Maseh v. Tarion Warranty Corporation, 2025 CanLII 18203

Citation: Maseh v. Tarion Warranty Corporation, 2025 ONLAT 16141

Licence Appeal Tribunal File Number: 16141/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”).

Between:

Kyrollos Maseh

Appellant

and

Tarion Warranty Corporation

Respondent

and

Hanna Homes Construction Inc.

Added Party

DECISION AND ORDER

Adjudicator:

Jeffery Campbell

Appearances:

For the Appellant

For the Respondent

For the Added Party

Heard by videoconference:

Kyrollos Maseh, Self-Represented

Cindy Zhou, Counsel

Jaclyn Solomon, Paralegal

Akram Hanna, Representative

January 20, 21 & 24, 2025

OVERVIEW

1Kyrollos Maseh (the “Appellant”) has appealed a Decision Letter issued on July 24, 2024 by the Tarion Warranty Corporation (“Tarion” or “Respondent”) under section 14(13) of the Act.

2The Appellant made a claim for warranty coverage on his home under the Act. The Respondent took the position that the Appellant may be entitled to make a claim for financial loss compensation under section 14(2) of the Act; however, the home is otherwise not entitled to the construction warranties set out in section 13(1) of the Act as the construction contract was not “substantially performed” within the meaning of the Act. The Respondent submits that “substantial performance” generally requires that the home was at least 97% completed by the Vendor/Builder, and it was not. The Appellant disagrees and submits that the 97% threshold was met.

3By Order dated October 2, 2024, the Vendor/Builder Hanna Homes Construction Inc. (“Hanna Homes” or “Added Party”) was added as a party to the proceeding as it has an interest in the proceeding.

PROCEDURAL ISSUE

4The Appellant sought to introduce two documents to which the Added Party objected. The Added Party submitted that those documents arise from separate litigation and, as such, are subject to the deemed undertaking rule (DUR) as restricted in case law and as codified in Rule 30.1.01 of the Rules of Civil Procedure. Tarion took no position with respect to this issue.

5The two documents in question are:

A. A transcript of a cross examination of Akram Hanna on behalf of Hanna Homes dated April 19, 2023. The applicants in that cross examination are Kyrollos Maseh and Marina Tanious and the Lien Claimant is Hanna Homes.

B. Undertakings and Refusals chart arising from the examination of Akram Hanna on April 19, 2023, with respect to Hanna Homes and Kyrollos Maseh, Marina Tanious and CIBC.

6The Appellant argued that the interests of justice require that the documents be included in this proceeding. Counsel for the Added Party argued that Rule 30.1.01 applies in this matter, and the inclusion of these documents will produce extreme prejudice to her client.

7As requested, both the Appellant and the Added Party provided me with their written submissions on this issue. Both parties made various points with respect to their position on the admission of the two documents.

8The DUR from Rule 30.1.01(3) of the Rules of Civil Procedure states that:

All parties and their lawyers are deemed to undertake not to use evidence or information to which the Rule applies for any purposes other than those of the proceeding in which the evidence was obtained.

9The DUR serves to protect the privacy and confidentiality of information obtained during the discovery process in civil litigation. It assists in not only protecting confidentiality, but also in encouraging full disclosure and for preventing the misuse of discovered information.

10However, the DUR is not absolute. There are exceptions in both case law, as well as codified in the Rules of Civil Procedure.

11An exception from case law which may allow the admission of evidence from a separate proceeding is when there are similar facts and issues between the two matters in dispute.

12With respect to this exception, I find the words of the Honourable Justice Binnie in the Supreme Court Decision of Juman v. Doucette, 2008 SCC 8 (“Juman”) helpful in this situation. In paragraph 35, speaking of the DUR, Justice Binnie stated:

“The case law provides some guidance to the exercise of the court’s discretion. For example, where discovery material in one action is sought to be used in another action with the same or similar parties and the same or similar issues, the prejudice to the examinee is virtually non-existent and leave will generally be granted.”

13Here Justice Binnie ties the similarity of the facts and parties with the mitigation of any possible prejudice to the examinee. That same principle applies in this case. In the case before me it may be that there is no difference from the Added Party’s testimony in this proceeding and the transcript and/or the undertaking chart from the separate proceeding. However, if there is a difference, that difference may be pointed out to impeach the witness for the Added Party, which is allowed. Rule 30.1.01 subrule (6) does not prohibit the use of evidence obtained in one proceeding, or information obtained from such evidence, to impeach the testimony of a witness in another proceeding.

14As stated by Justice Binne, Rule 30.1.01(6) of the Rules of Civil Procedure allows for evidence from one proceeding to be used in another proceeding where it is for the purpose of impeaching the testimony of a witness.

15Justice Binnie continues in Juman in paragraph 41:

“Another situation where the deponent’s privacy interest will yield to a higher public interest is where the deponent has given contradictory testimony about the same matters in successive or different proceedings. If the contradiction is discovered, the implied undertaking rule would afford no shield to its use for purposes of impeachment.”

16The proceeding before me deals with similar facts and parties as those in the documents in the separate proceeding. As those facts and parties are similar and as both Rule 30.1.01(6) and case law allow for the use of transcripts to impeach a witness, I will allow the introduction of both the transcript of the cross examination and the undertaking chart, not for the truth of their content, but only for the purpose of impeaching the testimony of a witness.

Issues

17The issues at the hearing are:

a. Is the home of the Appellant is eligible for any warranty coverage under the Act?

b. If it is, then what kind of protection does it have under the Act?

Issue 1 – The Home is not eligible for any warranty coverage under the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-o31/latest/rso-1990-c-o31.html)

18I find the Home is not eligible for any warranty coverage under the Act.

19On August 23, 2019, the Appellant and his spouse, Marina Tanious, purchased the property of 46 Grove Park Crescent for construction of a new home on the site.

20On June 6, 2021, the Appellant’s mother, Samia Sahyone, entered into a Construction Management Fee Proposal (the “contract”) l between herself and the Added Party for the construction of four homes, including the construction of the Home. Although the contract was not signed by the mother, it appears from the evidence before me that the terms of the contract were agreed upon by the Appellant and the Added Party. In June 2021, construction commenced on the Home. The same month it was agreed that the construction of the Home would be invoiced separately to the Appellant and his spouse, as the other three homes were experiencing delays in their construction.

21On March 22, 2023, the Appellant terminated the contract with the Added Party and disallowed the Added Party to enter the property or to continue the overseeing the construction of the Home.

22The evidence before me shows that no application for a Tarion warranty was made at any time for the Home between June 2021 and March 22, 2023.

23On June 7, 2023, the Appellant emailed Tarion requesting information as to whether the Home was warranted by Tarion. In that email, the Appellant advised that repair costs on the Home would “exceed well above $150,000.00”. On June 13, 2023, Tarion replied to the Appellant requesting further information regarding the Home, which the Appellant provided. On June 14, 2023, Tarion advised the Appellant via email that the Home is not enrolled with Tarion and advised that an investigation was necessary in order to determine eligibility for warranty coverage. This was confirmed by letter to the Appellant the following day.

24The Appellant testified that, after March 22, 2023, he had taken over the completion of the Home. The evidence shows that he received a City of Toronto Occupancy Permit on July 27, 2023.

25On March 20, 2024, in response to the Appellant’s earlier enquiries, Tarion conducted a telephone interview with the Appellant. From this interview, a Guide for % Completion for Contract Homes was completed by Tarion which concluded that the contract to build the Home was 97.71% completed.

26On April 9, 2024, Tarion conducted a similar telephone interview with Akram Hanna, owner of the Added Party. From this interview, again using the Guide for % Completion for Contract Homes, Tarion concluded that the contract to build the Home was 74% completed.

27On May 1, 2024, Tarion advised the Added Party, via email and letter, that the Home is eligible for warranty and that the Added Party is responsible for servicing the warranties. This eligibility was based on the March 20, 2024 interview with the Appellant, which found that the contract work of the home was 97.71% completed. That same day, the Added Party advised Tarion via email that it disputes their decision regarding the warranty.

28On May 10, 2024, Tarion then advised the Appellant via letter that the Home is eligible for warranty.

29On July 9, 2024, Tarion reversed their decision of May 1, 2024, advising the Appellant via letter that the Home was not eligible for warranty. Michael Skinner, on behalf of Tarion, testified that he had earlier failed to take into account the Guide for % Completion for Contract Homes calculation of 74% completion arising from the telephone interview of the Added Party. Mr. Skinner testified that, now taking into account the calculation of 74% completion, he averaged the two calculations of 97.71% and 74% and came to a conclusion that the contract for the Home was only 85.85% completed.

THE LAW

30Section 14(3) of the Act states that Subject to the regulations, an owner of a home is entitled to receive payment out of the guarantee fund for damages resulting from a breach of warranty if,

(a) the person became the owner of the home through receiving a transfer of title to it or through the substantial performance by a builder of a construction contract;

31As, in this case, the Home is not the subject of a transfer of title, the issue is whether was there a substantial performance by the builder, i.e. the Added Party.

32Substantial performance is defined in s. 14(5) of the Act as follows:

For the purposes of this section, a construction contract is substantially performed if it is substantially performed within the meaning given by subsection 2(1) of the Construction Act, 1990, R.S.O. 1990, c. C.30.

33Section 2(1) of the Construction Act states:

For the purposes of the Construction Act, a contract is substantially performed,

(a) when the improvement to be made under that contract or a substantial part thereof is ready for use or is being used for the purposes intended; and

(b) when the improvement to be made under that contract is capable of completion or, where there is a known defect, correction, at a cost of not more than,

(i) 3 per cent of the first $1,000,000 of the contract price,

(ii) 2 per cent of the next $1,000,000 of the contract price, and

(iii) 1 per cent of the balance of the contract price.

34As the contract with the Added Party was terminated prior to its completion, the question becomes whether, at the time of the termination of the contract,

A. there was, indeed, a contract by the Added Party to construct the Home; and

B. the Home was both ready for use or is being used for the purposes intended, and the contract between the Added Party and the Appellant had been substantially performed. If either one of these criteria fails, the Home is not eligible for warranty.

35The Appellant submits that the Home was ready for use at the time of the termination. He also submits that the contract between himself and the Added Party had been substantially performed. Tarion and the Added Party refute both of those positions of the Appellant.

ANALYSIS

A. There was a Contract between the Appellant and the Added Party

36Tarion submitted a Construction Management Fee Proposal from the Added Party to Samia Sahyone, the Appellant’s mother, dated June 6, 2021 outlining comprehensive construction management duties for the construction of four homes, including the Appellant’s. As noted, by way of agreement, the Appellant’s home was later invoiced separately from the other three homes, due to the delays in the construction of those other homes.

37The Appellant did not dispute that the Added Party was under contract to construct the Home. In his testimony, the Appellant stated that it was agreed that the Added Party would be in charge of all construction and that he was relying on the Added Party “for everything”.

38The evidence before me, including progress invoices, detailed invoices and ledger invoices, indicates that the Added Party received fees for its management of the construction of the Home. The evidence also establishes that the Added Party recommended trades for the construction of the Home, hired the trades, paid the invoices from trades directly and invoiced the Appellant for reimbursement for those payments.

39It is evident from numerous emails between the Added Party and the Appellant’s mother, the Appellant’s spouse and the Appellant himself that the Added Party was managing all aspects of the construction of the Home.

40Based on the above, I am satisfied that the Added Party was under contract to construct the Home to completion.

B. The Contract was not Substantially Performed

41As stated, s.2(1)(b) of the Construction Act sets out that, at the time of the termination of the contract, the home must be ready for use or is being used for the purposes intended, and the contract between the Added Party and the Appellant had been substantially performed. This means that both intended for use and substantial performance of the contract must be proven in order for the home to be eligible for warranty under s. 14(3) of the Act. I will focus on the second part of the test, namely, was the contract substantially performed.

42Substantial performance of a contract in the context of the Construction Act is not to be confused with either a home being ready for occupancy or with the substantial completion of the home. Substantial performance is a specific calculation of how much of the builder’s contract to complete the home has been performed at the time of the application for warranty eligibility. This is a financial and mathematical calculation assessing, firstly, the value of the contract to complete the home and, secondly, the dollar amount of what is required to complete that contract.

43Often, over the course of home building, the cost of a home (the value of the contract) fluctuates over the period of construction. Such is the case before me.

44The evidence before me presents various estimates of the value of the contact as being:

i. Construction Management Fee Proposal of June 6, 2021: $1.2 to 1.6 million;

ii. Email from the Added Party to Samia Sahyone dated February 23, 2023: $1,315.000;

iii. The testimony of Akram Hanna on behalf of the Added Party: $1.1 to 1.6 million;

iv. The testimony of the Appellant: $1 to 1.1 million;

v. Draft Report of Renovation Dispute Specialists, as of April 2, 2023 (the “RDS Report”): $1,610,000 ($1,460,000 completed to that date plus $150,000.00 in order to finalize the completion of the contract).

45I prefer the estimate of the Draft Report from Renovation Dispute Specialists. It is the only estimate by a non-party (with the exception of the mother of the Appellant) to this matter. I accept that Renovation Dispute Specialists were retained by the Appellant for the exact purpose of estimating the final cost of the Home, and to identify the cost of completion of the Home after the termination of the Added Party. Specifically, paragraph 3.2 of the RDS Report states that the purpose of the report was “to clarify the scope of work:

a) to identify deficiencies and incomplete work…

b) to identify subquality workmanship including the itemization of construction deficits.

c) to review the state of the project as of April 2, 2023 and to itemize work that was deficient and incomplete as of the project phase…

d) to discuss the standards of a project manager and to identify where Hanna Homes failed to meet the standards in the context of the project.”

46Paragraph 3.3 of the RDS Report states that “the issues listed in [the Report] represent the minimum work required to complete the project in accordance” (bolding theirs).

47In accepting the figure of $1,610,000.00, the calculation for the maximum amount for the performance of the contract as set out s. 2(1)(b)(i) and (ii) of the Construction Act, is as follows:

3% of the first million = $30,000.00

2% of the second million = $12,200.00

48Given the above, the cost of the performance of the contract must not exceed $42,200.00 in order for the contract to be substantially performed and for the Home to be eligible for warranty under the Act.

49In its Decision Letter dated July 23, 2024, Tarion states that “substantial performance generally requires that the home was at least 97% completed by the builder.” This is a mere proximation of the mathematical formula from s. 2(1)(b)(i) of the Construction Act. I find this creation of a percentage “threshold” by Tarion arbitrary, non-exact and unhelpful. Their statement also creates confusion in stating that the requirement is that the Home be at least 97% complete. The statutory requirement is that the contract (not the Home) be substantially performed according to the heretofore calculation from the Construction Act.

50The question now becomes, what is the cost of the remaining work needed in order for the contract to be substantially performed? As per the above calculations, if that work exceeds $42,200.00, the Home is not eligible for warranty.

Evidence of the Appellant

51The Appellant submits that the value of work required following the termination of the contract in order to establish substantial performance of that contract is less than $42,200.00.

52The Appellant submitted 15 videos and one photograph of the Home produced on March 22, 2023. The videos show the state of the Home on that date and encompassed the entire Home, including the entrance, kitchen, bathrooms, bedrooms, living rooms, basement, etc. The videos and the photograph provide a helpful context of the state of the Home at the time of the termination of the contract. It does reveal a home that is at the end stages of construction but shows numerous items that required completion, such as the laying of some floors, the connection of the HVAC systems (already installed), the connection of plumbing, the finalization of the electrical system and smart system and the completion of the driveway and landscaping. Although helpful with respect to context, the videos, however, do not assist in assessing the actual cost of the substantial performance of the contract.

53The Appellant also submitted a City of Toronto Deficiency Report dated June 14, 2023. The Appellant submits that this report shows the deficiencies in the Home that needed to be corrected for the purpose of an occupancy permit. The report shows that an engineering report must be submitted regarding fire blockings, guard railings to be installed, a handrail to be installed, exposed spray to be protected, a window restrictor to be added to one room and a vacuum pipe in the garage ceiling was required to be caulked. However, I do not find the Deficiency Report helpful in measuring the amount of work required in order to verify the substantial performance of the contract for a number of reasons. Firstly, as with the videos, no actual cost to the completion of these items is provided. Secondly, the requirements were listed 43 days after the termination of the contract. Thirdly, the report was for the purpose of an occupancy permit, which is different from that of quantifying the substantial performance of the contract.

54The Appellant also presented a Year End Form highlighting the cost of items required for occupancy. The total of the itemized items was $21,937.00. The Appellant submits that this is less than the $42,000.00 as required in Tarion’s decision letter of July 24, 2024.

55Upon cross-examination, the Appellant stated that there were some items that he had not taken into account such as the cost for completing the cold room ($1,000.00), and further electrical work ($1,440.54). The Appellant also admitted to having sent Tarion an invoice for landscaping that needed to be completed, in the amount of $25,000.00 The Appellant advised that he did not believe that this amount was required for occupancy.

56As with the Deficiency Report, the Appellant’s analysis of his Year End Form was for the purpose of the occupancy permit and not that of substantial performance of the contract, which, as noted earlier, the Appellant testified was “for everything”. This would include grading and landscaping, which were not completed at the time of the termination of the contract. I find that the Year End Form, although informative, does not assist with the determination of the amount of work required for substantial performance of the contract as the Year End Form is calculated for the purpose of obtaining an occupancy permit and that the numbers seem somewhat questionable, not being accompanied by invoices and receipts to confirm the amounts paid for post-termination work done. Also, from the testimony of the Appellant, his calculation of $21,937.00 appears not to be thorough and accurate.

Evidence of the Added Party

57Akram Hanna testified on behalf of the Added Party. Mr. Hanna testified that the contract with the Appellant was for the completion of the Home, including finished basement, grading and landscaping.

58Mr. Hanna testified that, at the time of the termination of the contract (March 22, 2023), it was his estimation that it would cost over $250,000.00 to complete the Home and that the Home was more than 15% incomplete. In a telephone interview with Mr. Skinner dated April 9, 2024, Mr. Hanna advised that it was his estimation that the Home was 80% complete.

59Mr. Hanna testified that, after the termination of the contract, the Added Party placed a lien on the property for $129,848.41. Under cross-examination with respect to that lien, on April 19, 2023, Mr. Hanna testified that the Home was 90-95% complete. I find that this disparity between Mr. Hanna’s testimony with regards to percentage completion of the home to be questionable and lacks credibility. I assign little weight to his estimates as Mr. Hanna is either confused regarding the percentages of completion or has increased the percentage for lien purposes and decreased them for warranty purposes.

60With respect to what was not completed in the Home at the time of termination, Mr. Hanna testified, in this hearing, of a number of items that were incomplete, including a non-functioning kitchen, non-functioning bathrooms, stairs without railings, no grading on the property, no asphalt on the driveway, a 6-foot drop-off from the kitchen outside door. Mr. Hanna testified that the electrical system was merely roughed-in and the HVAC system had yet to be tested. This information provides a context to the completion of the Home (or lack thereof) but does not provide the amount of cost to complete the contract. The best evidence in that regard is the amount that had been invoiced by the Added Party and paid by the Appellant.

61Mr. Hanna testified that by March 22, 2023, the Added Party had invoiced the Appellant in the amount of $819,854.99, of which the Added Party had been paid $665,472.88. When adding the amount of the claimed lien amount of $129,848.41, the total amount of $795,321.29 was either paid to or allegedly owed to the Added Party. Even considering the lowest cost estimate of the value of the contract (that being $1,000,000.00) the difference of $240,678.71 is well above the limit of $42,200.00 for the substantial completion of the contract.

Evidence of Tarion

62Tarion submitted an email from the Appellant to them dated June 7, 2024, enquiring as to whether the Home was warranted by Tarion. In that email, the Appellant advised Tarion that the Added Party “concealed failed city inspections for over a year, and recently after retaining a structural engineer, I found out that the failed items that he concealed require repair at costs that exceed well $150,000.00”.

63The amount of $150,000.00 is also reflected in the RDS Report of April 2, 2023, in which the author, Jeff Clarke, Registered Home Inspector, reported that “The project was approximately 85% complete as of April 2, 2023”, and “There will be an added expense of approximately $150,000.00 to complete the project so the owner can occupy the home.” This figure is the calculation derived from the report’s itemized summary of 69 deficiencies and incomplete work.

64I find both the Appellant’s email as well as the RDS Report (which, as noted, was commissioned by the Appellant) to be the most persuasive evidence in this matter.

65I find the RDS Report to be credible and impartial. Its conclusions regarding the dollar amount necessary for the completion of the contract are echoed by the Appellant himself in his email to Tarion dated July 7, 2024.

66The Appellant testified that he finished the Home for $100,000.00, and that amount, he states, consists largely of materials that were already purchased. This, however, is not congruent with his email of July 7th. The Appellant, as noted, also presented the Year End Form which indicated that only $21,937.00 was required for occupancy. However, I conclude that this figure is unreliable for reasons previously noted.

Conclusion

67Based on the evidence before me, I find that the Appellant has not established, on a balance of probabilities, that the contract with the Added Party was substantially performed, thereby entitling the Home to warranty coverage. I conclude that the cost of the finished home, and therefore the cost of the substantial performance of the contract to be $1,610,000.00. On this valuation, the allowable amount pursuant to s. 2(1)(b) of the Construction Act is $42,200.00.

68I also conclude that the practical cost of finishing the Home (and therefore the quantification of the substantial performance of the contract) to be $150,000.00, $117,800.00 higher than the allowable amount. As such, I find that the contract was not substantially performed pursuant to s. 2(1)(b) of the Construction Act.

69Therefore, pursuant to s. 14(3) of the Act, I find that the Appellant is not entitled to receive payment out of the guarantee fund for damages resulting from a breach of warranty.

Issue 2 – The Appellant may be entitled to financial compensation

70While I have found that the Appellant is not entitled to payment resulting from a breach of warranty, s. 14(2) of the Act does provide financial compensation in certain situations.

71Section 14(2) of the Act states:

Subject to the regulations, an owner of land who has entered into a construction contract and who has a cause of action against the builder for damages resulting from the builder’s failure to substantially perform the contract, is entitled to receive payment out of the guarantee fund of the amount by which the amount paid by the owner to the builder under the contract exceeds the value of the work and materials supplied to the owner under the contract.

72I have already found that the contract to build the Home was not substantially performed. In the decision letter from Tarion dated June 24, 2024, Tarion stated that “If the construction contract was not substantially performed within the meaning of the Construction Act, the [Appellant] may be entitled to a financial loss compensation of up to $40,000.00 under section 14(2)”.

73No evidence was proffered with respect to whether the Appellant does have a cause of action against the Added Party, nor of any quantification of any resulting financial compensation. I therefore draw no conclusion or finding as to the Appellant’s entitlement to this compensation, nor the amount, if any, under section 14(2).

ORDER

74The Home is not eligible for warranty as set out in section 13(1) of the Act.

LICENCE APPEAL TRIBUNAL

___________________________

Jeffery Campbell, Vice-Chair