Court File and Parties

CITATION: Birani Homes v. Tarion Warranty Corporation, 2018 ONSC 7096

Divisional Court File No.: 51/16

DATE: 20181127

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Birani Homes Limited, Appellant

AND: Tarion Warranty Corporation, Vasantrai Joshi and Jyotibala Joshi, Respondents

AND: Licence Appeal Tribunal, Intervenor

BEFORE: Henderson, Fregeau and Matheson JJ.

COUNSEL: C. Kellowan, for the Appellant D. Peck, for the Respondent Tarion Vasantrai Joshi and Jyotibala Joshi, self-represented Respondents V. Crystal, for the Intervenor

HEARD at London: November 26, 2018

Endorsement

BY THE COURT:

[1] This is an appeal from a decision of the Licence Appeal Tribunal (the “LAT”) dated September 16, 2016. That decision directed the respondent, Tarion Warranty Corporation, to pay the respondents, Vasantrai Joshi and Jyotibala Joshi (the “owners”), compensation in the amount of $300,000 under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “ONHWP Act”). The appellant Birani Homes Limited was the vendor and builder of the owners’ home and was added as a party to the LAT proceeding.

[2] Tarion is the non-profit corporation designated by the Ontario government to administer the ONHWP Act. There are one-year, two-year and seven-year warranties for eligible owners, as set out in the ONHWP Act and its regulations. Warranty coverage begins when the homeowner takes possession of the home.

[3] The owners purchased their home in 2007. Within the first year warranty period covering defective workmanship and materials, the owners submitted a warranty claim that identified a concern about parging in relation to the concrete foundation of their home. Tarion initially assessed that concern as warranted. After the owners clarified their concern, Tarion reassessed the first year claim, noting concerns about the concrete foundation itself, which had been poured in the winter. Tarion reassessed that claim as warranted, and, since the appellant had agreed to repair it, it was also resolved.

[4] There continued to be difficulties, giving rise to further assessments, due to disagreements between the parties, represented by counsel, about the required testing and repairs and due at least in part to the owners not giving the appellant access to the property. Those steps were ongoing in 2013, and the owners submitted another warranty claim form in 2013, claiming compensation for a major structural defect in relation to the concrete problems.

[5] Tarion did another warranty assessment report in October 2013, giving rise to the decision that was challenged at the LAT. By letter dated November 12, 2013, Tarion notified the owners of its decision that the concerns regarding the poured concrete foundation had previously been assessed as warranted under the first year warranty, and the recent claim was therefore deemed not warranted.

[6] The owners appealed to the LAT. The appellant was joined as an added party at Tarion’s request. The appellant wanted to be a party and was added without its objection.

[7] The owners then moved to remove the appellant as a party, noting the appellant’s extensive participation in the pre-hearings that was focused on a civil action that the owners had commenced against the appellant rather than the owners’ appeal to the LAT. The appellant resisted the motion, raising the possible impact of the appeal decision on it and submitting that it was appropriate for it to inform the LAT about the status of the civil proceedings. The appellant submitted, and the LAT accepted, that it had a vital interest in the proceeding. The motion was dismissed and the appellant remained a party.

[8] The appellant participated fully throughout the LAT proceedings.

[9] At the pre-hearing stage, the issues were narrowed. As set out at the outset of the reasons for decision, the LAT proceeded on the basis that the parties had agreed that there was a problem with the foundation and that the statutory requirements for a successful claim under the ONHWP Act had been met. The issues to be addressed at the hearing related to the determination of the nature and extent of the repairs to be made to the foundation and the owners’ conduct in denying access.

[10] The LAT held a 5-day hearing in June 2016, including testimony from expert witnesses called by the appellant and the owners.

[11] In its decision, the LAT noted that “the parties have agreed that the statutory requirements for a successful claim under the Act have been met.” In keeping with the pre-hearing order, in its reasons for decision the LAT stated that the disagreement between the parties related to the nature and scope of the repairs required to remedy the warranty breach. The evidence called at the hearing and submissions of counsel were consistent with the above admissions and narrowed issues.

[12] As set out in the reasons for decision, the LAT evaluated the evidence, indicated what expert evidence it preferred, and made findings in relation to the nature and extent of the repairs that would be required to remedy the problem with the foundation. The LAT found that the owners had established their case, except in regard to the garage walls. On remedy, the LAT found that the cost was in excess of the statutory maximum liability under the warranty of $300,000.

[13] The LAT order required that Tarion pay $300,000 to the owners. No order was made against the appellant.

Analysis

[14] The parties agree the standard of review on this appeal is reasonableness.

[15] The appellant raises a number of issues before this Court.

[16] First, the appellant seeks to overturn the pre-hearing decision denying the owners’ motion to remove the appellant as a party before the LAT. The appellant now submits that the motion should have been granted even though the appellant argued against the owners’ motion at the time. As is amply reflected in the reasons for decision on the motion, the LAT considered all the submissions, accepted submissions made by the appellant at the time and dismissed the owners’ motion. The appellant has not demonstrated that the decision was unreasonable.

[17] Second, the appellant submits that the LAT wrongly made a finding that it was obliged to indemnify Tarion. That order was not made. As set out in the LAT’s order, the only order made was against Tarion. The appellant relies on a statement made in the LAT’s overview of the law in its reasons for decision that if a warranty claim was successful and Tarion repaired the damage or compensated the owners, any payments made by Tarion “may” be enforced against the appellant. This is a general statement about the legal framework, not an order against the appellant. Further, there is no dispute that the LAT had no jurisdiction, in deciding the appeal before it, to make any order against the appellant.

[18] Third, the appellant submits that the LAT failed to consider and rule on whether the problems with the foundation met the statutory definition of a “major structural defect” and raises the related question of whether the LAT ought to have decided the scope of the repairs with respect to the first year warranty in the appeal. The appellant also argues that the LAT could not consider these issues because the original Tarion decision (which warranted the claim) had not been appealed.

[19] These submissions are premised at least in part on a submission that the LAT wrongly stated that certain issues had been agreed to by the appellant. Beginning with that issue, the record of proceedings before the LAT supports the LAT’s statements about the scope of the proceeding before it and the related admissions. The appellant was represented by counsel throughout. The opening statement of the appellant included concessions and was focused on the scope and cost of repair. Counsel for the appellant submitted that the appellant had conceded since 2009 that there was a problem with the above grade concrete and the extent of the needed repairs was at issue. The evidence called by the parties, including the appellant, was also focused and consistent with the concessions noted by the LAT. We are not persuaded that the LAT erred in the scope or matters at issue in the proceeding.

[20] With respect to the definition of major structural defect, the Tarion decision dated November 12, 2013, under appeal to the LAT, expressly stated that it was made under s. 14(3) of the Act, not the provision for major structural defects under s. 14(4). Further, the conduct of the proceedings before the LAT, including that of the appellant, does not support the position that a ruling should have been made under s. 14(4) including its definition of major structural defect.

[21] There is no doubt that the history of this matter was complicated, and included reassessments and multiple decisions arising from the first year warranty. The early decision that the concrete foundation claim was “warranted” did not require an appeal by the owners in order to pursue appeal rights at a later date. There were numerous relevant events thereafter, culminating in the 2013 decision that was appealed to the LAT. There were then numerous pre-hearing steps to determine the issues to be addressed, with full participation by the appellant. In the particular circumstances of this case, the appellant has failed to demonstrate that the decision of the LAT was unreasonable.

[22] This appeal is therefore dismissed, with costs to Tarion in the amount of $10,000 all inclusive, paid by the appellant, and no costs to or against any other party.

J. Henderson J.

J. Fregeau J.

W. Matheson J.

Date:

CITATION: Birani Homes v. Tarion Warranty Corporation, 2018 ONSC 7096

Divisional Court File No.: 51/16

DATE: 20181127

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Birani Homes Limited, Appellant

AND:

Tarion Warranty Corporation, Vasantrai Joshi and Jyotibala Joshi, Respondents

AND:

Licence Appeal Tribunal, Intervener

BEFORE: Henderson, Fregeau and Matheson JJ.

HEARD: November 26, 2017

ENDORSEMENT

Released: November 27, 2018