FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Honda Australia Pty Ltd [2023] FCA 1602

ORDERS

THE COURT ORDERS THAT:

1.    Within two business days, the parties provide to the Court any agreed minute of proposed orders to give effect to the Court’s reasons for judgment, and in relation to costs.

2.    If the parties cannot agree, then within three business days each party provide to the Court a minute of proposed orders, together with a short written submission.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1    The respondent, Honda Australia Pty Ltd (Honda) is a wholly-owned subsidiary of Honda Motor Co Ltd (Honda Motor Co) and sells Honda-branded motor vehicles and parts in Australia. Historically, Honda operated a franchise model, whereby independent dealers were appointed to sell Honda vehicles and parts within various designated geographic territories pursuant to a Dealer Agreement.

2    In March 2020, following a strategic review, Honda gave notice to each authorised Honda dealer that it would be transitioning to an agency model, and that each Dealer Agreement would be terminated effective 30 June 2021. As part of its transition to an agency model, Honda identified dealers that would be offered the opportunity to participate as agents under the new model (Remain Dealers) and dealers that would not be made such an offer (Exiting Dealers).

3    Of the 36 dealers that exited the Honda network, 12 elected to do so prior to 30 June 2021 (Early Exit Dealers). Some Exiting Dealers ceased all operations, while others continued to operate, including by operating independent service centres after termination.

4    Of the Early Exit Dealers, three dealers are central to this proceeding. These are:

(a)    Brighton Automotive Holdings Pty Ltd, which operated under the name “Astoria” in Victoria (Astoria);

(b)    Tynan Motors Pty Ltd, which operated in New South Wales (Tynan); and

(c)    Buick Holdings Pty Ltd, which operated under the name “Burswood” in Western Australia (Burswood).

5    On 29 January 2021, Astoria and Tynan ceased to be authorised Honda dealers. Each of Astoria and Tynan operated independent service centres following termination.

6    On 31 March 2021, Burswood ceased to be an authorised Honda dealer. Burswood operated an independent service centre following termination.

7    In this proceeding, the applicant (the ACCC) alleges that in the period January to June 2021 Honda contravened ss 18 and 29(1)(j) of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law), by falsely representing that Astoria, Tynan and Burswood:

(a)    would close or had closed (the Closure Representation); and

(b)    would no longer service, or were no longer servicing, Honda vehicles (the No Servicing Representation),

(together, the alleged representations).

8    The ACCC alleges that these representations were false because, in fact, Astoria, Tynan and Burswood were not closing and continued to operate service centres for vehicles (including Honda vehicles).

9    Honda has admitted that it made the alleged representations by sending service reminder emails and text messages (Service Reminder Communications) to customers of Astoria and Tynan (in the period 1 February 2021 to 26 April 2021) and to customers of Burswood (in the period 1 April 2021 to 26 April 2021). These communications are set out at Tabs 1 and 2 of Annexure A to the Statement of Agreed Facts (SOAF). Further, Honda admits that, on 17 occasions in the period 24 December 2020 to 15 April 2021, call centre staff acting on its behalf made statements that conveyed the alleged representations. These communications are set out in Tabs 8 to 23 of Annexure A to the SOAF and item 11 of Annexure A to the ACCC’s amended concise statement. Honda admits that it thereby contravened ss 18 and 29(1)(j) of the Australian Consumer Law.

10    There is a dispute between the parties as to whether the alleged representations were conveyed by certain other communications, namely:

(a)    emails relating to a dealer ceasing to be an authorised Honda dealer (Exit Communications). The relevant emails were sent to customers of Astoria and Tynan on about 1 February 2021, and to customers of Burswood on about 1 March 2021 and 31 March 2021. They are set out in Tabs 3 to 7 of Annexure A to the SOAF;

(b)    statements made on the Honda website. These statements are set out in Tabs 24 and 25 of Annexure A to the SOAF; and

(c)    one of the call centre communications relied on by the ACCC. This communication is set out in item 22 of Annexure A to the ACCC’s amended concise statement.

11    There is also an issue between the parties as to the appropriate penalty for the contraventions of s 29(1)(j). The ACCC contends that a penalty in the range of $7 million to $9 million is appropriate. Honda contends that a penalty in the range of $1 million to $3 million is appropriate.

12    For the reasons that follow, I have concluded as follows:

(a)    In relation to the communications in respect of which there is a dispute between the parties, I conclude that Honda did not contravene ss 18 and 29(1)(j) of the Australian Consumer Law.

(b)    I consider the following penalties to be appropriate: $5.5 million in respect of the contraventions involving the Service Reminder Communications, and $500,000 for the 17 Call Centre contraventions. This produces a total penalty of $6 million.

Pleadings

13    The ACCC seeks the relief set out in its amended originating application dated 25 August 2023. The ACCC’s contentions are set out in its amended concise statement dated 25 August 2023.

14    Honda’s response is set out in its amended concise response dated 5 September 2023.

The hearing and the evidence

15    The hearing took place over two days.

16    As indicated above, the parties prepared a statement of agreed facts (referred to as the “SOAF” in these reasons).

17    The ACCC tendered the documents in the Court Book (CB) and Supplementary Court Book (SCB). The ACCC did not call any witnesses.

18    Honda relied on evidence from the following witnesses:

(a)    Carolyn McMahon, a director of Honda; Ms McMahon has held this position since April 2017; her role as a director is an executive role and she is involved in the day-to-day running of the business; Ms McMahon was the ‘project sponsor’ for a business restructure undertaken by Honda in the period from about 2019 to 2021 (Project Fresnel), which meant she was the Board member with operational oversight of the project;

(b)    Matthew Evans, the General Manager, Automotive of Honda; between April 2017 and October 2022, Mr Evans was the General Manager of Aftersales at Honda; he was involved in Project Fresnel in multiple capacities and was part of the senior leadership team of Project Fresnel;

(c)    Benjamin Familton, the Head of Data Transformation at Honda; he commenced working at Honda in May 2016 as Brand and Communications Manager; he held that position at the relevant times for the purposes of this proceeding; his role within Project Fresnel was to run the marketing stream of the project team (excluding direct customer communications); he reported to Mr Thorp (referred to below);

(d)    Sotirios (Sam) Cokalis, who holds the position of Finance Enablement Lead at Honda; he has held this position since June 2022;

(e)    Johnny Yeung, who holds the position of Customer Data Specialist, Customer Experience – Digital Team at Honda; he held this position at the relevant times; in this role, he was and is responsible for the implementation of Honda’s automated customer communications via its cloud-based software solution; at the relevant times, he reported to Sam McMahon (referred to below); and

(f)    James Greenwood, the General Manager, Ownership Experience at Honda; he has held this position since February 2022; at the relevant times, he held the position of Head of Crash Trade Parts (Transformational Project Role).

19    Each of the above gave evidence by affidavit. All of the above apart from Mr Greenwood were cross-examined. Each of the witnesses who were cross-examined gave evidence in a clear and straightforward way. Unless otherwise indicated, I accept their evidence.

20    Two individuals who were involved in the relevant events did not give evidence in the proceeding. The first is Robert Thorp. Mr Thorp had the primary responsibility for the communications strategy as a whole for Project Fresnel. Mr Thorp ceased working for Honda in February 2022. Ms McMahon gives evidence in her affidavit (which I accept) that Mr Thorp was asked to make an affidavit on behalf of Honda in this proceeding, but indicated that he was not prepared to do so.

21    The other individual is Mr Sam McMahon (who is not related to Ms McMahon). I will refer to him as “Sam McMahon”, rather than Mr McMahon, to avoid confusion with Ms McMahon. Sam McMahon was the Manager of Honda’s Customer Experience Team (CX Team) at the relevant times. He no longer works at Honda. Ms McMahon gives evidence in her affidavit (which I accept) that Sam McMahon was asked to make an affidavit on behalf of Honda in this proceeding, but indicated that he was not prepared to do so.

Factual findings

22    In addition to the matters set out in the Introduction, I make the following findings based on the SOAF and the affidavit, oral and documentary evidence.

Honda and related companies

23    The corporate entity directly responsible for the performance of the Asia & Oceania regional unit is Asian Honda Motor Co Limited (Asian Honda). Asian Honda is also a subsidiary of Honda Motor Co. Honda reports to Asian Honda on its budgets, forecasts and strategic directions, but is not a subsidiary of Asian Honda – rather, it is a subsidiary of Honda Motor Co.

Honda’s systems for communication with customers

24    Part of Honda’s customer data is collected from information provided by dealerships into a centralised platform. From there, the data is uploaded onto, and maintained on, a cloud-based platform known as Salesforce. The platform contains details of interactions with customers and potential customers, including customers who have bought Honda vehicles and/or had Honda vehicles serviced at authorised Honda service centres.

25    While Salesforce stores the data described above, the platform is not used by Honda to execute certain communications, such as service reminders or general customer announcements. These communications are executed by way of a different platform, known as Salesforce Marketing Cloud (Cloud). Cloud is a cloud-based platform which enables communications to be directed to customers, by reference to characteristics that can be defined on a case-by-case basis and according to a predetermined pattern. For example, Honda can choose to send a specific email or SMS (i.e. text message) to a customer of a particular dealer, or by reference to other distinguishing characteristics, such as the make or model of their vehicle, or when the customer’s vehicle was last serviced at an authorised Honda service centre. Any form of group communication is referred to by Honda as a “campaign”, and the designated recipients of a campaign are referred to as the “audience”. Customer communications typically occur by way of SMS to the customer’s mobile phone or by e-mail (otherwise referred to as electronic direct mail, or EDM), or both.

26    A campaign may be executed through the Cloud either by a direct send or, more commonly, by a process known as a “journey”. Each journey is manually configured in the Cloud, having regard to the relevant audience, the relevant form of communication(s) and the timing for the occurrence of each communication. This manual configuration includes various rules which dictate when a communication is sent and who the audience is for each communication.

27    The schematic within a journey may identify specific content to be sent to a defined audience on specific dates. In the case of service reminders, for example, the journey might be configured to send a service reminder to a customer 30 days before a vehicle service is due, 15 days before the service is due (if the vehicle hasn’t already been serviced) and again 15 days after the service was due, if it didn’t occur. The timing for each communication may be configured to occur on a specific date, or by reference to a period before or after a designated date for each member of the audience (typically denoted by the use of a “T-X“ or “T+X” designation, where “T” is the relevant date and “X” is the number of days before or after that date). In the service example above, T-30 would be 30 days before the service due date and T+15 would be 15 days after the service due date. In this example, the date of the communication will vary from customer to customer, depending on the date on which their service is due. While the execution of each step in the journey occurs on an automated basis as configured, the actual content of each customer communication (Content) is manually uploaded to the Cloud.

28    During 2021, most Content entries and amendments into journeys were made by Mr Yeung or Sam McMahon.

29    At the relevant times, inbound communications to Honda were directed to the Honda call centre (the Call Centre). The Call Centre was managed by an external provider, Probe Group (Probe). Honda provided Call Centre staff with a suite of FAQs and scripts to manage incoming calls from customers.

30    Probe was responsible for providing general training to Call Centre staff. Honda supported Probe with respect to delivering the messages in the FAQs and scripts. A member of Mr Evans’s team (David Steven) worked with Probe in relation to training of staff. Mr Evans had oversight of the content of the training, but did not attend the training himself.

Project Fresnel

31    On 9 May 2019, Honda informed all dealers at the National Honda Dealer Business meeting that it would be undertaking a strategic review of its operating model in light of declining profitability.

32    In or around June 2019, Honda held an offsite meeting with the Directors and General Managers in Daylesford. At that offsite meeting, Ms McMahon, along with Stephen Collins and Hiroyuki Shimizu, presented about the proposed business restructure, and sought feedback from the General Managers. The business restructure was referred to within Honda as Project Fresnel.

33    In February 2020, the strategic review period concluded. On 27 February 2020, Ms McMahon (along with Mr Collins and Mr Shimizu) presented the proposed restructure to Asian Honda. Asian Honda approved the proposed restructure.

34    On 5 March 2020, Honda resolved to implement a new business model. The restructure project involved:

(a)    transitioning to an agency model for the sale of new vehicles;

(b)    reducing the model line-up and overall sales volume of new vehicles; and

(c)    reducing the number of dealers and restructuring the dealer network.

35    On or around 23 March 2020, Honda wrote to each Exiting Dealer and informed them of Honda’s intention to terminate their Dealer Agreement. Honda acknowledged that it had a liability to those dealers for any relevant loss and damage suffered by them as a result of the restructure. In or around March 2020, Honda established a Dealer Relations Office, which assisted in negotiating, on a without prejudice basis, the appropriate termination payment for Exiting Dealers. Honda subsequently reached agreement with respect to the quantum of compensation payable with all Exiting Dealers other than Astoria and Tynan.

Project Fresnel communications strategy

36    As part of Project Fresnel, Honda designed and implemented a communications strategy that encompassed communications with dealers, customers and the market more broadly.

37    The objectives of the communication strategy were:

(a)    to develop and execute a communication strategy that supported the launch of Honda’s new business model;

(b)    to develop and execute a smooth transition of current Honda customers from Exiting Dealers to the new network (referred to as “H2H” or “Honda to Honda”);

(c)    to educate consumers on the need for change across the industry;

(d)    to identify, mitigate or respond to potential public-facing issues associated with the business change; and

(e)    to start positioning Honda in Australia as a premium brand with an exceptional customer experience.

38    The strategy encompassed advertising and media campaigns, as well as targeted customer communications. Targeted customer communications included emails and text messages to customers of Exiting Dealers to inform them of the restructure, and to seek to transition them to an authorised Honda dealer. There were two types of targeted communications:

(a)    Exit Communications; and

(b)    Service Reminder Communications.

39    The Exit Communications were initial communications with an Exiting Dealer’s customers advising the customers that the Exiting Dealer was: ceasing to be an authorised Honda dealer; would no longer sell new Honda vehicles; and would no longer be an authorised Honda service centre. The strategy envisaged that tailored communications would be sent to customers 30 days prior to termination, and again on the date of termination.

40    The Service Reminder Communications were communications in relation to ongoing servicing, intended to be sent following the termination of the Dealer Agreement. The communications were to be sent 14 days prior to the customers’ scheduled service date, 7 days prior to the scheduled service date (if it had not yet occurred or if the customer had not yet booked their vehicle in for service at an authorised Honda service centre), on the scheduled service date, and 14 days after the scheduled service date (if the service had not yet occurred or if the customer had not yet booked their vehicle in for a service at an authorised Honda service centre).

41    In late 2020, the template for the Service Reminder Communications was developed.

May to December 2020

42    On or around 26 May 2020, Travis Honda notified Honda that it intended to exit the dealer network on 31 August 2020. Although Travis Honda is not one of the three dealers that are central to this proceeding, it is relevant to refer to Travis Honda because the communications materials that were prepared by Honda for the exit of Travis Honda came to be used (with or without amendment) as the basis for Honda’s communications in relation to other Exiting Dealers (as discussed below). Travis Honda ultimately elected to cease being an authorised dealer in respect of new vehicle sales on 5 August 2020 and in respect of service on 31 August 2020. Travis Honda was one of the first dealers to exit the network. It is important to note that Travis Honda ceased to operate entirely (as distinct from Astoria, Tynan and Burswood, which continued to operate an independent service centre after exiting the network).

43    On or around 21 July 2020, Burswood agreed with Honda that the termination of its Dealer Agreement would become effective from 1 October 2020 with respect to sales, and 31 March 2021 with respect to servicing.

44    Following the closure of Travis Honda (on 31 August 2020), Mr Thorp directed the Project Fresnel team to use the experience of managing Travis Honda’s exit to design a communications strategy that was to be used as the template for all Exiting Dealers. That strategy contemplated three potential scenarios for Exiting Dealers:

(a)    sales department closure only, in which case there would be an EDM notifying all of the dealer’s customers that the sales department was ceasing to operate but that the service centre was continuing to operate;

(b)    service department closure only, in which case an EDM would be sent to all customers notifying them of the closure. If the customers did not open that EDM, then a follow up SMS would be sent to customers that had serviced their vehicle at that service centre in the past 24 months; and

(c)    sales and service departments closures, in which case an EDM would be sent to all of the dealer’s customers notifying them of the closures, with a follow-up SMS to be sent to customers that had serviced their vehicle at that dealer in the past 24 months but did not open the EDM communication.

45    On 1 October 2020, Burswood ceased to be an authorised Honda dealer with respect to sales of vehicles (but continued to be authorised with respect to servicing).

46    In late 2020, Sam McMahon instructed Mr Yeung to create a journey within the Cloud to provide customers of any Exiting Dealers with upcoming service reminders and to provide them with details of authorised Honda service centres (the service journey). Mr Yeung started preparing this in late 2020.

47    On 24 December 2020, Astoria and Tynan advised Honda that they accepted Honda’s repudiation of their respective Dealer Agreements and considered that those agreements were at an end immediately. However, Astoria and Tynan informed Honda that they were willing to consider entering into a short “holding over period” of the Dealer Agreements with Honda, in order to arrange an efficient winding down of each dealership.

Call Centre conversations (24 December 2020 to 15 April 2021)

48    On various dates in the period from 24 December 2020 to 15 April 2021, customers or potential customers called the Call Centre. During the calls, staff at the Call Centre made the statements in Tabs 8 to 23 of Annexure A to the SOAF, which included statements to the effect that Astoria, Tynan or Burswood (as the case may be) had closed. It is accepted by Honda that these communications conveyed the alleged representations. For example, Tab 14 is a call that took place on 20 January 2021 as follows:

Caller: “… I’m just wanting to clarify, I am looking to buy or upgrade my Honda and I’m just wondering if the dealership down in Brighton is going to still remain.”

Honda Australia Representative: “No, so the … that dealership is called Astoria Honda so that dealership is closing down, so unfortunately, yeah, they won’t be partnered with Honda Australia anymore.”

…

Caller: “Now the service centre that I always go to, which is in walking distance, is on North Road in East Bentleigh, and that is an Astoria Honda one, but is that going to remain as a service centre or close down?”

Honda Australia Representative: “No, so Astoria the franchise, so the two … so the Brighton and the Bentleigh franchise are both closing down.”

Caller: “Well that’s a bit of a shame, had a long association with Astoria Honda so that’s a bit of a shame, nevermind.”

…

(Emphasis added.)

49    By way of further example, Tab 17 is a call that took place on 27 February 2021 as follows:

Caller: “… I’m just making some inquiries about the changes with Honda. I bought a new car last June and I haven’t had my first service, as yet. Now, has that ..., I presume it’s changed, the service centre.”

Honda Australia Representative: “So it depends which service centre you’re referring to”

Caller: “I bought the car in Sutherland, so it would have been under the Tynan. So, what happens now if I want to book in the service?”

Honda Australia Representative: “So unfortunately obviously it won’t be Tynan Honda, but we can have a look and confirm your next nearest authorised Honda dealer for any servicing or warranty work to be done for your vehicle.”

…

Honda Australia Representative: “And ah, yeah, because unfortunately Tynan Honda are closed, do you want me to check and confirm who your closest dealer is?”

Caller: “Yes please”

…

Honda Australia Representative: “So your next, your preferred next dealership – you’ve got one in Banksia or Leichhardt.”

Caller: “Geez, both of them are not very convenient.”

Honda Australia Representative: “Yeah far away unfortunately” …

(Emphasis added.)

50    In addition, it is accepted by Honda that the Call Centre conversation at item 11 of Annexure A to the ACCC’s amended concise statement conveyed the alleged representations (T114). That conversation took place during January 2021 and was as follows:

Caller: “Ah yes hello, I’m just inquiring about an email that I received in relation to, um, basically closing down a service centre and dealership and just want to double check that that is the case and also, too, where would I now take the Honda to for a service.”

Honda Australia Representative: “Sure, could I … what dealership did you receive the email for?”

Caller: “It’s for, it just says Astoria Honda.”

Honda Australia Representative: “Correct that’s in Brighton and Bentleigh East in Victoria.”

Caller: “No no no. Well, I’m not in Victoria, I’m in South Australia so I don’t know why I would get this”

Honda Australia Representative: “Oh, yeah, because Astoria Honda is closing down and customers have received a communication, but that dealership is in Victoria.”

…

(Emphasis added.)

51    There is an issue between the parties as to whether the Call Centre conversation at item 22 of Annexure A to the ACCC’s amended concise statement conveyed the alleged representations. That conversation took place in January 2021 and was as follows:

Caller: “… I’ve just got a couple of questions, I’ve owned 3 Hondas before and I’m thinking of buying another one, I don’t have a Honda at the moment, but I’ve been reading about Honda having a new business model and they are going to have less dealers.”

…

Caller: “… currently we don’t have clarification on how many dealerships are going to shut. There are about two or three which have already shut – which um.. the two in Victoria, there’s one in Western Australia, but at this point in time we have clarification of how many dealerships will actually be shutting down”

Caller: “So, which ones in Victoria have closed down?”

Honda Australia Representative: “There’s Ferntree Gully which has shut down– I can tell you just give me a moment. There’s Burswood Honda which is in Western Australia…”

Website (January to 6 June 2021)

52    From January 2021 to 6 June 2021, Honda maintained a webpage on its website Honda.com.au as set out in Tab 24 of Annexure A to the SOAF. There is an issue between the parties as to whether this webpage conveyed the alleged representations.

January 2021

1 to 7 January

53    In early January 2021, Sam McMahon instructed Mr Yeung to create separate and discrete journeys for communications to customers of each Exiting Dealer (each, a closure journey). At that time, the only journey for an Exiting Dealer that Mr Yeung had been involved with, was Travis Honda. Given the number of Exiting Dealers and the fact that each dealership’s circumstances were likely to be different (i.e. different customers and different end dates for each of their operations), a separate journey needed to be created for each dealership, as the audience – and Content – would be different for each.

54    On about 6 January 2021, in accordance with Sam McMahon’s instructions, Mr Yeung created closure journeys for each of Astoria and Tynan. For each of Tynan and Astoria, he created separate journeys for the communications to be sent on T-14 (i.e. 14 days before the dealers ceased to be authorised dealers) and T-0 (i.e. on the date that the dealers ceased to be authorised dealers). In addition, he created a test version of each of the T-14 journeys for Tynan and Astoria (referred to, in each case, as “Wave 1”), which was designed to send the Content to a small subset of the audience. This is ordinarily done in order to be able to test audience response before sending Content to an entire audience. Accordingly, in total, Mr Yeung created three closure journeys for Astoria and three closure journeys for Tynan.

55    On 6 January 2021, the service journey (see [46] above) was activated. This was a single journey that applied for all Exiting Dealers. The service journey was the journey that related to the sending of the Service Reminder Communications.

56    On or around 7 January 2021, Astoria and Tynan agreed with Honda that the termination of their respective Dealer Agreements would become effective from 29 January 2021.

57    During January 2021, Ms McMahon understood that, while Astoria and Tynan would be exiting the Honda network, they would be operating independent service centres after exiting. Ms McMahon gave evidence to this effect during cross-examination. I infer from the evidence generally that the other key relevant individuals at Honda (such as Mr Thorp and Sam McMahon) also had this understanding.

58    In early January 2021, Mr Thorp informed Mr Familton that the Astoria and Tynan dealerships would be exiting the dealer network. Mr Thorp told Mr Familton that he anticipated Astoria and Tynan would go on an aggressive “media buy” in an effort to retain service customers. Mr Thorp tasked Mr Familton with ensuring Honda matched the media campaigns of Astoria and Tynan to compete for those customers.

Exit Communications

59    On 14 January 2021, Honda sent emails to each of Astoria and Tynan setting out the text of a proposed Exit Communication to be sent by email to customers of those dealers (CB tabs 136, 137). The draft emails to customers included a statement that Astoria and Tynan (as the case may be) would “close its business operations” on 29 January 2021.

60    On 15 January 2021, at 8.46 am, Astoria responded, stating that it considered the email in its current form to be misleading and deceptive in contravention of the Australian Consumer Law (CB tab 147). Astoria stated that the draft email was false because it gave the impression that Astoria’s business was closing down completely and “[t]his is simply not the case”. The email emphasised that, while Brighton Automotive Holdings Pty Ltd would cease trading as an authorised Honda dealer, it would continue to operate as an independent service provider, including in relation to Honda vehicles. Astoria requested that Honda amend its proposed email to remove any reference to the “closure” of Astoria and any representation that the business of Brighton Automotive Holdings Pty Ltd would not be continuing. An email in substantially the same terms was sent by Tynan to Honda on 15 January 2021 (CB tab 159). It may be inferred that they had the same adviser assisting them in drafting such correspondence.

61    At 8.52 am on 15 January 2021, Mr Yeung sent an email to Joe Gelsi of Honda (copied to Sam McMahon) with the subject “Today’s emails and SMS…” (CB tab 156). The email referred to “the 2 dealership closures coming up for Astoria and Tynan” and attached a sample email to be sent to their customers. Mr Yeung’s email stated that a small group would be sent an email that day, to gauge what the response would be at the Call Centre; the bulk of the emails would be sent the following week (unless there was an influx of calls at the Call Centre). Mr Yeung’s email then set out the wording for proposed text messages to be sent to customers of Astoria and Tynan.

62    At 10.21 am and 10.31 am on 15 January 2021, Mr Thorp sent emails to Sam McMahon and others within Honda suggesting a change to the wording of the proposed Exit Communications to customers of Astoria and Tynan, to change the words “close its business operations” to “cease being an Authorised Honda Dealer on” (see CB tabs 146, 161).

63    In accordance with Mr Thorp’s emails, the text of the proposed Exit Communications to customers of Astoria and Tynan was amended. The revised wording stated that Astoria or Tynan (as the case may be) would “cease being an authorised Honda dealer” or “is no longer an authorised Honda dealer” rather than that the dealer is “closing”.

64    In re-examination, Ms McMahon gave evidence that, from mid-January 2021, Honda’s position was that the language of “closure” was not suitable language to be used in communications to be sent to customers, and that they should be referring to Exiting Dealers as “ceasing to be authorised representatives of Honda Australia”. I accept that that reflects the position adopted by Honda management, albeit it was not implemented in practice in some cases.

65    At 1.38 pm on 15 January 2021, Sam McMahon sent an email to Joe Gelsi (copied to Mr Yeung) (CB tab 156) that stated in part:

Hi Joe,

Please note one last minute change was made to both the email and SMS for both Tynan and Astoria.

The subject line, title and copy were updated from ‘<dealer> is closing soon’ to ‘<dealer will cease to be and Authorised Honda Centre from 29/01/2021’. This is a much more accurate description of what is happening and not misleading for customers.

I’m not sure if this change will have an impact on any of the call centre agent scripts or any other aspects of call handling but wanted to flag this update with you.

…

(Emphasis added.)

66    In paragraphs 36-37 of Mr Evans’s affidavit he states (and I accept) that: he recalls becoming aware, in or around mid-January 2021, that Astoria and Tynan had raised a concern with the language of proposed closure communications to be sent to their customers; he became aware of the issue when it was mentioned in a Project Fresnel leadership team meeting; and Mr Thorp had primary responsibility for managing the Exit Communications for Astoria and Tynan.

67    In paragraph 38 of his affidavit, Mr Evans gives the following evidence:

To the best of my recollection, the proposed communications to customers of Astoria and Tynan were based on the template used for Travis Honda. However, the language was not correct because it referred to the relevant dealer ‘closing’. Accordingly, I recall Mr Thorp telling me (and others in a leadership team meeting, in January 2021) that, on becoming aware of the issue, he instructed the CX team to ensure that all communications with customers (of all dealers) refer to the relevant dealer ‘ceasing to be an authorised Honda dealer’, as opposed to ‘closing’. I agreed with his direction.

The third sentence of the paragraph set out above (commencing “Accordingly, …”) is subject to a “limited use” ruling, namely that the use of the evidence is limited to the fact that Mr Thorp told Mr Evans (and others) that he had given such a direction to the CX Team (as opposed to proving the fact that Mr Thorp gave the direction to the CX Team). I accept the evidence set out in the first, second and fourth sentences of paragraph 38. In relation to the third sentence, I accept that Mr Thorp told Mr Evans (and others) that he had given such a direction to the CX Team.

68    Insofar as Honda contends that Mr Thorp gave a direction to the CX Team that all communications with customers refer to the relevant dealer as “ceasing to be an authorised Honda dealer” as opposed to “closing”, the evidence does not establish the precise terms of Mr Thorp’s direction.

69    On around 15 January 2021, 19 January 2021 and 1 February 2021, Exit Communications (being automated emails) were sent by Honda to customers of Astoria and Tynan. The text of the 15 January 2021 and 19 January 2021 communications is not set out in the SOAF. However, the text of the Exit Communications sent on 1 February 2021 is set out in the SOAF (see below).

Service Reminder Communications

70    Although Honda made changes to the wording of the proposed Exit Communications in relation to Astoria and Tynan on 15 January 2021, it seems that no-one at Honda turned their mind to whether any corresponding changes needed to be made to the service journey. This journey was responsible for sending the Service Reminder Communications.

71    It is accepted by Honda that the Service Reminder Communications conveyed the alleged representations. It is also accepted that these communications were sent to customers of Astoria and Tynan during the period 1 February 2021 to 26 April 2021.

72    During cross-examination of Mr Yeung, a factual issue emerged as to whether Service Reminder Communications were sent to customers of Astoria and Tynan before 29 January 2021 (the date when they exited the network). As noted above, the service journey was activated on 6 January 2021. Mr Yeung gives evidence (at paragraph 59 of his affidavit) that the service journey was configured to send communications to customers of the Exiting Dealers, “following the exit of those dealers”, to provide reminders about upcoming (or missed) scheduled servicing of their vehicles. During cross-examination, it was suggested to Mr Yeung that the Call Centre conversations at Tabs 12 and 13 of Annexure A to the SOAF (dated 13 January 2021 and 7 January 2021 respectively) indicated that customers of Astoria had received Service Reminder Communications during January 2021 (that is, before 29 January 2021). Mr Yeung did not accept this. Having regard to the text of the Call Centre conversations at Tabs 12 and 13, I am not satisfied that Honda started sending Service Reminder Communications to customers of Astoria and Tynan before 29 January 2021. In those conversations, the customer referred to the dealer closing “at the end of this month” or on “the 29th”. The Service Reminder Communications (set out below) did not include the date. This makes it unlikely that the customers in each of those calls had received the Service Reminder Communication. It is unclear what communications those customers received.

Media campaign

73    On or about 15 January 2021, Mr Familton contacted James McKay and Beth Brady at Zenith Media to engage them to assist in designing a media campaign directed to customers within the Astoria and Tynan ‘Prime Marketing Areas’ (PMAs), being the term used by Honda to describe the territory in which dealers were active under the dealership model. Zenith Media is a media buying agency that Honda commonly engaged to assist in purchasing advertising space on television, digital media (such as online news sites), search engines and social media. On 15 January 2021, Mr Familton sent a follow up email to Ms Brady and Ms McKay at Zenith, with the details of Astoria and Tynan, to which they responded with a summary of their understanding of their brief.

74    At about the same time, Mr Familton engaged Leo Burnett (a creative agency) to assist in developing advertisements for Honda that were to be designed to promote Honda and to explain why customers should stay with authorised Honda service centres. Leo Burnett was responsible for putting Honda’s message to customers into a form that would work as effective advertising. At about this time, Mr Familton was told by Sam McMahon and/or Mr Thorp that the CX Team were anxious to ensure the language in customer communications did not refer to Astoria or Tynan “closing”, but instead that they were ceasing to be an “authorised Honda dealer”. Even though Mr Familton was not involved in the direct communications to customers, he was conscious of the need to ensure that the content of the advertising campaigns for which he was responsible was aligned with the approved customer communications language.

75    On 21 January 2021, Nikki Allen of Leo Burnett emailed Mr Familton (and others in his team) setting out the instructions she had been given with respect to the media campaign. The media campaign to try to retain Astoria and Tynan customers was referred to within Honda as the “Dealer Exit Combat Strategy”. The evidence includes a presentation explaining the strategy. The strategy involved purchasing advertising space on search engines such as Google, as well as a social media campaign across Facebook and Instagram promoting the benefits to customers of remaining within the authorised Honda network. The intention was that, each time a customer within Astoria’s or Tynan’s PMA searched for a Honda dealer or service centre, they would see an authorised Honda advertisement alongside the advertisement of Astoria and Tynan. The strategy was a ‘pull strategy’, which means it was directed at attracting customers towards authorised Honda service centres (such as by promoting the benefits of having their vehicles serviced by authorised Honda technicians with access to genuine Honda parts), as opposed to a ‘push strategy’, which comprised targeted communications to customers of a particular dealer that was exiting the Honda network.

76    In late January 2021, the Dealer Exit Combat Strategy was approved by Mr Thorp.

Call Centre scripts and training

77    Mr Evans does not annex to his affidavit the call script that was in place during January 2021 to deal with calls regarding Exiting Dealers. The evidence includes (at CB tab 181) a script relating to Exiting Dealers. The date for this document in the CB index is 21 January 2021, but its text suggests that it was prepared earlier, at the time that Travis Honda closed (in August 2020). Mr Evans did not refer to any other script as being in place during January 2021 when he was asked about this during cross-examination, and he was not taken to any other script during re-examination. I infer, therefore, that the script at CB tab 181 was in place during January 2021. The script includes the following:

78    The above script referred to dealers “closing”. It did not refer to dealers “ceasing to be authorised Honda dealers”. This would explain why, on some occasions during January 2021, Call Centre staff made statements to customers or potential customers that Astoria or Tynan was closing.

79    On or around 23 January 2021, Mr Evans (who had responsibility for Call Centre staff in connection with Project Fresnel) became aware of a complaint that Call Centre staff had informed a customer that Tynan’s service centre was “closing”. On that day, Probe emailed Mr Evans recordings of certain calls.

80    On 25 January 2021, Mr Evans sent an email to Probe that included: “I think there are opportunities to improve the scripts as these calls will only intensify over the coming months”. In response, Probe suggested that Mr Evans meet with certain staff “and look at the scripts we have and determine any scenarios that might arise but where we [Probe] have no guidance”. It appears that this led to a new script being provided by Honda to Probe on 1 February 2021 (see below).

Astoria and Tynan cease being authorised Honda dealers

81    On 29 January 2021, Astoria and Tynan ceased to be authorised Honda dealers. After that date, they operated independent service centres (including for Honda vehicles) under different names, namely “Astoria Brighton” and “Tynan Motors” respectively.

Service Reminder Communications (1 February to 26 April 2021)

82    It is an agreed fact that from around 1 February 2021 to 26 April 2021 (for Astoria and Tynan) and from around 1 April 2021 to 26 April 2021 (for Burswood), Honda sent Service Reminder Communications to customers of these dealers. It is accepted by Honda that these communications conveyed the alleged representations. The form of these communications is set out in Tabs 1 and 2 of Annexure A to the SOAF. The email communication (Tab 1) was in the following form:

Subject: We’d love to see your Honda [Model] [First Name]

Preheader: Book your next service

Headline: YOUR HONDA [MODEL] IS DUE FOR A SERVICE SOON

Body:

Hi [First Name],

Our records show that your Honda [Model] is due for its [service interval] service on [date].

As you may be aware, due to some recent changes to the Honda Australia dealer network your previous service dealer, [Dealer] is now closed. We apologise for any inconvenience this may cause but we would like to assure you that our dealer network has a number of Service Centres all with access to your vehicles records and will be more than happy to assist you moving forward.

To keep your Honda running safely and at its best please contact your local Honda dealership to book your service.

CTA: FIND MY NEAREST DEALER

FEEL CONFIDENT KNOWING THE COST OF YOUR SERVICE

The Honda Tailored Service tool allows you to see the current price of both the Base scheduled service as well as the cost for Adaptive items.

The Honda Tailored Service price guide is applicable for the first 5 years or 100,000km (whichever occurs first).

CTA: SERVICE PRICING

WHY SERVICE WITH HONDA

No one knows your Honda [Model] like a Honda trained technician. Our team has unique tools and expertise to keep your Honda at its optimal performance. We only use Genuine Honda Parts, which are designed to the same exacting standards of fit and function as all Honda vehicles.

CTA: FIND OUT MORE

If you have recently booked or serviced your vehicle with us, please disregard this reminder.

(Emphasis added.)

83    The form of the text message (Tab 2) was as follows:

Hi [First Name], this is a reminder that your Honda [Model] service is due on [date].

Your previous service dealer has closed so please find your nearest Honda Service Centre here: [website link]

Txt STOP to 0429592015 to Opt Out

(Emphasis added.)

84    It is an agreed fact that, between about 1 February 2021 and 26 April 2021, Honda sent Service Reminder Communications to approximately 1,393 customers of Astoria and 440 customers of Tynan.

85    It is also an agreed fact that, in the period from 1 April 2021 to 26 April 2021, Honda sent Service Reminder Communications to approximately 300 customers of Burswood.

86    The Service Reminder Communications were programmed to be sent, and were sent, at the following times:

(a)    in respect of the emails:

(i)    14 days before the customer’s vehicle was due for a service;

(ii)    7 days before the customer’s vehicle was due for a service;

(iii)    14 days after the customer’s vehicle was due for a service; and

(b)    in respect of the SMSs:

(i)    7 days before the customer’s vehicle was due for a service; and

(ii)    on the day the customer’s vehicle was due for a service,

unless the customer had their vehicle serviced or had booked their vehicle for a service at an authorised Honda dealer before the relevant interval.

February 2021

Exit Communications

87    On about 1 February 2021, further Exit Communications (being automated emails) were sent by Honda to customers of Astoria and Tynan. There is an issue between the parties as to whether these emails made the alleged representations. The Exit Communications sent on 1 February 2021 in relation to Astoria (set out in Tab 3 of Annexure A to the SOAF) were as follows:

HONDA

IMPORTANT CHANGES TO ASTORIA HONDA

Dear Eric,

Astoria Honda is no longer an Authorised Honda Dealer, but no need to worry about any future sales or servicing requirements as we have a number of other Honda Centres in your area and our dealer network will continue to provide the same level of service that you’ve come to expect from Honda.

Find another Honda Centre near you

HONDA CENTRE LOCATOR

We have a record of your vehicle details and service history and

We have a record of your vehicles details and service history and will contact you prior to your next scheduled service. The trained technicians at all of our Authorised Service Centres will ensure your vehicle is maintained to the highest possible standard to keep your Honda running safely and at its best.

If you’d like to learn more about Honda’s business changes, click here to visit our website. Or if you would like to speak to a member of our team, please call 1800 804 954 (8.30am to 6pm AEDT weekdays). They’ll be happy to answer any of your questions.

Kind regards,

Robert Thorp

General Manager – Product, Customer & Communications / Company Secretary

Honda Australia

You are receiving this email because you purchased or have previously serviced your vehicle at Astoria Honda. Unless you have opted to receive communications about Honda products and promotions you have not been subscribed to any additional email list by Honda Australia Pty Ltd.

The Honda Australia Privacy Policy can be accessed at www.honda.com.au/privacy or call Honda Customer Assistance on 1800 804 954. This email was sent by Honda Australia Pty Ltd (ABN 66 004 759 611).

Copyright © 2021 Honda Australia Pty Ltd. All rights reserved. You have received this email because you have opted to receive communications about Honda products and promotions, or are a customer of Honda Australia.

Can’t view this email? Click here

88    The Exit Communications in relation to Tynan (Tab 4 of Annexure A to the SOAF) were in substantially the same terms.

89    The Exit Communications were sent to approximately 20,258 customers of Astoria and 11,000 customers of Tynan.

Call Centre scripts and training

90    On 1 February 2021, Honda provided the Call Centre with: (a) a new script relating to Exiting Dealers (CB tab 214); and (b) Attachment A to the script (CB tab 215). The Call Centre started using the new script on 2 February 2021. The script included:

91    Attachment A to the script was a one-page document with the following information:

92    One of the problems with the above script is that the answer to the second question, by commencing “Yes, that is correct”, was apt to confirm that the dealer was closing. If applied to Astoria and Tynan, this was incorrect. During cross-examination, Mr Evan was taken to the second question and answer in the script and it was put to him that the word “Yes” was an error. He responded that there was no intention to mislead the customer, and he believed the answer to be true, in that they were no longer an authorised Honda dealer. I accept that there was no intention to mislead, but it may well be that the words “Yes, that is correct” at the beginning of the answer to the second question contributed to the problem that, on some occasions, Call Centre staff made statements to the effect that Astoria and Tynan were closing.

93    Further, the heading of the first column of Attachment A was incorrect (because Astoria and Tynan were not closing, they were merely exiting the Honda network). It appears that the relevant individuals at Honda used the word “closing” as shorthand for “closing as authorised dealers” and therefore did not appreciate that this document was incorrect. However, the heading in Attachment A is likely to have contributed to the problem that, on some occasions, Call Centre staff made statements to callers to the effect that Astoria and Tynan were closing.

94    On 2 February 2021, a training session for Call Centre staff was held with Mr Steven (of Honda), to address the need to ensure that, instead of Call Centre staff saying a dealer is “closing”, they said that the dealer “is no longer an authorised Honda dealer”.

Media campaign

95    On 1 February 2021, the Dealer Exit Combat Strategy (see above) went live. The strategy continued until about 19 May 2021.

Customer retention

96    Mr Evans accepted during cross-examination that Honda undertook a retention strategy, to retain customers of Exiting Dealers in the Honda network. The evidence includes an internal Honda presentation titled “Customer Transition Planning” that was prepared on or about 14 February 2021 (CB tab 238), which related to Honda’s strategy of retaining customers of Exiting Dealers in the Honda network. Pages 4 and 5 of the presentation contained a description of the different forms of communications being sent by Honda to customers of those dealers, and data relating to those communications.

March 2021

Exit Communications

97    On or around 1 March 2021 and 31 March 2021, Honda sent Exit Communications (by email) to approximately 12,766 customers of Burswood. The Exit Communications were in the terms set out in Tabs 5, 6 and 7 of Annexure A to the SOAF. There is an issue between the parties as to whether these emails made the alleged representations. The Exit Communications sent on about 1 March 2021 (Tab 7) stated:

HONDA

UPDATE TO BURSWOOD HONDA

Dear [Customer],

Over the next couple of years Honda Australia is making some changes to its business operations and dealer network – to build a stronger and better new car buying and ownership experience.

As a result of these changes, Burswood Honda will cease being an Authorised Honda Dealer on 31st March 2021.

If you need to service your Honda before 31st March 2021 please call the team at Burswood Honda on (08) 6164 1000. After this date, Honda Australia and our national dealer network remain committed to providing you with the same great products and service that you’ve come to expect from Honda.

If you’d like to learn more about Honda’s business changes, click here to visit our website. Or, if you’d like to speak to a member of our team, you can call 1800 804 954 (8:30 am to 6pm AEST weekdays). They’ll be happy to answer any of your questions.

Kind regards,

Robert Thorp

General Manager – Product, Customer & Communications / Company Secretary

Honda Australia

98    The SOAF contains two versions of the Exit Communications sent on about 31 March 2021 (Tabs 5 and 6). It is sufficient to set out the form of email at Tab 5:

HONDA

UPDATE TO BURSWOOD HONDA

Dear [Customer],

Burswood Honda is no longer an Authorised Honda Dealer, but no need to worry about any future sales or servicing requirements as we have a number of other Honda Centres in your area and our dealer network will continue to provide the same level of service that you’ve come to expect from Honda.

Find another Honda centre near you

FIND HONDA CENTRE

We have a record of your vehicles details and service history and will contact you prior to your next scheduled service. The trained technicians at all our Authorised Service Centres will ensure your vehicle is maintained to the highest possible [standard] to keep your Honda running safely and at its best.

If you’d like to learn more about Honda’s business changes, click here to visit our website. Or, if you’d like to speak to a member of our team, you can call 1800 604 954 (6.30am to 6pm AEST weekdays). They’ll be happy to answer any of your questions.

Kind regards,

Robert Thorp

General Manager – Product, Customer & Communications / Company Secretary

Honda Australia

Customer retention

99    During cross-examination, Ms McMahon was taken to a presentation titled “Active Customer Transition – Kick-off Session” (CB tab 252) (dated 4 March 2021 in the CB index). In that context, the following exchange took place:

Well, was there a commercial benefit to Honda Australia in minimising loss of customers throughout network transition?---There was a benefit to the – to the dealer network to maintain customers.

Yes?---Within the Honda – the Honda family; yes.

Yes. And to Honda Australia itself, too?---If you – if you keep – if you keep customers within your franchise, then you can sell other cars to them, so yes.

And there were benefits to Honda Australia from both customers doing periodic maintenance within their dealer network; correct?---Well, more so benefits to the dealers themselves.

But also to Honda Australia?---Yes.

Yes. And also doing general repairs within authorised dealers?---Yes, for dealers and – and Honda; yes.

All right.

HIS HONOUR: Sorry, could I just clarify that. So the extent – so what I understood you just said in the answer to the last couple of questions was that there was – in terms of servicing – the benefit is mainly to the dealers, rather than to Honda Australia?---Yes.

But to some extent, there’s a benefit to Honda Australia if a customer services with a Honda authorised dealer, is that right?---Yes, because the dealer purchases the parts for the service from Honda. But the customer – mainly the revenue from the customer service goes to the dealer.

100    During cross-examination, Ms McMahon was taken to page 16 of that presentation. That page contained an analysis of Astoria’s customer base, with the number of customers in each of four categories. At page 18 of the presentation, one of the work projects there identified was monthly reporting on active customer transition. The project was:

Development of a model that tracks movements of active customers (nationally and per exit dealer) and a dashboard/report that can be used to report to the board on a monthly basis. This stream should also address risks/gaps and work with the regions on remediation strategies/actions.

Ms McMahon said that these reports were presented in the Fresnel meeting or they may have been presented to the Board.

101    During his oral evidence, Mr Evans said that an independent service centre (i.e. one that was not authorised by Honda) may purchase parts from Honda to carry out repairs.

Issue is raised regarding Service Reminder Communications

102    On or around 26 March 2021, Ms McMahon was informed by Mr Thorp that Honda had sent Service Reminder Communications to some customers of Astoria and Tynan that contained language that Astoria and Tynan were “closing”. Ms McMahon gives evidence in her affidavit (which I accept) that she understood at the time that the template that had been uploaded to the relevant journey incorrectly stated that Astoria and Tynan were closing.

103    Ms McMahon gave evidence in her affidavit (which I accept) that: she instructed Mr Thorp to ensure that all communications were updated to reflect the fact that Astoria and Tynan were ceasing to be authorised Honda dealers and not state that they were closing; she was informed by Mr Thorp that he had passed on that direction to his team; she was also informed by Mr Thorp that he had arranged for his team to send a corrective communication to affected customers and advise them that while Astoria and Tynan had ceased to be authorised Honda dealers, they continued to trade and offer servicing under another name.

104    On or about 28 March 2021, Mr Yeung became aware that statements such as “the dealership is now closed” and “your previous service dealer has closed” had been made to customers of Astoria and Tynan. On that day, he created a specific journey designed to send corrective communications to affected customers of Astoria and Tynan (the correction journey). Mr Yeung gives evidence in his affidavit (which I accept) that: the correction journey started sending communications to the audience on 30 March 2021; and the correction journey was configured to send – and sent – the corrective emails to 1,202 recipients.

105    On 29 March 2021, Sam McMahon uploaded amended versions of the communications for version 1 of the service journey (that is, the journey that sent the Service Reminder Communications) in which statements such as “the dealership is now closed” and “your previous service dealer has closed” were removed. However, as discussed below, due to a technical issue, these amendments did not take effect.

Burswood ceases to be an authorised Honda dealer

106    On 31 March 2021, Burswood ceased to be an authorised Honda dealer in relation to servicing vehicles (having earlier ceased to be an authorised Honda dealer in relation to sales). After that date, Burswood operated an independent service centre (including for Honda vehicles).

April 2021

107    On 26 April 2021, Astoria and Tynan commenced a proceeding against Honda in the Supreme Court of Victoria. They alleged that Honda had sent communications to their customers that were misleading or deceptive, on the basis that the communications referred to the dealers as having closed, when that was not the case. Astoria and Tynan sought injunctive relief. At this date, Honda was still sending Service Reminder Communications to customers of Astoria and Tynan (and Burswood) in the form set out at [82]-[83] above (that is, with statements that the dealer “is now closed” and “has closed”). The amended versions uploaded on 29 March 2021 had not taken effect for reasons discussed below.

108    On 27 April 2021, Sam McMahon sent an email to Mr Yeung informing him that Astoria was claiming that service reminders were being sent to Astoria’s customers saying that Astoria had closed. Sam McMahon told Mr Yeung that he (Sam McMahon) had changed the communications within the service journey on 29 March 2021, but it now appeared that the change had not been effective. Mr Yeung gives evidence in his affidavit (which I accept) that this did not make sense to him, and he could not understand why the new communications had not replaced the earlier ones. Mr Yeung paused the service journey until the reason for the change not being effective could be determined.

109    On 28 April 2021, Mr Yeung raised a query with the Cloud support team to try to understand why the update made on 29 March 2021 had not been effective. Later on 28 April 2021, the Cloud team representative responded to Mr Yeung’s query, informing him that in order to give effect to any change to Content within a journey, it was necessary to republish that Content; if a journey had already commenced, subsequent changes would only be effective if the journey was “paused” and then restarted. Mr Yeung gives evidence in his affidavit (which I accept) that he had not been aware of this requirement.

110    On 28 April 2021, Sam McMahon asked Mr Yeung to provide him with a list and contact details of all Astoria and Tynan customers who had received the Service Reminder Communications since the exit of the dealers (i.e. since 29 January 2021). On the next day, Sam McMahon asked Mr Yeung to provide a list of all Astoria and Tynan customers who had received the communications from 29 March 2021 until the journey was paused on 27 April 2021. Later that day, Sam McMahon confirmed that the service journey would not be restarted until it was confirmed that it was correct.

111    Mr Yeung gives evidence in his affidavit that the errors with respect to the communications within the service journey ceased on 26 April 2021. I accept that, from the time when Mr Yeung paused the service journey (on 27 April 2021), Honda ceased sending Service Reminder Communications to customers of Astoria, Tynan and Burswood that contained statements that the dealer “is now closed” or “had closed”.

May 2021

112    In May 2021 (and also in July 2021), the script previously provided by Honda to the Call Centre was revised. Each time an updated script was provided by Honda to the Call Centre, the Call Centre Team Leader (supported by a Honda employee as required) briefed the Call Centre staff about the script to ensure they understood its contents. Another tool that was implemented was to instruct Call Centre staff to keep hard copies of the scripts in sight at all times (or, if they were working from home, to ensure the script was stored in an easily accessible location on their computer). Review of call recordings was increased to assess Call Centre staff compliance with appropriate processes and scripting.

113    In or around May 2021, training was arranged for all Call Centre staff regarding their obligations under the Competition and Consumer Act (including the Australian Consumer Law).

June 2021

114    On 7 June 2021, Honda revised the webpage on its website. Between 7 and 30 June 2021, Honda maintained the webpage in the form set out in Tab 25 of Annexure A to the SOAF. There is an issue between the parties as to whether this webpage conveyed the alleged representations.

July 2021

115    From 1 July 2021 onwards, a Honda employee had a daily meeting with the Team Leader of the Call Centre to ensure compliance with processes, including for the purpose of monitoring Call Centre staff compliance with the Competition and Consumer Act.

Contraventions

Applicable provisions and principles

116    Section 18(1) of the Australian Consumer Law provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

117    Section 29(1)(j) of the Australian Consumer Law provides:

29    False or misleading representations about goods or services

(1)    A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:

…

(j)    make a false or misleading representation concerning the availability of facilities for the repair of goods or of spare parts for goods; or …

118    In Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8; 408 ALR 195, Kiefel CJ, Gageler, Gordon, Edelman and Gleeson JJ stated at [80]-[84]:

80    The principles are well established. Determining whether a person has breached s 18 of the ACL involves four steps: first, identifying with precision the “conduct” said to contravene s 18; second, considering whether the identified conduct was conduct “in trade or commerce”; third, considering what meaning that conduct conveyed; and fourth, determining whether that conduct in light of that meaning was “misleading or deceptive or … likely to mislead or deceive”.

81    The first step requires asking: “what is the alleged conduct?” and “does the evidence establish that the person engaged in the conduct?”. The third step considers what meaning that conduct conveyed to its intended audience. As in this case, where the pleaded conduct is said to amount to a representation, it is necessary to determine whether the alleged representation is established by the evidence. The fourth step is to ask whether the conduct in light of that meaning meets the statutory description of “misleading or deceptive or … likely to mislead or deceive”; that is, whether it has the tendency to lead into error. Each of those steps involves “quintessential question[s] of fact”.

82    The third and fourth steps require the court to characterise, as an objective matter, the conduct viewed as a whole and its notional effects, judged by reference to its context, on the state of mind of the relevant person or class of persons. That context includes the immediate context — relevantly, all the words in the document or other communication and the manner in which those words are conveyed, not just a word or phrase in isolation — and the broader context of the relevant surrounding facts and circumstances. It has been said that “[m]uch more often than not, the simpler the description of the conduct that is said to be misleading or deceptive or likely to be so, the easier it will be to focus upon whether that conduct has the requisite character”. That said, the description of the conduct alleged and identified at the first step should be sufficiently comprehensive to expose the complaint, because it is that conduct that will ultimately, as a whole, be determined to be or not to be misleading or deceptive.

83    Where the conduct was directed to the public or part of the public, the third and fourth steps must be undertaken by reference to the effect or likely effect of the conduct on the ordinary and reasonable members of the relevant class of persons. The relevant class of persons may be defined according to the nature of the conduct, by geographical distribution, age or some other common attribute, habit or interest. It is necessary to isolate an ordinary and reasonable “representative member” (or members) of that class, to objectively attribute characteristics and knowledge to that hypothetical person (or persons), and to consider the effect or likely effect of the conduct on their state of mind. This hypothetical construct “avoids using the very ignorant or the very knowledgeable to assess effect or likely effect; it also avoids using those credited with habitual caution or exceptional carelessness; it also avoids considering the assumptions of persons which are extreme or fanciful”. The construct allows for a range of reasonable reactions to the conduct by the ordinary and reasonable member (or members) of the class.

84    Although s 18 takes a different form to s 29, the prohibitions are similar in nature. In these appeals, there is no relevant meaningful difference between the words “misleading or deceptive” in s 18 and “false or misleading” in s 29. Under s 29 it is necessary to identify a representation made in connection with the supply or possible supply of goods or services, or in connection with the promotion of the supply or use of goods or services, that is false or misleading and meets one of the descriptions in subs (1)(a) to (n).

(Footnotes omitted.)

119    The words “likely to mislead or deceive” in s 18 make clear that it is not necessary to demonstrate actual deception to establish a contravention (Google Inc v Australian Competition and Consumer Commission [2013] HCA 1; 249 CLR 435 at [6]), or that the respondent had an intention to mislead or deceive: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; 149 CLR 191 at 197-198, 216; Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640 at [56]. Nor is it necessary to show that the impugned conduct actually influenced a person to make or be likely to make a particular decision, or to lead evidence as to the effect of the impugned conduct on consumers: Australian Competition and Consumer Commission v Online Dealz Pty Ltd [2016] FCA 732; [2016] ATPR ¶42-524 at [145]; Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634; 317 ALR 73 (Coles Supermarkets) at [45]. In this context, “likely” does not mean more than 50 per cent; it means a real and not remote chance or possibility of having that effect: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 87; Comité Interprofessionnel Du Vin De Champagne v Powell [2015] FCA 1110; 330 ALR 67 at [174].

Consideration

120    As noted above, Honda has admitted that:

(a)    it made the alleged representations by sending Service Reminder Communications to customers of Astoria and Tynan (in the period 1 February 2021 to 26 April 2021) and to customers of Burswood (in the period 1 April 2021 to 26 April 2021). These communications are set out at Tabs 1 and 2 of Annexure A to the SOAF; and

(b)    on 17 occasions in the period 24 December 2020 to 15 April 2021, Call Centre staff acting on Honda’s behalf made statements that conveyed the alleged representations. These communications are set out in Tabs 8 to 23 of Annexure A to the SOAF and item 11 of Annexure A to the ACCC’s amended concise statement.

121    Honda admits that it contravened ss 18 and 29(1)(j) of the Australian Consumer Law by making those representations.

122    On the basis of the factual findings set out earlier in these reasons, and these admissions, I accept that Honda did make the alleged representations by the communications set out in [120] above and that it thereby contravened ss 18 and 29(1)(j) of the Australian Consumer Law.

123    As noted above, there is a dispute between the parties as to whether the alleged representations were conveyed by certain other communications, namely:

(a)    Exit Communications that were sent to customers of Astoria and Tynan on about 1 February 2021, and to customers of Burswood on about 1 March 2021 and 31 March 2021. The communications are set out in Tabs 3 to 7 of Annexure A to the SOAF;

(b)    statements made on the Honda website. These statements are set out in Tabs 24 and 25 of Annexure A to the SOAF; and

(c)    one of the Call Centre communications relied on by the ACCC. This communication is set out in item 22 of Annexture A to the ACCC’s amended concise statement.

124    I will deal with each disputed communication in turn.

125    In relation to the Exit Communications, I have set out, at [87] above, the email that was sent by Honda to customers of Astoria on about 1 February 2021. The Exit Communications sent by Honda to customers of Tynan on about 1 February 2021 were in substantially the same terms. The Exit Communications sent by Honda to customers of Burswood on about 1 March 2021 and 31 March 2021 are set out at [97]-[98] above.

126    The ACCC submits that, by sending these Exit Communications, Honda expressly or impliedly made the No Servicing Representation. The ACCC submits that the emails represented that, for servicing requirements (and future sales), the customer would have to attend another Honda service centre in the customer’s area and (at least implicitly) could not have their car serviced by attending Astoria, Tynan or Burswood.

127    In my view, the Exit Communications referred to at [125] above did not make the No Servicing Representation. It is necessary to read each communication as a whole and in context. The communications did not say that the relevant dealer was “closing”; merely that they would cease, or had ceased, to be an authorised Honda dealer. In my view, the ordinary and reasonable member of the relevant class (owners of Honda vehicles who had their vehicles serviced at the relevant dealer) would understand the distinction between the dealer ceasing to be an authorised Honda dealer and the dealer closing down. They would understand that, if the relevant dealer was ceasing to be an authorised Honda dealer, the dealer might nevertheless continue to operate. In these circumstances, I am not satisfied that the communications conveyed a representation that the relevant dealer would no longer service, or was no longer servicing, Honda vehicles.

128    In relation to the statements on the Honda website (Tabs 24 and 25 of Annexure A to the SOAF), the ACCC notes that Honda’s webpage included information referring to the “closure of some current Honda dealerships”. The ACCC relies on the following text (which appeared in both forms of the webpage):

How do I know if my local Honda dealership is one that is closing and what do I do if it is?

Customers that are impacted by a change in their service location will be notified, providing Honda has your accurate and up-to-date contact information. For a list of Honda sites please visit: www.honda.com.au/dealers, alternatively, you can reach our team on 1800 804 954 (8.30am to 6.00pm weekdays)

129    The ACCC submits that the above text directed users of the website to “a list of Honda sites” that did not include Astoria or Tynan. The ACCC submits that the webpage conveyed both the Closure Representation and the No Servicing Representation because it:

(a)    referred to the closure of dealers and directed customers to a list of Honda dealers that were not closing (which excluded Astoria and Tynan); and

(b)    addressed a concern about “what to do” if the customer’s dealer was closing by directing customers to the list of dealers that excluded Astoria and Tynan and, by doing so, at least implicitly conveyed that it was necessary for customers to attend one of those (non-closing) dealers for their servicing requirements.

130    In my view, the part of the webpage relied on by the ACCC did not convey the alleged representations. Although the question is, “How do I know if my local Honda dealership is one that is closing …”, the first part of the answer is that customers will be notified of a change in their service location. It is only in the next sentence that reference is made to “a list of Honda sites”. I consider that the ordinary and reasonable person in the relevant class (users of the website) would understand the list to be a list of authorised Honda dealers. The absence of Astoria and Tynan on the list would indicate that they are not authorised Honda dealers. I am not satisfied that the ordinary and reasonable person in the relevant class would understand from this that Astoria and Tynan had closed or that they were no longer servicing Honda vehicles.

131    In relation to item 22 of Annexure A to the ACCC’s amended concise statement (set out at [51] above), which is a conversation that took place in January 2021, the ACCC submits that the Call Centre staff member made the Closure Representation and the No Servicing Representation in relation to Burswood. I accept that the Call Centre staff member did convey that Burswood had closed, which was incorrect. However, in the context of the call, the error was inconsequential. First, it appears that the caller was interested in purchasing a new Honda vehicle. As at January 2021, Burswood was no longer an authorised Honda dealer for sales. Therefore, the caller would not have been able to buy a new Honda vehicle from Burswood. Secondly, it appears that the caller was looking to purchase a vehicle in Victoria. Burswood is located in Western Australia. Therefore, the information about Burswood was irrelevant. In light of these matters, I am not satisfied that Honda contravened the statutory provisions by this conversation.

132    In summary, in relation to the communications in respect of which there is a dispute between the parties, I conclude that Honda did not contravene ss 18 and 29(1)(j) of the Australian Consumer Law.

133    In respect of the admitted contraventions, it is appropriate to make declarations reflecting these contraventions. The requirements for the making of declarations are satisfied in the present case, in that: (a) the question whether Honda contravened the provisions is a real and not a hypothetical one; (b) the applicant, the ACCC, has a real interest in raising the question; and (c) there is a proper contradictor (notwithstanding that Honda has admitted the contraventions).

134    In the amended originating application, the ACCC seeks two declarations: one referable to the No Closure Representation; the other referable to the No Servicing Representation. Each proposed declaration applies for the period January to June 2021 and in relation to all three dealers. I consider that it would be preferable for the declarations to be recast so that they refer to the relevant communications, namely the Service Reminder Communications and the statements made by Call Centre staff. Further, I consider that the declarations should reflect the fact that the time periods were different for the Service Reminder Communications relating to Astoria and Tynan and those relating to Burswood. In light of these matters, and subject to any submissions the parties may wish to make, I propose to make declarations along the following lines:

IT BE DECLARED THAT:

1.    Between about 1 February 2021 and 26 April 2021, the respondent (Honda), in trade or commerce:

(a)    in connection with the promotion and supply of automotive servicing and repair services to Australian consumers, made false or misleading representations concerning the availability of facilities for the repair of vehicles, in contravention of s 29(1)(j) of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law); and

(b)    engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18(1) of the Australian Consumer Law;

by:

(c)    sending service reminder emails and text messages (Service Reminder Communications) to customers of Brighton Automotive Holdings Pty Ltd (Astoria) and Tynan Motors Pty Ltd (Tynan) that represented that Astoria or Tynan (as applicable):

(i)    would close or had closed; and

(ii)    would no longer service, or were no longer servicing, Honda vehicles,

when in fact:

(d)    Astoria and Tynan were not closing, did not close, and during that period continued to operate vehicle servicing departments and were able to service, repair and provide spare parts for vehicles, including Honda vehicles.

2.    Between about 1 April 2021 and 26 April 2021, Honda, in trade or commerce:

(a)    in connection with the promotion and supply of automotive servicing and repair services to Australian consumers, made false or misleading representations concerning the availability of facilities for the repair of vehicles, in contravention of s 29(1)(j) of the Australian Consumer Law; and

(b)    engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18(1) of the Australian Consumer Law;

by:

(c)    sending Service Reminder Communications to customers of Buick Holdings Pty Ltd (Burswood) that represented that Burswood:

(i)    would close or had closed; and

(ii)    would no longer service, or were no longer servicing, Honda vehicles,

when in fact:

(d)    Burswood was not closing, did not close, and during that period continued to operate a vehicle servicing department and was able to service, repair and provide spare parts for vehicles, including Honda vehicles.

3.    Between 24 December 2020 and 15 April 2021, Honda, in trade or commerce:

(a)    in connection with the promotion and supply of automotive servicing and repair services to Australian consumers, made false or misleading representations concerning the availability of facilities for the repair of vehicles, in contravention of s 29(1)(j) of the Australian Consumer Law; and

(b)    engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18(1) of the Australian Consumer Law;

by:

(c)    call centre staff acting on Honda’s behalf making statements to callers that represented that Astoria, Tynan or Burswood:

(i)    would close or had closed; and/or

(ii)    would no longer service, or were no longer servicing, Honda vehicles,

when in fact:

(d)    Astoria, Tynan and Burswood were not closing, did not close, and during that period continued to operate vehicle servicing departments and were able to service, repair and provide spare parts for vehicles, including Honda vehicles.

Pecuniary penalty

Applicable provisions and principles

135    Pursuant to s 224(1)(a)(ii) of the Australian Consumer Law, if the Court is satisfied that a person has contravened a provision of Pt 3-1 of the Australian Consumer Law (which relevantly includes s 29(1)(j)), the Court may order the person to pay such pecuniary penalty in respect of each act or omission by the person to which the section applies, as the Court determines to be appropriate. The Australian Consumer Law does not empower the Court to impose a pecuniary penalty for a contravention of s 18.

136    Section 224(2) provides that, in determining the appropriate pecuniary penalty, the Court must have regard to all relevant matters including:

(a)    the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission; and

(b)    the circumstances in which the act or omission took place; and

(c)    whether the person has previously been found by a Court in proceedings under Ch 4 or Pt 5-2 of the Australian Consumer Law to have engaged in any similar conduct.

137    At the relevant times (that is, from December 2020 to April 2021), the maximum penalty for a body corporate for each contravention of s 29(1)(j) of the Australian Consumer Law was the greater of:

(a)    $10 million; or

(b)    if the Court can determine the value of the benefit obtained from the contravention – three times the value of the benefit; or

(c)    if the Court cannot determine the value of the benefit – 10% of the annual turnover of the body corporate.

138    I recently considered the applicable principles in relation to s 224 of the Australian Consumer Law in Australian Competition and Consumer Commission v Optus Internet Pty Ltd [2022] FCA 1397 at [24]-[36]. I draw on those paragraphs in the paragraphs set out below.

139    In Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (the Agreed Penalties Case), the High Court emphasised that the primary purpose of civil penalties is to secure deterrence. In contrast to criminal sentences, they are not concerned with retribution and rehabilitation but are “primarily if not wholly protective in promoting the public interest in compliance”: Agreed Penalties Case at [55] per French CJ, Kiefel, Bell, Nettle and Gordon JJ; see also at [110] per Keane J. This point was also emphasised by the High Court in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450 (Pattinson) at [15]-[16], [43], [45], [55] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ.

140    The plurality in Pattinson affirmed (at [18]) the well-known statements of French J, as his Honour then was, in Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR ¶41-076 (CSR). In that case, his Honour listed several factors that informed the assessment of a penalty of appropriate deterrent value under the Trade Practices Act 1974 (Cth). His Honour stated:

The assessment of a penalty of appropriate deterrent value will have regard to a number of factors which have been canvassed in the cases. These include the following:

1.    The nature and extent of the contravening conduct.

2.    The amount of loss or damage caused.

3.    The circumstances in which the conduct took place.

4.    The size of the contravening company.

5.    The degree of power it has, as evidenced by its market share and ease of entry into the market.

6.    The deliberateness of the contravention and the period over which it extended.

7.    Whether the contravention arose out of the conduct of senior management or at a lower level.

8.    Whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention.

9.    Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention.

141    After setting out the above passage, the plurality in Pattinson stated at [19]:

It may readily be seen that this list of factors includes matters pertaining both to the character of the contravening conduct (such as factors 1 to 3) and to the character of the contravenor (such as factors 4, 5, 8 and 9). It is important, however, not to regard the list of possible relevant considerations as a “rigid catalogue of matters for attention” as if it were a legal checklist. The court’s task remains to determine what is an “appropriate” penalty in the circumstances of the particular case.

(Footnotes omitted.)

142    The plurality in Pattinson considered the role of the prescribed maximum penalty as a yardstick in a civil penalty context, affirming (at [53]) the explanation provided by the Full Court of this Court in Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 (Reckitt Benckiser) at [155]-[156]. See also Pattinson at [54]-[55].

143    In cases involving a very large number of contraventions, it may be unhelpful to seek to make a finding as to the precise number of contraventions, or to calculate a maximum aggregate penalty by reference to such a number: see Coles Supermarkets at [18] and [82]; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113; 254 FCR 68 at [143].

144    It is relevant to refer to the course of conduct principle, which was considered by the Full Court of this Court in Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2017] FCAFC 159; 258 FCR 312 at [421]-[428]. The Full Court stated at [424] that the course of conduct principle is a useful “tool” in the determination of appropriate civil penalties. The Full Court continued:

… As we have already indicated, the principal object of the penalties imposed by s 76 of the [Trade Practices Act 1974 (Cth)] is that of specific and general deterrence. With this in mind, in a civil penalty context, the course of conduct principle can be conceived of as a recognition by the courts that the deterrent effect in respect of a civil penalty (at both a specific and general level) is measured by reference to the nature of the conduct for which it is imposed. It is therefore of paramount importance to identify whether multiple contraventions constitute a single course of conduct or separate instances of conduct, so as to ensure that an appropriate deterrent effect is achieved by the imposition of the penalty or penalties in respect of that particular conduct.

145    In relation to the course of conduct principle, in Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) [2016] FCA 698 (Hillside), Beach J stated at [25]:

… the “course of conduct” principle does not have paramountcy in the process of assessing an appropriate penalty. It cannot of itself operate as a de facto limit on the penalty to be imposed for contraventions of the ACL. Further, its application and utility must be tailored to the circumstances. In some cases, the contravening conduct may involve many acts of contravention that affect a very large number of consumers and a large monetary value of commerce, but the conduct might be characterised as involving a single course of conduct. Contrastingly, in other cases, there may be a small number of contraventions, affecting few consumers and having small commercial significance, but the conduct might be characterised as involving several separate courses of conduct. It might be anomalous to apply the concept to the former scenario, yet be precluded from applying it to the latter scenario. The “course of conduct” principle cannot unduly fetter the proper application of s 224.

146    The above passage was cited with approval by the Full Court in Reckitt Benckiser at [141].

147    In determining the appropriate penalty, it is relevant to consider steps taken to ameliorate loss or damage (such as payment of compensation) as potentially mitigatory considerations: Australian Competition and Consumer Commission v Woolworths Limited [2016] FCA 44; [2016] ATPR ¶42-521 at [166]-[167]; Australian Competition and Consumer Commission v AGL South Australia Pty Ltd [2015] FCA 399; 146 ALD 385 at [38].

148    Co-operation with authorities in the course of investigations and subsequent proceedings can properly reduce the penalty that would otherwise be imposed. The reduction reflects the fact that such co-operation: increases the likelihood of co-operation in future cases in a way that furthers the object of the legislation; frees up the regulator’s resources, thereby increasing the likelihood that other contravenors will be detected and brought to justice; and facilitates the course of justice: see, eg, Agreed Penalties Case at [46]; NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; 71 FCR 285 at 293-294.

Consideration

149    As noted above, the ACCC contends that a penalty in the range of $7 million to $9 million is appropriate for the contraventions of s 29(1)(j) of the Australian Consumer Law; Honda contends that a penalty in the range of $1 million to $3 million is appropriate.

150    As noted above, the maximum penalty for each contravention of s 29(1)(j) was the greater of: $10 million; or, if the Court can determine the value of the benefit obtained from the contravention – three times the value of the benefit; or, if the Court cannot determine the value of the benefit – 10% of the annual turnover of the body corporate. It is common ground that, in the present case, the benefit obtained by Honda from the contravening conduct cannot be determined. Further, it is common ground that 10% of the annual turnover of Honda in the 12 months before each contravention is approximately $98.8 million. Accordingly, the maximum penalty per contravention is approximately $98.8 million.

151    The number of contraventions of s 29(1)(j) of the Australian Consumer law is as follows. The Service Reminder Communications were sent by Honda to 1,393 customers of Astoria, 440 customers of Tynan and 300 customers of Burswood. Assuming there is only one contravention for each customer to whom Service Reminder Communications were sent, the total number of contraventions involving the Service Reminder Communications is 2,133. In addition, there were 17 Call Centre conversations that constituted contraventions. Given that the maximum penalty per contravention is $98.8 million, the total maximum penalty is an extremely large figure.

152    I will now consider the various relevant considerations.

The nature and extent of the contravening conduct

153    The Service Reminder Communications were emails and text messages sent to 2,133 customers of Astoria, Tynan and Burswood. The conduct continued for several months (in relation to Astoria and Tynan) and for about one month (in relation to Burswood). There were 17 Call Centre conversations that constituted contraventions, and these occurred over a period of several months.

Loss or damage suffered as a result of the act or omission; whether any benefit to Honda

154    Honda’s contraventions of s 29(1)(j) may have caused loss to Astoria, Tynan and Burswood by way of loss of business (that is, servicing vehicles). It may be accepted that, although the Service Reminder Communications incorrectly stated that Astoria, Tynan or Burswood (as the case may be) “is now closed” or “has closed”, some customers may not have been misled by this. For example, the evidence includes some communications sent by Astoria and Tynan to their customers informing them that they were continuing to operate. Communications of this type reduce the prospect of customers being misled. It may also be accepted that some customers would have chosen to take their vehicle to an authorised Honda dealer for servicing in any event. In such cases, even if the customer was misled by Honda’s communications, the contraventions did not cause loss to Astoria, Tynan or Burswood (as the case may be). Nevertheless, I consider it likely that, at least in some cases, Honda’s communications (that is, the Service Reminder Communications) would have misled customers into thinking that Astoria, Tynan or Burswood (as the case may be) had closed and led the customer to take their vehicle to an authorised Honda dealer rather than having it serviced at Astoria, Tynan or Burswood. In such cases, Astoria, Tynan or Burswood (as the case may be) suffered a loss of business. The evidence does not enable the loss to be quantified.

155    It is likely that some customers suffered non-pecuniary loss by way of the loss of a purchasing choice as to where to take their vehicle for servicing. The evidence does not enable a finding to be made as to whether customers suffered pecuniary harm.

156    The parties’ submissions also address the topic of benefit to Honda. To the extent that the contraventions led some customers to having their vehicle serviced at an authorised Honda dealer rather than at Astoria, Tynan or Burswood, Honda may have derived a benefit through the purchase of parts from Honda and (at a more general level) through retaining the customer in the Honda network. However, the evidence does not enable me to form a concluded view on the issue of benefit.

Circumstances in which the act or omission took place

157    The contraventions of s 29(1)(j) took place in circumstances where Honda was undertaking a significant business restructure. In connection with the restructure, Honda undertook a communications strategy both to inform customers of the changes and to seek to retain them within the Honda network.

158    The circumstances include the fact that, although Honda made changes to the wording of the proposed Exit Communications in relation to Astoria and Tynan on 15 January 2021, no-one at Honda turned their mind to whether any corresponding changes needed to be made to the service journey (which was responsible for sending the Service Reminder Communications) (see [70] above). This occurred in a context where Astoria and Tynan had, in strong terms, drawn Honda’s attention to the misleading nature of the draft Exit Communications. The relevant people at Honda were aware that Astoria and Tynan would continue to trade after exiting the Honda network, and therefore aware that statements to the effect that Astoria and Tynan were closing, or had closed, would be misleading. I consider that Honda’s systems and processes were deficient in that they did not pick up that the wording of the Service Reminder Communications was misleading. The fact that those messages were automated, and therefore to be sent in the same form to many customers, underlines the need for systems and processes to check the accuracy of the communications.

159    The circumstances also include the fact that, when the matter was raised in late March 2021, Honda attempted to correct the wording of the Service Reminder Communications. However, due to a technical issue, the change did not take effect. This was not appreciated at the time and therefore incorrect communications continued to be sent until late April 2021. The failure to appreciate that the changes to the wording had not taken effect represents a further failure of Honda’s systems and processes. In circumstances where Honda had already been sending misleading messages to customers of Astoria and Tynan for approximately two months, it is unsatisfactory that it did not undertake checks to ensure that the wording of the communications had been corrected.

160    In relation to the Call Centre contraventions, the script that Honda had in place during January 2021 was inadequate and likely contributed to Call Centre staff making misleading statements during that month. While an improved script commenced to be used on 2 February 2021, this was still deficient (see [92]-[93] above). These deficiencies are likely to have contributed to the Call Centre staff making misleading statements after 2 February 2021.

Previous findings by a court in proceedings under Ch 4 or Pt 5-2

161    Honda has not previously been found to have engaged in contraventions of the Australian Consumer Law.

Size of contravening company

162    Honda accepts that it is a large company, with revenue of approximately $880 million for the financial year ending 31 March 2023. Annexure B to the ACCC’s “closing propositions” dated 5 September 2023 sets out Honda’s and Honda Motor Co’s consolidated revenues, profits and net assets for the last five years. These figures were accepted as correct by senior counsel for Honda. It is sufficient for present purposes to focus on the financial position of Honda. The figures show that Honda is a large company, with large revenue.

The deliberateness of the conduct

163    Honda’s contraventions of s 29(1)(j) were not deliberate. As noted above, the contraventions relating to the Service Reminder Communications occurred in circumstances where Honda amended the wording of the draft Exit Communications in mid-January 2021, but failed to appreciate that the wording of the Service Reminder Communications also needed amending.

164    The evidence establishes that Honda management’s position, from mid-January 2021 onwards, was that communications to customers should refer to dealers “ceasing to be authorised Honda dealers” rather than to dealers “closing”. There was a failure, due to inadvertence, to fully implement that position.

165    In relation to the Call Centre, while there were deficiencies with the script in place during January 2021, I do not consider that there was an intention to mislead. Similarly, while there were deficiencies in the script in place from 2 February 2021, I do not consider this to have been intentional.

Whether the contravention arose out of the conduct of senior management or at a lower level

166    The contraventions of s 29(1)(j) did not arise from the conduct of senior management. Rather, they arose from the conduct of employees at a lower level. In particular, the failure to appreciate that the Service Reminder Communications needed to be amended in the same way as the draft Exit Communications were amended occurred at a level below senior management.

Corporate culture

167    Ms McMahon’s affidavit contains details of Honda’s corporate compliance program at paragraphs 84-89 and the improvements to that program since the contraventions at paragraph 90. While Honda had a compliance program in place in 2020-2021, it did not prevent the contraventions occurring.

168    I note that Honda sent out corrective communications to customers of Astoria and Tynan in late March 2021 (see [104] above). However, these were only sent by email (rather than email and text). Corrective emails were not sent to customers of Burswood who had received the contravening Service Reminder Communications.

Co-operation with the ACCC

169    Honda admitted, at an early stage of this proceeding, that the Service Reminder Communications relating to Astoria and Tynan and some of the Call Centre conversations made the alleged representations and that Honda thereby contravened s 29(1)(j). Honda did not appreciate, until shortly before trial, that Service Reminder Communications in the same form had also been sent to customers of Burswood. (In this regard, Honda accepts that its response to a notice issued to it under s 155 of the Competition and Consumer Act was in error.) Upon realising that Service Reminder Communications had also been sent to customers of Burswood, Honda promptly notified the ACCC. Subsequently, Honda admitted that this conduct also contravened s 29(1)(j). I consider that Honda’s cooperation with the ACCC, as outlined above, was substantial and should be taken into account to lower the penalty that would otherwise be imposed.

Course of conduct

170    I consider that the contraventions are appropriately grouped for penalty purposes into two courses of conduct: one comprising the sending of the Service Reminder Communications; the other comprising the 17 Call Centre conversations. The conduct in sending the Service Reminder Communications was of the same character and stemmed from the one error (the failure to appreciate that the wording of the Service Reminder Communications needed to be amended in mid-January 2021). Likewise, the Call Centre communications are of the same character and can be appropriately grouped together.

Conclusion in relation to penalty

171    In forming a view as to an appropriate penalty, I have had regard to the cases cited by the parties as being comparable cases. However, the assistance they provide is limited as the circumstances of each case are different. Also, the maximum penalty was much lower in many of the cases.

172    Although the contraventions of s 29(1)(j) were not deliberate, they were nevertheless serious. The number of contraventions is large. The contraventions took place over a period of several months. Honda is a large company; a large penalty is therefore required to achieve specific and general deterrence. Honda’s cooperation with the ACCC is a factor that reduces the penalty that would otherwise be imposed.

173    In all the circumstances, subject to consideration of the totality principle, I consider the following penalties to be appropriate: $5.5 million in respect of the contraventions involving the Service Reminder Communications and $500,000 for the 17 Call Centre contraventions. I consider these amounts to be necessary to achieve the objects of specific and general deterrence.

174    The two penalties produce a total penalty of $6 million. I have considered whether any reduction is required on the basis of the totality principle (see Australian Securities and Investments Commission v Wooldridge [2019] FCAFC 172 at [26]). I do not consider that any reduction is required on this basis. I will therefore impose a total penalty of $6 million.

175    I note for completeness that the ACCC submitted that the Court ought to draw an adverse inference (as discussed in Jones v Dunkel [1959] HCA 8; 101 CLR 298) from Honda’s failure to call Mr Thorp. In circumstances where Mr Thorp no longer works for Honda and indicated that he was not prepared to make an affidavit, I do not consider that an adverse inference should be drawn from the failure to call Mr Thorp. A party is not, under pain of a detrimental inference, required to call a witness in circumstances where they do not know what the witness will say: Fabre v Arenales (1992) 27 NSWLR 437 at 449-450 per Mahoney JA, Priestley and Sheller JJA agreeing.

Conclusion

176    For the above reasons, I have reached the conclusions summarised at [12] above. I will, at this stage, make an order that, within two business days, the parties provide any agreed minute of orders to give effect to these reasons and in relation to costs, or, failing agreement, each party provide its proposed minute of orders and a short submission within three business days.

Associate:

Dated:    15 December 2023