Hc sets the scene for corporate misconduct

The High Court of Australia has delivered a decision that directly addresses how Captain Cook College operated within the VET FEE-HELP system, and who can be held responsible when a corporate system produces widespread consumer harm. In dismissing the college’s appeal, the Court confirmed that Captain Cook College’s recruitment and enrolment model - which resulted in thousands of students incurring substantial VET FEE-HELP debts with little or no educational benefit - constituted systemic unconscionable conduct under the Australian Consumer Law (ACL).

The Court also clarified that corporate accountability may extend beyond the legal entity itself.

Where senior executives and managers have oversight of systems that produce harmful outcomes, and where they have knowledge of the factual circumstances that make those systems harmful, they may be personally liable even if they did not directly participate in the misconduct.

At its core, the case addresses a longstanding regulatory problem: how to respond when consumer harm is produced not by a single rogue actor, but by a business model that predictably generates detriment.

By endorsing a systems-based approach to unconscionability and confirming that executives with visibility over such systems may be personally liable if they know the essential facts, the High Court has established a significant precedent.

Background

Captain Cook College operated within the VET FEE-HELP loan scheme, relying heavily on commissioned recruiters to generate enrolments. Evidence in the proceedings established that recruiters used high-pressure sales tactics and misleading inducements, including the offer of “free laptops,” when targeting prospective students.

Internal safeguards designed to confirm student suitability and protect against inappropriate enrolments were removed to increase enrolment volumes. As a result, the college’s revenue from Commonwealth student loan payments increased substantially, despite many students receiving little or no vocational benefit from their courses.

By endorsing a systems based approach to unconscionability and confirming that executives with visibility over such systems may be personally liable if they know the essential facts, the High Court has set a significant precedent. The decision establishes that oversight itself can attract legal responsibility, and that courts will scrutinise how corporate systems are designed, incentivised, and allowed to function when assessing both corporate and individual liability.

legal considerations

The central legal question concerned whether systemic unconscionable conduct could be established through the operation of corporate systems rather than through proof of specific acts of dishonesty or direct financial gain. Historically, prosecutions for corporate fraud or misconduct relied on identifying individual wrongdoing.

The High Court expanded this framework, holding that corporations act through their systems and that the structure of those systems can constitute the statutory mental element for unconscionable conduct.

A second key issue involved accessorial liability. The court examined whether an executive who possesses knowledge of the facts constituting the corporate contravention can be held personally liable.

High Court Outcome

The High Court dismissed the appeal by Captain Cook College and confirmed findings of systemic unconscionable conduct. The court held that harmful business practices embedded in corporate systems can be attributed to the corporation as deliberate conduct. This includes policies that incentivise behaviour likely to cause consumer harm, or the removal of safeguards that previously mitigated such risks.

Penalties

The matter returned to the Federal Court for assessment of penalties and costs. Final orders were handed down on 27 May 2025.

Here is what the court ordered:

• Captain Cook College was ordered to pay $20 million for systemic unconscionable conduct, plus $750,000 for making false or misleading representations to students.

• Site Group International Ltd (the parent company) was penalised $10 million.

• Blake Wills was ordered to pay $400,000, and was disqualified from managing corporations for three years.

• Ian Cook  - Former CEO of Captain Cook College - As part of an earlier settlement (June 2020), he admitted being knowingly concerned in the College’s unconscionable conduct. He was disqualified from managing corporations for three years and ordered to pay $250,000 in penalties.

• The court also granted a costs order in favour of the Australian Competition and Consumer Commission (ACCC).

  
  

The Government ultimately waived the VET FEE-HELP debts of affected Captain Cook College students and withheld some of the payments from the college.

Professional Significance

• Corporate systems matter: The case confirms that corporate systems and procedures not just individual acts of deception or fraud, can ground unconscionable conduct findings under the ACL.

• Senior officer accountability: Senior managers who know the essential facts of systemic misconduct and participate in organisational systems risk personal liability even if they did not personally engage in individual misconduct.

• Risk management imperative: Boards and executives must ensure that corporate policies, control systems, and risk frameworks are designed and operated in compliance with consumer protection laws.

wider commentary

According to Professor Elise Bant (University of Western Australia), whose academic model on systems-based responsibility was adopted in the judgment, “It really is a game changer.”

Alexander Morris, partner at King & Wood Mallesons, stated that “This case is going to be noticed,” noting that the decision indicates that senior managers with visibility over organisational conduct “need to become the corporate conscience.”

“Captain Cook College’s conduct not only cost taxpayers tens of millions of dollars, but it also caused distress to the thousands of consumers enrolled in their courses who for many years were told they had significant debts to the Government,” ACCC Chair Gina Cass-Gottlieb said.