Licence Appeal Tribunal File Numbers: 16114/NHCLA and 16115/NHCLA
In the matter of an appeal from administrative penalty orders issued by the Registrar, Home Construction Regulatory Authority (“HCRA”) under the New Home Construction Licensing Act, 2017, S.O. 2017, c. 33, Sched. 1.
Between:
Samalie Nsubuga and Joy Nneji
Appellants
and
Registrar, Home Construction Regulatory Authority
Respondent
DECISION AND ORDER
VICE-CHAIR: Geneviève Painchaud
APPEARANCES:
For the Appellants: Samalie Nsubuga, Appellant Joy Nneji, Appellant
For the Respondent: Alex Alton, Counsel Madhavi Gupta, Counsel
Heard by video conference: April 16, 17, 2025 and June 4 and 6, 2025
OVERVIEW
1Samalie Nsubuga and Joy Nneji (the “appellants”) appeal administrative penalty orders (“APO”) issued by the Registrar, HCRA (the “respondent” or the “Registrar”) on July 11, 2024 to the Licence Appeal Tribunal (the “Tribunal”). Each of the two orders were made pursuant to s. 76 of the New Home Construction Licencing Act, 2017 (the “NHCLA” or “Act”) and require that the appellants each pay an administrative penalty of $99,150.77 for contravening s. 37(1) of the Act.
2The appellants entered into a pre-construction agreement of purchase and sale with Mancini Homes Ltd. (the “builder”) on June 22, 2021, to purchase a home located at 2 McCrae Crescent, Woodville, Ontario (the “property”) as co-owners, for $725,000.00.
3The appellants took possession of the property on June 28, 2023, and the final purchase price was $752,312.61.
4The appellants signed a listing agreement with a Realtor on June 29 or June 30, 2023, to put the property for sale.
5On June 30, 2023, Rita Mancini, a representative from the builder, sent a complaint to Manveer Cheema, an investigator with the Registrar, alleging the appellants were attempting to flip the property, that there was a For Sale/ Coming Soon sign on the property on the previous day, and that the appellants’ agent said they had been flipping houses for two years.
6Ms. Mancini sent another email to Mr. Cheema on July 4, 2023, again mentioning that the appellants were attempting to flip the property as they closed on June 28 and the For Sale sign was already on the property on June 29, 2023. She again advised Mr. Cheema that apparently their Realtor said they have been flipping homes for two years.
7Mr. Cheema was away from the office and did not review these emails until his return on July 5, 2023.
8The property was listed for sale on July 5, 2023.
9On July 10, 2023, the appellants entered into an Agreement of Purchase and Sale (“APS”) to sell the property for $925,000, which was sold firm on July 15, 2023.
10The new owners took possession of the property on July 31, 2023.
11On May 8, 2024, the appellants each received a Notice of Proposal to Issue an Administrative Penalty (“NPIIP”).
12On July 11, 2024, the appellants each received an APO in the amount of $99,150.77.
13The appellants are both lawyers.
PROCEDURAL HISTORY
14A case conference was held on September 17, 2024, where files 16114/NHCLA and 16115/NHCLA were combined on consent of the parties as they submitted that the allegations and facts were identical for the two matters. A two-day hearing was set for January 2025.
15At the outset of the January 29 and 30, 2025 hearing, the parties requested mediation which the Tribunal accommodated on January 29th.
16On January 30th, the appellants requested an adjournment as they believed that the files may need to be re-separated due to differing positions, and they also wanted to raise Canadian Charter of Rights and Freedoms (“Charter”) issues. An adjournment was granted until April 2025. The Tribunal thereafter confirmed the hearing would proceed on April 16 and 17, 2025.
17On March 23, 2025, the appellants brought a motion requesting adding issues to the hearing, and a further adjournment.
18In the Motion and Adjournment Decision dated April 14, 2025, the Tribunal ordered that:
a. The request for an adjournment is denied;
b. The appellants may raise procedural unfairness at the hearing;
c. The appellants may raise ss. 7 and 15 of the Charter with respect to the reasonableness of the Registrar’s decision at the hearing.
d. The appellants may not raise the allegation that the specified provisions in the NHCLA breach s. 7 of the Charter.
19On April 16, 2025, at the outset of the first day of the planned two-day hearing, Ms. Nsubuga’s articling student, Ms. Dadvar, made an oral request for an adjournment on her behalf.
20Ms. Dadvar advised that Ms. Nsubuga was at the hospital due to a health emergency with her child and was therefore requesting an adjournment. She added that the request was only for that day and that the hearing could proceed as planned the following day.
21The respondent did not oppose the adjournment request as it was due to a medical emergency, but suggested the hearing could proceed without Ms. Nsubuga since the two files could be separated. Ms. Nneji submitted that this would not be feasible as the two appellants had split how they would present their case and she could not speak to all the issues.
22Rules 16.2 and 16.3 of the Licence Appeal Tribunal Rules, 2023 (“Rules”) outline the process and factors that may be considered for an adjournment. This adjournment request was on consent, but this was the third request for an adjournment. The file has been ongoing for some time as the administrative penalty order is dated July 11, 2024. An adjournment was already granted on January 30, 2025, and one denied on April 14, 2025. I found that a medical emergency requiring a hospital visit is an unforeseen event that justifies an adjournment. Also, separating the case would not make the process more efficient.
23Because of this being a third adjournment request, and the assurance that the appellants could proceed the following day, I granted the adjournment with the hearing to proceed on a peremptory basis.
24The hearing proceeded on April 17, 2025, and at the end of the day, it became clear that more time would be required, and two more dates were set: June 4 and 6, 2025. The hearing resumed on those days and concluded on June 6, 2025.
ISSUES
25The issues to be determined are:
a. Whether the appellants have proven that the Registrar’s finding that the appellants acted as vendors without a licence in the sale of the property was unreasonable; and
b. If not, whether the quantum of the administrative penalty imposed on the appellants by the Registrar as a result of the alleged contravention was reasonable under the circumstances.
c. Was the Registrar’s finding made in a procedurally unfair manner?
d. Were there violations under ss. 7 and 15 of the Charter with respect to the reasonableness of the Registrar’s decision.
RESULT
26The appellants contravened subsection 37(1) of the Act by selling their property without a licence. The appellants meet the definition of vendor under the Act.
27It was reasonable for the Registrar to impose the APOs. However, I find the reasonable amount of each administrative penalty against the appellants to be $66,492.13 and I vary the amount accordingly.
28The allegation of procedural unfairness has not been established.
29There were no violations under ss. 7 and 15 of the Charter with respect to the reasonableness of the Registrar’s decision.
LAW AND ANALYSIS
30For the Tribunal to order that the APOs be revoked pursuant to subsection 77(4) of the Act, the appellants must satisfy me that they did not contravene subsection 37(1) of the Act and therefore the imposition of an administrative penalty by the Registrar was not warranted. If I determine that the appellants contravened subsection 37(1) by being unlicensed vendors in the sale of their property, and the Registrar was justified in issuing an administrative penalty under subsection 76(1) of the Act, I must also consider whether the amount of the APOs were reasonable under the circumstances.
31The appellants also raise breaches of procedural fairness in the investigation and breaches under ss. 7 and 15 of the Charter in regard to reasonableness of the Registrar’s decision.
The appellants were acting as vendors
32I find the appellants acted as vendors in the sale of the property.
33At the centre of this appeal is the respondent’s determination that the appellants were “vendors” under the Act and therefore in contravention of subsection 37(1) of the Act by not being licensed as vendors when they sold the property.
34The appellants signed an APS with the builder on June 22, 2021. After delays in construction, they took possession of the property and transfer of title on June 28, 2023.
35The appellants then signed a listing agreement on June 29 or 30, 2023 and the property was listed for sale on July 5, 2023. They accepted an offer on July 10, 2023 with a possession date of July 31, 2023.
36To summarize:
a. There were approximately one to two days between when the appellants took possession of the property and when they signed a listing agreement with a Realtor.
b. There were approximately six to seven days between when the appellants took possession of the property and when it was actively listed for sale.
c. There were approximately 11 to 12 days between when the appellants took possession of the property and when they entered into an APS with the purchaser.
d. There were approximately 31-32 days between when the appellants took possession of the property and when the purchaser took over possession.
37The respondent alleges that the appellants acted as vendors of a new home between July 5, 2023, and July 10, 2023, without being licenced as a vendor, contravening section 37(1) of the Act. During this time, they also did not occupy the property.
38Section 37(1) of the Act stipulates that no person may sell a new home unless the person is licensed as a vendor. The definition of vendor, for the purposes of the Act, is found in section 1(1) of the Ontario New Home Warranties Protection Act, RSO 1990, c O.31 (“ONHWPA”). A vendor is a person who sells a home that was “not previously occupied”.
39The appellants’ position is that they occupied the property prior to selling it and are therefore not “vendors” for the purpose of the Act.
40The appellants submit that they purchased the property together in 2021 so Ms. Nsubuga could have a home office in Lindsay, but that there were construction delays, so they took possession in 2023 instead of 2022.
41Ms. Nsubuga bought another home, in July 2022, which she moved into with her family and has been living in since.
42Ms. Nsubuga states that she went to visit the property on or around June 29, 2023, with her family to assess where they could put their belongings but that is when they decided the house would not work for them due to the layout.
43Ms. Nsubuga’s position is that she moved in partially but did not completely move in. She did not bring furniture and did not want to answer if there was a bed, although she does not recall sleeping there. She left some coats and brought court clothes there after it was listed for sale as it was still her home.
44Ms. Nneji did not argue she lived in the home.
45The appellants also argue that between July 5, 2023, and July 10, 2023, the house was not sold so they were not in contravention of the Act.
46The respondent submits that the appellants did not meet the legal threshold for having previously occupied the property. Their putting up the property for sale within one to two days after taking possession, as unlicensed vendors, is therefore a contravention of section 37(1) of the Act which makes them subject to the APOs under section 76 of the Act.
47The respondent argues that the appellants did not move in and that they had no furniture in the home. In addition, the fact that they had to replace the lawn prior to closing on their sale to the new purchasers demonstrates they were not living in the home and maintaining it. In the Registrar’s interview with the new purchasers of the home, they were told the home was unoccupied when they purchased it and that there was no furniture, personal belongings or appliances.
48The respondent points to Ali and Butt v. Registrar, Home Construction Regulatory Authority 2024 ONLAT NHCLA 15772 and 16108 where the Tribunal outlined that neither the NHCLA nor the ONHWPA, nor the regulations under the two acts define “previously occupied”. Nevertheless, this case outlined many instances where the courts have addressed the issue and concluded that Ali and Butt did not meet the threshold of occupying the home even if they had the intention to occupy the home as they only stayed there two nights with sleeping bags.
49I agree with the respondent that the appellants do not meet the threshold of having occupied the property. Ms. Nsubuga confirmed they did not move in any furniture and the property was sold without appliances. As the respondent repeatedly asked Ms. Nsubuga to answer if there was even a bed in the property which she chose to not answer, I draw an adverse inference as the question was straightforward and capable of being clearly answered. Also, even if she had a coat or two there, Ms. Nsubuga stated she brought court clothes there only after the property was listed for sale.
50I also find it improbable that the decision to sell was only made the day after taking legal possession because Ms. Nsubuga already had purchased another home in 2022 where she lived with her family and stated she had visited the property at other times prior to taking possession. I am therefore not convinced she was surprised about the layout on the day after closing. I find that the appellants never occupied the property and sold a new home.
51With respect to the timing of when they sold the property, I find that between July 5 and July 10, the appellants were actively attempting to sell the property. It was listed for sale on July 5, and they accepted a conditional offer on July 10, 2023.
52I accept the respondent’s position as reasonable and find that the appellants acted as vendors of a new home between July 5, 2023, and July 10, 2023 without being licenced as vendors, thus contravening section 37(1) of the Act.
The Registrar’s findings were not made in a procedurally unfair manner
53I find that the appellants’ investigation was conducted differently than the Registrar’s investigation into the sale of another property located at 13 McCrae Crescent, but the appellants were not treated unfairly.
54I begin with a review of how both investigations were conducted.
2 McRae Crescent (the property purchased by the appellants)
55The appellants took possession of the property on June 28, 2023.
56On June 30 and July 4, 2023, Ms. Mancini, a representative of the builder, sent emails to Mr. Cheema, an investigator at the Registrar, to notify him that the appellants had taken possession of their property on June 28th, and it already had a For Sale sign erected the next day. She included a picture of the For Sale/Coming Soon sign.
57On July 5, 2023, upon his return from being away from work, Mr. Cheema read the emails from Ms. Mancini, and asked her for and received the APS between the builder and the appellants via email. He added that this file became assigned to him as he was already dealing with another complaint on the same street. He created the complaint for this investigation on that day.
58Mr. Cheema explained that he then needed to determine if there were reasonable grounds to investigate. One of his first steps was to ensure the property was registered under Tarion which he confirmed. He also conducted a search of the property on Geowarehouse which showed the property still owned by the builder on July 5th, 2023. He stated this was not abnormal as there is a delay in title transfers being updated on the database.
59This led Mr. Cheema to continue monitoring the property for updates.
60On July 11, 2023, he discovered the property was listed on HouseSigma as an unfurnished home with no appliances, which was updated as conditionally sold on July 12, 2023. It was updated as a firm sale for $925,000 on July 19, 2023.
61In a further search on Geowarehouse on July 19, 2023, he found that the property title was finally described as transferred from the builder to the appellants. On July 26, 2023, the Parcel Registry indicated a notice of assignment of rent, which indicates the applicants intended to rent the property.
62On August 23, 2023, Mr. Cheema’s Geowarehouse search revealed that the appellants had transferred the property title to new owners. This is when he admits to starting to believe there was a contravention, but he needed to complete his investigation to come to a determination. He contacted the purchasers’ lawyer to be able to connect with them.
63On August 30, 2023, one of the purchasers, S.W., contacted Mr. Cheema. A few days later, Mr. Cheema requested the APS from him.
64On September 6, 2023, Mr. Cheema visited the property and spoke to the new owner who confirmed the home was not occupied before he moved in. A neighbour also confirmed that the only person who moved into the home was the new owner.
65In October 2023, Mr. Cheema received the APS from S.W.
66Mr. Cheema continued his investigative work, collecting more information and having a videoconference interview with S.W. on November 29, 2023.
67Mr. Cheema finished his investigation on December 8, 2023, and concluded the property was unoccupied prior to S.W. occupying the home and therefore that the appellants acted as unlicensed vendors when they listed the home for sale. He then recommended that an assessor review the case to consider an administrative monetary penalty.
68On May 8, 2024, NPIIPs were issued for each appellant which mentioned:
a. This was in intention to issue an APO;
b. The contravention and particulars;
c. The proposed administrative order amount and how they arrived at this amount;
d. The purpose of imposing administrative penalties;
e. That additional information could be considered that may impact the proposed order within 15 days, and how they can send it in; and
f. The relevant legislation.
69Following the receipt of her NPIIP, Ms. Nneji reached out to Mr. Cheema about possibly coming to a resolution for a lesser amount. Mr. Cheema testified that his notes indicate that he advised her to seek legal advice.
70On May 27, 2024, after the 15-day deadline had passed, to respond to the NPIIPs, one of the appellants emailed a without prejudice letter to the Registrar.
71On July 11, 2024, the appellants each received an APO in the same amount as the NPIIP of $99,150.77 signed by Todd Drain of the Registrar, which included:
a. The contravention and particulars;
b. The administrative order amount and how they arrived at this amount;
c. The purpose of imposing administrative penalties;
d. That no additional information was submitted within the 15-day deadline, and a further letter was received by the appellants marked “without prejudice” which could therefore not be considered to vary the order;
e. The right to appeal to the Tribunal, and the process; and
f. How to make a payment.
13 McRae Crescent (purchased by W.A. and Z.B.)
72W.A. and Z.B. took possession of this home on December 16, 2022, from the same builder and on the same street as the appellants. This was approximately six months prior to the appellants taking possession of 2 McRae Crescent.
73The complaint for this property was also started by Ms. Mancini. She sent an email to HCRA on January 10, 2023, alleging that this and two other homes were sold by unlicensed vendors.
74Mr. Cheema was assigned the investigation on March 30, 2023. He reviewed HouseSigma and saw the home as sold as a brand-new home.
75On April 3 and April 11, 2023, Mr. Cheema reviewed the parcel registry which still showed the home as owned by W.A. and Z.B. He continued to check it weekly.
76On April 6, 2023, he received the original APS from Ms. Mancini.
77On May 16, 2023, Mr. Cheema was told another investigator visited the home and observed that it was unoccupied.
78Mr. Cheema determined he did not yet have enough information to support his belief that W.A. and Z.B. acted as unlicenced vendors.
79Although he does not normally contact the parties he investigates until an investigation is concluded, Mr. Cheema sent an email to W.A. on May 19, 2023, to possibly obtain more information. W.A. replied the same day and told him that his home was sold May 5, 2023.
80Mr. Cheema explained that he does not usually contact the parties early in an investigation because as he does not want to imply someone broke the law until he has evidence, he does not want to risk tipping off a party who may then hinder the investigation and because he wants to gather as much information first in order to ask the right questions.
81On May 30, 2023, Mr. Cheema discovered that Geowarehouse had been updated and showed a title transfer of May 5, 2023 from W.A. and Z.B. to the new owners.
82Mr. Cheema stated that at that point, the Registrar still did not have enough evidence to proceed and therefore sent W.A and Z.B. warning letters on July 7, 2023, with an opportunity to comply with the Act. At that point he was not sure if W.A. and Z.B. had occupied the property, if the new owners had moved in nor did he have the APS proving the sale to the new owners.
83The warning letters stated that:
a. The HCRA believed they had sold the home without being licenced;
b. They had one final opportunity to comply with the Act, and that if they applied for a licence with the HCRA before August 7, 2023, further action may not be taken against them;
c. They were welcome to provide evidence to demonstrate they did not require a licence to sell the home; and
d. They should consult with a lawyer before disclosing information about potential illegal activities to the HCRA.
84W.A. replied on July 8, 2023 and said he was out of the country so he was not reachable.
85On July 26, 2023, W.A. told Mr. Cheema that he occupied the home for three to four weeks and offered to provide evidence. Mr. Cheema advised him to get legal advice. Throughout August, W.A. told Mr. Cheema he had not yet reached a lawyer.
86The investigation pursued between August 2023 and February 2024, including visits to the property, discussions with the purchasers and builder, receiving the statement of adjustments from the purchasers in December, 2023, and receiving information from W.A. and Z.B.
87On February 9, 2024, two NPIIPs were issued, with similar information than the appellants’ NPIIPs.
88On March 13, 2024, two APOs were issued with a base penalty amount of $14,130.43, a monetary benefit amount of $107,941.82, and similar information as on the appellants’ APOs with one notable difference; essentially that after reviewing the additional information provided by W.A and Z.B., the assessor remained satisfied that they contravened the Act.
Comparing the nature of the decisions made and the process followed in making them in the two investigations
89The appellants submit that the factors set out in Baker v. Canada (Minister of Citizenship and Immigration), 1999 CanLII 688 (SCC) point to a high duty of fairness which was not followed in the Registrar’s choice of procedure. They allege this was due to discrimination based on gender and race which resulted in being treated differently and unfairly.
90The respondent agrees that the appellants are entitled to procedural fairness, which they have received, but that the test in Baker does not relate to their grievances as the appellants misapplied Baker to the investigation rather than the decision being made.
91The respondent submits that the process under s. 75 and s. 76 of the Act was followed.
92The leading decision in Canada on procedural fairness is Baker v. Canada and paragraphs 23 to 27 of Baker identify five factors used to determine whether a proceeding is procedurally fair:
i. The nature of the decision being made and the process followed in making it.
ii. The nature of the statutory scheme and the terms of the statute pursuant to which the body operates.
iii. The importance of the decision to the individual or individuals affected.
iv. The legitimate expectations of the person challenging the decision may determine what procedures the duty of fairness requires in given circumstances.
v. The analysis of what procedures the duty of fairness requires. In particular, the choice of procedure made by the agency.
93The parties agreed that in both investigations being compared, the HCRA issued NPIIPs setting out the allegations and giving them 15 days to respond as required by the Act, followed by the NOPs.
94The appellants argued that they should have been informed by the HCRA and the builder about the Act, and if they had been, like W.A. and Z.B., they may have not followed through with the sale of the property or may have gotten licenced and avoided the penalty. Failing to inform them is a form of entrapment.
95They point to the Registrar’s website that states that:
If the Registrar receives a complaint about a licensee, the HCRA will gather information to determine what, if any, action is required. Licensees will be notified of the complaint and are required to provide any information requested by the Registrar as soon as is reasonably possible.
96They also submit that they should have been informed about the complaint as soon as it was made as they had not yet sold the home at that point, and they should have been given an opportunity to participate in the investigation and come into compliance with the legislation, as it is the HCRA’s duty to ensure compliance.
97The appellants argue that unlike W.A. and Z.B., they were not provided an opportunity to comply through a warning letter, which was procedurally unfair as it allowed W.A and Z.B. an opportunity to come into compliance and avoid further action.
98They add that if they were advised of the issue, they may not have completed the sale of the home as any deal can be rescinded before closing as it was only an agreement to sell and there would be no penalty. In addition, since it may have been illegal to sell the property, an illegal contract could not have been enforced by the Courts.
99The respondent submits that procedural fairness does not require the HCRA to immediately notify individuals when a complaint is made against them. They did not have a duty to inform the appellants when they receive a complaint, which is simply an allegation made by a third-party. They need to conduct their own investigation into the matter and collect evidence. By the time they even started to have evidence the home had been sold, title had been transferred to new owners.
100According to the respondent, the section of the HCRA website pointed to by the appellants relates to those licenced to sell new homes and not the general public.
101Also, no two investigations are the same. While processes followed were somewhat different, with the W.A. and Z.B property, the HCRA did not have enough evidence to proceed, unlike in the case of the appellants. Realizing he was at a dead-end in the investigation, Mr. Cheema decided to contact W.A and Z.B.
102The respondent also adds that compliance was not offered through a warning letter or education letter as the information it had at the time was that the appellants were flippers who had been doing this for two years, and that unlike the case of W.A. and Z.B., they had a strong case against the appellants. It adds that compliance is not a deterrent, and the purpose of the Act is to deter unlicensed vendors.
103Also, it points out that the warning letter states that compliance “may” prevent further action, but not that it absolutely will.
104Mr. Cheema explained that at some point in the summer of 2023, the Registrar changed its policy of sending warning letters as they discovered that these letters had the effect of allowing people to use loopholes in the legislation such as listing homes privately for sale and hiding evidence. He does not know of a single case of a warning letter resulting in someone coming into compliance with the Act and avoiding an administrative penalty. On the contrary, these letters were making cases harder to prove.
105The respondent submits that in the NPIIPs, the appellants were advised of the licencing process and given an opportunity to submit documents prior to an order being issued. The appellants only submitted information without prejudice.
106The respondent submits the appellants took no steps to get licenced and would not have met the criteria to get licenced. They were not familiar with the requirements to become vendors and denied they had the qualifications such as being a builder, project manager, financial planner or knowledgeable about the Tarion warranty program.
107It adds that even if the appellants became licenced after the sale of the home, only the penalty portion may have been reduced and not the monetary benefit as that had already happened and the property had changed ownership.
108Subsection 76(9) of the Act establishes that imposing an APO against a person applies even when the person upon whom the APO is imposed took all reasonable steps to prevent the contravention or, had an honest and reasonable belief in mistaken facts that, if true, would have rendered the contravention innocent. Put another way, the APO applies even if the persons had no knowledge of their obligations under the Act or had received information, they believed to be true, that led them to conclude they had no such obligations.
109I have not been pointed to evidence demonstrating that the process followed in making a decision was procedurally unfair. I do not find the respondent was required to inform the appellants immediately after they received a complaint. On the other hand, I find the HCRA should investigate complaints properly before alleging any misconduct. I have also not been pointed to evidence that the builder is required to inform their clients about the Act. The Act is there for the public protection and to prevent unauthorized flipping of homes for profit.
110In fact, the appellants did have an occasion to submit information after they received their NPIIPs but did not.
111I also do not find that the Registrar has a duty to inform the public on how to come into compliance after a sale nor how to circumvent the Act. This runs counter to the intent of the legislation and the interest of the general public, which is to prevent the flipping of homes by unlicensed vendors.
112I agree with the respondent that the section of the HCRA website the appellants are using relates to licensees and the appellants are not licensees, so it does not apply to them.
113I do not accept the appellants’ unsupported opinion that they could have simply chosen to rescind their sales agreement with no consequence if they had been advised they were contravening the Act nor that they had a valid reason to rescind the agreement they entered into.
114While I accept the appellant’s submission that the Courts will not enforce an illegal contract, based on the information presented, I am not convinced by the theory that the appellants did not have a valid contract for the sale of their home and therefore that such contract could not have been enforced.
115I accept that no warning letter was sent to the appellants, unlike in the case of W.A and Z.B. I also accept that the Registrar did not need to take that step in the appellants’ investigation. I also have insufficient evidence to conclude that a warning letter would have impacted the result nor that it was procedurally unfair not to send one.
116Based on the evidence I find the appellants had no intention on becoming licenced as vendors. After being again asked multiple times, Ms. Nsubuga chose not to answer if she tried to get a licence, and only agreeing she did not get a licence. I draw an adverse inference from this lack of response to a straightforward question. I find the appellants took no serious action to get licenced. They did not even take such steps in the 60 days between receiving the NPIIPs and the APOs. As for W.A. and Z.B, while they received a letter offering steps that may lead to bringing them into compliance, there is no evidence that they got licenced.
117I find that being treated differently is not the same as being treated unfairly. Although the Registrar has a process to follow in their investigations, it does not have an obligation to treat every investigation in the exact same way as the facts of each case are different. There was no breach of procedural fairness in its choice of procedure. While the investigation into the appellants was conducted somewhat differently than the investigation into W.A. and Z.B.’s property, I find that this was based on different circumstances, and still was in line with the requirements under the Act. It is reasonable that Mr. Cheema took different steps in both cases. On the other hand, W.A and Z.B. received a higher base penalty imposed on them compared to the appellants. While, as stated, the process was legitimately different between the appellants and W.A. and Z.B., it is obvious from the result that W.A. and Z.B. were not afforded preferential treatment.
118I also accept the respondent’s position that the HCRA changed its policy regarding issuing warning letters and involving parties in investigation because they were noticing more people trying to circumvent the intention of the Act.
119As race and gender-based discrimination were argued throughout, I will make my analysis in this regard further below. I do not find that anything else under Baker applies to this case.
120I do not find the respondent’s investigation was made in a procedurally unfair manner.
There were no violations under s. 7 of the Charter with respect to the reasonableness of the Registrar’s decision.
121The appellants argue that the severe financial penalty and potential on the appellants’ professional reputation could infringe on their right to liberty, particularly economic liberty. They add that the appeal process has taken time away from their work as well, adding more economic loss. They question whether it is reasonable for them to still have the proceeds of the sale of the property one year after the sale of the property.
122The respondent argues that s. 7 of the Charter does not apply and points to Canada (Attorney General), v. United States Steel Corporation, 2010 FC 642 where the Court distinguished between purely economic impacts and penalties which engage life, liberty and security of the person:
“There is no doubt that the importance of the decision to the affected party is a significant factor. However, a distinction must be drawn between those decisions that implicate the life, liberty and security of the person involved and those, as in the present case, having only an economic impact.” [para 84]
123The respondent adds that most of the amount sought in the APOs is the return of the monetary gain the appellants made so they do not benefit from their wrongdoing.
124The burden of proof is on the appellants to establish a breach of s. 7 of the Charter. I find that the appellants have failed to establish any violations under s. 7 of the Charter with respect to the reasonableness of the Registrar’s decision. The purely economic impacts, beyond the repayment of the gains, are $10,869.57 per appellant, which do not impact their right to liberty under the Charter. I have not been pointed to any evidence of the impact on their professional reputation nor how s. 7 would apply.
There were no violations under s. 15 of the Charter with respect to the reasonableness of the Registrar’s decision.
125The burden of proof is on the appellants to establish a breach of s. 15 of the Charter.
126The appellants allege that since their investigation proceeded differently than the W.A and Z.B. investigation, this constitutes race and gender-based discrimination and a breach of s. 15 of the Charter as they are both women of African descent. The parties they say are responsible for this discriminatory conduct are Mr. Cheema, and both HCRA counsel. They argue that W.A. and Z.B. were provided preferential treatment.
127They submit that since they could not decipher why they were treated differently, it must be due to discrimination. They argue that this discrimination and the lack of receiving a warning letter, precluded them from complying with the Act.
128The appellants argues that W.A. and Z.B. were offered a licencing pathway and advised of their right to obtain legal advice, unlike in their case, making it a breach under s. 15(1) of the Charter.
129The appellants believe that Colleen, an employee with the builder, knew they were women of black descent, and she could have told Rita Mancini, another representative from the builder, who could have in turn told the investigator at HCRA.
130The appellants admit there is no evidence demonstrating where W.A. and Z.B. are from but will not agree that Z.B. is a woman.
131On the other hand, they rely on a Tribunal decision regarding W.A. and Z.B. to allege they were treated differently based on gender and country of origin, and this decision addresses W.A. as a man and Z.B. as a woman, his wife.
132The respondent presented how the Supreme Court of Canada summarized the s.15 test in Fraser v. Canada (Attorney General), 2020 SCC 28 at para. 27:
To prove prima facie violation of s. 15(1), a claimant must demonstrate that the impugned law or state action:
i. On its face or on its impact, creates a distinction based on enumerated or analogous grounds; and
ii. Imposes burdens or denies a benefit in a manner that has the effect of reinforcing, perpetuating, or exacerbating disadvantage.
133The respondent submits that the appellants have not met either part of that test with evidence and have only made inferences based on people’s names. The investigator had not seen, met, or spoken to the appellants and did not know the appellants’ gender nor race until his investigation was concluded and after the NPIIPs were issued.
134The parties agree that the only evidence the HCRA could have relied upon to discriminate was their names as the first time one of them spoke to the HCRA was after the NPIIPs were issued.
135I find there is no evidence or nexus that could lead to the determination that the appellants were treated differently based on their gender and race, since the HCRA did not even have that information during the conduct of their investigation. The appellants have failed to demonstrate how on its face or on its impact, the Registrar’s actions created a distinction based on enumerated or analogous grounds, nor how this alleged distinction reinforced, perpetuated, or exacerbated disadvantage.
136I have not been presented any information regarding W.A. and Z.B.’s country of origin, but on the other hand, I find the appellants knew Z.B. is a woman. The fact the appellants did not understand why some part of the investigations proceeded differently does not automatically mean it is due to discrimination.
137I do not agree with the theory that one employee of the builder told another employee the appellant’s race and gender, who then told the HCRA investigator. I see no basis for this assertion.
138While the appellants mention discrimination by HCRA counsel, they have not made further submissions on this point, and I see no relation with the investigation process at the HCRA where they allege discrimination and this hearing process.
139I find there were no violations under s. 15 of the Charter with respect to the reasonableness of the Registrar’s decision.
The quantum of the amounts imposed in the APOs are varied
140I find the amounts proposed in the APOs shall be adjusted downward to recognize the appellants’ cost of owning the property between June 28 and July 31, 2023.
141The APOs issued on July 11, 2024 calculated the monetary benefit at $88,343.70 and the base penalty amount at $10,869.57 per appellant.
142Under subsection 76(1) of the Act, an assessor of the HCRA may impose an APO against a person if they are satisfied that the person has contravened a provision of the Act. Further, the reasons for imposing an APO are set out in subsection 76(4) and may include one or more of:
a. Ensuring compliance with Act and its regulations; or
b. Preventing a person from deriving an economic benefit as a result of contravening the Act.
143In a practical sense, an APO not only penalizes non-compliance, it signals to the marketplace and the public that failing to abide by the licensing scheme could carry a significant financial penalty.
144Subsection 76(4) of the Act provides the basis for APOs in ensuring compliance with the Act, and in preventing persons from deriving an economic benefit as a result of any contravention of them.
145The amount of any APO is determined by an assessor of the HCRA in accordance with sections 12 and 13 of the O. Reg 573/22 (the “Regulation”). The APO amount consists of two components: the monetary benefit and the base penalty.
146The factors the assessor must consider regarding the monetary benefit determination is set out in section 13 of the Regulation. Section 13 focuses on the amount that accrued to the persons as a result of their contravention, including:
a. The costs that they avoided by failing to comply, or the costs they delayed incurring by delaying compliance; and
b. The gain the persons accrued or losses they avoided by failing to comply with provisions of the Act.
147Subsection 76(6) of the Act establishes that the total amount of the administrative penalty may be increased by an amount equal to the amount of the monetary benefit acquired by or that accrued to the person as a result of the contravention.
148The base penalty can be no more than $50,000. The assessor’s determination of the base penalty amount is guided by the factors set out in section 12 of the Regulation, including:
a. The impact on the HCRA’s ability to carry out its purpose;
b. The impact on purchasers or owners of new homes or other persons;
c. In respect of the persons who carried out the contravention, their history of non-compliance and whether they acted to remedy the contravention, and if so, how urgently; and
d. Whether the contravention was deliberate.
The monetary benefit is adjusted to $55,622.56 for each appellant
149The APOs issued on July 11, 2024 calculated the monetary benefit at $88,343.70 per appellant.
150These amounts were based on information available to the HCRA when the APOs were issued. My finding of the monetary benefit being unreasonable and needing to be varied is only based on information provided after the APOs were issued.
151In determining the monetary benefits, the HCRA considered the costs avoided and gains accrued by failing to comply.
152At the hearing, the monetary benefit amounts were recalculated by the respondent in accordance with evidence submitted by the appellants that was not provided to the assessor at the time the original penalties were calculated and the APOs issued.
153While the parties concur that the monetary benefit calculation should be reduced by several factors, there are a few that are disputed.
154The respondent submits that the difference between the original purchase price and the resale price (before the monetary benefit calculation) should be adjusted from $176,562.40 used in the APOs to $197,014.81 from the statement of adjustments, as the latter accounts for the HST rebate. This information was not available to them at the time the APOs were issued. The appellants disagree and argue that the respondent should not be allowed to increase the amount sought after the APOs were issued, and that there is no evidence they received the HST rebate.
155I find that the respondent is not increasing the total amount sought as it has made a multitude of adjustments based on information provided by the appellants, including the statement of adjustment indicating the HST rebate, which resulted in the HCRA seeking an overall lower amount. I find that it is reasonable to make positive and negative adjustments to the monetary benefit calculation based on new evidence and that the difference between the original purchase price and the resale price to be used for the calculation is $197,014.81.
156The appellants request an adjustment of $4,000 which was paid to the purchasers for lawn restoration shortly after closing. The respondent does not dispute that this amount was paid but argues that this was due to negligence in not maintaining the property and should therefore not be accounted for in the monetary benefit calculation. I agree with the appellants and find that the $4,000 cost of lawn restoration is reasonable and impacted the total monetary benefit from the sale of their property. This cost was incurred in order to proceed with the sale.
157The appellants also request an adjustment of $5,906.85 for interest expense as they put a downpayment of $75,000 in August 2021, and if that money was invested until July 31, 2023, at the prime rate of 4.4%, they would have made that much in interest as money always attracts interest. The respondent submits that no evidence of such has been provided and that this potential opportunity cost does not impact the monetary benefit and it is not an expense under the Act. I agree with the respondent and find that there was no convincing evidence or authorities presented in support of a loss of potential interest on the deposit, nor that such would qualify as a reduction in monetary benefit in the sale of the property.
158The appellants also dispute the HCRA licencing fees arguing that they did not benefit from having a licence. The respondent argues this is a cost avoided by selling the property unlicensed. I find that if the appellants had been licenced in order to sell the property, they would have had to bear that cost and that the avoidance of getting licenced is to be taken into account in the calculation as per s.13 of the Regulation.
159The appellants submit that subsection 76(6) does not state that all monetary benefits should be paid back and therefore it should be reduced by half or eliminated due to the actions of the HCRA. While I agree that there is no absolute in the amount of monetary benefit to be paid back under this subsection, I have not been convinced that any action by the HCRA should impact the intent of the Act, which is that unlicenced vendors should not derive an economic benefit from the sale of their property.
160The assessor split the profits equally for the determination of the monetary benefit and the appellants did not submit that it should have been otherwise.
161The monetary benefit accrued from the sale of the property is therefore reduced from $88,343.70 to $55,622.56 per appellant and is calculated as follows:
Resale price less original purchase price $925,336.42 LESS $728,321.61
$197,014.81
LESS: Real estate commissions
$39,196.88
LESS: Land transfer tax, legal fees, title insurance, transfer fee, lender fee, lender legal fee, mortgage registration fee, wire transfer fees, post closing search, lender discharge legal fees
$29,065.40
LESS: Property tax holdback, mortgage interest, mortgage discharge fee, mortgage statement fee, 1 month property tax, lender commitment fee, home insurance
$17,382.40
LESS: Lawn Repair
$4,000.00
TOTAL Net gain
$107,370.13
ADD: Cost of licencing
$3,875.00
TOTAL monetary benefit for the property
$111,245.13
DIVIDED BY TWO APPELLANTS = Monetary benefit per appellant
$55,622.56
The penalty amount is not adjusted
162The APOs issued on July 11, 2024, calculated the base penalty amount at $10,869.57 per appellant.
163In the APOs, the registrar explained how it determined the penalty amount and considered:
a. There is an impact of the HCRA’s ability to carry out its purpose when a person fails to engage in the regulatory scheme;
b. There is an impact on the purchaser of the home as the Tarion warranty start date should reflect when the home was first occupied. Since the home started being occupied by the new owners over a month after the appellants took possession, it resulted in a reduction of approximately one month of protection to the consumer including the important 30-day form for noting deficiencies;
c. This is the first instance of non-compliance by the appellants;
d. There is no evidence the appellants contacted Tarion to remedy the contravention and harm done;
e. There is no evidence the contraventions were deliberate; and
f. The length of time of the contravention was short.
164As a result of considering the above factors and the maximum penalty amount of $50,000.00, the assessor proposed a base penalty amount of $10,869.57 per appellant.
165The appellants submit there is no minimum on the penalty, and they were first time homebuyers at that time.
166The respondent submits that the purpose of APOs is not only to prevent economic benefits. If there were no penalties issued, there would be no risk for unlicensed vendors beyond losing their monetary benefit and therefore they would not be deterred to contravene the Act.
167While I agree with the appellants that there is no minimum and only a maximum for the penalty amount, I also agree with the respondent that these are in place to signal to the marketplace and the public that failing to abide by the licensing scheme could carry a significant financial penalty. Unlicensed vendors should be risking more than their financial gain if they choose to flip homes and contravene the Act, or there would not be a deterrent. While many factors have been considered to determine the administrative penalty, I find those reasonable and I have not been convinced of a need to vary them.
168I find the base penalty amount in the APOs is reasonable under section 12 of the Regulation.
169To summarize, I find that the base penalty should be maintained at $10,869.57 per appellant and the monetary benefit decreased to $55,622.56 per appellant for a total administrative penalty reduced to $66,492.13 per appellant.
CONCLUSION
170I find the appellants contravened subsection 37(1) of the Act by selling the property without a licence and it was reasonable for the HCRA to therefore issue the APOs.
171I find the allegation of procedural unfairness has not been established.
172I find there were no violations under ss. 7 and 15 of the Charter with respect to the reasonableness of the Registrar’s decision.
173The APOs are varied to $66,492.13 per appellant for a total of $132,984.26.
ORDER
174The appellants are deemed vendors for the purposes of the Act in selling their property.
175Pursuant to section 77(4) of the Act, I order the APOs issued to the appellants on July 11, 2024 be varied to $66,492.13 per appellant.
Released: July 21, 2025
LICENCE APPEAL TRIBUNAL
Geneviève Painchaud Vice-Chair