Licence Appeal Tribunal File Number: 15472/ONHWPA

In the matter of an appeal from a decision of Tarion Warranty Corporation under s. 14 of the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “Act”).

Between:

Newton and Leah Ormsby

Appellants

and

Tarion Warranty Corporation

Respondent

DECISION

ADJUDICATOR:

Bruce Stanton

APPEARANCES:

For the Appellant:

Newton Ormsby (Self-Represented)

Leah Ormsby (Self-Represented)

For the Respondent:

Ted Weredynski, Paralegal

Heard by way of written submissions

OVERVIEW

1Newton and Leah Ormsby (the “appellants”) appeal from a decision letter issued by Tarion Warranty Corporation (the “Tarion”) dated November 10, 2023 pursuant to s. 14(13) of the Act, in respect to deficiencies in their home.

ISSUES

2The issues in dispute are:

a) Was there a breach of warranty in items 15, 19, 26, 32, 33, 38, 44, 68, 73, 75 and 77 in the decision letter?

b) If so, did the appellants suffer monetary damage resulting from the breach?

c) Where a breach of warranty occurred and monetary damage resulted, what is the amount of the damages?

RESULT

3The appellants are disentitled to compensation for warranty claim items 15, 26, 32, 33, 73, 75 and 77 because they unreasonably denied the builder access to their home, and the appellants are barred from appealing warranty claim items 19, 38, 44 and 68 because they cancelled conciliation of them. It follows that I order Tarion to deny the appellants’ claims, pursuant to s. 14(19) of the Act.

ANALYSIS

Tarion warranty protection scheme

4This matter concerns the appellants’ claim of entitlement to compensation from Tarion’s Guarantee Fund (the “Fund”) for breaches of the new home warranty. It is therefore necessary to understand how the warranty scheme under the Act functions and what rights and responsibilities the appellants, the builder and Tarion have within it.

5Tarion is a private, not-for-profit corporation designated by the Lieutenant Governor-in-Council to administer the Act and manage its warranty scheme. Each new home constructed in Ontario for sale or built by a builder who contracts to carry out all of the construction on the home on behalf of the owners must be enrolled with Tarion with an enrolment fee paid prior to the commencement of construction.

6Tarion does not operate as an insurance company. Instead, its role is to ensure that builders comply with the statutory warranties set out in the Act. The warranties are those of the builder, not Tarion. The builder is also required to respond to warranty claims within certain defined time periods.

7If the builder does not repair or resolve a warranty claim within the prescribed time, a homeowner may request a conciliation, a process where Tarion assesses the unresolved items on the homeowner’s warranty form and decides whether they are covered under the warranty set out in the Act. The builder is given a further period after the date the homeowner requests the conciliation inspection to repair or resolve the claim items. A conciliation inspection is scheduled with a Tarion representative, and a representative of the builder typically attends.

8After the inspection, Tarion issues a Conciliation Assessment Report (“CAR”) setting out which of the unresolved claims are warrantable, i.e. constitute a breach of warranty, and which are unwarranted. If a claim item in the CAR is warranted, the builder has 30 days from the date the CAR is issued to resolve or repair the item.

9Under this scheme, the homeowner is obliged to provide reasonable access to the home for the builder to attempt to repair or resolve the defects being claimed under warranty, and access for Tarion to inspect the warranty claims and to determine if they constitute a breach of warranty.

10If the builder fails to resolve the warranted items within the statutory timeline, Tarion will then schedule a follow-up inspection with the homeowner to determine whether the builder has carried out repairs to the warranted items. If a warranted item remains unresolved, Tarion will arrange to carry out the repairs or provide cash compensation to the homeowner from the Fund.

11If a homeowner disagrees with Tarion’s warranty assessments in the CAR, they can request a decision letter, upon which further negotiation or mediation can continue between the homeowner and Tarion, or the homeowner may file an appeal with the Tribunal.

Events leading to the disputed issues

12Under s. 13(1) of the Act, the builder of a new home warrants that it is constructed in a workmanlike manner and is free from defects in material, is fit for habitation, and is constructed in accordance with the Ontario Building Code. Under the Act and the applicable regulations, the builder’s warranty is divided into three post-occupancy periods: 1, 2 and 7 years, each offering warranty protection for certain types of construction defects. This appeal is in relation to some of the appellant’s claims under the 1-year warranty.

13The appellants took possession of their home on April 16, 2021. On April 18, 2022, the one-year mark after taking possession, the appellants submitted their Year-End Form to Tarion, listing 92 interior and exterior deficiencies which they believed should be covered under the 1-year warranty.

14Under section 4.3(5) of O. Reg. 892 (the “Regulation”), the builder has 120 days plus a ten-day grace period, after receipt of the Year-End Form to repair or resolve the claims. If the builder does not repair or resolve the claims by then, the homeowner may request a conciliation.

15The appellants and the builder worked to resolve and address the one-year warranty claims during the 120 days following the Year-End Form submission but ultimately the appellants requested that Tarion conduct a conciliation inspection. That inspection occurred on December 6, 2022 and Tarion issued a CAR on January 14, 2023 (“CAR-1”). Of the 92 items in the Year-End Report, CAR-1 reported that 54 items were not warranted, 7 items were warranted, and 17 were withdrawn for a total of 78 items. I take note that 14 of the 92 items are not accounted for. The parties did not provide a reconciliation of the Year-end Form against CAR-1, therefore I conclude that the 14 items were either no longer in dispute by the date of the conciliation or were consolidated into other similar warranty claims. The appellants asked for a decision letter on the “not warranted” items in CAR-1 and Tarion issued it on March 7, 2023.

16Tarion issued a second decision letter on November 10, 2023 (the “DL”) which accounted for the “warranted” and “withdrawn” items (24 in total) from CAR-1 plus three claim items previously noted as “not warranted” for a total of 27 items. For clarity, of the 27 claim items listed in the DL:

a) Items 26, 90 and 92 had previously been listed as “not warranted” in CAR-1. These three items were included in the previous decision letter of March 7, 2023. Item 26 was later determined to be warranted during a re-inspection conciliation on March 6, 2023, item 90 (standing water in drainage area) was deemed to not be related to home construction, and item 92 was withdrawn during the case conference in January 2024. Of the three items, only item 26 remains in dispute;

b) 13 items were previously noted in CAR-1 as withdrawn and appear to no longer be in dispute;

c) Item 58 was deemed warranted and Tarion proposed $344.40 in compensation for this claim. Since item 58 is not listed as being in dispute in the Case Conference Report and Order (“CCRO”) of January 23, 2024, and having no other evidence to the contrary, I conclude that this warranty claim is resolved; and

d) The remaining 10 items are, in accordance with the CCRO, noted as being in dispute; however, three of them (items 38, 44, and 68) were previously withdrawn during the conciliation process and item 19 is noted as being under investigation.

17Accordingly, and in summary, this matter concerns only 11 of the disputed warranty claims listed in the DL and they will be analysed below as follows:

a) seven warranted claim items (15, 26, 32, 33, 73, 75 and 77);

b) three previously withdrawn claim items (38, 44 and 68); and

c) item 19, unwarranted defect under investigation.

Claim items 15, 26, 32, 33, 73, 75 and 77

18I find the appellants are disentitled to these claim items because the appellants denied the builder the opportunity to attempt to repair or resolve the warranted items. I therefore order Tarion to deny the claims on these items.

19As noted above, the warranty scheme under the Act provides the builder with specified periods of time to repair or address defects that Tarion has determined are breaches of warranty.

20Section 4.3(8) of the Regulation states that if an owner requests a conciliation, the builder shall have 30 days after the date of the homeowner’s request to repair or resolve all the claim items listed in the year-end form that are covered by a warranty.

21Although I was unable to find in either of the parties’ evidence the date the appellants requested the conciliation, an email from Tarion to the appellants on October 24, 2022 appears to respond to the appellants’ request for conciliation. Accordingly, the builder was to have had until approximately November 24, 2022 to repair or resolve these claim items.

22Section 5.1(3) of the Regulation provides the builder a further 30 days from the date on which the CAR is issued to complete the repairs or pay the compensation required in the report.

23CAR-1, following the conciliation inspection, was issued on January 14, 2023 for all the warranted items in dispute in this matter (15, 32, 33, 73, 75, and 77), and a CAR in respect to warranted item 26 was issued on March 6, 2023 (“CAR-2”).

24Pursuant to s. 5.1(3) of the Regulation, the builder was to have had until February 13, 2023 to repair or resolve claim items 15, 32, 33, 73, 75 and 77, and up to April 5, 2023 to repair or resolve claim item 26.

25Tarion submits that the builder was denied access to the home to attempt to repair or resolve the warranted items and argues that had the builder been permitted access, the repairs could have been carried out at the builder’s cost resulting in no claim against the Fund.

26Tarion relies on email correspondence it received from the builder, dated November 2, 2022, in which the builder states the appellants denied it access to the property to make repairs and attempt to resolve the claim items, and the builder’s position document in respect to the issues in dispute in this matter in which the builder states it has been denied access to the appellants’ home since July 2022.

27The email string included with the builder’s November 2, 2022 email to Tarion reveals that the appellants refused to schedule a time for the builder’s subcontractor to conduct carpet re-seaming until the builder provided a response to the appellants’ question of whether the property’s driveway was constructed in accordance with Town of Ajax specifications.

28The appellants submit that the builder has failed to meet its obligations under the warranty and repair provisions and despite numerous attempts to have the builder address and rectify the defects, its response has been inadequate, delayed, or completely absent.

29The Tribunal has recently found in Imperato v. Tarion Warranty Corporation, 2024 CanLII 23447 (ON LAT) (“Imperato v. Tarion”) that the homeowner was disentitled to warranty coverage because he unreasonably denied the builder access to the home to investigate and attempt to repair or resolve claims. As a result, the appellant was not entitled to compensation from the Fund. In Imperato v. Tarion, the adjudicator referenced the Tribunal’s decision in 5871 v. Tarion Warranty Corporation, 2010 CanLII 100819 which notes “of great importance .. is the right of a contractor to attend a home and carry out repairs or remedial work during the 30 days following a finding by Tarion that an item has been warranted.” In that case, the homeowners were deemed to have refused access to their home contrary to legislative requirements and therefore their warranty claim was denied.

30The appellants’ documents include emails which reflect their dissatisfaction with the builder over its alleged inattention to roof repairs and the removal of a dirt pile from their backyard; however, it is not clear that these concerns are at the root of the appellants’ refusal to allow the builder access to the property.

31The appellants have not directed me to their reasons for denying the builder access to the property during the 30-day periods the builder ought to have had to attempt to repair or resolve the warranted items. Those periods are as follows: approximately October 24 to November 24, 2022, January 14 to February 13, 2023 for CAR-1, and for item 26 only, March 6 to April 5, 2023 for CAR-2 (the “builder repair periods”). Absent their reasons, I am unable to determine if their denying the builder access was reasonable.

32The appellants’ evidence lists no occasions during the builder repair periods where the builder attended the property to conduct repairs. Taken together with Tarion’s evidence describing the builder’s lack of access, I find that the builder was denied access to the property for the purposes of affecting repairs and attempting to resolve the warranted claim items during the builder repair periods.

33It goes without stating that the appellants have every right to decide whom may enter their home; however, under this warranty scheme, builders have the right to investigate and make repairs and attempt to resolve warranty claims within the time periods set out in the Act and Regulation. I agree with the Tribunal finding in Imperato v. Tarion. If a homeowner wishes to pursue a warranty claim, they have an obligation to permit the builder reasonable access.

34On April 25, 2023, Tarion asked the appellants if the builder had resolved the warranted items in the CAR-1 and CAR-2. The appellants responded that the builder had not resolved any of the items. The evidence before me suggests that contrary to the requirements of the Act and Regulation, the builder was not permitted access to address them. Had the builder been provided access, it could have completed repairs to the warranted defects at its cost, mitigating any compensation that might have otherwise been obligated by Tarion or the Fund.

35Accordingly, I order Tarion to deny claim items 15, 26, 32, 33, 73, 75 and 77. The appellants are not entitled to compensation for the breaches of warranty because the builder was not permitted access to the property during the builder repair periods for the purposes of repairing and attempting to resolve these warranted defects.

Claim items 38, 44 and 68 - previously withdrawn

36I find the appellants are barred from appealing claim items 38, 44 and 68 because they cancelled the conciliation of them.

37As noted above, the appellants requested conciliation of these items after the end of the 120-day builder repair period. CAR-1 reports these items as withdrawn.

38In their submissions for the hearing, however, the appellants claim each item constitutes a breach of warranty, they have suffered monetary damage from these defects, and they propose estimates to repair and resolve the defects using outside contactors.

39The appellants’ submissions give no comment or explanation as to why the claim items were listed as “withdrawn” in CAR-1, nor do they refute Tarion’s claim that they were withdrawn. The appellants had Tarion’s submissions in this matter at or around April 15, 2024 and had the opportunity to provide reply submissions but the Tribunal received no reply submissions from them.

40Tarion submits that these claim items were withdrawn during the conciliation process that commenced in October 2022 and proceeded through to January 2023. Tarion submits that because the appellants withdrew the claim items during conciliation, it did not undertake any further inspections to determine their warrantability. Tarion submits that it was therefore deprived of an opportunity to inspect the items and mitigate any damages. Tarion made no submissions on the relief expected of the Tribunal in respect to these claim items.

41The claim items requested for conciliation included all claim items on the Year-End form that were not repaired or resolved by the builder during the 120-day builder repair period. Items 38, 44 and 68 are listed in CAR-1. It is evident that the builder did not resolve them and the appellants initially intended they be included in the conciliation.

42Section 4.3(7) of the Regulation stipulates that if a homeowner cancels the conciliation requested, the homeowner is deemed to have withdrawn all claim items listed on the year-end form. I interpret s. 4.3(7) as similarly applying to the cancelation of any portion of the claim items requested for conciliation. i.e. if, after requesting conciliation, the homeowner cancels the conciliation of one or more of the claim items scheduled for the conciliation inspection, the homeowner is deemed to have withdrawn those items from the year-end form. Although these claim items are listed in the DL, I find that they are deemed withdrawn and effectively no longer in dispute for the purposes of this proceeding.

43Once a claim item has been withdrawn, it can only be revived as a live claim under s. 4.3(9) of the Regulation. Section 4.3(9) provides that an item withdrawn from the Year-end Form can be resubmitted in accordance with s 4.4 (second year form) or s. 4.6 (major structural defects) provided the warranty period applicable to the claim item has not yet expired. Since the two-year warranty period has expired and items 38, 44 and 68 do not involve major structural defects, s. 4.3(9) provides no relief for the appellants to resubmit these claims.

44There is no provision in Act for the Tribunal to revive a warranty item that was previously withdrawn. The Tribunal cannot order Tarion to restart the conciliation process because there is no provision in the Act that a warranty claim item that was withdrawn by a homeowner at the time of conciliation can be ordered resumed as part an appeal to the Tribunal. Under s. 14(19) of the Act, the Tribunal can only direct Tarion to take the actions it considers Tarion ought to take in accordance with the Act and the Regulation. There is no provision for reviving a warranty claim once it has been withdrawn, except s. 4.3(9) of the Regulation as noted above.

45I find that pursuant to s. 4.3(7) of the Regulation the conciliation of these three warranty items was canceled by the appellants. They are therefore deemed withdrawn and despite being listed as “in dispute” in the CCRO they are not properly before Tribunal. The appellants are barred from appealing these withdrawn claim items.

Claim item 19

46I find the appellants are barred from appealing claim item 19. By denying access to the subject area (attic space, low insulation levels) during the conciliation process, the appellants effectively canceled the conciliation of this warranty item.

47As noted above, the appellants requested conciliation of this items after the end of the 120-day builder repair period. CAR-1 reports this item as under investigation.

Dispute over whether access to the attic space was provided

48The appellants claim the lack of insulation and other deficiencies in the attic constitute a breach of warranty from which they have suffered damages and they seek relief in the amount of $14,275.00, a contract by Ajax Roofing to increase insulation levels as part of the contract to completely replace the roof shingles (claim item 77). The appellants rely on photos of the attic space and evidence from a Home Inspection Report by Steve Blashin that there are low insulation levels in attic.

49The appellants submit that multiple requests were made to the builder and to Tarion to inspect the attic space in relation to claim 19 with no success.

50The appellants submit that the builder had “7 days of free rein inside our house” but did not inspect the attic insulation item. The appellants submit that “Tarion never has [inspected it] either”. The appellants rely on an email from the builder, copied to Tarion, dated July 4, 2022, in which the builder lists the status of claim items from the Year-end Form categorized into “warranted”, “completed”, “items for further review”, and “not warranted”. In the email, the builder referred to the list as being the “things it will and will not address” during its attendance at the property the week of July 11 to 15, 2022.

51The email notes item 19 as being in the “for further review” category. It is not clear from the email whether item 19 was in the category of “will” or “will not” be addressed during the builder’s attendance at the home.

52The appellants have not directed me to any documents that support their claim that arrangements for Tarion or the builder to inspect the attic space were attempted, or why it was that their attempts failed. In the absence of any documents to the contrary, I conclude from the July 4, 2022 email that a review of item 19 by the builder was pending, i.e. that the builder intended to review and attempt to address it.

53Tarion submits that during the conciliation inspection in December 2022, the appellants denied it access to the attic area, but the claim item was given a status of “under investigation”. Tarion submits that the builder agreed to inspect the attic space and provide Tarion with the results of their findings; however, no report of the builder’s inspection, if it did occur, was ever provided. Tarion undertook to get a third-party consultant to inspect the attic to determine the extent of the reported defect and sought, by email on January 24, 2023, the appellants’ permission for the third-party consultant to inspect the attic area. Tarion submits that the appellants did not respond to the email. Tarion submits that it is prepared to investigate this item further if the appellants allow access

54The appellants submit that multiple pleas were sent to Tarion, even up to March and April 2024, to gain assistance to rectify the roof and attic issues. It is not clear from the appellants’ submission that seeking assistance to rectify the defect included granting Tarion access to inspect the attic. Tarion’s written submissions for the hearing were submitted on or about April 15, 2024, indicating that the issue of its access to the attic space remained, at that time, unresolved.

55The appellants had an opportunity to provide reply submissions by no later than April 23, 2024. No reply submission was received.

56I am not persuaded by the appellants’ claim that multiple requests of the builder and Tarion to inspect the attic were made without success because it is not supported by evidence.

57Based on the July 4 email, the builder appears to have intended to inspect and address the attic space; however, the builder was denied access to the home after July 2022. The July 4 email that the appellants rely on does not demonstrate that the builder refused to address it.

58In reference to Tarion’s alleged inability to inspect the attic, July 2022 was during the 120-day builder repair period for the Year-end Form items. Tarion would have no inspection role on those items until and unless the appellant’s sought conciliation (which they did later that year). In July 2022, Tarion’s activity in respect to the appellants’ home was in relation to their initial (30-day) Claim Form and an Emergency Form the appellants had submitted. Item 19 was not part of the 30-day or Emergency Form so Tarion had no role in inspecting the attic during July 2022.

59Considering that the builder was denied access to the home beyond July 2022, Tarion was denied access to the attic space during the conciliation inspection in December 2022, Tarion’s proposal to have a third-party inspect the attic space has gone unanswered by the appellants, and that the appellants’ have not directed me to any other documents to support their claim, I give little weight to the appellants’ submission that multiple requests to the builder and Tarion to inspect the attic space were made and rebuffed.

60Further, I find that the appellants denied access to the attic space as part of the conciliation process thereby canceling the conciliation pursuant to s. 4.3(7). As noted above, if after requesting conciliation, the homeowner cancels the conciliation of one or more of the claim items scheduled for the conciliation inspection, the homeowner is deemed to have withdrawn those items from the year-end form.

61As noted above, there is no provision in Act for the Tribunal to revive a warranty item that was previously withdrawn. The Tribunal cannot order Tarion to restart the conciliation process because there is no provision in the Act that a warranty claim item that was withdrawn by a homeowner at the time of conciliation can be resumed as part an appeal to the Tribunal. Under s. 14(19) of the Act, the Tribunal can only direct Tarion to take the actions it considers Tarion ought to take in accordance with the Act and the Regulation. There is no provision for reviving a warranty claim once it has been withdrawn, except s. 4.3(9) of the Regulation as noted above.

62I find that pursuant to s. 4.3(7) of the Regulation, the conciliation of warranty item 19 was canceled by the appellants. It is therefore deemed withdrawn and despite being listed as an issue in dispute in the CCRO is not properly before Tribunal. The appellants are barred from appealing this withdrawn claim item.

63I note that as of the date of Tarion’s submissions, on about April 15, 2024, Tarion is prepared to investigate this item further if the appellants allow access. The appellants may wish to pursue that invitation in the interests of gaining relief for claim item 19.

Cost

64The appellants seek costs in amount of $1,000.00 per day for the case conference, the submission of documents and evidence, the writing of arguments, and preparation for the written hearing. Their submission does not specify the number of days costs being sought

65Rule 19 of the Licence Appeal Tribunal Rules, 2023 (“Rules”) provides the parameters for the consideration of a party’s claim for costs. Rule 19.1 provides that a party may request costs if they believe another party has acted unreasonably, frivolously, vexatiously or in bad faith during the proceeding. The actions or behaviour of a party that occurred prior to the filing of an appeal with the Tribunal cannot be considered.

66Rule 19.4 provides that a submission on costs shall set out the reasons for the request and the particulars of the other party’s conduct during the proceeding that are alleged to be unreasonable, frivolous, vexatious, or in bad faith

67In their submissions for costs the appellants outline their reasons which can generally be described as allegations that Tarion and the builder were inattentive to their warranty claims and that they purposely denied, delayed or deferred decisions in an effort to discourage the appellants from “continuing to fight for what they deserve.

68The appellants submit that Tarion has failed to address construction defects, that the process of warranty claims has negatively impacted their business and incomes as sole proprietors, and their health and well being has suffered.

69The respondent made no submissions on the issue of costs.

70I find that the alleged conduct of Tarion the appellants outline in their reasons for costs relates to their grievances with the warranty resolution process and not this proceeding. The appellants’ concerns with the builder’s conduct are not relevant because the builder is not a party to this proceeding.

71The appellants have not provided any particulars of Tarion acting unreasonably, frivolously, vexatiously or in bad faith during this proceeding. The appellants’ references to Tarion’s conduct predate the filing of their appeal to the Tribunal.

72Accordingly, the appellants’ claim for costs is denied.

CONCLUSIONS

73Warranty claims 15, 26, 32, 33, 73, 75 and 77 are denied.

74The appellant is barred from appealing warranty items 19, 38, 44 and 68.

75The appellants’ claim for costs is denied.

ORDER

76Pursuant to s. 14(19) of the Act, I order the following:

i. Tarion is ordered to deny warranty claims 15, 26, 32, 33, 73, 75 and 77.

77The appellant is barred from appealing warranty items 19, 38, 44 and 68.

78In accordance with Rule 19, the appellants’ claim for costs is denied.