Beecham Motors Pty Ltd v General Motors Holden Australia NSC Pty Ltd [2025] VSC 125

Chris Hey  |  Michael Lo  |  Dan Dowling

Key takeout

In the absence of any bad faith, dishonesty, unconscionable conduct or conduct undermining the bargain between parties, courts are reluctant to interfere and imply terms which may alter the agreement between parties.

Facts

Beecham Motors Pty Ltd and other Holden dealerships brought a class action against General Motors Holden Australia NSC Pty Ltd (GM Holden) alleging that GM Holden had breached the terms of the dealer agreements when GM Holden decided to exit the Australian market. The plaintiffs alleged (amongst other things) that GM Holden breached:

• an obligation that GM Holden supply new vehicles to the dealers for the entire duration of the dealer agreements. The dealer agreements contained a clause that provided ‘[GM Holden] will endeavour to supply dealers with a sufficient quantity of vehicles that will allow achievement of sales evaluation guide (‘SEG’) or meet reasonably anticipated demand‘ (supply term);
• an implied term in the dealer agreements that GM Holden would ensure the availability of supply of new vehicles to the dealers for the entire duration of the dealer agreements; and
• an implied duty of good faith in the dealer agreements, and a duty of good faith pursuant to the Franchising Code of Conduct (Franchising Code) by failing to ensure the availability of new vehicles for supply.

The key issue before the court was whether any of the dealer agreements contained any of the alleged terms (express or implied) as contended by the dealerships.

Decision

The court dismissed the dealer’s claims made against GM Holden.

No breach of the supply term

The court held that GM Holden had not breached the supply term. The supply term was an endeavour obligation requiring GM Holden to take steps a reasonable person in the circumstances would have taken, and on a factual analysis, the court was not satisfied that GM Holden had failed to exert itself to attempt to supply a sufficient quantity of vehicles to achieve SEG or anticipated demand.  

The court noted that what is reasonable is conditioned by the terms of the contract and the circumstances of the person carrying out the obligation.

No implied terms

The implied terms proposed by the dealerships could not be implied into the dealer agreements either for business efficacy, or by reason of the custom and usage of the car retailing industry because the proposed implied term for the continuous vehicle supply lacked clarity and certainty, was inconsistent with the express terms of the contract and it was not necessary for business efficacy. 

Nichols J noted that an implied term cannot be used to re-balance risks where a contract is otherwise coherent in a practical and commercial sense.

No breach of duty of good faith

GM Holden had not breached its duty of good faith under section 6(1) of the Franchising Code (or the implied duty) because the court was not satisfied that GM Holden had acted dishonestly, undermined the bargain or failed to act reasonably. As the allegations against GM Holden were based on the alleged breach of the supply term (which the court did not accept), it followed that alleged breach of the duty of good faith could not provide a ‘separate or alternative route home‘.