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HONDA Japan has rejected legal documents sent from an Australian lawyer representing three Honda dealers in Australia on the basis that the documents were delivered by a courier.

Yutaro Kawabata, of the Tokyo-based law firm Nishimura & Asahi, told Evan Stents at HWL Ebsworth Lawyers that sending the documents by courier was not in accordance with the Hague Convention and therefore the documents were not properly served.

The letter from Tokyo, which was sent by email and registered post, also suggests that it would also not be correct to serve the documents by “a postal service”.

The documents from Australia were related to a move by the dealers to get a discovery order against Honda Japan (as well as Honda Australia) in the Supreme Court of Victoria.

The action is to obtain discovery of key documents relating to what and for how long Honda Japan knew of the plans by Honda Australia to discontinue the agreements of key Australian dealers in preparation for adopting the agency sales model.  The dealers mentioned are Brighton Automotive Holdings, Newco Car Sales and Tynan Motors.

The letter from Tokyo in response has been entered into evidence by the Senate Committee inquiring into the treatment of Australian car dealers by OEMs and is subject to the protection of the parliament.

It said that Honda Japan would not act on the documents because of the manner in which they were delivered.

One of the Honda dealers in the action, Mark Avis and Ron Klein from Astoria Brighton in Melbourne’s south, who is having their Honda PMA taken over by a neighbouring agent, wrote to the Senate Committee saying that Honda Japan was “employing delaying tactics” and said that “the inevitable delay and legal costs this has caused is not unintended”.

Mr Avis’ letter has also been admitted into evidence by the Senate Committee.

It also reveals that on the eve of a Supreme Court of Victoria hearing in December, Honda Australia accepted that it had wrongfully repudiated (broken) the agreements of dealers who were not offered agencies under its new sales model for Australia and the way now lies open for these dealers to move forward to seeking proper compensation determined by a court.

In 2019, Astoria Honda Brighton was the largest selling Honda dealer in Australia. More than 120 new and demonstrator vehicles were delivered each month. The company has sold and delivered around 18,000 Honda cars over the past 10 years and has a current database of more than 34,000 customers. Astoria Honda Brighton has been the largest Honda spare parts dealer in Australia for the past 15 years – a business from which Astoria is now excluded.

An auto industry accounting specialist has calculated that correct compensation for Astoria Brighton would be four times that offered by Honda Australia. This is because, among other various considerations, unlike Holden dealers which were offered continued servicing of Holdens for five years and up to 10 years, Honda Australia is excluding the repudiated dealers from authorised Honda service business.

Not only that, it is actively telling the customers of these dealers to leave them.

Meanwhile, Mr Avis told the Senate Committee: “Since we last communicated, Astoria Brighton and two other Honda Dealers served a writ in the Supreme Court of Victoria against AUH (Honda Australia) seeking an order from the Court that AUH’s action constituted a wrongful repudiation of a legally binding agreement.

“AUH had previously denied this and engaged in protracted correspondence through their lawyer to string us out hoping we would weaken and fold. Nothing could be further from our minds.

“Just prior to the directions hearing before Justice Sloss, AUH finally conceded that it had repudiated the Honda Dealer Agreement. AUH even disputed having to pay our legal costs but eventually relented.

“As a result, we accepted the AUH’s repudiation and ceased to be authorised Honda Dealer on 29 January 2021.

“As you will note, AUH’s actions are intended to delay and obstruct our claim for compensation.

“This modus operandi continues in light of other very recent events. In our submission to the Senate Inquiry, we tabled our intention to seek pre-action discovery from AUH and Honda Japan to obtain documents relevant to the proposed proceeding.

“We believe that AUH’s change of business model from Dealers to Agents was known or ought to have been known when we signed our Honda Dealer Agreements in July 2018 for a five-year term.

“If this is established, there would be serious consequences for AUH which includes engaging in misleading and deceptive conduct and unconscionable conduct under the Australian Consumer Law.

“On numerous occasions, our lawyers requested all relevant documents from AUH and from Honda Japan. This has been refused.

“As a result, we and the two other Honda Dealers commenced another proceeding in the Supreme Court of Victoria in December 2020 seeking discovery of all documents in the possession or control of AUH and Honda Japan relating to the change in business model prior to July 2018 including the strategic review of Honda’s Australian operations and reducing the number of owners in Honda dealer network.

“AUH have now indicated that they will appear before the Court.

“However, Honda Japan is employing delaying tactics as evidenced by the attached letter from its lawyers in Japan. It is notable that the lawyers for Honda Japan allege that our lawyers have contravened the Hague Service Convention and the Rules of Court. We are seeking advice about this but in our view, the inevitable delay and legal costs this has caused is not unintended.

“There is little doubt that AUH and Honda Japan have coercively acted in a deceptive manner with the sole intent of intimidating us into submission. We are confident that the Supreme Court will eventually order AUH and Honda Japan to discover the relevant documents.

“We understand that courts take a dim view of dominant parties who exert their commercial strength to frustrate the processes of the law. Notably, the Civil Procedure Act 2010 (Vic) sets some binding overarching obligations that apply, for example: to cooperate in the conduct of civil proceedings, to use reasonable endeavours to resolve a dispute, to minimise delay and to disclose the existence of documents.”

What the letter from Tokyo said:

The letter from Tokyo said that attempting to serve the documents on Honda Japan by sending them using Toll Group’s international delivery service rendered the service of court documents invalid because it must follow the process dictated under the Hague Service Convention and that Japan is a signatory to the Hague Service Convention.

The letter went on: while Article 10 (a) of the Hague Service Convention provides for “the freedom to send judicial documents, by postal channels, directly to persons abroad”, the same article also provides that contracting states can object to the use of postal channels.

1 The Government of Japan has declared its objection against the use of postal channels.

2 As such, sending documents relating to court proceedings in Australia to Japan using postal channels fails to comply with the Hague Service Convention.

The letter went on: “HWL has directly sent the Documents to Honda Japan using international delivery service. While you state in the Letter that “we enclose by way of service on Honda Motor Company Ltd … the method you elected as service of court documents to Honda Japan is in contravention of the Hague Service Convention.

“We thus understand that you have failed to comply with the Order 80 of the 2015 Rules and that the documents were not properly served against Honda Japan.

“We therefore hereby put you on notice that Honda Japan has not been validly served the Documents as required under the Hague Service Convention and the 2015 Rules.

“Since the Applicants have failed to validly serve the Documents, they should refrain from taking any action in the proceeding before the Supreme Court of Victoria against Honda Japan.

“If the Applicants elect to do otherwise, Honda Japan requires HWL to inform the court that service of the Documents has not been validly effected on Honda Japan and provide a copy of this letter to the judge.”

By John Mellor

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