AADA wants to cash out

THE split earlier this year between franchised dealers and the motor trades associations has turned rancorous, with the new dealer body suing for control of assets worth more than $420,000.

The new body – the Australian Automotive Dealer Association Pty Ltd (AADA) — has started court action in Canberra to regain control of three units in the trust that owns MTAA House in Canberra and some other assets.

The Australian Motor Industry Federation (AMIF) is refusing to hand over control. At last accounting, the units were worth $420,470.

Control of the assets is critical for the new dealer body, which started basically from scratch earlier this year, launching a membership campaign aimed at enlisting the support of the larger dealer groups around the country.

These larger groups had previously felt the representation provided by the AMIF and its Australian Automobile Dealers Association was dominated by, and aimed at, smaller and regional dealers.

The AMIF is the peak body for the motor trades associations around the states, including the Victorian Automobile Chamber of Commerce (VACC). It represents all traders in the automotive industry, retail, repair and maintenance.

In an action lodged with the Supreme Court in the Australian Capital Territory, the new dealer body, through a company called Dealer Support Services Pty Ltd (DSS), is claiming the unit holders in the MTAA Unit Trust had agreed to hand over the units in 2012.

Documents lodged with the court indicate DSS is seeking a declaration that it is the holder of the three units — the “AADA units” — in the MTAA Unit Trust.

It is also asking that the court order MTAA House Pty Ltd to issue a unit certificate to DSS in respect of the AADA units.

And, in accordance with the unit trust’s deed, DSS wants MTAA House Pty Ltd to offer the AADA units for sale to other unit holders or to be able to sell the units itself.

The other unit holders are the state motor trades associations, including the VACC. There is a total of 116 units in the trust, which is expected to produce a total dividend or distribution to unit holders of $632,500 for the year to June 2014.

The AADA units would receive a distribution of around $4500.

The root of the dispute lies in a decision by representatives of franchised dealers to break away from the MTAA and form an independent association.

A new company, Australian Automotive Dealer Association Ltd, was formed and started a membership drive earlier this year.

Previously, franchised dealers had been represented by the MTAA through an unincorporated body called the Australian Automobile Dealers Association, which was formed and controlled by the MTAA.

In 2011, it was decided to beef up the representation of franchised dealers, so the unincorporated Australian Automobile Dealers Association was dissolved and a company, called Australian Automotive Dealers Association Pty Ltd (with the same AADA initials), was formed.

The members of the unincorporated body decided to transfer its assets to the new company, which was later renamed Dealer Support Services Pty Ltd.

The DSS court documents claim that the MTAA Unit Trust unit holders unanimously agreed that DSS was a unit holder in the MTAA Unit Trust. It was subsequently registered as the unit holder of the AADA Units under its then-current name Australian Automobile Dealers Association Pty Ltd.

However, the MTAA wrote to DSS in February 2014 to say that the transfer was ineffective and, therefore, DSS is not the unit holder.

DSS alleges this is a breach of trust and has started the court proceedings to regain title to the AADA Units.

Patrick Tessier, the chief executive of the new dealer body said the dealer group decided to break away from the MTAA as it considered it was not getting the representation it needed.

The re-organistion that was started in 2011 with the dissolution of the unincorporated Australian Automobile Dealers Association was meant to kick-start a reinvigorated representation of franchised dealers.

“But nothing happened,” Mr Tessier told GoAuto.

So the board of the unincorporated AADA set up the new AADA, the Australian Automotive Dealer Association Ltd.

“This association is run by the old association. It’s the same board,” Mr Tessier said.

He said the dealers had effectively bought the AADA Units over a long period, through their membership fees to the state associations.

“The bottom line is, these assets categorically belong to the dealers.”

He stressed the new company had always wanted to work with the state motor trades associations.

“I have written to them numerous times asking for us to all sit down, with very little response from any party.”“We want to represent the dealers, we want to build an association.” Mr Tessier said the dealer recruitment program was progressing well. He said the new AADA had already signed up at least 700 franchised outlets.

He was confident the membership would reach 2000 by the end of July, almost half the 4106 dealer franchises around the country.

He said Automotive Holdings Group (AHG) had committed to join its 100-plus franchises. Others to sign already include the AP Eagers group and the Nick Polites group.

When the new AADA broke away in February, the chief executive of the VACC, David Purchase said he thought “there had been some things that have been done, frankly, too quickly and without sufficient consultation”.

He conceded that, if the large dealers backing the new AADA believed they needed a more effective national body, they had every right to try to achieve that.

“VACC has not, and will not, do anything to hinder that.”