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: AFRAAT@ontario.ca
Guelph (Ontario) N1G 4Y2 Tél.: (519) 826-3433, Téléc.: (519) 826-4232 Email: AFRAAT@ontario.ca
AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL
APPEAL:
Chesterman Farm Equipment Inc. (CFEI) v CNH Canada Ltd. (CNH)
Chesterman Farm Equipment Inc. v CNH [Pre-Hearing Conference] 2012 ONAFRAAT 26
STATUTE:
Farm Implements Act
HEARING:
September 5, 2012
September 7, 2012
2012-26
NEUTRAL CITATION:
2012 ONAFRAAT 26
Chesterman Farm Equipment Inc. (CFEI) v CNH Canada Ltd. (CNH) [Pre-Hearing Conference]
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 Chesterman Farm Equipment Inc. (CFEI), of Tillsonburg, Ontario, under Section 5 of the Farm Implements Act from a dispute with CNH Canada Ltd. (CNH).
AND IN THE MATTER OF: An endorsement and oral decision (transcript) from the Divisional Court remitting matters concerning the liability issue related to the dealer agreement to the Tribunal for reconsideration.
AND IN THE MATTER OF: a September 5th, 2012 Pre-hearing Conference pursuant to Rule 24 of the Tribunal’s Rules of Procedure, held for the purposes of determining the issues as set out in the Notice of Pre-hearing Conference.
Before:
John O’Kane, Vice Chair; Susan Whelan, Vice-Chair; Rob Scouller, member
Appearances:
John May, co-counsel for the appellant, CFEI
Eric Gillespie,co-counsel for the appellant, CFEI
Stuart Mackay, counsel for the respondent, CNH
PRE-HEARING CONFERENCE
DECISION OF THE TRIBUNAL
Overview
In a proceeding made to this Tribunal, CFEI sought relief from CNH under the Farm Implements Act (the “Act”) over the end of CFEI’s farm equipment dealership relationship with CNH. CFEI sought a liability finding against CNH with respect to the end of that relationship (relationship liability). In addition, CFEI sought a liability finding against CNH in respect of certain warranty claim issues (warranty liability).
Two intervenor parties, the Association of Equipment Manufacturers (AEM) and John Deere Limited (JDL), joined the proceeding in respect of the warranty liability issues.
CFEI also sought an award of money compensation from CNH, in the event of an affirmative finding on the relationship liability.
The Tribunal hearing took place over seven days in October 2010. At that time, the liability phase and damages phase of the hearing were separated with the liability phase proceeding first.
On March 17th, 2011 the Tribunal released its liability decision in this matter finding against CFEI in respect of the warranty issues and for CFEI in respect of the end of the relationship issues.
CNH appealed the Tribunal’s decision to the Divisional Court.
On April 21st, 2012, the Divisional Court remitted certain of the matters to the Tribunal on the consent of the parties and the Court provided the Tribunal with specific directions to guide its “further consideration” or “reconsideration” of those issues.
Rather than repeat those Divisional Court directions, a copy of the Court’s endorsement together with a copy of the transcript of the Court’s oral reasons and directions are appended as a schedule to this procedural order.
Clarifying the Tribunal’s Policy About Recording Proceedings
The Divisional Court appeal also involved a motion to adduce fresh evidence on appeal regarding the last paragraph on page 16 of the Tribunal’s decision. Specifically, that paragraph referred to counsel agreeing as to the effect of the auto renewal of the Dealership Agreement and from that flowed the Tribunal’s determination about that auto renewal, in the context of the provisions of Ontario Regulation 123/06.
Part of Divisional Court’s stated reasons for remitting the matter to the Tribunal for reconsideration was its inability to decide with confidence what had been agreed to by counsel before the Tribunal. The Divisional Court’s ability to decide that issue was hampered by the lack of a transcript of the proceedings before the Tribunal. The Divisional Court’s reasons suggested that the Tribunal reconsider its policy of destroying the recording of proceedings after rendering a decision. That suggestion invites a clarification of the Tribunal’s practices and policies.
The Tribunal has no mandate under the Act to provide court reporting services at its hearings.
Tribunal members keep bench notes of the evidence and arguments in proceedings and in addition, Tribunal members utilize an audio recording device. Each Tribunal member receives a digital file copy of the audio recording to supplement their bench notes. No transcript is prepared from that audio recording. Tribunal staff does not keep a copy of the audio recording.
In the Chair’s opening statement at a hearing under the Act, parties are advised that the recording is only used to supplement the members’ bench notes and that no party will be given access to the bench notes and that once a hearing is concluded, the audio recording files will be destroyed.
The Tribunal’s Rules of Procedure (Rule 16) specifically allow for the parties to arrange for court reporting services at their own cost. The parties were reminded during the Pre-hearing conference of that Rule.
The Tribunal also encouraged Counsel that, given the importance of the issues to their clients, and given that this was a case of first instance, and given that everyone involved understands that the outcome will be appealed to the law courts, that it was in their clients’ interests to carefully consider arranging for the services of a court reporter.
Scope of the Issues Remitted to the Tribunal for Further Consideration
The issues remitted for further consideration or reconsideration flow out of the CNH Factum on appeal.
Since the Tribunal does not sit in appeal of its own decisions, the Tribunal restates those issues, as the following questions:
Did Regulation 123/06, and in particular, subsection 3(6) remove or void CNH’s contractual right not to renew under the Dealer Agreement? [Paragraphs 31-55, CNH Appeal Factum]
Did the auto renewal provision of the Dealer Agreement satisfy the renewal request requirement of Regulation 123/06? [Paragraph 55-66, CNH Appeal Factum]
Did Regulation 123/06 require that a manufacturer or a distributor give a dealer written notice that it was withholding renewal approval and an opportunity to cure any defect or address the manufacturer’s concerns? [Paragraphs 67-71, CNH Appeal Factum]
Was the opportunity to cure rendered academic due to CFEI’s inability to address CNH’s underlying concerns, or for some other reasons? [Paragraphs 72-78, CNH Appeal Factum]
Are unreasonableness, unconscionability and bad faith mutually exclusive, or does a finding of one, necessarily lead to a finding of the others? [ Paragraphs 79-91, CNH Appeal Factum]
In addition to agreeing that those issues are remitted to the Tribunal, the parties also agreed that the Tribunal would hear new evidence related to those remitted issues, but “limited to evidence of legislative intent and implications for entities beyond the current parties to this appeal”1.
Contentious Issues
At the Pre-hearing conference the parties had agreed to most of the procedural matters associated with advancing the matters remitted to a hearing.
The first of two contentious issues that the parties argued related to the order of presentation of the new evidence and arguments associated with the issues numerated above.
In resolving this procedural contention between the parties, the Tribunal is not altering the reality that this proceeding is an application by CFEI for relief and it is CFEI that has the ultimate burden of proof, in respect of both liability and damages.
However, these remitted issues arose from the CNH Divisional Court appeal and it is in that context that the Tribunal concludes that CNH understands these issues best. Therefore, CNH best understands what evidence will be needed to inform and educate the Tribunal so that the Tribunal can conduct the reconsideration directed by the Divisional Court.
Reconsideration is not that different than the process contemplated when the Tribunal conducts a review of a decision pursuant to Rule 29 of its Rules of Procedure. Under that review process, the party seeking the review puts forward the evidence and arguments supporting the review and the other party responds. Therefore, by analogy with the Tribunal’s Rule 29, there are parallels with the reconsideration directed by the Divisional Court.
Therefore, the Tribunal considers that the most practical procedure to advance our further consideration or reconsideration of the issues will be for CNH to call its evidence at the hearing, followed by the CFEI evidence in response and leaving open the opportunity for CNH to lead reply evidence, if any.
The second of the two contentious issues argued related to whether the resumption of the hearing should also continue after the liability phase, to deal with the evidence and argument related to damages.
The Tribunal’s decision to separate liability and damages arose early in the October 2010 hearing when the parties advised the Tribunal that the time scheduled for the hearing would be insufficient to complete both liability issues and the damages issues. The parties advised the Tribunal that, at that time in October 2010, they all consented to separate the hearing into a liability phase and a damages phase.
The Tribunal adopted the parties consent and ordered that the liability phase and damages phase be separated. CFEI now seeks to schedule the damages phase immediately after the reconsideration of the liability issues. CNH seeks to keep the liability and damages phases separated.
Generally, bifurcation of issues within a proceeding is discouraged. Trying liability and damages together is the default approach in the law courts. It is also the default approach in the Tribunal justice system. There has to be good reasons to bifurcate. In October 2010 there were good reasons to grant the request to bifurcate.
At the October 2010 hearing there were, in addition to the principle litigants, two intervenor parties that had an interest in the outcome of the warranty liability issues. Those intervenors had no interest in the relationship liability issue and had no interest in the damages issue. Therefore, at that time, it made good sense to bifurcate the issues so that the intervenors did not need to participate in the damages phase. That reason for bifurcation no longer exists, as the warranty liability issue is no longer a live issue.
A second good reason to bifurcate at that time was, that depending on the Tribunal’s relationship liability finding, there might not be a damages phase. That is, if the Tribunal found against CFEI on the relationship liability issues, the damages phase would become academic or, the other alternative was that if the Tribunal found in favour of CFEI on the relationship liability issues, there might be an agreement as to damages.
What is abundantly clear now is that despite the good intentions of all concerned to devise a hearing approach that promoted expediency and economy, this case is destined to have a life beyond a hearing at first instance. Already, the appeals process consumed twelve months since the Tribunal released its decision. Given the schedules of counsel canvassed at the Pre-hearing conference, it is unlikely the resumed hearing will be scheduled much before February or March 2013.
As counsel pointed out, when the Tribunal renders a further decision, that is appealable to the Divisional Court and there is also a further appeal right from the Divisional Court to the Court of Appeal for Ontario and beyond that, possibly the Supreme Court of Canada. It is not unreasonable to estimate that the appeals process could add two to five years to life of the proceeding. If the appeal courts remitted any issues to the Tribunal, that would further prolong the proceedings.
If a bifurcated approach is continued, the potential lifespan of this proceeding could stretch beyond a decade, since the appeal rights that arise in respect of the liability issue, could also arise in respect of the damages issue. That potential lifespan also translates into greater costs. Those greater costs would be borne by the parties, by the administrative justice system and by the court system.
The Tribunal considers these factors in the context that the relationship between CFEI and CNH that spawned these issues ended in December 2006. Therefore, already almost six years have passed since the issues between these parties first arose.
The Tribunal is mindful of the warning that justice delayed is justice denied.
In these present circumstances, the Tribunal is satisfied that continuing to separate liability and damages will lead to unnecessary delays that will lead to prejudice to CFEI. That prejudice includes both unnecessary delay and added cost.
CNH does not lose any appeal rights if liability and damages are re-joined. CNH will suffer no prejudice if liability and damages are re-joined.
At the Pre-hearing conference, Counsel for CNH provided the case of Bourne v. Saunby (1993) 23 C.P.C. (3d) 333, as the leading authority on bifurcating civil trials. In that case Justice Tobias listed fourteen questions described as “helpful” to considering whether to bifurcate. Not all those queries are necessarily applicable in all cases and certainly in respect of our original decision to bifurcate, no party addressed that authority or those queries.
In coming to our decision to re-join liability and damages, the following considerations informed and guided us in arriving at that determination:
- The issues for determination have become simplified since the warranty liability issues are concluded.
- The issues for determination have been simplified and narrowed by the directions from the Divisional Court and the agreement between the parties about the issues for reconsideration.
- The factual structure that the case is based on is not so extraordinary and exceptional that there is good reason to depart from the default practice of hearing liability and damages together.
- There is no clear advantage to all parties to have the remaining liability issued tried separately.
- There is no evidence that there will be substantial savings of costs through bifurcation.
- There is no certainty that splitting the case will save time.
- We are reasonably certain that continued splitting of the case will result in unnecessary delay.
- As confirmed at the Pre-hearing conference, there is no agreement on the quantum of damages.
- There is no evidence for us to conclude there is any likelihood that the conclusion of the hearing on liability will put an end to the proceeding.
Agreed Procedural Matters
The parties agreed on the following procedural matters:
- CFEI and CNH would each file with the Tribunal copies of their respective Divisional Court Appeal Facta and authorities. Counsel agreed that providing those Facta to the Tribunal would give a complete context for understanding the remitted issues.
- At the resumption of the hearing, the parties would introduce new evidence on the liability issue limited to evidence of legislative intent and the implications for entities beyond the current parties.
- So that each side would have a fair opportunity to understand the case of the other, as it relates to the limited re-opening of the evidence on the liability issues remitted for further consideration or reconsideration, there will be a limited form of discovery before the hearing resumes.
- The limited discovery process will be scheduled between counsel and completed at least sixty days before the resumption of the hearing and will involve:
- the parties exchanging detailed written witness statements of any prospective witness;
- the parties having an opportunity to conduct an examination/cross-examination of any prospective witness;
- In the event counsel has any issues with scheduling the limited discoveries, the Tribunal is available for a further pre-hearing conference by way of telephone conference call.
- Any limited new evidence at the resumed hearing will be given orally and subject to cross-examination by the party opposed in interest.
- The parties will file any new documentary evidence with the Tribunal sixty (60) days before the resumed hearing.
- The parties agree that three hearing days will be required to complete the liability phase with one day for new evidence and two days for legal arguments. The parties agree that four hearing days will be required for the damages phase of the hearing.
ORDER OF THE TRIBUNAL
For the reasons explained herein, the Tribunal Orders that:
The parties will forthwith deliver to the Tribunal office, five copies of each of their respective Divisional Court appeal Facta and Book of authorities.
Within thirty (30) days of the date of this decision, the parties will: a. disclose to each other and to the Tribunal office, the identity of any proposed witnesses to be called to provide evidence about legislative intent and implications for entities beyond the current parties; and, b. exchange detailed witness statements of the anticipated evidence of the proposed witnesses.
At least sixty (60) days before the resumption of the hearing, the parties will: a. have completed a limited form of discovery by conducting such examinations/cross-examinations in order that they each know the evidentiary case of the other on the issues remitted to the Tribunal; and, b. file with the Tribunal office five copies of any new documentary evidence.
The Tribunal will hear oral evidence at the resumed hearing.
At the resumption of the hearing, on the further consideration or reconsideration of the remitted liability issues, the order of presentation of the evidence and argument is that CNH will go first, CFEI will respond and CNH will have the opportunity for reply.
The issues of liability and damages are hereby re-joined, so that following the resumed hearing on liability, the Tribunal will hear evidence and argument on damages. The order of presentation of evidence and argument during the damages phase is that CFEI will go first, CNH will respond and CFEI will have the opportunity for reply.
The liability phase will be scheduled for three days followed, as soon thereafter as practical, by four days for the damages phase.
The resumed hearing date(s) will be established by the Tribunal office and notice will be sent to the parties.
In the event the parties are unable to agree on the scheduling of the limited form of discovery examinations, the Tribunal will make itself available for a further Pre-hearing conference by telephone conference call.
Dated at Brampton, Ontario this 7th day of September, 2012