The business was bought as recently as June 27 this year for $2.8 million.
Werribee Volkswagen is owned by joint dealer principals Bo (Nick) Zhao and John Tofari. Mr Zhao owns 80 per cent of the company and Mr Tofari owns 20 per cent.
Court papers say Mr Zhao funded half of Mr Tofari’s interest in the company with a loan of $300,000 and that if VGA proceeds the business will be worthless.
Court documents say that VGA is alleging misconduct in relation to the sale of cars to third parties in other states who, VGA alleges, proceeded to onsell them.
Werribee Volkswagen denies any misconduct and won an order to restrain VGA and its finance arm from proceeding with any steps that would effectively close the business.
Specifically, Werribee Volkswagen, via its owner, Werribee Automotive Holdings (WAH), succeeded in securing an injunction in the Supreme Court of Victoria from Justice Vickery to restrain both VGA and Volkswagen Financial Services Australia (VWFS) “from entering upon or taking possession of or removing any of the motor vehicles presently situated at the premises of … Werribee Volkswagen”.
The injunction was granted on Thursday September 8. A writ was issued the next day.
According to claims set out by WAH in that writ, VGA’s move to terminate their VW franchise agreement is based on concerns VGA allegedly has about the sale of 18 vehicles – five Touaregs sold to a Mark Zheng of Good Wealth Group Pty Ltd for its corporate business purposes and 13 Amaroks purchased by WGD Australia Group Pty Ltd for use in its car rental business.
WGD Australia Group was described as “a known car rental company located in various cities along the eastern seaboard of Australia”.
WAH claims that at a meeting on August 24, VGA alleged that Werribee Volkswagen “sold the vehicles with a view to obtaining a financial advantage; obtained a fleet discount in circumstances where they were not entitled to do so; and, had not obtained a sales advice signed by the customer”.
WAH claims in the writ that, “to its knowledge and belief at the time of the sale the said vehicles were not purchased for or on behalf of any reseller”.
The writ outlines that Mr Zhao and Mr Tofari attended a meeting in Sydney at VGA’s request on September 5 with various VGA personnel including managing director Michael Bartsch.
WAH alleges that at this meeting Mr Zhao and Mr Tofari were told that “VGA would terminate the dealer agreements with effect from September 29, 2017 and that WAH no longer had any Volkswagen franchise business that it could sell”.
According to the WAH writ, after being handed a letter dated September 5, Mr Zhao was then escorted from the meeting but Mr Tofari was asked to stay.
WAH alleges that “in Mr Zhao’s absence the representatives of VGA offered Tofari the opportunity to become VGA’s sole franchisee in Werribee and that VWFS would provide incentives and support for such acquisition by him”.
It is claimed by WAH that “the VGA offer was not conditional on Tofari making any payment to WAH or Zhao in respect of that opportunity”.
WAH also claimed that “VGA made the said offer to Tofari knowing full well that he was then a director, officer and employee of WAH and it would be in breach of his duties owed to WAH” under the Corporations Act.
In the writ, WAH claimed that VGA’s September 5 letter handed to Mr Zhao alleges that WAH had submitted fleet program registration forms that contained false and fraudulent information and had been signed by a person employed at Werribee Volkswagen rather than the customers.
WAH also claims that, “no proper particulars of the allegations of VGA were contained in the September 5 VGA letter and no supporting evidence for those allegations has ever been provided to WAH by VGA”.
The writ further outlines that WAH is seeking permanent orders against VGA to prevent the termination of its franchise agreements and compensation from VGA under various provisions of the Australian Consumer law plus costs.
WAH says that it has already suffered and will suffer irreparable damage or loss as the company’s trading activities have been adversely affected by VGA’s actions and that WAH, due to VGA’s actions, would lose the $2,854,760 paid to purchase the business last June.
A Volkswagen Australia spokesman declined to comment as the matter is before the court.
The matter due to be heard again on September 18.
By Daniel Cotterill and John Mellor
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