Reference no: EM131624417

Discuss the legal issues arising from the article below. Refer to relevant statute and/or case law in your answer.

Advertisement for Sage Institute of Fitness which featured Commando Steve
Sage Institute of Fitness staff made redundant as company ceases trade
Eryk Bagshaw, Georgina Mitchell

A private college network heavily promoted by Steve "Commando" Willis that spent more than a third of its taxpayer funded budget on advertising in one year has closed, leaving 1600 students in limbo and 200 staff redundant.

Shocked students at the college network, the Australian Careers Institute, which owns the Sage Institute of Fitness, have been informed that they will still be liable for up to $18,000 in student fees for courses that were yet to be completed.

The college earned more than $32 million over two years through the now-scrapped VET FEE-HELP loan scheme, while graduating 45 per cent of students.

A hearing in the Administrative Appeals Tribunal in October heard the college had spent $6 million marketing Commando Steve's unique "cutting edge" Diploma of Fitness Coaching Course in one year.

It was forced to shut its doors on Wednesday after a deal fell through with the owner of the National Basketball League, Larry Kestleman.

Mr Kestleman, who founded Dodo internet and made hundreds of millions of dollars out of high end property, took over the league after first purchasing Melbourne United.

The Melbourne basketball team used Mr Willis as the face of a new partnership between Sage and the Melbourne United basketball club in August 2016.

Sage has previously denied any taxpayer money was spent on the Melbourne United arrangement.

Larry Kestelman spends about $7 million annually on the National Basketball League Photo: Arsineh Houspian

Mr Willis, who has denied multiple requests for comment since Fairfax Media first revealed concerns over the college last year, told News Corp last week that he was also a victim of the college's demise.

"I have no ownership or financial interest in Sage and no involvement in the running of their business, so I can't speak to the reasons for their financial problems," he said.

Sage student James Dixon raised concerns about the facilities on offer. Photo: Joe Armao

The college, which has campuses in Sydney, Melbourne and Brisbane, had received no federal government money since late 2016, after the axing of the scandal-ridden VET FEE-HELP scheme caused cash to "dry up".

In a notice to students on Tuesday, administrator George Georges from Ferrier Hodgson said the plan to sell the company to Mr Kestleman's LK group would not be going ahead.

"Unfortunately, we have not received a Deed of Company Agreement [sic] proposal to allow the Group to continue to provide courses across Australia," the notice said.

"Therefore, the Administrators regret to advise that the Group has ceased to trade in Sydney and Brisbane, effective as at 7 March 2017."

Students have been told they "may still be liable" to pay for the portion of the course they have completed, despite the college shutting down.

They have lashed out at the college's operators, because the course promoted by Commando Steve as "unique" does not exist at other colleges.

Rheumatoid arthritis sufferer Robyn Dunphy, who undertook the course for her health and as part of a career change, said she had "organised a student revolt" over the misleading marketing of the college.

Student Lee Matthews said he "had been sucked in from the start".

"They market themselves to be the biggest and best in the industry and then you go there and see how it's run, it's just been disappointing really," he said.

"The so-called training facility is an absolute joke, it's a bit of old equipment on an office floor."

Classes at the college's "ground breaking, interactive learning" campuses have moved between four office buildings in Sydney alone since 2015. They have been suspended for seven days in Victoria.

"We are still exploring opportunities with regard to Victorian students," the notice said.

Ferrier Hodgson is working with the Australian Skills Quality Authority and the Australian Council for Private Education and Training to figure out how to assist students who are currently enrolled in the defunct courses.

"This will likely include assistance to transfer to another provider to complete your course," students were told on Tuesday.

"We appreciate that this can be a difficult time for students and their families and that you will have many questions."

The story Sage Institute staff sacked, colleges closed first appeared on The Sydney Morning Herald.