Tony.......I think you should bypass the dealers as they have made their decision by refusing to accept your warranty claim. Now you should go to Honda Australia, whether it be customer service or management, and get them to review their decision to not accept your claim. In this instance, you can verify with the mechanic's independent report that the vehicle was damaged by a manufacturer's defect.

If they then refuse, I guess there is legal option but that is probably out of the question due to costs, time and likelihood of winning.

Or otherwise you could write to Sydney Morning Herald as they have that Drive section once a week where disgruntled owners state their case, then SMH goes get the Honda dealer to state their case, they also get Honda Australia to state their case. This publicity may be a good cause.