Brandt Tractor Ltd v BOMAG (Canada) Inc, 2021 ABQB 71

Court of Queen’s Bench of Alberta Citation: Brandt Tractor Ltd v BOMAG (Canada) Inc, 2021 ABQB 71 Date: 20210128 Docket: 2001 07716 Registry: Calgary Between: Brandt Tractor Ltd Plaintiff - and- BOMAG (Canada) Inc and SMS Equipment Inc Defendants _______________________________________________________ Endorsement of the Honourable Madam Justice B.E.

Romaine _______________________________________________________ [ 1 ] The Plaintiff Brandt Tractor Ltd, a long-term dealer of equipment manufactured by the defendant BOMAG (Canada) Inc., applies for an interlocutory injunction against BOMAG and SMS Equipment Inc. [ 2 ] In January, 2000, BOMAG and Brandt entered into a Heavy Equipment Distributor Agreement pursuant to which BOMAG granted Brandt the non-exclusive right to sell products described as BOMAG Light Equipment and BOMAG Heavy Equipment, being soil equipment products, asphalt products, recyclers, stabilizers and landfill machines.

The Agreement expressly permits non-renewal by either party without cause.

[3] The BOMAG/Brandt Agreement provides that Brandt was not permitted to act as a distributor for any direct competitor ofBOMAG. [4] On August 23, 2019, BOMAG learned that Brandt was acquiring an equipment dealer called Nortrax. Nortrax is a party to adistribution agreement with Wirtgen, a competitor of BOMAG.

This distribution agreement prohibited Nortrax from representing othermanufacturers. [5] On September 13, 2019, BOMAG notified Brandt that it would not be renewing the Agreement and that the Agreementwould expire on December 31, 2019. [6] On October 1, 2019, SMS issued a press release indicating that BOMAG and SMS had entered into an agreement pursuantto which SMS would replace Brandt as the exclusive dealer of BOMAG products in Canada.

Brandt immediately expressed itsdisappointment with this and gave notice that BOMAG had an equipment repurchase obligation under the Agreement. [7] On October 25, 2019, prior to the termination of the Agreement with BOMAG, but after having received notice oftermination, Brandt made the following public announcement with respect to becoming the Canadian distributor of Wirtgen: The Wirtgen Group is the #1 supplier in the world for the road construction machinery.... The Wirtgen line will be delivered nationwidethrough Brandt...

As a result of this product line addition, Brandt will be ending its long time relationship with compaction productsmanufacturer BOMAG. [8] Thus, BOMAG entered into an agreement to replace Brandt prior to the termination of the Agreement, but after giving noticeto Brandt, and Brandt was in breach of the Agreement prior to its termination date. [9] Brandt submits that BOMAG was not entitled to terminate the Agreement on the basis that the Farm Implement andDealership Act, SA 2001, c F-7.5 (the “FIDA”),

an act governing the distribution and sale of farm implements, applies to the Agreement,and that the Act requires court approval of any change in competitive circumstances or termination of a dealership agreement. [10] The problem for Brandt is that it concedes that it was not a licensed dealer under the FIDA at the time the Agreement wasterminated. BOMAG has never been a licensed farm implements distributor under FIDA. BOMAG says that it manufacturesroadbuilding and compaction construction equipment, and has never designed or marketed products for use in agriculture or farmingapplications.

BOMAG says that the FIDA requirements were never raised by Brandt until it issued its statement of claim. Evidence fromthe Farmers’ Advocate Office of Alberta indicates that Brandt was not registered under FIDA until June 2020 when the litigationcommenced. [11] Brandt’s evidence that it sold BOMAG equipment to farmers and agricultural operations for use in agricultural capacitiesdoes not withstand scrutiny. Some of the alleged sales relate to a line of products for use in landfills, which Brandt regularly sold to andserviced for municipalities.

The other four units cited by Brandt as examples of agricultural use are BOMAG rollers intended to be usedfor road construction, and there is no evidence that they were used for farming operations. [12] Therefore, Brandt is not entitled to a statutory injunction under FIDA. [13] To determine whether Brandt is entitled to a common law interim injunction prohibiting BOMAG from distributingconstruction equipment to SMS, prohibiting SMS from selling and servicing BOMAG products in competition with Brandt or reinstatingBrandt as a non-exclusive distributor of BOMAG products in Canada, it is necessary to address the test set out in RJR-MacDonald vCanada (Attorney General), (SCC), [1994] 1 SCR 311. [14] With respect to the first part of the three-part test, whether there is a serious issued to be tried, the Agreement was non-exclusive, and BOMAG was permitted to seek out other potential dealers.

BOMAG was within its rights not to renew the Agreement andBrandt has not established that it was improperly terminated. There is no basis to asses damages a result of the non-renewal of theAgreement.

There is only a weak assertion of bad faith that does not cross the line into an intention to deceive, rather than merelywithholding confidential information about a party’s future business plans. [15] In the recent decision of CM Callow Inc v Zollinger, 2020 SCC 45, which counsel for Brandt brought to the Court’s attentionafter the application was decided but before a formal order was entered, the terminating party withheld notifying the counterparty to acontract of its decision to terminate the contract for a number of months and engaged in discussions with the counterparty regarding arenewal of the contract.

This led the counterparty to believe that it was likely to have the contract renewed, and to perform additionalwork on a related contract without charge. The Supreme Court found at paragraph 101 that: …[the terminating party] intentionally withheld information in anticipation of exercising [the termination clause], knowing that suchsilence, when combined with its active communications, had deceived [the counterparty]. By failing to correct [the counterparty’s]misapprehension thereafter, [the terminating party] breached its contractual duty of honest performance.

This is in stark contrast to [United Roasters, Inc v Colgate-Palmolive Co, 649 F. 2d 985 (4th Civ 1981)], where the defendant merely withheld its decision toterminate the agreement. Unlike in this case, the defendant there did not engage in a series of acts that it knew would cause the plaintiffto draw an incorrect inference and then fail to correct the plaintiff’s misapprehension. [16] In this case, BOMAG gave notice of termination shortly after learning of Brandt’s proposed acquisition of Nortrax.

It is not acase where BOMAG knowingly misled Brandt through a false impression created by its conduct. [17] Thus, Brandt has not satisfied the first branch of the test. [18] Even if it had, Brandt has not established irreparable harm if the injunction is not granted. While losing BOMAG as adistributor, it has made arrangements with BOMAG’s competition, Wirtgen. There is no evidence that customers cannot be servicedthrough Wirtgen, and no evidence of a decline in sales that could not be compensated by a monetary award. Any loss of revenue must,

from the evidence of past sales, be a small percentage of Brandt’s overall revenue. [ 19 ] Brandt has not satisfied the onus it has of proving irreparable harm. There is no evidence of loss of goodwill or even evidence of loss of market share. [ 20 ] Finally, the balance of convenience favours BOMAG. Given Brandt’s acquisitions of Nortax and partnership with Wirtgen, there is no evidence of any material impact on Brandt. However, the impact of granting this injunction would be significant for BOMAG. [ 21 ] Finally, the issue of whether a

summary trial is appropriate is not properly before the Court. [ 22 ] In conclusion, Brandt’s application is dismissed. Dated at the City of Calgary, Alberta this 28 th day of January, 2021. B.E. Romaine J.C.Q.B.A. Appearances: Justin R. Lambert and Amarjot Brar for the Plaintiff Brandt Tractor Ltd Warren P. Foley and Mark Crane for the Defendant BOMAG (Canada) Inc Jerritt R Pawlyk for the Defendant SMS Equipment Inc