S.J. v. Tarion Warranty Corporation, 2018 CanLII 128771

Licence Appeal Tribunal

Safety, Licensing Appeals and Standards Tribunals Ontario

Tribunal d’appel en matière de permis

Tribunaux de la sécurité, des appels en matière de permis et des normes Ontario

Date: 2018-09-13

An Appeal of a Decision of Tarion Warranty Corporation under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (“ONHWPA”) to disallow a claim.

S.J.

Appellant

-and-

Tarion Warranty Corporation

Respondent

REASONS FOR DECISION AND ORDER

ADJUDICATOR:

Cezary Paluch, Member

APPEARANCES:

For the Appellant:

Self-represented

For the Respondent: For Remington Oakville Preserve Inc.

Ted Weredynski, Paralegal Carol Street, Counsel

Heard in Writing:

July 18, 2018

OVERVIEW:

1The Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “ONHWPA”), allows homeowners to appeal their denied Tarion Warranty Corporation (“Tarion”) claims to the Licence Appeal Tribunal (“Tribunal”).

2The appellant, S.J., appealed a Decision Letter issued by Tarion on March 15, 2018, refusing multiple aspects of the appellants’ warranty claims with respect to a new home he purchased from Remington Oakville Preserve Inc. (“Remington”).

3A case conference took place on May 4, 2018. However, the parties were unable to participate in a case conference and scheduled a preliminary hearing because Tarion requested that the Tribunal add Remington as a party to this proceeding. An order was issued on May 28, 2018 scheduling a preliminary issue hearing for July 18, 2018, with Tarion’s and Remington’s submission due by June 25, 2018, and the appellant’s submission due by July 9, 2018 (the “Order’).

4Tarion’s motion raises the following question:

Does Remington have a “significant interest” in this particular appeal?

5After the preliminary motion was scheduled and submissions dates set, the appellant brought a motion requesting that the Tribunal not accept Remington’s initial submissions and evidence as they were filed after the date provided for in the Order. I reviewed this motion first as part of the written hearing prior to making the decision on the substantive issue related to adding Remington as a party.

RESULT:

6This entire matter was dealt with by way of written submissions.

7I decline the appellant’s motion to exclude Remington’s evidence. I do not see how S.J. was prejudiced in any way by the late filing of the submissions.

8After considering the submissions of the parties, the request to add Remington as a party is allowed.

APPELLANT’S MOTION TO EXCLUDE REMINGTON’S EVIDENCE:

9The Tribunal Order dated May 28, 2018 stated Tarion’s and Remington’s submissions and evidence were due on June 25, 2018, the appellant’s submissions due on July 9, 2018 and the reply from Tarion and Remington by July 17, 2018.

10However, Remington submitted their submissions on July 9, 2018 relying on a Notice of Preliminary Hearing dated May 30, 2018, (the “Notice”) which incorrectly stated that Remington’s submissions were due July 9, 2018.

11It appears that part of the confusion resulted from the initial direction at the case conference to have Remington submit their submissions on July 9, 2018, but when the order was drafted it became clear that the proper approach was to have Remington who, like Tarion, was requesting the particular relief, proceed first. Certainly, it is the issued Order that governs by which date submissions need to be filed. The Case Conference Report, at footnote 3, explained this clarification and alerted the parties. This resulted in Remington’s understandable confusion which was further complicated by it apparently not receiving the Order and Case Conference Report from the Tribunal. In these circumstances, Remington should not have to bear the burden of the Tribunal’s administrative oversight.

12Since S.J. received Remington’s submissions on July 9, 2018, and filed his submissions on the same day, it could potentially be said that he was prejudiced by not having the benefit of Remington’s submissions in preparing his responding submissions. In that respect, when the discrepancy of the submission dates became apparent, the Tribunal wrote to the parties on July 10, 2018, requesting if they were agreeable to changing the submission date for the appellant to July 13, 2018. Tarion and Remington were both agreeable to allowing S.J. additional time to prepare his responding submission which would have cured any potential disadvantage. Notably, the hearing date would not have to be moved or delayed. However, S.J. was not agreeable to this remedy and filed his motion to exclude Remington’s submissions arguing that for fairness and the timeline set out in the order this will only cause additional delays.

13Finally, in response to this matter, counsel for Remington explained in email correspondence dated July 10, 2018, that this was an inadvertent error and also that she experienced some personal extenuating circumstances at the time of receipt of the Case Conference Report and Notice of Written Preliminary Hearing that led her to notice the discrepancy in the dates after the due date for the submission had already passed.

14Part of the mandate of the Tribunal is to provide a fair, impartial and efficient way to resolve disputes. Cooperation and goodwill amongst parties plays a crucial role in meeting these objectives. I would have expected that a brief indulgence of mere days, without any clear prejudice to the appellant, given the clear discrepancy in the Notice and Order, and given the passing of a loved one, was a reasonable request in these circumstances and something that S.J. should have provided, thereby avoiding the necessity of this motion. I note here that S.J. filed his submissions on July 9, 2018 and did not request additional time.

TARION’S MOTION TO ADD REMINGTON AS A PARTY:

The Appellant/S.J.

15In submissions, S.J. argues that adding the builder will not be efficient and will merely complicate this matter. He explains that Tarion already has all of the relevant documentation required to resolve the issues in dispute.

The Respondent/Tarion

16Tarion submitted that Remington has a significant interest in this proceeding for four main reasons:

a. any award against Tarion generally becomes the liability of Remington;

b. participation will ensure that the best and most-relevant evidence is brought forward to address the warranty issues;

c. Remington’s involvement can result in a significant reduction or elimination of its liability depending on how the parties arrange to have repairs done; and

d. it provides an opportunity for Remington to engage in meaningful and early resolution discussions.

The Builder/Remington

17Remington adopted everything that Tarion submitted and added that it will be prejudiced if it cannot call its own witnesses such as Mr. Scott Rowland, a construction framing expert, who could best respond to the allegations or put forth relevant documents. It also added that Remington’s ability to challenge the correctness of any Tribunal decision would be limited or non-existent if it was not a party.

THE LAW:

18S. 16(4) of the ONHWPA names Tarion, homeowners and such other persons who required a hearing as parties but not builders. The term "such other persons" clearly gives the Tribunal the jurisdiction to add persons or parties other than the owner/appellant and Tarion.

19In the exercise of controlling its process, the Tribunal has established rules, which apply to its proceedings. In particular, Rule 3.6 of the Tribunal’s Common Rules of Practice and Procedure (the “Rules”) sets out the following consideration for adding parties to a proceeding:

3.6 ADDED PARTIES

The Tribunal may add a person as a party to a proceeding if the person has a significant interest in the proceeding.

20Therefore, Rule 3.6 explicitly allows the addition of parties in the discretion of the Tribunal.

ANALYSIS:

21In reviewing this matter before me today, I am convinced that this proceeding is of great importance to Remington. That, however, is not the test as to whether or not they should be added as a party. Nor is the test of what is in the best interest of the parties, as Tarion submits.

22It is clear that the Tribunal is empowered to add a person as a party (including builders) in appeals if they have a “significant interest”. The words “significant interest” are not defined in the Rules or the ONHWPA.

23The Black’s Law Dictionary defines the word “significant” as an “embodying or bearing some meaning…of special importance; momentous.”¹ Collectively, “interest” refers to “any one right, privilege, power or immunity.”² Drawing on this guidance, in assessing whether Remington has a “significant interest” when read in the context with the remaining words “in the proceeding” I interpret this phrase to mean a crucial, unique or important interest that is not remote and may ultimately impact or affect the result of the hearing or have a significant interest in the outcome of the proceeding. In my view, a “significant” interest is not trite, minimal or insignificant – it is a high threshold and must be something great, momentous or vital to the proceeding. Simply put, in my view, Remington’s presence before the Tribunal is necessary to ensure that all matters may be effectively and completely determined and adjudicated upon and it has a right to defend itself to protect its interest.

24In exercising my discretion, I am persuaded by the submissions and evidence that Remington should be granted party status in this case for the following reasons.

25This is a unique case and can be distinguished from M.W. and D.W. v. Tarion Warranty Corporation³ because the appellant has been before the Tribunal before regarding the very same home and what appears to be similar alleged defects. S.J. made a 30 day claim to Tarion for a number of alleged breaches in construction including an issue related to the framing of the house. A hearing took place in August 2017, and a decision was released on September 27, 2017. A Reconsideration was rendered on January 26, 2018, which upheld the Tribunal decision. Significantly, Remington participated in that hearing as an added party. I note that, at paragraph 95, Adjudicator Spencer set out the framing issue as being in dispute. With respect to this current matter (being the items listed on the Year End Form), the appellant has also included the very same framing issue as part of this dispute – something that appears to have already been adjudicated upon. Indeed, Tarion’s Decision Letter dated March 15, 2018, explains that this item is a repeat from the 30-Day case that the Tribunal has already ruled on. My review of Tarion’s Decision Letter with respect to the items listed on the appellant’s Year–End Form that forms the basis of this appeal is that 9 of the 19 listed defective items (#1, 3, 8, 11,12,15,17 and 19) have already been ruled on by the Tribunal and denied.

26The purpose of an appeal to the Tribunal is to determine whether there is merit to a claim for breach of the statutory warranty which was denied by the warranty program.⁴ In particular, a key issue as part of this dispute is an alleged defect related to the framing of the house which has been the main focus of S.J.’s complaint. Indeed, Remington explains that all of their homes in subdivisions, including the appellant’s, are based on 2” x 6” (exterior limited interior) and 2” x 4” (interior) materials. In response, as I understand the appellant’s position, the entire framing of his home should have been 2” x 6”. If this was found to be a breach of warranty, it would be a substantial breach, and likely would have a wider impact and expose Remington to significant financial loss.

27Remington submits that the issue of the framing is a significant one since the method of framing is found in all the homes built of S.J.’s subdivision and if the Tribunal were to find that the framing in S.J.’s house were warranted that would raise a concern with respect to all the other homes in the subdivision potentially exposing Remington to significant damages. The same argument applies to the alleged defective shower stall in the master bathroom and whether there is a design flaw.

28The Affidavit of Heidi Scheibmayr dated July 2018, filed in support of this motion by Remington, also explains the wider impact that any breach of the framing issue may have on Remington beyond S.J.’s home. Specifically, it deposes that all of the homes in S.J.’s subdivision, and other of Remington’s subdivisions are built in the same fashion (ie. 2” x 4” interior materials used) and “if this were found to be a breach of warranty by Tarion or the Tribunal, it could expose Remington to significant financial loss.” As well, any alleged design flaw with respect to the shower stall, would also have a wider impact on Remington as the same shower stall is installed in virtually all of the homes Remington has built. This evidence is unchallenged by the appellant.

29Tarion supports Remington’s request to be added as a party and also explains that pursuant to the ONHWPA any award by the Tribunal against Tarion to make payments, statutorily and contractually becomes the liability of Remington.⁵ Similarly, Remington submits, that if S.J. is successful resulting in a payment to him by Tarion, Remington will likely be invoiced by Tarion for what it pays plus 15%. Therefore, it is evident to me that given the wider implications that the framing issue, and also that Remington may have to indemnify Tarion, any adverse decision on this issue will directly and significantly impact Remington.

30It seems to me that such a major alleged defect as the framing of a home is also fundamental to the integrity and quality of workmanship of the entire house. It is also a defect that appears to be of special importance, complex in nature and best addressed by the builder of the home who has the requisite specialized background and knowledge to address this issue at the hearing and present the best evidence as to allow the Tribunal to effectively decide this issue. As just one example, I note here that in the first hearing, Remington did call Mr. Scott Rowland, who has significant expertise in industry standards of construction which the tribunal considered in arriving at its decision. If Remington was not a party to the proceeding, this witness likely may not have been called to assist the Tribunal. For this reason, I do not accept the appellant’s submissions that Remington does not have any additional insight or knowledge of the residence as far the framing issue. Such knowledge may ultimately impact the result of the proceeding.

31Moreover, with respect to the design of the shower stall, Remington’s evidence is that at the prior hearing it produced and disclosed internal records and communications, plans, shower design information and other materials, such of which was not included in S.J.’s or Tarion’s materials. It appears to me that Remington’s participation will ensure that Tribunal has the best available materials and information in arriving at its decisions. The best available evidence should always inform the Tribunal’s decision and it is appropriate that the Tribunal canvass all evidence.

32In my view, due to the complexity of the issues in dispute, the only way the Tribunal can determine whether there are in fact defects is to have Remington before it as a party, with full rights to call evidence, including expert evidence which appear to be required to understand the more complex nature of the issues related to the framing and design of the shower stall, cross examine the witnesses (especially since there appears to be statement or admission at the first hearing by S.J. that he agreed that the framing issue was not in breach of the Ontario Building Code) and make submissions.

33In addition, as support for Remington’s position, the Affidavit of Heidi Scheibmayr dated July 2018, deposes at paragraph 15 that: “I have closely reviewed his year-end claim and in my opinion he is again asserting the same claims that have been denied by Tarion and rejected by the Tribunal.” The appellant in his written submission, or any responding Affidavit, has not refuted this assertion although his Notice of Appeal dated March 26, 2018, does state that the one year claim is separate from the year end claim and he has new evidence and new issues.

34Therefore, for this reason alone, given that Remington was allowed to participate in the Tribunal hearing in 2017, with the same parties, coupled with evidence before me that numerous of the defects in the current appeal appear to be the same (or at least related), the builder does have a significant interest to participate in this proceeding. More to the point, any other outcome, would deny Remington the opportunity to be heard and raise potential defences related to the possibility that some of the issues (i.e. framing) have already been dealt with by the Tribunal in a prior hearing, if any, to be properly and expeditiously addressed.

35More generally, parties before a Tribunal hope to have their legal issues resolved as expeditiously as possible and reduce multiplicity of proceedings. What they do not expect is to have the same issue re-litigated before a different adjudicator at the request of a losing party. A party should not have to face the same claim twice. This is particularly true in disputes over new home warranties, such as this one, where the same defects may be brought up again at the different time intervals related to the mandatory warranty periods. It appears from the evidence, that there is significant overlap between this proceeding and the last one, and that given that Remington had party status at the last one, it would be unfair to prevent them from participating in this application which appears to deal with the same or very similar issues. It is also in the interest of justice to avoid multiplicity of proceedings and re-litigation of the same issues.⁶ For this reason, it is clear to me, that the presence of Remington would be necessary for determining the issues in dispute and they would be denied procedural fairness if they were not given this opportunity.

36As well, if Remington was not allowed to participate, and the appellant was successful, we could potentially have inconsistent decisions on the same facts. This would not be consistent with the Tribunal’s objective of ensuring a fair and efficient resolution of the issues once and for all. In this sense, denying Remington participation may ultimately affect the result of the hearing. This is another reason why Remington’s participation is crucial and of special importance as they have an important point of view to contribute to the issues in dispute.

37Having participated in the first appeal by defending itself and calling witnesses, and given the appellant appears to be raising the framing issue again, it should have been obvious to him from the outset that Remington would seek to participate in this matter and it would be unfair not to allow them to do that given the prior history of these proceedings. I also do not accept the appellant’s submissions that he will somehow be prejudiced by adding Remington which will add more time and complicate this matter. I agree that there will be some additional time, but not great complications. To the contrary, it will allow the Tribunal to have the same parties that were part of the August 2017 hearing before it, have the best evidence available and allow any preliminary issues related to defects that have already been dealt with by the Tribunal in a prior hearing, if any, to be properly and expeditiously addressed.

ORDER:

38Having considered the evidence and submissions of Tarion, Remington, and the homeowner, I find that Tarion has demonstrated that Remington should be added as a party to this appeal. Tarion’s motion is granted. Remington should be designated as an added party and the style of cause amended.

LICENCE APPEAL TRIBUNAL

___________________

Cezary Paluch, Member

Footnotes

1. 1Black’s Law Dictionary 10th ed. Thomson Reuters, page 1594.
2. 2Black’s Law Dictionary, 10th ed, Thomson Reuters, page 934.
3. 3M.W. and D.W. v. Tarion Warranty Corporation, 2018 ONLAT ONHWPA 11020.
4. 4See Decision Letter March 15, 2018.
5. 5Tarion’s Submissions para. 41 and 42. See also s. 1 (4) of Terms and Conditions of Registration of Builders and Vendors, RRO 1990, Reg. 894 which states that the registrant [builder] shall indemnify and save harmless the Corporation [Tarion] and the insurers…from any loss which they or any of them may suffer by reason of the registrant’s failure to diligently perform or cause to be performed all obligations imposed under the Plan and under any agreement made with the Corporation in respect of the Plan
6. 6Ontario New Home Warranty Program v. Ontario (Commercial Registration Appeal Tribunal), 1998 CanLII 18854 (ON CTGD), [1998] O.J. No. 1948 (OCJ) at para. 23