CITATION: Blair v. Tarion Warranty Corporation, Presidential Homes (Erskine) Ltd., 2015 ONSC 1925
DIVISIONAL COURT FILE NO.: 37/14 DATE: 20150324
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
J. WILSON, SACHS AND HARVISON YOUNG JJ.
BETWEEN:
MARGARET BLAIR
Applicant
(Appellant in Appeal)
– and –
TARION WARRANTY CORPORATION
Respondent
(Respondent in Appeal)
-and –
PRESIDENTIAL HOMES (ERSKINE) LIMITED
Added Party
(Respondent in Appeal)
John Dixon, on behalf of Margaret Blair (Applicant/Appellant in Appeal)
David John Outerbridge, for the Respondent (Respondent in Appeal)
William A. Chalmers, for the Added Party (Respondent in Appeal)
HEARD at Toronto: March 24, 2015
SACHS J. (ORALLY)
Nature of the Proceeding
[1] This is an appeal from a decision of the Licence Appeal Tribunal (the “Tribunal”) dated December 10, 2013, wherein the Tribunal granted the motion of the respondent, Tarion Warranty Corporation (“Tarion”) to dismiss an appeal brought by the appellant arising from the denial of her claim for compensation from Tarion pursuant to the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (“ONHWPA” or the “Act”). The appellant sold her home after initiating an appeal to the Tribunal, but included a collateral agreement in the purchase and sale agreement relating to her home so as to allow her to continue her claim against Tarion. The Tribunal held that the appellant had lost standing to continue her appeal.
Background
[2] The appellant took possession of her new home in February 2010 and thereafter made a complaint to Tarion about insufficient heating in the home. In 2011 a Tarion Warranty Services Representative conducted an inspection of the heating system in all of the units, including the appellant’s home (one of nine townhouses in a condominium complex). Tarion then hired experts to determine the cause of the heating issues in the complex. This investigative work was completed by the summer of 2012 and it was determined that duct modification take place in all the units, starting as a pilot project with one unit.
[3] In November 2012, the appellant installed a gas fireplace in her home without the approval of Tarion. She sought compensation from Tarion for the cost of the fireplace ($17,000), but her claim was denied by letter dated February 28, 2013. The appellant appealed the decision denying her fireplace claim to the Tribunal. Two pre-hearings were conducted by the Tribunal. Prior to the second hearing, the appellant disclosed that she had sold her home and indicated that as part of the purchase and sale agreement she and the purchaser had entered into a collateral agreement whereby the appellant sought to maintain her claim against Tarion. Tarion brought a motion to dismiss the appellant’s appeal for lack of standing.
The Tribunal’s Decision
[4] The Tribunal held that when the appellant sold her condominium on October 15, 2013, she lost standing to continue her appeal against Tarion. The Tribunal considered two previously decided cases, Charles v. Paradise Homes Inc. et al. (unreported) and Liddiard v. Tarion Warranty Corporation, 2009 65801 (ON SCDC), [2009] O.J. No. 4912 (Div. Ct.) and rejected the appellant’s argument that these cases could be distinguished.
[5] The Tribunal held that because of s.13(6) the appellant could not contract out of the statutory warranties through an assignment. Section 13(6) of the Act states:
Application of warranties
13(6) The warranties set out in subsection (1) apply despite any agreement or waiver to the contrary and are in addition to any other rights the owner may have and to any other warranty agreed upon.
[6] The Tribunal held that as a result the collateral agreement was a nullity as against Tarion.
Court’s Jurisdiction
[7] Section 11 of the Licence Appeal Tribunal Act, 1999, S.O. 1999, c. 12 Sched. G states that a party to a proceeding before the Tribunal relating to a matter under the ONHWPA “may appeal from its decision or order to the Divisional Court in accordance with the rules of court”.
Issues on this Appeal
[8] There are two issues raised by this appeal:
(i) Was Liddiard v. Tarion decided in error?
(ii) If it was not, did the Tribunal err in failing to recognize that by virtue of the collateral agreement between the appellant and the purchasers of her home, she had preserved her rights to pursue the appeal in question?
[9] In this regard, the appellant states that by virtue of the collateral agreement the purchasers of her home assigned to her their rights to pursue any claim against Tarion arising from the heating issue in the home. In this regard, the appellant relies on the decision of the Tribunal in Liddiard (Ontario (4549-ONHWPA-claim (Re)) [2009] OLATD No. 3, where the Tribunal stated the following at para. 44:
Nothing in this decision should be construed as denying the Applicants the right to approach the current owners of the home and to seek some form of assignment of their claim.
[10] According to the appellant, this is what she did by virtue of the collateral agreement.
Standard of Review
[11] On the question of whether the Divisional Court decision in Liddiard was properly decided, the respondent submits that the standard of review is correctness. On the issue of whether the Tribunal whose decision is under appeal properly applied the law to the facts of this case, the standard of review is reasonableness. We agree.
Analysis
Was Liddiard properly decided?
[12] In our view, the Divisional Court in Liddiard correctly determined the issue of “whether a person who did own but who no longer owns a home which is subject to warranty may continue an appeal under the Act to the LAT from a denial of a claim by Tarion” (Liddiard, at para. 3).
[13] Prior to Liddiard there were a number of Tribunal and lower court decisions establishing that a warranty “runs with the home” and therefore former owners were not entitled to pursue a warranty claim under the ONHWPA. In Liddiard, this Court carefully reviewed the entire scheme of the ONHWPA and confirmed that the Act does not extend warranty coverage to former owners of a home. The decision is consistent with the ordinary meaning of “owner”, with the logic and grammar of the Act and with the scheme and purposes of the Act.
[14] The concept of “owner” in law connotes exclusivity of title. This is consistent with the facts that under the ONHWPA, the owner controls and permits access to the property. The definition of “owner” in the ONHWPA itself, which speaks of an owner as a “successor in title” suggests that there is only one title holder at a time, one succeeding another. In this case, the “and” used in the “owner” definition should, be construed to mean “or”. Given the exclusive nature of ownership rights, this is an interpretation which gives effect to the legislative intent and makes logical sense.
[15] The ONHWPA is consumer protection legislation designed to protect homeowners against defective construction. This purpose is served by fixing buildings rather than simply compensating people. The statute is designed to provide a streamlined claims processing regime. It is not designed to duplicate the legal remedies available to a homeowner at common law. The legislature made a deliberate choice to limit the availability of compensation within the regime to damage to the home itself to avoid the time and expense associated with litigating this type of complicated claim. Thus, the warranty runs with the house.
[16] For these reasons, we find that the Tribunal was correct to follow Liddiard and that Liddiard was properly decided.
Did the Tribunal Err in Failing to Find that the Collateral Agreement Distinguished the Appellant’s Case from Liddiard?
[17] In dealing with this submission, it is important to note that the appellant’s appeal is only in relation to the costs of installing the fireplace. It is not in relation to any remaining HVAC claims, which the current owners have not given up their rights to pursue.
[18] If the collateral agreement purported to assign the current owner’s rights to pursue their warranty claims against Tarion, we agree that this would violate s.13(6) of the Act. To the extent that the appellant is relying on language from the Tribunal decision in Liddiard to support her appeal, the Tribunal decision was superseded by the decision of the Divisional Court.
[19] As noted by Low J. in the Divisional Court decision in Liddiard, at para. 36, the purpose of s.13(6) is not only to prevent original owners from being enticed by builders to waive their warranty rights; it is also for the protection of subsequent owners during the warranty period.
[20] In our view, the collateral agreement in question could not be an assignment by the purchasers to the appellant of the fireplace claim. The purchasers of the appellant’s home had no claim to assign in this regard. As part of the house purchase, they purchased the fireplace and continued to enjoy the benefits its presence confers.
[21] In terms of the justice of this case (which is only about the fireplace claim), it is important to emphasize that when the appellant sold her home she got compensated by the purchasers for the fact that she had installed a fireplace. Put another way, the purchase price paid was higher than it would have been if there had been no fireplace. If the appellant is alleging that the compensation she received from the purchasers for the fireplace was somehow deficient, this is not the kind of claim that the Act is designed to address.
[22] With respect to the reduction in price that the appellant agreed to because of other HVAC claims (which is not the subject of this appeal), as indicated in Liddiard, it is possible for prior owners and new owners in connection with a purchase and sale of a property to address unresolved warranty claims in a way that does not run counter to the framework of the statutory warranties. As outlined by Tarion in its factum, two critical criteria are that:
(i) any warranty claims must be pursued by the then owner of the home; and
(ii) in order to respect the warranty framework, the arrangement must still allow for the possibility of the builder or Tarion to remediate any valid defect, as opposed to providing only for the payment of compensation from Tarion.
[23] For example, the seller and purchaser could simply discount the purchase price to reflect the uncertainty the purchaser may face in pursuing the warranty claims thereafter. The parties quantify the risk and no readjustment is necessary. The scheme of the legislation is maintained as the seller does not attempt to retain rights in his/her own name and the new owner can pursue valid claims.
[24] A second example given by Tarion in its factum is as follows:
(i) the seller and purchaser could set a purchase price which reflects a remediated home;
(ii) the purchaser/current owner would in the normal course pursue the warranty claims and accept appropriate remediation to the home or retain any compensation paid; and
(iii) recognizing the risk relating to ultimate success in pursuing a warranty claim and the quantum of recovery or value of work, the agreement could provide a risk mitigation measure such as: a payment to the seller from the purchaser equal to any amounts received by the purchaser or value of work received over and above “X” dollars; or alternatively, a payment by the seller to the purchaser if the purchaser receives less than “X” dollars.
[25] A third possibility put forward by Tarion that would respect the statutory framework is the following:
(i) The purchaser and seller could provide to Tarion a written signed appointment and acknowledgement document in which they clearly state to Tarion that:
(a) the seller has been appointed as agent for the purchaser/current owner to pursue the unresolved claims for and in the name of the current owner;
(b) if resolving the claim requires access to the home and/or provision of supplementary information about the home, the current owner will upon request of the seller and/or Tarion provide such information and provide necessary access including access for any remedial work;
(c) generally, that the seller as agent has full power and authority to speak for and on behalf of the current owner and agree upon a final and binding resolution of the unresolved claims for and on behalf of the current owner (as between the seller and purchaser they could agree that there must be mutual agreement upon acceptable resolution); and
(d) any compensation to be paid by the builder or Tarion or the value of any work performed on the home would initially accrue to the current owner but then as between the seller and the owner an agreement could exist to make a payment by the current owner to the seller in an amount equal to compensation paid by the builder or Tarion, or the value of the work done on the home.
[26] Presumably, the three arrangements noted above are examples of what is contemplated in the section on Tarion’s website referred to in the appellant’s factum where it says, “If there are any claims which have not yet been resolved, you each should agree on who will gain the benefit of any remedy provided by the builder and Tarion.” Although the appellant may have some legitimate concern about the clarity of this wording, it is to be noted that Tarion’s website is intended to be summary information of a general nature and is not legal advice.
Conclusion
[27] For these reasons the appeal is dismissed.
J. WILSON J.
COSTS
[28] I have endorsed the back of the Appeal Book, “For oral reasons given, this appeal is dismissed. No claim for costs.”
___________________________ SACHS J.
JANET WILSON J.
HARVISON YOUNG J.
Date of Reasons for Judgment: March 24, 2015
Date of Release: March 27, 2015
CITATION: Blair v. Tarion Warranty Corporation, Presidential Homes (Erskine) Ltd., 2015 ONSC 1925
DIVISIONAL COURT FILE NO.: 37/14 DATE: 20150324
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
J. WILSON, SACHS AND HARVISON YOUNG JJ.
BETWEEN:
MARGARET BLAIR
Applicant
(Appellant in Appeal)
– and –
TARION WARRANTY CORPORATION
Respondent
(Respondent in Appeal)
-and –
PRESIDENTIAL HOMES (ERSKINE) LIMITED
Added Party
(Respondent in Appeal)
ORAL REASONS FOR JUDGMENT
SACHS J.
Date of Reasons for Judgment: March 24, 2015
Date of Release: March 27, 2015