Licence Appeal Tribunal File Number: 15776/ONHWPA
In the matter of an appeal from a decision of Tarion Warranty Corporation under the Ontario New Home Warranties Plan Act R.S.O. 1990. c.O.31 (the “Act”) to disallow a warranty claim
Between:
Jeremy Laird & Amanda Dykstra
Appellants
-and-
Tarion Warranty Corporation
Respondent
-and-
Fidelity Homes Inc.
Added Party
DECISION AND ORDER
ADJUDICATORS:
Jeffery Campbell, Vice Chair
Geneviève Painchaud, Vice Chair
APPEARANCES:
For the Appellant
For the Respondent
For the Added Party
Heard by videoconference:
Jeremy Laird, Appellant (self-represented)
Amanda Dykstra Laird, Appellant (self represented)
Justin Devries, Warranty Service Representative
Shantam Gorawara, Counsel
Tim Williams, Officer, Fidelity Homes
Mark Pederson, Counsel
August 27, 2024
OVERVIEW
1Jeremy Laird and Amanda Dykstra Laird (the appellants) appeal to this Tribunal a decision letter (the “Decision Letter”) issued by Tarion Warranty Corporation (the “respondent”) dated February 20, 2024, denying a claim they made under section 14(13) of the Act.
2The appellants purchased a new home from Fidelity Homes (the “Builder” / added party) and both parties were represented by Kim Etherington of Royal Heritage Realty Ltd. (the “Realtor”) for this transaction.
3The appellants submitted a warranty claim arguing that the driveway paving had not been completed (the “deficiency”).
4The appellants filed a request for conciliation based on unresolved items on their 30 Day Form which included over 20 items. An inspection was conducted by Justin Devries of Tarion on March 3, 2023. The driveway is the only item that is being appealed at this hearing.
5In its conciliation report, Tarion concluded that this item was not warranted because “The owner has not established that they were entitled to an item that was not supplied to them by the vendor. Tarion cannot conclude that there is a breach of warranty.” In its reasons, Tarion’s position was that there was no section of the Agreement of Purchase and Sale (“APS”) that binds the Builder to provide a paved driveway, and that clause 8 of Schedule A2 describes the potential conditions to consider if a holdback or deduction on closing is to be considered.
ISSUES
6Is the respondent liable to pay for a deficiency the appellants allege exists under the Act? If so, what is the quantum of damages or other relief are the appellants entitled to?
RESULT
7For the reasons listed below, we find that the appellants have not proven on a balance of probabilities that there was a deficiency as per the Act.
8We confirm Tarion’s denial of the claim.
EVIDENCE AND ANALYSIS
9On January 31, 2022, the appellants purchased a new home from Fidelity Homes through a Realtor, using a standard APS, with a completion date of June 30, 2022. Several schedules were included in the APS covering many details regarding floor plan, inclusions, exclusions, warranty, closing, payment and assignment.
10The structure of the home at the time of purchase only had a foundation poured but details of what was to be built were included in the APS.
11The appellants submit that a paved driveway was supposed to be included in the purchase price and that they only received a gravel driveway.
12The respondent and the Builder submit that a paved driveway was not part of the APS, that the appellants are not entitled to it, and therefore there is no deficiency.
The Paving of the Driveway was not included in the APS
13All parties agree that the APS should be considered as a whole.
14In looking at the APS as a whole, we find the mention of a paved driveway is not meant as an inclusion by the Builder and there is therefore no deficiency.
15The appellants submit that their Realtor told them to look at two nearby homes built by Builder to have an idea of the product they were buying, and introduced a picture of a house with a paved driveway in evidence to demonstrate what they were comparing to. In his oral testimony, the representative for the Builder confirmed that the home pictured to argue this point was not a home built by Fidelity Homes. In any event, the fact that one home has a driveway is irrelevant to what was included in this home’s purchase agreement.
16There was no evidence presented demonstrating a paved driveway being discussed at any time in the buying process and the appellants admit that a paved driveway was not discussed specifically with the Builder in the process.
17The appellants mainly rely on schedule A2 of the APS entitled “Additional Provisions Agreement of Purchase and Sale from Fidelity Homes Inc.” and in particular, clause 8 (“Clause 8”) that reads as follows:
Completion: For the purpose of Closing, the Dwelling shall be deemed to be completed when all interior work has been substantially completed so that the building reasonably may be occupied, notwithstanding that there remains exterior work to be completed including, but not limited to, painting, driveway paving, grading, deck construction, sodding and landscaping. There shall be no holdback or deduction on Closing for uncompleted work.
On or before closing, the Seller shall provide to the Buyer’s Lawyer, at the Seller’s expense, an issued occupancy permit from the Municipality.
18In looking at the items mentioned in this clause, the appellants argued that the items in clause 8 are not mentioned anywhere else, unless there was an alteration or substitution to them. They stated that, for example, the painting described in Clause 8 is not described elsewhere else but was completed.
19The parties agree that Schedule B outlines that the lot will be “graded, top-soiled and seeded” which is different that the sodding mentioned in Clause 8, but this item substitution was specifically agreed to by the parties.
20The appellants also point to another mention of a driveway in clause 4 of schedule A2 (“Clause 4”) that reads:
Construction Approvals: The siting, plans and specifications of the home including architectural detail and exterior finishes may be subject to approval by the Municipality. If any such required approval is not obtained, the Seller may in writing terminate this Agreement within seven (7) days of the later of the date of this Agreement or plan registration. In that case, the Buyer’s deposit shall be returned without interest or deduction and this Agreement shall be at an end. However, the parties shall accept minor modifications which the Developer of the Municipality may require, including retaining walls, swales, narrowed driveway entrances, and relocation of decks, or side porches. If the Land is a lot on a plan of subdivision which has not yet been registered, lot sizes or dimensions are also subject to change without notice provided they are not substantially varied.
21The parties agree that there is no section of the APS that mentions a driveway except for clauses 4 and 8 of schedule A2, and nowhere is a gravel driveway mentioned. The Builder submits that a “paved driveway” is not mentioned anywhere, and this should be distinguished from “driveway paving.”
22The respondent points to Sivasubramaniam v. Mohammed, 2018 ONSC 3073 where the entire agreement clause in Inntrepreneur Pub Co. Ltd v. East Crown Ltd, (2000) 41 E.G. 209 (U.K. Ch.) is described by Lightman J. as:
The purpose of an entire agreement clause is to preclude a party to a written agreement threshing the undergrowth and finding in the course of negotiations some (chance) remark or statement (often long forgotten or difficult to recall or explain) on which to found a claim such as the present to existence of a collateral warranty…For such a clause constitutes a binding agreement between the parties that the full contractual terms are to be found in the document containing the clause and not elsewhere. (Emphasis added in the original.)
23We agree with all the parties that the APS needs to be considered as a contract as a whole, an entire agreement. The word “driveway” was mentioned twice in the APS yet never in the context of inclusions and there are many other areas in the APS that deal with inclusions and exclusions.
24In looking at the APS as a whole, we agree with the respondent and the Builder that the first mention in Clause 4 was in the context of construction approvals where the contract stipulates that situations like narrowing a driveway could be a modification made, although nowhere else is there mention of the width of the driveway. The second mention is in Clause 8 in the context of a completion clause describing examples of items that, even if not completed, would not impact the completion of the transaction and possession. Clause 8 is about when the closing is to happen and does not impose a performance obligation. In looking at the APS as a whole, we find the mention of a paved driveway in clause 8 is not meant as an inclusion by the Builder and there is therefore no deficiency.
The Gravel Driveway was not a Substitution
25We find that the evidence demonstrates that this appeal is not covered under s. 18 and s.19 of the Regulation.
26Section 18 of Regulation 892, R.O.O. 1990 (the “Regulation”) of the Act provides:
Every vendor of a new home warrants to the owner that the vendor shall make no substitution in those items of construction or finishing for which the purchaser is entitled to make selection pursuant to the purchase agreement without the written consent of the purchaser.
27Section 19 of the Regulation provides:
Every vendor of a new home warrants to the purchaser that, where the vendor makes a substitution with respect to an item that is referred to in the purchase agreement that is not an item that is to be selected by the purchaser, the item will be of equal or better quality that the item referred to in the purchase agreement.
28The appellants consider that their gravel driveway is not of equal or greater value than a paved driveway, which is in breach according to clause 5 of schedule A2 indicating that the Builder “may substitute other materials of at least equal quality for those specified and may alter the plans and specifications, provided that such substitution or alteration shall not diminish the value of Real Property or substantially alter the Dwelling.”
29We agree with the respondent that section 18 of the Regulation only refers to items that the purchaser is entitled to select, and nothing about the driveway was to be selected by the purchaser in the APS. As for section 19, we agree with the respondent that it applies to substitutions of items in the purchase agreement, and the paved driveway was not specified as an inclusion.
30We conclude that sections 18 and 19 of the Regulation do not apply as the appellants did not select anything about the driveway, and since we found that the paved driveway was not included in the APS, no substitution was made.
CONCLUSION
31As we find that the paving of the driveway was not included in the APS and that the gravel driveway was not a substitution, we conclude that there was no deficiency as per the Act.
ORDER
32For these reasons, we order Tarion to deny the appellants’ claims as set out in the decision letter dated February 20, 2024.
LICENCE APPEAL TRIBUNAL
Jeffery Campbell, Vice-Chair
Geneviève Painchaud, Vice-Chair
Released: September 9, 2024