Licence Tribunal

Appeal d'appel en

Tribunal matière de permis

DATE:

2016-10-04

FILE:

8452/ONHWPA

CASE NAME:

8452 v. Tarion Warranty Corporation

Appeal from a Decision of Tarion Warranty Corporation under the Ontario New Home Warranties Plan Act to Disallow a Claim

The Appellants

Appellants

-and-

Tarion Warranty Corporation

Respondent

-and-

Birani Homes Limited

Added Party

MOTION ORDER

ADJUDICATOR:

Laurie Sanford, Vice-Chair

APPEARANCES:

For the Appellants:

One Appellant, on behalf of both

For the Respondent:

Danielle Peck, Counsel

For the Added Party:

W. Scott Gallagher, Counsel

Heard by written submission:

September 28, 2016

REASONS FOR MOTION ORDER

OVERVIEW

The Appellants (the “Homeowners”) bring this motion for costs, presumably against both the Tarion Warranty Corporation (“Tarion”) and the builder of the home and Added Party, Birani Homes Limited (“Birani Homes”). The Homeowners submit a number of grounds for awarding costs, including alleged unprofessional conduct on the part of Tarion and Birani Homes, manipulated test results, and a refusal to act on the part of Tarion that “amounted to harassment” of the Homeowners.

The motion was heard by written submissions. Submissions were provided by the Homeowner. After reviewing these submissions, the Tribunal concluded that submissions from Tarion and Birani Homes were not required. For the reasons below, the Tribunal dismisses this motion.

LAW

The Tribunal’s Rules of Practice applicable to this motion are those effective from May 1, 2014 to March 2016. Although this appeal was commenced before May, 2014, these Rules applied to all appeals then outstanding. Costs are dealt within Rule 14, which provides:

14.1 Where a party believes that another party in the proceeding has acted unreasonably, frivolously, vexatiously or in bad faith, that party may make a request to the Tribunal for costs, which shall be made with notice to the other parties. . .

14.5 A request for costs shall set out the reasons for the request and the particulars of the other party’s conduct that is alleged to be unreasonable, frivolous, vexatious or in bad faith, such as:

(a) failing to attend a hearing, pre-hearing or motion, or to send a representative without notifying the Tribunal and other parties;

(b) failing to comply in a timely manner with the Tribunal’s direction or order, or with the party’s or representative’s undertaking, that results in prejudice or delay to another party;

(c) failing to comply in a timely manner with the disclosure requirements in the Rules; or

(d) knowingly presenting false or misleading evidence.

14.6 The amount of costs shall not exceed $500 for each half-day of attendance at a motion, pre-hearing or hearing, and shall not exceed $1000 for each full day of attendance at a motion, pre-hearing or hearing.

It should be noted that the bar for awarding costs under this Rule is high. Conduct would not only have to be unusual or out of the ordinary to attract costs, the conduct would have to be unreasonable, frivolous, vexatious or undertaken in bad faith. This is a high standard of misconduct.

REASONS FOR DECISION

The Homeowners took possession of their home in 2007 and noticed problems with their foundation. They filed an initial claim under the Ontario New Home Warranties Plan Act (the “Act”) in August, 2008 concerning the parging on the foundation surface. Tarion, the corporation charged with administering the Act, initially refused to warrant the claim. It became clear to the Homeowners that the damage to the foundation was more structural than the cosmetic parging. There was some preliminary testing of the foundation. Based on this and the opinion of the Homeowners’ expert, Tarion reversed its position on the warranty. However, Tarion neglected to inform the Homeowners that it was now warranting the foundation itself, not merely the parging. Tarion also declined to take a position on the scope and nature of repairs that would be required. There was an extensive delay during which one or more civil suits were launched between the Homeowners and Birani Homes. It appears that much of the delay was caused by the Homeowners’ reluctance to permit testing on the foundation. Eventually, the Court ordered the Homeowners to cause testing to occur.

Both the Homeowners and Birani Homes retained experts to interpret the results of these tests. The hearing in this matter took place over five days in June, 2016. The Tribunal decided in favour of the Homeowners and awarded them the maximum damages available under the Act.

The Homeowners cite numerous grounds for their claim to costs. Many of these grounds relate to alleged conduct concerning the civil suit(s). Some of the grounds are an attempt to litigate matters between the parties in the civil suit(s). These grounds are beyond the jurisdiction of the Tribunal to consider. Rule 14 addresses only conduct during proceedings before it.

The Homeowners allege unprofessional conduct by Tarion and Birani Homes in these proceedings. Many of these allegations relate to choices Tarion and Birani Homes made in presenting their cases, such as retaining a mechanical engineer to assess the results of the tests on the foundation. The Homeowners retained a structural engineer and regarded this as a preferable choice. However, Birani Homes is entitled to present its case as it sees fit. The test for costs in the Tribunal’s Rules of Practice is not the professionalism or otherwise of the parties but whether a party “has acted unreasonably, frivolously, vexatiously or in bad faith”. The Tribunal has reviewed the allegations of unprofessionalism leveled by the Homeowners against the other parties and finds that the conduct complained of does not rise to the level required under Rule 14 of the Tribunal’s Rules of Practice.

The Homeowners attempt in their submission to relitigate some of the issues between the parties in the proceedings before the Tribunal. The question to be determined in awarding costs is not whether the case put forward by a party had merit but whether the conduct of that party was such as to attract costs under Rule 14.

The Homeowners allege that someone manipulated the concrete test results. The expert retained by Birani Homes performed a calculation in interpreting the test results. This calculation was not in accordance with the testing standards and the expert did not insist on it during the hearing. This is not a “manipulation” of the results that would amount to bad faith or constitute “knowingly presenting false or misleading evidence”. The Homeowners also assert that the expert retained by Birani Homes gave evidence outside his area of expertise. This is a matter of credibility, not a matter of costs. The Homeowners assert that the expert violated his professional code of conduct. This is a matter to be pursued in another forum. The Tribunal did not observe unreasonable, frivolous, vexatious or bad faith conduct on the part of the expert retained by Birani.

The Homeowners submit that Tarion, by questioning the test results, by refusing the original claim and by providing “made up” reasons to require further testing, acted unfairly towards the Homeowners. The Homeowners assert this and other conduct as actions which “amounted to harassment” of the Homeowners. Tarion acknowledged during the hearing that it should have been clearer with the Homeowners that, when given evidence of the test results, it was warranting not only the parging but the underlying concrete of the foundation. The lack of clarity led to the Homeowners filing a new complaint for a major structural defect. Despite this new complaint, Tarion still did not clarify its position. Ms. Peck, Counsel for Tarion, acknowledged that this caused confusion and acknowledged as well that Tarion could have handled the matter better. The Tribunal expressed its hope that Tarion would be clearer in similar situations in the future. The Tribunal also notes that Tarion declined to take a position as to the nature and scope of repairs required. Given that Tarion had warranted the defect, the Homeowners were entitled to expect Tarion to play a more active role in resolving the matter or at least explain its passive stance. While these actions and inactions are unfortunate, this conduct falls short of the bar of unreasonable, frivolous, vexatious, or bad faith conduct.

ORDER

The Tribunal dismisses this motion for costs.

LICENCE APPEAL TRIBUNAL

Laurie Sanford, Vice-Chair

Released: October 4, 2016