7945 v. Tarion Warranty Corporation, 2013 CanLII 87776

Licence Tribunal

Appeal d'appel en

Tribunal matière de permis

DATE:

2013-12-24

FILE:

7945/ONHWPA

CASE NAME:

7945 v. Tarion Warranty Corporation

Notice of Motion by Tarion Warranty Corporation for an Order Dismissing the Appeal of the Applicant under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31

Applicant

Applicant

-and-

Tarion Warranty Corporation

Respondent

-and-

Presidential Homes (Erskine) Limited

Added Party

REASONS FOR DECISION AND ORDER

ADJUDICATOR:

Terrance Sweeney, Vice-Chair

APPEARANCES:

For the Applicant:

John Dixon, Representative

For the Respondent: For the Added Party: Heard in Toronto:

Gena Argitis, Counsel William Chalmers, Counsel December 10, 2013

DECISION AND ORDER

BACKGROUND

This is a hearing before the Licence Appeal Tribunal (“Tribunal”) arising out of a Notice of Motion, dated November 15, 2013, for an Order dismissing the appeal of the Applicant under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “Act”).

DECISION

The Tribunal has considered the facts, the Act, relevant jurisprudence and the submissions of the representatives of the parties. Tarion Warranty Corporation (the “Respondent” or “Tarion”) has proved its case. Accordingly, its motion succeeds and the appeal of the Applicant is dismissed for the reasons which follow.

FACTS PROVEN

All of the parties agreed at the opening of the hearing that the facts were not in dispute. Thus, the Tribunal rules that the following facts are proven:

1. The Applicant’s claim against the Respondent related to insufficient heating in her condominium. While the Respondent was investigating her claim, she purchased a gas fireplace without the prior approval of the Respondent. She then claimed against the Respondent for the cost of installing the fireplace.

2. The Respondent denied the Applicant’s claim and issued a Decision Letter dated February 28, 2013.

3. The Applicant appealed the Respondent’s decision to the Licence Appeal Tribunal (“LAT”). Shortly before a second pre-hearing, the Applicant revealed that she had sold her home and that the sale was to be completed on October 9, 2013.

4. The sale was completed on October 15, 2013 and title was transferred to the current owner.

5. The Applicant and the current owner entered into a “collateral agreement” in August 2013 whereby the Applicant sought to maintain her claim against the Respondent.

SUBMISSIONS

For the Respondent and Added Party

Counsel for the Respondent, supported by Counsel for the Added Party, argued two main points:

1. Ontario Courts, on two occasions, have ruled that the statutory warranty under the Act “runs with the home”. Thus, when the Applicant sold her home she lost standing to proceed with her appeal. See: Charles v. Paradise Homes Inc. et al.¹ and Liddiard v. Tarion Warranty Corporation.²

2. The collateral agreement is a nullity as it offends against subsection 13(6) of the Act.

For the Applicant

Mr. Dixon sought to distinguish those cases on the following bases:

1. In each of those cases, the owner of the home defaulted on its mortgage and the property was either foreclosed or sold under power of sale. That is not the case here where it was a voluntary transfer.

2. The Applicant followed some judicial musing in Liddiard and tailored the collateral agreement to preserve her rights against the Respondent.

3. The collateral agreement is an assignment of a chose in action and there is nothing in the Act to prevent such an assignment. Moreover, the Courts have not considered this question. Subsection 13(6) of the Act should be interpreted so as to prevent a builder from getting around the warranty and should not apply here.

APPLICATION OF LAW TO THE FACTS

Charles, above, was a civil action brought by the homeowners against Tarion and others. After the action was launched the homeowners lost their home through foreclosure proceedings. Accordingly, the Respondent moved for summary judgment to dismiss the claim of the plaintiffs.

Lax J. granted Tarion summary judgment and dismissed the claim. Her endorsement reads, in part, as follows:

… the protection afforded by the Act is available only to those who acquire a home registered under the Act and to their successors in title … the warranty runs with the home … upon the transfer of title from the Plaintiffs to their successors in title, any right to compensation passed to them.

Liddiard was an appeal to the Divisional Court from the LAT which had ruled that the appellants had lost standing when they ceased to own the home. W. Low J. wrote the decision for the majority. She upheld the LAT decision and said:

… the LAT did not err in law in following Charles … and the view expressed in Charles that the warranty runs with the land was correct.

In the course of her judgment, W. Low J. examined the Act and in support of her decision concluded that:

1. The Act aims to protect consumers.

2. The consumer the Act seeks to protect is not only the original purchaser of a home but also those who acquire ownership subsequently during the term of the warranty.

3. The statutory warranties cannot be waived.³

4. The primary and specific benefit conferred by the Act is delivery of construction of the home in conformity with the warranties. In other words “putting the property right” through remedial work.

Voluntary transfer?

The Applicant argues that these cases are distinguishable because they involved cases where the homeowner lost the property through foreclosure or power of sale whereas here a voluntary sale took place. The question surely is not “how” but “if” and “when” the transfer of title took place. The argument of the Applicant, if it were to be accepted, would introduce a distinction without a difference. Vice-Chair Sanford of the LAT has recently rejected this argument as does this Tribunal.⁴

Is the collateral agreement effective to assign the right to continue the claim against the Respondent?

The Applicant says that the collateral agreement of August 2013 is merely an assignment of a chose in action. There is nothing in the Act to prevent it and the courts have not considered the question.

The collateral agreement seeks to avoid Charles and Liddiard but runs afoul of s. 13(6) which reads:

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.

Mr. Dixon invited the Tribunal to interpret the subsection as applying only to a builder who might take advantage of a purchaser. Such an interpretation cannot be justified. The words are plain and of wide import. They apply to the current owner. She cannot contract out of the statutory warranties. The collateral agreement is a nullity as against the Respondent. When the Applicant sold her condominium on October 15, 2013, she lost standing to continue her appeal against the Respondent.

ORDER

The appeal of the Applicant is dismissed.

LICENCE APPEAL TRIBUNAL

Terrance Sweeney, Vice Chair

Released: December 24, 2013

Footnotes

1. 1[1999] S.C.J. (unreported)
2. 22009 CanLII 65801 (ON SCDC), [2009] O.J. No. 4912 (Ont. Div. Ct.)
3. 3s. 13(6) of the Act
4. 4Ontario (6345-ONHWPA-Clain) (Re), [2011] O.L.A.T.D. No. 117