4640 John Deere case goes up to the Court of Appeal

I previously wrote about a small claims case in Saskatchewan where a man had bid $18,000 at auction to purchase a 4640 John Deere (with loader) but had mistakenly been allowed to pay only $1,800.  The cashier had entered the bid amount incorrectly, missing the last zero in the price.  The purchaser refused to pay any additional amount and claimed that $1,800 was the bid amount.  The Court did not allow the purchaser to take advantage of the mistake and ordered payment of the balance of the $18,000 on the basis of unjust enrichment.

Well, the decision was appealed by the purchaser (who referred to the trial as a "mockery of the judicial system) and has made its way up to the Court of Appeal for Saskatchewan.  I invite you to read the Court of Appeal's reasons for dismissing the purchaser's application for leave to appeal (leave to appeal a decision by the Court of Queen's Bench that dismissed an initial appeal), which set out the various interesting grounds of appeal, but here is the conclusion:

[The Purchaser] fails to come to grips with a very simple issue—he was found on the evidence to owe money to pay for farm equipment he purchased at an auction. He had the opportunity at trial to explain why he should not have to pay and passed on the opportunity. His arguments have nothing to do with the fundamental issue, i.e. he did not pay his bid price for equipment because of the mistake of fact and he owes the money. One can only surmise that his actions and his whole argument are simply an attempt to avoid payment.
He has raised no question of law and the appeal has no merit in any event.
The application for leave is dismissed with costs in the usual manner.

Auction sale error - John Deere 4640 goes for $1,800 - Court fixes mistake

The Provincial Court of Saskatchewan has granted judgment to an auctioneer to correct a 10x mistake in the price paid for a John Deere 4640 tractor at auction.  Evidence from attendees at farm auction testified that the winning bid for the tractor was $18,000, but the successful bidder paid only $1,800 to the auctioneer.  The clerk for the auctioneer had made a clerical error and listed $1,800 on the invoice issued to the successful bidder, who provided payment in that amount and took possession of the tractor. 

Although the successful bidder was contacted by the farm owners about the mistake, he refused to pay the difference between the $18,000 bid and the $1,800 had had already paid.  At trial, the successful bidder called no evidence, but did cross-examine the witnesses from the auctioneer "in an apparent effort to challenge their credibility".  During his testimony, the auctioneer explained that he had paid out the $18,000 to the farm owners after the mistake made by his clerk was discovered.

The Court found that there was a clerical error made, the purchase price of the tractor was actually $18,000, and the successful bidder "seized on the mistake, to obtain a benefit he knew or ought to have known that he was not entitled in law to have."

Read the decision at: Ukrainetz (Ukrainetz Auctioneering) v Borowski.

Equipment Company had no right not to renew dealer agreement: Appeal Tribunal

In 1987, CFEI became a dealer with Ford New Holland Inc., CNH's predecessor. In June 1999, Ford New Holland sent CFEI a letter advising that it would not renew the existing Dealer Agreement and that it would terminate effective December 31st, 1999. Ford New Holland then offered CFEI the opportunity to continue as a dealer under a new Dealer Agreement.  The new Dealer Agreement created a one-year renewable term. The term renewed automatically unless either party gave at least ninety days written notice of its intention not to renew.

Both the 1987 and 1999 version of the Dealer Agreement are very similar. Both Dealer Agreements are standard form contracts drafted by the farm implement manufacturer. CFEI had no opportunity for input into any of the terms. The reality for CFEI was that if it wished to be a CNH dealer, it was obliged to sign the standard form Dealer Agreement without any changes.

In late September 2006, CFEI received a letter from CNH dated September 30th, 2006 advising CFEI that CNH would not renew the Dealer Agreement at the end of 2006.  That letter explained that CNH based its decision not to renew on "serious breaches" of the Dealer Agreement.  That letter also explained that CFEI had failed to "achieve and maintain a reasonable market share" during the previous four years. The letter included a chart giving an illustration of CFEI's performance in select product categories.

CFEI challenged the non-renewal of the relationship before the Agriculture, Food and Rural Affairs Tribunal pursuant to the Farm Implements Act.  The parties characterized the end of the relationship differently. CFEI characterized it as a termination while CNH characterized it as non-renewal. Regardless of the characterization, the practical result was the same, the end of the business relationship.

Section 35(c) of the Act provides that the Minister of Agriculture, Food and Rural Affairs may make regulations prescribing information to be included in a dealer agreement and setting out legal rights and obligations for parties to the agreement.  The Minister prescribed Ontario Regulation 123/06.  The Regulation came into force when filed on April 25th, 2006.  The Regulation created mandatory terms that must be included in any dealer agreement and that the Regulation deems are part of any dealer agreement. The Regulation provides that any provision in a dealer agreement contrary to the prescribed mandatory terms is void.

The Appeal Tribunal found that, despite any contractual wording to the contrary, CFEI has a prescribed right to renew the Dealer Agreement by giving CNH that written notice. Both counsel agreed that in this case the Dealer Agreement itself, which contemplated annual "auto-renewal", would satisfy the requirement from the Regulation for written notice. It was clear from the Dealer Agreement that the annual term starts January 1st and concludes December 31st.  While CNH had a contractual right not to renew the annual term before April 25th, 2006, the effect of the Regulation was to remove CNH's contractual right not to renew from paragraph 22 of the Dealer Agreement. The Regulation replaced that right with a regulated approval. Therefore, beginning April 25th, 2006, CNH no longer had any right not to renew the Dealer Agreement.

The consequence flowing from CNH's liability remains to be determined in the second phase of the proceeding.

Read the decision at: Chesterman Farm Equipment Inc. (CFEI) vs. CNH Canada Ltd. (CNH).