9275 v. Tarion Warranty Corporation, 2015 CanLII 20251

Licence Tribunal / Appeal d'appel en / Tribunal matière de permis

DATE: 2015-03-26

FILE: 9275/ONHWPA

CASE NAME: 9275 v. Tarion Warranty Corporation

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

The Appellant Appellant

-and-

Tarion Warranty Corporation Respondent

-and-

Soho Lisgar Inc. Added Party

REASONS FOR DECISION AND ORDER

ADJUDICATOR: D. Gregory Flude, Vice-Chair

APPEARANCES:

For the Appellant: Self-represented

For the Respondent: Mario Gravel, Counsel

For the Added Party: Christine A. Powell, Counsel

Heard in Ottawa: March 17, 2015

DECISION AND ORDER

OVERVIEW

1The Appellant appeals the decision of Tarion Warranty Corporation (“Tarion”) to deny his warranty claim for delayed occupancy compensation set out in a Decision Letter dated November 28, 2014. The Added Party, Soho Lisgar Inc., is the vendor of the home and is liable to reimburse Tarion for the delayed closing costs in the event that the Tribunal finds in favour of the Appellant. The Added Party supports Tarion’s position in this matter.

2None of the material facts are in dispute. The Appellant purchased a 10^th floor condominium unit in Ottawa. The Agreement of Purchase and Sale is dated May 6, 2010. It has a tentative closing date of September 30, 2012. Schedule “A” of the agreement sets out the Added Party’s right to extend the closing date up to an Outside Occupancy Date of May 31, 2013. The Added Party extended the closing date twice, firstly to May 1 and finally to May 30, 2013. There is no issue with these closing date extensions.

3A few weeks before the May 30 closing date, the Union of Elevator Installers and Repairmen called a province-wide strike. The Added Party was unable to finish the upper floors of the building. It invoked the Unavoidable Delay provisions of the Agreement of Purchase and Sale. The Appellant argues that the Added Party did not comply with the Unavoidable Delay procedure with the result that he is entitled to the maximum delayed occupancy payment of $7,500.00. Tarion has denied his claim on the basis that he has misinterpreted the Unavoidable Delay provisions.

4The Tribunal finds that the Added Party did comply with its obligations under the Unavoidable Delay provisions in the Agreement and denies the Appellant’s claim.

ANALYSIS

5The Added Party sent a letter to the Appellant dated May 10, 2013 advising him that they were invoking the Unavoidable Delay provisions. At the time that the letter was sent, it was impossible to estimate the length of the strike. It simply advises the Appellant that there is a strike and closing will be delayed indefinitely. The Appellant does not argue that this notice is defective in any way. He does argue that the letter advising him of the end of the Unavoidable Delay either triggers obligations on the part of the Added Party that it failed to satisfy or does not comply with the requirements of the Agreement of Purchase and Sale. In either case, the Appellant argues that the effect of provisions is that he is entitled to delayed occupancy compensation from the originally scheduled occupancy date, that is, May 30, 2013 until the date of the actual occupancy, August 21, 2013.

6The letter in dispute is dated July 17, 2013. It is entitled “Notice of Firm Occupancy Date.” The salient points in the letter state:

The elevator strike in now over and the process has begun to have our elevators completed and inspected by the TSSA. The next step will be to have the City of Ottawa inspect all units to issue occupancy permits for the higher floors. The timing of this is beyond our control, but we are confident that the “force majeure” is now coming to an end, and we are able to provide you with a firm occupancy date…

This letter shall serve as written notice to you that the firm occupancy date will be 8/21/2013.

7The Appellant argues that this letter is notice to him of an end to the Unavoidable Delay Period as that term is defined in the Agreement of Purchase and Sale. There is no other communication between the Appellant and the Added Party regarding the termination of the Unavoidable Delay so, in the alternative, the Appellant argues that if July 17, 2013 is not the end of the Unavoidable Delay Period then the Added Party failed to give him notice of the end of the period.

8Schedule “A” to the Agreement of Purchase and Sale sets out the obligations of the Added Party in the event of an Unavoidable Delay. It is incorporated into all condominium sales agreements pursuant to the provisions s. 6 of O/Reg 165/08 under the Ontario New Home Warranties Plan Act, R. S. O. 1990, c. O.31. The specific provisions in issue in this appeal are the definitions of “Unavoidable Delay” and “Unavoidable Delay Period” and s. 7 (c) and (d).

9“Unavoidable Delay” and “Unavoidable Delay Period” are defined thus:

“Unavoidable Delay” means an event which delays Occupancy, which is a strike, fire, explosion, flood, act of God, civil insurrection, act of war, terrorism of pandemic, plus any period of delay directly caused by the event, which are beyond the reasonable control of the Vendor and are not caused or contributed to by the fault of the Vendor.

“Unavoidable Delay Period” means the number of days between the Purchasers 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.

Using the definitions above, the Appellant and Tarion agree that the time between the May 10 notification of the commencement of an Unavoidable Delay and the July 17 letter is 68 days. Tarion disagrees with the proposition that July 17 is the end date for the Unavoidable Delay.

10S. 7 of Schedule “A” sets out a procedure for extending time due to Unavoidable Delay. In particular s. 7 (c) establishes a procedure for calculating the length of delay and 7 (d) establishes penalties for failing to follow the procedure. They read:

(c) As soon as reasonably possible, and no less than 10 days after the Vendor knows or ought to have known 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 and the 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…

(d) If the Vendor fails to give written notice of the conclusion of the Unavoidable Delay in the manner required by paragraph 7 (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.

11Applying the formula in section 7 (c) above, the Appellant took July 17, 2013 as the end date of the Unavoidable Delay and added 68 days to his May 30 closing date. He calculated the new Critical Date as August 7, 2013. He takes the position that the July 17 letter failed to set a new Critical Date on or before August 7 and runs afoul of s. 7 (d). Consequently the notice is ineffective and delayed occupancy costs are calculated from the original critical date of May 30, 2013.

12Tarion and the Added Party take the position that the Appellant has misapplied the definition of Unavoidable Delay. They point out that the end of the strike did not end the delay. It was necessary to schedule the elevator contractors to complete about three days of work. Once the elevator work was completed, two inspections need to be scheduled: one by the TSSA and the second by the City of Ottawa so Occupancy Permits could be issued. Shortly prior to July 17, the Vendor’s construction manager scheduled the necessary work and inspections and made his best estimate of the time when they would be completed. This was the date of August 21 set out in the July 17 letter. It was predicated on the fact that the City of Ottawa stated that they would inspect two floors per week, starting on the fifth floor and moving upwards. What actually happened is that the City completed all of its inspections in one week and issued Occupancy Permits by August 7. All of these events were beyond the reasonable control of the Vendor and were not caused or contributed to by the Vendor.

13A fair reading of the letter dated July 17 makes it clear that it does not define the end of the strike as the conclusion of the Unavoidable Delay Period. On its face it contemplates the end of the Unavoidable Delay at some future point and sets out the steps that must be taken before that event occurs. These steps are all beyond the control of the Added Party and were not contributed to by it. The Added Party had no control over the date upon which the elevator contractors could attend to complete the necessary work in the aftermath of the strike, nor any control over the attendance by inspectors. All it could do was schedule attendances at the earliest possible dates. It was the Added Party’s evidence that this is exactly what transpired. The Tribunal finds that the calculation of the Unavoidable Delay Period up to July 17, 2013 is unreasonable and not supported by the facts.

14The Appellant asserts that if July 17 does not denote the end of the Unavoidable Delay Period then he never received notice of the end of that period in violation of s. 7 (c). With respect, the Tribunal disagrees. While the letter does not use wording that states that the Unavoidable Delay will end on a specific date, it sets out in detail the steps that must be taken to address the force majeure (Unavoidable Delay) and, by setting a firm closing date, confirms that the delay will be completely resolved by August 21. The Tribunal does not read into s. 7 (c) any prohibition to setting the date for the end of the Unavoidable Delay and the new Critical Date on the same day.

15Overall, the exchange of correspondence indicates that the Added Party took all reasonable steps to keep the Appellant informed of the nature and extent of the Unavoidable Delay. The evidence disclosed that the Added Party established a reasonable timetable to bring the transaction to a conclusion as early as possible based on the best scheduling information available to it. It then communicated that information to the Appellant in a clear and concise manner. In doing so, it satisfied both the letter and intent of s. 7 of Schedule “A.”

ORDER

16Pursuant the authority vested in it by the provisions of the Ontario New Home Warranties Plan Act, R. S. O. 1990, c. O.31, the Tribunal upholds the decision of Tarion to deny delayed occupancy compensation to the Appellant as set out in its Decision Letter dated November 28, 2014.