The Federal Court has found NRM Corporation Pty Ltd and NRM Trading Pty Ltd (together, NRM), guilty of contempt of court. NRM owns and operates the business known as the Advanced Medical Institute (AMI).

The ACCC filed proceedings for contempt on 20 August 2015 alleging that NRM had failed to comply with court orders made by Justice North on 22 April 2015 in earlier proceedings brought by the ACCC.

In those earlier proceedings, Justice North 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 treatments offered and prospective patients’ need for AMI treatments, except where they were made by a duly qualified medical practitioner during face-to-face consultations.

The contempt proceedings were heard by Justice Moshinsky on 24 November 2015. His Honour found that NRM committed contempt of court by making representations on its website and in radio and television advertisements regarding the efficacy of AMI sexual dysfunction treatments offered by NRM in breach of Justice North’s orders.

Justice Moshinsky said that NRM’s conduct was deliberate and that the orders were “clear and unambiguous”.

The statements found to have breached the order were made on ten occasions 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 over the period of 25 April 2015 to 30 July 2015.

“This decision reinforces the importance of abiding by any orders which the ACCC has obtained for the protection of consumers,” ACCC Chairman Rod Sims said.

“The ACCC will take action where necessary to enforce such orders.”

The ACCC had also argued that NRM had made representations in breach of the injunction prohibiting it from making statements to patients about their need for AMI treatments and any adverse consequences that may result from consumers not obtaining such treatments. The ACCC was not successful in that part of the action.

A hearing on penalty will be heard on a date to be fixed.

Background

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.

The Court also declared that Mr Vaisman, who was a director and CEO of the AMI companies, then subsequently NRM, aided and abetted and was knowingly concerned in the unconscionable conduct by the AMI companies and NRM. Mr Vaisman was restrained for a period of seven years from having a role in connection with training, supervising or counselling or terminating employees, agents or contractors of NRM.

NRM and Mr Vaisman have appealed the judgment of Justice North. The appeal is scheduled to commence before the Full Court of the Federal Court in May 2016.