Chesterman Farm Equipment Inc. v. CNH Canada Ltd., 2009 ONAFRAAT 8

Agriculture, Food and Rural Affairs Appeal Tribunal 1 Stone Road West

Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales 1 Stone Road West

Guelph, (Ontario) N1G 4Y2 Tel: (519) 826-3433, Fax: (519) 826-4232 Email: appeals.tribunal.omafra@ontario.ca

Guelph (Ontario) N1G 4Y2 Tél. : (519) 826-3433, Téléc. : (519) 826-4232 Courriel : appeals.tribunal.omafra@ontario.ca

Chesterman Farm Equipment Inc. v. CNH Canada Ltd. PHC - Discoveries Ruling

CFEI v. CNH PHC 2009 ONAFRAAT 8

Farm Implements Act

DATE OF DECISION:

April 8, 2009

2009-08

2009 ONAFRAAT 8

AND IN THE MATTER OF: an Appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal (Tribunal) by Chesterman Farm Equipment Inc. (“CFEI”), of Tillsonburg, Ontario, from 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;

Before:

John O’Kane, Vice Chair

INTERIM DECISION OF THE TRIBUNAL

As part of an ongoing case management of this appeal, I have remained seized of any motions arising from discovery undertakings and refusals.

The Tribunal directed the parties to submit brief written submissions on undertakings and refusals by March 27^th, 2009.

The Tribunal office received the following from counsel for the parties:

March 27^th, 2009 letter from McKenzie Lake LLP to the Tribunal office with submissions on CFEI’s refusal to provide copies of Cub Cadet and Polaris dealer agreements;
March 27^th, 2009 letter from McKenzie Lake LLP to the Tribunal office with submissions on Mr. May’s letter of March 24^th, 2009 about what remained in issue;
March 27^th, 2009 letter from John W. May to the Tribunal office with submissions on CNH’s improperly answered questions, undertakings and on CFEI’s continued refusals;
March 30^th, 2009 letter from McKenzie Lake LLP to the Tribunal office with submissions on the last paragraph of the first page of Mr. May’s March 27^th, 2009 letter;
March 24, 2009 letter from John W. May to McKenzie Lake LLP;
March 17^th, 2009 letter from McKenzie Lake LLP to John W. May;
March 17^th, 2009 letter from McKenzie Lake LLP to John W. May;
March 12^th, 2009 letter from McKenzie Lake LLP to John W. May;
February 25^th, 2009 letter from McKenzie Lake LLP to John W. May;
February 20^th, 2009 letter from McKenzie Lake LLP to John W. May;
February 17^th, 2009 letter from McKenzie Lake LLP to John W. May;
Transcript of Mr. Mackow of CNH; and
Transcript of Mr. Chesterman of CFEI.

Examination of CNH

Mr. May raised issues with two categories of questions from his examination of CNH’s representative, Mr. Mackow. The first category of question relates to Mr. Mackow’s not knowing answers and what Mr. May describes as a lack of preparedness for the examination. The second category relates to unsatisfactory or incomplete undertaking answers.

I will deal with each category separately.

Category One

Questions 21-73; 82-88; 103-108; 111; 116-125; 132; 143; 147-148; 154; 166; 169-172; 187-196; 209-226; 256-257; 292-293; 334-337; 418:

These questions relate to, among other things; CNH’s position or interpretation of sections of the Farm Implements Act, the Dealer Agreement, amendments to the Dealer Agreement, warranty issues, warranty costs, transportation costs and sub-contracting mechanics for warranty repair work.

Mr. Mackow did not know the answers to most of the questions and indicated to some that the answer would lie within some other CNH department.

Mr. May did not ask for undertakings to make inquiries to get answers to those questions, which might have obviated the need to argue an undertaking motion.

Rule 26.06 of the Tribunal’s Rules of Procedure provides for direction about questions a “party” is unable to answer. In my view, the purpose of the rule is to make the discovery process meaningful and to allow parties to know the case they have to meet. In modern civil and administrative litigation there should be no more trial by ambush.

In my view, the reference to “party” in Rule 26.06 is a reference to a party to the proceeding. In this case, the parties are CNH and CFEI. I do not regard Mr. Mackow as a party, but rather, a representative of CNH who is a party.

The transcript evidence satisfies me that there is some other person at CNH that could provide the answers to this series of questions.

Therefore, in order to avoid any spectre of the trial by ambush legacy and in order to craft a discovery process that ensures full and open disclosure, I order that CNH answer the questions. Despite my ruling on this point, I will observe that many of the questions focus on CNH’s interpretation on the legislation and the contract. Interpreting the legislation and the contract are questions of law that ultimately, this Tribunal, must decide. However, the answers to these questions might provide relevant factual context that will assist the Tribunal understanding the issues between CNH and CFEI.

Questions 531-551:

These questions relate to information about other manufacturers, and not to CNH. The evidence is that information is in the possession of third parties.

Therefore, CNH need not answer these questions. The issue of production from third parties has previously been the subject matter of a procedural Order of this Tribunal.

Question 554:

This question relates to Mr. Mackow’s knowledge about other manufacturers’ methods to determine market share.

Like my ruling above, concerning information in the possession of third parties and not in CNH’s possession, CNH need not answer this question.

Category Two

Mr. May indicated in his March 27^th, 2009 letter to the Tribunal, that he seeks Mr. Mackow’s compliance with Rule 26.06 in respect of the list of questions set out below.

Rule 26.06 sets out procedures where a witness at discovery is unable or unwilling to answer a question.

The following list of questions remains in issue:

258-259; 585-589; 622-630; 777-778; 797-799; 803-805; 819-828; 844-848; 883-884; 906-919; 995-996

Mr. Mackay responded to the Rule 26.06 questions in his letter of March 30^th, 2009 to the Tribunal. The letter appends a table summarizing the above questions and the answers provided by CNH.

My ruling on each question follows:

Question 258-259:

Mr. Mackow gave a best efforts undertaking to provide CNH’s market share for 2003-2006 in the regional sales area, if the information was available.

CNH’s undertaking response, set out in Mr. Mackay’s March 30^th, 2009 letter was that they do not have market share reports for the regional sales area.

Based on that answer, the information is not available. The undertaking is satisfied.

Question 585-589:

Mr. Mackow gave an undertaking to find out if there were discretionary programs that would have an effect on terms, other than price, a dealer could offer a purchaser.

CNH’s response was part of Mr. Mackay’s February 17^th, 2009 letter which included a list of twelve programs offered in 2005 and 2006, together with documentation explaining each program.

Based on that answer, the undertaking is satisfied.

Question 622-630:

Mr. Mackow gave several undertakings related to the approval process of September 12, 2006 related to the termination of CFEI’s dealer agreement.

CNH’s undertaking response, set out in Mr. Mackay’s March 30^th, 2009 letter was that no meeting took place on September 12, 2006. The response indicates that during the review process there were face-to-face meetings and telephone discussions about the termination action.

That is not a complete answer to the undertakings given by Mr. Mackow. Therefore, I order CNH to produce any notes or minutes created by any of the participants in the review process meetings or telephone discussions.

Questions 777-778:

Mr. Mackow gave an undertaking to produce, subject to their ability to find them, a number of apparently missing Dealer Profile Reports (DPRs). It is uncertain from the transcript if there were three or four missing DPRs.

CNH’s response, set out in Mr. Mackay’s March 17^th, 2009 letter was to provide copies of DPRs for Winchester of Stayner and Ellis Farm Equipment Ltd. and to report their inability to find DPRs for Tavistock and West Metro.

Based on that answer the undertaking is satisfied, subject to CNH’s continuing disclosure obligation to provide copies of the remaining DPRs if they are located.

Questions 797-799:

Mr. Mackow undertook to do his best to determine if sales in Ontario by out of province dealers count toward determining market share.

CNH’s response set out in Mr. Mackay’s March 30^th, 2009 letter was that the information was not in any readily-available format and referred to their response to question 258-259.

Based on that answer, the information is not available. The undertaking is satisfied.

Question 803-805:

Mr. Mackow gave an undertaking to confirm if Ralph Walsh’s handwriting appears on the letter of October 19^th, 2006 and if he sent a copy to Real Prefontaine.

CNH’s response, set out in Mr. Mackay’s March 30^th, 2009 letter appears to confirm that the handwriting belongs to Ralph Walsh but does not address the second part of the undertaking.

That is not a complete answer to the undertaking given by Mr. Mackow. Therefore, CNH is ordered to confirm it is Ralph Walsh’ handwriting and to confirm if he sent a copy to Real Prefontaine.

Question 819-828:

Mr. Mackow gave several undertakings related to the e-mails at Tab 15 of the Supplementary Document Brief. One undertaking was to determine if Mr. Prefontaine attended a June meeting and, if so, produce a summary of the meeting.

CNH’s response, set out in Mr. Mackay’s March 30^th, 2009 letter indicates an answer will follow shortly to the first.

That is not an answer to the undertaking given by Mr. Mackow. Therefore, CNH is ordered to confirm if Mr. Prefontaine attended the meeting and, if so, to produce a summary of the meeting.

Question 844-848:

Mr. Mackow gave an undertaking to determine if there was any reply from CNH to the e-mail chain at Tab 15 of the Supplementary Document Brief that began October 5.

CNH’s response, set out in Mr. Mackay’s March 30^th, 2009 letter indicates there are no other e-mails on the topic.

That is not a complete answer to the undertaking given by Mr. Mackow since replies can be in format other than e-mail. Therefore, CNH is ordered to confirm if there was any other form of reply.

Question 883-884:

Mr. Mackow gave an undertaking to determine if anyone approached CNH Capital about extending CFEI’s terms to allow an orderly sale of used inventory.

CNH’s response, set out in Mr. Mackay’s March 30^th, 2009 letter indicates they continue to make inquires.

That is not an appropriate answer to the undertaking given by Mr. Mackow. Therefore, I order CNH to confirm if anyone approached CNH Capital with that question.

Question 906-919:

Mr. Mackow gave an undertaking to confirm if the end of the sentence in undertaking #5 should read in the dealer’s own PMR or province.

CNH’s response, set out in Mr. Mackay’s March 30^th, 2009 letter is blank.

That is not an appropriate answer to the undertaking given by Mr. Mackow. Therefore, I order CNH to confirm what the sentence should read.

Question 995-996:

Mr. Mackow was re-examined about the undertaking given at questions 622-630 and undertook to re-ask the questions about the face-to-face and telephone meetings that were part of the review process.

CNH’s undertaking response, set out in Mr. Mackay’s March 30^th, 2009 letter was that there is no additional specific information to provide at this time.

I have already made an order in respect of this issue in respect of questions 622-630.

Mr. May withdrew the two questions refused by Mr. Mackow and all others taken under advisement.

Examination of CFEI

There were two questions refused by CFEI.

Question 88:

Mr. Chesterman refused to provide CNH with copies of other dealer agreements made by CFEI with Cub Cab and Polaris.

While the Farm Implements Act governs neither the Cub Cab products nor the Polaris products, Mr. Mackay’s submissions of March 27^th, 2009 persuade me that these agreements are somewhat relevant. They will provide the Tribunal with some context and understanding of CFEI’s familiarity with dealer agreements that address issues such as warranty work, warranty time, and performance levels.

Therefore, I order that CFEI produce the Cub Cab and Polaris dealer agreements.

Question 137:

Mr. Chesterman refused to answer whether the trust relationship between dealer and manufacturer was codified into what the manufacturer determined was a reasonable time to complete warranty repairs. CFEI refused to answer on the basis that it was a question for the manufacturer, since it created the time schedules.

The question is not one CFEI can properly answer since it does not speak for all dealers nor does it speak for the manufacturer that drew the time schedule.

Therefore CFEI need not answer the question.

Dated at Guelph, Ontario, this 8^th day of April, 2009