The Federal Court has imposed a 3 year sentence for contempt of court, following breaches of court orders by a marketer of weight loss products. The case confirms that the ACCC can be expected to take a hard-line approach to any breaches of final court orders, particularly where the breach is deliberate.
In September 2005, the ACCC obtained court orders against Peter Foster, after successful proceedings for resale price maintenance and misleading and deceptive conduct in connection with the marketing of TRIMit — a ‘purported weight loss aid’.
The court orders initially obtained by the ACCC restrained Mr Foster from promoting or conducting a business relating to weight loss, cosmetic or health industry products or services for a period of 5 years. The orders also restrained him from making representations about the standard or quality of any product or service for a period of 5 years without providing a copy of the orders to the representee. Tailored orders of this kind are commonly sought by the ACCC in the course of its enforcement activities.
In December 2009, a little over 4 years after the orders were made, and 9 months before they were due to expire, Mr Foster became involved in a new enterprise called SensaSlim. The business manufactured an oral spray which was marketed as a weight loss aid. In the course of his involvement in the business, Mr Foster produced promotional DVDs, newsletters and advertisements, and corresponded with prospective franchisees. Copies of the promotional DVDs, which contained inflated claims about the efficacy of the spray, were provided to franchisees but without any disclosure of the prior court orders.
The ACCC became aware of Mr Foster’s activities and headed back to the Court, alleging breach of the earlier orders and that Mr Foster was in contempt.
Justice Logan found Mr Foster guilty, noting that ‘it was difficult to envisage a more flagrant and deliberate breach’ of the orders and observing that the case amounted to an ‘extremely serious contempt’. His Honour sentenced Mr Foster to a hefty 3 years imprisonment (with 18 months suspended) and placed further restrictions on his involvement in the weight loss, cosmetics and health industry.
The case follows a 2011 Federal Court decision, in which the ACCC obtained a fine of $45,000 for contempt of court against Allphones in relation to a breach of voluntary undertakings given to the Federal Court.