The Federal Court has granted the Australian Competition and Consumer Commission leave to join Peter Foster and other senior executives and consultants of Chaste Corporation Pty Ltd (in liquidation) to its current court action against Chaste and its director Mr Braddon Webb. The ACCC has also expanded its allegations in its statement of claim.
The ACCC alleges that Chaste supplied the purported weight loss product TRIMit throughout Australia via approximately 70 area managers who were appointed by Chaste to be exclusive distributors for specified geographic territories.
It is further alleged that Peter Foster was the mastermind behind the TRIMit scheme. It is alleged that Chaste acted with complete disregard of area manager's reasonable commercial expectations or the long term viability of Chaste.
It is alleged that Chaste engaged in resale price maintenance, made false representations, engaged in misleading and deceptive conduct and unconscionable conduct in contravention of the Trade Practices Act 1974 in respect of various aspects of the TRIMit scheme including:
the lawfulness of area management agreements
marketing and advertising support to area managers
the efficacy of TRIMit
the genuineness of the business opportunity for area managers
the potential income of area managers
a guarantee to buy back distributorships and refund monies to area managers.
Other persons the ACCC alleges were involved in the TRIMit scheme include:
Jillian Foster, who is alleged to have been a trustee or beneficiary of World Maps Marketing Trust which allegedly licensed Chaste to sell TRIMit in Australia. It is alleged that she assisted Peter Foster with the establishment, promotion and ongoing control of the TRIMit scheme
Sean Cousins, a Barrister who is alleged to have been the legal advisor to Chaste and Peter Foster, and former CEO of Chaste. It is alleged that he was involved in the planning, promotion, supervision and management of the TRIMit scheme
Constantine Xenoudakis, who is alleged to have been the former International Sales Director of Chaste; and Ken Cooper who is alleged to have been the former General Manager of Chaste. It is alleged they were involved in the management and promotion of the TRIMit scheme
Professor Stephen D’Alton, who is alleged to have been the former Research Director and Chairman of the Market Research and Development Committee of Chaste. It is alleged he was directly involved in the promotion of TRIMit.
The ACCC is seeking the following remedies:
declarations from each respondent that the conduct engaged in was unlawful;
pecuniary penalties for resale price maintenance conduct
a full refund of all money paid by the area managers for the purchase of the distributorship
injunctions restraining Peter Foster and Jillian Foster from providing advice or assistance to any corporation which sells or advertises goods or services which are purported to have, therapeutic, cosmetic, weight loss or other health benefits to the user, unless prior to providing the advice or assistance, they disclose their involvement
injunctions restraining Chaste Corporation, Sean Cousins, Constantine Xenoudakis, Ken Cooper and Stephen D’Alton rom repeating the alleged conduct
the implementation of a compliance program by each respondent
the ACCC's court costs.
A date for the directions hearing is to be confirmed.
