In CNH Canada Ltd., v. Chesterman Farm Equipment Ltd., the Ontario Court of Appeal ruled on the interpretation of a standard form farm equipment dealership agreement. The agreement was interpreted at first instance by the Agriculture, Food and Rural Affairs Tribunal pursuant to the Farm Implements Act, a statute meant, in part, to remedy the contractual power imbalance between farm implement dealers and distributors. The appeal arose from a decision of the Divisional Court largely upholding the Tribunal's decision.
The dispute related to the termination of the dealership agreement and the impact of the recently in force Dealership Agreements Regulation on that termination. The Tribunal held that the Regulation amended the agreement, and revised its renewal provision to incorporate the Regulation's mandatory terms respecting renewal, making the manner in which the agreement was terminated a breach of the contract. The Tribunal awarded damages to the dealer for the breach, and ordered a significant costs award against the distributor for its conduct in the termination of the dealership agreement, as well as during the proceedings.
Appeals from decisions of the Tribunal are limited solely to questions of law, and the Court emphasized that questions of contractual interpretation usually involve questions of mixed fact and law. However, the Court noted that the interpretation of a contract like the dealership agreement, which incorporated statutory terms by operation of law, was of "precedential value" and transcended the factual circumstances of the parties such that the interpretive exercise before it was a question of law and properly before the Court.
Applying a standard of review of reasonableness, the Court of Appeal ultimately upheld the decision of the Tribunal with respect to its interpretation of the renewal provisions of the agreement. The decision of the Court provides a clear circumstance in which the interpretation of a contract will be deemed a question of law, informing both the appropriate standard of review on appeal and whether, in circumstances in which a statute limits a right of appeal to questions of law alone, appellate review is available at all.
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