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The Farm Machinery and Equipment Amendment Act

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S.M. 2000, c. 22

THE FARM MACHINERY AND EQUIPMENT AMENDMENT ACT


 

(Assented to August 18, 2000)

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

C.C.S.M. c. F40 amended

1         The Farm Machinery and Equipment Act is amended by this Act.

2(1)      Section 1 is amended by renumbering it as subsection 1(1), by repealing the definition "purchaser" and by adding the following definitions in alphabetical order:

"financial institution" means

(a) a bank or authorized foreign bank, as defined in the Bank Act (Canada),

(b) a body corporate to which the Trust and Loan Companies Act (Canada) applies,

(c) an association to which the Cooperative Credit Associations Act (Canada) applies,

(d) an insurance company or fraternal benefit society to which the Insurance Companies Act (Canada) applies,

(e) a trust, loan or insurance corporation incorporated by or under an Act of the Legislature of Manitoba or an Act of the legislature of another province,

(f) a credit union or caisse populaire to which The Credit Unions and Caisses Populaires Act applies,

(g) a cooperative credit association incorporated by or under an Act of the legislature of another province,

(h) a foreign institution that would come within the provisions of any of clauses (a) to (g) if it had been incorporated or formed in Canada; (« établissement financier »)

"financial lease", in relation to farm machinery or farm equipment, means a lease or lease-purchase between a financial institution or financial leasing corporation and a purchaser that, after allowing for the rate of return to the financial institution or financial leasing corporation agreed to by the purchaser, is intended to recoup to the financial institution or financial leasing corporation its entire investment in the machinery or equipment, taking into consideration the value of any tax benefits accruing to the financial institution or financial leasing corporation on account of the lease or lease-purchase, including tax credits and capital cost allowance claims; (« crédit-bail »)

"financial leasing corporation" means a body corporate

(a) the activities of which are limited to the financial leasing of personal property and incidental activities, and

(b) that, in conducting the activities referred to clause (a), does not direct its customers to particular dealers in the leased property or the property to be leased; (« personne morale de crédit-bail »)

2(2)      The following is added after subsection 1(1):

Meaning of "purchaser"

1(2)      In this Act, "purchaser" means a farmer who resides in Manitoba and

(a) who

(i) purchases, or

(ii) leases, with or without the right to purchase,

farm machinery or farm equipment from a dealer in Manitoba for the farmer's own use; or

(b) who leases farm machinery or farm equipment from a financial institution or financial leasing corporation in Manitoba for his or her own use under a financial lease, if the financial institution or financial leasing corporation obtains the farm machinery or farm equipment from a dealer in Manitoba at the request of the farmer.

3         The following is added after subsection 2(1):

Financial lease of farm machinery or equipment

2(1.1)    When a financial institution or financial leasing corporation in Manitoba acquires farm machinery or farm equipment from a dealer in Manitoba at the request of a farmer who resides in Manitoba and leases the equipment to the farmer under a financial lease, the farmer is deemed to have leased the farm machinery or farm equipment from the dealer. In that case, this Act applies in respect of that machinery or equipment to the same extent as if the farmer had leased the machinery or equipment from the dealer under a lease or lease-purchase contract with the dealer.

Notice to dealer

2(1.2)    At the time the financial institution or financial leasing corporation obtains the farm machinery or farm equipment from the dealer, it must inform the dealer of the name and address of the farmer who is leasing the machinery or equipment.

4         The following is added after subsection 8(2):

Exception for financial institutions, etc.

8(3)      Clause (1)(c) does not apply to a financial institution or financial leasing corporation that leases farm machinery or farm equipment to a purchaser under a financial lease.

5         The following is added after section 16:

DEALER-VENDOR BUSINESS DEALINGS AND DEALERSHIP AGREEMENTS

Application of sections 16.2 to 16.12

16.1      Sections 16.2 to 16.12 apply to every dealership agreement

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

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

Definition of "terminate" in sections 16.3 to 16.11

16.2      In sections 16.3 to 16.11, "terminate", in relation to a dealership agreement, means to terminate, cancel, fail to renew, fail to extend or substantially change the competitive circumstances of the dealership agreement.

Prohibition on termination of dealership agreement

16.3(1)   No vendor shall terminate a dealership agreement

(a) without cause; and

(b) subject to subsection (2), without an order of the court under subsection 16.5(3).

Exceptions

16.3(2)   A vendor does not require a court order to terminate a dealership agreement if

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

(b) the cause for termination is a cause prescribed in the regulations.

Prohibition on discrimination

16.4      No vendor shall

(a) discriminate in the prices charged for its product 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.

Application to court for order

16.5(1)    A vendor who wishes to terminate a dealership agreement shall, if clause 16.3(1)(b) requires an order, apply to the Court of Queen's Bench for a determination of whether the vendor has cause to terminate the agreement.

Order to protect parties' interests

16.5(2)   At the request of either the dealer or vendor at any time after the application is made, the court may make an order imposing any conditions on either or both of them that the court considers necessary to protect their respective business interests until a determination is made under subsection (3).

Order by the court

16.5(3)   If the court determines that the vendor has cause to terminate the agreement, the court

(a) shall make an order to that effect; and

(b) may impose conditions on the termination, including allowing the dealer an opportunity to correct the default.

Circumstances that are cause for termination

16.6      For the purposes of a determination under section 16.5, any of the following circumstances constitute 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 bankruptcy;

(b) the dealer's farm machinery or farm equipment business, 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 14 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 circumstance prescribed in the regulations.

Circumstances that are not cause for termination

16.7      For the purposes of a determination under section 16.5, 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 farm equipment, or a service, from the vendor, unless the farm machinery, farm equipment or service is necessary for the operation of farm machinery or farm equipment commonly sold by the dealer;

(c) the vendor desires further market penetration, while recognizing that the vendor may require the dealer to achieve, in comparison with other similarly situated dealers, a reasonable sales performance level of the vendor's product;

(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 circumstance prescribed in the regulations.

Mediation

16.8(1)   At the request of the dealer or vendor, the court shall by order appoint a mediator, unless it is satisfied that the purpose of the request is to delay its determination under section 16.5 unnecessarily or that mediation is not in the interests of justice. The mediator shall try to facilitate a settlement of the dispute.

Length of mediation period

16.8(2)   The court shall fix the length of the mediation period and may shorten or lengthen the period at the request of the dealer or vendor.

Parties may agree to extend mediation

16.8(3)   The dealer and vendor may agree to shorten or lengthen the mediation period.

Stay of proceedings

16.8(4)   No further proceedings may be taken in the application during the mediation period without leave of the court.

Choice of mediator

16.8(5)   If the dealer and vendor agree on the person to be appointed as mediator, the court shall appoint that person. Otherwise, the court shall appoint the mediator from the list of persons maintained under subsection (6).

List of mediators

16.8(6)   The minister shall establish and maintain, and may share with dealers and vendors, a list of persons who have indicated to the minister their willingness to act as mediators and have, in the opinion of the minister, qualities and experience that make them suitable persons to act.

Mediator to meet with parties

16.8(7)   The mediator shall meet and confer with the dealer and vendor as often as he or she considers necessary.

Parties must participate in good faith

16.8(8)   The dealer and vendor must participate in the mediation in good faith.

Mediator's report

16.8(9)   On or before the last day of the mediation period, the mediator shall file a report with the court that either sets out the agreement reached by the dealer and vendor or states only that they did not reach agreement. The mediator shall give copies to the dealer, vendor and board promptly after filing the report.

Admissions in course of mediation

16.8(10)  No evidence of anything said or of any admission or communication made in the course of the mediation is admissible in any proceeding.

Mediator's fees and expenses

16.8(11)  The court shall require the parties to pay the fees and expenses of the mediator, and shall specify the proportions or amounts of the fees and expenses that each must pay.

No liability

16.8(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 under this Act.

Certain provisions void

16.9      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 a benefit or remedy available to a dealer under this Act.

Application to court for relief from termination

16.10(1)  A dealer who considers that his or her dealership agreement with a vendor has been terminated in contravention of section 16.3 may apply to the Court of Queen's Bench for relief.

Court may order reinstatement etc.

16.10(2)  On an application under 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).

Application of section

16.10(3)  Subsections (1) and (2) apply despite any other penalty that may be imposed on the vendor under this Act with respect to the vendor's contravention of section 16.3.

Termination by mutual agreement

16.11     Nothing in section 16.3 precludes a vendor and a dealer from terminating a dealership agreement by mutual agreement.

Limitation of actions

16.12     No action or proceeding, other than an application under section 16.5 or 16.10, may be instituted or continued against the Crown or any other person based on any cause of action, whether arising before or after this section comes into force, for compensation, loss or damages, or for injunctive or declaratory relief, arising out of the application of sections 16.2 to 16.11 to a dealership agreement.

6         Subsection 17(1) is amended

(a) by repealing the part before clause (a) and substituting "When a dealer sells new farm machinery or farm equipment to a purchaser, or to a financial institution or financial leasing corporation in Manitoba that acquires it for a financial lease to a purchaser,"; and

(b) by repealing subclause (b)(i) and substituting the following:

(i) the name and address of the dealer and the purchaser or, in the case of a sale for a financial lease, the dealer and the financial institution or financial leasing corporation,

7         The centred heading before subsection 21(1) is repealed and the following is substituted:

LEASES, LEASE-PURCHASES AND FINANCIAL LEASES

8         Section 21 is repealed and the following is substituted:

Leases, lease-purchases and financial leases

21(1)     Clause 17(1)(b), subsections 17(4) and (6) and sections 18 and 19 apply with necessary modifications to leases, lease-purchases and financial leases of new farm machinery or farm equipment.

Lease, lease-purchase or financial lease may be assigned

21(2)     A lease, lease-purchase or financial lease may be assigned by the lessor, his or her assignee and any sub-assignee.

9(1)       Subsection 22(1) is amended by striking out "or" at the end of clause (a), by adding "or" at the end of clause (b) and by adding the following after clause (b):

(c) sold by a dealer to a financial institution or financial leasing corporation in Manitoba that acquires it for a financial lease to a purchaser;

9(2)      The following is added after subsection 22(2):

Warranty enforceable by purchaser under financial lease

22(2.1)   A warranty that applies to farm machinery or farm equipment under clause (1)(c) is enforceable by the purchaser who leases the machinery or equipment under the financial lease.

10        Section 62 is amended

(a) by adding the following after clause (k):

(k.1) for the purposes of clause 16.3(2)(b), providing for circumstances that constitute cause to terminate a dealership agreement without a court order;

(k.2) for the purposes of clause 16.6(g), providing for circumstances that constitute cause to terminate a dealership agreement;

(k.3) for the purposes of clause 16.7(e), providing for circumstances that do not constitute cause to terminate a dealership agreement;

(b) by renumbering it as subsection 62(1); and

(c) by adding the following as subsection 62(2):

Retroactive regulations

62(2)     A regulation made under any of clauses (1)(k.1) to (k.3) may be made retroactive to a day not earlier than the day on which sections 16.1 to 16.12 come into force.

Coming into force

11        This Act comes into force on a day fixed by proclamation.