BILL NO. 32

(as introduced)

3rd Session, 58th General Assembly
Nova Scotia
52 Elizabeth II, 2003

Private Member's Bill

Farm Machinery Dealers and Vendors Act

The Honourable Ernest L. Fage
Cumberland North

First Reading: April 9, 2003

Second Reading: May 20, 2003

Third Reading: May 22, 2003 (LINK TO BILL AS PASSED)

Be it enacted by the Governor and Assembly as follows:

1 This Act may be cited as the Farm Machinery Dealers and Vendors Act.

2 In this Act,

(a) "Court" means the Supreme Court of Nova Scotia;

(b) "dealer" means an individual, corporation or partnership carrying on a retail business in which the individual, corporation or partnership

(i) leases, with or without the right to purchase, or sells new farm machinery,

(ii) sells repair parts for farm machinery, or

(iii) operates a maintenance and repair service shop for farm machinery;

(c) "dealership agreement" means a written or oral agreement between a dealer and a vendor;

(d) "farm machinery" means any equipment, implement or machinery that is used or intended for use in farming operations, including any combine, tractor, implement or attachment, but does not include a motor vehicle within the meaning of the Motor Vehicle Act other than a farm tractor;

(e) "terminate", in relation to a dealership agreement, means to

(i) terminate the agreement,

(ii) cancel the agreement,

(iii) fail to renew the agreement,

(iv) fail to extend the agreement, or

(v) substantially change the competitive circumstances of the agreement;

(f) "vendor" means

(i) a manufacturer of farm machinery or repair parts who
(A) sells, consigns or delivers farm machinery or repair parts to a dealer for sale by the dealer, or to a distributor or supplier for sale by a dealer, or

(B) leases or delivers farm machinery to a dealer for the purpose of being let by the dealer, or

(ii) a distributor or supplier of farm machinery or repair parts who

(A) sells, consigns or delivers farm machinery or repair parts to a dealer for sale by the dealer, or

(B) leases or delivers farm machinery to a dealer for the purpose of being let by the dealer.

3 This Act applies to every dealership agreement

(a) whether entered into before or after this Act comes into force; and

(b) notwithstanding any provision to the contrary in the agreement.

4 No vendor shall

(a) directly or indirectly discriminate in the prices charged for farm machinery of like grade and quality to similarly situated dealers;

(b) impose substantially different contractual requirements on similarly situated dealers; or

(c) discriminate against or penalize a dealer for carrying on business as a dealer or agent for another vendor, or selling or servicing the product of another vendor.

5 No vendor shall terminate a dealership agreement except in accordance with this Act.

6 (1) A vendor who wishes to terminate a dealership agreement shall apply to the Court for a determination of whether the vendor has cause to terminate the agreement.

(2) At any time after an application is made pursuant to subsection (1), either the dealer or vendor may request that the Court make an interim order to protect the business interests of the dealer or vendor, respectively.

(3) Upon a request pursuant to subsection (2), the Court may make an interim order imposing any condition on the dealer or vendor, or both of them, that the Court considers necessary to protect the business interests of the dealer and the vendor.

(4) An order made pursuant to subsection (3) is effective until a determination is made pursuant to subsection (5) and may be varied by the Court.

(5) Where the Court determines that the vendor has cause to terminate the agreement, the Court

(a) shall make an order to that effect;

(b) may impose conditions on the termination; and

(c) may allow the dealer an opportunity to correct any default.

7 For the purpose of a determination pursuant to Section 6, any of the following circumstances constitutes cause to terminate a dealership agreement:

(a) the dealer has made an assignment in bankruptcy or has been petitioned into bankruptcy, and has not been discharged from the bankruptcy;

(b) the dealer's farm machinery, or a substantial part of it, is being liquidated, and the liquidation materially affects the contractual relationship between the dealer and vendor;

(c) the dealer has defaulted under a security agreement between the dealer and vendor, or a guarantee of the dealer's financial obligations to the vendor has been revoked or discontinued;

(d) the dealer has failed to operate in the normal course of business for fourteen consecutive days, or has otherwise abandoned the dealership;

(e) the dealer has pleaded or been found guilty of an offence affecting the contractual relationship between the dealer and vendor;

(f) the dealer has failed to substantially comply with the essential and reasonable requirements of the dealership agreement, if the requirements are not different from the requirements imposed on other similarly situated dealers;

(g) any other circumstances prescribed in the regulations.

8 For the purpose of a determination pursuant to Section 6, none of the following circumstances constitutes cause to terminate a dealership agreement:

(a) the executive management or ownership of the dealer has changed, unless the change is detrimental to the representation or reputation of the vendor's products;

(b) the dealer has refused to purchase or accept delivery of farm machinery or a service from the vendor unless the farm machinery or service would normally be purchased by similarly situated dealers as an essential part of the operation of the dealer or for the repair of farm machinery commonly sold by the dealer;

(c) the vendor desires further market penetration, unless the dealer has failed substantially to achieve, in comparison with other similarly situated dealers, a reasonable sales performance level of the vendor's product required of all such similarly situated dealers to achieve that penetration;

(d) the dealer is carrying on business as a dealer or agent for another vendor, or selling or servicing the product of another vendor;

(e) any other circumstances prescribed in the regulations.

9 (1) Where an application has been made pursuant to Section 6, the Court shall, at the request of a dealer or vendor, by order, appoint a mediator who shall endeavour to facilitate the settlement of a dispute.

(2) The mediation shall be conducted in accordance with Schedule C to the Commercial Arbitration Act and that Schedule and Section 39 of that Act apply mutatis mutandis to the mediation.

(3) The Court

(a) shall fix the length of a mediation period; and

(b) may shorten or lengthen the mediation period at the request of the dealer or the vendor.

(4) The dealer and vendor may agree, with the Court's approval, to shorten or lengthen the mediation period.

(5) Where the dealer and vendor agree on the person to be appointed as mediator, the Court shall appoint that person.

(6) Where the dealer and vendor do not agree on the person to be of mediator appointed as mediator, the Court shall appoint a mediator.

(7) The mediator shall meet and confer with the dealer and vendor as with parties often as the mediator considers necessary.

(8) On or before the last day of the mediation period, the mediator shall file a report with the Court that either

(a) sets out the settlement agreement reached by the dealer and vendor; or

(b) states only that the dealer and vendor did not reach an agreement.

(9) The mediator shall give copies of the report filed pursuant to subsection (8) to the dealer and vendor promptly after filing it.

(10) No evidence of anything said or communication made in the course of the mediation is admissible in any proceeding.

(11) The Court shall

(a) require the parties to pay the fees and expenses of the mediator; and

(b) specify the proportions or amounts of the fees and expenses that each party shall pay.

(12) No mediator is liable for any loss or damage suffered by any person by reason of any action or omission of the mediator in the discharge of the mediator's duties pursuant to this Act.

10 The following provisions in a dealership agreement are void:

(a) a provision allowing for termination of the agreement without cause;

(b) a provision requiring the dealer to carry on exclusive dealings with the vendor, so as to prevent the dealer from, or penalize the dealer for, carrying on business as a dealer or agent of another vendor, or selling or servicing the product of another vendor;

(c) a provision that limits, modifies or makes inapplicable, or in effect limits, modifies or makes inapplicable any benefit or remedy available to a dealer pursuant to this Act.

11 (1) A dealer who believes that the dealer has suffered harm because of actions of a vendor that contravene Section 4 or that the dealer's dealership agreement with a vendor has been terminated in contravention of Section 5 may apply to the Court for relief.

(2) On an application pursuant to subsection (1), the Court may make any order that it considers appropriate, including one or more of the following:

(a) an order directing the vendor to reinstate a dealership agreement or restore any rights under a dealership agreement that have been terminated;

(b) an order enjoining the vendor from doing or continuing to do anything that contravenes this Act;

(c) an order awarding damages to the dealer for any loss resulting from the vendor's contravention of this Act;

(d) an interim order of the kind referred to in clause (a) or (b).

(3) Subsections (1) and (2) apply notwithstanding any other penalty that may be imposed on the vendor pursuant to this Act with respect to the vendor's contravention of Sections 4 or 5.

12 (1) Every vendor who contravenes Section 4 or 5 is guilty of an offence and is liable on summary conviction to

(a) a fine of not more than one hundred and fifty thousand dollars; and

(b) in the case of a continuing offence, a further fine of not more than ten thousand dollars for each day or part of a day during which the offence continues.

(2) In addition to any penalty imposed with respect to a contravention referred to in subsection (1), the convicting court may order the vendor convicted of the offence to comply with any terms of a dealership agreement that the vendor has contravened.

13 Nothing in this Act precludes a vendor and a dealer from terminating a dealership agreement by mutual agreement.

14 For greater certainty, no person is entitled to any compensation from Her Majesty in right of the Province as the result of the application, enforcement or operation of this Act or the regulations.

15 (1) The Governor in Council may make regulations

(a) prescribing circumstances in addition to those listed in Section 7 that constitute cause for termination of a dealership agreement;

(b) prescribing circumstances in addition to those listed in Section 8 that do not constitute cause for termination of a dealership agreement;

(c) defining any word or expression used but not defined in this Act;

(d) respecting any matter or thing the Governor in Council considers necessary or advisable to carry out effectively the intent and purpose of this Act.

(2) The exercise by the Governor in Council of the authority contained in subsection (1) is regulations within the meaning of the Regulations Act.

16 This Act comes into force on such day as the Governor in Council orders and declares by proclamation.