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Friday, July 18, 2014

Combine repair dispute goes to the Ontario Agri Appeal Tribunal


In Ontario, the Farm Implements Act provides for the investigation and mediation of disputes related to the sale of farm equipment; where mediation fails, the dispute can be put to the Agriculture, Food and Rural Affairs Appeal Tribunal for a hearing.  Recently, the Tribunal ruled on a warranty claim involving a used 2008 Lexion 570R combine.  HF purchased the combine from EFE.  The original owner of the combine had purchased it from DP, and HF went back to DP for the service and repair of the combine.

In October of 2011, problems arose with the hydraulic pump and motor, and HF hired DP to fix the problems.  Over the next year and a half, the problems would be repaired and then reappear - each time DP would fix the problems and HF would pay for repairs.  However, following a final repair in late 2012, HF refused to pay the $25,698.10 invoice rendered by DP.  HF claimed that the repair was under warranty.  HF asked the Tribunal to absolve HF of its responsibility to pay the final invoice, and to require DP to pay various costs (including a $25,000 loss allegedly incurred when the combine was re-sold).

Section 16 of the Farm Implements Act provides for an implied warranty as to the quality of repair parts.  If a new repair part is purchased from an authorized dealer and is supplied by the same distributor who supplied the farm implement for which the part is intended, then there is an implied warranty that the repair part will be free from defects in material or work for a period of 90 days from purchase or, if purchased out of season of use, 90 days from the date it is first used by the purchaser in the next season of use.  It is also possible for the distributor or dealer to give a longer warranty.

In this case, DP was an authorized dealer and was the distributor who had first sold the combine to the original owner.  Further, DP had given a contractual warranty for 6 months, double the implied statutory warranty.  In spite of DP's argument to the contrary, the Tribunal determined that the warranty given covered both parts and labour (since a warranty for parts only would be no warranty at all - the parts themselves were already covered by a warranty from DP's supplier), and applied to the last repair in late 2012.

On this basis, the Tribunal ruled that HF would not have to pay for the final repair costs and that DP would have to reimburse HF for the costs it incurred after the fact in fixing the machine.  However, the Tribunal did not award damages related to machine downtime costs and trading loss to HF, finding that there was insufficient evidence concerning these claims.

Read the decision at: Holtrop Farms v. Delta Power Equipment.