Dealerships, News ,

BRIGHTON Automotive Holdings (trading as Astoria Motors) and Tynan Motors have won an early court round in their legal pursuit of Honda Australia arising from the termination of their dealerships that took place in preparation for the agency sales model in the Melbourne and Sydney market.

Associate Justice Patricia Matthews in the Supreme Court of Victoria has handed down a decision in favour of Astoria and Tynan that requires Honda Australia to produce all relevant internal documents relating to its moves to introduce a planned reduction in sales by some 50 per cent and adopt an agency sales model that involved dismissing large numbers of Honda dealers, including Astoria and Tynan, in large metro markets.

The documents are being sought to discover what Honda Australia management knew about such vital fundamental changes to the business model between the brand and its dealers at the time that Honda was renewing dealer agreements (that were subsequently terminated in the move to an agency sales model).

If the discovery documents show that Honda Australia had commenced planning such fundamental changes to its network business model and did not disclose these changes before dealers signed their 2018 agreements, it has the potential to open the way for Astoria and Tynan to move forward to seek damages in the event a court finds that they suffered from misleading or deceptive conduct and unconscionable conduct in contravention of the Australian Consumer Law. (See background below).

According to court documents in the case, Astoria/Tynan say that they “believe they may have a right to seek relief against Honda Australia and Honda Japan pursuant … to the Australian Consumer Law (ACL) in respect of contraventions of s18 (misleading and deceptive conduct) and/or s21 (unconscionable conduct) of the ACL”.

The court documents say the claims “concern Honda Australia’s failure to disclose to the dealers (plaintiffs) the existence or contemplation of the strategic review at the time they entered into the motor vehicle dealership agreements”.

A deposition by the applicants to the court in the latest hearing said that Astoria and Tynan “may have the right to obtain relief from Honda Australia pursuant to s 236 or s 237of the ACL in respect of misleading or deceptive conduct in contravention of s 18 of the ACL and/or unconscionable conduct in contraventions of 2 21 of the ACL”.

Dealers who have settled their compensation packages with Honda Australia are watching the case with interest as any information that might come to light has the potential to agitate new claims from terminated dealers.   

The terminated dealer agreements in question dated from July 1, 2018. 

The court order says that Honda Australia must produce the relevant documents (see below) dating back to January 1, 2016, two and a half years before the terminated dealer agreements were signed.

The court also agreed that it was prepared to extend the discovery period to an even earlier date on application by Brighton Automotive (Astoria) or Tynan Motors. While the applicants have yet to act on the offer, it never-the-less remains open for them to do so.


In her ruling, Associate Justice Matthews granted Astoria preliminary discovery from Honda Australia in the following areas: 

 

  1. Documents between January 1, 2016 and June 30, 2018 recording or evidencing any consideration by Honda Australia or any Related Body Corporate of:
  • a strategic review of Honda’s Australian operations
  • restructuring the business of Honda Australia
  • ‘right sizing’ the business of Honda Australia
  • Honda Australia selling a narrower model range and significantly reducing Honda Australia’s overall national sales volume
  • reducing the number of owners in Honda Australia’s existing dealer network
  • realigning the Prime Market Areas (PMAs) in Australia
  • transitioning to a new operating model for new vehicle sales in Australia
  • the strategic review announced at the National Honda Dealer Business Meeting in Brisbane, Australia on 8 and 9 May 2019.

 

  1. Documents between January 1, 2016 and June 30, 2018 recording or evidencing any:
  • terms of reference for
  • review
  • outcome of review
  • decision taken to do any of the matters set out in paragraph 1 above or any matter in connection with those things.

A jurisdictional hearing to determine whether the Supreme Court of Victoria has the power to order the Honda Motor Co in Japan to furnish any relevant documents for discovery is set down to be heard on October 21.


Honda Japan joined in dealer lawsuit

By John Mellor

Manheim
MotorOne
Schmick