e n -

PRODUCTIVITY PARTNERS PTY LTD (TRADING AS CAPTAIN COOK COLLEGE) ACN 085 570 547

First Appellant

SITE GROUP INTERNATIONAL LIMITED ACN 003 201 910

Second Appellant

and

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

First Respondent

BLAKE WILLS

Second Respondent

Office of the Registry
Sydney No S116 of 2023

B e t w e e n -

BLAKE WILLS

Appellant

and

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

First Respondent

PRODUCTIVITY PARTNERS PTY LTD (TRADING AS CAPTAIN COOK COLLEGE) ACN 085 570 547

Second Respondent

SITE GROUP INTERNATIONAL LIMITED ACN 003 201 910

Third Respondent

GAGELER CJ
GORDON J
EDELMAN J
STEWARD J
GLEESON J
JAGOT J
BEECH‑JONES J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 8 FEBRUARY 2024, AT 10.00 AM

(Continued from 7/2/24)

Copyright in the High Court of Australia
GAGELER CJ: Mr Hodge.

MR HODGE: Thank you, your Honour. Your Honours, yesterday where we had finished was looking at this Court’s decision in Rural Press, and I had indicated I would go to the Full Court’s decision in order to make good the proposition about what the argument was.

Can I ask your Honours then to take that up. That is [2002] FCAFC 213; 118 FCR 236, and it is in the joint bundle of authorities, volume 8, tab 55, page 2324. The discussion of accessory liability begins at page 280 of the judgment, page 2368 of the joint bundle. You will see there is a heading in the middle of the page which is, “The individual respondents – accessory liability”, and then, at the end of paragraph 154 is set out what appears to be in the initial framing of the argument. You will see it begins:

Mr Douglas argued that they should be –

and could I invite your Honours to read to the end of that paragraph. Then you will see at the bottom of page 155, the court begins summarising some of the findings made by the primary judge. And you will see there is an explanation – this is in the second sentence of 155:

He specifically held . . . that each of Mr Law and Mr McAuliffe intended by their communications to procure a result whereby Waikerie Printing ceased to provide the information and services of the River News in the Mannum area.

Could I invite your Honours then to continue to read over the page to the end of that paragraph. So, there were findings made by the primary judge – and I will come back to some more in a moment. The Full Court summarised that he established or held the belief, or knowledge, of the two individuals in relation to competition, and the effect on competition.

It looks like the submission then took something of an interesting turn. You can see this at paragraph 156. When then happens is the Full Court summarised or set out the primary judge’s summary of what the relevant principles are, which one would have thought were uncontroversial. Then you will see at the end of that setting out, it said:

In argument before us, Mr Douglas on behalf of the appellants took issue with the proposition in the second last sentence of the above passage –

You will see the second last sentence was:

It is not necessary that the accessory should have appreciated that the conduct was unlawful –

It appears that, then, the argument that was made was that Yorke v Lucas stood for the proposition – which, with respect, it plainly does not – that you needed to know that the conduct was unlawful. The court then spends some time explaining why that cannot possibly be right. They refer back to Giorgianni, and after they go through that, they then return to some things about the facts. If your Honours come over two pages to page 283 of the judgment, page 2371 of the joint bundle, you will see ‑ ‑ ‑

BEECH‑JONES J: I am sorry, what page is that, Mr Hodge?

MR HODGE: I am sorry. Page 283 of the judgment, page 2371 of the joint bundle.

BEECH‑JONES J: Yes, thank you.

MR HODGE: At the bottom of the page, page 162, you will see then the court returns to attempting to grapple with what, in effect, must have been where the original argument had started with. They identified that the concepts under those particular provisions of what was then the Trade Practices Act can be elusive. You will see they then set out, though, that whilst they did not turn their mind to the legal characterisation of the facts or the legality of the conduct, that there were specific findings made. You can see those continuing over the page, and particularly, we would note, at the end of paragraph 162:

The primary judge found that each of them was aware of the general market in which the Standard operated. Plainly they were aware that the Standard was the only regional newspaper circulating in the Murray Bridge area, including Mannum, before the incursion by the River News. They intended that the incipient competition in that area should be brought to an end.

Then the concluding point made at 163 is that it is not “necessary” for them to have known that:

the purpose or effect . . . was substantially to reduce competition in the market ultimately identified in the judgment.

And the court says:

The definition of the market is a mixed question of fact and law involving sophisticated economic and legal concepts.

So, it appears as if where it ultimately focused on was the meaning of “market”, and, as is well established, in competition law in this country – at least under the Act – a market is not a “fact” in the conventional way in which we think about facts. A market is a tool of economic analysis which – I think the most authoritative statement in this country in this Court is the judgment of your Honour the Chief Justice together with Justice Kiefel in the Flight Centre decision, explaining the concept of a market.

This is, as best we can tell, the most detailed explanation of what the argument was that was made before the Full Court. Presumably, the same argument was what was then taken up to the High Court. We can see a limited amount of information in that judgment about what was put, but, in our submission, there is simply no comparison between the argument that we are making which is, there is an essential element of unconscionable conduct, which is a fact, and it is necessary to know that fact if you are to have accessorial liability, and this, which deals with two propositions, neither of which – one of which does not even arise here, which is, do you need to know about the economic concept of a market when it is a mixed question of fact and law, and the other of which is, do you need to know that it is a contravention of the law, which we do not submit and everyone accepts, one would have thought, is not consistent with either Giorgianni or Yorke.

GAGELER CJ: Did you look at the notice of appeal or the transcript in this Court in this case?

MR HODGE: No. I cannot assist your Honours with that.

GAGELER CJ: Thank you.

GLEESON J: What would be the position if the accessory knew of the conduct and believed that the conduct was unconscionable for reason A, for example, because they believed that the conduct was degrading – the court found that the conduct was unreasonable for reason B because it took advantage of a person and caused them to suffer significant financial harm?

MR HODGE: The short answer is they could not be liable. The longer answer is, as an example there is a challenge with it, which is that the premise of it is that the person knows that it is unconscionable, which is to introduce the language of the statute. But if I can reframe it to say what is embedded in that example is that they believe that the conduct is dishonest, but the court finds not that the conduct is dishonest but the conduct lacks good faith or takes advantage of somebody, and then says as a matter of legal characterisation that is unconscionable and therefore a contravention of the law. They do not know the facts which give rise to the legal conclusion.

GLEESON J: This might come back – I think you were going to take us to the pleading at some point.

MR HODGE: Yes.

GLEESON J: But it comes back to the question of: what is the value or the nature of the unacceptable departure from commercial standards of conduct?

MR HODGE: Yes, I was going to do that now. That was all I wanted to say about the second reason advanced by the ACCC, which is that Rural Press precludes the argument that we make. In our submission, it does not – and it certainly is not a situation where the court in Rural Press was overruling what was said in Yorke v Lucas and Giorgianni. Either we are right that Yorke v Lucas and Giorgianni set what it is necessary to know or we are wrong, and on that legal point we will lose.

BEECH-JONES J: Mr Hodge, just so I can re‑orientate myself. Just to be clear, you are not saying that the person who is secondarily liable has to have a belief that it answers the word “unconscionable”.

MR HODGE: No.

BEECH-JONES J: You are saying, they have to have an understanding – it is contrary to what amounts to being unconscionable which is contrary to the standards of, say, ordinary commercial people. Is that right?

MR HODGE: Yes.

BEECH-JONES J: So, you distinguish Rural Press by saying Rural Press is simply authority for the first proposition I put to you. That is, you do not have to have the relevant belief that matches the words of the statute; it is something that amounts to what matches the words of the statute. So that, in this case, people saying, well, I intended to get rid of the competition was, effectively, good enough.

MR HODGE: All of what your Honour has said is right; that is our submission. The only reason I am qualifying or hesitating for one moment is that that certainly seems to be what the joint judgment in this Court was dealing with in Rural Press. It may be that there is a slightly different point that emerges from the Full Court in Rural Press which is this issue of what is a market in competition law and whether you need to know and understand an economic concept, but that is my only qualification to that.

We do not say that you need to know that it is a breach of the law, and we do not say that you need to think in the language of the statute, but what you do need to know is that it is contrary to whatever are the norms and values that are said to then give rise to the unconscionable conduct finding.

BEECH‑JONES J: I understand, thank you.

MR HODGE: What I was then going to do was to move to the ACCC’s third reason, which is, in effect, a submission broadly put that it is impractical – the approach for which we contend. As part of addressing this, I am hoping that I can pick up almost all of the homework that I have been given. So, I will start with the question of what was actually pleaded against my client, in answer to your Honour Justice Gleeson’s question yesterday, and then move to the findings. If your Honours could first take out the book of further material which contains the pleading.

GORDON J: This is the respondents’ book of further material?

MR HODGE: The appellant’s book of further material. This is the final version of the statement of claim; the second further amended statement of claim. If your Honours come to page 45 of the book, which is page 41 of the pleading, you will see at the bottom of the page, there is a heading which is:

Part 14 – Wills’s Knowing Involvement in CCC’s –

so that is the College:

Systemic Unconscionable Conduct –

I will just walk you through the knowledge allegation. You will see paragraph 132 is that Mr Wills:

knew of CCC’s plan to implement the Process Changes and the implementation of the Process Changes.

So, that is making the two changes. Then, if you go over the page, you will see 133, he:

knew of CCC’s Profit Maximising Purpose in respect of the Process Changes.

Then if you go over the page to page 47 of the book, 43 of the pleading, you will see 134, he:

knew of the CA Misconduct Risk.

So, that is the risk of course advisors engaging in misconduct.

GLEESON J: Just pause, Mr Hodge. If you go back to 31 of this book, that conduct risk does include incurring the VFH Debt.

MR HODGE: Yes. And then 135, he:

knew of the Unsuitable Enrolment Risk.

So, that is the risk that students who were unsuitable, as broadly defined within the pleading, would be enrolled. Then, if you go over the page to 48 of the book, you will see 136 is:

At all material times, Wills knew of the matters pleaded in paragraphs 118 to 120 –

and I will come back in a moment to those allegations. Then you will see 137:

By no later than around May 2016, Wills knew about the Process Changes Results.

and I will come in a moment to what are the process changes results. Then, if your Honours keep going, you will see there is then an alternative case of knowledge, which is a 137AA, that he knew at the commencement of the implementation – so that is 9 September 2015 – or during the period that they were implemented:

that the Process Changes would likely lead to the Process Changes Results or results of the type of the Process Changes Results –

Then, you will see 137AAA, which is that he knew that they had claimed revenue from a large proportion of consumers, and you will see that that is by May of 2016. Then, if you look at 137A, which comes at the bottom of page 50, you will see that then moves onto what effectively the acts are that were ultimately relied upon. The limits of what were pleaded as for his knowledge are the things that I have just shown you, and if you then go back to page 33, you will see at the bottom of the page, paragraph 118:

The Outbound QA Call provided a means by which –

the risks could be mitigated. Then over the page, 119:

The CDWD process –

Which is the campus driven withdrawal process:

provided a means by which –

the risks could be mitigated. Then 120:

The Process Changes materially reduced –

the ability of the College to mitigate those risks. Then, if you come through to page 36 of the book, page 32 of the pleading, you will see there, in 122, what is the process changes results. There are various aspects of the process changes results, or what are said to be the process changes results, set out, and then it gets wrapped up and defined as the process changes results at the bottom of page 39 of the book.

You will see what they are, which is, in effect, there is an enormous increase in the number of students, there is an enormous increase in the number of students progressing through census, there is an enormous increase in the amount of revenue, and there is an enormous increase in the proportion of students who are uncontactable. There is not an allegation, and there was no finding that Mr Wills knew that these people who progressed through the census – or the people referred to within the process changes results – had been the victims of CA misconduct or were unsuitable. There is no allegation, as you will see, and there was never any finding that he knew that people who were – to use the Full Court’s words – unwitting were being taken advantage of by the College.

GAGELER CJ: If there had been such a pleading then the case presented would have been a case of accessorial liability, would it?

MR HODGE: I beg your pardon, your Honour?

GAGELER CJ: If you just add those additional words, a new paragraph, that would be a sufficiently pleaded case, would it?

MR HODGE: If they were to plead that Mr Wills knew that students who were unwitting were being taken advantage of then yes, that would have at least raised the very thing that goes to what it is said to be unconscionable in this case. I should just add the qualification: depending upon whether the Court is looking at the findings by the Full Court, or the findings by the primary judge, and I will point out the slight difference there.

EDELMAN J: As I understood your submission, that still would not be enough. Your submission is that there would also need to be a plea that Mr Wills was aware that that taking advantage or the withdrawal, with the possibility of agent misconduct, was contrary to the norms of society regarded as part of the collective social conscience, or however you might express the norm of unconscionability.

MR HODGE: Yes, strictly that must be right. That is, you would need to plead out all of the facts here in an integer-like way. You would need to say it is a norm of society not to take advantage of people, but in a conventional way of dealing with the pleading, with what might be regarded as the ordinary commercial values embedded within society – do not take advantage of people, do not act dishonestly, fidelity to a bargain – I think it is highly unlikely that anyone is going to take a pleading point to say you needed to specifically plead that society at large held those values.

GLEESON J: It has to be taking advantage to a degree that amounts to unconscionable conduct, or taking advantage to a degree that is a substantial departure from accepted commercial standards.

MR HODGE: I accept there is – once we actually got into the pleading of it and a particular case there might be various issues of degrees – do you need to plead something more than to simply say these people who were unwitting were taken advantage of? What seems to be built into – the reason I use “unwitting” and “taken advantage of” is because that seems to be the most common way that the Full Court phrases it, and that is a more conventional way of understanding unconscionable conduct because what it is effectively saying is you are a vulnerable person and you have been taken advantage of. But none of that was pleaded against my client, and it is not – the Full Court is quite express ‑ ‑ ‑

GORDON J: But it was Mr Hodge, was it not? In the sense that what was pleaded against your client was that you knew of the two risks, which are misconduct by the agents and unsuitable enrolment. You knew you had at least two mechanisms in place that minimised or reduced that risk and you took those two away knowing that the risk existed, and that as a result of taking away the risk was necessarily amplified. One of those was vulnerability, in relation to both categories of student.

JAGOT J: Could I just, before you answer that, add to the question, which is, if you add to that the pleading which is “Further or alternatively” at 137AA, you knew that the process changes were likely to lead to the types of things that were the process changes results, and those things include – well, the matters that you have taken us to is 122, is it not, which include (c):

a substantial increase in the number and proportion of consumers who incurred a VFH Debt but who did not complete –

and (d):

were not contactable –

I am just wondering why it is not comparable to the inference‑drawing process that is in Rural Press. I am assuming you are right that you need to understand – you would need to prove actual language of a norm and the quality of falling seriously short of the norm. Why is that pleading not adequate to raise those issues? The norms are not secretive or difficult. The norm is you do not take advantage of vulnerable people. Why is it that that is not an adequate pleading – not that that we are really looking at that – but why is it that inferentially you could not get there anyway?

MR HODGE: Well, my short answer to it as a pleading matter is, if the norm is not taking advantage of somebody and you do not plead that you knew that somebody was being taken advantage of, you on any view have not completed – on my construction of the law, you have not completed the material facts that are necessary for accessorial liability.

STEWARD J: Mr Hodge, is your point that when Mr Wills supported the changes of removing the two safeguards, he did so without any knowledge about the difficulties with unwitting and unsuitable students and abuse by course advisers?

MR HODGE: No, we do not challenge the findings that I will take you to in a moment, which are that he knew that there was a risk. There is a slight issue which is about campus driven withdrawal because the primary judge accepted that he did not understand the relationship between campus driven withdrawal and the effect of passing through the census, which I will take you to. But the point is a more fundamental one, which is the premise upon which it is said that this conduct is unconscionable, if you boil it down – that is the primary contravention – is that there were people who were taken advantage of, and that is the thing that makes it against conscience. There was not a case that was put against Mr Wills that he knew the people were being taken advantage of, and that is the problem.

JAGOT J: I am just perplexed, given that the whole business model carried within it these known manifest issues that people were being taken advantage of, lots of people, and that is part of the whole – the numbers. You would only need to look at the numbers and know it was pleaded and found that he knew of the two risks. Inherent within that is a taking advantage of because it is imposing on people a debt for something they are never going to get any benefit from.

GORDON J: Put in a different way, your analysis seems to me to ignore what went before. What went before about knowledge are the things that Justice Jagot just put to you. Those risks were real. Your figures before the period the subject of complaint were real, and you knew them. Not only did they know them, they took steps to minimise them. What happened was the complaint is – putting aside whether that conduct was unconscionable – you then took off two of things which minimised the very risk that you were seeking had come home. They were not hypothetical. They were real.

MR HODGE: Yes. Can I respond to that in three ways. The first two are brief and then the third one I need to take your Honours to the judgment.

JAGOT J: And in responding could you just – the word “prevalent” appears throughout the reasons that they are not – Justice Gordon says “real”, but in fact they were prevalent. It was inherent within the business model that this misconduct was occurring at a high level, and then something happens. So, that is what I am struggling with. Why does that not inferentially lead to all the knowledge you need?

MR HODGE: That is a slightly different question from whether or not the case, as pleaded, gives rise to the fact. But I understand what your Honour says, which is, can you inferentially go from what is found to be known to the finding of “take advantage”.

STEWARD J: Can I ask you this question, slightly differently. Why would you not infer knowledge that he was taking advantage of the students on a Jones v Dunkel basis? Given what we know he participated in and what he did know, why could you not just draw the inference?

MR HODGE: That was not the allegation that was put. Of course, whilst it is said Jones v Dunkel – and you can sense the moral outrage that comes through the idea that Mr Wills did not give evidence – but to say we did not plead a case that he took advantage or knew that people were being taken advantage of and then to try to use Jones v Dunkel to pull it up, is problematic. He has to meet the case that is pleaded against him.

EDELMAN J: I understood your point to be a different one; not that the knowledge of the likelihood that the process changes results would occur or that the results of that type would occur needed to be characterised as a “taking of advantage”. I thought your point was that the knowledge of these likely process changes results needs to be accompanied, also, by a knowledge that that risk, or that effect, is contrary to a normative standard of conduct which in the community is so sufficiently serious that it would amount to unconscionable conduct.

MR HODGE: Yes, that is right.

BEECH-JONES J: Or, to put it bluntly, he knew that what the company was doing for a form of sharp practice.

MR HODGE: Yes. That is the point.

BEECH-JONES J: I thought that was your point. But that is just saying it is not in pleading and it is not in the judgment.

MR HODGE: Yes.

GAGELER CJ: It is no part of your case to say that an inference of knowledge would not have been available if the case had been put.

MR HODGE: Yes. Can I just try to give a brief answer, though, to pull together the points made by Justice Gordon and Justice Jagot, which is – and this will become apparent when one looks at the judgment, but the temporal issue does create a problem here because at the time that the process changes are made – and they are not made by Mr Wills – one question is: is it known that the consequence of the process changes is likely to be people being taken advantage of?

Then, there is another question that would arise at a later point of time, where Mr Wills is said by the Full Court to have been fixed with knowledge, which is, at that point in time, the process changes have already been made, people are already going through the census, and the question then that arises is: what is the particular conduct then that he has associated himself with and why is that conduct unconscionable?

To illustrate that further, what we know happened was that it was not as if the College simply gave up on the students or did not even attempt to contact the students and so was taking advantage of them in the sense of just bringing in all of the money and not trying to offer a service. They introduced a process of actively trying to contact the students in order to get them to engage.

The reason I raise that is because that illustrates the complexity of saying, just on the basis of this pleading and what was put against Mr Wills, it must have been unconscionable so long as you knew that there was a real risk that the consequence of the process changes would be that more people would progress through census without actively engaging. There is always going to be more that is required, and the question ‑ ‑ ‑

BEECH-JONES J: Mr Hodge, that just sounds like Mr Giles’s argument yesterday, and I just did not think that was part of your appeal.

MR HODGE: It is not. I do not want to go there. The reason I raise it is just to illustrate the complexity of saying you can just infer something, some understanding of wrongfulness against Mr Wills just on the basis of these facts. Can I switch, then, to the judgment. If your Honours take up the – perhaps the core appeal book from the other appeal. I can do it off of either, but that way you will only have to have one judgment that you mark up rather than two.

GAGELER CJ: Are you going to the Full Court judgment?

MR HODGE: Yes.

GAGELER CJ: If you give us the paragraph numbers, it might be the simplest thing.

MR HODGE: Thank you. If your Honours go to paragraph 122, which is on page 272, you will see there the Full Court quote from the primary judge’s conclusion as to what makes this unconscionable. Could I just invite your Honours to read that. You will see there the way in which the primary judge framed it was by reference to what might be thought to be the conventional kinds of values that are embodied within unconscionable practice; taking “advantage of the consumers”, “sharp practice”, “manifestly unfair”, and “preyed on their vulnerability”.

Then, if your Honours go over the page, you will see the Full Court summarises the findings of what Mr Wills was aware of, at 125. And which, effectively, the trial judge’s findings, except in one respect, matched up to the finding ‑ ‑ ‑

GAGELER CJ: What paragraph?

MR HODGE: Sorry, paragraph 125 – matched up to the findings about knowledge that had been pleaded. Then they identify some other matters, as well that the primary judge found was known, in paragraph 126. Can I just give your Honours a moment to read that. The only note I would make is, you see at the end of 126(a), it says:

The ongoing risk of “CA misconduct” had been brought to his attention –

I do not think it makes any meaningful difference, but that is ongoing CA misconduct in the industry, and it is a reference to the fact that there was exposure and a legal case that had been brought in respect of another college called Phoenix, and there was – within this college they were looking at that, and they were concerned to try to prevent CA misconduct.

If your Honours go over the page to 274, you will see subparagraphs (e) and (f) are findings that Mr Wills was aware of part of the process changes results, and you will see, though, that comes after the period when he is the acting CEO, and his knowledge of those outcomes is not linked to the risks of CA misconduct or the unsuitable enrolment risk. Then, if you come to page 300 ‑ ‑ ‑

BEECH‑JONES J: What is the paragraph number, Mr Hodge?

MR HODGE: The paragraph is paragraph 186, on page 300.

GORDON J: Just before you leave there, do you make anything of what is in 127? We cannot ignore that, can we? That is part of the context.

MR HODGE: Yes. That is involvement, as I understand it. I am going to come to that as the second ground.

GORDON J: I see, thank you.

MR HODGE: If your Honours go to paragraph 186 on page 300, this seems to be the majority in the Full Court summarising or pulling together why it is that they regarded the conduct as unconscionable. You will see in about the eighth line, it said:

These were persons being enrolled in the online campus in circumstances where the person did not do so willingly and with full knowledge of the obligation being incurred or where the person is unsuitable for enrolment because they lack sufficient . . . skills –

Presumably, then, what this is saying is what the College knew was going to be the effect – that is, the finding, as we apprehended – or expected to be the effect, was that there will be a large increase in the number of unwitting and unsuitable students, presumably – to put it in a different commercial term – people who did not understand the transaction that they were entering into.

STEWARD J: Can I ask this question. Having regard to what Justice Gordon drew to your attention at paragraph 127, why would we not just attribute the knowledge of the College to Mr Wills, who was the representative, if you like, of the shareholder? He was intimately involved, he had oversight. In circumstances, he does not give evidence.

MR HODGE: There are two answers to that. The first is there was no pleaded case against my client that whatever the knowledge of the corporation was, was attributable to him as an individual. And the second answer is, as a matter of attribution of knowledge, the fact that you are an officer of a corporation – in fact he, for most of the time, was not actually an officer of the subsidiary – but the fact that you are somebody who is involved in the corporation, even intimately involved in the financial management of the company, does not have the consequences as a matter of law that attributed to you are things that are known by the company but not known by you.

STEWARD J: But he was a participant in the decision to remove the safeguards. He was sent the Memorandum and he supported it.

MR HODGE: He supported changes to the enrolment process.

STEWARD J: In circumstances, he knew what two risks were, and he knew that these safeguards were designed to ameliorate those risks, so taking them away increases them.

MR HODGE: Yes. We might be at cross‑purposes.

STEWARD J: Sorry.

MR HODGE: We do not take any issue with the proposition that the things that he is found to have known, he knew. I understood your Honour was raising the possibility there might be things that he did not have actual knowledge of but which the corporation had knowledge of, and therefore they could just be attributed to him. But that does not work, in our respectful submission, either as a principle of attribution or what is required for accessorial liability.

STEWARD J: Perhaps not as a principle of attribution but a principle of inference.

MR HODGE: I suppose, we are battling with a hypothetical in the sense that there was no case put that it could inferentially be known that he knew whatever it was that the College knew. The only case of inference is he knew the things that it is said to have been inferred. He knew based on having read documents and things like that.

If your Honours then go to paragraph 198, this is part of the passage of the judgment where the Full Court is trying to grapple with the temporal issue with the Commission’s case. It is, in our respectful submission, a paragraph that answers the question that a number of your Honours asked yesterday about what it is that is the conduct that was unconscionable or found to have been unconscionable. It is clear that it is framed as a composite. That is not what my focus is on. My focus is the last two sentences of 198, where it said:

As found by the primary judge, the College took advantage of the students who were enrolled as a result of agent misconduct or who were unsuitable for enrolment by maintaining their enrolment and claiming VFH revenue from the Commonwealth . . . It is in that sense that claiming and retaining the resulting VFH revenue was a composite part of the unconscionable conduct.

It appears, then, the majority there is adopting that “take advantage” finding that we saw earlier in paragraph 500 of the primary judgment. Then, if your Honours go to paragraph 327, on page 353, you will see here, this is the majority summarising the things that the primary judge found that Mr Wills knew. Then it said:

they are the essential matters showing that the College engaged in a system of conduct that was unconscionable.

Could I invite your Honours to read that paragraph.

GORDON J: This is 327?

MR HODGE: Yes, your Honour. You will see there is no finding that Mr Wills knew, either before the process changes were implemented – which is an irrelevant period in any event because his knowledge is not said to extend back to that point – or during the time of the implementation of the process changes, that the reason that the high proportion had changed – or the reason there was a change in the proportions was because there was a substantial increase in the number of students who were unwitting or unsuitable, and there is no finding that he knew that those people were being taken advantage of. Then, if your Honours go through to paragraph 338, which is on page 356.

JAGOT J: Did we skip 331, or did you go to that? Just the last bit of 331, in particular.

MR HODGE: Yes. Is your Honour referring to the last sentence?

JAGOT J: Yes.

MR HODGE: Yes. In my submission, that does not change what, in our submission, is the problem with the case.

JAGOT J: No, no. I understand on your case it does not, because you would say it embodies the problem.

MR HODGE: It does embody the problem.

JAGOT J: Yes. I just thought it was relevant while you were along the way.

MR HODGE: Thank you, your Honour. At paragraph 338, you will see the Full Court returns to the question of the essential matters.

BEECH‑JONES J: What paragraph was that, sorry?

MR HODGE: Paragraph 338, that begins at the bottom of page 356 of the joint book. So, could I just invite your Honours to read that. We will note one thing about that which is you will see there is an extra essential matter that has been added there, which is the last essential matter, that:

the College knew, or ought to have been aware, of the immediate consequences of the changes, which was to escalate the numbers of students who were enrolled unwittingly or who were unsuitable for the course in which they were enrolled.

It is a bit confusing, because that is not a finding that was made by the primary judge, and the Full Court does not say that that was a finding made by the primary judge, but they identify that as one of the essential matters and then proceed on from that. But they still do not suggest or deal with what we say is the fundamental issue which is, what you need to know is that these students are being taken advantage of. That is the premise of the thing, and that is the essential matter.

GAGELER CJ: Mr Hodge, this might be unduly reductionist – I do not think it is – but if you go back to the last sentence of paragraph 331, to which Justice Jagot drew your attention, you accept, I think, that Mr Wills had knowledge of all of the essential matters that rendered the College’s system of conduct unconscionable. What you say was not pleaded and not put by the ACCC, was that he had knowledge that the conduct was unconscionable; equating unconscionability in this context with taking advantage.

MR HODGE: No. We disagree with both propositions because an essential matter that renders the – the primary contravention gives rise to it – is that they are taking advantage of vulnerable students. So, the two things cannot be disentangled. It was not said that he knew that and that must, necessarily, be an essential matter that gives rise to the contravention. It is apparent through the reasons of both the primary judge and also the Full Court.

EDELMAN J: I think you might be mixing up two different points. One point, as I understand it, is that the “taking advantage” element is a necessary factual matter in the context of this case that needed to be established. The second point – which is what the Chief Justice is also putting to you – is that I understood your case to be that, in addition to that, he also needed to know that the taking advantage in these circumstances was of sufficient gravity as to amount to a serious breach of the norms of society that might otherwise attract the label “unconscionable”.

MR HODGE: That is right. But, neither of those things are things that he was said to have known or found to have known.

EDELMAN J: But they are different points.

MR HODGE: They are different points – I agree with that. Can I then pick up the suggestion by Justice Beech‑Jones yesterday that I have a look at R v Ghosh, which is helpful in the sense that it illustrates that there is nothing particularly foreign about the approach that we are suggesting because the standard of dishonesty under Ghosh and also under the Criminal Code has two components to it, as your Honours know – that it is dishonest by the ordinary standards of reasonable and honest people, and that the defendant knew that it was dishonest by those standards.

In our submission, that process of – or that factual necessity that arises in relation to dishonesty is the same kind of standard that arises in relation to unconscionable conduct; that what needs to be known is that the conduct was contrary to the ordinary standards of commercial people. The court at the end of Ghosh gives a Robin Hood related example, to tie it back to Friar Tuck, but I do not think we need to explore Robin Hood any further, other than to say there is nothing in our submission particularly innovative about the proposition that we put.

The point that we are making is, there is this element, it is an element that is understood as being factual. There might or might not be some challenges for the Commission in establishing it – though, in our submission, the practical challenges are overblown – and this is the test that the legislature has set.

Can I then move to the two cases that Justice Gordon wanted me to look at, which are Stefanovski and Colin R Price. So, Stefanovski [2018] FCAFC 31; (2018) 368 ALR 607 is in the joint book of authorities volume 8, tab 56, at page 2377. If your Honours go to page 628 of the judgment, page 2398 of the joint book. I expect it was paragraph [71] of that judgment to which Justice Gordon was referring. Could I invite your Honours to read that.

So, this was a case where there was a finding of accessorial liability at trial based on, at least seemingly primarily – sorry, accessorial liability to unconscionable conduct at trial. There were a whole series of problems with what had happened at trial, but this particular one is that the unconscionable conduct was said to arise from:

a breach of a duty of good faith –

In our friends’ submissions, they suggest it is a contractual duty of good faith. It is not entirely clear from the judgment, but it seems more likely it is a statutory duty of good faith under the Franchising Code that is being referred to. The court says in that case that it would at least be necessary to know all of those circumstances, and given that in that case the relevant circumstance was said to be a breach of the duty of good faith, that it was necessary to plead that duty, and plead the breach of that obligation.

In our submission, that is certainly not inconsistent with the proposition that we put – and we would say consistent – and we have relied upon it because if the relevant norm – that is, the thing that gives rise to the finding of unconscionable conduct – is that there is a statutory standard of good faith – or even if it is not a statutory standard, there is just a standard of good faith – it is necessary to plead that the accessory knew of that standard and knew that it is breached. It is insufficient to plead that they knew a series of facts from which ultimately the finding is going to be made that there was a breach without pleading that they knew about the standard and knew about the breach.

Then the other case that is referred to by both my client and the ACCC is the decision of Colin R Price [2017] FCAFC 75; 251 FCR 404. That is volume 7, tab 47, at page 1992 of the joint book. The relevant part is on page 426 of the judgment, page 2014 of the joint book, paragraph 89. Again, in our submission, there is nothing inconsistent in that with the proposition that we put. The two accessories in that case were found to have known about the vulnerability and poor bargaining position, the unfair tactics and undue pressure, and the taking advantage of the predicament.

I am not sure whether a pleading issue arose in this case – there were other procedural issues that arose – but in any event, in answer to your Honour Justice Gordon’s question yesterday as to what were needed to be pleaded, if the case is that the unconscionable conduct arises from the vulnerability of a person and the taking advantage of that vulnerability and the application of unfair tactics to that person – that is, the introduction of the conventional kinds of values embodied in unconscionable conduct – then it would be necessary to at least plead the knowledge by the accessory of the fact of those things.

One would think that it is also necessary to prove that those are conventional values, but as I said before, with most of the standard kinds of things that we are thinking about – fidelity to a bargain, good faith, not taking advantage of vulnerability – I expect, in a practical sense, in courts in this country, there would be no pleading issue that would arise from not saying that that is a norm of society. It might be, if you were talking ‑ ‑ ‑

EDELMAN J: I am not sure that is right. There is values, and there is unconscionability. It may not be unconscionable to have a breach of the obligation of good faith in all circumstances, or it may not be unconscionable in all circumstances to have a breach of an obligation of fidelity. Ultimately, it depends upon an evaluative exercise, whether in the particular circumstances it is sufficiently serious a breach of good faith, or a breach of fidelity, and so on.

MR HODGE: I do not disagree with that. Can I break that down into two propositions. One is that if you were dealing with a value that is outside of what we might think of as just the core values of taking advantage of somebody who is vulnerable, and so to take up the point made by Justice Steward yesterday, what happens if it is some unusual value that needs to be pleaded, then you will have to plead it. So, for example, the statutory duty of good faith. Undoubtedly, you would need to plead that there is that statutory duty, because that is the value, that is the thing that needs to be contravened.

The second point is the way in which you breach that might or might not be sufficient to give rise to unconscionable conduct, and it might also follow – depending on the particular case – that it is not sufficient to just plead there is a breach of the duty of good faith, you would need to plead other circumstances about the way in which that duty was breached, because it is the way in which that duty is breached that leads to the legal characterisation of unconscionable conduct.

I was about to go back to something from Ghosh. Perhaps I will do that just to illustrate this point again using the Robin Hood example. Ghosh is not dealing with accessorial liability, it is dealing with primary liability for dishonesty, but if you had a circumstance in which to take Robin Hood, there was some question about whether if the social norm was not to steal, then undoubtedly you would need to positively plead that the social norm was not to steal. The actual point made in Ghosh about Robin Hood is: it does not matter that Robin Hood thinks it is okay to steal, he knows that that is against the standard social value not to steal, but if we were looking at something where there is something unusual or different about the particular values – to go back to Justice Steward’s point – you would undoubtedly need to specifically plead that, and identify the basis upon which that value arises.

JAGOT J: Even though the source is the statute?

MR HODGE: Assuming we are talking about the source being the statute, as opposed to a value at large within society, then presumably what you would plead is there is an obligation arising from the statute not to do things without good faith, which is the thing that in Stefanovski the Full Court said needed to be pleaded.

JAGOT J: I do not want to distract you too much, but you made a point about paragraph 138 where the Full Court said the College knew, or ought to have been aware of, the immediate consequences, which was to escalate the number of students, and you said that, in fact, the primary judge had not found that. I am trying to work out what significance you give to that, because all they are dealing with there is whether Mr Wills knew that at 7 September or later – and they are saying he knew it later, not at 7 September.

MR HODGE: Yes.

JAGOT J: I read that as meaning that they took it that the trial judge had found that he knew that – leave aside the words “ought to have been aware” for the moment – at 7 September. If that is the way to read that, then is that not a taking advantage of? Taking advantage of is just another way of describing that sentence. If that is right that the College knew that, or – leave aside “ought to have been” – expected, anticipated in the sense that it must have because look at its previous numbers – you cannot escalate the numbers, withdrawing the protections, without increasing the number of unsuitable or unwitting students, because that is inherent in the business model. Why is that not enough, even on your test? Even accepting what you say, that you need to know a norm, you need to know that what was being done was in breach of the norm, why does that not all get you there?

MR HODGE: The court does not say that the primary judge found that Mr Wills knew that these students were being taken advantage of. So, to come back to your Honour’s question to me much earlier this morning and my answer to it – or my attempted answer to it – whether or not the fact that there were many students who had been enrolled unwittingly or who were unsuitable, that there is then a taking advantage of them depends upon what the response is.

For example, when you come to the point when a whole lot of students have been enrolled, one way that you might respond – which, effectively, is the ACCC’s case – is to say you needed to automatically disenroll any of them. You effectively needed to reintroduce campus driven withdrawals. But that would not be the only possible response. Another possible response would be to investigate whether there has been CA misconduct to attempt to institute contacting students in order to determine why they are not active and to then deal with the students in that way. One way involves taking advantage of the students, the other way presumably does not. That is, you are not trying to take advantage of the students, you are trying to identify why it is that they have been enrolled.

JAGOT J: But you know from the two risks, you know as I am not following, I am just putting together the end of 331, that says:

Mr Wills had knowledge of all the essential matters that rendered the College’s system of conduct unconscionable.

And then you go to 338, and they summarise:

the essential matters that rendered the College’s conduct unconscionable –

That must be relating back to the end of 331. I mean, it is using the same language. They are:

not persuaded that there was any error . . . of all of the essential matters that rendered –

and then you go to 338:

As summarised in the context of the appeal by the College and Site, the essential matters that rendered the College’s conduct unconscionable at its inception were –

And one of them is this matter where they knew – I am going to leave aside “ought to have been aware” and say expected/anticipated – that the immediate consequence of the change was to escalate the number of students “who were enrolled unwittingly” or “unsuitable”. There is, really, almost no step there to get to “taking advantage of”. That is what I am lost by. You do not challenge that particular thing; you said the primary judge did not find it – you do not say ‑ ‑ ‑

MR HODGE: No.

JAGOT J: No, so there it is. And you do not challenge the end of 331.

MR HODGE: No, we do not challenge 331.

JAGOT J: I am just wondering, even if you are right about quality of conduct, it just seems a microscopic distance – anyway, maybe that is just me, I do not know, I am only thinking for me, I cannot get much distance between that and what you are saying.

MR HODGE: I understand. I think the only answer I can ‑ ‑ ‑

GORDON J: Can I just add one part to that? That is what is pleaded. Although it is identified as a risk, it is actually pleaded, and found, to be the reality. That is, that students were taken advantage of because they were unwitting, and they knew that not only from their own business model and what had happened in the period before but because there had been reports and things in the media that this is actually what was happening. So, the taking advantage of was a risk, but it was a risk that had come home in the past which they had sought to minimise. The daylight between, as Justice Jagot says, those two paragraphs is pretty small, if there is anything at all.

MR HODGE: As I say, the – and I do not know that I will be able to give any better answer to this than what I am about to say – the fact that you know there is a risk of something bad happening, and the fact that you reduce the protections you have against those risks occurring is not itself, one would think, sufficient to establish unconscionable conduct. There are other elements that are involved, which are that, relevantly, you are taking advantage of the people who are then – due to the risk having actually come to fruition – are in a position where you are seeking to derive a benefit from them in a way that can be characterised as taking advantage of them.

STEWARD J: So, that means that you say that when Mr Wills supported the decision in August 2015 to remove the safeguards in order to increase enrolments, he thought that all the increased enrolments come from students who would not be unwitting or unsuitable or not subject to course advisor risk.

MR HODGE: There is no finding or suggestion that he thought that the increase in enrolments was going to come from students who were unwitting.

STEWARD J: It beggars belief.

MR HODGE: It might not – the reason I say that is ‑ ‑ ‑

STEWARD J: Given all the things Justice Jagot and Justice Gordon have put to you, it does beggar belief, does it not?

MR HODGE: Except it was not the case that was put against my client. And the positive finding that is made about knowledge is, if your Honours come to the primary judgment and go to paragraph 282, which is page 82 of the core appeal book, you will see in the second sentence, it said:

It is not established on the evidence that Mr Wills, unlike the college’s officers, was necessarily aware that the poor conversion rate was because of the high proportion of students who were uncontactable and who were therefore subject to campus driven withdrawal.

The way in which this connects together is that the critical change that was made is not really the change from outbound to inbound calls. It is a change to remove campus driven withdrawal. The connection through all of this is that if students were not actively participating then, pre‑ the change, the campus would automatically disenroll them before the census date, but after the change they were not automatically disenrolled. That fact is presumably the fact that ultimately is the way in which – we would say is the thing that matters when one is thinking about “take advantage”, but none of this is – and I emphasise this – this is just not the way in which the case was put against my client.

GORDON J: We might have distracted you, but I think the Full Court paragraphs at page 346 and following – I do not seek, Mr Hodge, for you to go through it, but they address this in some detail.

MR HODGE: They do address it in some detail, your Honour.

GAGELER CJ: Mr Hodge, where are we up to in your outline? I am comparing my estimation of your progress with your estimate of two hours in total in chief.

MR HODGE: Yes. At this point, I am only at halfway through the second page. What I might do is give you two sentences to deal with the remainder of the second page of my outline, and then move to what is the last issue, which is in relation to what is participation.

GAGELER CJ: Yes.

MR HODGE: And, in relation to the other points that we make, I have addressed already the first, second and third reasons advanced by the Commission. The fourth reason is, in our submission, effectively a re‑statement of the first reason – it is just another way of saying that there is some distinction that is to be drawn so that the fact of the conduct being unconscionable is something that does not need to be known because it involves an evaluative judgment.

The fifth reason, which invokes the ideas of the morally obtuse, is problematic for two reasons. The first, I identified yesterday, which is it is really invoking a standard of knowledge which is not the standard of knowledge under accessorial liability under statute. The second reason is that it seeks to change the standard for accessorial liability depending upon what the primary contravention is, whereas what is the primary contravention cannot affect what is the standard for knowledge. It always, in our submission, has to be is this an essential matter or an essential element giving rise to the contravention.

GAGELER CJ: And how long do you expect to be dealing with ground 2.

MR HODGE: I think 20 minutes.

GAGELER CJ: Very well. The Court will take its morning adjournment at this stage.

AT 11.14 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.30 AM:

MR HODGE: Your Honours, to condense the second point as much as possible, can I ask you to go to the Full Court judgment and go to paragraph 283, which is on page 333 of the appeal book in the other proceeding.

STEWARD J: Did you say paragraph 283?

MR HODGE: Paragraph 283, yes, your Honour.

STEWARD J: Thank you.

MR HODGE: This is the beginning of the majority’s reasoning as to what is the activity of Mr Wills that was the thing that associated him. I should just note, the majority acknowledges – if your Honours go back to paragraph 280 – in the middle of that paragraph, that:

Occupation of an office does not of itself establish participation in or assent to conduct.

We do not understand there to be any dispute about that. What the Court then does – or the majority does – at 283 is to set out various facts that they say show that:

Mr Wills had considerable authority –

If your Honours then go over the page to paragraph 284, you will see they set out some further facts in 284 and 285 saying, in effect, he:

had high level responsibility for the College –

Then, in 286, say:

The foregoing matters do not establish that Mr Wills participated in the contravening conduct.

They say:

They provide the backdrop to the decisions that were made that involved the contravening conduct. Those decisions, which involved Mr Wills, were as follows.

Then, what follows are a series of five decisions, beginning in paragraph 287 and ending in paragraph 292. The decision in 287 is a decision made in April 2015. The decision in 288 and 289 is a decision in August 2015. The decision in 290 is also a decision in August 2015. The decision in 291 is a decision in August 2015, and the decision in 292 is a decision in September 2015. So, all of those five critical are decisions made before the Full Court later finds that Mr Wills had knowledge of all of the essential facts. But you will see in paragraph 293, the Full Court says:

On the basis of the above facts, we consider that the primary judge was correct to find that Mr Wills was “concerned” in that part of the College’s contravening conduct that comprised the implementation of the enrolment process changes.

Our submission is simple: it is impossible that that conduct could constitute his participation in the contravening conduct because it could not be with knowledge and intent because the later finding is he did not have the knowledge until 20 November 2015, or thereabouts. Then, at 294, the Full Court switches to dealing with the implementation of the enrolment process changes, and your Honours will see in the fourth sentence there is a reference to a decision on 30 September 2015, so also a decision before it was said that he had knowledge, and then there is a reference to his receiving the papers and attending two management meetings of the College on 21 October 2015 and 18 November 2015, so also before he had knowledge, and then there is a discussion about what was discussed in those meetings. Then when you come to the last two sentences it says:

Mr Wills was acting CEO from 20 November 2015 through to 20 January 2016. In the period until September 2016, the findings of the primary judge show that Mr Wills continued to exercise authority over the College and received regular reports about the College’s revenue and student engagement (or rather lack of student engagement).

Those facts – and I will come in a moment to what was pleaded against Mr Wills – but those facts are also not capable of establishing participation in the contravening conduct. It is not said, and was not found, that he was exercising authority over whether the College was continuing to implement this system. It was not said that he exercised authority over whether the College claimed or retained VFH revenue because that was never the case that was put against him. In 295 there is then a summing-up of what is said to be his continued exercise of authority and supervision over the College, and you will see there are these points made. First, that he:

continued to receive reports about the implementation of the enrolment process changes and its effects on enrolments and VFH revenue –

That might go to knowledge, but it does not go to participation. Second, and importantly ‑ ‑ ‑

GORDON J: Well, it might, in this sense – your client did not give evidence, but it might in the sense that he continued to receive reports but there is no evidence that any step was taken, having received the reports. So that is participation by absence of act.

MR HODGE: If the case that was pleaded against him was that, having regard to his position, he ought to have taken a step and he failed to take that step, then that would be a different case, but that ‑ ‑ ‑

GORDON J: I do not think that is necessary. It is that you have this knowledge and your participation was taking no step to stop it. You do not need to plead that, one just looks to see whether the system – we are doing a systems case here, and we are trying to work out whether someone is accessorily liable. Anyway, I do not think that one can just say that that is knowledge and not address it as part of participation.

MR HODGE: The reason we say that it is not participation is because it does not go further in the way that your Honour is positing – as we apprehend it – which is that he ought to have taken some step and he failed to take that step, because what is required for participation is some positive act that associates the person with the conduct. This is simply saying that he received reports, it does not identify any positive step.

GORDON J: It does, I think, because it goes on to say he received them; that is participation. You have received something, and you are associated with the conduct by the receipt, because of what they say. Anyway, that is a minor point, I think, Mr Hodge.

MR HODGE: Yes. The more fundamental point is the finding that he continued to implicitly give his support and concurrence. The difficulty with that is that the Full Court does not identify what it is that he did to continue to give his support and concurrence to what is said to be the unconscionable conduct because that was never pleaded against him. No case was run against him at trial that he continued to give support and concurrence, and so somehow connecting his role to doing something, some positive act.

Can I illustrate that, then, by taking your Honours to the pleading, which is the book of further materials. If your Honours go to paragraph 137A, which is on page 50 of that book, you will see at the bottom of that page is 137A, and it said “By reason of”, and then there is a series of subparagraphs. The first five subparagraphs are the ones that seem to be some identification of something – some action or position of Mr Wills – and you will see (a) and (b) are his holding of roles, which it is accepted that the mere holding of roles is incapable of constituting participation. I will come back to (c) in a moment. Subparagraph (d) is his participation in an August 2015 meeting, but that was before he was found to have knowledge. Subparagraph (e) is his participation in the Sero meeting, but that was back much earlier, before he had knowledge. What it is left with, then, is (c), which is:

his participation in Advisory Board Meetings and Management Meetings generally, as pleaded in –

and there are some paragraphs that are identified. The paragraphs in the pleading are in chronological order, so your Honours will see – and it is only necessary to go to the last set of paragraphs, which is 89 to 97. This is the last lot of meetings that was pleaded against Mr Wills as giving rise to his participation, and if you go to paragraph 89 on page 25 of the materials, you will see 89 to 92 deal with a meeting on 21 October 2015, before the Full Court found that he had knowledge. Paragraphs 93 to 97 also deal with a meeting before he had knowledge, this one on 18 November 2015.

The entirety of the case pleaded against him was a case that occurred before the Full Court found that he had knowledge, and there is no finding by the primary judge – unsurprisingly because it was not run – that after the 20 November 2015 Mr Wills engaged in some conduct that was implicitly giving his assent to the continuation of the system. That just was not the way in which the case was put.

Now, the ACCC in their submissions have raised some other conduct, and can I just note what that is. So, if your Honours take up the ACCC submissions, and if you go to paragraph 49 of those submissions, you will see at 49, which begins:

The findings below . . . establish that Mr Wills decided to take on the role of acting CEO in order to manage the enrolment process changes that he knew were being implemented.

And then, in terms of identifying what it is that was done, you will see the third sentence is:

He proceeded, with knowledge of the vast numbers . . . to oversee the progression of such students through censuses –

Now, there is no identification of what that act is of Mr Wills by which he is doing this, and it was not pleaded against him. Then you will see a little bit further down, it is said that he:

adjusted the details of the enrolment process; and (ii) acknowledged that the College would be claiming VFH revenue in respect of students enrolled in the impugned enrolment period in email communications –

Now, (ii) – again, not something that was pleaded nor identified by any court as an act of participation. Can I just fixate, though, on (i), which is “adjusted the details of the enrolment process”.

EDELMAN J: Why do you keep referring to “participation”? Are you assuming that being concerned in is the same as participating in?

MR HODGE: No, I am sorry. I am using it as shorthand for what I think is undisputed as the test, which is some positive act of association. You will see the references to paragraph 401 of the primary judgment. So, if your Honours then go back to the core appeal book in proceedings 118 and go to page 109, you will see there paragraph 401, beginning:

In fact, the college ceased enrolling students in its online courses on 18 December 2015.

Could I just invite your Honours to read that. In our submission, it is not apparent what adjustment to the enrolment process is being made by Mr Wills from that finding. The only adjustment that is being referred to is that the College would cease to enrol students. Even assuming it was Mr Wills who made that decision, it would be peculiar if deciding to cease to enrol students was an act of participation in taking advantage of students, and otherwise the conduct referred to is emailing ‑ ‑ ‑

BEECH-JONES J: But were they not ceasing to enrol because we will already make enough money by claiming from the students who we have enrolled?

MR HODGE: Yes, that is right. They have already hit the cap.

BEECH-JONES J: Yes. So, in that sense, the adjusting is connected to what is said to be the unconscionable conduct, is it not?

MR HODGE: Except it does not – well, the adjusting is connected only in the sense that they have hit the cap, so they have stopped enrolling students.

BEECH-JONES J: Because they are going to keep claiming money for them throughout 2016.

MR HODGE: Yes. But it is not said that Mr Wills is the person making this decision as to what it is that they are going to do. Of course, that was never the case that was pleaded against him.

BEECH-JONES J: Well, he has agreed with it, and he is the person in charge, so he could have stopped it.

EDELMAN J: I mean, he is promoting it in correspondence.

BEECH-JONES J: He is saying in correspondence to a course adviser they are not going to take any further enrolments because they have hit the cap. That is the finding. That, in our submission – apart from not being pleaded, not found by either the primary judge or the Full Court to be participation – is not something that is capable of constituting a positive act of association with what is the unconscionable conduct in this case.

Those are our submissions in relation to the second ground, your Honours.

GAGELER CJ: Thank you, Mr Hodge. Mr Giles, do you have something to say in this appeal?

MR GILES: No, I have not. Site Group’s liability is dependent on Mr Wills’ liability. We consequently adopt Mr Wills’ submissions.

GAGELER CJ: Thank you. Mr Solicitor.

MR DONAGHUE: Your Honours, there are three questions raised by this appeal and the associated notice of contention. The first question is: is it sufficient to establish accessorial liability for a contravention of section 21 of the ACL to show that the alleged accessory knew the facts and circumstances that rendered the primary contravener’s conduct unconscionable, or is it necessary to prove that the person subjectively determined that the conduct was offensive to conscience? I will need to add some precision to that, which I will do in a moment.

The second issue is: if the first issue is resolved in favour of the ACCC, did Mr Wills have the requisite knowledge from 7 September 2015 onwards? That is point raised by the notice of contention. The third issue is: if the second issue was resolved against the ACCC, was Mr Wills’ conduct after 20 November 2015 sufficient to implicate or involve him in the College’s breach? That is the second ground of appeal that Mr Hodge has just addressed in the last 20 minutes or so. I am going to address your Honours on the first question, and Mr Bigos on the second and third.

Very briefly, by way of factual context, the Full Court summarised its conclusions concerning Mr Wills – and I am using the Productivity appeal book, but it is paragraph 18 of the Full Court’s reasons. If you are in the Productivity book, it is on page 234, at paragraph 18. So, in its summary, at the start – and the Full Court said something quite similar to this at 283 in the substantive part of its reasons:

Mr Blake Wills held a position of senior authority over the activities and decisions of the College. He was involved in all of the key decisions that resulted in the College’s unconscionable conduct and he was knowingly involved by the time he assumed the position of acting CEO on 20 November 2015. His attempts to avoid personal responsibility for the decisions that he was intimately involved in should be rejected.

That, we submit, is a fair summation of the body of detailed reasoning that your Honours have seen and that follows. As your Honours know, Mr Wills as, of course, he was entitled to do, chose not to give evidence at the trial and he called no witnesses. He was, plainly, better placed than anyone else to give evidence as to his knowledge in the period. If he was not reading the emails or if he was not participating or paying attention in the meetings, he could have said so. The primary judge at paragraph 144 – you do not need to go to it – drew a Jones v Dunkel inference. Specifically, he inferred that Mr Wills, quote:

read and understood the emails and documents that were sent to him, and that he participated in and understood the discussions that took place at meetings –

I emphasise that only because, at least in writing, Mr Wills has said – for example, in paragraph 61 – that he was a mere “passive presence” at the meetings. It is too late for him to run that case. He did not appeal against the Jones v Dunkel inference, and, in our submission, your Honours should, consistently with that inference, infer that where the documents show he was at meetings and sending emails, he knew and understood what he was doing.

EDELMAN J: Knew and understood and participated in.

MR DONAGHUE: Participated in, yes – importantly, for the second ground. The fundamental issue upon which I propose to address your Honours is that which I identified as the first point. At a very high level of generality, the parties are agreed that in order to an accessory to be knowingly concerned in a primary contravention, the accessory must have knowledge of all the essential facts or all of the essential elements – the authorities use different words – that make up the primary contravention. That is Yorke v Lucas and no one ‑ ‑ ‑

GORDON J: Facts and circumstances.

MR DONAGHUE: Facts and circumstances. Sometimes the cases say “essential facts”, sometimes they say “essential facts and circumstances”, sometimes they say essential matters. In my submission, they always mean the same thing and they always mean factual questions – the essential facts and surrounding circumstances. That comes from Yorke v Lucas and no one has challenged it. Yorke, of course, draws on Giorgianni – which you were taken to by Mr Hodge, and I do not propose to take your Honours back to it.

Can I ask you to note, if your Honours are looking at it later, a passage at the bottom of page 506 in the joint reasons of Justices Wilson, Deane and Dawson, where their Honours said – and it is one sentence, so I will read it to you:

it is necessary to distinguish between knowledge of or belief in the existence of facts which constitute a criminal offence and knowledge or belief that those facts are made a criminal offence under the law.

Our friends say that they accept that distinction and that their argument is consistent with it. The submissions I am going to develop shortly are directed to testing whether that is so – whether this submission can sit coherently with that distinction.

Before I turn to that, can I say something briefly about what we submit is a surprising turn that the appeal took this morning, where your Honours have heard quite extensive arguments which, in our submission, are directed to something quite different from the issue that has been previously raised. Your Honour Justice Edelman raised with my friend that they were two quite separate points, and we respectfully agree with what your Honour said.

Your Honours have heard quite some submissions which seem to be directed around whether the case was sufficiently pleaded and proved against Mr Wills that he knew that the College was taking advantage of students who were victims of CA misconduct or the unsuitability risk, as distinct from what we had understood the case to be, that it was pleaded and proved that he knew that the conduct was unconscionable or contrary to the standards and values of the Australian business community. That second point is the main point I am going to address.

As to the first point, we respectfully adopt many of the observations that fell from your Honours Justice Jagot and Justice Gordon about that submission. We say that it was sufficiently pleaded and proved that he knew that the College was taking advantage of students subject to those two risks. Really, all I want to add on that is to ask your Honours to go back to paragraph 327 in the Full Court’s reasons – which is one of the paragraphs that was the subject of quite some submissions.

GAGELER CJ: Do you accept that had to be pleaded and proved, that he knew there was a taking advantage?

MR DONAGHUE: Yes, because it was part of – it was one of the five main things that was proved to show why the College had contravened the provisions.

EDELMAN J: But it did not need to be pleaded in the magical words “taking advantage”. If all of the facts and circumstances that amount to a taking advantage are pleaded and proved, why does there need to be a specific plea that in all of the circumstances this equals a taking advantage?

MR DONAGHUE: Sorry, your Honour. My answer to the Chief Justice was imprecise and I withdraw it. That is what I meant ‑ ‑ ‑

GAGELER CJ: I am lucky to have Justice Edelman who explains my questions.

MR DONAGHUE: I am perhaps more lucky to have Justice Edelman tidying up my answer because the answer was loose. But the pleadings that you have been taken to – and I do not want to go back to them – plead all of the risks.

GORDON J: What you say is it plead the facts and circumstances.

MR DONAGHUE: Yes, your Honour.

GORDON J: They happened to be identified risks, which included risks which were not only – I mean, the label “risk” is a bit unfortunate. They were real.

MR DONAGHUE: Your Honour, that is what I was putting to your Honours yesterday. There were real, actual students suffering from these real, actual problems which the College knew. At 327, where I am inviting your Honours to go back to – which is the Full Court recording what the primary judge found that Mr Wills knew – there are the essential facts and circumstances that constituted the College’s contravention. If your Honours go down about six lines – maybe I will start at four lines; so, after the semicolon – one of the things Mr Wills knew was that:

those changes –

the abolition of the outbound call on campus driven withdrawals:

would remove mechanisms to mitigate the agent misconduct risk and the unsuitable enrolment risk –

and he also knew that those changes:

would likely lead to a substantial increase in the number of students –

That is just a casual word. The abolition of two mechanisms that mitigated the two identified risks would lead to the substantial increase in students. What was causing what happened was removing the safeguards against the identified risks. In our submission, in addition to the points that your Honours have made to Mr Hodge, we just submit that the diversion that the case took this morning goes nowhere. That part of the case, to the extent that it was necessary to prove that Mr Wills knew the essential facts and circumstances, we did.

GORDON J: One of the things that worries me about this – when someone comes to plead this, it cannot be magic words. One has to set up the facts and circumstances by reference to the case that is before it, and address it. To think that you have to have some magic word in there that somehow brings about a big tick rather than a big cross is, I think, very unfortunate.

Do you embrace what Justice Jagot put to Mr Hodge this morning, that when you look at the Full Court at the intermediate level about the process of analysis, and the process of reasoning, in order to reach those sorts of conclusions is the appropriate way going by reference to the facts and circumstances?

MR DONAGHUE: I entirely embrace that. In our submission, what one has to prove are, factually, the essential facts and circumstances of the contravention. One pleads those – the facts – and the court will make findings as to the appropriate facts and circumstances, and then, in our submission, the court will analyse those proven facts against the relevant statutory norm and identify which of the section 22(1) factors are engaged, and how the case is properly characterised as unconscionable.

But the pleader does not need to accurately identify – and this really feeds into where I am coming to – because the accessory does not need to accurately know precisely how those facts and circumstances will be characterised within the context of the statute. They just need to know the essential facts and circumstances that are ultimately relied upon to prove the primary contravention. That is our submission.

GLEESON J: Mr Donaghue, in the primary judge’s findings at 281, he made a finding that college officers knew that there would be increased numbers of proportion of consumers enrolled and would incur a VFH debt who would get no benefit from their enrolment. Then, at 282, he says Mr Wills also had knowledge of matters that included that; that they would get no benefit from their enrolment. Does that finding find expression in the Full Court’s reasons, and secondly, does that allegation – is that finding based on the pleaded case?

MR DONAGHUE: Your Honour, without seeking to dodge, can I invite your Honour to leave that question to Mr Bigos, because that is our notice of contention. We are saying that the Full Court should have found that Mr Wills had the relevant knowledge back to the September date. That is one of the issues he will be addressing.

Can I turn to what we had understood to be the point of significant principle raised by the case. Our friend started yesterday afternoon by saying his case is actually very simple. He says an accessory must know the essential facts and circumstances that make up the contravention – Yorke v Lucas. If the primary contravention is a contravention of section 21 of the ACL, an essential fact is that the conduct was unconscionable. Therefore, the accessory must know – meaning, must have subjectively formed the belief – that the acts that occurred were unconscionable.

Almost immediately, our friend started walking that back. And I do not know if your Honours have access to the transcript from yesterday. If you do, at line 3371, your Honour Justice Edelman put to my friend:

As I understand your opening submission, it is that, in order to be liable as an accessory . . . you have to subjectively believe that your own conduct is unconscionable.

Mr Hodge’s response was:

You have to subjectively believe that the primary contravention is wrong.

Then your Honour Justice Beech Jones, over the page, said:

I thought your argument was not about the individual moral code of the person but that the person must subjectively understand, in the context of unconscionability, that what they are doing is, according to Justice Gordon in Stubbings, contrary to what is right and proper according to the values recognised in society –

And Mr Hodge said yes to that. But when your Honour said to him this morning, you are not saying you have to know that it is unconscionable, Mr Hodge agreed with the proposition. And, instead, your Honour has heard a variety of formulations: you have to know that there is vulnerability, you have to know that there is taking advantage, you have to know that there is sharp practice.

BEECH-JONES J: I think my question was, you do not have to know that it has the word “unconscionable”. That is, the accessory does not have to know of that description, which is the statutory one.

MR DONAGHUE: Yes.

BEECH-JONES J: I take your point, Mr Solicitor, but I think that is the context.

MR DONAGHUE: I accept that, your Honour. But the point that I am trying to make is that having opened by saying you have to know the essential elements, and an essential element of section 21 is it is unconscionable, what your Honours then heard was, what you have to subjectively know is something slightly different – overlapping, perhaps, but not the same.

STEWARD J: The impression I got was you had to know the layperson’s concept of unconscionability, rather than the lawyer’s, and I am not sure what the difference is.

MR DONAGHUE: Well, that was part of the flavour of it, and that is the very point that I am about to seek to develop, your Honours. Because, as your Honours know – backing up one step. Here, where the primary contravention is alleged to be contrary to section 21, what has to be proved is that in all the circumstances the conduct is unconscionable. But the concept of unconscionability in that statutory provision is not at large, and your Honours have been at pains to explain that it is not a word that calls for an intuitive reaction based on the circumstance.

One needs, informed via values of section 22, to give a particular legal meaning to that word, which sometimes will be easy, but sometimes will not be. And so, in Kobelt – and I might ask your Honours just to turn up these passages briefly. It is volume 5, tab 32, ASIC v Kobelt (2019) 267 CLR 1. In Justice Nettle and Gordon’s reasons at paragraph 153, which is on page ‑ ‑ ‑

EDELMAN J: Which tab is this?

MR DONAGHUE: Sorry, your Honour. It is tab 32, in volume 5. In paragraph 153, which is on page 59 of the report, about five lines down, their Honours said:

Certainly, in any given case, a conclusion as to what is, or is not, against conscience may be contestable: so much is inevitable given that the standard is based on a broad expression of values and norms.

Skipping some lines:

This is because evaluating whether conduct is unconscionable “is not a process of deductive reasoning predicated upon the presence or absence of fixed elements or fixed rules”. Instead, at least in the Australian statutory context, what is involved is an evaluation of business behaviour (conduct in trade or commerce) in light of the values and norms recognised by the statute.

And your Honour Justice Edelman, at paragraph 302, said something similar. Paragraph 302 starts on page 104, but if you go over on to page 105 and look at the last eight lines or so:

Without attention to those factors –

That is, the 22 factor:

the assessment of unconscionability becomes a high-level instinctive reaction that the legislation seeks to avoid.

So, if the reason that an accessory can only be liable if they formed a subjective belief that the primary contravener’s conduct is contrary to the norm, logically that belief must relate to the concept of unconscionability, as embodied in the norm, because it makes no sense to require an accessory to know or believe that conduct is unconscionable according to a different or general sense if that different or general sense is not an essential element of the contravention that is alleged.

The whole rationale for asking this question is to say, well, we are focusing on what are the essential elements of the contravention. One cannot, then, transplant a wider or more diffuse notion of unconscionability as if it was an element of the primary contravention so as to avoid the logic of the argument, which leads to saying, well, you can only be an accessory if you know that your conduct is contrary to the law, contrary to the statutory standard that section 21 has erected.

BEECH-JONES J: Mr Solicitor, I perhaps overconfidently asserted yesterday that if this were decided by a jury, a jury would be told in the context of a particular case what unconscionability meant, including, perhaps, by Justice Gordon’s description in Stubbings. And even though it is ultimately that the jury, and if it had a component – it is contrary to the norms of commercial people or commercial standards – do you agree that a jury would determine that?

MR DONAGHUE: With respect, your Honour, we are not sure that that is right. And I am going to come to that, prompted by that exchange, to make some submissions about that shortly, if I may ‑ ‑ ‑

BEECH-JONES J: Yes, all right. Just take your course.

MR DONAGHUE: It is in our outline. Paragraph 5 is where I am coming to that, your Honour. Our starting and, really, threshold submission is that it is internally contradictory for the appellant to say that you need this knowledge, because knowledge of – you need to know the essential elements of the offence, and unconscionability is an essential element of the offence, but then to seek to substitute for “unconscionability” words like “taking advantage”, because not all taking advantage is unconscionable.

So, if all you know is that someone is taking advantage, you do not know what might be the essential element of the contravention. You may need to know more. The same is true of vulnerability or sharp practice. The logic of the argument entails knowledge of the law, and our friend in paragraph 34 in writing, and orally, has accepted that it cannot be the case that an accessory must subjectively know that the primary contravener has contravened the legal standard.

GAGELER CJ: Is it really correct to say that unconscionability is an essential element of the offence? I mean, another, better, way of putting it might be that the offence is to engage in conduct which is properly characterised as unconscionable.

MR DONAGHUE: Your Honour, that is really what we say, and therefore you need to know the conduct that will eventually be so characterised, but you do not need to know the characterisation itself because the characterisation itself – and this is where I am going in answer to Justice Beech‑Jones – in our submission, is a question of law.

GAGELER CJ: I know you were not going to go to Giorgianni, but how do you explain the need in Giorgianni to have knowledge that the manner of driving was dangerous to the public?

MR DONAGHUE: In short, your Honour – and I will anticipate where I go a little bit to say “dangerous to the public”, in our submission, are words in a statute that are used in the common or ordinary understanding. Words used with their common and ordinary understanding involve a question of fact. They involve a question of fact as long as the meaning attributed to those words is a meaning that they are capable of bearing as a matter of ordinary language. So, what needed to be proved in that case were the essential facts, and one of those facts was dangerousness. In my submission, the difference is that unconscionability does not raise a question of fact of that way. That is the line I am going to draw.

GAGELER CJ: Thank you.

EDELMAN J: Can I just ask, are you going to address at any stage whether there is a difference between the aiding and abetting limb, and the knowingly concerned limb?

MR DONAGHUE: On the part of the case that I am addressing, your Honour, which is the knowledge part, we have taken Yorke v Lucas to be authority for the proposition that the knowledge part is the same for those two concepts, because in Yorke the Court starts with paragraph (a), the aiding and abetting limb, and then treats in paragraph (c) the knowingly concerned limb in the same way. There may, as I think Mr Hodge accepted, be a difference on the conduct element part, and that is Mr Bigos’ territory.

EDELMAN J: There may be a slight difference, though, in that one can accept that the knowledge that is required is the same degree of knowledge, constructive knowledge will not suffice, and so on. But there may be a difference as to what it is that needs to be known for the purposes of aiding and abetting or for the purposes of being knowingly concerned. The origin of the phrase seems to be, at least in Australian law, the Secret Commissions Act 1905, which may have been the first case in which it is brought in, and it is brought in in the context where there seems to have been a conscious decision not to use language of “aiding and abetting”, perhaps because evaluative judgments are involved.

MR DONAGHUE: Your Honour, I confess I had not given thought to whether we could put the knowledge requirement differently as between those two limbs, and so I would not want to rule out the possibility that one might be able to do that. But it is sufficient, in my submission, for the purposes of this appeal, for your Honours to find it on either limb. You do not need to have knowledge of unconscionability or any substitute for it that our friends invite. That is how I put that. Can I ask your Honours to turn to Rural Press, which is volume 5, tab 37 ‑ ‑ ‑

BEECH‑JONES J: Are you going to Yorke v Lucas or have you covered it?

MR DONAGHUE: I was not intending to go to Yorke v Lucas, unless your Honours need me to.

BEECH‑JONES J: Just before we leave, can I ask you to look at paragraph 305 of the Full Court’s reasons, which is on page 340 of – I think it is the joint appeal book in the earlier appeal.

MR DONAGHUE: Yes, you Honour.

GORDON J: Could I ask Justice Beech‑Jones just to repeat that question, so we can hear it down this end? Thank you.

BEECH‑JONES J: Sorry, yes. Paragraph 305 of the Full Court.

MR DONAGHUE: Yes, your Honour, I have that.

BEECH‑JONES J: The Full Court’s analysis of what is required of accessorial liability appears to at least start or include an interpretation of Yorke v Lucas as only in what I would call an old section 52 case involving a false representation as only requiring knowledge of the accessory:

of the circumstances that render the representation false.

Do you accept, firstly, that that is the correct analysis of Yorke v Lucas?

MR DONAGHUE: Your Honour will not be surprised to learn that that is a difficult question that has caused us some reflection, because as your Honours no doubt know, the question of what knowledge is required of an accessory in an old section 52 and new section 18 case is a hotly contested issue, which has divided intermediate appellate courts around the country. There are multiple intermediate court appellates in both directions. That reading, in paragraph 305, is undoubtedly a contestable reading of Yorke v Lucas, but the contest, in my submission, relates to or revolves around the fact that the falsity of a representation would ordinarily be regarded as a fact.

BEECH‑JONES J: Right. So, part of your argument is that even if that is the wrong way of reading Yorke v Lucas, there is some distinction between section 18 accessorial liability and where we are going to with section 21?

MR DONAGHUE: That is correct. That is precisely correct, and the distinction is the answer that I gave the Chief Justice earlier, that even if that is wrong about false and misleading, it would be wrong because the falsity of a representation is a fact, and so may be something that needs to be known as part of the essential facts and circumstances. That is the contrary argument. In my submission, because unconscionability is not properly characterised in that way, your Honours do not need to go there, and therefore my imputation to your Honours is not to go there. Given how much contestation there has been, it would be more appropriate for this Court to resolve that question in an appeal that squarely raises it.

EDELMAN J: Although the way you were going to reconcile Giorgianni really does strongly support, I think, a characterisation of Yorke v Lucas as based upon falsity being a fact. If dangerousness amounts to a fact, then falsity ought to amount to a fact.

MR DONAGHUE: Your Honour, I accept the logic of that. But, while I accept the logic of that, there are intermediate appellate courts that have formed a different view. So, really, the frank answer to Justice Beech‑Jones is that I am not setting out to defend paragraph 305 but, in my submission, this Court does not need to determine the correctness of paragraph 305 to determine the appeal. Although, the logic of my argument may have implications for how your Honours might do that in due course.

Can I ask your Honours to go to Rural Press [2003] HCA 75; (2003) 216 CLR 53, which is volume 5, tab 37. Your Honours, of course, were taken to this yesterday. Our submission is that – notwithstanding what you have heard from Mr Hodge – the argument that is not advanced is very close to the argument that was put by Mr Douglas in that matter. It was rejected at trial, it was rejected on appeal to the Full Federal Court, and it was unanimously rejected as wholly unrealistic by this Court and that, in those circumstances, there had been no application to re‑open Rural Press, it should be followed – just as the Full Court did. The Full Court found, in paragraph 304, that Rural Press was directly contrary to the argument that was put and, we submit, it was correct to do so.

Your Honours have seen the way that Mr Douglas put the argument in Rural Press, on paragraph 57 of the report. I do not need to take your Honours back to it, although, I do emphasise – as the Chief Justice observed – that that argument included submissions about Yorke v Lucas. We have had a look at the transcript of the argument. We have not given it to your Honours – although, of course, we can if that would be of assistance. But, in our submission, the CLR summary is fair.

It is not the case that this was a point not properly examined by the Court. It was one of the significant issues that was before the Court on appeal. It was dealt with shortly because the Court evidently regarded the argument as untenable. Justice Heydon, in particular, put some propositions during the course of argument that find close analogies with the language that you see in paragraph 48.

Can I just emphasise the way this issue arose, for your Honours, factually, very briefly, and give your Honours the references. So, in paragraph 16, you see that there was a newspaper called the Standard that published in many parts of Australia. Sorry, Rural Press published in many parts of Australia, and it had a subsidiary bridge which published in a newspaper called the Murray Valley Standard in a particular area. In paragraph 22, you see that a rival, much smaller newspaper, the River News sought to expand its circulation into an area that was already covered by the Standard’s area and sought to solicit advertising from businesses within that area. At the end of paragraph 22, you see:

The result of introducing this competition into the . . . area was that the circulation . . . increased by between 100 and 500 –

newspapers. Then, in paragraph 24, you see the facts recounted as to how Rural Press responded to that. I do not need to take your Honours through all of them. But there was a threat – you can see in the middle of paragraph 24 – contemplated, and then later implemented to threaten to introduce a rival newspaper in the River’s primary area if they did not withdraw. Then, at paragraph 25, there are findings about the awareness of the two alleged accessories, McAuliffe and Law.

Again, I will not read them all. They were aware of the financial strength of Rural Press, the fact that there were activities in competition, et cetera. They intended to procure a cessation of the provision by River News of the services in the Mannum area. Those, in my submission, are all facts. They were the facts and circumstances alleged to contravene section 45 of the Act, involving a substantial lessening of competition.

Ultimately, in paragraph 26, you see the threat worked, and River Press withdrew. The Court found that those facts involved a contravention of section 45(2), and that the two executives – McAuliffe and Law – were knowingly concerned. The norm – I will not take your Honours to it, we have given it to you in tab 26 of the TPA as it stood at the relevant time – but the norm was that a corporation shall not make a contract or arrangement to arrive at an understanding which has the purpose, or would have been likely to have the effect, of substantially lessening competition.

The High Court’s rejection of the argument advanced by Mr Douglas – actually, perhaps just to remind your Honours, I will ask you to go briefly back to page 57 – the argument, as the CLR records it, is that to be liable as an accessory, the accessory needs to know:

each of the elements of the breach, including knowledge that the relevant conduct was anti‑competitive.

Citing, amongst others, Yorke. The Court’s rejection of that at paragraph 48 is unequivocal. Your Honours see about five lines down, in the end the argument was that:

McAuliffe and Law “did not know that the principal’s conduct was engaged in for the purpose or had the likely effect of substantially lessening competition . . . in the market as defined”. It is wholly unrealistic to seek to characterise knowledge of circumstances in that way. Only a handful of lawyers speak or think in that fashion . . . In order to know the essential facts . . . it is not necessary to know that those facts are capable of characterisation in the language of the statute.

We make three points about that. First, the formula used there by this Court was the essential facts. We do not submit that that is materially different from essential facts or circumstances, or essential matters, but the reason that they are all the same is that they are all talking about facts. The second point that we make is that the Court said it is not necessary to know that the facts are capable of characterisation of the statute, in the language of the statute, let alone that they have actually subjectively been characterised in that way by the alleged contravener within their own mind.

They are different concepts, capable of characterisation and having been characterised, and the High Court says if you do not know it is capable of characterisation you obviously cannot have so characterised it, so you do not need either. The third is that the wholly unrealistic language used in that paragraph speaks, in our submission, to the necessity to attempt to give effect to Parliament’s intention in extending accessorial liability with respect to norms of this kind, which we submit would be an intention likely to be substantially defeated if it is necessary to prove a subjective belief on the part of an executive who is entitled to penalty privilege and may not give evidence.

BEECH-JONES J: Just to maybe reiterate what you said earlier, you accept danger to public as fact, falsity is a fact, but you say unconscionability is not a fact or element?

MR DONAGHUE: And I am about to explain why, or develop my submissions as to why. Just before I do that, your Honours will have seen, I think in the Full Court’s reasons, from paragraph – particularly 301 – paragraph 300 contains a discussion of Giorgianni, 301 turns to Rural Press, summarises both the High Court and the approach taken by Justice Mansfield and the Full Court, which I am going to come to in a moment, quotes paragraph 48, and then at 304 says:

The reasoning and conclusion in Rural Press is in contradiction of the appellants’ submission –

So that was how the Full Court dealt with it principally.

EDELMAN J: Mr Solicitor, you said you had had a look at the transcript of oral argument. In that, Mr Douglas does say that – or does accept that – I think his words were:

all that has been established against the relevant executives of the respondents is that they were aware that they were engaging in what one might describe broadly as anti‑competitive behaviour.

Why is that not, if one translated that to this case, effectively a concession of awareness or knowledge of all of the relevant norms, but just not the label “anti‑competitive behaviour” or the section 46 label or the section 21 label?

MR DONAGHUE: Because, in my submission, your Honour, one of the components of the norm is not just anti‑competitiveness but a substantial effect on competition. Again, it is the light version of the element to say, well, you just have to know generally that it is anti‑competitive. That does not mean you know the essential elements of the contravention. That is my answer.

Our friends have purported to distinguish Rural Press rather than attack it on the basis that they say it was dealing really only with whether an accessory needs to know that the conduct is actually unlawful. We submit that that is not borne out by an analysis of the way the argument was put either in this Court or below. There are partial extracts from Justice Mansfield’s reasons at first instance in the Full Court’s judgment in 301. The Court does not quote paragraph 138, which is the paragraph mentioned by the High Court in footnote (71) that your Honour Justice Gordon mentioned yesterday. His Honour said there that he did not:

consider it necessary for the ACCC to demonstrate that each of them explicitly thought about the concepts which s 46 of the Act draws attention to –

But there was not enough in that to warrant handing it up. But if I could ask your Honours to go briefly back to the Full Court’s reasons, we read those reasons rather differently from our friends. It is volume 8, tab 55, Rural Press Ltd v ACCC [2002] FCAFC 213; (2002) 118 FCR 236. The point that I am going to seek to develop fairly shortly is that there were two different arguments that were advanced and both of them were rejected in this case.

The first argument you see, which our friend, Mr Hodge, described as the original way the case was put, but we say this was never abandoned, is at 154 in the last few sentences of that paragraph which Mr Hodge asked you to read. It is an argument that there was:

no finding, and there was no evidence –

of:

knowledge that the purpose or effect ,or likely effect, of the arrangement . . . would be a substantial reduction in competition –

and the complaint in the last sentence:

it was submitted that this “question was never put to either of them”.

So actual knowledge of a substantial reduction. That is not actual knowledge of a contravention that is argued there but of the concept of a substantial reduction in competition. Then it evolves ‑ ‑ ‑

GORDON J: Sorry, is that any more to say that that is a fact and not a legal analysis?

MR DONAGHUE: What Mr Douglas seemed to be saying was that you – I do not think he was putting it in those terms, and he was saying someone should have put to these witnesses, you knew that what you were doing involved a substantial reduction in competition, and the High Court evidently did not disagree – did not accept that, and neither did the Full Court.

The argument did evolve – orally, by the look of it – in 156 so as to include a contention that the ACCC had to show that the accessories knew that there was a contravention by the primary contravener, but what you see – and, sorry, just before going on, I should emphasise in 155 at the top of page 281, there is an extract from the primary judge where he said:

“It may well be that, from the point of view of Law and McAuliffe, the competition to the Standard in its prime circulation area . . . was not great. But it was, and was perceived them to be, competition.”

So, the trial judge seems to have thought, well, they may well have thought that the effect was not substantial. That seems to be what his Honour is saying; they perceived it as competition but they may well have thought that it was not substantial, but they are still found liable as contraveners. Now, without wanting to dwell on this too long, your Honours, the reasoning rejecting those arguments – both of those arguments – appears at 162 and 163. In paragraph 62 – and again I think Mr Hodge asked you to read this – you see, from the second sentence, three lines down:

made findings sufficient to establish that Mr Law and Mr McAuliffe were aware of the material facts and circumstances constituting the contraventions . . . even though –

So, there is a distinction between the essential facts and matters:

they may not necessarily have turned their minds to the legal characterisation of those facts or circumstances –

That is the first argument, the 154 argument:

or to the legality of the conduct.

That is the second argument, the 156. So, both of them are in play, and one of the things the Court was saying is that you do not need to have turned your mind to the legal characterisation of the facts and circumstances. Then their Honours, in the next paragraph – and this is the one that is cited with approval by this Court in the footnote:

It was not, in our view, necessary for the primary judge to find that Mr McAuliffe and Mr Law knew and appreciated that the purpose or effect of the arrangement was substantially to reduce competition –

Partly because there are some “sophisticated economic and legal concepts” involved. So, you just do not need to know that the facts and circumstances are capable of being characterised as a contravention of the conduct – a contravention of a statutory norm. If you know the facts and circumstances themselves, that is enough.

So, in our submission, we come to the point that Justice Beech‑Jones has raised with me: is unconscionability properly able to be characterised as one of the essential facts and circumstances, or not, in circumstances where we know that substantial lessening of competition was not characterised as an essential fact or circumstances. The line that we draw is the line that I have foreshadowed: is it a question of fact or not? To try to develop my answer to Justice Beech‑Jones’ question, we have given your Honours, overnight, two authorities. One is Vetter v Lake Macquarie and the other is a judgment of your Honour the Chief Justice in Minister for Immigration v SZVFW.

Can I start with Vetter v Lake Macquarie (2001) 202 CLR 439. The facts are not relevant, it is the discussion of the fact‑law distinction that we are going to this judgment for. If I could ask your Honours to turn to paragraph 24, in the joint reasons of Chief Justice Gleeson and Justices Gummow and Callinan – Justice Hayne generally agreed, while adding additional observations with this judgment. The starting point in our submission is this first sentence in paragraph 24:

Whether facts as found answer a statutory description or satisfy statutory criteria will very frequently be exclusively a question of law.

Obviously, that is qualified. In paragraph 25, their Honours say Justice Mason, with the agreement of Justices Gibbs, Stephen, Murphy and Aickin:

discussed the matter comprehensively and stated the law on this topic in this country as follows in Hope –

this is on the fact‑law distinction:

“Many authorities can be found to sustain the proposition that the question whether facts fully found fall within the provisions of a

statutory enactment properly construed is a question of law

and then about five lines further down, picking up Lord Parker quoted by Chief Justice Latham:

where all the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly construed of some statutory enactment, the question is one of law only.

That is subject to a qualification. The qualification appears – we of course rely on that whole passage from Hope – but the qualification appears in the last paragraph of the passage quoted from Hope, and it exists where:

a statute which on examination is found to use words according

to their common understanding –

So, the first question, which is a question of law, is does a statute use a word according to its common understanding or not. If it does use words in accordance with their – as a question of law, then whether facts fully found fall within the provision is a question of law only.

GAGELER CJ: Mr Solicitor, these are very, very difficult distinctions, and it may well be, in Australian Gas Light Co that is referred to in paragraph 24 of this decision – certainly in a judgment of Sir Frederick Jordan somewhere – he said that what is a question of law, for the purpose of asking is this an appeal on a question of law, is not necessarily the same as what is a question of law for the purpose of determining should a judge decide it or should a jury decide it. I appreciate the distinction you seek to draw here as being is it a question of fact. If that is an appropriate decision, it is not necessarily answered by looking at judgments drawn from this context.

MR DONAGHUE: Your Honour, I accept that, but what we are seeking to do – and I know that the endeavour is somewhat complicated by the fact that the law on this distinction is notoriously complicated – is to try to provide a principled line to differentiate between the cases which I am going to come to, which have held in the unconscionability context that you do not need the knowledge that our friends assert, and those such as Giorgianni where you do. In my submission, the essential facts and circumstances line, as is suggested by the phrase itself, is directing attention to facts; why does that not include unconscionability?

The case I am about to come to, your Honour’s judgment in SZVFW [2018] HCA 30; (2018) 264 CLR 541 – and perhaps I should come to that, rather than anticipate it. We are only going to one paragraph in that reasoning, which was a paragraph where your Honour was grappling with, what the applicable standard on appeal is. Is it a correctness standard, or the standard involving a judicial discretion? In paragraph 46 of that case, your Honour discusses this Court’s earlier decision in ACCC v CG Berbatis Holdings, and says about halfway through paragraph 46:

There the conclusion of the primary judge which was the subject of appellate challenge was that certain conduct in which a corporation was found to have engaged answered the statutory description of “conduct that is unconscionable”. A submission to the effect that the evaluative character of that conclusion triggered application of the standard of appellate review applicable to an exercise of judicial discretion was unanimously rejected –

Notwithstanding the fact that there is some evaluation of the facts involved, and your Honour says at the end of that paragraph:

Like a common law duty of care, a statutory prohibition on conduct that is unconscionable posits a standard of conduct which, on proven facts, a person obliged to meet that standard either has met or has not.

We read that, putting that conclusion together with the discussion in Vetter, that the question of whether facts found contravenes section 21 has only one right answer. It either is unconscionable or it is not. It might be difficult, there might be an evaluation, there might be borderline cases involved, but ultimately it is a question that has only one right answer. If it has only one right answer, Vetter says it is a question of law. Accepting that some of the difficulties, if it is a fact-law distinction, unconscionability is on the law side.

BEECH‑JONES J: To pick up what I think is your opponent’s argument, which is the concept of the facts fully found, just mean the actual facts of the conduct, or does it involve some form of evaluation against a standard or a norm before you get to the conclusion of unconscionability?

MR DONAGHUE: Your Honour, in my submission, the evaluation that follows – the evaluation that reproduces the one, single, correct result – comes after the essential facts and circumstances have been identified, and involves a court – ultimately, a majority of this Court – dive in to find what the right evaluation of this conduct is against the standard. But otherwise ‑ ‑ ‑

BEECH‑JONES J: My question is: are we doing a jury role or a judge role when we do that?

MR DONAGHUE: In my submission, consistently with the Chief Justice’s analysis of Berbatis, you are doing a judge role.

GLEESON J: How does that fit with the analogy with the common law duty of care?

MR DONAGHUE: In the sense, your Honour, that – yes.

BEECH‑JONES J: That might have been a judge question, I cannot remember now.

MR DONAGHUE: That was what caused me to pause as well, your Honour. The distinctions, I fully accept, are not straightforward. But the question that is posed to your Honours really is – ultimately, a matter of statutory interpretation but informed by an endeavour to give effect to parliamentary intention – how this actually works in the case of people alleged to – corporate executives who have been intimately involved in contraventions of consumer protection legislation, including – specifically, in this appeal – the unconscionability standard.

If it be the case that, as our friends suggest, you need to subjectively know that the conduct is unconscionable because it being unconscionable is an essential element of the contravention, then what that means in a case like this is that you need to subjectively know how a court will ultimately characterise potentially quite complex conduct against a quite complex standard. As was pointed out by the Court in Rural Press, people just do not think like that, so they are unlikely to have subjectively thought in terms of the norm.

EDELMAN J: Mr Solicitor, the fact-law distinction was addressed in Collector of Customs v AGFA‑Gevaert, where this Court referred to the authorities that make the point that you are making, that an ordinary meaning of a word, or its non-technical legal meaning, is a question of fact, but then went on to say that such general expositions of a law are helpful in many circumstances but they lose a degree of their utility, when – as in the present case – the phrase or term and issue is complex, or the inquiry that the primary decision-maker embarked upon is not clear. Do you say that, in this context, it is necessary for the purposes of assessing accessorial liability to introduce this distinction between fact and law, even though in other areas it is now regarded as one that can create a minefield of difficulties?

MR DONAGHUE: I do say that it is necessary because Yorke tells us that the essential facts and circumstances have to be known and, in my submission, that phrase does not include a subsequent legal characterisation. But I do not say – I have two alternative pathways to the conclusion that unconscionability is not one of the essential facts and circumstances. Pathway one is that the word “unconscionability” in section 21 is not being used in accordance with its common understanding; it is a legal term.

As your Honour Justice Gageler said in Kobelt, it is an obscure English word, which centuries, if used by courts, have transformed into a legal term of art. In a particular context, it is 21 – I refer back to the passages from Justice Nettle and Gordon, and your Honour Justice Edelman in Kobelt about the infused by 22. So, you need to be interpreting the statute, and because you need to interpret the statute and apply it to the facts as found, it is a question of law. That is Vetter, 24 ‑ ‑ ‑

EDELMAN J: The point that I am struggling with, though, is that if one steps back from the overall answer, or the overall characterisation, of unconscionable and looks at the middle field – which is between the findings of what is, undoubtedly, or uncontestably, here, facts and the conclusion of unconscionable, there is an introduction of these social values. The social values are partly a question of law, on your argument – at least partly a question of law on your argument – but they are also partly a question of fact – or a fact of social norms and social expectations. So, is this not more one of those combined questions of law and fact, rather than just a question of law?

MR DONAGHUE: That is a possibility, your Honour. Although, ultimately, in my submission, what our friends say is the essential element is the unconscionability of the conduct. So, it is the outcome of all of that. There are, clearly, legal questions along the way. In my submission, the fact that, having gone through that process of applying the facts found at the statute produces only one correct answer means that, in our submission, one properly characterises the evaluation of the conduct against the norm as a legal question only.

My alternative is, as your Honour puts to me, that is a mixed questions, and that would be sufficient for my purposes because it is still not an essential fact, given the – and I have not dwelt on them – pathway through the reasoning process in Vetter, one does not need to know the law in order to contravene, and one cannot know that the primary contravention is unconscionable without knowing the law – it is impossible.

The reason that our friends have tried to substitute other contexts – taking advantage, et cetera – is that they know they are going to lose if their case requires them to know the law, but in my submission, you cannot know the primary contravention is contrary to section 21 without knowing the law, and that is why their argument is wrong.

GORDON J: So, of the two pathways, the better pathway you have outlined, and the second is the concept of unconscionability that is being posited is not a legal concept, and so they have substituted a term, or, in effect, sought to amend the statute – is one aspect of the argument.

MR DONAGHUE: Yes.

GORDON J: And then, the other argument is that if it is the legal term, then it is something which is contrary to what Rural Press says in 48, i.e., that it is not essential:

to know that those facts are capable of characterisation in the language of the statute.

MR DONAGHUE: I think that is fair, your Honour.

GORDON J: Thank you.

BEECH‑JONES J: So, in the hypothetical jury trial that I keep coming back to, you would say – or what the judge would tell the jury is if the Crown had proven these six facts, I direct you, as a matter of law, that would be unconscionable conduct.

MR DONAGHUE: That is right, because there is – that is the only available answer, if the jury finds those facts. I see the time, your Honour.

GAGELER CJ: Very well. We will take the luncheon adjournment.

AT 12.48 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

GAGELER CJ: Mr Solicitor.

MR DONAGHUE: Your Honours, can I start with a pre‑emptive defensive point. I said to your Honours that we had not given you the transcript in Rural Press because we thought that the Commonwealth Law Report summary of the argument was reasonable. Our friends are, I understand, going to hand the transcript to you, I do not know what is going to be said about it by way of reply, but when your Honours have it, can I ask you to note that we rely particularly on pages 30 and 31 of the transcript in support of the submission that I made. In particular, on page 30, the Chief Justice at line 1227 said:

GLEESON CJ: What was it that these people did not know that they needed to know to establish accessorial liability?

MR DOUGLAS: As we put it in our submissions, they did not know that the principal’s conduct was in engaged in for the purpose or had the likely effect of substantially lessening competition, as was in the market as defined.

Then Justice Heydon said:

But people do not think like that; only lawyers think like that.

That is the passage that I was referring to, our friends may make some different point of it. Before lunch, I was developing a submission that conduct, the proposition that the conduct of a primary contravener is unconscionable is not an essential fact in the Yorke v Lucas sense because it is the application of a legal standard to the material facts as found. Vetter at 24 to 25 says that is a question of law, and we say, because of that, it is not an essential fact.

I do maintain that submission – I am not withdrawing it – but I also accept that it introduces a level of complexity into this area of law that might not be thought to be wholly desirable. So, I emphasise that perhaps a simpler way of explaining the point is the way that we explained it in writing at paragraph 29 in our submissions in this matter – which is a paragraph to which Mr Hodge took your Honours yesterday afternoon. Can I ask your Honours to go back to it. There, the distinction that we draw is a distinction between knowledge about the existence of facts and the requirement to have formed a normative judgment about those facts.

GLEESON J: This is paragraph 28?

MR DONAGHUE: Paragraph 29, your Honour, beginning “First, the “knowledge” aspect” is properly understood to be concerned with the existence of facts, as distinct from a normative judgment about facts. We would say, a fortiori, a normative judgment about facts by reference to a statutory standard, because if the normative principle is found in a statutory standard it becomes very hard to differentiate from knowledge of a contravention of the law.

The appellants made a submission both orally and in writing in their reply at 6 to 8 which attributes to us the proposition that the distinction is between “facts” and “an evaluations of facts”. That is not the distinction that we draw. Sometimes a conclusion of fact does involve an evaluation against other facts. So, there is nothing wrong with needing to compare some facts to reach a factual conclusion.

EDELMAN J: Well, that is an inference. An inference is an evaluation, a conclusion of fact based upon an evaluation of other facts.

MR DONAGHUE: Based on other facts, indeed – or a conclusion of falsity might be because one fact is contradicted by other facts. But it is no part of my case to say you cannot – have to have knowledge of a fact that is reached by a process involving some evaluation. Our line – the distinction that we invite your Honours to draw – is between facts and normative evaluation of the facts. So, that may be a simpler way of describing the distinction that I am seeking to draw.

GAGELER CJ: Could the distinction also be stated, relevantly, for present purposes, as a distinction between conduct and circumstances on the one hand, and characterisation of that conduct in those circumstances as unconscionable.

MR DONAGHUE: Yes, I do not understand that to be materially different. Your Honours, all I want to do before concluding is to take your Honours to the relatively small number of cases that have considered the question now before the Court specifically in the context of section 21. There are not many. The first is Coggin v Telstar Finance Company (Q) Pty Ltd [2006] FCA 191, which your Honours will find in volume 7, tab 46, a decision of Justice Heerey. When your Honours have that, if you could turn to page 17, paragraph 72, which is at the bottom of page 17. Paragraph 72, Justice Heerey says:

It is not necessary for Mr Coggin to show that, at the time, Mr Cunningham personally characterised or recognised the facts constituting the contravention as unconscionable.

His Honour then relies on the paragraph of Rural Press to which much attention has already been directed. Then, following the quotation from paragraph 48, refers to Yorke v Lucas and the need to know “the essential matters”. Then, about halfway down that paragraph, under the quote:

the assessment of conduct as unconscionable or not under s 51AC –

or, we say, section 21:

may involve the consideration and weighting of 13 statutory criteria, and an infinite number of other criteria which appear relevant to the judge, it would be quite unworkable to suppose that there could be no finding of accessorial liability unless the individual, at the time of the contravention, considered the same factors, and gave them the same weight, as did the judge at the subsequent trial. Apart from anything else, the morally obtuse would have an underserved advantage.

That last sentence is accurate as a matter of fact, but it is not essential to the reasoning process that his Honour adopts. That case was noted as one of the authorities discussed by the Full Court in this matter at paragraph 313, but I do not need to take your Honours back to it.

Then there are the two Full Court authorities that Justice Gordon mentioned yesterday. If your Honours could go first to Colin R Price & Associates v Four Oaks [2017] FCAFC 75; (2017) 251 FCR 404, which is volume 7, tab 47. The relevant paragraphs are 88 and 89. This was a case where the unconscionable conduct of the company was conducted entirely through the two named accessories. Your Honours were taken to this paragraph, but we read it slightly differently to our friends. In 89, the two alleged accessories:

were personally involved in all stages –

of the company’s conduct, and:

each of them knew the essential facts that together constitute the contravention found.

They knew of the “vulnerability”, “poor bargaining position”, “unfair tactics”, and “pressure”, “taking advantage”, et cetera:

The appellants were not required to show that Mr Power and/or Mr Reynolds knew or recognised that the facts constituted unconscionable conduct –

And the authorities cited: Yorke and Rural Press at the same paragraph, again. So, the Federal Court, both in Justice Heerey at first instance and then a decade later in the Full Court evidently analysed Rural Press in the same way that we do: as supporting a proposition that there is no need for a subjective recognition that conduct can be characterised as unconscionable.

In the other case, Stefanovski [2018] FCAFC 31; (2018) 368 ALR 607, which is volume 8, tab 56, we accept that the court appears to have made observations that point the other way. Our friends read paragraph [71] to you, and I do not need to read it again, but it is really the words at the end. It is suggested that it would have been necessary in a case:

based upon a breach of a duty of good faith –

and I should say, I think my friend is right when he says it seems that that was a duty that was found in statute under the franchise code, rather than in contract. It is a little unclear, but it seems that is the case that:

the applicant would have to put to the respondents that they were aware of the obligation of good faith and the conduct on which they relied was in breach of that obligation.

Now, if one accepts that breach of an obligation of good faith is an evaluation against a statutory normative standard, then I would have to say that that is on the side of the line that I say does not have to be known, but we do observe a few things about that paragraph. One, it is plainly obiter. This was a case which not only had no contravention by the accessory been pleaded, but no primary contravention of an obligation of good faith had been pleaded, as you can see from the bottom part of paragraph [72]. So, there was a fundamental pleading problem, and ultimately the court found in paragraph [81] that no primary contravention had occurred.

BEECH-JONES J: Mr Solicitor, could this just be an example of the way in which the unconscionability was put in that particular case? So, you could have a case where the primary contravention incorporates either a state of mind or a breach of some external standard; that is, the ACCC could formulate its case against the primary contravener in that way, and in that case an accessory would have to have knowledge of the existence of that external standard, would they not?

MR DONAGHUE: Because the ‑ ‑ ‑

BEECH-JONES J: Because of the way it is put.

MR DONAGHUE: Because of the way it is put, yes. If there were to be – if I am understanding your Honour correctly – if there were to be a case that was put, such that ‑ ‑ ‑

BEECH-JONES J: You breach the industry ‑ ‑ ‑

MR DONAGHUE: ‑ ‑ ‑ essential fact, was – I am not adding to what I have said to your Honour, I agree.

BEECH-JONES J: Yes, like an industry code.

MR DONAGHUE: Yes.

BEECH‑JONES J: Yes. Then, the accessory will say – well, the accessory might need to know that there is an industry code, if that is the way the ACCC puts its case.

MR DONAGHUE: Because it is coming in via 22(1)(g) as part of the essential factual matrix. I think that is ‑ ‑ ‑

GORDON J: It just is an essential fact; the essential fact of the case by the Commission is that it knew the code applied because it was in the industry, and it breached it.

MR DONAGHUE: Yes, I accept that; that it would be possible to formulate a case in a way that would bring that in, and if that be so, then the paragraph might sit comfortably with the other authorities that I have pointed to.

EDELMAN J: How do you treat “reasonableness” – absence of reasonable grounds, or a requirement like that? Is that an issue of characterisation, or an issue of facts or circumstances?

MR DONAGHUE: Your Honour, I am not sure I can give a one‑size‑fits‑all answer to that question, because my submission involves – if I articulate the line in the way I tried to a few moments ago – evaluation against a statutory standard. There might be some contexts in which the question of whether something is reasonable or not – I was going to say is a factual inquiry, it seems to be intuitively right, but I cannot think of an example as I sit here.

EDELMAN J: Because it is a classically jury question.

MR DONAGHUE: Yes.

EDELMAN J: That is not something that would be taken away from the jury.

MR DONAGHUE: No, that is why, intuitively, it seems that it must be the case that it sometimes would be a factual question that would need to be known, but I do not think I can answer it completely in the abstract. One of the submissions that we urge upon the Court is that, while I appreciate that, to some extent, any principles the Court articulates in this case would be generalisable, as the Federal Court has acknowledged, it is one thing to say the principles are generalisable and that the Yorke principle applies equally to all contraventions, but what the essential facts or matters are that need to be known do need to be carefully analysed in the context of each possible standard that might be being contravened. So, it is difficult to answer your Honour’s questions in a way that would ‑ ‑ ‑

EDELMAN J: Well, the example the appellant gives is absence of reasonable grounds in the context of a misrepresentation, or misleading or deceptive conduct as to the future.

MR DONAGHUE: And that inquiry, I think, your Honour, would often be properly characterised as a factual one. What was known to the person at the time that they made the representation as to a future matter, were those things that were known, did they provide reasonable grounds for the statement that was being made?

Your Honours, those are the only cases that have applied these principles, but they have applied them, in my submission, entirely consistently with the way that we read Rural Press and with the analytical approach that we invite the Court to adopt in differentiating between facts and circumstances that must be known and the characterisation thereof, or the evaluation against a norm. We submit, therefore, that there is no deficiency in the Full Court’s conclusion by reason of the fact that the ACCC did not set out to prove that Mr Wills knew that his conduct was unconscionable. They did not set out to prove that because they did not need to in order to establish accessorial liability.

Unless the Court has any further questions, I would invite the Court to invite Mr Bigos to complete the ACCC’s case.

GAGELER CJ: Thank you, Mr Solicitor. Yes, Mr Bigos.

MR BIGOS: Your Honours, I wish to advance two propositions. First, Mr Wills’ knowledge of the essential facts and circumstances dated back to 7 September 2015 and did not begin only from 20 November 2015, as the Full Court found. That is the first proposition and that is the subject of our notice of contention filed in each appeal.

The second proposition is, if your Honours are against us on bringing back the date of knowledge, there was sufficient conduct by Mr Wills from 20 November 2015 onwards to amount to being concerned in, or party to, the contravention. That is the participation element, and this is responding to Mr Wills’ second ground of appeal.

Dealing with the first proposition first, if I can take your Honours to the Full Court’s decision at paragraph 338 – it is on pages 356 to 357. There, the Full Court set out the five essential matters that rendered the College’s system of conduct unconscionable. Their Honours begin at the top of page 357:

the College knew of the risks of agent misconduct –

that is the first one. The College knew of the “unwitting and unsuitable” student risk, that is the second. The third is:

the College knew that the outbound QA call procedure and the campus driven withdrawal process were important safeguards –

The fourth is:

to counter declining enrolment and declining revenue, brought about by agents referring students to other VET providers, the College implemented the enrolment process changes –

And then the fifth is:

the College knew, or ought to have been aware, of the immediate consequences of the changes –

Now, their Honours adopted the trial judge’s findings on all of those except for – the only finding that was disturbed was in relation to the timing of Mr Wills’ knowledge of the third matter, that is, the important safeguards, being the QA call and the campus driven withdrawal process. That can be seen in paragraph 340. Their Honours say:

However, we do not consider that the primary judge’s findings support a conclusion that, as at 7 September 2015, Mr Wills had a sufficient awareness of the extent to which the outbound QA call procedure and the campus driven withdrawal process were important safeguards to protect the interests of students who were enrolled unwittingly or who were unsuitable . . . This is an important fact that rendered the College’s conduct unconscionable.

Their Honours then say, in the final two sentences:

Certainly, it can be inferred that Mr Wills had some awareness of that fact by virtue of the Sero campus investigation. However, we consider that to be an insufficient basis to infer that Mr Wills had a real appreciation, as at 7 September 2015, of the full consequences of the changes.

Their Honours go on to find in the following paragraph that Mr Wills’ knowledge of that species of the contravention attained only from 20 November 2015.

STEWARD J: Mr Bigos, can I ask you, we are asking the question of when Mr Wills acquired knowledge of certain things ‑ ‑ ‑

MR BIGOS: Of that element only.

STEWARD J: Of that element, but the judges below say he had some awareness. What is the difference between “some awareness” and “sufficient awareness” in the context of having knowledge? He either knew or he did not.

MR BIGOS: Yes. It seems that the Full Court majority said he had “some knowledge” but not “sufficient”, not ‑ ‑ ‑

STEWARD J: Do we know what the deficiencies were in that knowledge?

MR BIGOS: There is no explanation by the Full Court other than those last two lines in paragraph 340. In our submission, in respect of the knowledge on that element, for the two‑and‑a‑half‑month period, we say the Full Court made two errors. One is their Honours overlooked other matters which Mr Wills had come to know by 7 September. The second error is understating the impact of the Sero audit findings. Those are the two errors we say their Honours made.

The first error is that their Honours refer to the Sero campus audit – the last two sentences – in isolation, without taking into account the additional matters that Mr Wills had come to know as at 7 September. These additional matters were the subject of findings that had been made by the primary judge, were not overturned on appeal, supported the primary judge’s finding of knowledge of this element – that he knew the importance of the safeguards as at 7 September – but were overlooked by the Full Court.

A convenient place to start is the primary judge’s finding of knowledge on this element, which is at paragraph 564, page 151. This is his Honour the trial judge’s conclusion on this matter. His Honour says at paragraph 564:

In respect of the abolishment of the outbound QA call and campus driven withdrawals as mechanisms to mitigate CA misconduct risk and unsuitable enrolment risk (SOC [136]), given the findings at [184]-[186] and [282] above, I infer that Mr Wills was aware that –

these:

would remove mechanisms to mitigate CA misconduct risk.

GORDON J: At what time?

MR BIGOS: His Honour does not refer to a time in this particular paragraph.

GORDON J: Thank you.

MR BIGOS: But the Full Court take that mean for the entire period – entire misconduct period, from 7 September onwards. Those paragraph numbers are important: 184 to 186, they refer to the Sero audit, which I will come back to, and 282, which I wanted to focus on for a moment. Paragraph 282 is the cross‑reference. If your Honours go to that paragraph, which is at page 82, it follows paragraph 281, where his Honour sets out – there is a reference there in the third line to the:

CA misconduct risk and the unsuitable enrolment risk –

the fact that:

The college’s officers knew, in addition, that the abolition of campus driven withdrawals would remove an important safeguard –

and there is that line about the getting “no benefit” that Justice Gleeson referred to earlier. So, what his Honour says at 282 is that:

Mr Wills also had knowledge of all those matters. See [188], [204] and [220] above.

If one goes to those paragraphs, 188 refers to the Sero audit – I will take your Honours to 204. Paragraph 204 is at page 63, and that is the finding that Mr Wills knew the existence of the CA misconduct risk. This is a finding that was made by the primary judge, was upheld by the Full Court majority, and is not challenged. Paragraph 204 is then cross‑referenced into paragraph 282, which is then cross‑referenced into paragraph 564, so that is one of the matters on which the primary judge based his finding that there was knowledge at the relevant time.

In relation to your Honour Justice Gordon’s question, the first sentence of paragraph 281 demonstrates that that knowledge was “by September 2015”.

GORDON J: Thank you.

GLEESON J: The heading is “AT THE END OF THE EARLIER PERIOD”.

MR BIGOS: Yes. I next wanted to take your Honours to paragraph 220, where the primary judge finds that Mr Wills had knowledge of the unsuitable enrolment risk. That is paragraph 220, the second line there. Again, that is a paragraph that is referred to in paragraph 282, which is cross‑referred to in 564, to support the judge’s finding of knowledge. Mr Wills knew those two risks. In addition, if one goes to paragraph 282 itself, one can see around the middle of the paragraph:

He was certainly aware that the enrolment and withdrawal processes were going to be changed, and I infer that he was aware of the essential elements of those changes –

So, there is a finding there that Mr Wills was aware, as at September 2015, of the essential elements of the two changes. Again, a finding that was upheld by the Full Court majority and is not challenged. There is a further finding at 284 – albeit not cross‑referencing to 564 – where his Honour says:

the enrolment process changes were clearly driven by an analysis on the part of the College and Mr Wills.

There is a paragraph there about the driver of those changes. So, those facts in combination, together with the Sero audit that I will come back to, demonstrate, in our submission, that by 7 September 2015, the importance of the QA call and campus driven withdrawals as safeguards for students were known by Mr Wills. That is consistent with the primary judge’s finding at 564 and inconsistent with the Full Court’s majority decision at 340.

Mr Wills knew that there was a misconduct risk – the risk that students who had been subject to CA misconduct would be enrolled, students would be subject to unsuitable – unsuitable or unwitting students would enrol, the QA call and campus driven withdrawals were being removed through the process changes in order to motivate course advisors and, in turn, increase enrolments. There are also the results of the Sero audit, which showed what would happen if such changes occurred. It follows, in our submission, that he must have known by that time that the QA call and campus driven withdrawals were important safeguards, and it was wrong of the Full Court to ignore that larger mosaic of what Mr Wills knew as at that time.

The second error, we say, the Full Court made in paragraph 340 is in those final two sentences, where their Honours understate, in our submission, the effect of the Sero audit findings on Mr Wills’ knowledge. Your Honours, the Sero audit was an audit of the Sero campus – that was a separate co‑provider campus that delivered the College’s online courses. The audit – or campus health check, it was called – had occurred in late 2014 and the findings about the Sero audit were summarised by the Full Court at 323, which is at page 347 of the materials. At paragraph 323(a), their Honours refer to findings made by the primary judge at 181 to 188. They say in the fourth line, at 323(a):

Sero demonstrated what would occur if a VET provider outsourced the recruitment of students to agents, where the agents took charge of testing for language literacy, and numeracy –

Pausing there, that is, essentially, the absence of that safeguard of the QA call – so if that was removed, that is what would occur:

and where there was no campus driven withdrawal process for enrolled students who were uncontactable –

Pausing there, that is the absence of the safeguard of campus driven withdrawals. So, those two facts, if they were missing, the College knew what would happen because that was demonstrated through the Sero audit:

some 85% of enrolled students passed the first census and incurred a VFH debt but never accessed their learning management system.

And their Honours refer with approval to paragraphs 181 to 182 of the primary judgment. Sorry for jumping around, but if one goes to those paragraphs, 181 to 182 of the primary judgment – that is at 57 to 58 of the materials – there is detail there as to what the report of the audit showed. For example, 181(2):

Although language, literacy and numeracy (LLN) testing of prospective students was mandatory, the marking agents were conducting the testing at enrolment with it thus being questioned whether the students completed the LLN tests themselves.

And (3):

In contrast to the college’s own campus driven withdrawal policy, Sero was progressing students past their first census date –

And in the last line:

no campus driven withdrawal process was implemented.

Mr Wills himself was informed at least three times between 14 December and 15 February. So, some months before the conduct period commenced, he was informed at least three times of the issues identified in the Sero audit, and that can be seen from paragraph 184 and following of the primary judgment. Just taking your Honours to 184:

On 15 December 2014, a meeting was held –

including where Mr Wills participated. In the third line:

The minutes record that Mr Cook reported on the Sero CHC –

campus health check:

including Sero “not doing campus driven withdrawals and just processing through census regardless” and identifying that with the college’s own “rigorous QA process” with its “centralised QA point with the Admissions Team”, the students would never have been put through.

So, there was a comparison made between what happened in Sero and what is happening with the College’s own “rigorous QA process” which had existed at the time.

STEWARD J: I am sorry, Mr Bigos, what paragraph was that?

MR BIGOS: That was paragraph 184 of the primary judgment.

STEWARD J: Thank you.

MR BIGOS: And that was the first instance that Mr Wills was notified of the Sero audit, then 185 and 186 are other instances where he was notified. This was brought to his attention, and the primary judge found at 188 that:

The relevance of the above events in relation to Sero is that they demonstrate the awareness of not only the college but also the Advisory Board (including Mr Wills for Site) of the importance of a rigorous QA process with respect to enrolments to ensure that unsuitable students are not enrolled and a campus driven withdrawal process to ensure that if unsuitable students are enrolled they are withdrawn prior to incurring a VFH debt.

His Honour focused there on those matters demonstrating the importance of both the QA process and the campus driven withdrawal process. Going back to the Full Court’s decision at 323, which is on page 347. At the bottom of page 347, their Honours quote that passage in the primary judge’s judgment at 188.

That analysis is at odds with the Full Court’s finding at 340 that the Sero audit did not give enough of an appreciation – did not give “a real appreciation” to Mr Wills about the likely consequences of the process changes. As your Honour Justice Steward said, there was no real explanation for that in their Honours’ reasoning. So, in our submission, that finding is wrong, and the notice of contention should be upheld, such that knowledge goes back to 7 September – Mr Wills’ knowledge goes back to 7 September.

If we are right on that, then Mr Wills’ second appeal ground goes away, because there is no question that there was a matching of knowledge and conduct in the period from 7 September 2015 onwards. If we are wrong ‑ ‑ ‑

GAGELER CJ: Including after 20 November?

MR BIGOS: Yes. It is sufficient for us to establish that there was a matching of knowledge and conduct. So long as there was a matching of knowledge at some point, he was involved. That is enough to establish his liability.

BEECH-JONES J: Was there some extra conduct between 7 September and the date he became CEO?

MR BIGOS: There was conduct between 7 September and 20 November. That has not been the focus of Mr Wills’ second appeal ground, because he is contesting – he says there was conduct, but not knowledge up to 20 November ‑ ‑ ‑

BEECH-JONES J: I understand that.

MR BIGOS: ‑ ‑ ‑ and then there was knowledge without conduct after 20 November. We can find for your Honour the references to the conduct during that period.

STEWARD J: There are those findings at 292 in the Full Court regarding attending a management meeting on 16 September:

Mr Wills closely followed the details of the matters that were discussed –

MR BIGOS: Yes. And similarly on 15 September, receives an email and then attends a management meeting on 16 September. Those three dates are at paragraph 292. I think there are some meetings ‑ ‑ ‑

STEWARD J: Paragraph 294.

MR BIGOS: Yes, in October as well. So, there is certainly conduct during that period. Now, we say, in our submission, that from 20 November onwards – so this is Mr Wills’s second appeal ground – there was sufficient conduct to implicate Mr Wills in the College’s contravention, and there are two propositions that we wish to advance in relation to that. Firstly, Mr Wills becoming the acting CEO on 20 November 2015, in the circumstances in which he did, was sufficient to associate him with a contravention. And, secondly – and in any event – Mr Wills did engage, post‑20 November 2015, in relevant conduct.

At the outset, I just want to emphasise that the relevant test here for conduct is as we set out in our submissions at paragraph 25. It is not, as Mr Wills suggests, positive conduct. That is not the test. Rather, it is participation in, assent to, being implicated or involved in, or having a practical connection with, the contravention. That is the test on the authorities.

Going to the first proposition, Wills becoming the acting CEO, in taking up the position in the circumstances in which he did, he sufficiently associated himself with the contravention. Can I take your Honours to the primary judgment at 567, which is at page 151 of the appeal book. The primary judge finds:

Mr Wills also injected himself –

So, he pushed for it:

He injected himself into the running of the college as acting CEO against the wishes and advice of Mr Cook. This decision reflects the culmination of his increased involvement in the affairs of the college.

Turning to 568, on the next page, the primary judge found, around the third line:

in taking up the acting CEO role ‑ ‑ ‑

EDELMAN J: So, what date was that from which he injected himself into the running of the college? Was that from the beginning?

MR BIGOS: He became acting CEO on 20 November.

EDELMAN J: So, that was from the moment that he became acting CEO.

MR BIGOS: Yes. And 568 sets out the purpose of him becoming CEO. His Honour says:

in taking up the acting CEO role for a short period of time –

Because he stayed in that role for two months:

Mr Wills was in fact devoting much of his time and energy to the college because he wanted to improve its financial situation and manage changes that he already knew had been planned and were being implemented.

And then his Honour notes that:

the financial success of the college was very significant to the performance of Site overall and therefore of key concern to Mr Wills at all times.

At 573, there is then a finding that Mr Wills was:

a key driver of the changes at the college to ensure that its financial performance improved.

None of these findings were challenged, and the Full Court referred to them at paragraph 127 of its decisions on page 274.

STEWARD J: That third sentence in 573:

There was nevertheless enough detail reported to him and which he learnt in the various meetings that he attended such that he knew that the enrolment and withdrawal process changes that were introduced had the effect of weakening the protections –

How is that reconcilable with not having sufficient knowledge?

MR BIGOS: Yes, we accept that. At paragraph 127 of the Full Court – just to show your Honours where the Full Court addresses this – their Honours say that:

Mr Wills was involved in the unconscionable conduct through his management and oversight of the College at all material times –

Their Honours refer to the period when he was acting CEO in the fourth line. Then their Honours say:

During 2015, Mr Wills had increasing involvement in the College’s affairs. He was a key driver of changes at the College to improve its financial performance and while he was not the architect of the enrolment process changes, the relevant decisions were reported to him and he oversaw their implementation; he was associated with the decisions and was a participant in key aspects of it –

They cross-reference into various findings made by the primary judge. So, Mr Wills’ role when he was acting CEO was the culmination, as his Honour expressed – the trial judge – of his increased involvement in the affairs of the management of the College. He was the person that oversaw the implementation of the changes, and, in our submission, those are sufficient findings of conduct to implicate him in the contravention. He was the senior executive in the College responsible for running it during the time when the changes were implemented, and he had knowledge about the essential elements of the contravention. Having had that knowledge, which he had acquired, on the Full Court’s reasoning, by 20 November, not only did he not turn away, he ramped up his involvement in the College by assuming the role of acting CEO.

So, this is a very far case from the cases referred to by our friends of a mere holding of office. He did not merely happen to be a director. He was not a silent observer, or had some sort of passive presence. This is not an ASIC v Maxwell‑type case, as our friends referred to in their submissions at paragraph 60. This was not merely someone who happened to be director, but he was the senior executive who became involved in the management and oversight.

I then wanted to turn briefly to our alternative basis for finding conduct post 20 November 15, and that is, that in any event, Mr Wills did engage in what our learned friends refer to as “positive conduct” – to borrow their phrase. We point to at least three findings of this type of conduct which are all examples of his management and oversight of the College post‑20 November 2015.

First of all, if your Honours can turn to paragraph 371 of the primary judgment, it is on page 103. His Honour refers to an updated checklist which was sent on 24 November 2015, so shortly after Mr Wills became acting CEO. It was copied to Mr Wills. Now, this was an updated admissions checklist:

The email records that the checklist had been “updated after feedback received from Blake.”

Mr Wills. So, he provided feedback on the admissions checklist which was part of the process changes. His Honour then concludes at 371:

This indicates the involvement of Mr Wills in the intricate details of the enrolment process, presumably in his capacity as acting CEO.

This fact is referred to in our submissions, at paragraph 12 of our submissions in‑chief. Second, I wanted to take your Honours to paragraph 574 of the primary judgment, which is on page 153. In the last three lines, the last sentence, their Honours say:

Mr Wills then oversaw –

The “then” is by the time he took over as acting CEO. You can tell that from the end of the fourth line:

Mr Wills then oversaw the process of continuing to progress those students through their first and subsequent censuses, even after the Commonwealth introduced the VFH cap, and the college claiming and retaining revenue in respect of those students.

The Full Court referred to that finding at paragraph 127 of their reasons. Again, this finding was not challenged on appeal and we know from paragraph 568 that I took your Honours to earlier of the primary judge’s decision that the appointment as acting CEO was because Mr Wills wanted to improve the financial situation at the College and to manage the changes.

The increase in student numbers was being achieved under his reign or authority by the progress of students through census. As soon as a student progressed through census, that resulted in revenue to the College. So again, Mr Wills was not merely a passive director who happened to be there at the time, but he was in the thick of it. He was appointed as acting ‑ ‑ ‑

GORDON J: What do we take from the previous sentence and anything in that paragraph?

MR BIGOS:

In particular, by the time he took over as acting CEO, Mr Wills knew that substantial numbers –

Well, we would say that the knowledge coupled with his – the knowledge contributed to a finding that there was conduct. Their Honours in the Full Court said that knowledge and conduct in this context cannot be divorced. When assessing conduct, one does that against the background of what is known.

The third finding we point to is, if your Honours go to paragraph 552 of the primary judgment, there is a finding that while he was acting CEO – so, this is page 148 of the appeal book at paragraph 552:

Mr Wills was acting CEO in December 2015 through to 20 January 2016. In that period, the Commonwealth imposed a cap on total

VFH revenue for 2016 and the college’s enrolments and revenue continued to increase. Under Mr Wills’s leadership, the college ceased enrolling students for 2016 but continued to claim revenue in respect of students who had enrolled in 2015.

Mr Wills writes correspondence about this, which is at paragraph 401 of the primary judgment. He sets this out in an explanation as to what the College was doing. Your Honours can see at page 109, paragraph 401:

the college ceased enrolling students . . . on 18 December 2015. It was explained by Blake Wills in correspondence . . . that the college would not enrol any students in 2016 as there were enough students continuing to study in 2016 –

who had already been enrolled:

who would reach census dates and thereby earn further VFH revenue for the college to use up the entire loan cap.

It was under Mr Wills’ leadership that the College continued to claim revenue, even though it had ceased to enrol students is found by the Full Court; 126(d) reflects that. This is Mr Wills referring to and acknowledging the College’s ongoing and anticipated future claiming and retaining of revenue, all done under his leadership as acting CEO.

It was within his power to make the decisions to stop enrolling students, and to continue to claim. Our learned friends criticise the pleaded case. In our submission, on a proper reading of the pleading, each of these matters are within the case that was brought by the ACCC. They are things that Mr Wills did or failed to stop while acting in the role of CEO. These are not simply things that happened because he happened to be acting as CEO, they are all things that he did while acting in the role of CEO as part of his management and oversight of the College, and those are words that were used in paragraph 137(a) of the pleading. We use the words, his management and oversight of the college at all material times. In our submission, those matters are instances of conduct that are all post‑20 November 2015, which support a finding of Mr Wills’ involvement.

Those are my submissions, if your Honours please.

GAGELER CJ: Thank you, Mr Bigos. Yes, Mr Hodge, do you have a reply?

MR HODGE: Yes, your Honours, three points. The first point is in relation to the notice of contention. I just wanted to direct your Honours to the relevant paragraphs of the primary judgment which illustrate the problem that the Full Court was dealing with, which is the reason why the ACCC submissions should not be accepted. If your Honours take up the primary judgment in the amended core appeal book, and go first to page 59, and paragraph 188, you will see this concludes the section in which the primary judge was considering the significance of the Sero investigation and audit. You can see at 188 it says:

The relevance of the above events in relation to Sero is that they demonstrate the awareness of not only the college but also the Advisory Board –

Which includes Mr Wills. So, in that paragraph the primary judge was directly addressing what knowledge arose from Sero. Then if your Honours go to page 68, paragraph 223, you will see his Honour makes the finding that:

It is not established on the evidence that Mr Wills was necessarily aware that the poor conversion rate was because of the high proportion of students who were uncontactable and who were therefore subject to campus driven withdrawal.

That finding is significant, and the reason that it is significant is that the reason that campus driven withdrawal has a significance as a safeguard in this case is because if campus driven withdrawal existed then students who are uncontactable – that is, fitted within the two categories that the Commission was saying were the people who were subject to the possible risks – they would be automatically withdrawn. So, the factual detail depends upon this matter, and then when your Honours come to paragraph 282, which is on page 82, to which I think – this will now be the third time you have taken to this today – but you see in the first sentence, it says:

Mr Wills also had knowledge of all of those matters.

And then it says “See”, and it refers specifically to 188, so calling back to that Sero finding, and then says:

It is not established on the evidence that Mr Wills, unlike the college’s officers, was necessarily aware that the poor conversion rate was because of the high proportion of students who were uncontactable and who were therefore subject to campus driven withdrawal.

And his Honour refers back to his finding at 223. It is that specific finding of what he did not know that is the problem that then the Full Court is overcoming when they then find, well, actually he did have knowledge as at 20 November 2015 of the essential matters because they are finding that by then he understands the significance of this, and that is why, in our submission, the ACCC’s notice of contention cannot succeed.

There is one other observation I should make about that, which is it is later in the judgment, as your Honours have been taken to. That is, the primary judge goes through and deals with these specific findings of knowledge as against Mr Wills – and your Honours have seen those, that is in the 500s. One of the issues that the Full Court had to grapple with was the absence of temporal consideration in relation to most things but particularly knowledge, so that part of the problem was – and this was, as your Honours know, not something that the Full Court necessarily blamed the trial judge for but blamed the ACCC for – that the ACCC did not draw temporal lines and deal with things in that way.

In fact, what is happening when it comes to knowledge, and what the Full Court is doing, is not that they are, in fact, in a true sense reducing the findings of the primary judge. What they are actually doing is taking those findings and putting them within the context of the necessarily chronological nature of time to say at what point in time does he actually know the things he needs to know. The second point in reply is in relation to Rural Press. Could I ask your Honours to take up the transcript of the first day of argument of Rural Press.

BEECH‑JONES J: Just before you do, Mr Hodge, do you accept that if the notice of contention succeeds, your ground 2 falls away?

MR HODGE: Yes.

BEECH‑JONES J: Thank you.

MR HODGE: If your Honours have the transcript and go to page 26, at line 1014 is where Mr Douglas’ submissions about accessorial liability begin. Can we direct your Honours to some parts of that. If you go over the page, to page 27, you will see at line 1081 that Justice Heydon said:

Mr Douglas, do you challenge that last sentence, beginning “I do not consider it is necessary for the ACCC to demonstrate”?

Then, Mr Douglas says they do not challenge any factual findings. Then, you will see the exchange that then follows down to line 1095. Then, if you come over the page, to page 28, after it appears that a substantial part of the reasons have been read out, you will see Justice Gummow says:

Mr Douglas, can we just look again for a minute at your submissions in‑chief?

Could I invite your Honours to read from line 1143 and then over the page to line 1167? You will see what has happened is up to this point, then – and Mr Douglas agrees at 1169 – the questioning from Justices Heydon and Gummow have eliminated paragraphs 38, 39 and 40 of the submissions. Then, at 1179, they then begin on paragraph 37, and Justice Hayne joins in, and the consequence then is that, in effect, the whole of that submission gets seemingly abandoned, and Mr Douglas then reframes the submission.

If you come over the page to the part that our friends referred to, on page 30, at line 1230, you can see the way in which the submission is re‑put is to say it is about an effect of substantially lessening competition in the market as defined, and if your Honours come over the page to page 31, and could I invite you to read from line 1250, part‑way through Justice Heydon’s question, where it begins:

What Justice Mansfield –

who was the trial judge, and then through to line 1276, the conclusion of the observation by the Chief Justice.

GAGELER CJ: Can you just let us in to the punchline. Where are we going with all of this?

MR HODGE: The point of this is to say what appears to happen is whatever the submission is that was being made by Mr Douglas is reduced, at this point on page 31, to something that is about knowing that it is in a market, which is the submission that I made earlier. It is not about understanding the characterisation of it in the terms of the Act as, to use our friends’ expression, the norm of substantially lessening competition. Then, when you go further over the page, to page 32, after the Court returns from the luncheon adjournment, at line 1304 to 1310, it appears that what then happens is Mr Douglas further reduces what is the nature of the submission to something that has been put in their written reply.

GAGELER CJ: Well, do we know what that is?

MR HODGE: No.

GAGELER CJ: Well, it is not very useful then.

MR HODGE: The point we make is once you work through this, trying to understand what it is that is put, in our submission, if you also add that to the particular things raised in the Full Court and the way it is put in this
Court in the judgment, it is not about something to do with the characterisation of something in accordance with a norm, it is about this issue, confused as it is, either about whether Yorke v Lucas requires knowledge of the contravention or, alternatively, about whether or not it requires knowledge of a market in the way in which it is defined for the purposes of the proceeding.

Our point, then, is whatever Rural Press is dealing with in terms of an argument, which is confused – that is, the argument is confused – it is not something that precludes the proposition or determines the proposition that we put in this case. The last point we make in reply is this. The way in which the submission was put to your Honours is that the normative judgment is not an essential matter for a contravention of the unconscionable conduct prohibition.

The difficulty, in our submission, with treating this as something that is a mixed question of fact and law, and therefore something to be removed away from what needs to be understood by the person who is said to be an accessory, can be looked at by considering it in this way. The reason that you have to have knowledge as an accessory, or a reason, is so that you are also able to intentionally associate yourself with whatever the contravention is.

If this reasoning was right, that this issue of normative judgment gets removed from what the thing is that you have to know and therefore the way in which you have to intentionally participate, the consequence is that you could have a positive belief that the relevant conduct is within the societal norms of acceptable commercial behaviour and yet, nevertheless, so long as you have done some act that associates you with the conduct and you are aware of all of the facts that the Commission says gives rise to the, what they say is, the pure legal question to be decided by the court, then nevertheless you can be found to have intentionally associated yourself with the contravention. That, in our submission, is inconsistent with the principle that underlies Giorgianni.

Those are our submissions, your Honours.

GAGELER CJ: Thank you, Mr Hodge. The Court will reserve its decision in this matter and will adjourn until 10.00 am on Tuesday, 13 February.

AT 3.14 PM THE MATTER WAS ADJOURNED