In this case, Ms. McLean purchased a BMW from a BMW dealership
in 2009. The purchase price was just under $110,000.
BMW Financial Services Canada financed the purchase. The
financing agreement assigned the dealership's rights entitled
to the car to BMW Financial, which registered a security interest
in the car in the usual manner.
Ms. McLean was dissatisfied with the vehicle. She returned to
the dealership for service a number of times. Ultimately, she made
a unilateral decision to return the car to the dealership in late
2010 and stopped making payments to BMW Financial.
BMW Financial sold the car at an auction for less than the
amount owing on the loan and sued Ms. McLean for the balance owing
of about $41,000 plus interest at 18 percent.
Ms. McLean defended the action, in part, on the basis that the
dealership had made false and misleading representations to her
that had induced her to buy the car. She argued that the
relationship between the dealership and BMW Financial was a close
and continuing one and as a result, she should be able to raise
defences available against the dealership in the action brought by
BMW Financial moved for judgment. The motion judge concluded
that the dealership and BMW Financial were separate entities,
independent from each other with nothing more than the trade name
"BMW" common to them.
Ms. McLean appealed to the Court of Appeal. The Court of Appeal
agreed with the motion judge and dismissed the appeal.
The reasoning in the case is straightforward and not
particularly surprising. An unsophisticated consumer might assume
that the presence of the BMW name in the name of the dealership and
the name of the financing entity would indicate a connection such
that one of them might be held accountable for the wrongdoing of
the other. Clearly, that is not the case. Presumably it would have
been open to Ms. McLean to assert a third-party claim against the
dealership when she was sued by BMW Financial so that she could
raise her arguments and complaints about the pre-contractual
misrepresentations in that manner. There is no indication in the
case that such an approach was made or even considered.
Nevertheless, for at least some people, this case may illuminate
the important distinction between dealerships and the financing
arms of auto manufacturers.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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