ACCC initiated Federal Court hearing on Mr Peter Foster

Mr Peter Foster will be asked to explain why he should not surrender his passport after an ACCC initiated Federal Court hearing late yesterday. Justice Spender of the Federal Court in Brisbane granted leave to the ACCC to file a notice of motion seeking orders against Mr Foster in a case where the ACCC has alleged that Mr Foster promoted, planned, controlled, managed and supervised the operations of the Chaste Corporation Pty and the TRIMit weight loss scheme.

The Court granted leave for the ACCC to file a notice of motion and supporting material seeking a variety of orders, including a mareva injunction to freeze Foster’s assets. The ACCC is also seeking orders requiring Foster to forfeit his passport and to provide the Court with information relating to his bank account and assets.

Justice Spender did not indicate whether he felt he had the power to grant the ACCC request.

Mr Foster was served with the notice of motion when he arrived at Coolangatta airport this morning. The ACCC motion will be considered at 10.15 am Monday, 3 February at the Federal Court in Brisbane.

The Court also granted liberty to the ACCC to apply on one hour’s notice to the Court by telephone for any further or other orders it might wish to make.

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 of TRIMit for specified geographic territories.

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.

It is also alleged that Chaste acted with complete disregard of area managers’ reasonable commercial expectations or the long term viability of Chaste.

The ACCC is seeking the orders because it believes that the conduct alleged against Foster is severe enough to warrant him remaining in Australia to answer the allegations.

The next directions hearing in the matter against all the respondents will be at 10.15 am Friday, 21 March before Justice Drummond at the Federal Court in Brisbane.