New South Wales Supreme Court CITATION : BMW Australia Finance Limited v Youngman [2009] NSWSC 960 HEARING DATE(S) : 7 August 2009 JUDGMENT DATE : 16 September 2009 JURISDICTION : Common Law JUDGMENT OF : McCallum J DECISION : (1) The appeal is dismissed. (2) The plaintiff is to pay the defendants' costs of the appeal. CATCHWORDS : COMMON LAW - appeal from decision of Local Court Magistrate - whether findings made open to Magistrate - appeal dismissed LEGISLATION CITED : Local Courts Act 1982 Local Court Act 2007 CATEGORY : Principal judgment CASES CITED : Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 BMW Australia Finance Limited v John Paul Youngman & Anor [2007] NSWSC 624 BMW Australia Finance Limited (Plaintiff) PARTIES : John Paul Youngman (1st Defendant) Martha Youngman (2nd Defendant) FILE NUMBER(S) : SC 15502/08 COUNSEL : Mr R Beasley (Plaintiff) Mr G Sirtes SC (Defendants) SOLICITORS : Bartier Perry Solicitors (Plaintiff) Landerer & Company (Defendants) LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 115/08 LOWER COURT JUDICIAL OFFICER : Magistrate Norton LOWER COURT DATE OF DECISION : 22 September 2008 - 8 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION McCALLUM J 16 SEPTEMBER 2009 15502/08 BMW AUSTRALIA FINANCE LIMITED v JOHN PAUL YOUNGMAN & ANOR JUDGMENT 1 HER HONOUR: This is an appeal against the judgment of a Magistrate given in the Local Court at Manly in proceedings commenced by BMW Australia Finance Limited following its repossession of a leased car. It is the second appeal brought by BMW in relation to those proceedings. 2 The car had been leased to a company, Veritage Press Pty Limited, under a hire-purchase agreement entered into on 10 May 2000. Veritage's obligations under the hire-purchase agreement were guaranteed by its directors, Mr and Mrs Youngman. 3 Veritage was placed into voluntary administration on 14 October 2003 and subsequently fell into default of hire instalment payments due under the agreement. On 19 December 2003, Mr Youngman made an offer to purchase the car for $52,000. That offer was refused by Mr Brian Siew on behalf of BMW. Mr Siew told Mr Youngman that BMW required him either to take over the lease or to return the car, in which case BMW would pursue a claim against Mr and Mrs Youngman as guarantors. 4 On 6 January 2004, Mr Paul O'Halloran wrote to Mr Youngman on behalf of BMW in the following terms (as written in original): "There are currently 2 options available to you in respect of this contract. They are: 1) Continue the agreement under current terms and conditions (which include provision for early payout – your current payout value valid to 9/1/04 is $62,014.72), or 2) Reassign the current agreement under it's (sic) current terms and conditions to another party. Whilst i appreciate your position & the suggestion of a fair and reasonable offer for the vehicle, i also ask that you understand the vehicle is subject to, and bound by, the parameters of a contractual agreement." The letter concluded by observing, politely but firmly, that the matter had been escalated as far as was appropriate and that Mr Youngman could be confident that he had received a "final and correct" response to his query. 5 Undeterred by those remarks, Mr Youngman responded immediately with a query as to the calculation of the payout figure. He enquired whether BMW would accept payment of $57,472.16 plus one month's lease payment ($1,275). The email was directed to Mr O'Halloran with a request that it be forwarded to Mr Siew. BMW did not respond. 6 On 14 January 2004, Mr Youngman sent an email directly to Mr Siew noting that his email of 6 January 2004 to Mr O'Halloran must have gone astray. The email stated: "Mr O'Halloran in his email of 6/1/04 specified a purchase price of $62,014. Provided that figure is inclusive of GST, it is acceptable. Please advise how and where you wish payment to be made and transfer documents arranged." 7 Again, BMW did not respond, except by serving a notice of intention to repossess the car. In subsequent correspondence, Mr Youngman asserted his understanding that he had accepted an offer made by Mr O'Halloran to buy the car for $62,014 and reiterated that he was "happy to proceed with the purchase on the basis of the price stipulated by Mr O'Halloran". BMW appears also to have ignored that correspondence. The car was repossessed and sold at auction for $30,000. 8 It was common ground that BMW was entitled to repossess the car when it did. In those circumstances, pursuant to clause 12(2) of the hire-purchase agreement, Veritage was liable to pay as liquidated damages "the amount by which moneys paid and value provided by the hirer or on the hirer's behalf by way of deposit and rent instalments together with the Value of the Goods at the time the owner takes possession is less than the net amount payable". 9 The interpretation clause of the agreement relevantly defined "Value of the Goods" to mean "the best price which could be reasonably obtained by the owner at the time of the owner taking possession of the goods". 10 By clause 20 of the agreement, Mr and Mrs Youngman had agreed to pay all moneys payable under the agreement which were not paid by Veritage. BMW's claim in the Local Court sought to enforce the guarantees given by Mr and Mrs Youngman on the premise that the "Value of the Goods" was the net proceeds of the sale at auction. 11 The proceedings were heard over two days on 24 March and 9 June 2006. On 9 August 2006 the Magistrate gave judgment in favour of Mr and Mrs Youngman. His Honour held: "At common law, a person who suffers damage as a result of a breach of a contract is required to mitigate his loss. The Plaintiffs refused the Defendants' offer, sold the vehicle at auction and have sued the Defendants for the loss being the difference between sale price and the amount due under the agreement thus the claim now before the Court. Had the Plaintiff accepted $62,014 sought by the Plaintiff as at 9 January as agreed to by the Defendant on 14 January there would have been no loss save and except approximately $250, a miniscule amount in the circumstances which I am satisfied could have been successfully negotiated between the parties." 12 BMW appealed against that judgment. 13 On 21 June 2007, Associate Justice Malpass allowed the appeal: BMW Australia Finance Limited v John Paul Youngman & Anor [2007] NSWSC 624. His Honour observed at [18] that the defences relied upon by the defendants had not raised any question of mitigation of damages. His Honour held that, in erroneously relying on that question to determine the plaintiff's claim, the Magistrate had failed to address the real issue put in contest by the parties, which was to determine the "Value of the Goods" within the meaning of the hire-purchase agreement. His Honour remitted the proceedings to the Local Court for determination according to law. 14 The proceedings came back before the Magistrate on 22 September 2008. The Magistrate found that the "Value of the Goods" within the meaning of the agreement was $62,014.72. Although articulated in different ways in four separate grounds, the essential issue raised by the present appeal is whether it was open to the Magistrate to make that finding on the evidence before him. 15 The grounds of appeal identified by BMW are: "(1) The learned magistrate should have held that upon the proper construction of the lease agreement the "best price that could reasonably be obtained" for the vehicle the subject of the agreement was the amount that the vehicle sold for at public auction on 29 February 2004 (less expenses), namely the sum of $26,702.00. (2) The learned magistrate erred in law in finding the first defendant's offer to pay to the plaintiff the sum of $62,014.72 on 14 January 2004 was the best price that could be reasonably obtained for the vehicle within the meaning of the terms of the lease agreement for the vehicle. (3) The learned magistrate ought to have held that the obligation of the first and second defendants pursuant to the contract of guarantee and indemnity they had entered into with the plaintiff was to pay to the plaintiff, after the vehicle was repossessed, the amount owing pursuant to clause 12(2) of the lease agreement being the amount of $49,711.72. (4) The learned magistrate erred in law in failing to hold that the first defendant's offer to pay to the plaintiff the sum of $62,014.72 on 14 January 2004 comprised two separate and unquantified components: a. a component to purchase the vehicle; b. a component for the release of the first and second defendants from their obligations and liabilities to the plaintiff pursuant to the guarantee and indemnity." 16 The appeal was brought under s 73 of the Local Courts Act 1982. Since the filing of the summons, however, that Act has been repealed by the Local Court Act 2007, which commenced on 6 July 2009. Pursuant to its transitional provisions, that is now the Act that governs the present appeal: see clause 6 of Schedule 4. 17 Section 39(1) of the Local Court Act provides: "A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law." 18 BMW contends that, although Mr Youngman's correspondence identified a purchase price of $62,014, which was plainly a better price than that which was obtained by BMW at the auction, it was not open to determine that that was "the best price which could be reasonably obtained by the owner at the time of the owner taking possession of the goods" within the meaning of the agreement. The basis for that contention is that Mr Youngman hoped or expected to obtain two things in exchange for his money. Plainly, he expected to take ownership of the car. BMW's submission rests on the fact that he also expected, if he bought the car, that he and Mrs Youngman would be released from any liability under the guarantee. BMW contends that the Magistrate erred in law in failing to construe Mr Youngman's offer in that way (ground 4) and that, on that basis, the Magistrate should have found that the price at auction, and not the amount offered by Mr Youngman, was the "Value of the Goods" (grounds 1 to 3). 19 In support of those contentions, BMW relied on the evidence given by Mr Youngman in the proceedings below. Mr Beasley, who appeared for BMW in the appeal, took me to the relevant transcript in respect of each stage of the negotiations between Mr Youngman and BMW. I accept that the evidence is consistent with the submission put by Mr Beasley as to Mr Youngman's expectation, if the sale were acceptable to BMW, that he and his wife would be relieved of their obligations as guarantors. 20 It is not enough, however, for BMW to establish that the Magistrate could have reached a different conclusion on the strength of the evidence before him. The determination of the questions of law raised by the present appeal turns on whether it was open to the Magistrate to make the ultimate finding that he made. In my view, it was. The Magistrate said: "The goods were repossessed on 2 February 2004. At this time there was an offer to purchase the goods made as recently as 14 January 04 of $62,014.72. As referred to in my judgment, there were two attempts to sell the vehicle at auction before it was finally sold at auction on 22 February 2004 for $30,000 less charges. The offer of $62,014.72 from the defendants was available for acceptance from 14 January 04 until the sale on 22 February 04. As referred to in my judgment on 9 August 06, the plaintiff because of the business they conducted, that is the financing of BMW motor vehicles together with the knowledge that the vehicle had failed to sell at auction on two prior occasions knew that the value of the goods at the time of the repossession, that is the best price which could be reasonably obtained at the time of taking possession of the goods, was $62,014.72 which was offered by the defendants as early as 14 January 2004 and still open to acceptance as at 22 February." 21 It is clear from that discussion that the Magistrate's ultimate finding of fact as to the value of the goods was based on his construing Mr Youngman's email dated 14 January 2004 as an unqualified offer to buy the car for $62,014.72. That may have entailed error if the Magistrate has misdirected himself as to the question to be answered, or applied the wrong test, but I do not accept that has occurred. In my view, it was open to the Magistrate to construe the email as he did, notwithstanding the fact that Mr Youngman had a different understanding or expectation. The legal effect of what Mr Youngman wrote stands to be construed objectively. Accordingly, I accept, as submitted by Mr Sirtes on behalf of Mr and Mrs Youngman, that it was open to the Magistrate to construe the email as an unqualified offer which remained open for acceptance when the car was repossessed. 22 Once that is accepted, it follows that it was open to his Honour to find that the amount offered by Mr Youngman was the best price BMW could reasonably obtain for the car at that time. This is not a situation where it is suggested that there was no evidence to support the finding: cf Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 355.7. BMW's challenge to the conclusion reached by the Magistrate turned on the contention that it was not open to his Honour to construe Mr Youngman's offer as he did. In my view, that construction was open. The appeal should be dismissed with costs. 23 Orders: (1) That the appeal be dismissed. (2) That the plaintiff pay the defendants' costs of the appeal. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.