|
Real Property - Ontario New Home Warranty Plan Act (ONHWPA) (2). 7084421 Canada Ltd. v. Tarion Warranty Corp.
In 7084421 Canada Ltd. v. Tarion Warranty Corp. (Ont Div Ct, 2025) the Ontario Divisional Court dismissed a JR, this against "a decision of the Respondent Tarion ... finding that: (a) The home municipally known as 103 Edward Street, Aurora (the “Home”) is entitled to statutory warranty coverage under the Ontario New Home Warranties Plan Act, RSO 1990, c.O.31 (the “Act”); and (b) The Applicant is “[t]he vendor responsible for providing the statutory warranties."
Here the court considered whether Tarion is a 'tribunal' [within the meaning of SPPA s.1(1) "tribunal", defn and s.3 'Application of Act'], and whether it afforded the applicant a hearing - here couched as an issue of procedural fairness:Procedural Fairness
[48] The Applicant argues that Tarion was required to hold a hearing pursuant to the Statutory Powers Procedures Act, RSO 1990, c. S.22 (the “SPPA”). Tarion argues that the SPPA does not apply because Tarion is not a “tribunal” and does not exercise a “statutory power of decision” within the meaning of the SPPA. It further argues that the Act does not require that Tarion hold a hearing: SPPA, s. 3(1).
[49] This issue was not raised with Tarion by the Applicant during Tarion’s process and was not raised by the Applicant in its Notice of Application: the Applicant raised the issue for the first time in its factum.
[50] The Applicant’s entire argument on this point is as follows:“Tarion made the decision without a hearing and without consent from the Applicant” [followed by quotation of the text of SPPA, s. 4.1]. [51] Tarion’s responding submissions include references to ss. 3(1) and 4.1, but no other legal authorities, and in particular, no jurisprudence related to the application of the SPPA or common law procedural fairness requirements to Tarion.
[52] The only procedural fairness issue raised by the Applicant is the failure to hold a hearing. This issue may be disposed of easily, without addressing broader issues of procedural fairness in detail.
[53] Subsection 3(1) of the SPPA provides:Subject to subsection (2), this Act applies to a proceeding by a tribunal I the exercise of a statutory power of decision conferred by or under an Act of the Legislature, where the tribunal is required by or under such Act or otherwise by law to hold or to afford to the parties to the proceeding an opportunity for a hearing before making a decision. [54] The “power[s] of decision” exercised by Tarion are conferred on it by the Act. The Act does not require Tarion to hold a hearing. No basis for such a requirement arising “otherwise by law” was identified or argued by the Applicant.
[55] Tarion is subject to common law requirements of procedural fairness. As noted above, Tarion gave notice to the Applicant of the issues it was investigating, the potential consequences to the Applicant, and gave the Applicant an opportunity to provide “its side of the story” in writing and in a phone call with the Tarion investigator. The Applicant’s response is set out above, in full, and did not include a request to provide further information. Tarion gave notice to the Applicant that it would decide matters on the basis of its investigation, and the Applicant asked Tarion to conclude that the Applicant was not responsible for statutory warranties for the Home.
[56] I am satisfied that Tarion gave notice to the Applicant, explained the process and potential consequences to the Applicant, and gave the Applicant a fair opportunity to be heard in writing and by telephone. I am satisfied that the Applicant engaged in Tarion’s process to the extent that it wished to do so, and did not request or expect a hearing. I would not engage in a more elaborate examination of procedural fairness issues (see: Baker v. Canada (Minister of Citizenship and Immigration, 1999 CanLII 699 (SCC), [1999] 2 SCR 817) in a case where they have not been adequately raised, particularised, and argued before this court, and in a case where basic requirements of procedural fairness have so obviously been met. . 7084421 Canada Ltd. v. Tarion Warranty Corp. ['vendor']
In 7084421 Canada Ltd. v. Tarion Warranty Corp. (Ont Div Ct, 2025) the Ontario Divisional Court dismissed a JR, this against "a decision of the Respondent Tarion ... finding that: (a) The home municipally known as 103 Edward Street, Aurora (the “Home”) is entitled to statutory warranty coverage under the Ontario New Home Warranties Plan Act, RSO 1990, c.O.31 (the “Act”); and (b) The Applicant is “[t]he vendor responsible for providing the statutory warranties."
Here the court considers the meaning of 'vendor' under the ONHWPA:Issue #1 – Is the Applicant a “Vendor” ?
[33] Section 13(1) of the Act provides:Every vendor of a home warrants to the owner,
(a) that the home,
(i) is constructed in a workmanlike manner and is free from defects in material,
(ii) is fit for habitation,
(iii) is constructed in accordance with the Ontario Building Code
(b) that the home is free of major structural defects as defined by the regulations; and
(c) such other warranties as are prescribed by the regulations. [34] Section 1 of the Act provides the following pertinent definitions:“vendor” means,
(a) ... a person who, on the person’s own behalf, sells a home not previously occupied to an owner ... .
“home” means,
(a) A self-contained one-family dwelling, detached or attached to one or more others by one or more common wall,
...
“owner” means a person who first acquires a home from its vendor for occupancy, and the person’s successors in title; [35] Tarion found that the Buyers are “owners” within the meaning of the Act. It is evident that the Buyers are the persons “who first acquired title to” the Home: the Home was not previously occupied when the Buyers purchased it. Tarion found that the Home fits the definition of “home”, as a detached “self-contained one-family dwelling.” Tarion found that the Applicant is the “vendor”, having sold the home on its own behalf to the owners.
[36] Tarion considered the Applicant’s argument that it did not sell the home on its own behalf, but rather sold it on behalf of Mr Patterson. Tarion rejected this argument on the basis that a mortgagee selling a home to an owner in the exercise of its power of sale is a “vendor” as found in Crown Trust.
[37] I see no reviewable error in Tarion’s findings. Crown Trust is the controlling authority on this issue. It has been good law in Ontario for forty years. The court in Crown Trust found as follows (paragraphs not numbered in the original):What is crucial to the determination of this appeal, however, is whether or not a mortgagee selling under his power of sale, sells “on his own behalf “within the meaning of this statute. In this regard, it is of some importance to note that in effecting the sale, the law imposes a duty on a mortgagee to act in good faith, with reasonable care, and to account for any surplus to subsequent encumbrancers and the mortgagor. He cannot act with the free hand of an absolute owner. However, that does not mean that the respondent’s submissions are correct.
The words used in a statute must be construed in their ordinary and natural meaning Having due regard to the subject- matter and object of the statute. In my view the object of the statute is to provide the warranties set out in s. 13 of the Act to persons who first acquire a home from its vendor for occupancy, and to protect such persons from any unscrupulous, financially irresponsible, or technically incompetent persons from whom they might purchase.
Black’s Law Dictionary defines “behalf” as benefit or advantage, amongst others. In the context of this statute the words “on its own behalf” are equivalent to “for its own benefit”, or “for its own advantage”. A “person who sells on his own behalf “therefore is a person who sells for his own benefit or advantage. There is no doubt in my mind that a mortgagee selling under a power of sale sells primarily for his own benefit or advantage and secondarily for the benefit or advantage of the subsequent encumbrancers and mortgagor. The proceeds of sale belong exclusively to the mortgagee to the extent of the mortgage debt and costs of sale. Any surplus belongs to the subsequent encumbrancers and mortgagor in accordance with their respective priorities. The mortgagee being one of the persons for whose benefit or advantage the sale is effected, it cannot be said that the sale was not effected on his behalf. To achieve the result contended for by the respondent a "vendor" would have to be defined as a person who sells on his sole or exclusive behalf. In my view, restricting the words to that extent is not warranted.
In arriving at that conclusion, I am not unmindful of the results which might obtain in other cases. To take an extreme example, let us suppose that the mortgagee is an elderly widow who inherited a small cash sum from her deceased husband and whose only income is an old age pension. Seeking some secure investment of her inheritance, she takes the advice of her solicitor and invests it in a building mortgage. On completion of construction of the home the builder-mortgagor becomes insolvent and goes into default. It is then necessary for her to sell the home under power of sale. She would then have to be registered under the Act. This would involve payment of a fee of $350 and satisfying the registrar under the statute of her financial responsibility. With her capital tied up in the mortgage in default, and with the meagre income of her pension, this might not be an easy thing to accomplish. The requirement of registration would amount to a real hardship in her case.
At the other end of the scale, however, are sophisticated investors, banks and trust companies who may take mortgages on a whole subdivision, being fully prepared to install services and complete construction of any and all uncompleted homes in order to protect their investments should the builder default. I do not believe that the Legislature intended that purchasers of such homes from the mortgagee selling under power of sale should be deprived of the warranties new home buyers otherwise would be entitled to.
In any event, the statute is unambiguous and it is not open to me in such a case to construe plain and unambiguous words in such a way as to avoid a harsh result in a particular case. That is a matter for the Legislature to consider: see 32 Hals., 4th ed., p. 410, para. 895.
There is one further consideration. A mortgagee who forecloses on the mortgaged property and then sells it, would clearly be a “vendor” under the statute. If the respondent’s submission is correct, the mortgagee’s choice of remedy would determine whether or not the home buyer was entitled to the statutory warranties. I do not believe that the Legislature intended to leave new home buyers’ rights under the statute in the hands of mortgagees and dependent on their discretion. As noted above, Crown Trust was affirmed by the Court of Appeal and is binding authority on Tarion and on this court. Accordingly, Tarion’s finding that the Applicant was a “vendor” was reasonable: I would not give effect to this ground of review.
....
The in terrorem and Unequal Treatment Arguments
[60] The Applicant argues in its factum that if the impugned decision stands, “no mortgagee would take possession of houses which had not been occupied. It would become virtually impossible for builders to get financing.” Crown Trust has been the leading authority on this point for 40 years. The Legislature has not found it necessary to intervene in the last forty years.
[61] The Applicant argues that the impugned decision would only apply to a small private lender such as the Applicant but would not apply to large institutional lenders. No legal basis is set out for such a conclusion. The leading case – Crown Trust – involved an institutional lender. No case was cited to this court where the principle in Crown Trust was held not to apply to an institutional lender. . Adi Developments (Masonry the West) Inc. v. Tarion Warranty Corp. [conciliation system]
In Adi Developments (Masonry the West) Inc. v. Tarion Warranty Corp. (Ont Div Ct, 2025) the Ontario Divisional Court dismissed a JR, here against "the conciliation decision (the “Conciliation Decision”) of the respondent Tarion Warranty Corporation (“Tarion”)" ... issued under the Ontario New Home Warranties Plan Act".
Here the court sets out the Tarion regime under the ONHWPA, and illustrates the related 'conciliation' system:[2] In the Conciliation Decision, Tarion resolved the dispute between Adi (the builder of a residential condominium development) and Halton Standard Condominium Corporation No. 729 (the condominium corporation) as to whether Adi breached statutory warranties by failing to rectify certain construction issues relating to the condominium’s common elements. Tarion decided that 14 of the items in dispute were in breach of the warranties. Tarion also found that the conciliation was chargeable to Adi.
[3] Adi submits that Tarion was unreasonable in finding that some of the construction issues breached the statutory warranties and in determining that the conciliation was chargeable to Adi. Adi asks that the Conciliation Decision be set aside and the conciliation remitted to Tarion.
[4] For the reasons below, I would dismiss the judicial review application.
....
II. The parties and the statutory scheme
[5] The ONHWPA creates statutory warranties that builders and vendors of new homes (including condominiums) must provide to homeowners under the Ontario New Home Warranties and Protection Plan. Tarion is a not-for-profit corporation designated under the ONHWPA to administer those warranties: see ONHWPA, ss. 2(1), 11(1); Designation of Corporation, O. Reg. 273/04, s. 1.
[6] Adi is the builder and vendor of a residential condominium complex called Masonry The West (the “Complex”) located in Burlington, Ontario. Adi became a registered builder under the ONHWPA on August 2, 2016, when it entered into a Builder Agreement with Tarion.
[7] The Complex’s common elements are owned by the condominium corporation, Halton Standard Condominium Corporation No. 729 (“HSCC 729”). A condominium’s common elements are the shared areas within the condominium complex that are owned and used collectively by all unit holders, as set out in the condominium’s declaration and description: see Condominium Act, 1998, S.O. 1998, c. 19, s. 1(1) (definition of “common elements”) and s. 138. HSCC 729’s declaration and description was registered under that Act on March 11, 2021.
[8] As the builder and vendor of the Complex, Adi provides statutory warranties to the owners that remain in effect for up to seven years from the warranty commencement date. The warranties that are at issue in this application are the warranties that apply to the Complex’s common elements for the first year after registration of HSCC 729’s declaration and description (the “one-year warranty”) and for the second year after that registration (the “two-year warranty”).
[9] The one-year warranty requires that the common elements are (i) constructed in a workmanlike manner, free from defects in material, (ii) fit for habitation, and (iii) constructed in accordance with the Building Code:[1] see ONHWPA, s. 13(1)(a). The two-year warranty requires (among other things) that the common elements be free from water penetration through the basement or foundation of the Complex and that there be no detachment, displacement or deterioration of exterior cladding: see Administration of the Plan, R.R.O. 1990, Reg. 892 under the ONHWPA (“Reg. 892”), s. 15(2).
[10] Within one year of filing a declaration and description, a condominium corporation is required to retain a professional engineer for the purpose of preparing a performance audit: see Condominium Act, s. 44(1). The purpose of the performance audit is to identify deficiencies in the common elements. A second-year performance audit is to be completed within 24 months of filing the declaration and description.
[11] In connection with the performance audit, the condominium corporation prepares a common elements Performance Audit Tracking Summary (“CE PATS”), which is uploaded to a Tarion-provided web application. The CE PATS system is used to track the progress of repairs to the common elements to address the items listed in CE PATS. The condominium corporation and the builder are required to provide periodic updates as to the status of the listed items: see Tarion’s Registrar Bulletin No. 2, Claims Process – Condominium Common Elements (issued February 1, 2021)[2] (“Bulletin No. 2”), at p. 6.
[12] For one-year warranty claims, the builder is provided a repair period of 18 months following the first anniversary of the warranty commencement date: Reg. 892, s. 5.5(3). For two-year warranty claims, the builder is provided six months from the second anniversary of the warranty commencement date: Reg. 892, s. 5.6(3).
[13] The need for a “conciliation” arises if the builder and the condominium corporation cannot agree as to whether (i) certain items are warranted or warrantable (that is, covered by either of the statutory warranties),[3] or (ii) the builder has made adequate repairs. In these circumstances, the condominium corporation may request that Tarion conduct a common elements conciliation to resolve the disputed items: Reg. 892, ss. 5.5(4), 5.6(6). A conciliation may involve an onsite conciliation inspection by Tarion (also attended by representatives of the builder and the condominium corporation), which Tarion may schedule following a meeting with the parties if “the parties are not working to repair the items or otherwise resolve them in a reasonable and diligent manner”: Bulletin No. 2, at p. 6.
[14] Upon completion of the conciliation inspection, Tarion will prepare a conciliation assessment report, identifying any items that Tarion found to be warranted: Reg. 892, ss. 5.5(7), 5.6(7). For those items, the builder is provided an additional 90 days following release of the conciliation assessment report to complete repairs: Reg. 892, s. 5.5(8), 5.6(8). If the builder fails to complete repairs to all items found warranted, Tarion will settle all outstanding warranted items directly with the owner (generally by performing or arranging for performance of any required repairs at the builder’s expense): Reg. 892, s. 5.5(9), 5.6(9).
[15] As part of the reconciliation process, Tarion also assesses whether a conciliation is chargeable to the builder. In Registrar Bulletin No. 4: How Chargeability is Determined and Applied, issued May 1, 2024 (“Bulletin No. 4”), Tarion addressed the circumstances in which it would determine that a charge should be levied against a builder as a consequence of an “unnecessary conciliation”. Under the heading “Chargeable Conciliation”, Bulletin No. 4 provides, at p. 2:If Tarion decides that conciliation could have been avoided had the builder honoured his/her warranty obligations within the builder repair periods, and if there is no exception to chargeability as outlined in this bulletin under Exceptions To Chargeability, then there is a consequence to the builder for an unnecessary conciliation. This consequence is called a chargeable conciliation and is a mechanism to encourage builders to fulfill their warranty obligations. [16] In Bulletin No. 4, at p. 4, a conciliation becomes chargeable if (i) Tarion finds one or more reported items to be warranted, (ii) the builder failed to repair or resolve the item(s) during the builder repair period, and (iii) there is no exception to chargeability set out in Bulletin No. 4. Any item found to be warranted, “even if it is considered minor (or the cost to repair is very low),” will result in a chargeable conciliation unless an exception applies.
[17] Under the heading “Exceptions to Chargeability”, Bulletin No. 4 provides, at p. 9:A conciliation is chargeable if Tarion determines that one or more items are warranted at the conciliation inspection, unless a specified exception to chargeability applies for each and every item that was assessed as warranted.
The general principle underlying the specified exceptions to chargeability is fairness. The exceptions are designed on the principle that a conciliation should not be chargeable if builders could/would have complied with their customer service obligation but, through no fault of their own, were unable to do so.
If a specified exception applies and the conciliation is not chargeable, the builder is still responsible for resolving the warranted item(s). Tarion will work with the builder and homeowner to facilitate fair and reasonable access in situations where there is a dispute about providing access.
[Emphasis added.] [18] Bulletin No. 4 sets out nine exceptions to chargeability. An exception may apply if, among other things:a. The owner did not accept “reasonable cash compensation made by the builder to resolve the warranted item(s)”: Bulletin No. 4, at p. 11 (the “Settlement Offer Chargeability Exception”); or
b. The builder “did not have a reasonable opportunity to resolve the warranted item(s) during the builder repair periods” because in the course of doing a repair, a “new and different defect” arises that the builder was unaware of but agrees at or before the conciliation to resolve the issue to the warranty standard: Bulletin No. 4, at pp. 12-13. (the “New Issue Chargeability Exception”). [19] If Tarion finds a conciliation to be chargeable, there are two adverse consequences for the builder.
[20] The first consequence is that the builder is required to pay a fee to Tarion. For a conciliation relating to a condominium’s common elements, the amount of the fee is $3,000: Bulletin No. 4, at p. 4 and Appendix A; Reg. 892, s. 5.8(2.2). That amount is intended to “reimburse Tarion for conducting the conciliation … if the conciliation inspection results in a chargeable conciliation”: Bulletin No. 4, at p. 7. The obligation to pay that amount is in addition to the builder’s obligation to perform (or bear the cost of) repairs for items found to be warranted: Bulletin No. 4, at p. 9. The repair obligation is not affected, whether or not the conciliation is found to be chargeable.
[21] The second consequence is set out in Bulletin No. 4, at p. 4:The builder’s record on the Ontario Builder Directory (maintained by the Home Construction Regulatory Authority) is updated to reflect that the builder has received a chargeable conciliation. The chargeable conciliation is a measure of builder performance. It stays on the builder’s record for 10 years. ....
IV. Conciliation Decision
[32] On November 15, 2024, Tarion released its 33-page Conciliation Report. The Conciliation Report included a three-page Assessment Summary, which listed and summarized 14 “Warranted” items, seven “Not Warranted” items, and 17 “Withdrawn” items. Also included was a two-page appendix, which summarized the warranties and protections under the ONHWPA.
[33] In the Conciliation Report, Tarion explained its conclusion that 14 of the items identified for inspection were assessed as warranted, that is, in breach of either the one-year warranty or the two-year warranty. If a particular disputed construction issue was found to be a breach of both the one-year warranty and the two-year warranty, each breach was counted as a separate item.
[34] In the covering letter accompanying the Conciliation Report, Tarion stated: “This conciliation is Chargeable for the following reason: Warranted item and no exceptions apply.” The Conciliation Report itself did not address the issue of chargeability. . 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.
....
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.
....
[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.
....
[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.
....
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.
|
