The concept of fairness in trade and commerce has been a recent focus for Australian Courts and regulators alike. The recent decision on relief in ACCC v Ashley & Martin Pty Ltd (No 2)  FCA 1739 is particularly noteworthy for two reasons.
First, together with the liability decision, it highlights the ACCC's commitment to enforcing the unfair contract provisions under the Australian Consumer Law (ACL) and second, it highlights the potential ramifications of relying on unfair contract terms when doing business, particularly with consumers.
Ashley & Martin is a well-known provider of medical hair regrowth and other related treatments under its 'Personal RealGROWTH Program'. As a tailored hair regrowth regime, the RealGROWTH Program typically involves administering various shampoos, conditioners, supplements and prescription only medications through Ashley & Martin contracted doctors.
Between June 2014 and 2017, Ashley & Martin relied on three iterations of a standard form contract for the RealGROWTH Program. Each of the contracts contained various terms which the ACCC submitted were unfair, namely, those in relation to payment, termination and refunds. The ACCC argued that together, the various impugned terms of each contract, had the effect of committing patients to paying for the RealGROWTH Program prior to having an opportunity to seek medical advice (independent or otherwise) and regardless of the advice received. It was submitted that patients who sought to withdraw from the program after receiving adverse medical advice could not do so without incurring a cost.
The Court considered the predominant circumstances in which consumers tended to enter into the contracts, namely, at an initial consultation prior to receiving medical advice, despite there being no obligation to do so. The Court found that it is unfair to hold a patient to an agreement for which they did not provide informed consent and for which they would be required to make payment upon termination. As a result, the disputed terms of each contract were void.
Nature of relief granted
The Court granted the declarations sought in respect of each of the three contracts, orders for consumer redress and a costs order against Ashley & Martin.
The orders for consumer redress provided relief for those Ashley & Martin patients who signed either of the contracts prior to receiving medical advice or within 7 days of receiving medical advice and who during the term of the contract:
- received medical advice that the RealGROWTH Program was not suitable;
- experienced side-effects from the prescription medicines which caused them to stop using such medicines;
- within 7 days of signing the contract or first obtaining medical advice (whichever is later), expressed a desire to terminate the contract or obtain a refund (absent any explanation); or
- expressed a desire to terminate the contract or obtain a refund because they did not have an opportunity to obtain medical advice or had considered medical advice and no longer wished to proceed with the RealGROWTH Program.
Relief was in the form of a full refund of all monies paid under the relevant contract, less any amount already refunded.
Key takeaways for providers of medical and other similar treatment
- Informed consent is critical – fairness will often dictate that consumers be given a reasonable opportunity to obtain independent advice prior to committing to any payments under a standard form contract.
- Consumers should have an opportunity to terminate a standard form contract without incurring any cost or to receive a full refund on the basis of adverse medical advice.
- The Court will consider the practical effect of any unfair terms, taking into account the standard form contract as a whole and the context in which consumers generally enter into the contract.
- Where terms of a standard form contract are considered unfair, the Court is willing to grant relief for a broad range of affected consumers, regardless of whether they actually expressed a desire to terminate their obligations.
- As in the usual course of litigation, respondents in unfair contract term proceedings are liable to costs orders being made against them.