Samuel Stone and Rose Yesovitch v. Tarion Warranty Corporation, 2025 CanLII 102207

Licence Appeal Tribunal File Number: 15917/ONHWPA

In the matter of an appeal from a Decision of Tarion Warranty Corporation under section 14 of the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31.

Between:

Samuel Stone and Rose Yesovitch

Appellants

and

Tarion Warranty Corporation

Respondent

DECISION

PANEL:

Caley Howard Colin Osterberg

APPEARANCES:

For the Appellant:

Sam Zucchi, Counsel

For the Respondent:

Cindy Zhou, Counsel

HEARD: By videoconference April 23 and 24, 2025

OVERVIEW

1Samuel Stone and Rose Yesovitch, (the “appellants”), appeal to the Licence Appeal Tribunal (the “Tribunal”) from the Decision Letter of Tarion Warranty Corporation (the “respondent”), dated May 3, 2024, regarding the appellants’ second-year claim form, submitted pursuant to the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “Act”).

2The Decision Letter found that the appellants’ claim regarding water penetration through the foundation of their home was a breach of warranty. The Decision Letter further indicates that the respondent offered the appellants compensation in the amount of $120,221.00, which would bring the appellants to the financial limit for warranty coverage under the Act. At the hearing, the respondent advised that the amount in the Decision Letter was an error and it should read $124,336.00.

3The parties agreed that the respondent paid the appellants the amount of $60,120.00 in respect of unrelated claims. The parties also agreed that the respondent paid $115,544.00 to Burkes’ Restoration on account of work performed at the appellants’ home between December 2022 and February 2023. Burkes’ Restoration was contracted by the respondent to perform the work.

4The parties further agreed that after the work done by Burkes’ Restoration, there remained problems with the foundation of the home that still needed to be addressed. The parties agree that repairs to the foundation will cost in excess of the $124,336.00 the respondent alleges remains available under the Act.

5The respondent’s position is that it does not have the jurisdiction under the Act to pay more than the $124,336.00 that it has offered to pay and, similarly, that the Tribunal does not have the jurisdiction to order it to pay more than that amount.

6The appellants take the position that they received no benefit from the work done by Burkes’ Restoration and that the $115,544.00 paid by the respondent to Burkes’ Restoration should not count towards the statutory limit of $300,000.00 that applies to all breach of warranty claims under the Act. They therefore allege that $239,880.00 remains available to them to cover warranty claims, including claims with respect to necessary repairs to the foundation.

ISSUES

7The issue in dispute is:

i. What amount of compensation are the appellants entitled to recover from the respondent as a result of the breach of warranty?

RESULT

8The appellants are entitled to the $124,336.00 remaining in the appellants’ guarantee fund, as offered by the respondent in the Decision Letter.

ANALYSIS

Tribunal’s jurisdiction to make the order sought by the appellants

9We find that we do not have the jurisdiction to order compensation in an amount greater than the $124,336.00 offered by the respondent.

10As the appellants’ second-year claim form was submitted in July 2019, the applicable version of the Act, and of Administration of the Plan, RRO 1990, Reg. 892 (the “Regulation”), is the period of July 1, 2019 through July 13, 2020.

11The respondent agreed that the water penetration into the basement claimed on the appellants’ second-year form was a breach of warranty and eligible for payment from the guarantee fund pursuant to s. 14(3) of the Act.

12Section 6(3)(c) of the Regulation provides that the maximum amount payable to the appellants in respect of their claim for damages resulting from a breach of warranty is $300,000.00. The appellant has the onus of proving the quantum of damages on a balance of probabilities.

13Section 14(6) of the Act requires the respondent to take into consideration, in determining the amount the appellant is entitled to receive out of the guarantee fund, any benefit, compensation or indemnity payable or the value of work and materials furnished to the claimant from any source.

14Section 14(7) of the Act permits the respondent to perform any work in lieu of or in mitigation of damages. This is the option the respondent took when it contracted with Burkes’ Restoration to perform the work at the appellants’ home.

15The powers of the Tribunal are set out at s. 14(19) of the Act, which states that the Tribunal may direct the respondent to take any action that the Tribunal considers it ought to take in accordance with the Act and the regulations. Also, the Tribunal may substitute its opinion for that of the respondent.

16While the parties agree that the Tribunal does not have the jurisdiction to order the respondent to pay more than $300,000.00 to the appellants out of the guarantee fund, they have differing arguments respecting whether the payment made by the respondent to Burkes’ Restoration should properly be included in the calculation of the $300,000.00 cap.

17The appellants submit that the Act, in particular s. 14(6), must be interpreted as requiring the respondent to consider the benefit received by the appellants in respect of the work done by Burkes’ Restoration, rather than the amount paid by the respondent to Burkes’ Restoration, when calculating the $300,000.00 cap and the remaining amount payable to the appellants. The appellants submit that they received no benefit from the work done by Burkes’ Restoration. They ask the Tribunal to declare that the $115,544.00 paid to Burkes’ Restoration shall not be included in calculating the statutory limit.

18In support of their submissions, the appellants rely on the case of Jelic v. Tarion Warranty Corporation and Millstone Homes Inc., 2021 CanLII 85111 (ON LAT) (“Jelic”), where the Tribunal determined that the Corporation was not permitted to deduct a benefit received by the homeowners for deficient work when calculating the amount of damages related to a breach of warranty. The appellants submit that it follows that where the respondent undertakes work on a home, the Tribunal may consider the value of the work provided to the homeowners, rather than the cost incurred by the respondent, when determining the remaining guarantee funds payable under the cap.

19The respondent submits that the appellants’ interpretation of s. 14(6) of the Act is flawed. The respondent submits that the full amount paid to Burkes’ Restoration by the respondent must be considered when calculating the remaining amount payable to the appellants and that the maximum amount that the Tribunal has the jurisdiction to order the respondent to pay is $124,336.00.

20In support of its submissions, the respondent relies on the case of Matthews (Re), [1996] OCRATD No. 52 (“Matthews”), where the Tribunal found it had no jurisdiction to order payment out of the guarantee fund in excess of the statutory limit. The facts in Matthews were similar to the appellant’s situation. The Ontario New Home Warranty Program (the “Program”), now known as Tarion, had undertaken to repair the water penetration through the homeowners’ skylights. After spending $19,000 on repairs, the Program agreed that a further $9,585 was needed to remove the existing skylights and install new ones. However, by that time, there was only $3,410 remaining in the guarantee fund. The homeowners argued that the Program should have realized sooner that the attempted repairs would not remedy the problem and authorized the installation of new skylights when there were still sufficient funds within the statutory limit. The Ontario Commercial Registration Appeal Tribunal, the predecessor of the Tribunal, disagreed with the homeowners’ argument and ordered payment of the $3,410 remaining in guarantee fund.

21The respondent further submits that the intention of s. 14(6) of the Act is to prevent double-recovery by homeowners where they are entitled to an insurance payout or holdback funds related to the breach of warranty. The respondent submits that the legislative intent behind s. 14(6) was not to require either the respondent or the Tribunal to look beyond the face value of the work and materials used to remedy a breach of warranty and determine the true benefit received by the homeowner in each case. The respondent submits that the appropriate payment to the appellants in this case is $124,336.00 that it agreed to pay in the Decision Letter.

22We do not accept the appellants’ proposed interpretation of s. 14(6) for the following reasons.

23We find that the decision in Jelic does not support the appellants’ position. Not only is Jelic factually distinct from the appellants’ situation, but the Tribunal in Jelic interpreted the words “the value of work and materials furnished to the person from any source” in s. 14(6) as referring to any source other than Tarion. This supports which is the respondent’s submission that the intention of s. 14(6) is to prevent double recovery. We were not directed to any other decisions where s. 14(6) of the Act, which is now s. 14(11), was considered by the Tribunal.

24We find that the language in s. 6(3)(c) of the Regulation, read in conjunction with s. 14(7) of the Act, makes it clear that the statutory limit set out in the Regulation is intended to apply whether the respondent chooses to pay compensation to a homeowner or undertake repairs itself. The effect of the appellant’s proposed interpretation of s. 14(6) would be a way around the statutory limit for some claimants that would not be available to others because it would only apply in situations where the respondent undertook to perform work on a claimant’s home. We find it unlikely that this was the intended result of the legislation.

25We agree with the respondent’s submission that s. 14(6) of the Act is intended to prevent double-recovery by a homeowner in a situation where the homeowner receives some compensation for the breach of warranty from a source other than Tarion. It is not intended to place an onus on Tarion or the Tribunal to determine a value for any work undertaken by Tarion pursuant to s. 14(7), beyond the price paid for such work.

26For the above reasons, we find that we do not have the jurisdiction to discount the $115,544.00 that the respondent paid to Burkes’ Restoration. This amount was paid by the respondent from the guarantee fund on account of the breach of warranty claimed by the appellants and must be included in the calculation of the statutory limit set out in s. 6(3)(c) of the Regulation.

The appellants are entitled to compensation of $124,366.00

27We find that the appellants are entitled to compensation of $124,366.00 for the breach of warranty claimed on their second-year form relating to water penetration of the basement.

28The July 2023 estimate from Burkes’ Restoration estimated remaining work totalling $107,141.48, which estimate did include fixing the garage slab and repairing the damaged drywall. However, the respondent acknowledged that, at the time of the Burkes’ Restoration estimate, there likely remained some unidentified costs related to fixing the home’s foundation.

29Based on this evidence, we find that the appellants have proven that they are entitled to compensation of $124,366.00 for the breach of warranty claimed on their second-year form.

Conclusion

30The appellants are entitled to compensation in the amount of $124,366.00 for the breach of warranty claimed on their second-year form in respect of water penetration in the basement of their home.

ORDER

31We order that:

i. The appellants are entitled to the $124,336.00 remaining in the appellants’ guarantee fund, as offered by the respondent in the Decision Letter.