Licence Appeal Tribunal File Number: 15387/ONHWPA

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”), Section 14.

Between:

Krishna Persaud and Yogeeta Singh

Appellants

and

Tarion Warranty Corporation

Respondent

DECISION and ORDER ON REQUEST TO ADD A PARTY

ADJUDICATOR:

Bruce Stanton

APPEARANCES:

For the Appellants:

Krishna Persaud, self-represented

Yogeeta Singh, self-represented

For the Respondent:

Justin Devries, Warranty Services Representative

Danielle Peck, Counsel

Representatives of the proposed added party, the builder

Aaron Salem, John Boddy Developments Ltd.

Edward Boddy, Principal, John Boddy Developments Ltd.

Chris Paul, Service Manager, John Boddy Developments.

Heard by teleconference

January 4, 2024

OVERVIEW

1Yogeeta Singh and Krishna Persaud (the “appellants”) appeal the Decision Letter issued, pursuant to s. 14(13) of the Act, by Tarion Warranty Corporation (the “respondent”), on October 16, 2023, in relation to the appellants’ warranty claim for deficiencies in the roof shingles of their new home.

2The respondent, Tarion Warranty Corporation (the “respondent”), brings a motion to add John Boddy Developments Ltd. (the “builder”) as a party to this appeal.

3The appellants oppose the addition of the builder as a party to this proceeding.

4Rule 3.6 of the Licence Appeal Tribunal Rules, 2023 (“Rule”) permits the Tribunal to add a person as party to a proceeding if the person has a significant interest in the proceeding.

5A hearing on the motion was heard at the commencement of today’s case conference.

ISSUES

6The issue in dispute is:

1. Does the builder have a significant interest in the proceeding?

RESULT

7I find the builder has an interest in the proceeding, but it does not rise the level of significant. The motion to add the builder is denied.

ANALYSIS

8Section 14(18) of the Act deems the Tarion Warranty Corporation and the warranty claimants (the appellants, in this case) as parties to the Tribunal proceeding, unless the regulations provide otherwise. For the purposes of subsection 14(18), section 12 of Ontario Regulation 627/70 (the “Regulation”) gives the Tribunal the ability to specify additional parties to a proceeding in accordance with its rules. As discussed above, Rule 3.6 gives the Tribunal the ability to add a party it considers having a significant interest in the proceeding.

What is the test for significant interest?

9Since “significant interest” is not defined in the Rules, the Act, or the Regulation, I refer to previous decisions of the Tribunal and the court, in coming to a determination of what represents a significant interest. I will also consider the request to add the party in the context of the purpose and focus of the Act, which is consumer protection.

10I am not bound by previous Tribunal decisions but I find them instructive in describing the circumstances and context in which adding the builder as a party should be considered.

11In M.W. and D.W. v. Tarion Warranty Corporation (“M.W. and D.W.”) the Tribunal determined that a significant interest is one that could be demonstrated by evidence of the proposed party’s substantive rights being decided or affected by an order of the Tribunal.

What substantive rights of the builder might be affected by an order of the Tribunal?

12The respondent submits that the Tribunal’s decision in this matter will be public and it therefore carries reputational risk for the builder. It points out that it is the builder, not the respondent, who warrants that the home is constructed with the appropriate workmanship, in accordance with the Ontario Building Code, and is free from defects in materials. Since a hearing in this matter will reveal evidence of the builder’s products and services, the respondent submits the builder has an interest in defending its workmanship and building competencies.

13The respondent submits that if the Tribunal orders it to compensate the appellants, the builder may be liable to indemnify the respondent for that amount of compensation. The builder, therefore, has a financial interest in proceeding.

14The respondent submits that it does not represent the builder’s interests and wants to ensure it remains independent in these proceedings. It submits the perception of the respondent’s independence may be adversely affected if it is required to rely on the builder’s documents and witnesses at the hearing.

15The appellants submit that the issues in dispute are only with the respondent’s response to their warranty claim. The appellants were unsatisfied with the builder’s response to the roof shingle deficiencies and therefore pursued a warranty claim under s. 14(3) of the Act, with the respondent. The Decision Letter identified that there were warrantable deficiencies in the roof shingles, but the appellant declined the respondent’s proposal to compensate for that breach of warranty. The appellants stated they have no interest in further engagements with the builder and do not believe it would add any value to this proceeding. They submit it is only the respondent’s reliability, conduct and analysis, which underpins the Decision Letter, that is in dispute.

16The appellants submit that adding a 3rd party to the proceeding will deflect from their dispute with the respondent and subject it to engagement with the builder, the very thing their warranty claim with the respondent was intended to prevent.

17Representatives of the builder attended the motion hearing. It did not file written submissions or request an opportunity to make oral submissions at the hearing.

18I find the builder has interests in this proceeding but they do not rise to the level of significant because its substantive rights, for example the right to recourse against the respondent if indemnification of any compensation was sought, would be unimpeded by a Tribunal decision in this matter.

19In the Tribunal’s decision in Paktunc v. Tarion Warranty Corporation, 2022 ONLAT ONHWPA 13991 (“Paktunc”), Adjudicator Osterberg determined the builder was, “ … not bound by the decision of the Tribunal and maintained its right to dispute Tarion’s claim for indemnity should Tarion determine to make such a claim.” I agree. Paktunc cites the Divisional Court ruling in Yildirim v. Tarion Warranty Corporation, 2019 ONSC 945 (Div. Ct.) (“Yildirim”) in this respect, noting the “Divisional Court interpreted similar provisions dealing with indemnification of Tarion in respect of warranty claims to require Tarion to establish the builder’s breaches of its obligations before being entitled to indemnity.” Put another way, the builder’s exposure to financial liability from this proceeding would require Tarion proving that the builder failed in its obligations under the Act. That would be a matter between the builder and Tarion. The substantive rights of the builder to defend against claims for indemnification in this respect are not impeded by the Tribunal’s decision in this matter.

20On the potential for reputational risk, Paktunc reasoned that the Tribunal hearing is not intended as a forum for the builder to defend its workmanship. Rather, as the decision in Yildirim also held, the purpose of the Act is to enable homeowners to obtain compensation without becoming bound up in protracted and expensive litigation with the builder responsible for any construction defects. The appeal provisions under s. 14 reinforce this concept. As noted above in s. 14(18), the parties to a Decision Letter appeal are presumptively Tarion and the warranty claimant, though subject to the Tribunal’s discretion to add another party.

21In relation to the respondent’s desire to maintain its independence in the proceeding, it is not clear to me how relying on documents and/or witnesses of the builder, as it may choose, would adversely impact the perception of the respondent’s independence and impartiality. Evidence from the builder is likely to be entirely relevant to both parties’ position. The respondent has every right, under the Rules, to file the builder’s evidence and call witnesses in support of its position in the proceeding, just as the other party would have the opportunity to challenge that evidence and cross examine those witnesses. I find that the possibility of an adverse perception of independence of the respondent does not rise to a significant interest in adding the builder as a party.

22I agree with the appellants. Adding the builder as a party could prejudice their position in the proceeding. They would effectively be required to prepare responses and address themselves to two respondents in the hearing. The builder would have the chance to call its own witnesses and file its own evidence, and cross examine the other parties’ witnesses. It would add a layer to this proceeding that would result in more time, cost, and complexity.

23I find that adding the builder as a party could only be merited in circumstances where its substantive rights could be jeopardized by a Tribunal decision. As discussed above, that is not the circumstance in this proceeding. Since it is unlikely that a substantive right of the builder would be adversely affected by this proceeding, the motion to add the builder is denied.

CONCLUSION

24The builder’s interest in this proceeding does not rise to the level of a significant interest. Therefore the motion to add the builder as a party is denied.

ORDER

25The motion to add the builder as a party to this proceeding is denied.