John Vieraitis vs. Xeltron et Phair Systems Ltd.

In the matter of the Farm Implements Act

And in the matter of: An Application to the Agriculture, Food and Rural Affairs Appeal Tribunal (Tribunal) by John Vieraitis, of Tillsonburg, Ontario, for a hearing under Section 5 of the Farm Implements Act with respect to the alleged failure of a colour sorting machine to perform to specifications.

And in the matter of: the hearing of a Motion by Phair Systems Ltd. pursuant to Rule 25 of the Tribunal's Rules of Procedure for a dismissal of all claims in this matter affecting Phair Systems Ltd.

Appearances:

Thomas Chalmers, counsel for Phair Systems Ltd.
Edward Oldfield, counsel for John Vieraitis
John Vieraitis, appellant

Decision of the Tribunal

This Motion hearing was held by conference call on February 16, 2011.

Background Contexte for the Motion

John Vieraitis (Vieraitis) grows soybeans and rye and carries on business as Ontario Specialty Grain.

In 2008, Vieraitis bought a machine to sort his crops. The machine was a Xeltron MV90 Colour Sorter (the Sorter). The Sorter was manufactured in Costa Rica by Xeltron S.A. (Xeltron).

Phair Systems Ltd. (Phair) facilitated Vieraitis' purchase of the Sorter.

Within a few months of operation, Vieraitis became dissatisfied with the Sorter's performance and started a process under section 22 of the Farm Implements Act (the Act) seeking termination of the sale agreement and a refund of the purchase price.

Mediation under the Act was unsuccessful and the dispute between the parties came before the Tribunal.
In this motion Phair asks that the Tribunal dismiss the dispute without proceeding to a full hearing that is now scheduled for March 22nd-23rd, 2011. Phair advanced four arguments supporting the dismissal:

1. The Sorter is not a farm implement under the Act.
2. There is no evidence about the manufacturer's specifications.
3. Phair has no obligation to refund the purchase price.
4. The Tribunal has no authority to make monetary awards
   

Xeltron did not participate in the motion hearing.

Vieraitis and Phair both filed affidavit evidence on the motion. Counsel for Vieraitis and for Phair each filed a Factum on the motion and made oral arguments. During the motion both counsel confirmed that they had been unable to find any Ontario court decision that addressed the extent of the Tribunal's jurisdiction under the Act.

I explained to counsel that I was aware of a 2009 Tribunal decision in Sharalea Farms Inc. v. Vandenbrink Farm Equipment that addressed, in part, the issue of the Tribunal's jurisdiction. Since neither counsel was familiar with that Tribunal decision I directed that both counsel file any additional submissions arising from their review of the Sharalea decision by the end of business on February 23rd, 2011. I limited those additional written submissions to two pages. I received the written submissions as directed and considered them as part of the arguments on this motion.

Nature of the Motion

Phair's motion, if successful, would deprive Vieraitis of a full hearing of the dispute on its merits.

While the Tribunal's Rules of Procedure do not expressly contemplate a motion for summary judgment, that is the nature of Phair's motion. The Tribunal's Rules do permit resort to the Rules of Civil Procedure to complete any procedural gaps in the Tribunal's Rules.

In addition, section 4.6 of the Statutory Powers Procedure Act (SPPA) authorizes a tribunal to dismiss a proceeding without a hearing if, among other things, the proceeding relates to matters outside the jurisdiction of the tribunal.

Since the Tribunal's Rules do not provide me with any direction about the test that I should apply on this motion to dismiss, I will adopt a modification of Rule 20 from the Rules of Civil Procedure.

In that regard, I believe that I should dismiss Vieraitis' application at this stage only if I am satisfied that there is no genuine issue requiring a hearing with respect to Vieraitis' claim. In determining whether there is a "genuine issue" for a hearing I must consider the evidence submitted on this motion.
I note that the recent amendments to the summary judgment Rule 20 have clarified a judge's power on such a motion to include weighing the evidence, evaluating the credibility of a deponent, and drawing any reasonable inference from the evidence.

Is there a genuine issue requesting a Hearing

I will answer that question as it relates to each of the four arguments addressed by the parties.

1. The Sorter is not a farm implement under the Act.
   

Ultimately, the issue will turn on how the Tribunal interprets "farm implement" as defined in the Act.

"farm implement" means any equipment or machinery designed and used for agricultural or horticultural use and includes attachments;

However, the Tribunal's interpretive exercise takes place within a factual context. The factual context about the Sorter provided by the affidavit evidence is contradictory.

William Phair's affidavit testifies that a sorter is a specialty machine used in processing crops, like beans, for the export market. He testified that no farm operation that he knows is equipped to process a crop for export.

Vieraitis's affidavit testified that he grows soybeans and rye and has always cleaned his own crops for sale. He testified he bought the Sorter to clean and sort his rye and soybeans before marketing the crops.

The essence of the argument advanced by Phair is that the Act is restricted to farm implements like tractors and combines and sprayers used in primary production but not the processing equipment that might be found in a Heinz factory that is processing tomatoes into a further processed product like ketchup or a sorter such as purchased by Vieraitis.

Even if I assumed that I had the Rule 20 powers granted to a judge to weigh evidence, evaluate credibility and draw inferences I could not, in these circumstances, come to any rational and judicious explanation for preferring the affidavit evidence of one over the other. Therefore, in these circumstances, I conclude that the interests of justice require that the powers of weighing evidence, evaluating credibility and drawing inferences be exercised by a full panel of the Tribunal at a hearing on the merits.

At this stage it is not clear to me whether the Sorter is or is not a farm implement and, therefore, in my view, that is a genuine issue that requires a hearing.

2. There is no evidence about the manufacturer's specifications.
   

A manufacturer's specifications about a farm implement is a question of fact and whether a farm implement fails to perform to those specifications is a question of fact.
The affidavit evidence is at odds over the manufacturer's specifications for the Sorter and whether the Sorter failed to perform to those specifications.

I am unable in these circumstances to come to any rational and judicious explanation for preferring the affidavit evidence of one over the other. Therefore, in these circumstances, I conclude that the interests of justice require that the powers of weighing evidence, evaluating credibility and drawing inferences be exercised by a full panel of the Tribunal at a hearing.

At this stage it is not clear to me on the evidence filed what the manufacturer's specifications are for the Sorter and whether the Sorter performed to those specifications and, therefore, in my view, that is a genuine issue that requires a hearing.

3. Phair has no obligation to refund the purchase price.
   

On this point, counsel for Phair conceded in argument that if the Tribunal heard the case, there did appear to be an arguable issue over the amount of money Phair received. The essence of that concession was, depending on how the Tribunal might rule in a hearing, Phair might have an obligation to refund some commission money received on the purchase and sale transaction of the Sorter.

Once again, the affidavit evidence is at odds about the flow of the purchase money. I found the affidavit evidence about the funds unclear.

Given the concession of Phair's counsel and the lack of clarity in the affidavit evidence that would preclude me making any findings of fact at this stage, it is apparent there is a genuine issue over the purchase money that requires a hearing.

4. The Tribunal has no authority to make monetary awards.

This part of Phair's motion focused on the Tribunal's jurisdiction under the Act.

Jurisdiction can relate to a party or to the subject matter of a proceeding or to a remedy.

In this respect, Phair's argument is less like a Rule 20 summary judgment motion and more akin to a Rule 21.01(3)(a) motion that the Tribunal has no jurisdiction over the subject matter of the proceeding or no jurisdiction to grant the remedy sought.

Despite my finding that there are genuine issues for hearing in respect of the first three arguments, this issue still must be addressed since if Phair is correct that the Tribunal does not have the jurisdiction, it would not be in the interest of justice to allow the case to proceed to a hearing on the merits.

The essence of Phair's argument was that while the Act may create causes of action, it is silent about any remedies and the Act does not authorize the Tribunal to make binding orders but only to offer its opinion in its written reasons. Phair argued that the purpose of the Tribunal was "ill-defined" in the Act. Phair argued that only the courts and not the Tribunal could give Vieraitis the relief he sought.
Phair's counsel referred me to the Supreme Court of Canada's decision in the City of Calgary v. ATCO Gas and Pipelines Ltd. [2006] 1 S.C.R. 4 in support of his argument that the Tribunal did not have the jurisdiction to grant Vieraitis the relief he sought.

As the majority reasons in ATCO reflect at paragraph 35, the tribunal must adhere to the confines of its statutory authority and it cannot trespass in areas where the legislature has not assigned it authority. Applying the Court's direction from paragraph 36, I am required to interpret the legislative framework by which the Tribunal derives its powers and actions.

I begin the exercise by considering the purpose of the Act. The Act does not contain an express purpose clause so I considered the overall structure and content of the provisions to glean the legislative purpose. The Act creates:

• a dispute resolution process while preserving any rights, duties and remedies that exist under any other Act and the common law;
• a registration system for farm implement dealers and distributors;
• minimum standards for every farm implement sale contract;
• minimum warranty standards for farm implements;
• minimum standards and obligations with respect to repair parts;
• rights and obligations where a farm implement fails to perform to the manufacturer's specifications;
• minimum buy-back rights and obligations in every farm implement dealership agreement;
• a framework for regulations that address, among other things, safety standards for farm implements.
  

In my view, the purpose of the Act is to provide, among other things, a scheme of legislated minimum contractual standards and an expeditious and economical mechanism for farm implement buyers, and farm implement dealers and distributors to resolve disputes about farm implements. The Tribunal plays a role in the Act's dispute resolution purpose.

Section 22 of the Act creates rights and obligations where a farm implement fails to perform to the manufacturer's specifications. Vieraitis engaged those provisions of the Act. Under the Act, the dealer or distributor has to try and get the farm implement working up to specification and if it fails, the dealer "shall terminate the sale agreement" and the distributor "shall refund to the purchaser" .

Here there is at least an arguable case that there is a dispute between a purchaser (Vieraitis), a dealer (Phair) and a distributor (Xeltron) about a farm implement failing to perform to a manufacturer's specification. Therefore, there is at least an arguable case that there is a dispute arising from the application of section 22 of the Act.
The ACTO case discussed at paragraph 38 the sources of tribunal jurisdiction as express grants under statutes ("explicit powers") and the common law doctrine of jurisdiction by necessary implication ("implicit powers").

Following the ATCO approach, I must first consider the ordinary meaning of the "explicit powers" granted to the Tribunal. Reproduced below are the relevant jurisdictional provisions from section 5 of the Act.

5. (1) On the request of a purchaser, dealer, distributor or manufacturer, the Director may inquire into and attempt to resolve a dispute with respect to any matter arising from the application of this Act or the regulations.

Mediator
(3) If a person makes a request to the Director for an inquiry under subsection (1) or an investigation under subsection (2), the Director may appoint a mediator to assist the parties to resolve the dispute.

Hearing
(5) If the parties to a dispute are unable to resolve it with the assistance of a mediator, any of the parties to the mediation may apply to the Tribunal for a hearing.

Decision
(6) The Tribunal shall decide the issue that is before it for a hearing and shall serve notice of the decision, together with written reasons, on the parties to the hearing in accordance with its rules of practice.

Phair's argument focused on the absence of express words in the Act that permit the Tribunal to make "an enforceable order that Phair pay the appellant".

The Tribunal makes orders and decisions expecting that parties will abide by the orders and decisions, subject to rights of appeal and judicial review. In addition, the SPPA provides a mechanism in section 19 to have a certified copy of a tribunal's decision or order filed in the Superior Court of Justice and upon such filing the Tribunal's order or decision is deemed to be an order of that court and is enforceable as such. Therefore, despite Phair's argument, the Tribunal need not concern itself with finding express words that permit it to make enforceable orders.

In my view, the ordinary meaning of those reproduced sections of the Act is that the Tribunal's mandate is to decide disputes with respect to any matter arising from the application of the Act or regulations, where the parties have been unsuccessful resolving the dispute at mediation.

The power to "decide the issue" in the context of a dispute under the Act is a very wide power. The Act contains no words that limit that decision making power.
However, following the modern approach to statutory interpretation, I do not read those reproduced sections in a vacuum. I read them in the context of all the words of the Act, including the words of section 22 and in the context of the overall purpose of the Act.

Therefore, I conclude that the Act grants the Tribunal the explicit power to decide disputes and that would include the power to make remedial orders, including ordering refunds where appropriate.

Following the ATCO approach, I must next consider the entire context of the statutory scheme to determine if implied powers are necessary for the tribunal to accomplish the task the legislature assigned it in the Act.

Phair argued that the "principal purpose" of the Act is found in section 4 and is to "ensure compliance with safety standards". Section 4 of the Act describes the Director, a person appointed by the Minister, whose responsibilities include promoting compliance with prescribed safety standards. However, promoting safety standards, while certainly one of the objects of the Act, is not, in my view its "principle purpose". I have already shared my view of the purpose of the Act.

The Legislature included the following (section 33) in the Act.
Rights, etc., preserved
33. The rights, duties and remedies provided by this Act are in addition to the rights, duties and remedies under any other Act and the common law.

Those words are part of the overall context I must consider. Those words satisfy me that the Legislature contemplated parties with rights, duties and remedies that might transcend those prescribed in the Act.

Applying Phair's theory of the Tribunal's jurisdiction, at the conclusion of the prescribed hearing, the Tribunal would say to an otherwise deserving applicant "you have been wronged, but you will have to go to the law courts to find a remedy" or "your dispute is about a contractual provision rather than a prescribed provision and therefore you must go to the law courts to have that issue decided".

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

If the Tribunal cannot grant an appropriate remedy, then it cannot fulfil its statutory mandate to "decide" the dispute. That result would produce an absurdity and there is a general presumption that the legislature does not intend its legislation to have absurd consequences .
Therefore, in my view of the overall context and purpose of the Act, the Tribunal has the implicit power to grant the remedies necessary to decide any dispute arising from the application of the Act or regulations.

Therefore, on the jurisdictional challenge, Phair has not satisfied me that the Tribunal is without jurisdiction to hear the dispute and grant a remedy, if the panel hearing the dispute determines it is appropriate.

Order of Tribunal

Therefore, for the reasons explained above, the Tribunal Orders that Phair's motion is dismissed and the costs of the motion are reserved to the panel hearing the dispute.

Dated at Brampton, Ontario this 24th day of February, 2011