Sharalea Farms Inc. (Scott Anderson) vs. Vandenbrink Farm Equipment

In the matter of the Farm Implements Act

An application to the Agriculture, Food and Rural Affairs Appeal Tribunal (Tribunal) by Sharalea Farms Inc. (Scott Anderson), of Scotland, Ontario, under Section 5 of the Farm Implements Act.

Before: John O'Kane, Vice Chair; Mary Field, Member; Rob Scouller, Member

Appearances:

Scott Anderson, on behalf of the appellant, Sharalea Farms Inc.
Neil Anderson, witness for the appellant
Matt Liska, witness for the appellant
Joe Sparks, witness for the appellant
Brian Marston, witness for the appellant
Robert Smith, witness for the appellant
Nick Ionite, witness for the appellant
John Gushie, witness for the appellant
Anne Vandenbrink, respondent, Vandenbrink Farm Equipment
David Vandenbrink, respondent, Vandenbrink Farm Equipment
Bruce Van Kemenade, witness for the respondent
Brian Rieger, witness for the respondent
Wayne Buchanan, Hardi North America Inc., witness for the respondent
Don Hewitt, Hardi North America Inc., witness for the respondent
Pete Mosey, Case IH Corporation, witness for the respondent
Albert Damen, Case IH Corporation, witness for the respondent
Brian Brock, counsel for Case IH Corporation

Decision of the Tribunal

Overview

Neil and Scott Anderson are father and son and operate Sharalea Farms Ltd. They have complaints about three farm implements bought from Vandenbrink Farm Equipment Inc. (VFE); a Case IH MX 255 tractor; a Case IH LX 780 loader; and a Hardi Navigator sprayer.

Mediation of the dispute between Sharalea and Vandenbrink under section 5(3) of the Farm Implements Act was unsuccessful and Sharalea brought the dispute to the Tribunal under section 5(5) of the Act. As this is Sharalea's case, the burden of proving the case rests with Sharalea.

The appeal was heard over five days between April and June, 2009. Sharalea's issues relate to its claim of defects in the three farm implements and because of those defects, it asks the Tribunal to order that VFE:

• provide it with a new Case IH MX 275 tractor, equipped to its specifications;
• provide it with a new Case IH LX 780 loader, to its specifications;
• provide it with a new Hardi 4400 Commander sprayer; and,
• pay it money compensation of $141,750.00.
  

Although Sharalea made the application to the Tribunal for the relief noted above, at the end of the hearing, in its closing submissions, VFE asked the Tribunal to advise Sharalea to pay an outstanding account from July 2007 for $695.57.

Preliminary Issues

1. Limited Intervenor Status

Brian Brock, counsel for Case IH Corporation, asked for limited intervenor status to raise a jurisdictional issue. Case IH did not seek full party status. Brock likened Case IH's role to that of a "friend of the Tribunal". The appellant and respondent did not object. The Tribunal granted Case IH limited intervenor status to address the jurisdictional issue.

Section 17 of the Act recognizes that parties can contract for greater warranty protections than set out in the Act. In this case, the Mullin's Farm Service contractual repair warranty was greater than that set out in the Act. However, the Mullin's twelve-month warranty expired, at the latest, October 31st, 2007, almost a year before the transmission seized.

2. Tribunal Jurisdiction

Case IH argued that the Tribunal's jurisdiction is different for "new" as opposed to "used" farm implements. The argument continued that the Tribunal had jurisdiction over the issues about LX 780 Loader and Navigator sprayer, since both were "new". However, the Tribunal had no jurisdiction over the issues about the MX 255 tractor since it was "used".

VFE supported Case IH's position on the jurisdictional point about the MX 255 tractor while Sharalea opposed the position.

The Tribunal reserved its decision on Case IH's preliminary jurisdictional motion concerning the MX 255 tractor until hearing the evidence about all three farm implements.

a. Facts about the Farm Implements Relevant to Tribunal Jurisdiction

i. The Hardi NP 1100 Sprayer

VFE sold Sharalea a Hardi NP 1100 crop sprayer for $40,000.00 on May 5th, 2006. VFE delivered the sprayer to Sharalea on May 8th, 2006.

Under section 14(1) of the Act, the section 13 implied statutory warranty as to quality on the sprayer is effective on May 8th, 2006 and, according to paragraph 3 of that section, continues for one year. One year is 365 days, except for leap years. Section 89 of the Legislation Act, 2006 directs that we exclude May 8th, 2006 when calculating the one-year statutory warranty period. Therefore, the statutory warranty period for the sprayer expired May 8th, 2007.

Hardi provides a contractual manufacturer's warranty on the sprayer of two years from delivery to the end user. Although the approach to computing time from the Legislation Act, 2006 applies only to legislation, we find that the approach is reasonable and that we should apply that approach by analogy to calculate contractual warranty periods, where the contract is silent. The Hardi contractual warranty is silent on how to compute time. Therefore, by analogy we find the contractual warranty on the sprayer expired on May 8th, 2008.

ii. The Case IH LX780 Loader

VFE sold Sharalea a Case IH LX780 Loader for $23,515.00 on December 30th, 2006. VFE delivered the loader to Sharalea on March 31st, 2007.

As noted above, the statutory warranty, according to paragraph 3 of section 14(1) of the Act, is effective on March 31st, 2007 and continues for one year. Applying the same time computation analysis as above, the statutory warranty period for the loader expired March 31st, 2008.

Case IH provides a contractual manufacturer's warranty on the loader of twelve months from delivery of the loader to Sharalea. Case IH is silent on how to compute time. Therefore, by analogy we find the contractual warranty on the loader expired on March 31st, 2008.

iii. The Case IH MX 255 Tractor

VFE originally sold the MX 255 tractor to Norm Watson on March 21st, 2005. The statutory warranties as to power and quality are limited to the lesser of one year or 1,000 hours operation . Therefore, the statutory warranties expired on March 21st, 2006.

The Case IH manufacturer's warranty for the tractor is the lesser of 24 months or 2000 hours. The manufacturer's warranty is transferrable from the original purchaser to a subsequent purchaser. Therefore, the manufacturer's warranty, which is greater than the statutory warranty, expired on March 21st, 2007.

Watson enrolled the MX 255 in Case IH's "Ultra Shield Protection Plan". That plan provides the first and second owner of the tractor with extended warranty protection on lubricated components of the tractor for up to the lesser of 10 years or 10,000 hours, provided the owner follows Case IH's maintenance and fluid testing program.

In the fall of 2005, after about eight months use of the MX 255, Watson placed an order with VFE for a new larger MX 275 model tractor. When it arrived in the spring of 2006, Watson traded in the MX 255 with 491 hours use on it for the newer and larger tractor. Watson's reason for upgrading the tractor, as explained by VFE, related to taking advantage of 0% purchase financing offered by Case IH.

On December 30th, 2006, VFE sold the MX 255 to Sharalea for $142,000.00.

Sharalea then became the tractor owner and entitled to the balance of the manufacturer's warranty and the balance of the "Ultra Shield", subject to the terms of those warranty plans.

b. Jurisdictional Analysis

When Sharalea purchased the MX 255 tractor, it was not "new", in the ordinary sense of that word and the statutory warranty periods had expired; however, the balance of the Case IH manufacturer's warranty as well as the balance of the extended "Ultra Shield" plan applied to the tractor.

Case IH's argument suggests that since the tractor was "used" when purchased by Sharalea, the Tribunal has no jurisdiction to hear disputes between buyer, seller and manufacturer. The inference in the argument is that only the courts could hear a dispute about a "used" farm implement.

Subsections 5(1), 5(2), 5(5) and 5(6) of the Act are the source of the Tribunal's jurisdiction in this case. Paraphrasing those sections, the Tribunal's mandate is to decide disputes with respect to any matter arising from the application of the Act or regulations or with respect to the charges made by a dealer for the repair of a farm implement, where the Director attempted to resolve the dispute and mediation was unsuccessful.

In this context, the sections of the Act relevant to determining whether the dispute is in respect to any matter arising from the "application" of the Act include: section 10 regarding farm implement sale agreements; section 12 regarding the power warranty; section 13 regarding the quality warranty; section 16 regarding the repair part quality warranty; and, section 17 regarding contractual warranties.

In respect of farm implement purchasers and their dealings with farm implement dealers and distributors, the Act:

• creates requirements for purchase agreements
• creates minimum warranty standards
• creates mechanisms to resolve
  • purchase and sale disputes
  • statutory and, as we will develop below, contractual warranty disputes
  • repair charge disputes
    

Despite creating minimum statutory warranties, the legislation also recognizes contractual freedom to agree to greater warranty terms than provided for in the Act .

With this statute and regulations, the legislature gave farm implement buyers, dealers and distributors enhanced rights and obligations that would not be available, for example, to buyers and sellers of automobiles.

The Tribunal does not accept the argument that the Tribunal does not have jurisdiction to hear disputes regarding "used" implements. The Act applies to "used" farm implements in several provisions, and a dispute with respect to any matter arising under the Act could include used farm implements under those provisions.

Under the Act, the statutory warranties may clearly apply to "used" farm implements in some cases. The warranties as to power and quality have a duration based on time from delivery to the purchaser , and are not limited to applying to only the first purchaser. That is, the statutory warranties as to power and quality could apply to a "used" farm implement if the duration of the warranty has not expired. Additionally, sales agreements regarding a used farm implement are to state the nature and duration of all warranties, and not just contractual warranties, further re-enforcing this interpretation . The Tribunal also notes that the warranty as to the quality of repair parts could apply where a "used" farm implement is repaired with new parts . In many cases, including this case, it would not be possible for the Tribunal to know what statutory warranties could apply without hearing all of the evidence. Furthermore, contractual warranties could apply to "used" farm implements.

The question of jurisdiction in this case involves interpreting section 5 of the Act. The Director attempted to resolve this dispute and mediation was unsuccessful, and so this precondition to jurisdiction is satisfied.

What is relevant to determining whether the Tribunal has jurisdiction in this case is whether this dispute is in respect to any matter arising under the Act or whether the dispute is in respect to the charges made by a dealer for the repair of a farm implement. This second aspect of the question will be addressed later on in these reasons. Regarding whether this dispute is in respect of any matter arising under the Act, if the statutory warranties apply, the answer to this question is clear. However, where none of the statutory warranties apply, as the Tribunal finds below, the question in this case becomes: is a dispute regarding contractual warranties a "dispute with respect to any matter arising from the application of the Act"?

The Tribunal notes that the Act expressly addresses contractual warranties. Despite creating statutory rights, duties and remedies, the legislation also preserves parties "rights, duties and remedies" under any other Act and the common law. A dispute regarding a contractual warranty arguably becomes a dispute with respect to any matter arising from the application of the Act or the regulations because of these provisions, and could be resolved by the Tribunal as with any other contractual dispute. However, the Act does not expressly state that the Tribunal has jurisdiction over these other "rights, duties and remedies". Also, the Act does not address contractual warranties other than to state that such warranties could give greater protection than the statutory warranties, and that sale agreements cannot contain a waiver of the statutory warranties and must indicate the nature and duration of all warranties.

Because of this uncertainty, the Tribunal shall consider the purpose of the Act.

The Act provides, among other things, a scheme to give farm implement buyers, and farm implement dealers and distributors, expeditious and economical mechanisms to resolve disputes about farm implements. The Tribunal substitutes the word "farmer" for the word "purchaser" at this point since farmers are the most significant group buying farm implements.

However, the Act is not entirely clear whether the Tribunal has jurisdiction to determine a dispute where the statutory warranties have expired and only contractual warranties remain operative.

The Tribunal notes that, as it was not clear at the outset of this hearing whether any of the statutory warranties could apply, the hearing of all of the testimony and the presentation of all of the evidence became necessary to determine if any statutory warranty applied. The need to hear the evidence before making a decision on jurisdiction would likely arise in other cases as well. In this case, as is noted in these reasons, the dispute is in regard to contractual warranties.

If the Tribunal does not have jurisdiction to determine disputes regarding contractual warranties, a possibility of bifurcated or unnecessary proceedings is created. For instance, if it is evident after hearing all of the evidence that a dispute involves contractual warranties only, and if the Tribunal does not have jurisdiction to determine such a dispute, then the proceedings before the Tribunal would not result in any remedy for the aggrieved party, be that a farmer, distributor or manufacturer. In essence, the only direction from the Tribunal in such a case would be to indicate to the parties that they should go to court. Similarly, if the dispute relates in part to statutory warranties and in part to contractual warranties or in part to charges made by a dealer to repair a farm implement and in part to contractual warranties, and if the Tribunal does not have jurisdiction to determine disputes regarding contractual warranties, then a second proceeding in court becomes necessary. The two proceedings would run parallel to each other or one after the other.

The Tribunal finds that it was not the intention of the Legislature, in enacting a statute designed to provide an expeditious and economical mechanism to resolve disputes regarding farm implements, to create the possibility of unnecessary or bifurcated proceedings that would make the dispute resolution process more time consuming and more costly.

c. Jurisdictional Ruling

The Tribunal finds that it was not clear at the outset of this hearing whether the dispute relates to statutory warranties only. It was also not clear whether the dispute relates to matters arising from the application of the Act or if the dispute relates to the charges made by a dealer for the repair of a farm implement. The Tribunal notes that "any matter arising from the application of the Act" could include disputes regarding contractual warranties, because the Act expressly preserves other rights, duties and remedies, and because contractual warranties are, albeit in a limited way, provided for in the Act.

The Tribunal also finds that bifurcated or unnecessary proceedings could result if the Tribunal does not assert jurisdiction over a dispute where contractual warranties are relevant and material. This could not have been the intent of the Legislature in enacting the Act, as is discussed above.

The Tribunal also finds that "a dispute with respect to any matter arising from the application of this Act" includes disputes regarding "used" farm implements in the proper case. For the reasons stated above, this is such a case.

For these reasons, the Tribunal finds that it does have jurisdiction to determine this dispute in its entirety, including jurisdiction over the contractual warranty disputes regarding the farm implements in issue, and including the "used" MX 255 tractor. Any alternative ruling would defeat the intent of the Act.

The Tribunal's jurisdiction is not to decide what is fair or right in the abstract or in a vacuum. The Tribunal's jurisdiction is to decide disputes that arise within the context of the Farm Implements Act.

The Farm Implement Disputes

1. The Case IH MX 255 Tractor

Three unresolved issues result in the dispute: problems starting the tractor, problems with the tractor stalling, and problems with the tractor "freewheeling" when the engine stalls.

Appended to these reasons is the full text of the Case IH warranty. The following is an extract of the warranty:

What's Covered

If a defect in material or workmanship is found in a unit and reported during the Warranty Period, Case IH will pay parts and labour costs to repair the defect if the services are performed by an authorized Case or Case IH dealer at the dealer's location. . . .

Bruce Van Kemenade, VFE's Service Manager, testified that when a customer notifies them of a service issue they "open" a work order. That means VFE assigns the issue to a service work order with any available details. It creates a record within VFE's system of service issues, as the customer reports them. Investigation of the service issue and repair work, if any, will follow later. The Tribunal accepts that process as VFE's standard operating procedure.

a. Starting Problems

Between March 2006 and December 30, 2006, Scott Anderson of Sharalea Farms repeatedly discussed buying the tractor with Dave Vandenbrink.

Anderson had many opportunities between March and December 2006 to investigate how the tractor performed.

Anderson test drove the tractor and used it on the farm for a trial period. Anderson also visited with the previous owner, Watson, to talk with him about the tractor. There was no evidence that during Anderson's investigations about the tractor that Watson or anyone else informed him of starting issues.

Although neither side called Watson to testify, Sharalea submitted into evidence an April 6th, 2009 letter from Watson. The following is the substance of that letter.

The reason I traded the tractor was that it always seemed to start hard in cool weather. The new series of Magnums has a heatable grid in the manifold to make them start easier. I was told that the MX255 just started that way because that was the "nature of the beast".

That letter did not disclose that Watson had any other issues with the tractor.

Based on his trial use of the tractor and before Sharalea bought the tractor, Anderson told VFE the tractor was hard to start.
Based on Anderson's complaint about hard starting, sometime around September 2006, while it still owned the tractor, VFE tested the starting and diagnosed a problem with the batteries. VFE replaced the batteries with two new batteries under warranty in September 2006.

The statutory warranties on the tractor had expired on March 21st, 2006, before Sharalea had purchased the tractor. Therefore, the focus narrows to the manufacturer's two-year warranty period.

Scott and Neil Anderson both testified that since buying the tractor on December 30, 2006, it has been hard to start in any weather but particularly in cool and cold weather.

However, there was no evidence that Sharalea took any steps to get the hard starting issue repaired before the expiry of the manufacturer's warranty on March 21st, 2007.

VFE called as witnesses its service manager, a service technician and a Case IH representative. All testified that the MX 255 did take longer starting. The explanation was that before the fuel system would allow the delivery of fuel to the engine, the engine had to make two complete revolutions. VFE acknowledged that for operators accustomed to a tractor starting right away, that this would seem like hard starting.

That evidence from the manufacturer and the dealer is that the nature of the MX 255 is harder to start. It is consistent with the evidence from the Andersons about their experience that the tractor was hard to start.

The tractor was at VFE's shop in March 2007. At that time, VFE was installing the new front-end loader and completing the "Ultra Shield" inspection and fluid sampling. The date of the "Ultra Shield" inspection work order #WO34202 is March 19th, 2007. The date of the "Ultra Shield" inspection checklist is March 24th, 2007. The date of the loader installation work order #WO34219 is March 26th, 2007.

Anderson's evidence is consistent with Van Kemenade's that, at some point while the tractor was in for the "Ultra Shield" inspection, Anderson told VFE that he had starting issues with the tractor.

However, simply discussing an issue without more, does not qualify as pursuing repair of a defect for warranty purposes. The farm implement dealer or distributor has to understand that a warranty claim exists since both statutory and contractual liabilities might arise with a warranty claim. Therefore, it is incumbent on a farm implement purchaser wanting to pursue a warranty claim or repair work to communicate that intent clearly to the dealer or distributor.

Anderson's advising Van Kemenade of hard starting issues while the tractor was in for the "Ultra Shield" inspection requires closer examination since it occurred near the end of the manufacturer's warranty period. Anderson did not testify to the date he made that comment to Van Kemenade. The Tribunal has no evidence if that discussion was before, on or after March 21st, 2007.

However, there is no evidence of any complaint made by Anderson after that date about hard starting issues. Anderson was using the tractor throughout 2007during the farming season. Common sense tells the Tribunal that if there were problems that prevented the tractor starting, Anderson would have communicated those problems to VFE, loudly and clearly and insisted on repairs to the tractor. Yet there is no evidence of such communication. The tractor was at VFE's shop under warranty in May 2007 for transmission repairs and in December 2007 for a fuel pump replacement. Additionally, in July 2007 the tractor was repaired in the field for a non-warranty hose leak. There was no evidence from Anderson or VFE that during those occasions, Sharalea pursued the issue about starting the tractor.

Therefore, the Tribunal is not satisfied that Sharalea discharged the burden of providing evidence to prove it pursued any repair or warranty claim about hard starting with VFE between December 30th, 2006 and March 21st, 2007, the end of the manufacturer's two-year warranty.

b. Problems with the Tractor Stalling

There was no evidence that Sharalea experienced stalling problems during its test drives or its trial use of the tractor before the December 30th, 2006 purchase.

There was no evidence that during Sharalea's inquiries with the previous owner, Watson, there was any issue about the tractor stalling.

The earliest warranty or service record related to Sharalea's ownership of the tractor is the March 19th, 2007 work order related to the "Ultra Shield" plan inspection and fluid testing (#WO34202). There is no mention in that record of any issue with the tractor stalling. There was no testimony from Sharalea that there was any report of any stalling problem during the manufacturer's warranty period.

The next tractor warranty or service record relates to the tractor transmission not shifting beyond the 13th gear. The first date of that record is May 14th, 2007 (#WO34522). The testimony of Van Kemenade confirmed that the transmission is a lubricated component that remained under the "Ultra Shield" extended warranty coverage after the manufacturer's two-year warranty period expired.

Anderson testified that around the time of the transmission issue he telephoned VFE and told Van Kemenade that something was "not right" with the tractor fuel system because the RPMs fluctuated wildly. VFE's service manager, Van Kemenade, confirmed in cross-examination that while the tractor was in for the transmission repairs in May 2007, Anderson told him he thought there was a problem with the fuel system. Anderson described how the RPMs would fluctuate and that the tractor would "stutter".

VFE's trucking sheets show that the tractor was picked up from Sharalea and transported to VFE's shop on May 29th, 2007 for the transmission repairs, which took about eleven days to complete. Van Kemenade testified they inspected the fuel system at that time since the transmission repair required disassembly of the fuel tanks and lines.

However, VFE did not find any problems in the fuel system. Van Kemenade also testified they tried a computer diagnostic but were unable to find any fault codes that confirmed a fuel system issue. VFE's evidence also confirmed that the computer diagnostic tool was not foolproof.

Based on that evidence, the Tribunal finds it was sometime between May 14th, 2007, and completing the transmission repairs in the second week of June 2007 that Anderson first raised the issue about the tractor stalling.

Van Kemenade testified that to investigate the RPM fluctuations further he set up a vacuum gauge that Sharalea could monitor while using the tractor. After the transmission repair and the tractor's return to Sharalea in June 2007, Sharalea monitored the vacuum gauge and reported the results to Van Kemenade. Based on the results of that gauge, VFE diagnosed the fuel injection pump was faulty. Anderson testified that he diagnosed the fuel system issue in July 2007.

Both Van Kemenade's and Anderson's evidence is consistent with the faulty fuel pump diagnosis crystallizing around July 2007. VFE's work order #WO34961 also records a July 27, 2007 service call to Sharalea that determined the injection pump was the cause of "recurring issues". The reference to "recurring" is consistent with the evidence that Sharalea reported the issue earlier (in May 2007), although the specific defect was not diagnosed.

On all the evidence, the Tribunal concludes the fuel system issue relates to the problem with the tractor stalling and that Sharalea first brought that issue to VFE's attention, at the earliest, in early May 2007.

By early May 2007, the statutory warranty had long since expired on March 21st, 2006 and therefore provides Sharalea with no assistance.

By early May 2007, the manufacturer's two-year warranty had just expired on March 21st, 2007 and therefore provides Sharalea with no assistance.

The next question is whether the extended protections afforded by the "Ultra Shield" plan cover the problem of keeping the tractor running.

The evidence was the "Ultra Shield" plan only covered certain lubricated parts of the tractor and only if the owner participated in Case IH's maintenance and fluid testing program.

In this case, Sharalea participated in the maintenance and fluid testing program at the relevant time. VFE's March 19th, 2007 service record (#WO34202) confirms that Sharalea had the Ultra Shield plan in early May 2007.

However, the Tribunal accepts the evidence of Albert Damen and Van Kemenade that "Ultra Shield" does not cover the fuel injection system, since it is not a lubricated part of the tractor.

There was no evidence that the problem with the tractor stalling relates to any tractor part, other than the fuel system.

Van Kemenade's evidence was that since, at the time of the reported problem in May 2007, the fuel injection pump was out of the manufacturer's warranty period, he contacted the Case IH representative and asked for special consideration to do something for Sharalea.

In response, during July 2007 Case IH agreed that if VFE covered the labour to replace the fuel pump and if Sharalea covered transporting the tractor, Case IH would supply a remanufactured fuel injection pump. Anderson did not want to be without the tractor during the balance of the farming season in 2007, so Sharalea continued to use the tractor until December before pursuing the fuel pump repair.

VFE completed the fuel pump repair, on those terms, during December 2007, after the farming season ended.

Anderson's evidence was that with the replacement of the fuel injection pump the tractor did run better initially but then, around the Spring of 2008, he began to have recurring issues of the same type where the engine RPMs fluctuate and the tractor stalls.

Despite the fact that the tractor was then out of manufacturer's warranty, the Tribunal questions why the dealer and manufacturer together did not take the time to go to Sharalea to field test and further investigate why, with the replaced fuel pump, Sharalea continued to have issues with the tractor stalling. Although it was out of warranty, as VFE's service advisor testified, the tractor "should run as it was engineered to".

The Tribunal accepts, as a fact, that Sharalea experienced recurring issues with the MX 255 tractor stalling. However, the Tribunal also finds that Sharalea first experienced the problem and first raised this issue for repair with VFE outside any applicable warranty coverage period.

Therefore, the Tribunal is not satisfied that Sharalea discharged the burden of providing evidence to prove a stalling defect in the tractor was reported and repairs pursued during any applicable warranty period.

c. The "Freewheeling" Problem

Anderson testified that after the June 2007 transmission warranty repair he was using the MX 255 tractor to cut hay on a hill and the tractor stalled while he was pulling a disc mower. The tractor then "freewheeled", or rolled backward down the hill with no controls since the engine had quit.

Van Kemenade and Damen, the Case IH representative, both testified that the tractor design prevented it from "freewheeling". They explained a specific safety feature of the tractor is that if the engine quits, a mechanical park brake engages to stop the tractor and prevent it from rolling or "freewheeling". The hydraulic pressure created by the engine works to disengage this mechanical brake. Once the tractor loses hydraulic pressure, the brake engages.

There is no dispute that a "freewheeling" tractor is dangerous. The dispute focused on whether the "freewheeling" Anderson described was possible.

The Tribunal does not doubt Anderson's evidence that the tractor "freewheeled". He was present and he experienced the "freewheeling". There is no reason for him to be untruthful about that experience.

Since "freewheeling" of the tractor happened despite design specifications to prevent it, this suggests that there is some underlying design or manufacturing flaw. However, the Tribunal had no expert engineering evidence about how or why the MX 255 tractor "freewheeled" downhill. The Tribunal also had no evidence about whether the issue was a one-time anomaly or whether it was a recurring issue. Rather than investigate the freewheeling issue, both VFE and Case IH dismissed the issue.

Regardless of that, and despite the significant danger presented by a tractor that "freewheels" when designed with safeguards to prevent "freewheeling", the issue arose for the first time, in June 2007. VFE and Case IH were contractually entitled to ignore the freewheeling issue as they did.

The Tribunal accepts that a freewheeling tractor poses a risk of a serious accident. However, the Tribunal questions why the dealer and manufacturer did not at least pursue a field investigation of the freewheeling issue. Common sense and prudent risk practices dictate that even when contractual warranty periods end, not investigating the issue would be irresponsible.

The Tribunal accepts, as a fact, that Sharalea experienced a "freewheeling" issue with the MX 255 tractor. However, the Tribunal also finds that Sharalea first experienced this outside any applicable warranty coverage period.

Therefore, the Tribunal is not satisfied that Sharalea discharged the burden of providing evidence to prove that any "freewheeling" defect in the tractor was reported during any applicable warranty period.

3. The Hardi NP1100 Navigator Sprayer

The Tribunal heard about many issues with the sprayer. In the first eleven months after Sharalea purchased the sprayer there were thirteen warranty repair claims.

Aside from Sharalea's request for a new sprayer, the issues remaining at the hearing include: a defective transport lock, paint missing from the right boom lift cylinder, a bent centre boom stabilizing "U" channel, bent right hand breakaway boom section, broken tank sight gauge cable, and an unusual "yaw" in the boom. Anderson explained the unusual yaw as one boom arm was oriented forward while the other boom arm was oriented backward putting unusual stresses on the centre frame of the sprayer.

There was no evidence Sharalea could not use the sprayer due to any of those issues.

The Hardi manufacturer's warranty was for two years from the delivery date, expiring on May 7th, 2008. The statutory warranty was for one year from the delivery date, expiring on May 7th, 2007.

Van Kemenade and Wayne Buchanan, the Canadian Sales Manager for Hardi North America, visited the Sharalea farm on May 13th, 2008 to inspect the sprayer. They asked Anderson about the outstanding issues and received the list of issues noted above.

Buchanan testified that Van Kemenade contacted him around May 8th or 9th, 2008 to set up a site visit to the Sharalea farm to inspect the sprayer.

That farm visit on May 13th, 2008 was six days outside the manufacturer's warranty. However, during Van Kemenade's evidence he agreed that Anderson had contacted VFE before the end of the warranty period to pursue repairs for Sharalea's continuing issues with defects in the sprayer. It was that contact within the warranty period that prompted the farm visit just after the warranty period.

The Tribunal heard Anderson's evidence about an unusual "yaw" with one of the sprayer booms.

The sprayer was never field tested by VFE or Hardi to assess the complaint about the unusual boom "yaw". However, VFE and Hardi were prepared after the May 13th, 2008 visit to repair the transport lock, the cylinder paint, the bent "U" channel and the broken tank sight cable. The evidence of Vandenbrink and Hardi about that confirms they accepted that Sharalea had warranty repair claims reported within the manufacturer's warranty period.

Based on the evidence, the Tribunal finds as a fact that Sharalea had several sprayer warranty complaints outstanding with VFE before the manufacturer's warranty period expired. VFE and Hardi acknowledged as much by the offer to complete repairs that they made to Sharalea after the May 13th, 2008 visit. However, Anderson's evidence was that by that point, he would not be satisfied with repairing the defects under warranty. Anderson wanted a new upgraded sprayer.

The Tribunal finds as a fact that the following sprayer issues arose during the contractual warranty period and remain unresolved:

• Defective or broken transport lock cylinder
• Defective or missing paint from the right hand boom lift cylinder
• Defective and bent "U" channel in the centre stabilizer boom
• Defective or broken tank sight gauge cable
• Bent right hand breakaway boom section

• Unusual boom "yaw"

The Issues

The issues common to the three farm implements in dispute are:

• Is there a defect covered by warranty?
• If so, what is the appropriate remedy?

Additionally there is the issue raised by VFE of its outstanding July 2007 invoice for $695.57.

Findings and Analysis

Covered Defect

Warranties are contract devices to transfer risks from purchasers onto sellers or manufacturers. Most manufacturers offer warranties. Presumably they work as an inducement to purchasers.

However, most warranties are limited, either in time or in scope. Each issue turns on the specific terms of the warranty. In this case, the contractual warranty on each farm implement is limited in time and in scope by the wording of the warranty.

• Sharalea has had significant problems with the MX 255 tractor. In two and half years the MX 255 has only worked about 700 hours for Sharalea. They had intended to use it about 1,000 hours each year. Those numbers underscore that Sharalea's most significant problem is keeping the tractor running. A tractor that does not run reliably is of little use to a farm business. The Tribunal has great sympathy when a farmer pays $142,000 for a tractor that will not run reliably. However, that most significant problem did not arise until after both the one-year statutory warranty and the manufacturer's two-year warranty expired. After the two-year manufacturer's warranty expired on March 21st, 2007, the risk of that problem shifted from the dealer and manufacturer onto the buyer. The same applies to the "freewheeling" and starting problems. Therefore, there is no defect covered by warranty.

• The LX 780 loader problem with leaking hose crimps arose very early but VFE addressed that promptly under warranty. From then to the end of the twelve-month statutory and contract warranties on March 31st, 2008 there was no significant problem identified with the loader. Therefore, there is no defect covered by warranty.

• The NP1100 sprayer had many problems, several of which VFE and Hardi addressed under warranty. However, there are a number of unresolved defects. When the unresolved issues arose and Anderson pursued repair, the one-year statutory warranty had expired. However, the two-year contractual warranty still applied. The Tribunal acknowledges that around June 2008, VFE and Hardi offered to address most of those warranty covered defects. Sharalea declined that offer because it was pursuing its appeal to the Tribunal. Additionally, by that time, Sharalea was so disaffected by its experience with the three farm implements that it would only be satisfied with new and better implements.
  

Appropriate Remedy

Although Sharalea sought significant money compensation ($141,750.00) for economic loss, mental, physical and emotional anguish and lost family time, there was no evidence proving the amount claimed. In any event, both the Case IH warranty and the Hardi warranty contain clear language excluding liability for incidental or consequential damages of that sort.

Sharalea asked the Tribunal to order that VFE provide it with new replacement farm implements for the tractor, loader and sprayer.

The general theory of the measure of contract damages is to put the aggrieved party back into the position they would have been in if the contract had been completed. In a warranty case that translates into completing the warranty repairs or paying the equivalent money compensation. It does not translate into compensation of new and significantly better farm implements. The evidence was that an MX 275 tractor and a Commander 4400 sprayer of the kind Sharalea demanded were significantly enhanced farm implements worth thousands more than the MX 255 tractor and the NP1100 sprayer. The Tribunal received no evidence about the equivalent money compensation for the warranty repairs.

Therefore, there is no warranty basis for any remedy for the MX 255 tractor or the LX 780 loader.

The appropriate remedy for the sprayer will be repairing the defects. While Hardi was not a party to this appeal, it was present throughout. Given Hardi's involvement with the May 13th, 2008, farm visit and their offer to Sharalea at that time, the Tribunal encourages Hardi to remain involved with VFE to complete the warranty work and to field test the sprayer to assess the unusual boom "yaw".

VFE's Outstanding Invoice

The wording of section 5(2) of the Act gives the Tribunal jurisdiction to deal with disputes about repair charges.

The Tribunal heard evidence that Sharalea experienced a hydraulic oil leak in a hose underneath the tractor cab in June 2007. VFE sent Rieger to Sharalea's farm and together Anderson and Rieger repaired the hose leak. Anderson felt the repair should be under warranty. VFE sent Sharalea an invoice for $695.57. Sharalea refused to pay the invoice. Later VFE offered to split that invoice with Sharalea but Sharalea refused.

In its closing submissions, VFE asked the Tribunal to "advise Mr Anderson to pay his outstanding account with" VFE.

In the circumstances, the Tribunal declines to make any order about that disputed invoice for the following reasons:

• VFE only raised its requested relief in its closing submissions.
• Although there was some evidence about the outstanding invoice, there was no identification of that as an issue in the hearing or that it was addressed in the dispute resolution that took place prior to this hearing which is a condition of the Tribunal asserting jurisdiction to make an order as per subsections 5(3) and (5).
• Sharalea had no opportunity to know that disputed invoice was an issue in the hearing.
• Without notice that it was an issue, Sharalea had no opportunity to know that was part of the case it had to meet.
  

 

Order of the Tribunal

 

1. With respect to the Hardi NP1100 sprayer the Tribunal Orders VFE to:
   a. replace the broken transport lock cylinder;
   b. repaint or replace the right hand boom lift cylinder;
   c. replace the bent "U" channel in the centre stabilizer boom;
   d. replace the broken tank sight gauge cable;
   e. replace the bent right hand breakaway boom section;
   f. field test the sprayer to assess the unusual boom "yaw" and, provided the problem would have been a warranty issue when reported under warranty, repair or replace such components as necessary to correct the problem.
2. With respect to the MX 255 tractor and the LX 780 loader, the Tribunal dismisses the balance of Sharalea's claims.
   

Any party to this hearing may appeal the decision of the Tribunal on a question of law to the Divisional Court of the Superior Court of Justice in accordance with its rules of practice within 15 days from the day on which this decision was served.

John O'Kane
Vice Chair

Rob Scouller
Member

Dated at Guelph, Ontario this 11th day of September, 2009.

Partial Disserting Opinion and Reasons

I concur with the decision of my colleagues on the findings and rulings on the issues surrounding the Hardi 4400 Commander Sprayer and Case IH LX 780 loader, including the facts regarding the sprayer and loader and the jurisdictional analysis. However I have a different interpretation of the facts on the issue of the MX 255 tractor.

I agree with my colleagues that the manufacturer's two-year warranty on the tractor expired on March 21st, 2007.

However, I disagree with my colleagues' conclusions that:

• Sharalea did not report the hard starting problems to VFE before the manufacturer's warranty expired; and,
• Sharalea did not diligently pursue VFE for repair of the hard starting problems before the manufacturer's warranty expired.
  

The following evidence supports my finding that the applicant, Sharalea, did report the hard starting problems to VFE and did diligently pursue VFE for repair through calls and dealership visits regarding the hard starting problem before the manufacturer's warranty expired:

• In oral testimony, Scott Anderson said that from the beginning, he complained about recurring hard starting issues with the tractor. He testified that Van Kemenade told him that "it is the nature of the beast" and the solution was that he should "just put some hours on it". Scott Anderson testified that Van Kemenade made those comments about the hard starting MX 255 when Anderson complained about it continuing to be a hard starter after he got it home. VFE's responses served to deflect Anderson's concerns over the hard starting. They, however, do not relieve VFE from performing the repair work under warranty. These exchanges between Anderson and Van Kemenade took place before the manufacturer's warranty expired on March 21st, 2007. I believe Anderson's oral testimony that he did in fact call several times and visit the dealership with his complaints about the hard starting tractor before the manufactures warranty had expired. I conclude Anderson pursed repair for the starting issue with the MX 255 during the warranty period.
  " I do not agree with my colleagues that Anderson did not diligently pursue VFE for repair of the hard starting tractor. Neil Anderson stated under oath that starting the MX 255 has, from the beginning, always been the number one problem. Neil Anderson also stated that he and others tried to resolve the issue with VFE and met with them several times. In another under oath exchange, VFE said "calls were not enough" and Anderson replied that he, "had on going discussions with VFE, and that he thought that was enough".
• Van Kemenade's testimony when cross-examined by Sharalea confirmed that when the tractor was at VFE for the "Ultra Shield" inspection, Scott Anderson said that there were starting problems. Van Kemenade did not disagree with Sharalea's suggestion that between 491 and 553 hours of use of the tractor, he had complained about starting issues. Unlike my colleagues, I find as a fact this exchange between Sharalea and Van Kemenade occurred before the March 21st, 2007 expiry of the manufacturer's warranty and I conclude it was sufficient diligent pursuit of repairs by Sharalea.
• I accept Scott Anderson's oral testimony that he complained about the starting of the MX 255 when he drove it, but accepted the explanation that the starting problem was battery related, and that it would eventually be corrected. This satisfies me that he would not have thought to ask the former owner about starting problems with the MX 255 when he visited him with Dave Vandenbrink. It was after he discovered starting was a 'chronic problem' that he visited the former owner, Mr.Watson, to discuss the tractor starting problems and got written conformation from Mr.Watson to that effect, which was presented to the hearing.
  

I do not agree with my colleagues that every complaint resulted in a work order as a result of VFE standard operating procedures.

• Oral testimony by Scott and Neil Anderson describing the poor starting, failure to keep running and free wheeling events they faced on the farm convinced me that not every complaint resulted in a work order because oral evidence from the Andersons and their neighbours described many more events than work orders listed at the hearing. Neil Anderson described being stranded in the field. Getting a diagnosis was a problem with the MX 255. Van Kemenade said that if fault codes do not "trip", VFE does not know what the problem is. Work order documents were provided at the hearing, describing work done to address diagnosed issues. Scott and Neil Anderson both gave oral testimony as to phone calls and visits to VFE to complain of these issues.
• Evidence was given by Vandenbrinks that because of complaints, VFE staff used diagnostic gauges and computers on the farm and at their shop to analyze problems, and at times these diagnostic tools failed to give clear reasons why the MX 255 "acted up". Albert Damen, Manager of field services for Case IH, said he does trouble shooting but had never been asked to visit the farm.
• I find that there were many more complaints than subsequent work orders based on the oral description of events around the MX 255 as described by the Andersons and their neighbours. I accept the testimony regarding the level of anger, frustration and disappointment expressed by Sharalea over the poor working of the MX 255. If the tractor work orders had addressed the problems and it had started and run properly, there would not have been a hearing concerning the tractor.
  

The evidence that I heard was as follows:

VFE and Sharalea had a long and trusting relationship, one that saw Sharalea purchasing some $350,000 worth of equipment from VFE before the purchase of the items that are the topic of this hearing. Sharalea described its satisfaction with the equipment it had previously purchased. Oral evidence by Scott Anderson indicated he felt he had a good working relationship with VFE, and this was not refuted by VFE. There was no evidence from VFE that convinced me Sharalea was abusive to its equipment. Oral evidence from Scott Anderson describing his maintenance routine and descriptions from his neighbours attesting to the age and hours on Sharalea's equipment led me to believe Anderson was a good caregiver to his equipment. This evidence described equipment of an older nature that he was able maintain so he could cash crop many acres, handle the care and feeding of his dairy herd, and do custom work. VFE gave no evidence that the MX 255 tractor was abused and the Ultra Shield warranty inspection verified that.

Evidence given by Scott Anderson was that in purchasing the three pieces of equipment from VFE, he felt it would take the load off his older equipment, his family and improve the efficiency of his farming operation.

Sharalea acted in good faith and fulfilled its side of the contract by trading in a combine and arranging financing for the rest of the agreed-upon purchase price of $142,000.00 for the MX 255.

Evidence given orally by Scott Anderson and documented by VFE's many work orders described an unacceptable number of serious issues with each piece of equipment. The work orders all described problems that had to be repaired. There was no evidence given to convince me that Sharalea was being contentious or frivolous about its complaints on any of the pieces of equipment, including the MX 255 tractor.

Even with all the problems outlined in this hearing, Scott Anderson stated he was not there to run the dealership down and that he simply wanted his equipment to work.

Evidence given orally by Scott Anderson and his neighbours, including Joe Sparks, outlined difficulties that caused lost work opportunities, financial loss, aggravation and a serious breakdown of the relationship between Sharalea and VFE. Events such as Sharalea having to move manure and the tractor quitting were testified to. Another occurrence that was testified to was Sparks and Scott Anderson working together haying, with Sparks describing the hardship and loss of time that was caused because the MX 255 was not working and having to make use of one tractor instead of two. Sparks said, "it really slows down the process". Nick Ionite, another neighbour, described the MX 255 starting and stopping while Scott Anderson was loading hay, necessitating them to take the loader off and use the Kubota to load the hay. Another event involved Neil Anderson being stranded in a field with the MX 255 because the MX 255 would not run or restart, resulting in them using another tractor to pull the MX 255 away and to pull the equipment to work the field. Oral testimony from Anderson's neighbours Brian Marston, Joe Sparks, Robert Smith, Nick Ionite all carried the same general message of a tractor that would not start and stay running, causing hardship for Sharalea.

I find that VFE and Case IH had expert knowledge of the MX 255 and should have been able to make it start and run properly. There was sufficient evidence over the course of the hearing that satisfied me that this did not happen. VFE and Case IH were aware of starting issues with this model of tractor. Testimony from Van Kemenade indicated that the CAPS fuel system made the MX 255 more difficult to start but more fuel-efficient. I accept that this particular tractor was probably a bigger problem than most, because under cross-examination when asked, "is this tractor more difficult?", Van Kemenade said," yes, this one has had more problems". When asked if the CAPS fuel system had anything to do with the problems, Van Kemenade said, "only the starting issue". However, that does not relieve VFE's responsibly to address starting issues under the warranty. I find that VFE knew that there were starting issues as I accept the oral testimony of the Andersons stating that they made phone calls and went to VFE with starting complaints before the end of the warranty period.

Appropriate Remedy

Sharalea bought a tractor that should start and run. VFE and Case IH should be ordered to respect their contractual obligation to Sharalea by providing it with service that would see the repair of the MX 255, in an expedient manner. VFE repaired many of the problems that occurred with the MX 255, however, starting and running remained a problem from the time the Sharalea purchased it, and VFE did not correct this problem. Common sense dictates you would expect a piece of equipment worth $142,000.00 to perform as it was designed and advertised to do. I believe that VFE and Case IH would want this situation resolved, as it reflects on them and their equipment.

Mary Field
Member

Dated at Port Dover, Ontario, this 11th day of September, 2009.