The Federal Court has fined NRM Corporation Pty Ltd and NRM Trading Pty Ltd (together, NRM) $350,000 for contempt of court. NRM owns and operates the business known as the Advanced Medical Institute (AMI).
This decision follows an earlier finding by Justice Moshinsky that NRM had failed to comply with court orders made by Justice North on 22 April 2015 in previous proceedings brought by the ACCC.
In imposing the fines for contempt against NRM, Justice Moshinsky said, “NRM continued to engage in the conduct after it was warned by the ACCC’s solicitors that it was in breach of the orders. NRM has not provided any explanation of how the breaches of the orders came about. NRM’s behaviour does not indicate contrition.”
“This decision reinforces the importance of compliance with any Court orders the ACCC obtains, and makes it clear that we will take steps to pursue businesses which fail to comply,” ACCC Chairman Rod Sims said.
“The ACCC considered that substantial fines were necessary in this case to deter NRM from further non-compliance with Court orders, as well as to send a more general deterrence message to other businesses and individuals.”
In those previous ACCC proceedings against NRM, Justice North had found that NRM had engaged in unconscionable conduct and used unfair contract terms in the way it promoted and supplied medical services and medications to men suffering from sexual dysfunction. Justice North made orders permanently restraining NRM from making representations about the efficacy of AMI treatments, except where they were made by a duly qualified medical practitioner during face-to-face consultations.
In determining the fines to be imposed on NRM for contempt, Justice Moshinsky took into account that the conduct was serious given the number of breaches, the fact that NRM was specifically put on notice about many of these breaches by the ACCC’s solicitors and the period of time over which these breaches occurred.
Justice Moshinsky also ordered NRM pay the ACCC’s costs on an indemnity basis, rather than the usual party-party costs order. This means the ACCC will be paid all of its costs for having brought the contempt application. His Honour considered this order was appropriate given the seriousness of NRM’s conduct, that NRM continued to breach the orders despite the ACCC putting it on notice and that NRM offered no explanation for its conduct.
The ACCC instituted proceedings against the companies formerly known as Advanced Medical Institute Pty Ltd and AMI Australia Holdings Pty Ltd (together, the AMI companies) and Mr Jacov Vaisman in December 2010. At that time the ACCC was concerned that the AMI companies had engaged in conduct that took advantage of vulnerable consumers. When the AMI business was subsequently sold to NRM, the ACCC remained concerned that the conduct was continuing and, as a result, NRM was joined to the proceedings.
On 22 April 2015 the Federal Court found that the AMI companies and NRM, by operating the AMI business, engaged in unconscionable conduct and used unfair contract terms in the way it promoted or supplied male sexual dysfunction products. See: Federal Court finds Advanced Medical Institute engaged in unconscionable conduct
This decision was upheld by the Full Federal Court on 22 July 2016. See: Full Court upholds unconscionable conduct finding against AMI
On 20 August 2015, the ACCC filed contempt proceedings against NRM for their alleged failure to comply with Justice North’s orders in relation to statements made by NRM:
- on the AMI website
- in six radio advertisements variously broadcast in Sydney, Perth, Brisbane, Melbourne, Adelaide and Newcastle and
- in a television advertisement broadcast in Sydney, Brisbane, and Melbourne on 2,421 occasions over the period of 25 April 2015 to 30 July 2015.
On 17 December 2015, Justice Moshinsky found NRM guilty of contempt. At that time, His Honour decided not to consider the issue of penalty for NRM’s contempt of court until the appeal process had concluded. NRM’s appeal was dismissed on 22 July 2016.