File: 12299/ONHWPA
Appeal of a Decision Letter of Tarion Warranty Corporation under the Ontario New Home Warranties Plan Act, R.S.O 1990, O.31, to Disallow a Claim
Between:
Natalia Karasik & Leonid Kaplan
Appellants
-and-
Tarion Warranty Corporation
Respondent
DECISION & ORDER
ON REQUEST TO ADD A PARTY
ORDER MADE BY: Jennifer Friedland, Member
Overview
1This is a decision following a request made by the respondent, Tarion Warranty Corporation (“Tarion”), to add Rodeo Homes Sharon Inc. (the “builder” or “vendor”) as a party to these proceedings.
2The appeal relates to Tarion’s decision dated August 21, 2019 to deny the appellants’ claim for delayed closing/occupancy compensation under section 14 of the Ontario New Home Warranties Plan Act, R.S.O 1990, O.31 (the Act).
3The issue to be determined on the appeal is whether the appellant is entitled to delayed closing compensation, under s. 13 of the Act and O. Reg. 165/08. This will involve a determination of whether an amended purchase and sale agreement signed by the appellant contained a valid and enforceable waiver of delayed closing compensation. There is no dispute over the quantum of the appellants’ claim, if the appeal succeeds. The parties agree that if the appellants are entitled to delayed closing compensation it will be $7500, which is the upper cap to such claims.
4At a case conference held on October 21, 2019, I heard submissions from the parties with respect to Tarion’s request to add the builder as a party. On consent of the parties, the builder participated on the conference call and also made submissions notwithstanding that it was not yet, and might not ultimately be made, a party. Only Tarion provided submissions in writing.
5For the reasons that follow, I am denying Tarion’s request to have the builder added as a party.
The Law
6Section 16(4) of the Act deems homeowners and Tarion as parties. The section also provides that “such other persons as the Tribunal may specify” may be added as parties but does not state the test for determining this.
7Rule 3.6 of the Licence Appeal Tribunal, Animal Care Review Board, and Fire Safety Commission Common Rules of Practice & Procedure, Version I (October 2, 2017) (the Tribunal’s Rules) sets out that to add a party, that party must have a significant interest in the proceeding.
Issue
8The issue that I must determine is whether the Tribunal should exercise its discretion to add the builder as a party to the appeal. This turns on whether I find that the builder has a “significant interest” in the proceedings. My conclusion is that the builder does not have a significant interest in the proceedings and should not be added as a party.
The position of the parties
9In its written submissions, Tarion relies on the following factors in support of its request to add the builder as a party:
- Under the Act, the Vendor provides the statutory warranties on the home of the Appellant(s). The Act requires the Vendor to indemnify Tarion for compensation Tarion pays as a result of the Vendor breaching those warranties. If in this proceeding the Tribunal orders Tarion to pay compensation to the Appellant(s), the Vendor may be liable to Tarion.
- The Vendor should, therefore, be given the opportunity to represent its own interests and participate in the proceeding by retaining its own legal counsel, presenting its own evidence and making its own submissions.
- Participation of the Vendor will benefit the case conference and hearing because of the potential for additional, helpful evidence and participation in settlement discussions. In [Tarion’s] experience, appeals are much more likely to resolve without a hearing when the Vendor is added as a party.
10In oral submissions, Tarion further submitted that the builder has a unique and specialized knowledge and can offer the best available evidence; and that natural justice requires that the builder be added as a party.
11The builder consents to being added as a party and essentially adopts the reasons of Tarion.
12The appellants oppose the request and ask that I follow 11837 v. Tarion Warranty Corporation1 where the Tribunal refused to add a builder as a party, notwithstanding that no party opposed the request.
Analysis
13In coming to the conclusion that the builder does not have a significant interest in the proceedings, I adopt the reasoning in 11837 ONHWPA and also M.W. and D.W. v. Tarion Warranty Corporation.2
14In MW & DW, Associate Chair Batty reasoned as follows, starting at paragraph 27:
[27] Builders may only be added as parties in appeals at the discretion of the Tribunal. The Tribunal is not fulfilling its statutory mandate if it decides the question as a matter of rote without considering the merits of the specific request.
[28] Starting from first principles, we need to remember there are generally two ways to participate in a proceeding at the Tribunal: as a witness or as a party. Witnesses have a limited role. They have no independent right to participate in a hearing; their participation is contingent on a party calling them to provide evidence. In contrast, parties have the right:
- to be represented by counsel in the proceeding;
- to obtain disclosure, introduce evidence, call witnesses, bring motions, and raise objections;
- to make submissions about how the law should apply to the facts and what orders the Tribunal should make; and,
- to participate in all hearings and case conferences.
[29] While a person may have important and relevant information that homeowners or Tarion may wish to put into evidence that is not reason enough to grant that person the extensive rights enjoyed by a party. If builders are named as parties in appeals under s.16 of the Act, it should not just be for the reason that their evidence is needed by the Tribunal.
[30] To be added as a party under s. 16(4), there should be evidence that the outcome may result in an order affecting that person’s interests. An interest is demonstrated by providing evidence that a person’s substantive rights are being decided or affected by the potential order of a Tribunal. To decide this question, the Tribunal needs to consider the purpose of the legislation, the subject matter of the proceeding, the potential party’s interest in the proceeding, and the effect on that interest.
[31] In conclusion, in deciding whether or not to add CHL as a party, the Tribunal must apply Rule 3.6 and satisfy itself that CHL has a significant interest in the proceeding. The Tribunal needs to consider the following questions when hearing this motion:
Based on the evidence before the Tribunal, does CHL have a significant interest in this particular appeal? To that end, what substantive rights of the builder are being decided, or adverse effects could it face, which justify CHL being named as a party in the appeal?
15Ultimately, in that case, the Associate Chair found that neither the parties nor the builder had provided sufficient evident to establish that the builder had a significant interest in the proceeding that justified it being added as a party pursuant to Rule 3.6.
16I come to a similar conclusion here. The request to add the builder as a party came from the respondent, Tarion. It was not the builder’s request and neither Tarion nor the builder provided evidence that the builder had a significant interest in the proceedings. Rather, the builder’s interest was identified simply as being the same as applies to virtually all builders in Tarion cases – that is, that it may become liable to indemnify Tarion if the appeal succeeds. In my view, this possibility does not, in and of itself, mean that the builder has a significant interest in the case. As stated in MW & DW:
If Tarion’s reasons for adding CHL as a party were to be followed, a request to add a builder would have to be granted in every appeal, which would undermine both the Act’s objective of avoiding court-like complexity for homeowners and the Tribunal’s discretion under s. 16(4) of the Act.
17While there may be some cases where the quantum of the damages claimed by an appellant may contribute to a finding that a builder has a significant interest in the proceedings, in this case the parties agree that the appellant’s claim is capped at $7500. I cannot conclude that $7500 amounts to a significant interest to the builder and there was no evidence presented to the contrary.
18In terms of the builder having the opportunity to present its own case, represent its own interests, obtain counsel, make submissions etc., while these may be reasons why a person who has a significant interest may seek to be added as a party, this result cannot be relied on to presuppose that very interest. This is also the reason why a natural justice argument fails in this case. It is only if a person has a significant interest in the proceedings that it might be a failure of natural justice not to let that person participate in the proceedings with all the rights of a party.
19While I do agree with Tarion and the builder that the builder’s evidence will be central to this appeal given that the substance of the appeal involves a contract between the appellant and the builder, this still does not translate into the builder having a significant interest in the proceedings. It only means that the builder will be Tarion’s primary witness.
20Finally, I note that even if a proposed party is found to have a significant interest in a proceeding, this still does not lead inexorably to the conclusion that it should become an added party. The Tribunal must still exercise its discretion carefully and mindful of procedural fairness as it impacts all parties, and in particular an unrepresented appellant. In this case for example, it is apparent that Tarion and the builder are aligned in interest. This is clear from Tarion’s denial letter which appears to be based solely on information provided by the builder. In my view, it would create unfairness for the appellant in this case to be cross-examined by two parties aligned in interest and to compete against two closing submissions. This further weighs against adding the builder as a party. The evidence of the builder can be called by Tarion and Tarion can defend its own decision to deny the appellant’s claim, just as the legislation contemplates.
Order
21The respondent’s request is denied.
LICENCE APPEAL TRIBUNAL
__________________________
Jennifer Friedland, Member
Released: November 4, 2019
Footnotes
- 2019 CanLII 43905 (ON LAT) (“11837 ONHWPA”)
- 2018 CanLII 43768 (ON LAT), (“MW & DW”)