Decision concerning refund following student withdrawal after commencement of course - complaint not upheld

Wednesday, December 21, 2016
S v P [2016] ISC Nov 2016

Summary of complaint

  1. This decision relates to a complaint from the Students, against Education Provider (the provider).
  2. The Students enrolled in a full-year (three trimester) course with the Provider, paying the full year’s fee prior to the course commencement. The Students completed the first trimester. Prior to commencing the second trimester, the Students elected to withdraw from the programme, and pursue an alternate programme at a different tertiary provider.
  3. The Students applied to the Provider for a refund of the remaining course fees. Initially the Provider advised a partial refund would be made, but soon after advised that information was incorrect, and that no refund was available under the refund policy. The Provider did however offer to defer the remaining course for up to a year, without any further cost to the Students. That offer was declined.
  4. Given the parties could not resolve the dispute directly, the Students made a complaint to the International Student Contract Dispute Resolution Scheme. A mediation was undertaken from which a settlement could not be reached. I now proceed to issue an adjudicated decision on the complaint.

Outcome

  1. The Students complaints cannot be upheld. The refund policy does not require that a partial refund be provided. There is no other legal obligation on the Provider to refund any course fees.

Background

  1. In March and April 2016 the Students accepted an offer to study. The acceptance form records a start date of 11 April 2016, and end date of 9 December 2016. On their respective forms, the Students ticked a box indicating they had “read and understood the Provider’s Refund Policy”, which was attached to the offer of study.[1]

  2. The Students commenced the programme, completing the first Trimester. 

  3. The Students emailed the Provider on 21 June 2016, advising that:

“Due to some personal reason, we may potentially leave [The Provider] for a while, and even need to change the course.”

  1. On 21 June 2016, the Provider emailed the students stating:

“I can give you that after graduation.

You are only entitled to a 50% refund for the rest of your course and I’ll have to let INZ know that you are withdrawing so they’ll cancel your visa.

If you decide to withdraw, please come here on Friday and I’ll give you a form to complete.”

  1. However, the Provider’s position with respect to the refund was corrected in an email on 29 June 2016, where it states that:

“When I submitted your refund forms, I was advised that I must apply the refund policy.

Under this policy, you and….. are not entitled to any refund.

You have signed your offers for the whole 9 months programme so effectively you are withdrawing after the course has started.

Please feel free to come and see me but there will be nothing I can do about the refund.

Please consider finishing the [course] you have started. It’s hard but you’ll learn invaluable things here.”

  1. On 15 July 2016 the Provider’s General Manager met with the Students, who confirmed that they wished to withdraw from the course on the basis that they had changed their mind about completing it. The Provider’s General Manager apologised for the mistaken information being provided with respect to the refund and advised that the Provider was prepared to defer the students’ course for a period of up to one full year with full preservation of the course fee.
  2. Given that the parties could not resolve the dispute directly, both Students lodged a complaint with the International Student Contract Dispute Resolution Scheme, stating:

“I have enrolled in a trimester course with [the Provider] I have only done one semester and decided not to continue further. I actually withdrew from the course before school started. I have requested the school to refund 50% of the total course fee for the trimester as per the signed agreement when enrolling for the course. However, they refused to pay and I now request you to help me out to get the 50% refund from [the Provider]. I paid a total $[amount] for the trimester. The agreement provides for a refund of at least 50% of the tuition fees in my circumstances.”

  1. A mediation meeting was convened on 7 October 2016 to attempt to resolve the dispute. Both Students were in attendance, and the Provider was represented by the Provider’s General Manager. [No settlement of the dispute was reached at mediation].

Students’ position

  1. The Students confirmed they have withdrawn from the course with the Provider, and have since enrolled [elsewhere], undertaking a [different type of] course. 
  2. While the students acknowledged that the Provider had made offers to continue the course at a later time, my impression was that the Students did not wish to continue the [Provider’s] training. The Students did accept that when they enrolled with the Provider, there was an intention to undertake a full-year programme.
  3. The Students consider the refund policy could be read as meaning that withdrawing from a single trimester-long paper could be considered as a withdrawal from the programme prior to the commencement of that programme, and therefore allow fees to be refunded.
  4. After the Students advised they were withdrawing from the course, the Students note they had been advised by the Provider that a refund of between 50% and 90% could be made. On that basis the Students consider a refund should be provided.
  5. The Students’ position is that a refund of the course fees should be made, and they consider a refund of around 50% would be fair. The Students explained that declining to provide a refund will result in hardship for them and their families.

Providers’ position

  1. The Provider’s position is that a refund cannot be given for the remaining two trimesters, primarily as such a refund would fall outside the refund policy.
  2. The Provider’s General Manager explained that the Provider had a range of fixed and variable costs which had been incurred, on the basis that the Provider had undertaken to provide training to the Students over the remaining two trimesters. That included course materials that have already been provided to the students, staff and building costs. Furthermore, a commission had been paid to agent who facilitated the Students’ enrolment. The Provider’s General Manager advised it would not be possible to find replacement students at short notice to offset the loss incurred, especially for a now intermediate-level course.
  3. The Provider’s General Manager considers that the Provider should be able to rely on the refund policy, provided to the students prior to enrolling in the course, and also emphasised during the orientation for the course.
  4. Again, The Provider’s General Manager confirmed that the students had been offered places on later courses, but as noted above, that offer was declined.

Discussion

  1. The question the International Student Contract Dispute Resolution Scheme must determine, is whether the Provider was correct in declining to refund all or a portion of the Students' course fees following course withdrawal.
  2. The parties agree that the Students had enrolled in a full-year course, and the Students confirmed it was initially their intention to attend for the full year. It is also agreed that the Students withdrew from the course after the first trimester. The Students confirmed that withdrawal was to allow enrolment in another course with a different tertiary education provider.

Contractual obligations

  1. At the time of enrolment, a contract was formed which created obligations for both parties. In short, the Students could expect the Provider to deliver the [subject] training, and the provider could expect the fee to be paid for that training. 
  2. When determining what the legal obligations are under the contract, I must consider what the terms of that contract are. The terms of the contract include the refund policy.[2] That policy states in part:
  • “By accepting a place in a program or course at [Provider named], a student enters a contract with [Provider name] for a period of one academic year (or the length of the course if less than one year). This contract means there is an obligation to pay the fee for the year (or the length of the shorter course).There is no automatic right to a refund of fees if a student changes his / her mind about studying at [Provider name].
  • Students who have paid fees for a programme that [Provider name] subsequently cancels, will receive a full refund.
  • If a formal withdrawal from the enrolment is received no later than two weeks prior to commencement of the program of study, 90% of the fees will be refunded.
  • If a formal withdrawal from the enrolment is received less than two weeks prior to commencement of the program of study, 50% of the fees will be refunded.
  • If formal withdrawal is received after the program commences, the student is not entitled to a refund of fees.”
  1. Importantly, I consider that the programme is the full year course, not just a single trimester course. I reach that view for the following reasons:
  1. The offer of study agreed by the students was for a programme running between April and December 2016.
  2. The refund policy refers to acceptance of the offer as acceptance for a full-year programme.
  3. The programme is for [qualification] which I accept cannot be achieved in only one trimester; rather would be a three-trimester course.
  1. Given my conclusion that the withdrawal occurred part-way through the programme, it must be that the final bullet point referred to in paragraph 27 of the decision is operative. That confirms that “if formal withdrawal is received after the program commences, the student is not entitled to a refund of fees”.
  2. Despite the terms of the refund policy, the Provider could be found liable to refund fees under the law of contract if there was evidence to show that the Provider had breached the contract in some material way. However there is no evidence supporting that situation. To be fair, the Students have not alleged that the Provider breached the contract.

Other legal obligations

  1. The Provider stated on 21 June 2016 that the Students were eligible to a refund of 50%. It appears that email was sent in error, and that error was corrected in a subsequent email on 29 June 2016. I accept that the original email stating that a refund was available was a mistake. As I have indicated above, the refund policy does not support eligibility to any level of refund in these circumstances. I cannot see that the Provider would be liable to provide a refund on the basis of this mistake, particularly in light of there being no evidence to show that the Students had materially changed their position in reliance on that email.
  2. I have also considered whether the refund policy, which forms part of the contract, would be in breach the Fair Trading Act 1986. That Act prohibits a contract term which is unfair. I cannot see that the terms would be unfair. The Provider has given sound justification for declining to refund fees, when a withdrawal occurs part way through a course. In particular, the provider will incur costs in reliance on the student attending the course, and I also accept that it would not be realistic to anticipate that a replacement student could be found at short notice. That is especially the case for any withdrawal in the second or third trimester, when passing the first trimester course is a pre-requisite for the later trimester training. 

Code compliance

  1. I have considered the dispute in light of the Education (Pastoral Care of Internal Students) Code of Practice 2016 (“the Code”). 
  2. The Code provides a range of obligations on providers, which includes the requirement to have clear terms and conditions relating to the enrolment process, including termination.
  3. In my assessment the offer of enrolment form, including the obligations under the refund policy, are clear. They are written using plain English. 
  4. I am also minded that in the case of these two students, they seem to have a reasonable grasp of English. I note they are currently enrolled in a Bachelor’s Degree programme at [name of University]. Passing the minimum standards for abilities in English with a second provider, supports that these Students should be able to understand a plain English document such as the refund policy.
  5. Clauses 29 and 30 of the Code specifically relate to managing withdrawal from courses, and provide specific requirements for refund policies. I am satisfied that the policy which applies with respect to voluntary withdrawal does comply with those obligations.

Conclusion

  1. In the circumstances of this complaint, the Provider was able to decline to reimburse course fees as it has done. I can see no breach of any obligation on the part of the Provider, which would require that any portion of the fees be reimbursed.
  2. Redacted.
  3. The proposed decision of the International Student Contract Dispute Resolution Scheme is that the complaint be dismissed.
  4. The parties are now invited to provide any final comments on this proposed decision, before the decision is finalised.

Final decision

  1. The proposed decision as set out above, has been provided to both the Students and the Provider.
  2. The Students replied that they have ‘nothing further to add’, and the Provider has accepted the proposed decision.
  3. In the absence of any further evidence or submission, the reasoning and proposed conclusion to this complaint as set out above are confirmed. The final decision of the International Student Contract Dispute Resolution Scheme, is that the Students’ complaint is dismissed.

 

Dated: 4 November 2016 
Rex Woodhouse
Barrister
International Student Contract Dispute Resolution Scheme


[1] A copy of that policy has been provided, and will be referred to in the discussion below.

[2] The students confirmed having considered and accepted the refund policy, as confirmed by ticking the box on the letter of acceptance of the offer.