Tuesday, 24 August 2021

Phoenix Institute acted unconscionably and misled students

Whilst this a good outcome, I wonder why the ACCC is continuing with the case for penalties and other orders against two companies which went into liquidation ages ago (which was probably not entirely unexpected given the name of one of the companies was the Phoenix Institute?)

The Commonwealth has already cancelled the debts of eligible students enrolled by Phoenix, so consumer redress has been achieved.

Unfortunately, the ACCC did not take legal action against any of the individuals behind the Phoenix Institute.

Therefore, declarations, injunctions, penalties and other orders against these two companies will serve no practical purpose.

I also note the recent changes to the Commonwealth Regulator Performance Guide issued in July 2021 which includes new guidance under Principle 2 - namely that Commonwealth regulators must take into consideration the "cost effectiveness" of regulatory action - ie:

"Adopting a risk based and data driven approach means regulators:
· consider the risks, cost effectiveness and impact of regulatory action, both before and after the regulatory action has commenced"

It may be time for the ACCC to drop this one - no point spending taxpayer's money to secure a phoenix fine against the Phoenix Institute!

Class Action Forum 2021

 For anybody interested in class action law in Australia I would strongly recommend the following Podcast entitled "Class Actions: Capital, Regulation and the Public Interest" hosted by the Australian Academy of Law and the Law Council of Australia.

The introduction by John Sheahan QC is a classic as he charts the inconsistent decision making and government interventions in the class action field over the last few years.

I would also recommend you listen carefully to Jason Betts' presentation. Jason Betts is from Freehills and is probably the leading class action defence lawyer in the country. I particularly liked his subtle use of language - ie

(1) referring to an analysis of class action activity as a "diagnosis" which seemed to me to be suggestive of the idea that class actions are some type of disease;

(2) referring to the fees charged by litigation funders as an "extraction" which sounded a bit like they are pulling people's teeth out - maybe defence law firms are doing their class action defence work on a pro bono basis rather than charging (extracting?) $800 plus an hour?

(3) asking the question whether the class action system is being used by plaintiff lawyers as a mechanism for the recovery of compensation for aggrieved consumers or rather as a launching pad for the generation of significant profits from the legal system - it seems to me that defence lawyers are very well compensated for their work (generating significant profits) particularly when you consider that they are not taking the same significant financial risks as plaintiff firms and litigation funders in running such claims on a no win no fee basis; and

(4) constant disclaimers that what Jason has just said or is going to say about class actions is not meant in a "pejorative" sense - now, I wonder why we would suspect that?

I strongly recommend the Podcast.

Tuesday, 10 August 2021

ACCC accuses Telstra, Optus and TPG of misleading consumers over maximum NBN speeds

The ACCC's sounds pretty mad about this case which involves allegations that Telstra, Optus and TPG's made false or misleading representations in their promotions of some 50Mbps and 100Mbps NBN plans. As stated by Sims:

"We've lost patience here. And we think it should be taken to court. And we'll be seeking very high penalties."
I suspect the ACCC will be pressing for multi-million-dollar fines, most likely making an argument for a 10% of turnover penalties against all three respondents. These could be the biggest penalties ever ordered under the ACL if the ACCC's likely arguments on penalties are accepted by the Court.
There is also an issue as to whether the companies complied with their earlier undertakings: Sims said:
“We are very disappointed that these companies do not seem to have taken seriously the undertakings they gave to the ACCC.”
On the undertaking point, it seems to me that part of the blame for non-compliance falls on the ACCC for not including more rigorous reporting obligations in the undertakings and requiring that compliance with the obligations be verified by an independent reviewer. The undertakings are clearly defective in both of these respects.