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Real Property - Ontario New Home Warranty Plan Act (ONHWPA) (2). Allegra On Woodstream Inc. v. York Regional Standard Condominium Corporation No. 1284
In Allegra On Woodstream Inc. v. York Regional Standard Condominium Corporation No. 1284 (Div Ct, 2025) the Divisional Court dismissed an appeal, here from an LAT ruling that "requires Tarion Warranty Corporation (“Tarion”) to pay the respondent ... to remedy major structural defects the Tribunal found to exist in underground garage facilities constructed by Allegra", this under the Ontario New Home Warranties Plan Act.
Here the court considered 'major structural defects' under the ONHWPA, and a related warranty time limit issue:The Major Structural Defect Issue
[15] Section 13(1) of the Act provides that every vendor of a new home (including condominiums) warrants to the owner that, among other things, the home is free of major structural defects as defined by the regulations.
[16] For the purposes of this appeal, Regulation 892 made under the Act defines “major structural defect” to include any defect in work or materials in respect of a building, including a crack, distortion or displacement of a load-bearing element of the building, if it materially and adversely affects the ability of a structural load-bearing element of the building to carry, bear and resist applicable structural loads for the usual and ordinary service life of the element. This is known as the major structural repair “function” test.
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Improper Extension of 7-year Warranty Issue
[20] Allegra submits that the Tribunal’s decision effectively and improperly extends the major structural defect warranty set out in the Act from a limited seven-year warranty to an unlimited warranty extending to an undefined time in the future. The specific errors alleged are that the Tribunal: (1) Misinterpreted or failed to acknowledge the legislative intention behind the seven-year warranty; (2) Failed to consider and ignored the deliberately limited timeframe allocated to the warranty by the legislation and improperly reallocated the risk to be borne by the applicable parties; and (3) Incorrectly ignored the evidence of the 1284’s failure to carry out maintenance on the garage, and/or how this failure could have lead to the alleged defects that were claimed.
[21] This submission is grounded in the cases of Wentworth Condominium Corporation No. 336 (Re), (2007) OLATD No. 158, and Ban (Re), [2002] OLATD No. 238, which hold that a major structural defect must manifest within the seven-year period prescribed by the Act to attract warranty protection; and that a structural defect found to exist during the seven-year warranty period that only becomes a major structural defect at some indeterminate future date, does not attract warranty coverage. The maintenance required to keep such defects from progressing after the seven-year warranty period is the responsibility of the owner.
[22] In my view, the Tribunal did not extend the warranty period improperly, or at all.
[23] The Tribunal correctly identified the function test at para. 39 of the decision:Tarion’s Guideline provides that to meet the function test the defect must materially and adversely affect the load bearing function of a structural load bearing element. Actual or imminent failure of the structural load bearing element is not required to satisfy the function test. The test will be met if the element’s load bearing function has been materially compromised. The load-bearing function of a building element is the ability of that element to carry, resist, transfer or distribute applicable loads for the usual and ordinary service life of the element. An adverse effect must be material, meaning there is either: (i) a present compromise in load bearing strength; or (ii) a defect that affects the ordinary service life of the structural element. [24] With respect to the columns, the Tribunal determined that Allegra’s failure to install a continuous expansion joint throughout the structure to be a defect in work which had materially and adversely affected the ability of the columns to carry, bear and resist applicable structural loads for their usual and ordinary service life. It made a similar finding with respect to the perimeter walls and with respect to the entrance ramp. With respect to the suspended level slab, the Tribunal found that the extent of concrete delamination determined by 1284’s experts supported a conclusion that its ordinary service life had been impacted adversely.
[25] This is not a case, as in WWC and Tan, where there was no evidence of a major structural defect within the seven-year warranty period. In this case the Tribunal specifically found that defects existed and that those defects were adversely affecting the ordinary service life of the structural elements in question. The Tribunals’ findings were based largely on the opinions provided by the parties’ structural engineering experts and the evidence upon which those experts relied. Tarion offered two reports completed by structural engineers at LEA Consulting Ltd. Allegra provided reports by Shawky Ibrahim, the structural engineer who designed the condominium, and Alan Tregabov, an architect. 1284 provided reports from Wynspec Engineering and Stephen Blaney, a consultant engineer. The Tribunal undertook a thorough and detailed review of the expert evidence and reasoned that the opinions of Wynspec and Blaney were to be preferred.
[26] There was clearly evidence upon which the Decision was made. The findings were not contrary to other accepted evidence. The Tribunal did not misapprehend the evidence or draw inferences based on speculation. In short, there was no palpable error. The Tribunal found a major structural defect that existed during the seven-year warranty period. It did not improperly extend the warranty period.
[27] Allegra also argued that because the construction joint used in this structure were permitted by the Ontario Building Code, it was a palpable and overriding error for the Tribunal to have found that failing to install a continuous expansion joint was a defect. In my view, the Tribunal properly considered and dismissed this argument. The warranty in question requires the structure to be free of major structural defects as defined by the regulation. Although the Ontario Building Code may be of assistance in determining whether such a defect exists, it is not determinative. The Ontario Building Code sets minimum standards for construction. Its standards may, but do not necessarily, equate to industry standards. Four of the five structural engineers gave evidence before the Tribunal that failure to install a continuous expansion joint in a structure this size was very unusual. Indeed, the Tribunal found that a continuous expansion joint had been anticipated in the initial design plan for the structure but was not followed and was revised only after construction was complete as an after-the-fact justification for installation of construction joints. There was evidence upon which the Tribunal made its finding that use of a construction joint rather than a continuous expansion joint throughout the structure was a departure from industry standards. There was no palpable error in this regard.
[28] Finally, Allegra argues the Tribunal failed to consider and address whether 1284’s failure to maintain the garage was the cause of the problems encountered by it. Such a finding, if made, would exclude warranty coverage under s. 13(2)(f) of the Act which says that a warranty under subsection (1) does not apply in respect of damage resulting from improper maintenance. However, I note that at paras. 62 and 74 of its decision, the Tribunal specifically considered and rejected the argument that problems with the perimeter walls and suspended slab were the result of a failure to maintain or repair and explained why.
[29] Furthermore, the major structural defects were identified as the failure to install a continuous expansion joint and failure of the concrete. On the facts, it is unclear to me how lack of repair or maintenance could be responsible for these major structural defects. . Allegra On Woodstream Inc. v. York Regional Standard Condominium Corporation No. 1284
In Allegra On Woodstream Inc. v. York Regional Standard Condominium Corporation No. 1284 (Div Ct, 2025) the Divisional Court dismissed an appeal, here from an LAT ruling that "requires Tarion Warranty Corporation (“Tarion”) to pay the respondent ... to remedy major structural defects the Tribunal found to exist in underground garage facilities constructed by Allegra", this under the Ontario New Home Warranties Plan Act.
Here the court noted it's jurisdiction and SOR for such an appeal:Jurisdiction
[10] This court has jurisdiction pursuant to s. 11(1) of the Licence Appeal Tribunal Act, 1999, S.O. 1999, c. 12. The appeal is not restricted to questions of law. . Shah v. 625 Sheppard Bayview Village GP Inc. [arbitration]
In Shah v. 625 Sheppard Bayview Village GP Inc. (Ont Divisional Ct, 2025) the Divisional Court granted a JR which sought "an order of certiorari quashing the costs award", here of an ONHWPA arbitrator.
The court distinguished 'arbitrator costs' and legal fees (which are addressed in "s.15(c) of the Tarion Form addended as part of the APS"):[2] The Applicant seeks an order that it recover from the Respondent his legal fees and disbursements under the specific regime that applies under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “ONHWPA”) and his arbitration agreement, including s. 15(c) of the Tarion Addendum to the parties’ Agreement and Purchase and Sale (the “APS”). The Tarion Addendum is statutorily required, as set out in s. 8(1)1 of O. Reg. 165/08 under the ONHWPA.
[3] There is no issue that the ONHWPA is consumer protection legislation aimed at protecting purchasers of new homes in Ontario: Tarion Warranty Corporation v. Kozy, 2011 ONCA 795, at para. 2.
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[5] With respect to disputes that may arise, s. 17(4) of the ONHWPA states as follows:Every purchase agreement and construction contract 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. [6] In accordance with the above, the Tarion Addendum to the APS included subsection 15(a), which provided that:The Vendor and Purchaser agree that disputes arising between them relating to termination of the Purchase Agreement under section 11 shall be submitted to arbitration in accordance with the Arbitration Act, 1991 (Ontario) and subsection 17(4) of the ONHWP Act. [7] Section 15(c) of the Tarion Addendum to the APS provided for a costs regime that is markedly different from the Rules of Civil Procedure:The Vendor shall pay the costs of the arbitration proceedings and the Purchaser’s reasonable legal expenses in connection with the proceedings unless the arbitrator for just cause orders otherwise. [8] The Applicant commenced an arbitration seeking an order for specific performance and/or an order for damages he alleged to have sustained due to the Respondent’s cancellation of the project.
[9] The parties agreed to appoint Arbitrator Huberman and executed an Agreement to Arbitrate and Terms of the Appointment (the “Arbitration Agreement”). The Arbitration Agreement provided that: “the Award is final, binding, and subject only to the appeal rights under the Arbitration Act, 1991”.
[10] The Arbitration Agreement did not deal with appeals. As a result, there could be an appeal on questions of law, with leave, is provided for under s. 46(1) of the Arbitration Act, 1991.
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[13] The Applicant/Purchaser argued that the Respondent/Vendor should pay the Arbitrator’s fees and disbursements, and pay his legal fees, both pursuant to s. 15(c) of the Tarion Form addended as part of the APS. As noted above, s. 15(c) requires an order in favour of the Purchaser unless the arbitrator, for just cause, orders otherwise.
[14] The Respondent argued that the Applicant should pay both the Arbitrator’s fees and disbursements and pay the Respondent’s legal fees on a substantial indemnity basis.
[15] The Arbitrator released his decision on March 18, 2024. In it, he held that the Vendor/Respondent should pay the Arbitrator’s fees and disbursements, finding no just case to order otherwise. However, he denied the request that the Vendor pay the Purchaser’s reasonable legal expenses. He applied costs principles from the Rules of Civil Procedure and ordered that the Applicant pay the Respondent’s costs on a substantial indemnity basis.
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Issue 2 - Was the Arbitrator’s Decision Reasonable?
[18] The Arbitrator’s costs decision decided two things – who paid the Arbitrator’s fees, and who paid the legal fees of which party and in what amount. His decisions conflict.
[19] This Court has no issue with the Arbitrator’s decision that the Respondent was required to pay the Arbitrator’s fees and disbursement. The decision is reasonable and there is a clear, logical path of reasoning explaining the result. However, the Arbitrator’s decision that the Applicant had to pay the Respondent’s legal fees and disbursements on a substantial indemnity basis is not reasonable. We say this for these reasons.
[20] First, the starting point is s. 15(c) of the Tarion Addendum to the APS, which imposed the following costs rule on the Arbitration:The Vendor shall pay the costs of the arbitration proceedings and the Purchaser’s reasonable legal expenses in connection with the proceedings unless the arbitrator for just cause orders otherwise. [Emphasis added.] [21] Subsection 15(c) changes the costs regime from the costs rules imposed by s. 131 of the Courts of Justice Act, and the Rules of Civil Procedure. That regime does not govern the question of who reimburses whom for fees and disbursements. The general rule of costs following the event under the Rules of Civil Proceedings does not govern. Instead, purchasers are presumed entitled to their costs regardless of the outcome of the Arbitration. Subsection 15(c) provides that the Arbitrator may only deviate from the presumption that Vendors pay the Arbitrator’s fees and disbursements and the reasonable fees and disbursements of the Purchaser “for just cause”. The phrase “for just cause” is not defined and the Arbitrator does not define it. It is notable that the words “in accordance with standard costs principles” or something similar were not used.
[22] The Arbitrator acknowledged that the ONHWPA is a remedial statute designed to offset the significant power imbalance between the Vendor and the Purchaser in disputes arising from a real estate transaction (see: paras. 39 - 40 of his interlocutory costs award quoted at p. 6 of the Costs Endorsement, and para. 68 to 70 of the latter).
[23] Notwithstanding this acknowledgement, in his explanation for awarding substantial costs to the Vendor/Respondent, the Arbitrator relies on traditional civil litigation costs rules and principles. The Arbitrator does not rationally connect those principles to the purpose of the ONHWPA or the markedly different costs regime that does apply.
[24] Further, the Arbitrator’s costs decision is internally inconsistent. It does not follow a coherent chain of analysis. Based on the same factual matrix and mandated costs regime, he finds that there is no just cause to depart from the presumption that the Vendor shall pay for the Arbitrator’s fees and disbursement, as set out in s. 15(c), but that there was just cause to depart from the presumption that the Vendor shall pay the Purchaser’s reasonable fees and disbursements. We cannot trace the Arbitrator’s reasoning without encountering the fatal flaws as discussed above.
[25] The above errors render the decision to require that the Applicant pay costs unreasonable: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, at paras. 85, 103.
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