ONTARIO COURT OF JUSTICE
BETWEEN:
Home Construction Regulatory Authority
— AND —
Lischkoff Build Design Ltd., and
James Lischkoff
Before Justice of the Peace K Kellough
Submissions on Sentence heard May 28, 2025
Reasons for Decision on Sentence
A. Alton, M. Gupta counsel for the prosecution
The defendant Lischkoff Build Design Ltd ……..…….. no appearance by or on behalf of Lischkoff Build Design Ltd., even though notified of time and place, proceeded on an ex parte basis
The defendant J. Lischkoff.................................................................... on his own behalf.
JUSTICE OF THE PEACE KELLOUGH:
Background
1The defendant, Mr. James Lischkoff is the owner/director of Lischkoff Build Design Ltd[1] (hereinafter “LBD”) which was incorporated on June 15, 2019. The corporation was engaged in building new homes. LBD sought protection from creditors in November 2022; bankruptcy proceedings are ongoing.
2Mr. Lischkoff and LBD were each charged with three counts contrary to the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. 0.31, as amended (hereinafter ONHWPA), and a single count contrary to the New Home Construction Licensing Act, 2017, S.O. 2017, c. 33, Sched. 1. (hereinafter NHCLA). Mr. Lischkoff was self-represented, and the trial proceeded on an ex parte basis for the corporation.
3LBD contracted with Mr. and Mrs. Farrell to build them a new home in Chatsworth Ontario; LBD also contracted with Mr. and Mrs. Sawicki to build them a new home in Meaford, Ontario. Following three days of trial, convictions were entered on all counts for both defendants on April 14, 2025. Findings of guilt were made for both defendants on the following:
- Under ONHWPA:
Count # 1: Section 6, No person shall act as a vendor or a builder unless the person is registered by the Registrar under this Act;
Count # 2:Section 12, A builder shall not commence to construct a home until the builder has notified the Corporation of the fact, has provided the Corporation with such particulars as the Corporation requires and has paid the prescribed fee to the Corporation;
Count # 4:Section 10.2(3), Subject to the prescribed requirements or restrictions, if any, a builder shall not enter into a contract with an owner of land for the construction of a home on the land unless the builder,
(a) is licensed as a builder under the New Home Construction Licensing Act, 2017;
(b) has notified the Registrar of the intention to commence construction;
(c) has provided the Registrar with the particulars that the Registrar requires and in the manner that the Registrar requires;
(d) has paid the Registrar the fee that the Registrar requires;
(e) has complied with the other requirements, if any, that are prescribed;
(f) has received confirmation from the Registrar that the home has been enrolled in the Plan; and
(g) has provided the registrar appointed under section 35 of the New Home Construction Licensing Act, 2017 with a copy of the confirmation described in clause (f). 2020, c. 14, Sched. 5, s. 18.
- Under NHCLA
Count # 3: Section 37(2), No person shall act or hold oneself out as a builder, offer to construct a new home or construct a new home unless the person is licensed as a builder and meets the other prescribed requirements, if any.
Facts
4Mr. Lischkoff executed construction management contracts with each home buyer. His defence was that the construction management contracts distinguished him from being a home builder and that he never held himself out as a licensed home builder to either the Farrells or the Sawickis. He claimed to honestly believe that these steps exempted him from the requirement that LBD register with the Plan and pay the requisite fee. He indicated that he was aware of the obligation to register; he wished to eventually come into compliance; and had completed the Tarion-approved: Customer Service and Tarion Warranty course in July 2019 as a first step. The court found that Mr. Lischkoff could not have reasonably believed in the mistaken facts at the time, which if true would render the act or omission innocent. Steps taken by him were done primarily to avoid or shield him from liability, as compliance with the legislation was too lengthy a process and would effectively prevent him from accepting work as a builder for a considerable period. He did not consult with or seek advice from anyone at Tarion. The confidence he had in his contract and approach was false. It was not based on reality, sound reasoning or any kind of evidentiary foundation.
5Mr. Lischkoff was found to be the operating mind behind LDB/LBN and was at all relevant times the officer/director of the corporation. He knew builders were required to register, to pay fees, and that new homes were to be enrolled in the warranty plan. He was also aware that to register under the Act would take a significant amount of time; time that would delay the operation of his business. Knowing these things Mr. Lischkoff made choices to try and avoid the requirements under the Act. It was found that there was no distinction between construction manager and builder. The homeowners each entered contracts with the defendant for the construction of new homes. The actions of the defendants fit squarely within the definition of a builder as set out in the legislation.
6The contract price of the Farrell’s home in Chatsworth was approximately $1,500,000. The relationship between the Farrells and Mr. Lischkoff deteriorated over the course of the build in large part due to increased costs. By May 2021 the Farrells provided LBD with an additional $250,000 to complete the home. In August 2021 they were asked for additional funds but refused, and by September LBD left the job site. Following this, the Farrells identified numerous components of their home which were either not completed or deficient. It is notable that by the time LBD left the project, the Farrells were able to obtain an occupancy permit as the home was substantially completed.
7The contract price of the Sawicki home in Meaford was approximately $1,100,000, and they provided LBD with a deposit of $233,983. On November 4, 2022, they received a call from Mr. Lischkoff advising that the corporation was in insolvency. At some point they had received an invoice for approximately $30,000 worth of preliminary work that had been done, but construction on the home itself had not commenced. Eventually the Sawickis received $40,000 in compensation from Tarion. They sustained a loss of $162,719.87.
The Background of the Defendants
8Mr. Lischkoff is 73 years of age. When LBD entered insolvency, his marriage broke down and he became estranged from his family. His family lost the money they had invested in the business, and he lost his income. He advised the court that he “suffered significant mental and financial loss” as well as a heart attack. Presently the defendant is living in a borrowed, portable trailer in British Columbia, with no fixed address. He is working with the Canadian Mental Health Association Homeless Outreach Program to try and secure more permanent housing.
9Presently his only sources of income are Old Age Security and Canada Pension Plan benefits which total $2,935/month.
10Mr. Lischkoff notes that his only remaining asset is a Registered Retirement Income Fund (RRIF) valued at $198,232.56. Monthly withdrawals from the RRIF finance his spousal support payment of $2,500.
11He reported a personal debt of $420,960 and a debt of $184,000 with the Canada Revenue Agency. Mr. Lischkoff advised the court that he is delaying personal bankruptcy until all litigation matters have concluded.
12At the time of entering insolvency LBD was reported to have a total liability of $3,776,184.01 and assets valued at $698,104. The amount owing to unsecured creditors was $3,033,080.01.
The Position of the Parties:
The Prosecution
13The prosecution is requesting fines of $15,000 on count 1 and 3 and a suspended sentence on counts 1 and 4 for each of the defendants. It is submitted that this is a comparatively low fine amount, which accounts for the ability of the defendants to pay a fine given their present financial circumstances.
14In addition, the prosecution seeks a restitution order in the amount of $162,719.87 for the Sawickis and $40,000 for Tarion. The prosecution seeks to impose the restitution orders on Mr. Lischkoff alone, presumably accounting for the insolvency of LBD. The prosecution cites the Ontario Court of Appeal decision in R. v. Castro:
Ability to pay must take into consideration what disclosure has been made respecting where the money is or has gone. Depriving the offender of the fruits of his crime is one of the overarching goals of making a restitution order: see Working Paper 5: Restitution of the Law Reform Commission of Canada (Ottawa: Information Canada, 1974), cited with approval by Laskin C.J.C. in Zelensky, at pp. 952-53. In cases of theft, robbery, fraud, breach of trust or the like, I see no reason why the court should accept an offender's bald assertion that he or she has no ability to make restitution because the money "is gone" when no evidence is proffered in support of this assertion. When the victims can clearly establish that "the replacement value of the property" under s. 738(1)(a) is the amount of money taken, surely it is the offender asserting that he or she has no ability to make restitution who is in the best position to provide transparency concerning what has happened to that money. A bald assertion that the money is gone should be given no weight. Similarly, when the location of the money illegally obtained by the offender is unknown, the sentencing judge is entitled to take that fact [page621] into account with respect to ability to pay in making a restitution order: see, e.g., R. v. Williams, [2007] O.J. No. 1604, 2007 CanLII 13949 (S.C.J.), per Hill J., at para. 41.[2]
It is submitted that Mr. Lischkoff has made a bald assertion that the money is gone, and he has an inability to pay. He has provided no evidence in relation to what happened to the money; accordingly, his assertion should be given little weight. The loss sustained by the Sawickis is easily ascertained. This should be considered when assessing the ability of Mr. Lischkoff to pay the restitution order.
15It was submitted by the prosecution that had Mr. Lischkoff participated in the licensing process, this may have highlighted the financial situation LBD was in which led to bankruptcy. Various parts of the licensing process examine the financial position of the applicant. The prosecution submits that this might have helped to prevent insolvency.
The Defendant
16Mr. Lischkoff requests a fine of $2,500 for each of the 4 counts. Mr. Lischkoff suggests that the court should dismiss the prosecution’s request for restitution.
17Mr. Lischkoff suggests that his ability to pay fines or restitution are severely restricted due to his income and debts. He reminds the court that the imposition of restitution is discretionary. Mr. Lischkoff appears to suggest that he and his family have already been punished for his actions; and because of this the court should not impose restitution. He asserts that the RRIF – his only remaining asset is earmarked to fund spousal support payments. As the possibility of personal bankruptcy is likely, Mr. Lischkoff expects that he will need to make a formal petition to protect these funds from creditors, so that they will continue to be available to fund his spousal support payments.
The Law
18The offences before the court are regulatory in nature and the Acts themselves have been characterized as consumer protection legislation aimed at protecting purchasers of new homes in Ontario. The Ontario Court of Appeal noted: “[t]he major purpose of the Plan Act is to protect purchasers of new homes by requiring that vendors and builders be screened for financial responsibility, integrity and technical competence. To assure public protection, it provides for warranties, a guarantee bond and compensation in the event of loss by a purchaser resulting from dealings with a registrant. In order to effect the purposes of the Plan Act, a broad and liberal interpretation of its provisions is appropriate”.[3]
19Section 22(2.1) of ONHWPA sets out the available penalties for counts 1, 2 and 4: on conviction an individual could face a maximum fine of $50,000 while a corporation could face a maximum fine of $250,000.
20Section 71(4) of NHCLA sets out the available penalties for count 3: following a first conviction an individual could face a maximum fine of $50,000 while a corporation could face a maximum fine of $250,000.
21Section 72 of NHCLA provides for both compensation and restitution even in the event of an insurance payout:
72(1) Orders for compensation, restitution If a person or entity is convicted of an offence under section 71, the court making the conviction may, in addition to any other penalty, order the person or entity convicted to pay compensation or make restitution.
72(2) If insurance has paid If an order is made in favour of a person or entity under subsection (1) and that person or entity has already received compensation or restitution from an insurer, the person or entity ordered to pay the compensation or make restitution shall deliver the amount to the insurer.
22Sentencing is a highly individualized process which must consider the context and circumstances of the offence and the offender. It is necessary to impose a sentence which is both proportionate to the gravity of the offence and the degree of responsibility of the offender. The seminal case for sentencing regulatory offences is R. v. Cotton Felts, 1982 CanLII 3695 (ON CA), 2 C.C.C. (3d) 287 (O.C.A.). The court identified the following factors to be considered when determining the quantum of fine to impose: the size of the company, the scope of economic activity involved, the extent of actual and potential harm to the public, the maximum penalty prescribed by statue and the need to enforce regulatory standards by deterrence. The fine amount imposed should be substantial enough to serve as a warning to others to deter similar conduct and reflect society’s disapproval of the act. “Without being harsh, the fine must be substantial enough to warn others that the offence will not be tolerated. It must not appear to be a mere licence fee for illegal activity.”[4]
23It is necessary to consider specific and general deterrence. General deterrence and denunciation are of paramount importance when assessing a fit sentence for such offences.
Analysis
24There are some mitigating factors at play which the court must consider. Both defendants are first time offenders. Since the offences and the insolvency of LBD, Mr. Lischkoff has experienced significant personal hardship. While some of this is undoubtedly caused by his own actions, it is impossible to ignore the difficulties he is presently experiencing. There has also been an impact on his mental and physical health. Given his age and personal circumstances it seems unlikely that he will reoffend in the future.
25One of the most aggravating circumstances present in this matter is the fact that Mr. Lischkoff knowingly and purposefully took steps to avoid compliance. The impact of this upon both sets of homeowners is considerable, particularly the scope of financial loss suffered by the Sawickis. He placed himself in a position of trust when he contracted with the parties to build each of them a high-end custom home. For most people buying a home, or having one built for them, is the most expensive purchase they will ever make. The actions of Mr. Lischkoff which led to his convictions serve to undermine consumer confidence in the homebuilding industry.
26The court agrees with the prosecution that substantial fines are appropriate. The fines suggested by the prosecution are appropriate and strike the correct balance between deterrence and restraint. Mr. Lischkoff’s suggested fine of $2,500 per count, falls well short of accomplishing general or specific deterrence. The court acknowledges that at this point any fine amount will be difficult for Mr. Lischkoff. The court takes some guidance from R v Stelco Inc.,[5] where the insolvency of a corporate defendant did not prevent the court from imposing a $250,000 fine. The court found that insolvency did not translate into a reduction of the fine that would otherwise be imposed. Further still the Ontario Court of Appeal in Ontario (Ministry of Labour) v. New Mex Canada Inc.,[6] noted in relation to general deterrence: “the sentence imposed and the relevant circumstances that support the sentence will become known to others and stand as a warning that the cost of the behaviour outweighs its benefits.”
27The prosecution suggests that Mr. Lischkoff’s lack of remorse should be viewed as an aggravating factor. I cannot agree. When a defendant is remorseful this is typically viewed as a mitigating factor. The lack of remorse demonstrated by Mr. Lischkoff is more appropriately described as the absence of a mitigating factor. Mr. Lischkoff had a right to a trial and he chose to exercise that right. He cannot be penalized for that. Mr. Lischkoff has shockingly little insight into his conduct. It was particularly distasteful when Mr. Lischkoff suggested that given his present state of hardship the Sawickis have come out of the process better off than he has, or that the Farrells have benefited from his naivety. A lack of insight or remorse speaks more to the rehabilitative prospects of a defendant. As mentioned, the risk of further offences is seen as negligible given the present circumstances of Mr. Lischkoff. Given this, the need for specific deterrence is somewhat lessened.
28There is evidence to support the notion that LBD was engaged in building million-dollar homes. However, there was little evidence before the court in terms of how large the business was. The number of employees, revenues, the number of homes built each year etc., were details that were never presented to the court. The Form 78 – Statement of Affairs (Business Bankruptcy) [hereinafter Form 78] filed by Mr. Lischkoff showed that the business listed 10 motor vehicles as securities as of November 2022. The prosecution asserts that this shows that LBD was a substantial operation. While 10 motor vehicles may infer the business was of some significance, this is the only evidence which may support this premise.
29As mentioned, the Form 78 was filed with the court by Mr. Lischkoff in his materials on sentence. Mr. Lischkoff also submitted recent statements of his Old Age Security and Canada Pension Plan Benefits, the current value of his RRIF, the separation agreement between he and his former spouse, and the current value of his personal bank account. Mr. Lischkoff has provided the court with real evidence as to both his own current financial position and that of LBD at the time of insolvency. This tends to rebut the prosecution’s submissions that Mr. Lischkoff has made a bald assertion with respect to the money being gone and his inability pay to restitution, or fines for that matter.
30There can be no question that Mr. Lischkoff’s actions amount to a breach of trust, and he deliberately took steps to avoid compliance with the legislation and shield himself from liability. However, it cannot be said that he intended or set out to deprive the Sawickis of their deposit amount. These are regulatory offences, not criminal offences. The Castro decision is helpful, but distinguishable in this sense. Perhaps Mr. Lischkoff’s financial disclosure falls short of true transparency, but there appears to be a genuine effort to disclose to the court his current personal financial circumstances. Mr. Lischkoff says he did not profit from these offences. The court was not provided with any tax returns for Mr. Lischkoff or LBD; these may have been of some assistance to give the court a sense of what Mr. Lischkoff’s income was prior to LBD pursuing insolvency. Based on what has been disclosed the court accepts that Mr. Lischkoff’s ability to pay fines and restitution are restricted based on his present income.
31The Sawickis have sustained a significant financial loss as a direct result of their dealings with the defendants. The Sawickis are not secured creditors: the likelihood they will receive any funds following bankruptcy proceedings for LBD is negligible. As mentioned, the only remaining asset belonging to Mr. Lischkoff is the RRIF. Mr. Lischkoff suggests that the RRIF may end up being protected from future personal insolvency as it funds his spousal support obligation. The prosecution suggests that even if that is so, the RRIF can still be considered in terms of his ability to pay restitution. It is unfortunate that there may well be two competing, yet equally deserving interests vying for these funds. This court is not tasked with deciding how the RRIF should be handled; but this court does accept that presently, these funds are assets belonging to Mr. Lischkoff, and they must be considered when assessing his ability to pay restitution. The restitution amounts for both the Sawickis and Tarion sought by the prosecution will be somewhat reduced to account for Mr. Lischkoff’s ability pay, and the principle of restraint. If the court were to follow Mr. Lischkoff’s suggestion and not impose restitution, it would be an error in law and the sentence would be manifestly unfit.
Sentence
32For Mr. Lischkoff the following sentence will be imposed:
Count 1: a fine of $15,000
Count 2: a suspended sentence
Count 3: a fine of $15,000
Count 4: a suspended sentence
A freestanding restitution order in the amount of $130,000 payable to Mr. and Mrs. Sawicki
A freestanding restitution order in the amount of $25,000 payable to Tarion
33For LBD the following sentence will be imposed:
Count 1: a fine of $15,000
Count 2: a suspended sentence
Count 3: a fine of $15,000
Count 4: a suspended sentence
Released: July 3, 2025
Signed: Justice of the Peace Kellough
1At the time of incorporation the corporation was named Lischkoff Build North Ltd. The name was later changed to Lischkoff Build Design.
2102 O.R. (3d) 609, 2010 ONCA 718 para 34.
[3] Ontario New Home Warranty Program v. Lukenda(1991), 1991 CanLII 7167 (ON CA), 43 C.L.R. 225, 2 O.R. (3d) 675, 47 O.A.C. 388, 1991 CarswellOnt 770 (Ont. C.A.) at para 7.
4Ibid at para 22.
62019 ONCA 30 at para 11 (emphasis in original).