AHG WA (2015) Pty Ltd v Mercedes-Benz Australia/Pacific Pty Ltd [2023] FCA 1022

Federal Court of Australia

AHG WA (2015) Pty Ltd v Mercedes-Benz Australia/Pacific Pty Ltd [2023] FCA 1022 File number: VID 604 of 2021

Judgment of: BEACH J

Date of judgment: 30 August 2023

Catchwords: CONTRACT – contractual power of non-renewal – scope, ambit and purpose of contractual power – "evergreen" agreements – termination of dealership agreement – issue of non-renewal notices – transition to agency business model – repudiation – whether non-renewal power was exercised for an improper purpose – whether MBAuP has appropriated the dealerships' goodwill – compensation for loss of goodwill – nature of goodwill – difference between legal and accounting concepts – legal concept of goodwill involving property, sources and value – relevance of contractual entitlement or licence from franchisor to carry on business – relevance of franchisor's intellectual property rights to concept of goodwill ECONOMIC DURESS – prior economic investment by dealers – whether agency model was imposed on dealers by MBAuP – whether dealers freely consented to business model – whether agency model has provided a worse financial return for dealers than existed under the prior dealership model – so-called "lawful act" duress FRANCHISOR AND FRANCHISEE – Franchising Code – duty of good faith – unfair terms – franchisor opportunism – whether there was a shift of profits from dealers to MBAuP – whether MBAuP acted in accordance with the direction of its parent company – whether MBAuP misled dealers in consulting on proposed business model UNCONSCIONABLE CONDUCT – whether conduct unconscionable in contravention of s 21 of the Australian Consumer Law – whether MBAuP sought to exploit superior bargaining position to extract best financial return at expense of dealers – whether appropriation of dealers' goodwill