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THE on-going battle between two former Honda dealers and Honda Australia has resulted in yet another decision in favour of the dealers who are seeking damages from the termination of their franchises in Honda’s move to an agency sales model.

Brighton Automotive Holdings, formerly Brighton Honda, a related entity and Tynan Motors  have so far instigated four different proceedings as part of the judicial process. The  first three proceedings resulted in orders being made in favour of the Honda dealers. That success has continued with the most recent orders being made in the fourth proceeding.

In the latest round in the Supreme Court of Victoria, Justice Button has ordered a wide range of documents be provided to the dealers under discovery, including documents relating to advice provided to Honda in the matter by Honda Australia’s solicitors Arnold Bloch Liebler and their consultant Deloitte.

The latest orders say that Honda must provide documents relating to internal discussions between Honda Australia and Honda Japan regarding the projected termination of 27 dealers, including 10 major metro dealers, and other discussions regarding the termination of 64 dealers in Australia, the breaking of existing contracts two years into the five-year period and the plan to reduce supply of Honda vehicles in Australia to a 20,000 unit business.

The latest orders also require Honda Australia to provide documents, reports, analyses or external professional input prepared during or before June 2018 relating to the impact of terminating or reducing the number of authorised Honda dealers in Australia, including those associated to the calculation of losses that Honda Australia the defendant would incur due to the terminations. 

Last October in the Supreme Court of Victoria, the dealers were granted ‘pre-action discovery’ of Honda Australia documents which pre-dated the commencement of their five-year dealer agreements in July 2018 which were repudiated by Honda Australia after just two years.

That claim, filed by HWL Ebsworth Lawyers, asserts that Honda Australia was internally considering the termination of a significant number of its authorised Honda dealers without disclosing this information to those dealers when renewing their dealer agreements in 2018.  

The claim alleges that Honda Australia knew, or at least considered the possibility, that these Honda dealers would have their dealer agreements terminated just two years into their new five-year terms before the new dealer agreements were signed. 

The claim says that, by failing to tell dealers Honda Australia intended the five-year dealer agreements to last only two years, or was at least considering this possibility, Honda Australia failed to provide the terminated dealers with the information they needed to reposition their business plans or take up other opportunities available to them before signing the new dealer agreements.

Under changes made in 2018, all Honda dealers were brought under a new dealer agreement that was to last until June 30, 2023. The new dealer agreements included terms for a renewal of the term ending on 30 June, 2023 and opportunities for the Honda dealers to sell their dealerships.

The court documents allege that non-disclosure of such information, so pertinent to the five-year dealer agreements and material to the decisions taken by the terminated dealers relating to their operations during that five-year period and beyond, was misleading or deceptive conduct by Honda Australia in contravention of the Australian Consumer Law.

The court documents also allege that around at least 6 June, 2018, only weeks before all Honda dealers were faced with signing brand new five-year agreement, Honda Australia “was undertaking or contemplating a strategic review of its business operations and dealer network in Australia” called Honda’s Strategic Review. 

It alleges further that “as part of Honda’s Strategic Review… Honda Australia was considering or contemplating reducing the number of authorised Honda dealers in Australia” called Honda’s New Dealer Strategy. 

After the ‘pre-action discovery’ orders were granted in favour of the dealers, the dealers filed a proceeding against Honda Australia claiming damages for breach of the dealer agreements and for contraventions of the Australian Consumer Law.  

In the current application before the court, the dealers  sought orders from the Supreme Court of Victoria for further discovery of documents after Honda Australia opposed the scope of documents proposed by the dealers.  

The orders made by the Court were favourable to the dealers because they widened the parameters of documents to be disclosed in the proceedings by Honda Australia, including to dates both before and after the signing of the dealer agreements in July 2018.


Justice Button’s orders regarding the categories of discovery from Honda Australia are seeking:

  1. Documents created on or before 31 December 2018 recording or evidencing any

consideration by Honda Australia, or any related body corporate of Honda Australia, of:

  1. Honda Australia’s Strategic Review and Honda Australia’s New Dealer Strategy in the period from 1 January 2017;
  2. a reduction of the number of authorised Honda dealers in Australia in the period from 1 January 2017; and
  3. a transition to a new operating model for new vehicle sales in Australia in the

period from 1 January 2017, including any documents evidencing any findings, evaluations or considerations in respect of the agency model employed by Honda New Zealand;

  1. Documents created on or before 31 December 2018 recording or evidencing any consideration prior to 1 July 2018, by Honda Australia, or any related body corporate of Honda Australia, of the approach to be taken to communicating with Honda dealers in Australia generally about any of the matters mentioned in 1 a-c above;
  2. Documents created on or before 31 October 2020 recording or evidencing any consideration, evaluation or implementation by Honda Australia, or any related body corporate of Honda Australia, of the decision to send the Termination Notices;
  3. Documents recording or evidencing any consideration by Honda Australia prior to signing the (dealer) Agreements of whether or not to disclose to the Honda dealers who instituted the proceeding that a potential future option for Honda Australia’s business was to reduce the number of authorised Honda dealers in Australia;
  4. In respect of a presentation dated June 2018 and presented by Honda Australia to the Honda Motor Company Ltd (Japan) at around that time:
  1. documents evidencing who compiled the Presentation;
  2. documents relied upon by Honda Australia or any related body corporate of Honda Australia when formulating the following options referred to in the Presentation:
  1. exiting ‘~27 dealers (up to 10 major metro)’;
  2. exiting ’64 dealers’;
  3. ‘Breaking existing contracts 2 years into the 5 year period’;
  4. reducing production such that the defendant is a ‘20,000 unit business’; and
  5. documents, reports, analyses or external professional input prepared during or before June 2018 relating to the impact of terminating or reducing the number of authorised Honda dealers in Australia, including those associated to the calculation of losses that Honda Australia would incur due to the terminations.
  6. All documents recording or otherwise evidencing Honda Australia’s or Deloitte’s calculations for compensation to be paid by Honda Australia to the Honda dealers who issued the proceeding pursuant to Honda Australia giving notice to terminate the Dealer Agreements of the Honda dealers who issued the proceeding, including: 
  1. the calculations for the compensation set out in Honda Australia’s Process Booklet accompanying the termination notices; and
  2. any advice given to Honda Australia, including advice from Honda Australia’s solicitors, in respect of the early termination of the Dealer Agreements and any calculations, analysis or assessments for compensation undertaken by or on behalf of Honda Australia, including calculations, analysis or assessments undertaken by the solicitors for Honda Australia, relating to the early termination of the Dealer Agreements of the Honda dealers who issued the proceeding.

Justice Button also ordered that a spreadsheet be prepared which records, for the period 29 January 2021 to 1 June 2022:

  1. for each recall issued in respect of motor vehicles distributed by Honda Australia during the relevant period the number of Honda customers who reside in each of the Honda dealers’ former prime market area who were notified about the issue of the recall;
  2. for each recall issued during the relevant period, the number of recall services undertaken for motor vehicles of Honda customers who reside in each Honda dealers’ former prime market areas;
  3. for each recall issued during the relevant period, the number of recall services undertaken for motor vehicles of Honda customers who purchased those vehicles from each Honda dealer that reside outside of each Honda dealer’s former prime market area; and,
  4. for each recall issued during the relevant period, the labour hours and rate allowed by Honda Australia for each recall service attendance undertaken by authorised Honda dealers or agents and the parts handling payment for each recall service attendance paid by Honda Australia to Honda dealers or agents.

The orders relating to the spreadsheet for recalls was specific to the Honda dealers who instituted the proceeding against Honda Australia and not the entire Honda dealer network.

Justice Button ordered that the spreadsheet be updated after Honda Australia notifies customers of any recall(s) issued after 1 June 2022 to include the details set out in subparagraphs (a) to (d) above. Honda Australia is required to provide these updated details on a bi-monthly basis.

Honda Australia was also required to supply all documents in the financial years ending June 2016 to June 2019 (inclusive) recording or otherwise evidencing: 

  1. the sale of Honda dealerships in Australia by Honda dealers to third party purchasers and/or the defendant (Dealership Sales);
  2. offers for the purchase by third parties and/or Honda Australia of Honda dealerships in Australia; 
  3. the valuations of Honda dealerships the subject of the Dealership Sales, including monthly reporting data sent by those Honda dealerships to Honda Australia, evaluations and other financial documents used by Honda Australia and/or Honda dealers to value those dealerships and any goodwill associated with those dealerships. 

Footnote: GoAutoNews Premium has been told that, although not listed in Justice Button’s judgement, there are categories of discovery that the Honda dealers will have to provide to Honda Australia. These categories were agreed to between the Honda dealers and Honda Australia and were not in dispute before the Court. Details of the extent of the categories of discovery are expected within the week.

By John Mellor

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