SUPREME Court Justice Patricia Matthews has reserved her decision on the level of compensation to be awarded to Brighton Automotive Holdings (BAH), which traded as Astoria Honda before having its Honda franchise terminated by Honda Australia.

Astoria Honda was one of 28 Honda dealers whose dealer agreements were cancelled three years into a five-year contract as part of Honda’s move to the agency sales model. A number of Honda dealers including Astoria sought legal redress although in the end all but Astoria discontinued the action.

In May, Justice Matthews ordered that the amount of compensation should be calculated by two independent accountants; one for Honda and one for Astoria.

In the February hearing, Honda had claimed that Astoria was entitled to no compensation at all or $1.6 million at most. At that stage Astoria was asking for $22.5 million but that amount included losses for the loss of an additional five years of trading as a Honda dealer which Justice Matthews did not allow in her judgement handed down in May.

However in a Supreme Court hearing yesterday which was set down for the court to assess the compensation amount, Justice Matthews was told that, adopting her Honour’s findings in her judgement of May 2024, the expert for Honda had calculated the compensation at $12.1 million with the Brighton Automotive (Astoria) expert setting the number at $13.9 million.

The hearing was told that the interest to be applied to the compensation amount would be 10 per cent.

It was also argued in court yesterday by Astoria that all costs should be awarded to Brighton Automotive. 

The court was told that just prior to the trial starting in February this year, Astoria offered to settle the dispute for $9.5 million but Honda did not respond to the offer. The case then proceeded to court. 

Brighton Automotive argued yesterday that none of the costs of the hearing would have occurred had Honda accepted the settlement offer in February.

The amount of damages to be calculated by the expert accountants was to take into account the number of cars that would have been sold had the dealer agreement run its course; plus the gross margin per car sold, plus additional sales of parts and service as well as profit from other sales activities associated with new car sales; plus interest.

The case arose after Honda Australia moved to an agency sales model. 

Honda offered compensation to its terminated dealers and subsequently entered into a confidential mediation process to resolve the dealers’ compensation claims.  

All dealers reached confidential settlements of their legal claims except for Astoria. BAH maintained that the compensation offered to it did not reflect the extent of the loss of its Honda franchise as it was one of Honda’s top-performing dealers in Australia. 

BAH also alleged that Honda Australia had misled the dealers by not disclosing that it already knew prior to the signing of the five-year dealer agreements that it would terminate the agreements after just three years.  

BAH said that by not disclosing its intentions at the signing of the five-year agreement Honda denied its owners of the opportunity of moving to other franchises and that not telling the dealers of its intention constituted misleading and deceptive conduct and therefore the circumstances of the dealer terminations was unconscionable in the circumstances. 

But this claim was not accepted by Justice Matthews on the basis that BAH was not able to establish, at the time of the signing of the five-year franchise agreements, the degree to which Honda Australia had decided it was going to terminate the agreements early.

Honda Australia admitted in its defence to the Supreme Court proceeding that its termination notice amounted to a repudiation of the BAH dealer agreement. So, in the event, the trial revolved around the compensation number.

BAH’s main claim was that it should be appropriately compensated for the lost sales of Honda vehicles and lost parts and service sales and other opportunities flowing on from those sales for the remainder of the term of its dealer agreement. 

In May, the court had heard that BAH’s expert estimated that BAH would have sold 1,544 additional Hondas per year if the contract had not ended early.  Honda’s expert estimated that BAH would have only sold 422 units in FY2022 and 391 units in FY2023.   

Justice Matthews findings in May were:

• The volume of vehicles that would have been available to BAH in the Remaining Contract Period was 1,078 per year;
  

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• The gross profit per vehicle would have ranged from $3,825 in 2021 to $4,675 in the financial years 2022 and 2023;
  

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• The amount of BAH’s damages in respect of the Remaining Contract Period Claim should be calculated by the experts … to be presented to the Court based on her Honour’s findings
  

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• Honda Australia did not engage in misleading or deceptive conduct by not disclosing to BAH before entering into the Dealer Agreement that it was considering or contemplating the early termination of dealer agreements with authorised Honda dealers in Australia. It also found that Honda did not engage in unconscionable conduct.
  

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• It is also found that BAH was not entitled to damages for a further term of the dealer agreement (the Further Contract Period Claim), for reasons including that BAH would never have been appointed an agent once the term expired.

In May, Carolyn McMahon, vice president and director of Honda Australia told GoAutoNews Premium: “Honda Australia acknowledges the judgement handed down by the Supreme Court and we are grateful that this proceeding is coming to an end.

“Honda Australia has always acknowledged that compensation would be owed to Astoria for breach of contract. We welcome the Court’s findings that Honda Australia has not engaged in misleading or deceptive conduct or unconscionable conduct under the Australian Consumer Law.

“Honda Australia remains committed to supporting it’s Honda Centres and customers as we look forward.”