Licence Appeal Tribunal
FILE: 7428/ONHWPA
CASE NAME: 7428 v. Tarion
An Appeal of a Decision of Tarion Warranty Corporation under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O. 31 – to Disallow a Claim
Applicants: 7428 -and- Respondent: Tarion Warranty Corporation -and- Added Party: Urbandale Construction Limited
REASONS FOR DECISION AND ORDER
ADJUDICATOR: Genevieve Blais, Member
APPEARANCES:
For the Applicants: Self-represented
For the Respondent: Danielle Peck, Counsel
For the Added Party: Matthew Sachs, Agent
Heard in Ottawa: September 13, 2012
REASONS FOR DECISION AND ORDER
This is an appeal by the Applicants to the Licence Appeal Tribunal (the “Tribunal”) from a Decision Letter of Tarion Warranty Corporation (“Tarion”) dated March 21, 2012 with respect to a new home purchased from Urbandale Construction Limited (the “Added Party”), in which Tarion denied the Applicants’ claim for compensation for delayed occupancy.
FACTS
The Applicants are husband and wife and they will be referred to, jointly, as “Applicants”. The Applicants’ evidence consisted primarily of oral testimony of the husband and he will be referred to as the “Applicant” throughout this decision. Tarion’s evidence consisted of documentation. Matthew Sachs, agent for the Added Party, provided oral evidence for the Added Party.
By agreement of purchase and sale (“agreement”) dated May 11, 2009 and by an amendment dated June 27, 2009, the Applicants agreed to purchase a condominium home to be built by the Added Party. The amendment contained the Addendum for Delayed Closing Warranty. The Applicants’ first tentative occupancy date was scheduled for May 13, 2010. On February 9, 2010, the Added Party set a second tentative occupancy date of June 15, 2010, which became the firm occupancy date.
On May 12, 2010, in accordance with Section 7 of the Addendum, the Added Party, by written notice, changed the firm occupancy date as a result of an unavoidable delay. The Applicants received a letter and the “Unavoidable Delay Has Occurred” notice from Mr. Sachs, agent for the Added Party. They were advised of a fire that occurred on May 6, 2010 at the condominium building which included their home.
Due to the fire damage, the condominium building needed complete reconstruction. The estimated time for reconstruction may cause a 52 week delay of the completion of their home. The estimate of delay to the Applicants was required by Tarion. The Added Party was hopeful to complete the reconstruction earlier than estimated. As soon as the fire investigation was completed, the reconstruction would begin and the Applicants would be provided with a more accurate estimate of the new tentative occupancy date. Due to the disruption caused by the delay, the Added Party offered the Applicants assistance with their move, storage, mortgage extension or any other specific needs if necessary. The Applicant testified that their approval for mortgage financing was not affected by the delay.
The Applicant testified that from June to September, 2010, he exchanged several emails and telephone calls with the sales consultant for the Added Party. The sales consultant kept them informed of the progress of the reconstruction. Progress was slow due to insurance issues and a new tentative occupancy date would be provided once the construction schedule resumed. In mid September, the Applicants did an electrical walk through the home and they were of the opinion that reconstruction of their unit was almost 80% complete. On September 20, 2010, the Applicants received an email from the Added Party stating that construction was progressing further than originally planned and new occupancy dates were not yet available. The Added Party hoped to decide on the dates in a couple of weeks thereafter. In his testimony, Mr. Sachs stated that by September 20, 2010, the reconstruction was ahead of schedule however, they were still four to five months from completion of the home. It was still too early to fix a new occupancy date and the Added Party was under no legal obligation to do so.
By mid October 2010, the Applicant stated that he was completely frustrated with the Added Party and their inability to set a new occupancy date. The Applicants were contemplating alternate living arrangements for the winter months and wished to finalize their financing and the purchase of appliances and furniture. The Applicants took the matter into their own hands and proposed to the Added Party their own new occupancy date of early May, 2011.
Under the terms of the agreement and by mutual consent, the Added Party accepted May 12, 2011 as the new firm occupancy date. Although the Applicant stated that the date resulted from frustration with the Added Party, it was set for the Applicants own convenience and allowed them to make personal plans, which included travel to the United States, for the winter months.
In November, 2010, the Applicants received by registered mail, from the Added Party, the “Unavoidable Delay Has Ended” notice dated November 12, 2010. The notice stated that the setback in time directly caused by the unavoidable delay was 48 weeks. The notice set the new firm occupancy date of May 12, 2011 for the Applicants, in accordance with the mutual agreement signed in October, 2010.
The Applicant testified that in his view, the Added Party ought to have known by October, 2010, when the unavoidable delay period would conclude. He maintains that the Added Party’s failure to set a new occupancy date was self-serving and that it was acting in its own self interest to meet other construction commitments. He based this observation on the fact that seven other units eventually had firm occupancy dates of December, 2010 and January, 2011. Mr. Sachs stated that, when the Applicants received the November 12, 2010 notice, had they requested an earlier occupancy date than May 12, 2011, it may have been possible. The Applicants did not approach the Added Party for an earlier date. The Applicant acknowledged that a move during the winter months was not convenient or possible as their winter plans were set.
Mr. Sachs acknowledged that it was a difficult time for the Applicants and he was aware of their frustration. In October, 2010, when the Applicants requested a much later occupancy date of May, 2011, the Added Party seized on the opportunity as it provided additional flexibility to the construction schedule of other units in the building.
Mr. Sachs stated that the Added Party was compelled to balance a number of factors, including the legal obligations under the Tarion warranty, prior to making a final decision on concluding the Unavoidable Delay Period and setting a new occupancy date. Tarion’s interpretation of the Unavoidable Delay Period is that it should be equal to the amount of time it takes to restore the property to the stage of construction that existed before the fire. The written notice, dated November 12, 2010, was sent in accordance with Section 7 of the Addendum, when the Added Party was confident in setting a new occupancy date. The Applicants’ new firm date was set to coincide with the previously mutually agreed date of May 12, 2011. A follow up email to the notice, dated December 17, 2010, was sent in response to the Applicants’ request for additional information and explanation of the process.
The Applicant maintains that neither the notice dated November 12, 2010 nor the December 17, 2010, unsigned email constitute proper notice as required under the Delayed Occupancy Warranty, Section 7(c) and therefore the Applicants are entitled to compensation payable under Section 9. He claims the notice is unsigned and the calculation of the unavoidable delay period is incorrect.
The Applicants took possession of their home on May 12, 2011. On July 26, 2011, Tarion received the Applicants’ claim for a delayed occupancy for the maximum compensation of $7,500 for living costs of $150 per day for 330 days.
Tarion’s position is that the first notice on May 12, 2010 estimated that the Unavoidable Delay Period would be 52 weeks. The second notice on November 12, 2010 stated the direct setback in time caused by the unavoidable delay was 48 weeks. The new firm date was determined by adding 48 weeks to the original firm date of June 15, 2010. The new firm date of May 12, 2011 set by the Added Party was an acceptable date. The Added Party was required to provide the second written notice 10 days after the unavoidable delay ended, which was done well in advance of the legal requirement The notice of November 12, 2010 constitutes proper notice and the Applicants are not entitled to compensation for delayed occupancy.
THE LAW
Regulation 165/08, under the Act, sets out, in section 6, conditions for a condominium home under the Act if parties enter into an agreement for the purchase of a condominium home between July 1, 2008 and October 1, 2012.
Section 6 states as follows:
Delayed occupancy
(1) Subject to subsections 3 (2) and (3), if, on or after July 1, 2008 and before October 1, 2012, parties enter into a purchase agreement for a condominium home, other than a vacant land condominium home, the following are conditions of registration under the Plan:
The vendor shall ensure that the parties complete the applicable one of the following documents, for which the form is available for inspection at the offices of the Corporation during normal business hours, and that the completed document forms part of the purchase agreement:
i. The Condominium Home Addendum (Tentative Occupancy Date) dated April 20, 2008 or April 22, 2009.
ii. The Condominium Home Addendum (Firm Occupancy Date) dated April 20, 2008 or April 22, 2009.
- Upon request, the vendor shall furnish to the Registrar proof that the applicable document described in paragraph 1, as completed by the parties, forms part of the purchase agreement. O. Reg. 165/08, s. 6 (1); O. Reg. 249/09, s. 2; O. Reg. 160/12, s. 4 (1).
(2) Subject to subsections 3 (2) and (3), if, on or after July 1, 2008 and before October 1, 2012, parties enter into a purchase agreement for a condominium home, other than a vacant land condominium home, the vendor warrants to the purchaser that the vendor will comply with the requirements applicable to the home that are imposed by section 9 of the Condominium Home Addendum (Tentative Closing Date) or the Condominium Home Addendum (Firm Closing Date), as the case may be, that paragraph 1 of subsection (1) requires form part of the purchase agreement, even if the vendor has not complied with that paragraph. O. Reg. 165/08, s. 6 (2); O. Reg. 160/12, ss. 4 (2).
Notice of decision under s. 14
- (1) Where the Corporation makes a decision under section 14, it shall serve notice of the decision, together with written reasons therefore, on the person or owner affected.
Notice requiring hearing
(2) A notice under subsection (1) shall state that the person or owner served is entitled to a hearing by the Tribunal if the person or owner mails or delivers, within fifteen days after service of the notice under subsection (1), notice in writing requiring a hearing to the Corporation and the Tribunal.
Powers of Tribunal
(3) Where a person or owner gives notice in accordance with subsection (2), the Tribunal shall appoint a time for and hold the hearing and may by order direct the Corporation to take such action as the Tribunal considers the Corporation ought to take in accordance with this Act and the regulations, and for such purposes the Tribunal may substitute its opinion for that of the Corporation.
Parties
(3) The Corporation, the person or owner who has required the hearing and such other persons as the Tribunal may specify are parties to proceedings before the Tribunal under this section.
The relevant portions of the Condominium Home Addendum (Tentative Occupancy Date) that apply to this case state as follows:
- Definitions:
“Unavoidable Delay” means an event which delays Occupancy which is a strike, fire, explosion, flood, act of God, civil insurrection, act of war, act of terrorism or pandemic, plus any period of delay directly caused by the event, which are beyond the reasonable control of the Vendor and are no caused or contributed to by the fault of the Vendor.
“Unavoidable Delay Period” means the number of days between the Purchaser’s receipt of written notice of the commencement of the Unavoidable Delay, as required by paragraph 7 (b), and the date on which the Unavoidable Delay concludes.
- Extending Dates – Due to Unavoidable Delay
(a) If Unavoidable Delay occurs, the Vendor may extend Critical Dates by no more than the length of the Unavoidable Delay Period, without the approval of the Purchases and without the requirement to pay delayed occupancy compensation in connection with the Unavoidable Delay, provided the requirements of this section are met.
(b) If the Vendor wishes to extend Critical Dates on account of Unavoidable Delay, the Vendor shall provide written notice to the Purchaser setting out a brief description of the Unavoidable Delay, and an estimate of the duration of the delay. Once the Vendor knows or ought reasonably to know that an Unavoidable Delay has commenced, the Vendor shall provide written notice to the Purchase by the earlier of: 10 days thereafter, and the next critical date.
(c) As soon as reasonably possible, and no later than 10 days after the Vendor knows or ought reasonably to know that an Unavoidable Delay has concluded, the Vendor shall provide written notice to the Purchaser setting out a brief description of the Unavoidable Delay, identifying the date of its conclusion, and setting new Critical Dates. The new Critical Dates are calculated by adding to the then next Critical Date the number of days of the Unavoidable Delay Period (the other Critical Dates changing accordingly), provided that the Firm Occupancy Date or Delayed Occupancy Date, as the case may be, must be at least 10 days after the day of giving notice unless the parties agree otherwise. Either the Vendor or the Purchaser may request in writing an earlier Firm Occupancy Date or Delayed Occupancy Date, and the other party’s consent to the earlier date shall not be unreasonably withheld.
(d) If the Vendor fails to give written notice of the conclusion of the Unavoidable Delay in the manner required by paragraph ( c ), the notice is ineffective, the existing Critical Dates are unchanged, and any delayed occupancy compensation payable under section 9 is payable from the existing Firm Occupancy Date.
(e) Any notice setting new Critical Dates given by the Vendor under this section must set out the revised next Critical Date and state that the setting of such date may change other future Critical Dates, as applicable, in accordance with the terms of the Addendum.
- Time periods, and How Notice Must be Sent
(a) Any written notice required under this Addendum may be given personally or sent by email, fax, courier or registered mail to the Purchaser or the Vendor at the address/contact numbers identified on page 2 or replacement address/contact numbers as provided in paragraph (c) below. Notices may also be sent to the solicitor for each party if necessary contact information is provided, but notices in all events must be sent to the Purchaser and Vendor, as applicable.
ISSUE
The issue in this matter is whether the Added Party’s notice that an Unavoidable Delay had concluded constituted proper notice in accordance with section 7 (c) of the Addendum to the Agreement of Purchase and Sale.
APPLICATION OF LAW TO FACTS
There is no question that the unavoidable delay created frustration and uncertainty for the Applicants. The Tribunal heard evidence that, during the delay period, the Added Party was proactive and exchanged information on several occasions with the Applicants, providing updates on the reconstruction and progress of their home. The Added Party had estimated a delay period of approximately 52 weeks and was compelled to manage the unavoidable delay in accordance with the provisions of the Addendum. The Tribunal disagrees with the Applicant’s submission that the Added Party delay in setting a new occupancy date was for the Added Party’s benefit. The Applicant presented no evidence to corroborate that matter. On the contrary, the evidence is uncontradicted that the Added Party did everything possible to accommodate and acted within the limits of the Addendum for Delayed Closing Warranty.
The notice provisions are clearly set out in Section 7 in the Addendum to Agreement of Purchase and Sale. A vendor, in this case the Added Party, must issue two notices when extending dates due to Unavoidable Delay. The first is when the Unavoidable Delay occurs and the second when the Unavoidable Delay has concluded. Tarion applies the notice provisions in a strict manner and requires the Added Party to use prescribed notice forms, which covers the requirements of the notice under Section 7 (c).
The Applicant maintained that the “Unavoidable Delay Has Ended” notice issued by the Added Party on November 12, 2010, did not identify the date the unavoidable delay concluded. The form was ambiguous. In his view, the email of December 17, 2010 was not an official document. Mr. Sachs explained that the mandated Tarion notice is in point form and even if brief, stated the required notice information. Unfortunately it was not as clear as desired. For this very reason he responded to the Applicants’ request for additional information with a lengthy email wherein he reiterated the process in greater detail and as it pertained to their individual circumstances.
The issue for the Tribunal is whether the notice “Unavoidable Delay Has Ended” is in accordance with Section 7 (c) of the Addendum. The notice is dated November 12, 2010, it sets out a brief description of the Unavoidable Delay and sets a firm closing date that coincides with the Applicants’ mutual agreed date of May 12, 2011. The Added Party provided written notice to the Applicants earlier than legally required.
The Tribunal is satisfied that the notice contained all the required elements as required in the Addendum and the Added Party provided proper notice. The Tribunal submits that the email of December 17, 2010, does not alter or nullify the provisions of the November 12, 2010 notice and considers the email only as supplemental information for the Applicants.
On the evidence before this Tribunal, and for the reasons given, the Added Party’s written notice that the Unavoidable Delay had concluded did constitute proper notice under the Addendum. The Applicants are therefore not entitled to compensation for delayed occupancy.
ORDER
Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs Tarion to deny the claim in full.
LICENCE APPEAL TRIBUNAL
Genevieve Blais, Presiding Member
Released: October 5, 2012