The Federal Court has granted orders to add NRM Corporation Pty Ltd and NRM Trading Pty Ltd (collectively NRM) as respondents in the Australian Competition and Consumer Commission’s case against Advanced Medical Institute for alleged unconscionable conduct.
In adding NRM as respondents, the ACCC has also taken its first court action under the unfair contract terms provisions of the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010) which came into force in July 2010.
Until June 2011 AMI conducted a business promoting and supplying medication and services for the treatment of male sexual dysfunction. AMI was placed into voluntary administration on 22 December 2010, the day after the ACCC instituted proceedings against it.
AMI continued to trade during its voluntary administration but in June 2011 sold the AMI business to NRM. Shortly afterwards, AMI was placed into voluntary liquidation. NRM has conducted the AMI business since acquiring it in June 2011. The court has also granted leave to the ACCC to proceed against the AMI companies in liquidation.
The ACCC alleges that AMI engaged in unconscionable conduct in breach of the Trade Practices Act 1974 and NRM is engaging in or proposing to engage in unconscionable conduct in breach of the Competition and Consumer Act 2010. The ACCC also alleges that Dr Lonergan was knowingly concerned in AMI’s conduct and Mr Vaisman being a former director of AMI and a current director of NRM was and is knowingly concerned in the conduct of those respondents.
The ACCC further alleges that NRM is in breach of the Australian Consumer Law by entering into long-term agreements for the treatment of male sexual dysfunction which contain unfair contract terms in relation to the termination of a contract.
NRM patients are required to provide 30 days' written notice to NRM to terminate the contract and must also pay a number of fees including a fixed administrative fee of 15 per cent of the original contract price. The ACCC alleges that each of the fees had the effect of penalising a consumer who gave notice of termination and therefore causing a significant imbalance in the parties’ rights under the contract.
The matter is next listed for a directions hearing at 10.15 a.m. on 13 October 2011, in the Federal Court, Melbourne.