Singer v. Ontario New Home Warranty Program

52 O.R. (3d) 254

[2000] O.J. No. 4769

Divisional Court File No. 372/98

Ontario Superior Court of Justice

Divisional Court

Blair R.S.J., Then and Coo JJ.

December 14, 2000

Sale of land--New Home Warranty Program--Scope of recovery --Purchaser buying condominium units for tax-sheltered investment--Vendor failing to perform contract--Purchaser entitled to coverage under warranty program for compensation for business and investment costs relating to transaction--Tax savings enjoyed by purchaser and rental income received to be deducted in determining purchaser's claim --Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31, s. 14(1).

NOTE: By reasons for judgment dated December 14, 2000, reported at 51 O.R. (3 ) 69, Blair R.S.J. and Then J., provided an addendum to their majority judgment. Their reasons are set out below.

Statutes referred to Condominium Act, R.S.O. 1990, c. C.26 Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31, s. 14(1) Rules and regulations referred to Administration of the Plan Regulation, R.R.O. 1990, Reg. 892, ss. 1 "interest", 6(1), (2)

Kevin D. Sherkin, for applicants. James C. Tory and John Terry, for respondent.

[1] BY THE COURT: -- By letter dated October 23, 2000, Mr. Sherkin requested clarification as to whether the majority of the court in its reasons released on October 20, 2000 intended that the applicants would be entitled to interest on the amounts determined by that judgment to be payable to the applicants by the Warranty Program, and consequently to an amount in excess of the $20,000 payment limit, by virtue of s. 6(2) of the Regulation [Administration of the Plan, R.R.O. 1990, Reg. 892]

[2] Mr. Tory and Mr. Terry filed a lengthy brief in response which in effect seeks a reconsideration of one aspect of the majority decision and which articulates at some length the various ways in which the majority has fallen into error. Those submissions are more appropriately addressed to a further appellate court, however, and we do not think them necessary for a determination of the narrower question of clarification raised by applicants' counsel. Mr. Sherkin did not invite, nor did the court request, a re-argument of the appeal.

[3] I propose, as part of this addendum to the majority reasons, to clarify certain matters pertaining to the interest question. In its reasons for decision, the majority concluded that the pre-judgment interest awarded as part of the damage judgment granted by White J. constituted an aspect of the "financial loss" sustained as a result of the vendor's failure to perform the contract. The total amounts indicated represented "the amount of such damage" that the Singers were "entitled to be paid out of the guarantee fund": Ontario New Home Warranties Plan Act, R.S.O. 1999, c. O.31, s. 14(1). In assessing the damages, the majority took into consideration the tax benefits which the Singers had received, and deducted them from the financial losses sustained, before arriving at the amount to be paid out of the fund.

[4] The majority omitted to specify in its reasons, however, whether the Singers were entitled to interest under s. 6(2) of the Regulations under the Act.

[5] Subsections 6(1) and (2) of the Regulation state:

6(1) A purchaser who has a claim under clause 14(1)(a) of the Act in respect of a purchase agreement entered into after the 30th of June, 1988 is entitled to be paid out of the guarantee fund an amount for damages arising from the breach of the agreement by the vendor that does not exceed $20,000.

(2) In the case of a home that is a condominium unit, the maximum limit under subsection (1) is increased by the amount of any interest owing on the amount to be paid out of the guarantee fund under subsection (1).

[6] Thus, the Regulation contemplates that interest may be awarded on the amounts to be paid out of the fund, and it specifies that, in the case of condominium units, the $20,000 cap on amounts to be paid may be increased if interest causes the total to exceed that limit. The Regulation defines interest to mean "the interest at the rate or rates prescribed under the Condominium Act required to be paid by the vendor on deposits".

[7] The Ontario New Home Warranties Plan Act, itself, neither defines nor mentions "interest". However, it is clear from the provisions of s. 14(1) that the legislature contemplated purchasers would be compensated for their damages for financial loss resulting from a vendor's failure to perform the contract for the provision of the condominium unit, and that such purchasers are entitled to be paid out of the guarantee fund "the amount of such damage subject to such limits as are fixed by the regulations". In terms of the damages for financial losses sustained, those limits are $20,000. However, in the case of condominium units, that amount may be increased to take into account interest payable on the up-to-$20,000 amount to be paid.

[8] I interpret the foregoing provisions of the Act and the Regulation to mean that a successful claimant against the Warranty Plan under s. 14(1) of the Act is entitled to receive interest on the amount to be paid out of the guarantee fund, and that the purchaser is entitled to be paid that interest at the rate set out in the Condominium Act, R.S.O. 1990, c. C.26, as described above. While neither the ONHWP Act nor the Regulation stipulate as of when that interest should be paid, it makes sense that it should be paid at least from the date upon which the Warranty Programs order was made. To hold otherwise would be to erode the purchasers' ability to recover the true financial losses, and put a premium on delays in the process.

[9] I would accordingly award the Singers interest at the Condominium Act rate on the amounts stipulated in the majority decision of the court, payable from the date of the Warranty Program's initial decision denying the applicants' claims, namely November 25, 1992.