Obstinate BMW fails in second lease appeal

BMW Australia Finance this week lost a second legal appeal over a wrangle with a client following the repossession of a car and the sale of that car at auction for $30,000, which was less than half the value that the client had offered to pay BMW.

The directors of a family company, John Youngman and Martha Youngman, provided guarantees over a lease taken out by the company over a leased BMW in 2000.

After placing the company into administration in 2003 the Youngmans attempted to negotiate a price at which to buy the car. BMW ignored the offers, insisted on a full payout in line with the lease contract, and ultimately repossessed and auctioned the car.

BMW then sought to enforce the guarantee in the Magistrates Court to recover the difference between the sale price of the car at auction and the value BMW deemed remained under the lease.

The Youngman's won that proceeding, heard in 2006, on the grounds that BMW ignored an offer to buy the car for $62,000 and in doing so failed to observe the requirement of the law that parties to contractual disputes seek to mitigate their loss.

BMW succeeded in a first appeal on technical grounds that returned the matter to the Magistrates Court. At a second trial the magistrate again found in favour of the Youngmans.

On the second appeal, resolved this week, the judge, Lucy McCallum, found that it was open to the magistrates to reach the conclusions they did.