Chesterman Farm Equipment Inc.(CFEI) vs. CNH Canada Ltd.

In the matter of the Farm Implement Act

And in the matter of:

An Application to the Agriculture, Food and Rural Affairs Appeal Tribunal (Tribunal) by Chesterman Farm Equipment Inc. ("CFEI"), of Tillsonburg, Ontario, about a decision of CNH Canada Ltd. ("CNH");

And in the matter of:

A Pre-hearing Conference pursuant to Rule 24 of the Tribunal's Rules of Procedure, held for the purposes of the hearing by the Tribunal of a Motion by CFEI seeking disclosure of documents from the Association of Equipment Manufacturers.

And in the matter of:

A request for review by CFEI from a decision of the Tribunal dated August 18, 2009 under Subsection 21.2(1) of the Statutory Powers Procedure Act and Rule 29 of the Rules of Procedure for the Tribunal.

Before:
Paula Lombardi, Vice Chair

Appearances: None

Background of the Request for Review

This matter arises from a request for review by Chesterman Farm Equipment Inc. ("CFEI') of the Decision of the Tribunal dated August 18, 2009 ("Decision"). This Decision is based on written submissions from the parties, intervenors, and a review of the record. No oral evidence was given.

The parties to the matter before the Tribunal are CNH Canada Ltd. ("CNH") and CFEI. CNH is a registered distributor/manufacture of farm equipment under the Farm Implements Act ("Act") and amendments thereto. CFEI is a registered "dealer" under the Act.

In 2006, CNH claims to have ended its dealership relations with CFEI. This is the issue that is in dispute between CNH and CFEI and subject to a Tribunal hearing under the Act. On January 16, 2008 both CNH and CFEI met with a mediator in an attempt to reach a settlement through mediation. The parties were unable to reach a settlement and as a result CFEI wrote to the Tribunal on January 18, 2008 to request a hearing pursuant to section 5(5) of the Act. CFEI seeks over $1 million in general damages and $1 million punitive and exemplary damages from CNH.

The issues arising in this case relates to CFEI's allegation of CNH's contractual and statutory breaches. CNH alleges that without CFEI's breaches of the contract (Dealership Agreement) it was likely the contract would have been renewed. The alleged breaches include among others, CFEI's failure to achieve a minimum market share.

On May 16, 2008 a prehearing conference was held by the Tribunal. At the prehearing conference, CNH and CFEI consented to a procedural Order that granted both the Association of Equipment Manufacturers ('AEM") and John Deere Limited ("JDL") limited intervenor status in these proceedings. AEM is a trade association whose membership includes equipment manufacturers in the agricultural, construction, forestry, mining and utility industries.

AEM does business as a US trade association and does not have a presence in Canada nor does it have any employees located in Canada. For the last five years, since January 1, 2005, AEM has relied on Howard Mains of Tactics Government Consulting, a government relations firm in Ottawa, as its Canadian representative. JDL is a farm equipment manufacturer. The parties agreed that the continuation of the prehearing conference would be scheduled for Wednesday, March 19, 2009.

The role of the intervenors (AEM and JDL) was limited in the procedural Order to submissions relating to the interpretation of section 18 of the Act specifically as it arises in the circumstances of the dispute between CFEI and CNH and as it relates to the statutory liability of distributors. The procedural Order established a schedule for production and discovery between CFEI and CNH. The intervenors AEM and JDL were purposely excluded from the production and discovery schedule due to the limited nature of their involvement in these proceedings. During discovery CNH confirmed that it obtains information about industry wide sales from AEM but has no information about AEM's data collection and processes.

CFEI contacted Howard Mains, AEM's Canadian representative, directly on February 17, 2009 listing 21 specific questions relating to AEM's data collection and distribution as well as two questions about how the data was obtained for the period between 2001 and 2008.

On February 18, 2009, AEM's counsel from Chicago, Illiniois, replied to CFEI advising that AEM would not respond to CFEI's questions.

On March 12, 2009, CNH replied to CFEI advising how CNH provides monthly sales information to AEM. CNH advised that: all major and most minor manufacturers or distributors provide similar sales information to AEM; AEM uses the data to provide generic non-identifiable information to each contributing distributor outlining sales by category/county; and CNH calculates its market share based on information provided by AEM.

At the continuation of the prehearing held March 18, 2009 the Tribunal was advised that during discovery, CFEI had requested information from CNH's representative about how CNH determined its market share. CNH's evidence was that it determined its market share using data obtained by AEM. CFEI then asked AEM to provide information about the market data. AEM refused to provide CFEI with the information requested. The Tribunal directed CFEI to bring a motion requesting an Order be issued to obtain the information from AEM.

The Tribunal adjourned the prehearing on Tuesday April 21, 2009 to hear CFEI's motion to obtain the information requested from AEM. As the Tribunal's Rules do not provide for the production and discovery from non-parties, the Tribunal issued a further procedural Order allowing CFEI to rely on Rules 30.10 and 31.10 of the Rules of Civil Procedure to bring a motion seeking production and discovery from the non-party AEM.

The Tribunal heard CFEI's motion seeking production and discovery from AEM, a non-party to the proceedings, on July 16, 2009. On August 18, 2009 the Tribunal rendered its Decision on CFEI's motion dismissing CFEI's motion for production and discovery and Ordering that CFEI pay AEM's costs of the motion filed at $16,935.54 inclusive of fees, disbursements and GST.

On September 18, 2009, Mr. Eric K. Gillespie, counsel for CFEI filed a written request with the Tribunal seeking a review of the August 18, 2009 decision to: have said decision set aside and an Order issued permitting CFEI to obtain documentary production from AEM; requiring AEM to make the necessary inquiries to respond to the questions posed by CFEI; allowing CFEI to conduct an oral examination for discovery; revoking AEM's intervenor status if the questions are not answered to the satisfaction of CFEI; granting CFEI leave to read in evidence at the hearing; and issuing a Restricted Access Order preventing public access to any documents produced by AEM except for statistical information and transcript evidence.

The Tribunal's Rules of Procedure

29.09 In deciding whether it is advisable to conduct a review of all or any part of a final decision or order, the Tribunal may consider any relevant circumstances including,

1. whether there is significant new evidence which was not available at the time of the original appeal;
2. whether the Tribunal made a material error of law or fact such that the Tribunal would likely have reached a different decision;
3. the extent to which any party to the appeal or any other person has relied upon the final decision or order;
4. the extent to which any party to the appeal or any other person will be affected by the review process; and
5. whether the public interest in finality of decisions is outweighed by the alleged prejudice to the requester.
   

Complaints behind the Request for Review

It is the Appellant's position that the decision is based on a material error of law or fact, such that the Tribunal would have likely reached a different decision.

Issue #1

The Tribunal misinterpreted and misapplied section 15 of the Statutory Powers and Procedure Act ("SPPA") in arriving at its decision.

Finding #1

Rule 1.09 of the Tribunal's Rules provides that where a matter of procedure is not provided for in the Rule, the Rules of Civil Procedure may be followed where the Tribunal deems appropriate.

On the understanding that the Tribunal's Rules do not provide for the production and discovery of non-parties, CFEI agreed to bring a motion seeking production and discovery from AEM pursuant to the requirements of the Rules of Civil Procedure. CFEI further agreed that Attorney General of Ontario et al. v. Stavro et al [1995] O.J. No. 3136 (C.A.) provides the leading authority on interpreting and applying Rule 30.10 of the Rules of Civil Procedure. It is clear that CFEI agreed that the Rules of Civil Procedure and jurisprudence relating to discovery of non-parties would apply to the motion.
The Tribunal properly found that unlike the Stavro case, AEM asserted privilege over some of the information being sought, which resulted in another factor being added for consideration in determining whether or not to permit production and discovery of a non-party, in this case AEM.

The Tribunal properly applied the SPPA in determining the admissibility and weight to be afforded to hearsay evidence. In determining the evidentiary value of the Cummings' Report, the Tribunal properly exercised its discretion in considering that Harry Cummings did not testify and that AEM had no opportunity to test the truth and validity of the Cummings' Report to come to the conclusion that almost 'no weight' be given to Cummings' Report.

Issue #2

The Tribunal failed to acknowledge that the Cummings' Report had already been disclosed to the parties, intervenors and Tribunal several months before the motion and was not "new evidence."

Finding #2

There is no evidence provided to indicate that the Tribunal treated and/or considered the Cummings' Report as "new evidence." The Tribunal accepted that the affidavit of Karen Dawson that included the April 2009 Cummings' Report as an appendix. The issue properly raised by the Tribunal was due to the fact that Karen Dawson's affidavit was submitted after CFEI had already cross-examined AEM's representative and that the affidavit failed to testify directly about the contents of the Cummings' Report.

Issue #3

The Tribunal failed to consider that as a matter of law documents may be tendered for purposes other than the truth of their contents.

Finding #3

This is a mischaracterization of the approach taken by the Tribunal in assessing the Cummings' Report. The information provided indicates that the contrary is true - the Tribunal did in fact consider the approach suggested by CFEI and looked not at the Cummings' Report for proof of the contents, but as defining the issue over the accuracy of the market share data relied on by CNH (AEM's data).

In coming to the conclusion on the Cummings' Report the Tribunal considered that: the Dawson affidavit arrived after CFEI cross-examined AEM's representative; the Dawson affidavit failed to provide any testimony relating to the Cummings' Report except for that it was delivered on April 19, 2009. The Tribunal properly assessed these facts in light of the jurisprudence and discretion provided by the SPPA to conclude that Cummings' Report be afforded almost "no weight." CFEI fails to acknowledge that it agreed to the application of the Rules of Civil Procedure and leading jurisprudence absent a Tribunal rule to deal with the motion.

Issue #4

The Tribunal failed to consider 21 of the 23 requests for productions(s) made by CFEI.

Finding #4

There is no information provided indicating that the Tribunal failed to consider the 23 questions raised by CFEI in its February 17, 2009 letter. The evidence indicates that AEM provided CFEI a copy of its Procedural Manual which provided some of the information being sought by CFEI. Further, in a letter dated March 12, 2009 CNH responded to several of the questions. AEM's Procedural Manual was attached as an exhibit to the Affidavit of Howard Mains and CFEI had every opportunity to cross examine Mr. Mains on information contained in AEM's Procedural Manual.

The Tribunal's Decision appropriately focused on the outstanding questions relating to AEM's confidential information, knowing that the other questions had been dealt with through the cross-examination of Mr. Mains, AEM's Procedural Manual and/or CNH's response to CFEI.

Issue #5

The Tribunal failed to acknowledge that AEM admitted that all confidentiality concerns could be addressed under the Tribunal's existing process.

Finding #5

This is a mischaracterization of the common law privilege of confidentiality considered by the Tribunal. AEM's Policy and Procedure Manual outlines the process used by AEM to gather private and confidential business information from distributors on the basis that the information: will remain confidential; be received stored and managed by an independent data management firm; and only the independent management firm will have access to the raw business data. The evidence provided indicated that AEM does not have access to the new business data.

In concluding that the AEM sales data is privileged, the Tribunal properly took into consideration the right to privacy and confidentiality of many of the unidentified parties that would be impacted by the release of AEM's data information along with the contractual obligations of AEM to its membership.

Issue #6

The Tribunal failed to properly consider and adjudicate on the issue of relevance.

Finding #6

The Tribunal assumed the relevance of the information being sought. At page 8 of the Decision the Tribunal states: "Therefore, despite uncertainty over the relevance of the requested material, I will assume relevance and turn to the fairness analysis." [emphasis added] Once relevance was assumed the Tribunal properly looked at whether it would be unfair to require CFEI to proceed to trial absent the information being requested by AEM.

Issue #7

The Tribunal failed to acknowledge that AEM has admitted in writing that its interests are at stake in these proceedings.

Finding #7

The Tribunal correctly concluded that AEM has no stake in the outcome of the dispute between CFEI and CNH. Both CFEI and CNH agreed that that AEM was an intervenor and not a party to the proceeding in the Tribunal's procedural order of May 2008.

The original motion brought by CFEI was a request for data from AEM. However, the new motion brought by CFEI made several allegations against AEM including that the AEM data is flawed in its collection, consolidation and reporting. It was this broadly stated allegation of CFEI that could have the effect of creating significant potential liabilities for AEM from its numerous members, who are neither parties nor intervenors in the proceedings between CFEI and CNH.

The dispute between CFEI and CNH is a contractual dispute, and the Tribunal appropriately found that AEM has no stake in the outcome of the specific dispute between CFEI and CNH before the Tribunal.

Issue #8

The Tribunal awarded costs, when there were no grounds in fact or in law for such an award.

Finding #8

As indicated above, Rule 1.09 of the Tribunal's Rules of Procedure ("Rule") provides that where a matter of procedure is not provided for in the Rule, the Rules of Civil Procedure may be followed where the Tribunal deems appropriate. In determining the issue of costs, the Tribunal considered the SPPA, Rules 1.09 and 28 of the Tribunal's Rules and the Rules of Civil Procedure.

It is clear from the evidence presented at the Tribunal hearing that AEM was required to retain Canadian legal counsel, prepare and file responding materials, participate in a cross-examination, and prepare for and attend a full day motion hearing. The costs incurred by AEM would not have occurred were in not for CFEI bringing its motion. The Tribunal awarded costs on the basis that a party to a private dispute, in this case CFEI, sought to involve a non-party, AEM, in such a manner that the non-party was forced to incur expenses. Although recognizing that the circumstances were unusual, based on the motion materials and the hearing of the motion, the Tribunal concluded that it was unreasonable for CFEI to seek to involve a non-party in the production and discovery phase of the dispute between CFEI and CNH and used its discretion to award costs to AEM.

Decision of the Tribunal

I therefore find that the Tribunal's August 18, 2009 decision was based on the proper application of the Tribunal's Rules and, where appropriate, the SPPA, Rules of Civil Procedure, and existing jurisprudence. There is no basis for a Review in the context of Rule 29 of the Tribunal's Rules.

The request for Review is hereby denied.

Dated at Lasalle, Ontario this 8th day of January, 2010.