Tribunals Ontario
Licence Appeal Tribunal
Date: 2021-07-09
An appeal from 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
Between:
Amanda Mashinter Appellant
And
Tarion Warranty Corporation Respondent
And
Dennis James Bruner Added Party
DECISION AND ORDER
Adjudicators: Marisa Victor, Member
Appearances: For the Appellant: Self-represented For the Respondent: Michael Owsiany, Counsel For the Added Party: Self-Represented
Heard by videoconference: June 14, 2021
OVERVIEW
1Amanda Mashinter, the appellant, has appealed a decision letter issued on December 7, 2020 (the Decision Letter) by Tarion Warranty Corporation to disallow a claim for warranty coverage under section 14(1) of the Ontario New Home Warranties Plan Act, R.R.O. 1990 (the Act).
2The appellant purchased an unfinished home on the understanding from the added party, Dennis Bruner, that the home had warranty coverage under the Act.
3The Decision Letter issued by the respondent denied that the home was eligible for warranty coverage because it was only partially completed. It was therefore not covered under the Act because it was not capable of occupancy at the time of the purchase and sale of the home from Mr. Bruner to Ms. Mashinter.
ISSUE
4The only issue in dispute is whether the home is eligible for warranty coverage under the Act.
RESULT
5The home was not capable of occupancy on the day it was transferred from the added party to the appellant and therefore it is not eligible for coverage under the Act.
EVIDENCE
The Appellant’s Evidence
6The appellant’s realtor, Stuart Coleman, testified that he showed the property to the appellant and her husband. The listing details of the property described that it was unfinished and specifically stated that the build was registered with Tarion. The listing included a comment that the purchaser of the home could save money by finishing the construction themselves.
7The appellant testified on her own behalf. She explained how she and her husband had viewed the property and purchased the property. On closing, the property was to be fully framed with significant work to be done. After the purchase and sale was complete, several deficiencies came to light including that the ABS plumbing had to be redone, there was not enough ventilation in the roofing, and the retaining wall did not have a rebar and also had to be redone. The appellant also testified that she had a warranty certificate from Mr. Bruner showing that the home was covered by the warranty program. The appellant explained that the purchase of the home was completed in July 2020 but that occupancy was not granted until October 2020.
8In cross-examination, the appellant confirmed that the deficiencies came to light after the closing. She confirmed that the plumbing was done to a rough-in state but did not include hot and cold water, that there was no exterior cladding on the home, that the electrical was also done to a rough-in state, that there was no heat source or duct work and no working bathroom.
The Respondent’s Evidence
9Patricia Lutz, Director of Customer Services in the warranty services department, testified for the respondent. She testified that a customer service representative took the initial call from the appellant but, after further information came to light about the incomplete construction of the house, the file was sent to Ms. Lutz for review.
10Ms. Lutz explained that the Act requires a completed home with legal occupancy in order for coverage to apply. The home must be sold by a person defined as a vendor under the Act and the home must be sold to an owner as defined by the Act. Ms. Lutz said it was significant that the owner was unable to obtain occupancy until October 2020, well after the purchase and sale of the home.
11Ms. Lutz agreed that the added party was a registered builder and had enrolled the home with the respondent. She explained that the home was enrolled long before the completion date, as is typical. The added party enrolled the home and provided in advance the projected occupancy date which was July 17, 2020. What was unusual in this case was that the home was sold in a state that was not ready for occupancy.
12Ms. Lutz explained that the home also did not qualify under the warranty available for a “contract home” where a homeowner owns the land and hires a registered builder to build a home.
13Ms. Lutz also confirmed that Mr. Bruner did not have any previous issues with Tarion Warranty prior to this file. She stated that he should have been aware that the home was not eligible for coverage. Ms. Lutz testified that the respondent does not have enough staff to check in advance whether homes should be covered by the warranty program and relies on builders to know what is or is not covered by the program.
14In the end, Ms. Lutz stated that she believed the home did not qualify for warranty coverage under the Act as it had more than one essential element of the home that was not completed at the time of purchase and sale. She issued the Decision Letter based on this understanding.
15Mr. Bryan Stott, Manager of Stakeholder Relations, Early Resolution and Outreach also testified for the respondent. He testified that section 1.3.3.4 of Regulation 332/12 (the Ontario Building Code) defines an occupancy permit. In essence it requires that a home be substantially complete. To meet the test, the home should be protected from water penetration, should have roughed-in electrical, plumbing that includes a sink, toilet and a place to bathe, rough grading and a heating system. He noted that not everything needed to be complete. For example, one working bathroom would suffice even if the home has multiple bathrooms. He noted that one item could be missing (for example, external cladding), but that the home had to be substantially complete.
16He testified that the appellant herself had confirmed prior to the Decision Letter that she could not obtain the occupancy permit until the rough grading was complete and that work was completed in October 2020, months after the sale closed.
Added Party Evidence
17Mr. Bruner testified on his own behalf. He explained that he thought that the trades could be warranted even if the entire home was not complete and that it was his mistake that he had misunderstood the warranty program. He agreed that the home was not ready for occupancy at the time of the purchase and sale to the appellant; there was no cladding, no insulation or vapour barrier, no kitchen, and the plumbing was not done to a rough-in state.
LAW AND ANALYSIS
18Section 1 of the Act contains the following relevant definitions:
a. Builder: a “person who undertakes the performance of all the work and supply of all the materials necessary to construct a completed home;”
b. Home: including a “self-contained one-family dwelling;”
c. Owner: a “person who first acquires a home from its vendor for occupancy and the persons successor’s in title;” and
d. Vendor: a “person who sells a home not previously occupied to an owner and includes a builder who acts as such under a contract with the owner.”
19Section 13(1) of the Act requires that there be a “vendor” of a “home” and that the “home” is fit for habitation.
20Section 13(3) of the Act requires the “vendor” of a “home” to deliver to the owner a certificate confirming the completion of the “home”, in other words, a certificate that the home is fit for occupancy.
21Section 1.3.3.4(4) of the Ontario Building Code requires that a permit authorizing occupation of a building shall be issued where the structure of the building is “substantially complete.” This includes requirements for the building envelope, the water supply, sewage disposal, lighting and heating systems, the plumbing fixtures, and drainage system.
22A plain reading of the Act shows that the home was not eligible for warranty coverage at the time of the purchase and sale. The evidence clearly establishes that the home was still under construction and lacked numerous elements in order to qualify as substantially completed and fit for occupancy under the Ontario Building Code. The home lacked a vapour barrier and was therefore not protected from the elements. There was no working bathroom, no hot and cold water and no heating system. Externally, it lacked cladding and the grading was not done to a rough-in shape. There was really no debate about the state of the home. It was not until three months later that the appellant had completed enough of the remaining work to obtain the occupancy permit.
23Given the facts of the case, the appellant could not qualify as an owner under the Act as she did not purchase a home from the vendor “for occupancy.” Mr. Bruner was not a vendor as he was not selling a “home” not previously occupied and he was not a builder because he was not undertaking the work to build a completed home.
24The case law supports this determination. The respondent supported its submissions with the decision in Chang.1 That decision confirmed that parties could not contract out of the warranty program under the Act. In the analysis, the Chang decision determined that the intention of the parties as to whether they are or are not a builder under the Act was not relevant to the determination of coverage. This is because the Act supersedes any private agreement between the parties.2 Further, the decision held that the enrollment of the home with the Tarion warranty program is also of no relevance.3 In particular, the decision notes that “Many times homes have been enrolled but due to exemptions within the legislation are not covered by the Program.”4 This describes the situation in the case before me.
25While the Chang decision is not binding on me, I find that it is persuasive. The Chang decision has also been previously relied upon by the Licence Appeal Tribunal.5 The parties cannot privately determine whether or not they are covered by the Act. While in Chang the parties attempted to contract out of the Act and could not, here the parties could not contract to be covered by the Act when the unfinished home did not meet the minimum requirements for coverage under the Act.
26The situation facing the appellant is unfortunate. The home was held out to her as covered by the warranty and she relied on that representation. Mr. Bruner agrees that he too thought the home was covered. The respondent also agreed that this was an unusual situation and a reversal of a typical case where the parties believe the home is not covered but in fact it is. However, as stated in Chang, even though the Act is a piece of consumer legislation, there are exclusions that apply and there are limitations as to when protection shall be given. The Act is not meant to cover every home that is built in Ontario.6 While the appellant does not have coverage under the warranty program, she may have other legal avenues for recourse.
ORDER:
27Pursuant to s. 14(9) of the Act, the Tribunal dismisses the appeal and orders the respondent to deny the appellant’s claim as set out in the Decision Letter dated December 7, 2020.
LICENCE APPEAL TRIBUNAL
Marisa Victor, Member
Released: July 9, 2021