BRIGHTON Automotive, the owner of the former Astoria Honda, is claiming in the Supreme Court of Victoria that the financial damage it suffered when Honda Australia terminated its dealership contract after just two years of a five-year agreement was $22 million.

Brighton Automotive said the amount was independently calculated on the lost income on the balance of the term of the agreement and the lost business for the loss of opportunity on the renewal of the agreement.

Brighton Automotive is alleging breach of contract and unconscionable conduct. An allegation of misleading or deceptive conduct was withdrawn early in the trial.

The termination of the Astoria Honda dealer agreement was part of a restructure of its retail arrangements by Honda from franchise agreements into agency agreements that involved the termination of the dealers agreements mid-term.

Thirty six Honda dealers were told they were no longer required under the agency model. The remaining dealers were allocated the expanded market areas containing the customers of the discontinued dealers.

While most Honda dealers elected to settle with Honda Australia, three dealers, including Brighton Automotive, took court action to recover what they believed to be the true cost suffered by the termination. All of the other dealers that took Honda to court have since settled their claims with Honda.

Astoria Brighton Honda says that it sold 18,000 Honda cars from its Bentleigh and Brighton branches in the 10 years before the franchise was terminated, accumulated a database of more than 34,000 customers prior to the termination of its franchise and that it was the largest Honda spare parts dealer in Australia.

Honda Australia has told the court that Brighton Automotive was entitled to compensation but that the number should be no more than $1.648 million.

Honda Australia said it has accepted that it deliberately breached the franchise agreements as part of its business plans and had estimated as far back as 2018 that it would have to pay compensation to terminated dealers of $60 million. This number became $75 million.

Honda Australia is fresh from being hit with a $6 million penalty imposed by the Federal Court from a separate action taken by the Australian Competition and Consumer Commission for telling the customers of three discontinued dealers, including Astoria Brighton, that implied that their service operations were no longer available to those owners when they were in fact still operating. 

It was alleged in the Court that Honda sent tens of thousands of messages to Honda owners in an attempt to capture the customers of dealers departing from the franchise and then directed those customers to the service operations of those Honda dealers which were remaining as agents. 

Similar messaging was alleged to have been conveyed to customers via Honda Australia call centres. 

Automotive specialist law firm HWL Ebsworth sought injunctions to restrain Honda Australia from sending more communications and the Federal Court action was commenced when the injunctions got the attention of the regulator. HWL Ebsworth is also acting for Astoria Brighton in the current Supreme Court proceeding.

The Australian Competition and Consumer Commission (ACCC) took issue with the communications because the messages said that the former authorised Honda dealers concerned, Brighton Automotive Holdings (Astoria), Tynan Motors (Tynan) and Buick Holdings (Burswood) had closed their service operations.