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Real Property - Ontario New Home Warranty Plan Act (ONHWPA). Eyelet Investment Corp. v. Song
In Eyelet Investment Corp. v. Song (Div Court, 2024) the Divisional Court considered an interesting ONHWPA arbitration mess, where the arbitrator asserted a radical degree of independence that did not accord with the views the appeal judges involved. An arbitrator-sympathetic characterization is that of cultural differences between the judicial and the arbitration 'benches'. It's a useful and even entertaining read, although at the end the CA puts it's foot down firmly on the side of law.
Here, the court - on doubt being cast on the ONHWPA appeal jurisdiction of the lower court decision - would have transferred the case to itself and upheld it, if required:The Arbitration on Liability
[4] Under the terms of the agreements of purchase and sale, the parties agreed to resolve disputes by arbitration. This is a requirement imposed by Tarion Warranty Corporation in its standard forms applicable to freehold new home purchases in accordance with a regulation under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31.
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Jurisdiction
[62] An astute reader might have wondered why the first appeal from the Arbitrator went before O’Brien J. as a single judge of the Superior Court of Justice while this appeal came before a panel of the Divisional Court.
[63] Under s. 45 of the Arbitration Act, 1991, and the definitions in s. 1 of that statute, an appeal from a domestic arbitration is taken to the Superior Court of Justice. But s. 17(4) of the Ontario New Home Warranties Plan Act provides:Arbitration
(4) Every agreement between a vendor and prospective owner shall be deemed to contain a written agreement to submit present or future differences to arbitration, subject to appeal to the Divisional Court, and the Arbitration Act, 1991 applies. [64] As this is an appeal from an arbitration provision in an agreement referred to in s. 17(4), an appeal lies to this court. As the appeal is subject to the Arbitration Act, 1991 and that statute provides for appeals to the Superior Court of Justice, it is not clear to me that the Superior Court is necessarily deprived of its jurisdiction to hear an appeal under s. 45 of that statute.
[65] Even if one accepts that the appeal before O’Brien J was taken to the wrong court and that the Superior Court of Justice had no jurisdiction to hear the appeal, it does not change the outcome. Despite the Arbitrator deeming of agreement by the parties, it seems to me that a court generally cannot obtain jurisdiction by consent. That would mean that O’Brien J. lacked jurisdiction to hear the appeal before her.
[66] If the appeal before O’Brien J. is a nullity, then so too is the subsequent award by the Arbitrator taken pursuant to the referral back to him under s. 37 of the Arbitration Act, 1991. In that case, the final award by the Arbitrator must be set aside in any event.
[67] But that result would leave the initial award on liability extant pending an appeal in this court. No one suggested that the initial award should be revived. The contract analysis by the Arbitrator cannot stand on any standard of review. It was wrong, unreasonable, legally unintelligible, and palpably so. If O’Brien J. lacked jurisdiction to hear the appeal before her, I would transfer it to this proceeding and allow the appeal as she did. . Wu v. Suevilia Development Corporation
In Wu v. Suevilia Development Corporation (Ont CA, 2023) the Court of Appeal considered an appeal from two dismissed summary judgment claims, one for a breached APS (and forfeiture of the deposit) by the vendor, and a counter-claim for return of the deposit by the purchaser. The case was heavily-influenced by the 'pre-construction sales' provisions of the New Home Warranties Plan Act.
Here, the court considers the statutory interpretation status of the ONHWPA, being benefits-conferring (ie. consumer):[46] I agree with Mr. Wu that the Ontario New Home Warranties Plan Act and its regulations are remedial, consumer protection legislation requiring a broad and liberal interpretation in light of their object and purpose: Ontario New Home Warranty Program v. Lukenda (1991), 1991 CanLII 7167 (ON CA), 2 O.R. (3d) 675 (C.A.), at para. 7. Such objects and purposes have been recognized to include protecting purchasers from vendors who do not proceed expeditiously with completion of a house, or who seek to use the fact of noncompletion to extricate themselves from an agreement in a rising market; and also, to better clarify and prescribe the conditions under which agreements of purchase and sale can be terminated: Wong v. Greyrock (Saddlebrook) Building Corp. (1993), 34 R.P.R. (2d) 215 (Ont. Gen. Div.), at para. 18; Reddy, at para. 23.
[47] Nonetheless, as noted in Reddy [SS: Reddy v. 1945086 Ontario Inc., 2019 ONSC 2554], the Special Committee that conducted the review that led to the reforms that brought about O. Reg. 165/08 acknowledged that the imposition of regulatory warranties should not unduly favour purchasers in a manner that is onerous for builders or that fails to recognize the inevitability of certain delays in new home construction: Final Report of the Special Committee on Delayed Closing, released February 2007, at p. 19. . Wu v. Suevilia Development Corporation
In Wu v. Suevilia Development Corporation (Ont CA, 2023) the Court of Appeal considered an appeal from two dismissed summary judgment claims, one for a breached APS (and forfeiture of the deposit) by the vendor, and a counter-claim for return of the deposit by the purchaser. The case was heavily-influenced by the 'pre-construction sales' provisions of the New Home Warranties Plan Act. Here, the court states the SOR for Tarion contracts, being standardized:[39] In Canadian Imperial Bank of Commerce v. Urbancorp (Leslieville) Developments Inc., 2020 ONCA 449, 18 R.P.R. (6th) 194, at para. 27, this court identified the standard of review for interpretation of the Tarion Addendum as correctness. . Wu v. Suevilia Development Corporation [pre-construction sales]
In Wu v. Suevilia Development Corporation (Ont CA, 2023) the Court of Appeal considered (and dismissed) an appeal addressing "whether a vendor of a pre-construction home fulfilled its obligations concerning setting closing dates and obtaining an occupancy permit for the home".
Here, the court considered some procedural requirements of 'pre-construction homes' under the Ontario New Home Warranties Plan Act (ONHWPA):[3] Because the APS related to the sale of a pre-construction home, Suevilia was required, by O. Reg. 165/08, to attach the Tarion Addendum[1] to the APS. The Tarion Addendum includes provisions that are part of the Vendor’s delayed closing warranty under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31. Among other things, the Tarion Addendum establishes procedures for setting and changing closing dates under the APS and, subject to certain conditions, a requirement for delayed closing compensation.
[4] Under the terms of the Tarion Addendum, at the time APS is signed, the Vendor must specify a First Tentative Closing Date in a Statement of Critical Dates attached to the Tarion Addendum. Thereafter, the Vendor has the option of unilaterally delaying Closing on up to two occasions for periods of up to 120 days each by setting a Second Tentative Closing Date and/or a Firm Closing Date. To do so, the Vendor must give written notice to the Purchaser at least 90 days prior to the immediately preceding properly set closing date, i.e., prior to the First Tentative Closing Date and/or the Second Tentative Closing Date.
[5] The Vendor is also entitled to set a Delayed Closing Date(s) that is no later than 365 days after the earlier of the Second Tentative Closing Date or the Firm Closing Date (the “Outside Closing Date”) on proper written notice to the Purchaser. However, subject to certain conditions, delayed closing compensation becomes payable where a Delayed Closing Date is set.
[6] The First Tentative Closing Date, Second Tentative Closing Date, Delayed Closing Date and Outside Closing Date are all defined terms under s. 12 of the Tarion Addendum and, together with the “Purchaser’s Termination Period”, are collectively defined in s. 12 as “Critical Dates”.
[7] As required under s. 1(b) of the Tarion Addendum, Suevilia identified July 31, 2018, as the First Tentative Closing Date in the Statement of Critical Dates attached to the Tarion Addendum forming part of the APS. As also required, it identified the outer limits for the Second Tentative Closing Date, the Firm Closing Date and the Outside Closing Date based on the timing for each such Critical Dates in relation to the other Critical Dates.
[8] About two months after the APS was signed, on May 30, 2017, Mr. Wu asked that the “Closing Date” be amended to May 31, 2018. Suevilia agreed. In accordance with s. 4 of the Tarion Addendum, which addresses “Changing Critical Dates – By Mutual Agreement”, the parties signed a new Statement of Critical Dates advancing the First Tentative Closing Date from July 31, 2018, to May 31, 2018, and also advancing the outer limits for the Second Tentative Closing Date, Firm Closing Date and Outside Closing Date established in the original Statement of Critical Dates.
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A. DID THE MOTION JUDGE ERR IN CONCLUDING THAT SUEVILIA’S NOTICES TO SET CRITICAL DATES COMPLIED WITH THE TARION ADDENDUM?
(1) Background
(a) Key provisions of the Tarion Addendum
[18] As indicated above, s. 1(b) of the Tarion Addendum requires that the Vendor identify the First Tentative Closing Date in a Statement of Critical Dates attached to the Tarion Addendum. Sections 1(c), (d) and (e) of the Tarion Addendum specify the requirements the Vendor must meet to unilaterally set a Second Tentative Closing Date and the Firm Closing Date:1. Setting Tentative Closing Dates and the Firm Closing Date
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(b) First Tentative Closing Date: The Vendor shall identify the First Tentative Closing Date in the Statement of Critical Dates attached to the Addendum at the time the Purchase Agreement is signed.
(c) Second Tentative Closing Date: The Vendor may choose to set a Second Tentative Closing Date that is no later than 120 days after the First Tentative Closing Date. The Vendor shall give written notice of the Second Tentative Closing Date to the Purchaser at least 90 days before the First Tentative Closing Date, or else the First Tentative Closing Date shall for all purposes be the Firm Closing Date.
(d) Firm Closing Date: The Vendor shall set a Firm Closing Date, which can be no later than 120 days after the Second Tentative Closing Date … If the Vendor elects to set a Second Tentative Closing Date, the Vendor shall give written notice of the Firm Closing Date to the Purchaser at least 90 days before the Second Tentative Closing Date, or else the Second Tentative Closing Date shall for all purposes be the Firm Closing Date.
(e) Notice: Any notice given by the Vendor under paragraphs (c) and (d) above, must set out the stipulated Critical Date, as applicable. [19] Section 2(a) of the Tarion Addendum sets out three ways the Firm Closing Date can be changed, one of which permits the Vendor to unilaterally change the Firm Closing Date by setting a Delayed Closing Date in accordance with s.3:2. Changing the Firm Closing Date-Three Ways
(a) The Firm Closing date, once set or deemed to be set in accordance with section 1, can be changed only:
i) by the Vendor setting a Delayed Closing Date in accordance with section 3. [20] If the Vendor cannot close on the Firm Closing Date, s. 3 permits the Vendor to set a Delayed Closing Date(s) by giving the Purchaser written notice of the Delayed Closing Date in accordance with s. 3 and provides that delayed closing compensation will be payable. Sections 3 (c) and (d) specify the requirements the Vendor must meet to set a Delayed Closing Date(s):2.Changing the Firm Closing Date - By Setting a Delayed Closing Date
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(c) The Vendor shall give written notice to the Purchaser of the Delayed Closing Date as soon as the Vendor knows that it will be unable to Close on the Firm Closing Date, and in any event at least 10 days before the Firm Closing Date … If notice of a new Delayed Closing Date is not given by the Vendor before the Firm Closing Date, then the new Delayed Closing Date shall be deemed to be the date which is 90 days after the Firm Closing Date.
(d) After the Delayed Closing Date is set, if the Vendor cannot Close on the Delayed Closing Date, the Vendor shall select and give written notice to the Purchaser of a new Delayed Closing Date. [21] Section 4 permits changes to Critical Dates by mutual agreement in writing. Among other things, s. 4 specifies that the written amending agreement must include a revised Statement of Critical Dates.
[22] Section 7 of the Tarion Addendum is entitled Delayed Closing Compensation. Among other things it sets requirements for when delayed closing compensation will be payable including that: Closing occurs or that the transaction is terminated for certain reasons other than breach of contract by the Purchaser.
[23] Section 12 of the Tarion Addendum is a definition section, which includes definitions of the following terms:"Critical Dates" means the First Tentative Closing Date, the Second Tentative Closing Date, the Firm Closing Date, the Delayed Closing Date, the Outside Closing Date and the last day of the Purchasers Termination Period.
"Delayed Closing Date" means the date, set in accordance with section 3, on which the Vendor agrees to Close, in the event the Vendor cannot Close on the Firm Closing Date.
"Firm Closing Date" means the firm date on which the Vendor agrees to Close as set in accordance with this Addendum.
"First Tentative Closing Date" means the date on which the Vendor, at the time of signing the Purchase Agreement, anticipates that it will be able to close, as set out in the Statement of Critical Dates.
"Second Tentative Closing Date" has the meaning given to it in paragraph 1(c). . Ashcroft Homes v. Tarion Warranty Corporation
In Ashcroft Homes v. Tarion Warranty Corporation (Div Court, 2023) the Divisional Court considered a JR of a decision by Tarion under s.14 of the Ontario New Home Warranties Plan Act (ONHWPA) "ordering it to pay $7,500 compensation to the purchaser for delayed occupancy".
Here the court cites sundry ONHWPA-related law:[16] The Applicant’s letter of March 18, 2021 did not fix an end date for the unavoidable delay. In fact, its letter states that the unavoidable delay is ongoing. In 5000933 Ontario Inc. v. Mahmood et al., 2022 ONSC 4726; affirmed 2023 ONCA 58, the court found that while the notices sent by the builder in question did not specify the exact date of termination of the unavoidable delay, the information provided enabled the purchaser to calculate the date when the unavoidable delay ended – thereby enabling the purchaser to determine whether it should engage the remedial provisions of the Act.
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Did Tarion fetter its discretion by applying the plain requirements in the Addendum in a rigid, arbitrary or incomplete manner?
[21] The Applicant submits that the addendum is not “law,” but that Tarion applied it as if it were, in a “rigid, arbitrary or incomplete manner.” The Applicant analogizes the addendum to the policy documents in issue that were created pursuant to statute in Latimer v. Canada (Attorney General), 2010 FC 806 (CanLII) and in Gordon v Canada (Attorney General), 2016 FC 643 and argues that this amounted to Tarion fettering its discretion in applying the relevant provisions to the facts before it.
[22] We disagree. The addendum is required by the Regulation to form part of every purchase agreement for a new home in Ontario. It is a mandatory contract prescribed by law.
[23] Tarion applied these requirements to the record before it. Tarion is responsible for the “administration of the Ontario New Home Warranties Plan.” Tarion does not have discretion to ignore express requirements of the warranties, including the Delayed Occupancy Warranty. It was not unreasonable for Tarion to require strict compliance with the consumer protection elements of s. 5(c) of the addendum as to the effectiveness of notice. We conclude that Tarion did not fetter its discretion by applying the requirements of the addendum. . Ashcroft Homes v. Tarion Warranty Corporation
In Ashcroft Homes v. Tarion Warranty Corporation (Div Court, 2023) the Divisional Court considered a JR of a decision by Tarion under s.14 of the Ontario New Home Warranties Plan Act (ONHWPA) "ordering it to pay $7,500 compensation to the purchaser for delayed occupancy".
In these quotes, the court illustrates some ONHWPA and Tarion procedures:Background
[5] The Applicant is a builder. On February 7, 2016, it entered into an agreement of purchase and sale with the purchaser for a condominium unit. The Applicant provided a “Statement of Critical Dates” as follows: March 1, 2018, for first tentative occupancy; August 31, 2020, as the outside occupancy date; and September 30, 2020, as the date of the purchaser’s termination period.
[6] On April 30, 2018, there was a fire at the condominium complex. It required remediation.
[7] On May 10, 2018, the Applicant wrote to the purchaser about the fire and notified him that the fire would cause an unavoidable delay and estimated that it would add 120 days to the previous occupancy dates. Ultimately, the delay in completion lasted until July 14, 2021. The Applicant sent updates to the purchaser during this period as follows:a. August 29, 2018 – a letter informing the purchaser about the significant smoke damage and estimating that completion would be in spring 2019 at the earliest.
b. April 15, 2019 – a letter advising that the remedial work for the smoke damage was done, the Applicant was working with its insurer, and estimating that completion would be between May and September 2020.
c. May 25, 2020 – a letter saying that the Applicant’s construction department would be setting a completion and occupancy schedule within “the coming weeks”.
d. August 10, 2020 – a letter mentioning the uncertainties caused by COVID-19 and outlining the progress to date, pushing the anticipated closing to summer 2021.
e. March 18, 2021 – an email with a letter attached revising the Statement of Critical Dates, including July 14, 2021, as the firm occupancy date. This is the key notice in question. The letter provided revised critical dates, including July 14, 2021 for occupation, although, as it said, “the unavoidable delay has yet to be declared over.”
f. May 21, 2021 – a letter setting the final closing date as November 12, 2021. [8] Section 14 (5.0.3) of the Act deals with compensation for delayed occupancy or closing. There is a delayed occupancy warranty provided for under O. Reg. 165/08. The Regulation requires that the Tarion addendum form part of the agreement of purchase and sale. The addendum says that the vendor must pay the purchaser $150 per day (up to $7,500) as delayed occupancy compensation, subject to certain exceptions. One such exception is where there is unavoidable delay and the vendor complies with the notice requirements.
[9] Unavoidable delay is defined in s. 5 of the addendum as “an event which delays Occupancy which is a strike, fire, explosion, flood, act of God, civil insurrection, act of war, act of terrorism or pandemic, plus any period of delay directly caused by the event, which are beyond the reasonable control of the Vendor and are not caused or contributed to by the fault of the Vendor.”
[10] The notice requirements which Tarion considered and applied in this claim read as follows:(b) If the Vendor wishes to extend Critical Dates on account of Unavoidable Delay, the Vendor shall provide written notice to the Purchaser setting out a brief description of the Unavoidable Delay, and an estimate of the duration of the delay. Once the Vendor knows or ought reasonably to know that an Unavoidable Delay has commenced, the Vendor shall provide written notice to the Purchaser by the earlier of: 20 days thereafter; and the next Critical Date.
(c) As soon as reasonably possible, and no later than 20 days after the Vendor knows or ought reasonably to know that an Unavoidable Delay has concluded, the Vendor shall provide written notice to the Purchaser setting out a brief description of the Unavoidable Delay, identifying the date of its conclusion, and setting new Critical Dates. [11] Here, the purchaser’s occupancy was delayed by more than three years, ultimately taking place on July 14, 2021. After closing, the purchaser filed a delayed occupancy claim with Tarion. Tarion concluded that the notice was ineffective because it failed to provide a brief description of the unavoidable delay and failed to specify its end date. . Muskoka Standard Condominium Corporation No. 51 v. Tarion Warranty Corporation
In Muskoka Standard Condominium Corporation No. 51 v. Tarion Warranty Corporation (Div Court, 2023) the Divisional Court considered an Ontario New Home Warranties Plan Act (ONHWPA) appeal, here from a LAT s.11(1) ruling involving deficiencies in a condominium's common areas. In these quotes to court sets out relevant ONHWPA procedures:[25] Tarion is the not-for-profit corporation designated by the Ontario government to administer the Ontario New Home Warranties Program (“ONHWP”) under the Ontario New Home Warranties Plan Act (“ONHWP Act”) [3].
[26] The ONHWP imposes certain mandatory warranties on new home vendors in Ontario and provides for the payment of compensation by Tarion to new homeowners whose vendors have failed to honour their warranties. The definition of new homes includes condominium units, as well as the common elements of a condominium.
[27] To qualify for statutory warranty coverage, notice must be provided to Tarion within the times and in the form set out in the Condominium Act and the ONHWP Act.[4]
[28] Section 44 of the Condominium Act requires that a PA must be completed by an engineer or architect. The purpose of the PA is to determine whether there are any deficiencies in the common elements that may give rise to a claim under the ONHWP.
[29] Section 44(5) describes steps that one must take in conducting the PA, including the requirement to conduct a survey of unit owners to determine whether they have any damage to their units that may be caused by defects in the common elements, and whether they have observed any defects in the common elements.
[30] Section 44(10) states that the filing of the PA with Tarion is deemed to constitute a notice of claim under the Condominium Act.
[31] In making a claim with respect to its common elements, the condominium corporation must show that there is a deficiency in the common elements that is covered by the vendor’s statutory warranties. If Tarion agrees, the vendor of the condominium is offered an opportunity to resolve the breach. Should it fail to do so, then Tarion will resolve the breach directly with the condominium corporation.
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