Licence Appeal Tribunal

Tribunal d'appel en matière de permis

DATE: 2016-12-29

FILE: 10201/ONHWPA

CASE NAME: 10201 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

Appellant -and- Tarion Warranty Corporation Respondent -and- 877 Wilson Corporation Added Party

REASONS FOR DECISION AND ORDER

ADJUDICATOR: Laurie Sanford, Vice-Chair

APPEARANCES:

For the Appellant: Colin Campbell, Counsel

For the Respondent: Ted Weredynski, Paralegal

For the Added Party: Kate Brandt, Agent

Heard in Toronto: December 7, 2016

REASONS FOR DECISION AND ORDER

BACKGROUND

This is an appeal from a decision letter dated April 15, 2016 from Tarion Warranty Corporation (“Tarion”) denying the Appellant her claim for $7,500 for delayed occupancy of a condominium unit.

The Ontario New Home Warranties Plan Act, R.S.O. 1990 c. O.31 (the “Act”) establishes a statutory set of warranties extended by builders/vendors to purchasers of new homes in Ontario. Subsection 6 (1) of Ontario Regulation 165/08 to the Act requires the vendor, in this case 877 Wilson Corporation (“877 Wilson”), to include as part of the Agreement of Purchase and Sale for a condominium unit a Condominium Home Addendum. This Addendum spells out the terms and conditions of the delayed occupancy warranty that is extended by 877 Wilson to the purchaser of the unit. The parties agree that the Appellant’s father (the “Purchaser”) bought the condominium unit and signed the Condominium Home Addendum.

The parties also agree on the chronology of events which may be summarized as follows. The Condominium Home Addendum was signed by the Purchaser on April 29, 2012. The Addendum included a set of critical dates for occupation of the condominium. These dates were not met and occupancy was delayed by 88 days, until December 12, 2014. There is no dispute that the amount of the delayed occupancy compensation would be $7,500. The Certificate of Completion and Possession started the warranties running and began the entitlement to claim the delayed occupancy compensation on December 12, 2014. The Purchaser and a third party were listed as owners of the condominium unit. On July 25, 2015, the date of closing, the Purchaser directed 877 Wilson to transfer title to his daughter, the Appellant, and this was done. The Appellant sold the unit to an unrelated party on November 26, 2015. On December 11, 2015, the Appellant submitted a claim to Tarion for the delayed occupancy. Tarion and 877 Wilson take the position that the Appellant is not entitled to claim the delayed occupancy compensation.

For the reasons given below, the Tribunal concludes that the Appellant is not entitled to claim the delayed occupancy compensation.

ANALYSIS

The parties disagreed on whether the Delayed Occupancy Warranty was one which ran with the land or one which was personal to the Purchaser. It is settled law that the warranties of workmanship and fitness for purpose in section 13 of the Act run with the land. Section 14 of the Act sets out the remedies available to homeowners who prove their claim. These remedies may consist of remedial work or damages. The delayed occupancy warranty, however, is different in form and substance. In form, the warranty is embedded in the Agreement of Purchase and Sale. In substance, it sets out a pre-determined compensation payable by a vendor to a purchaser that varies depending on the number of days the occupancy is delayed. The compensation is expressly stated to be for living expenses. There is a cap on the compensation of $7,500. Unlike the section 13 warranties, the Delayed Occupancy Warranty does not address defects in the building or fixtures. Instead, it addresses the personal inconvenience that the purchaser of a condominium unit can be expected to experience if he or she cannot take occupancy on the date agreed to. These indicia point to the Delayed Occupancy Warranty as one which is personal to the Purchaser or his assignees. It is important to note that, for the reasons given below, regardless of how the warranty is characterised, the Appellant is disentitled to it.

Tarion submits that the Delayed Occupancy Warranty is a personal one. What follows from that, in Tarion’s submission, is that the Purchaser, in this case, the Appellant’s father, should either have made the claim for compensation himself or should have assigned his rights and obligations to the Appellant prior to the transfer of title. Ontario Regulation 892 to the Act defines a “purchaser” as meaning “a person who enters into a purchase agreement with a vendor for the purchase of a home and includes an assignee of the purchaser’s interest in the purchase agreement.” This definition, which applies to the Delayed Occupancy Warranty, supports Tarion’s position and the Tribunal accepts that view.

If, on the other hand, the warranty runs with the land, Tarion submits that the Appellant is disentitled to the claim because she sold the property in the fall of 2015. Under that analysis, the new owner of the condominium ought to claim the delayed closing compensation.

The Purchaser testified that he bought the condominium with the intent of transferring it to his daughter, the Appellant. At the time of the transfer, she was living in Florida and intended to return to Canada. During the delay in closing, the Purchaser submits, her circumstances changed and she was obliged to sell the unit in the fall of 2015 without having taken occupancy.

If the warranty was a personal one, then it was open to the Purchaser to make the claim at any time from the date of occupancy until the end of the claim period in December, 2015. He did not. If the claim runs with the land, then it was open to the Appellant to make her claim any time before she transferred the land to the unrelated party. Alternatively, it was open to the unrelated third party to make her claim any time from the November transfer of the title to her up to December 2015. None of these claims were made. Instead, the Appellant made a claim after she had sold the condominium unit.

The Purchaser submits that formalities of assignment should not apply between a father and daughter, and the Tribunal should find that there was an assignment between the parties before the transfer of title. His testimony was that he always intended that his daughter would own and live in the condominium unit. The Purchaser noted that he is not a lawyer and was unaware that he needed to assign his rights to his daughter before closing. Alternatively, the Purchaser submits, it is open to the Tribunal to find that the Appellant was acting as agent for the Purchaser in submitting the claim. However, the Purchaser submitted no evidence of an agency arrangement or the intent to create an agency relationship. The Purchaser testified, and the representative for 877 Wilson confirmed, that the Purchaser and the Appellant are the only condominium unit owners not to be granted compensation for the delayed occupancy. The Tribunal notes that the Act is consumer protection legislation and is to be given liberal interpretation. However, to grant this claim would require finding either a form of assignment from the Purchaser to the Appellant or some form of agency between them. As noted above, there is only the Purchaser’s testimony about his intent to transfer title as evidence to support either option. This is not sufficient to permit the finding of either an assignment or an agency relationship.

Mr. Weredynski, representing Tarion, noted that the Statute of Frauds, R.S.O. c. S.19, requires transactions relating to land to be reduced to writing. Therefore, in Mr. Weredynski’s submission, oral arrangements between father and daughter cannot be determinative of the title or the rights associated with it. Mr. Weredynski submitted that the public interest in providing certainty in real estate transactions is a rationale for this requirement. The Tribunal accepts this argument and finds that it is not open to the Purchaser to rely on an intention to assign his rights without some documentary evidence.

It is unfortunate that the Purchaser did not claim the delayed occupancy compensation. It was open to him to do so at any time from December 12, 2014 to December 11, 2015, if one accepts the warranty as personal. Equally, if the warranty runs with the land, then the only person who could make the claim was the owner, as of December 11, 2015. In either analysis, that person is not the Appellant.

ORDER

Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs Tarion to deny the Homeowner’s claims.

LICENCE APPEAL TRIBUNAL

Laurie Sanford, Vice-Chair

Released: December 29, 2016