8138 v. Tarion Warranty Corporation, 2014 CanLII 30037

Licence Tribunal

Appeal d'appel en

Tribunal matière de permis

DATE:

2014-02-05

FILE:

8138/ONHWPA

CASE NAME:

8138 v. Tarion Warranty Corporation

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

Applicant

Applicant

-and-

Tarion Warranty Corporation

Respondent

DECISION AND ORDER ON MOTION

ADJUDICATOR:

Douglas R. Wallace, Vice-Chair

APPEARANCES:

For the Applicant:

Self-Represented

For the Respondent:

Andrew McKenna, Counsel

Heard in Cornwall:

December 12, 2013

REASONS FOR DECISION AND ORDER

The Applicant and his partner (the ‘Homeowners’) found water penetration in the basement of their newly purchased home within two years of taking possession in 2009. They made a claim against their Builder under the Ontario New Home Warranty Plan Act (the Act) and followed up with the statutory guarantor of the programme, Tarion Warranty Corporation, (Tarion). In the course of conciliating this dispute, Tarion retained a building engineer who made findings as to the cause of the leakage and recommended remedial work. Based on the engineer’s findings, the Homeowners and the Builder entered into an agreement (the Settlement Agreement) whereby the Builder agreed, amongst other things, to fund remedial work to be carried out by a contractor retained by the Homeowners. When the repairs did not rectify the problem to the Homeowner’s satisfaction, the Applicant requested additional repairs. Tarion found these additional repairs unwarranted in its Decision Letter of May 27, 2013. The Applicant appealed Tarion’s Decision Letter by Notice of Appeal received on June 7, 2013. This motion arises in the course of this appeal.

The Applicant describes his motion as an “omnibus motion”. It encompasses a request for many things, including

1. Summary judgment requiring Tarion to correct all deficiencies in work or materials listed in Tarion’s Decision Letter of May 27, 2013 or, in the alternative, provide compensation for a number of listed items in the Decision Letter.

2. An order that Tarion warranty all work for 2 years and 7 years as per normal warranties.

3. An order requiring that the Respondent (Tarion) honour its commitments to him which were set out in emails from the Respondent. These commitments included:

(a) An assurance that the Applicant’s warranty would not be “jeopardized”

by any failure of a Settlement Agreement;

(b) Assurance that the Respondent would step in to ensure that all

warranty matters would be resolved;

(c) An agreement to pay the Applicant’s engineer’s site visit fee of February 22, 2013; and

(d) An agreement not to leave the Applicant’s home open to the elements due to the destructive testing performed by the Respondent.

3. An order requiring the Respondent perform its obligations set out in the Act, Regulations and Policy manuals created by the Respondent.

4. An order for the oral examination under oath of Perry Harkin and Carol Metcalfe to clarify and attest to certain matters.

In the event the above-noted remedies are denied, the Applicant moved for an order striking statements in the Decision Letter and, in the alternative for particulars, disclosure and oral discovery.

In support of his motion, the Applicant produced a bundle of unnumbered documents which was filed as an exhibit and made lengthy oral submissions. He called no witnesses and did not testify under oath. The Applicant referred to a number of statutory provisions and prior decisions of the Tribunal during his submissions. As the Applicant did not give the Respondent advance notice of the authorities he intended to rely on and did not provide copies of the authorities during the hearing the Tribunal gave Counsel for the Respondent an opportunity to make written submissions on the cases cited if he felt it necessary. Such submissions have now been received and reviewed by the Tribunal.

Issues

There are two fundamental issues: Does the Tribunal have jurisdiction to grant the relief sought and if so, how should the Tribunal exercise its discretion?

The Applicant’s Position

The Applicant submitted that the Tribunal has jurisdiction to grant all the relief claimed. In support, he relied on a number of provisions in the Statutory Powers and Procedures Act (the “SPPA), two Rules of Practice of the Tribunal (the “Rules”), several clauses in Regulation 892, RRO 199O, and a number of prior Tribunal decisions.

The first section of the SPPA relied on is Section 25.0.1. This section provides as follows:

Control of process

25.0.1 A tribunal has the power to determine its own procedures and practices and may for that purpose,

(a) make orders with respect to the procedures and practices that apply in any particular proceeding; and

(b) establish rules under section 25.1. 1999, c. 12, Sched. B, s. 16 (8).

The second section of the SPPA relied is section 5.4. dealing with the Tribunal’s jurisdiction to order further disclosure:

Disclosure

5.4(1)If the tribunal’s rules made under section 25.1 deal with disclosure, the tribunal may, at any stage of the proceeding before all hearings are complete, make orders for,

(a) the exchange of documents;

(b) the oral or written examination of a party;

(c) the exchange of witness statements and reports of expert witnesses;

(d) the provision of particulars;

(e) any other form of disclosure. 1994, c. 27, s. 56 (12); 1997, c. 23, s. 13 (11).

With respect to the Tribunal’s jurisdiction to order examination of witnesses, the Applicant relied on section 10.1 of the SPPA.

Examination of witnesses

10.1A party to a proceeding may, at an oral or electronic hearing,

(a) call and examine witnesses and present evidence and submissions; and

(b) conduct cross-examinations of witnesses at the hearing reasonably required for a full and fair disclosure of all matters relevant to the issues in the proceeding. 1994, c. 27, s. 56 (20)

The Applicant also relied on section 2 of the SPPA requiring the Tribunal to construe the Act and the Rules liberally so as to achieve the stated goal of a “just, expeditious and cost effective determination” of every dispute.

The Rules of Practice relied on by the Applicant include Rule 2.10 authorizing the dismissal of a proceeding without a hearing if it finds:

(a) the appeal to be frivolous, vexatious or commenced in bad faith,

(b) if it relates to matters outside the jurisdiction of the Tribunal

(c) some aspect of the statutory requirements for bringing the proceeding has not been met or

(d) the party filing the appeal has abandoned the proceeding.

He also relies on Rule 6.1 authorizing the Tribunal to order any party to provide such further particulars as the Tribunal considers necessary for a full and satisfactory understanding of the subject of the proceedings.

With respect to the Tribunal’s jurisdiction to order Tarion to carry out its statutory duties, the Applicant cited clauses 5(0.1), 5.1(2) and 5.1(4) of the regulation placing obligations on Tarion to conduct inspections and conciliations, issue Warranty Assessment Reports and make repairs or payment out of the guarantee fund within a certain time frame.

The prior decisions relied on by the Applicant in support of his submissions with respect to jurisdiction include the following:

1. Cases dismissing appeals on motions: 6345/ONHWPA, 6371/ONHWPA, 6134/ ONHWPA, 6530/ONHWPA, 6834/ONHWPA, 6836/ONHWPA, 6836/ONHWPA

2. Cases involving motions for summary judgment: 5255/ONHWPA (May 7, 2009)

3. Cases excluding evidence on motions: 7871/ONHWPA, (excluding testimony of two witnesses), 5919 ONHWPA (disregarding a second decision letter)

4. Cases ordering particulars: 6639/ONHWPA

The Applicant submitted that the statutory references, Rules of Practice of the Tribunal and prior decisions of this Tribunal cited give the Tribunal ample authority to grant the relief requested. Having jurisdiction, the Tribunal should exercise that jurisdiction in his favour given the following facts:

1. A number of statements in an expert report prepared for Tarion noting that the home owners continue to have water leakage and mould as a result of the original construction

2. The Settlement Agreement was entered into on the direction of Tarion’s representative and Ombudsperson

3. Tarion’s agreement, expressed in an email of May 16, 2012, that the homeowners would not “jeopardize their warranty with Tarion “and that if the work should fail for any reason Tarion would step in to ensure that all outstanding warranty matters were resolved”

4. The Settlement Agreement contains a clause stating that:

The intent of this Agreement is to fund all items in the Agreement, providing for equivalent work as would be provided by Tarion under the Homeowner’s warranty. Should the terms of this Agreement not be complied with by the Builder such that the Homeowners’ are not provided with work equivalent to what would be provided by Tarion, the Homeowners may terminate this agreement and rely on their rights under their Tarion warranty.

5. Tarion’s failure to perform its mandate

6. Numerous inaccurate statements and false claims in the Decision Letter of May 27, 2013

7. The Homeowners did not “take over the work” as stated by Tarion but rather acted as Tarion’s agents in having the work done under the Settlement Agreement

8. The need to interpret and apply the Rules of the Tribunal in a manner which will “secure the just, most expeditious and cost-effective determination of every proceeding”.

When asked why he needed the relief sought prior to the hearing, the Applicant advised that he needed the information sought in order to know the case he has to meet at the hearing and to properly prepare for the hearing.

The Respondent’s Position

The Respondent filed three documents in response to the Applicant’s motion: a sworn affidavit by Roberto D. Aburto, an Associate in the Counsel’s law firm, submissions of Tarion Warranty Corporation regarding the “Omnibus Motion”, and additional written submissions commenting on the cases cited in the Applicant’s closing submissions.

The submissions made by the Respondent at the hearing of the motion set out a number of facts which were not disputed by the Applicant. These facts included a description of the proceedings leading up to this motion and the fact that the Respondent had provided the Applicant with all Warranty Assessment Reports generated for this file. He also noted that he has instructed Tarion’s expert witness to bring his entire file, including any drafts of his final report, with him to the hearing for the Applicant’s examination. A list of witnesses to be called by the Respondent at the hearing was also provided to the Applicant as part of the pre-hearing procedure.

In his written submissions, Counsel took the position that nothing in the Rules or legislation relied on by the Applicant gives the Tribunal jurisdiction on a motion to make decisions on substantive issues such as granting relief equivalent to a summary judgment. He distinguished the following cases: 6345/ONHWPA, 6371/ONHWPA, 6134/ONHWPA, 6530/ONHWPA, 6834/ONHWPA, 6836/ONHWPA ,and 683/ ONHWPA, relied on by the Applicant from the case before the Tribunal on the grounds that the cited cases dealt with motions to dismiss rather than motions for judgment. Motions to dismiss without a hearing are specifically authorized by Rule 2.10, whereas there is no similar provision in the Rules authorizing motions for judgment.

Counsel also took the position that even if the Tribunal had jurisdiction to grant summary judgment on a motion, the jurisdiction should only be exercised on the same grounds as a court would exercise its jurisdiction on such a motion, that is to say, when there is clear, undisputed evidence on the record that there is no genuine issue for trial. No such evidence exists on the record in this case. To the contrary, it is clear that there are genuine issues of credibility that can only be determined through the examination and cross-examination of witnesses under oath at a full hearing.

With respect to the Applicant’s request for oral discovery, disclosure of all documents in the power, possession and control of Tarion, an order striking out portions of the Decision Letter and an order compelling Tarion to compensate the Applicant for warranted items the Respondent made the following submissions:

• Oral Discovery: There is no provision in the Rules for such a procedure.

• Disclosure: The Rules specifically require disclosure of documents which will be relied on at the hearing. There is no requirement to produce additional documents that a party does not intend to rely on. What specific documents have been requested the Respondent has agreed to produce.

• Order striking out parts of Decision Letter: The Rules do not provide for such a procedure.

• Order for Compensation: Costs of repairs can only be determined on the basis of proper sworn evidence. Compensation for indirect costs is specifically excluded from amounts that may be paid out of the compensation plan provided in the Act.

In conclusion, Counsel submitted that the motion was simply an attempt by the Applicant to obtain a ruling from the Tribunal prior to the hearing based on the Applicant’s personal opinion that the facts make it clear that the Decision Letter is wrong. Such a determination can only be made when the Tribunal has had an opportunity to hear from all the witnesses and examine all the documentary evidence.

Analysis and Decision

Jurisdiction of the Tribunal over substantive matters

The Ontario New Home Warranties Plan Act and its regulations set out in some detail the rights and duties of the four bodies involved in the construction, sale and warranty of new homes: vendor/builders, purchasers, a named corporation (Tarion) and this Tribunal. Each body has its own rights and obligations under the Act. Although both Tarion and the Tribunal deal with warranties, judicial decisions have made it clear that the Tribunal in carrying out its power to decide whether a deficiency is warranted owes no deference to Tarion and the decision it made while carrying out its investigation and conciliation powers. The roles of the two bodies are different. Tarion’s role is set out in a number of sections of the Act and Regulations including those sections of the Regulations relied upon by the homeowner in this case. These duties include the investigation and conciliation of disputes and the production of Warranty Assessment Reports and Decision Letters. The role of the Tribunal on the other hand as set out in section 16(3) of the Act is to arrange for a hearing at the request of any homeowner who gives the notice prescribed by the Act. Until it receives a Notice of Appeal arising from a Decision Letter, the Tribunal has no jurisdiction to interfere in any manner with the way other parties to the process carry out their obligations under the Act.

The powers of the Tribunal are set out in section 16 (3) of the Act as follows:

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. R.S.O. 1990, c. O.31, s. 16 (3).

The Tribunal finds that there is nothing in this section or in any legislation cited by the Applicant which would give the Tribunal jurisdiction to grant an order such as the Applicant requests, directing Tarion in the manner it carries out its duties under section 5(0.1) or 5.1 of Regulation 892, 1. Similarly, no rule or legislation can be found giving the Tribunal jurisdiction to delete any part of Tarion’s Decision Letter or to order Tarion to honour its written commitments to the Applicant. Finally, the Tribunal finds that it has no jurisdiction on a pre-hearing motion to order Tarion to extend a warranty as requested by the Applicant.

The exercise of the Tribunal’s discretion over substantive matters

The Tribunal finds that even if it had jurisdiction to grant the relief sought in these three parts of the motion it would not exercise its discretion in favour of granting the relief requested on a pre-hearing motion. Such decisions can more appropriately be made only following a full hearing when the Tribunal hears evidence from all parties as to the circumstances surrounding the making of the commitments and the alleged breaches of the Act by the Respondent.

Jurisdiction over procedural matters

In addition to the substantive jurisdiction given to the Tribunal under section 16 (3) of the Act, the Tribunal has been given all the powers that are “necessary or expedient” for carrying out its duties and is expressly authorized by section 6 of the Licence Appeal Tribunal Act to “make rules establishing procedures for hearings and the rights of parties to a hearing”. (Section 6.1). The Rules made by the Tribunal may be of general or specific application and may apply differently to different hearings. (Section 6.4).

Pursuant to this authority and section 25.1 of the SPPA, the Tribunal has adopted Rules of Practice governing such procedural matters as the dismissal of a proceeding without a hearing (Rule 2.10), the ordering of particulars (Rule 6.1) and the disclosure of documents (Rule 6.3). The Tribunal finds that it has jurisdiction to grant the relief sought in the parts of the motion requesting relief under these rules.

The Tribunal now turns its mind to the question of whether this jurisdiction should be exercised in the Applicant’s favour. It finds that it should not.

The exercise of the Tribunal’s discretion over procedural matters

Summary judgment

The Act clearly envisions a scheme whereby two parties with adverse interests have an opportunity to make their cases before an impartial body. They are allowed to make out their cases by producing documents and testimony from witnesses of their choosing and to test the case put forward by adverse parties through cross-examination at the hearing. The parties should only be deprived of their right to present their cases and test the case put forward by adverse parties in exceptional circumstances. The limited circumstances justifying the dismissal of an appeal without a hearing are set out in Rule 2.10. The Rules do not provide for any circumstances which would justify depriving a Respondent of its right to defend its decision and the Tribunal finds no evidence of circumstances justifying such a serious departure from the normal procedure in this case. The fact that the Respondent or an expert retained by the Respondent may have considered a defect warranted at some time in the conciliation process does not preclude the possibility that the Respondent may have changed its opinion in light of subsequently discovered evidence. Nor does it preclude the possibility that the Tribunal may come to a different conclusion after hearing all the evidence. In any event, the Tribunal finds that it should not deprive the Respondent of its right to a full hearing on its merits by exercising its discretion in the Applicant’s favour in this case.

An order for particulars

Rule 6.1 (2) states that the Tribunal may order any party to provide such further particulars “as the Tribunal considers necessary for a full and satisfactory understanding of the subject of the proceedings”. A review of the affidavit filed on behalf of the Respondent and the substantial book of documents produced to date, indicates that the Respondent has produced a full range of documents indicating why the homeowners’ claims were denied.

The Tribunal does not find any further particulars necessary at this time for a “full and satisfactory understanding of the subject” of this appeal and accordingly declines to grant relief under this part of the Applicant’s motion.

An order for further disclosure

The Applicant asks for an order allowing for the oral examination of Tarion’s service representative. Such an examination would no doubt focus on the statements made by Mr. Harkin indicating that the owners would not lose their warranty under certain circumstances. Counsel for the Respondent has undertaken to produce Mr. Harkin as a witness at the hearing and the Tribunal has no doubt the full circumstances surrounding his statements will be subject to examination and cross-examination at that time., It may well be that the Applicant would like to know what Mr. Harkin will say in answer to questions on cross-examination immediately but there is no evidence how, if at all, the answers by Mr. Harkin in cross-examination prior to a hearing would assist in the resolution of this dispute. . On the contrary, the Tribunal’s view is that an oral discovery at this time would only further delay the hearing. As noted above, the Respondent has made fulsome disclosure relevant to the denial of the Applicants’ claim.

There is no provision in the Rules for oral discovery. and In the Tribunal’s view such a procedure in this case would not be in keeping with the purpose of the SPPA which is to provide for the “just, expeditious and cost effective determination” of disputes.

An order for further production of documents

The Applicant also asks for the disclosure from the Respondent of “any and all documents relating to their claim”. The motion can be distinguished from the cases cited by the Applicant in that it fails to name the documents required. When asked to specify the documents, the Applicant specified earlier drafts of the Decision Letter and the expert report relied on by the Respondent. The Respondent voluntarily agreed to ask the authors of both documents to bring any earlier drafts of these documents with them to the hearing. The Tribunal finds that the agreement goes beyond the requirements of the Act and Rules. In the circumstances, no order will be made for further production.

An order to strike out portions of the Decision Letter

The Applicant moved to exclude portions of the Decision Letter that refer to the Settlement Agreement or that “deal with unsubstantiated allegations, false or misleading claims”. The grounds for exclusion appeared to be that the Settlement Agreement and the Decision Letter contained facts which the Applicant does not believe are true. This may or may not be the case. In any event, the truth of all statements in these documents can best be decided at the hearing when both parties have the opportunity to adduce evidence as to the surrounding circumstances. The Tribunal accordingly dismisses this aspect of the Applicant’s motion.

COSTS

Both parties to the motion asked for costs in their written submissions. Costs may be awarded under Rule 14 (1) when the Tribunal finds that a party in the proceeding has acted “unreasonably, frivolously, vexatiously or in bad faith. Section 14 (2) of the Rules indicates that in determining whether a party has acted “unreasonably, frivolously, vexatiously or in bad faith”. the Tribunal will take a number of circumstances into account. These circumstances include failing to attend a hearing, failing to comply with a procedural order failing to comply in a timely matter with the disclosure requirements set out in the Rules and knowingly presenting false or misleading evidence. The Tribunal finds there to be no evidence that the Respondent’s conduct in responding to this motion could be described as acting in such a manner and accordingly denies the Applicant’s request for costs.

With regard to the Respondent’s request for costs, the Tribunal finds the Applicant’s conduct troublesome. The material presented was disorganized, lengthy and, more seriously, misleading. It presented what were strongly held beliefs as if they were facts while disregarding surrounding circumstances which would explain or refute the beliefs being put forward. In this respect his conduct may be said to have been unreasonable. The Tribunal takes into account, however, the fact that the Applicant was not represented by counsel and, further, that his strong personal belief in the justice of his cause may make it difficult to distinguish belief from facts. In the circumstances the Tribunal does not find the Applicant’s conduct meets the criteria set out in Rule 14 and denies the Respondent’s request for costs.

ORDER

For the reasons cited above, the Applicant’s motion is dismissed and the parties are directed to proceed expeditiously to a hearing.

LICENCE APPEAL TRIBUNAL

Douglas R. Wallace, Vice-Chair

Released: February 5, 2014