Licence Appeal Tribunal File Number: 16458/NHCLA

In the matter of an appeal from a Notice of Proposal issued under s. 43 of the New Home Construction Licensing Act, 2017, S.O. 2017, c. 33, Sch. 1 (the “Act”).

Between:

Sunrise Acquisitions (Patterson) Inc., Sunrise Acquistions (Barrie) Inc., Sunrise Homes Ltd.

Appellants

and

Registrar, New Home Construction Licensing Act, 2017

Respondent

DECISION

ADJUDICATOR:

Bruce Stanton

APPEARANCES:

For the Appellant:

Muzammil Kodwavi, director/officer

Sajjad Hussain, director/officer

Ari Silverberg, director/officer of Sunrise Acquisitions (Barrie) Inc.

For the Respondent:

Madhavi Gupta, Counsel

Alex Alton, Counsel

Heard by videoconference:

July 14, 15, 2025

OVERVIEW

1Sunrise Acquisitions (Patterson) Inc. (“Sunrise Patterson”), Sunrise Acquistions (Barrie) Inc. (“Sunrise Barrie”), and Sunrise Homes Ltd. (“Sunrise Homes”) (the “appellants”) appeal from a Notice of Proposal (the “NOP”) issued by the respondent Registrar under the Act on October 30, 2024

2Muzammil Kodwavi and Sajjad Hussain are sole directors/officers of Sunrise Patterson and the sole directors of Sunrise Homes. They are also officers and directors of Sunrise Barrie together with officers/directors Ari Silverberg and Alan Winer. Mr. Silverberg and Mr. Winer also represent Harbour (Station Towns) Limited Partnership, a 50% beneficial owner of Sunrise Barrie.

3Mr. Kodwavi and Mr. Hussain are the sole directors/officers of Sunrise Acquisitions (Hwy 7) Inc. (“Sunrise Hwy 7”), Sunrise Acquisitions (Elmvale II) Inc. (“Sunrise Elmvale”), and Sunrise Acquisitions (Stayner) Inc. (“Sunrise Stayner”), each related to separate development project locations.

4Mr. Hussain, on behalf of the appellants, described Sunrise Homes as primarily a builder under the Act, i.e., undertaking the performance of all the work and supply of all the materials necessary to construct a home, and Sunrise Patterson and Sunrise Barrie as vendors under the Act, i.e., entities that sell previously unoccupied homes of a specific housing project or development. Sunrise Barrie is a 58-unit development in the Big Bay Point area of Barrie and Sunrise Patterson is a 46-unit development on Patterson Road in Barrie.

5The Registrar issued the Notice of Proposal to refuse the renewal of the licence of Sunrise Barrie and to revoke the licences of Sunrise Patterson and Sunrise Homes on the basis that the appellants are each ineligible to hold a licence pursuant to s. 38(1) of the Act.

6The appellants filed an appeal to the Licence Appeal Tribunal (“Tribunal”) on November 14, 2024, disputing the allegations in the NOP and declaring that refusing to renew the licence of Sunrise Barrie and revoking the licences of Sunrise Patterson and Sunrise Homes are not in the public interest.

7To succeed in their appeal, the appellants must establish that the grounds on which the Registrar determined the appellants to be ineligible for a licence fail to meet the threshold of ineligibility for a licence pursuant to s. 38(1). Essentially, the appellants must prove the non-existence of the reasonable grounds for belief

that the Registrar is relying on in proposing to deny the appellants a licence. Put another way, they must disprove the basis of the NOP by showing that it is unsupported by the facts and evidence (see: Yarco Developments Inc. v. Registrar, Home Construction Regulatory Authority, 2024 ONSC 93 at paras. 53 and 68 (Div. Ct.)).

ISSUES

8The issues in dispute are:

1. Can the appellants reasonably be expected to not be financially responsible in the conduct of their business, having regard to their past and present financial position and the past and present financial positions of all interested persons in respect of them;

2. Can the appellants reasonably be expected to not be financially responsible in the conduct of their business, having regard to the past and present conduct of their officers and directors and all interested persons;

3. Does the past and present conduct of the appellants’ officers and directors and interested persons afford reasonable grounds for belief that their businesses will not be carried on in accordance with the law and with integrity and honesty;

4. Have the appellants or any interested person in respect of the appellants, carried on or are they carrying on activities that are in contravention of the Act or its regulations; and

5. Is granting the renewal of a licence, or continuing the privileges of a licence, as the case may be, not in the public interest?

9The wording of issue 1 has been modified from the Case Conference Report and Order of January 20, 2025 (“CCRO”) to add “… and the past and present financial positions of all interested persons in respect of them;” to mirror the provisions of s. 38(1)(b)(i) on which the issue and the grounds of the NOP are based. The additional phrase is also a modification of the wording of issue 1 from the version presented to the parties at the hearing. As evidence was presented at the hearing, it became clear that the financial positions of the appellants’ associated persons/corporations were relevant to the issues in dispute and the grounds on which the NOP was issued. Therefore issue 1 should appropriately include all elements of the s. 38(1)(b)(i) including the past and present financial positions of interested persons.

RESULT

10Sunrise Patterson and Sunrise Homes cannot reasonably be expected to be financially responsible in the conduct of their businesses and therefore both are disentitled to a licence. I direct the Registrar to carry out the NOP in respect of Sunrise Patterson and Sunrise Homes.

11Sunrise Barrie can reasonably be expected to be financially responsible in the conduct of its business, there are reasonable grounds for belief that Sunrise Barrie will carry on business in accordance with the law and with integrity and honesty, and it is in the public interest to renew the licence of Sunrise Barrie. I substitute my opinion for Registrar and direct the Registrar not to carry out the NOP in respect of Sunrise Barrie but renew Sunrise Barrie’s licence with conditions.

PROCEDURAL ISSUE

Late filed evidence

12On day 2 of the hearing, July 15, 2025, the respondent proposed to enter three documents into evidence, as follows:

1. Court order dated December 20, 2022, by Justice Osborne, in respect of an order that Sunrise Hwy 7 and its principals and related corporations, pay the Receiver $14,359,012.00;

2. Endorsement Slip of Justice Osborne’s December 20, 2022 decision; and

3. Endorsement Slip, dated May 8, 2023, of Justice Osborne’s amended and restated order dated April 14, 2023.

13The respondent submitted that it did not include the three documents in the document book it served and filed for the hearing because it did not anticipate that the appellants would take issue with the relevance and context of the April 14, 2023 amended and restated court order that it included in its book of documents (Exhibit 2) at Tab 15. It submitted that the April 14, 2023 ruling was plain and straightforward in its language and should not have been in question.

14The respondent submitted that Mr. Hussain’s answers during cross-examination gave the first indication that he viewed the April 14, 2023 amended and restated court order not as a settlement of the dispute, but rather as an order upon which there would be a subsequent settlement. The respondent disagrees with Mr. Hussain’s characterization of the April 14, 2023 order as “interim” and therefore sought to enter the additional documents for context and perspective on the subject.

15The respondent submitted that these are publicly available documents and were within the knowledge of Mr. Hussain and Mr. Kodwavi.

16Mr. Hussain, on behalf of Sunrise Patterson and Sunrise Homes, objected to the evidence being entered.

17Mr. Hussain submitted that there was a subsequent settlement, after the April 14, 2023 order, for a repayment to the Receiver for Sunrise Hwy 7 of $9.0 million. He stated that if the respondent wished to add these documents, he should be permitted to add the $9.0 million settlement document as well.

18On the question of whether Mr. Hussain had knowledge of the three proposed documents, he submitted that Sunrise Hwy 7 was represented by counsel for the proceedings that resulted in the December 20, 2022 and April 14, 2023 court orders, and he and his co-principals were receiving updates, but they did not always agree with counsel’s recommendations.

19Mr. Hussain submitted that he suffered a heart attack in August 2022 and was recovering from it through to January 2023. His absences during this period may have contributed to him being less familiar with the details.

20I find that the three documents shall be entered into evidence and can be relied on.

21Pursuant to Rule 9.3, when a party fails to comply with the Rules for the disclosure and filing of documents, in this case not disclosing the documents it wished to rely on by June 13, 2025 (pursuant to the Case Conference Report and Order of January 20, 2025), it cannot rely on the documents at the hearing without the permission of the Tribunal.

22In accordance with Rule 9.3, the parties had an opportunity to make submissions on whether the documents could be used in the hearing. In determining whether a late filed document could be used, Rule 9.3 sets out several factors for the Tribunal to consider. I have considered the factors and find that:

1. The respondent’s reasons for not complying with the disclosure deadline are reasonable, considering that the appellant filed no documents, and it could not have anticipated that Mr. Hussain would consider the December 2022 court order to be irrelevant, or that he would not be knowledgeable of it;

2. There is little prejudice to the appellants from entering the documents because the documents were or ought to have been within the knowledge of Mr. Hussain and Mr. Kodwavi, and they were represented by counsel during the receivership proceedings from which the documents are derived;

3. Any prejudice to the appellants can be mitigated by their opportunity to cross-examine the evidence and argue the weight that should be assigned to them; and

4. The documents are relevant to Mr. Hussain’s testimony regarding the sequence of events concerning the receivership of Sunrise Hwy 7 that is material to the past and present financial position of interested persons in respect of the appellants, and the conduct of officers and directors of the appellants.

23In addition, pursuant to s. 15(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (“SPPA”), the Tribunal may admit as evidence, any document or other thing relevant to the subject matter of the proceeding. I find the documents relevant because they help clarify the evidence of Mr. Hussain and Mr. Kodwavi’s past and present conduct as officers and directors of the appellants. Further, I find that while s. 15(1) presumptively prohibits admission of evidence protected by privilege (e.g. communications in furtherance of settlement are one form), the privilege can be dispensed with to prove the terms of settlement, particularly where there is a competing public interest that outweighs the public interest in encouraging settlement (see, e.g., Union Carbide Canada Inc. v. Bombardier Inc., 2014 SCC 35 at para. 35; Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37 at paras. 17-19). I find that there is a competing public interest, namely the question of the appellants’ financial responsibility as that relates to their eligibility to be licensed in a regulated sphere of activity. I also find that the issued Court order is a public document and therefore obviates any concern about settlement privilege as it may apply to any of the three documents.

24Accordingly, the three documents were entered into evidence as Exhibits 8, 9 and 10, respectively.

ANALYSIS

Issue 1: Having regard to their past and present financial position and the past and present financial position of their interested persons, can the appellants reasonably be expected to not be financially responsible in the conduct of their business?

25Under s. 40(1) of the Act, the Registrar may refuse to renew the licence of a licensee if, in the Registrar’s opinion, the licensee is not entitled to a licence under s. 38(1).

26Under s. 40(2) of the Act, the Registrar may revoke a licence at any time for any reason that would cause a licensee to be disentitled to the licence. I read “disentitled” in this provision as running afoul of the thresholds for entitlement to a licence set out in s. 38(1).

27Section 38(1)(b) sets out the thresholds for entitlement to a licence when the applicant or licensee is a corporation, as is the case for the appellants. The NOP relies on ss. 38(1)(b)(i), (ii) and (iii), and s. 38(1)(c)(i) and 38(1)(g) as the basis of its refusal to renew the licence of Sunrise Barrie, and to revoke the licences of Sunrise Patterson and Sunrise Homes.

28Issue 1 arises from on s. 38(1)(b)(i) which establishes that a corporate licensee is entitled to the renewal of its licence when, in the opinion of the Registrar, having regard to its past and present financial position, and the past and present financial position of its interested persons, the licensee can reasonably be expected to be financially responsible in the conduct of its business. If a licensee does not meet that threshold, it runs the risk of having the renewal of its licence refused, or its licence revoked.

Interested and associated persons

29Section 1(2) of the Act defines an interested person as a person who is associated with the other person or, if in the opinion of the Registrar:

1. the person has or may have a beneficial interest in the other person’s activities;

2. the person exercised or may exercise control either directly or indirectly over the other person; or

3. the person has provided or may have provided financing either directly or indirectly for the other person’s activities.

30Section 1(3) defines one person as being associated with another person in any of the following circumstances:

1. One person is a corporation of which the other person is an officer or director;

2. One person is a corporation that is controlled directly or indirectly by the other person;

3. Both persons are partners of the same partnership;

4. One person is a corporation that is controlled directly of indirectly by the other person;

5. Both persons are corporations and one corporation is controlled directly or indirectly by the same person who controls directly or indirectly the other corporation;

6. Both persons are members of the same voting trust relating to shares of a corporation; or

7. Both persons are associated within the meaning of paragraphs 1 to 6 with the same person.

31The respondent submits that it considers the receivership of the Sunrise Hwy 7, Sunrise Elmvale, and Sunrise Stayner projects as being material, pursuant to s. 1(2) of the Act, to the financial position of the appellants. The respondent submits that Sunrise Hwy 7, Sunrise Elmvale and Sunrise Stayner meet the definition of interested persons pursuant to s. 1(2), as each is a person interested in at least one of Sunrise Patterson, Sunrise Homes or Sunrise Barrie.

32I find that, by virtue of s. 1(3)5 of the Act, Sunrise Hwy 7, Sunrise Elmvale and Sunrise Stayner are associated persons of Sunrise Patterson and Sunrise Homes because they are corporations controlled directly or indirectly by the same persons; officers and directors Hussain and Kodwavi. Because Sunrise Hwy 7, Sunrise Elmvale and Sunrise Stayner are associated with the appellants under s. 1(3), they are interested persons under s. 1(2) in respect to Sunrise Patterson and Sunrise Homes.

33I find that, by virtue of s. 1(3)5, Sunrise Hwy 7, Sunrise Elmvale, Sunrise Stayner, Sunrise Patterson, and Sunrise Homes are not associated persons of Sunrise Barrie because all are corporations and the latter is not under the control, either directly or indirectly, of the other five, or the officers or directors of the other five, pursuant to a Board of Director’s Resolution of Sunrise Barrie dated September 5, 2023. The Resolution removes the votes and control that officer/directors Kodwavi and Hussain have in Sunrise Barrie. I find, therefore, that Sunrise Hwy 7, Sunrise Elmvale, Sunrise Stayner, Sunrise Patterson and Sunrise Homes are not interested persons in respect to Sunrise Barrie.

34Pursuant to s. 1(3)1, Mr. Hussain and Mr. Kodwavi are associated persons in respect to Sunrise Barrie because they are officers and directors of the corporation. While in practical terms they may not exercise control over Sunrise Barrie, I find that they are associated persons by virtue of their corporate roles because s. 1(3) does not carve out the lack of practical control despite holding office, and are therefore each of Hussain and Kodwavi are interested persons in respect to Sunrise Barrie.

35Accordingly, when considering the financial position of the appellants for the purposes of issue 1, I find that the financial position of Sunrise Hwy 7, Sunrise Elmvale and Sunrise Stayner is relevant to the financial position of Sunrise Patterson and Sunrise Homes, but not to Sunrise Barrie, and the financial position of Mr. Kodwavi and Mr. Hussain is relevant to the financial position of all the appellants.

The financial position of Sunrise Patterson and Sunrise Homes

36Mr. Hussain, on behalf of Sunrise Patterson and Sunrise Homes, testified that he has been in the real estate development business for more than 20 years and has successfully completed developments in over 10 municipalities in and around the GTA. He testified that Sunrise Patterson is a 46-unit development comprised of two phases. The first phase is 25 units of which 12 have been sold and are near completion; the second phase of 21 units has not yet been put on offer. He testified that Sunrise Patterson launched in 2022.

37Mr. Hussain testified that Sunrise Patterson had a primary lender and the development was running as smoothly as could be expected until a writ of execution was issued in relation to the receivership of Sunrise Hwy 7.

38Mr. Hussain testified that once the writ was issued, their cash flow for Sunrise Patterson was negatively affected. It became more difficult to obtain construction financing and investment dried up. He testified that the current lender on the project is helping to complete the 25 units in phase 1 which are 65% to 75% complete.

39Mr. Hussain testified that Sunrise Homes is a brand. It has no assets. He testified that since 2021 and the COVID-19 pandemic, the development market has “gone sideways” and their troubles were compounded by the writ being issued. He testified that Sunrise Homes is the builder of Sunrise Patterson.

40The appellants did not provide any details of the financial position of Sunrise Patterson beyond the current status of its project in terms of sales and the extent of completion, nor any details of the financial position of Sunrise Homes beyond its role as the builder of Sunrise Patterson and the former builder of Sunrise Barrie.

Receivership of Sunrise Hwy 7 and repayment of improper withdrawals

41The Ontario Superior Court (the “Court”) appointed KSV Restructuring Inc. (“KSV”) as the receiver and manager of Sunrise Hwy 7 on June 9, 2021.

42In its second supplement to the Third Receiver Report dated August 5, 2022, KSV reported that Mr. Kodwavi and Mr. Hussain, together with related Sunrise Acquisition parties, withdrew $11.4 million from Sunrise Hwy 7 without any apparent justification and in contravention of its loan agreements and covenants to the mortgage holder. There were also discrepancies between the corporation’s banking information and the General Ledger entries provided to the Receiver. For example, amounts were “recorded in the General Ledger as being paid to suppliers but were actually amounts paid to Sunrise Parties.” By “Sunrise Parties” the Receiver was referring to Mr. Kodwavi, Mr. Hussain, their family members and other interested parties.

43KSV filed a Notice of Motion July 6, 2022 seeking an order directing Mr. Hussain and Mr. Kodwavi, their spouses and related Sunrise parties to immediately repay the $11.4 million improperly diverted from Sunrise Hwy 7. The Sunrise Hwy 7 principals (Hussain and Kodwavi) engaged MNP LLP (“MNP”) to conduct a forensic assessment and report on theirs and the associated persons of Sunrise Hwy 7’s alleged improper withdrawals from the company. MNP filed its report on October 18, 2022 concluding that net payments to the Sunrise principals and related parties totalled $12,861,490.

44The Court issued a decision December 20, 2022 ordering Mr. Kodwavi, Mr. Hussain and several of their associated corporations and interested persons, to repay KSV $14,359,012. Mr. Hussain referred to this order as a “writ”. That order was amended and restated by the Court on April 14, 2023 in the amount of $14,510,545.24 to be repaid to the Receiver by Mr. Hussain, Mr. Kodwavi, and various interested parties including Sunrise Homes. Then, on April 28, 2023, KSV recommended that the Court issue an order approving a Proposed Settlement Agreement of the matter in which the responding parties (Mr. Hussain, Mr. Kodwavi, and other corporations owned or operated by Mr. Kodwavi and Mr. Hussain) would be required to pay the Receiver $10.5 million. Justice Osborne endorsed that proposal on May 8, 2023, accepting the settlement agreement in lieu of the April 14, 2023 order.

45Neither Mr. Hussain nor Mr. Kodwavi testified or filed documents into evidence about the current status of the $10.5 million settlement agreement or to what extent it has been discharged.

46Mr. Silverberg submits that, from Sunrise Barrie’s perspective, “no project funds may be directed to the Sunrise principals or any related entities for the duration of the existing settlement order.” Based on Mr. Silverberg’s submission, it seems that the settlement order remains in whole, or in part, outstanding to the Receiver. I have no information before me to suggest any part of the $10.5 million owing to the Receiver has been paid.

47The respondent submits that both Sunrise Homes and Sunrise Patterson are jointly and materially responsible for the roughly $14.5 million writ issued by the Court in respect to the Sunrise Hwy 7 receivership. Sunrise Homes was kicked off the job on Sunrise Barrie, has no assets, and the appellants have offered no evidence that their current financial position will improve any time soon.

48The respondent submits that Sunrise Patterson faced similar challenges as Sunrise Barrie, in terms of escalating costs, a precarious residential housing market post-COVID, and the strain of associated corporations going into receivership, but in the former’s case, there was no partner to help bail the project out. It submits that Sunshine Patterson’s past and present financial condition offers no confidence that they will be financially responsible in the conduct of their business.

49I find the appellants have not met their onus in proving that the NOP to disentitle licencing for Sunrise Patterson and Sunrise Homes pursuant to s. 38(1)(b)(i) of the Act is without merit because the appellants provided no documentation or oral testimony regarding the past or current financial position of Sunrise Homes or Sunrise Patterson that persuades me that the two corporations will be financially responsible in the conduct of their business.

50I give weight to the oral evidence presented by Mr. Hussain characterizing the implications of the Court’s demand that he, Mr. Kodwavi and interested persons in respect of them, are responsible to pay KSV $10.5 million in the settlement agreement referred to above. Those implications included difficulty attracting new investment, attracting financing, and retaining suppliers.

51I am persuaded by the fact that neither Mr. Hussain nor Mr. Kodwavi provided any indication of whether some or all of the $10.5 million has been paid, nor any indication of how or from what source the $10.5 million will be satisfied. The court-ordered obligation adds considerable doubt to the financial condition of Sunrise Patterson and Sunrise Homes especially when no evidence has been offered to offset that doubt.

52I give weight to Mr. Kodwavi and Mr. Hussain being the sole directors/officers of both Sunrise Homes and Sunrise Patterson. As noted above, they are both interested persons in respect of Sunrise Patterson and Sunrise Homes, and both are obliged to repay $10.5 million to KSV.

53I give weight to the documentary evidence pointing to the principals of Sunrise Hwy 7’s withdrawal of funds from the project in contravention of their obligations and to MNP’s revelation of a different General Ledger for which no explanation for its existence was provided. The record of unsanctioned withdrawals and dubious bookkeeping undermines any confidence these corporations could be expected to be financially responsible in the conduct of their business.

54I give weight to the documentary evidence provided by the respondent in establishing that the Sunrise Elmvale and Sunrise Stayner projects, also under the directorship and control of Mr. Hussain and Mr. Kodwavi, are also in receivership arising from their inability to meet financing obligations.

55Accordingly, I find on a balance of probabilities, that Sunrise Patterson and Sunrise Homes can reasonably be expected to not be financially responsible in the conduct of their business.

The financial position of Sunrise Barrie

56Mr. Kodwavi testified that sales for this project began during the COVID-19 pandemic. Of the 58 units in the project, 50 have been sold to date, most of them being sold in June and July 2020. He testified that, as the pandemic restrictions lifted in 2022, Sunrise Barrie was faced with up to a 35% increase in the cost of materials (due to supply chain disruption). It became apparent the project would need more investment and loans but Mr. Kodwavi and Mr. Hussain had no additional investment to provide. They were having difficulty paying suppliers and with construction liens being put on the property.

57Mr. Kodwavi testified that they sought a financial partner to help complete the project and found one in Harbour Equity JV Development Fund V (“Harbour Equity”). He testified that Harbour Equity brought their own private investment and gained the confidence of a lender, Meridian Bank, to put the project on a stable financial footing through to completion. He testified that Harbour Equity essentially took over the project in September 2023, including bringing Cope Project Management Corp. (“Cope”) to assist with construction and upgrades.

58Mr. Silverberg testified on behalf of Harbour Equity, noting that it provides private equity capital for residential real estate developers. They have helped finance several large development projects in Ontario in recent years and raised approximately $350 million in equity capital between 2011 and 2022. He testified that Harbour Equity incorporated Harbour (Station Towns) Limited Partnership (“Station Towns”) to be a 50% beneficial owner of Sunrise Barrie and he and Mr. Winer were appointed directors and officers of Sunrise Barrie.

59Mr. Silverberg testified that Sunrise Barrie has taken steps to stabilize its financial position. It is in the process placing Cope as the builder, replacing Sunrise Homes, and arranged additional financing and investment so that the project can be completed.

60Station Towns entered into a co-ownership agreement with Sunrise Barrie and Sunrise Acquisitions Inc. on March 1, 2021. Mr. Hussain and Mr. Kodwavi are officers and directors of Sunrise Acquisitions Inc.

61Two and a half years after entering into the co-ownership agreement, Sunrise Acquisitions Inc. defaulted on its financial obligations under the agreement and on September 3, 2023, the Board of Directors of Sunrise Barrie passed a resolution conveying all the rights set out in the default provisions of the agreement to Station Towns, giving it exclusive day-to-day control of the Sunrise Barrie project. It gave Mr. Silverberg and Mr. Winer sole absolute authority to perform all actions, make all decisions, and do all things deemed necessary with respect to management matters, including signing authority.

62A progress report on Sunrise Barrie, No. 10, by Altus Group dated May 31, 2025, shows that the total project will require approximately $34.1 million in funds, $10.1 million of which will be provided in cash equity. Costs to date are $22.2 million leaving $11.9 million in costs to complete the project. The report notes gross sales on the project are expected to be $33.2 million or $0.9 million shy of the total funding (loans and equity) provided for the project. The total sales amount includes $8.0 million from 10 unsold units and $3,637,500.00 from amended APSs (41 owners, each agreed to increase the purchase price by $87,500, and one owner by $50,000, due to post-COVID escalation in construction costs). In addition, the project anticipates additional revenue will come from purchasers for parking ($270,000.00), upgrades ($696,000.00), and recoveries ($1,208,000.00) for a total of $2,174,000.00 additional revenue. If these additional revenues are realized, the project would dispose of the $0.9 shortfall noted above and show a net gain of $1.274 million (about a 12.6% rate of return on $10.1 million equity investment).

63Mr. Silverberg testified under cross-examination that most of the holders of the APSs (the unit owners) agreed to the $87,500.00 increase in their purchase price because even when the $87,500 was added to the original purchase price, the unit price to the owner would still be below current market value.

64The respondent submits that Sunrise Barrie’s past financial position was not responsible. It had to be bailed out by Harbour Equity and even since Harbour Equity took over, it has implored the original home purchasers to pay an extra $87,500.00 for their units or face losing them (with only their deposit(s) in return). The respondent submits that despite Harbour Equity righting the financial viability of the project, Sunrise Barrie’s past financial position suggests it cannot reasonably be expected to be financially responsible in the conduct of its business.

65I find that, considering the past and current financial position of Sunrise Barrie, it can reasonably be expected to be financially responsible in the conduct of its business because Station Towns has invested in the project and regained the confidence of a mainstream lender to see the project through to completion.

66I am persuaded by Mr. Silverberg’s oral and documentary evidence which appears to demonstrate a sound financial footing for Sunrise Barrie; that a new builder has been brought in to complete the units; that, although Mr. Hussain and Mr. Kodwavi remain as directors and officers of Sunrise Barrie, control over the project rests with Station Towns’ Mr. Silverberg and Mr. Winer; and that any proceeds in favour of Mr. Hussain and Mr. Kodwavi must be directed to the receivers in those Sunrise Acquisitions projects in receivership. I accept that if Sunrise Barrie succeeds to completion as planned, Mr. Hussain and Mr. Kodwavi may benefit monetarily, even in reducing their obligations to receivers, but they will have little, if any, influence over the company’s ability to be financially responsible in the conduct of its business.

67I find that the past and present financial condition of Sunrise Patterson, Sunrise Homes, Sunrise Hwy 7, Sunrise Elmvale and Sunrise Stayner is not pertinent to Sunrise Barrie because they are not interested persons in respect of Sunrise Barrie.

68Mr. Kodwavi and Mr. Hussain are interested persons in respect of Sunrise Barrie, as noted above, and their financial position would be persuasive but for their default of the co-ownership agreement which has effectively relegated them to the status of silent partners in the project. I find that the past and present financial condition of Mr. Kodwavi and Mr. Hussain is relevant to Sunrise Barrie but the September 5, 2023 Board of Director’s Resolution leaves them with little to no influence in the financial matters or day-to-day control of the corporation. Their roles in Sunrise Barrie have little bearing on its ability to be financially responsible in the conduct its business.

69I disagree with the respondent’s conclusion that the past financial condition of Sunrise Barrie suggests it cannot reasonably be expected to be financially responsible because that conclusion ignores that Station Towns is in charge of the remainder of the project and documentary evidence demonstrates there are sufficient funds and financing to complete the project in a financially responsible fashion.

70Accordingly, I find on a balance of probabilities that, when considering its past and present financial condition and that of its interested parties, Sunrise Barrie can reasonably be expected to be financially responsible in the conduct of its business.

Issue 2: Having regard to the past and present conduct of their officers and directors and all interested persons, can the appellants reasonably be expected to not be financially responsible in the conduct of their business?

71Since I have determined that Sunrise Patterson and Sunrise Homes are disentitled to a licence under s. 38(1)(b)(i), it is not necessary to analyse whether they meet the eligibility threshold in the remaining provisions of s. 38(1) on which the NOP is based. If they meet the disentitlement threshold on one of the provisions of s. 38(1), the Registrar has sufficient grounds, pursuant to s. 40(2), to revoke their licences. Section 40(2) provides the ground for revocation for “any reason that would cause a licensee to be disentitled to the licence.”

Sunrise Barrie

72I find that, in regard to the past and present conduct of Sunrise Barrie’s officers and directors, Sunrise Barrie can reasonably be expected to be financially responsible in the conduct of its business.

73As discussed above, although the past and present conduct of Mr. Hussain and Mr. Kodwavi is pertinent to Sunshine Barrie, it is inconsequential because the resolution of the Board of Directors of Sunshine Barrie of September 5, 2023 relegates control of the Sunrise Barrie project to Station Towns; effectively Mr. Silverberg and Mr. Winer.

74Mr. Silverberg’s and Mr. Winer’s conduct and involvement with the Sunrise Barrie project, through Station Towns, is responsible for giving it financially stability and a financially responsible path to completion. Therefore, I find that in regard to the officers and directors of Sunrise Barrie, it reasonable to expect that Sunrise Barrie will be financially responsible in the conduct of its business.

Issue 3: Does the past and present conduct of Sunrise Barrie’s officers and directors and interested persons afford reasonable grounds for belief that the businesses will not be carried on in accordance with the law and with integrity and honesty?

Sunrise Barrie

75As noted above, for the remaining issues in dispute, I will be analysing the merits of the NOP only in respect to the refusal to renew the licence of Sunrise Barrie.

76I find that, having regard for the past and present conduct of Sunrise Barrie’s officers and directors, there are reasonable grounds for belief that the business will be carried on in accordance with the law and with integrity and honesty.

77The respondent submits that despite Harbour Equity and Station Towns being involved the last two years, Sunrise Barrie continued, during that period, to be in contravention of provisions of the Act including failures to report material changes of the licensee, selling homes prior to being licensed, and failing to confirm it had Qualification for Enrolments (“QFE”s) for its units in accordance with s. 10.1 of the Ontario New Homes Warranties Plan Act, R.S.O. 1990, c. 0.31 (the “ONHWPA”) prior to selling or offering to sell a home.

Notice of Material Change

78The respondent submits that under s. 50(1) of the Act, a licensee must notify the Registrar when a person ceases to have a controlling interest or acquires a controlling interest in a licensee. Section 52 of the Act obligates a licensee who experiences a material change to inform the Registrar promptly, answer any inquiries the Registrar has with respect to the change, and produce any documents or information the Registrar requests with respect to the change. A material change, for the purposes of s. 52, is defined in s. 8 of the O. Reg. 631/20 (the “Regulation”) as a change to the information that a licensee has provided to the Home Construction Regulatory Authority (“HCRA”), including a change to information about the business, operations, personnel, assets, liabilities or affairs of the licensee, whether the change is proposed, imminent, or implemented. It submits that Sunrise Barrie failed to meet its obligations as a licensee regarding the ownership changes and structure regarding Station Towns and Harbour Equity. It submits that when a new entity takes over a project the way Station Towns did, it ought to have undertaken steps to understand its responsibilities as a licensee.

79Mr. Silverberg submits that they did not think engaging Cope to assist with construction of the project constituted a material change. He submits that once Station Towns became aware of the NOP in November 2024, they promptly connected with HCRA and filed the appropriate material change requests.

Selling homes before being licensed

80The respondent submits that after Mr. Silverberg became involved, the selling of homes was still going on without Sunrise Barrie being licensed. The record indicates that Sunrise Barrie became licensed in March 2023. All but two of the 50 APSs were sold in July 2020 prior to the HCRA beginning its licensing mandate on February 1, 2021. Before HCRA, builders were required to register under the provisions of the ONHWPA as it existed then. The respondent submits that Sunrise Barrie offered and executed APSs in 2020 without being registered under the ONHWPA and continued in operation post-February 1, 2021 without being licensed until March 2023.

81The respondent submits that after Station Towns became involved, they continued to rely on Mr. Hussain and Mr. Kodwavi to manage the relationship with HCRA despite their poor record of compliance with the Act and financial misconduct on other Sunrise Acquisitions projects and this continued reliance on Mr. Kodwavi and Mr. Hussain demonstrates a lack of competency.

82The respondent submits that Sunrise Barrie is now compliant with its obligations as a licensee but in the past it was not.

83Mr. Silverberg submits that Sunrise Barrie is the licensed vendor for the project and its privileges need to remain intact to finish the project. He acknowledges that some obligations as a licensee were overlooked but submits that since taking over control of the project in September 2023 Station Towns has acted swiftly to correct any regulatory deficiency in a detailed, transparent and responsible manner.

84Mr. Hussain submits that mistakes were made with registrations under the ONHWPA and licensing under the HCRA but he thought his staff had taken care of the HCRA obligations and something must have been missed in the transition from Tarion to HCRA’s mandate. He submits that they had a blanket registration for all its projects with Tarion and separate registration for Sunrise Barrie was not required.

Failing to confirm QFEs before selling homes

85The respondent submits that at least two APSs were signed after Station Towns became involved in March 2021, for which the QFEs had not been confirmed. The respondent directed me to a certificate from Tarion Warranty noting that between February 1, 2021 and January 2024 Sunrise Barrie did not file or pay fees to have their units enrolled under the ONHWPA. The certificate was followed by a list of 50 units including two that were signed November 22, 2023. The failure to confirm QFEs is a contravention of s. 10.1 of the ONHWPA.

86Mr. Kodwavi testified that they did not complete the QFE process on Sunrise Barrie until January 2024. He thought that their administration person had completed the QFEs but by January 2024, they were no longer in control of the project.

87Mr. Silverberg submits that Station Town undertook to initiate QFEs in January 2024 upon discovering the units/homes had not been enrolled.

88I find that on all three contraventions of the Act cited by the respondent, Sunrise Barrie failed to meet its obligations; to register its units with Tarion prior to February 1, 2021 (and obtaining its licence from HCRA on February 1, 2021), to file the material change information on a timely basis, and in confirming QFEs on the 58 units after HCRA began its mandate. This past conduct could easily afford reasonable grounds for belief that the licensee would not carry on business in accordance with the law and with integrity and honesty.

89I am not persuaded by the submissions of Mr. Hussain and the testimony of Mr. Kodwavi that these contraventions were an administrative oversight. They may well have been, but this does not dismiss the lapse of responsibility that Mr. Kodwavi and Mr. Hussain committed by not registering Sunrise Barrie with Tarion before it offered units for sale. I find it unlikely that the two principals, with the years of experience they had in the residential development business, would be unaware of requirements of the ONHWPA or its successor, the HCRA.

90I am persuaded by Mr. Silverberg’s submissions that Station Towns has worked to rectify the regulatory omissions of the previous principals of Sunrise Barrie and that currently, Sunrise Barrie is compliant with the Act.

91Section 38(1)(b)(iii) compels me to consider if, after regarding past and present conduct of the officers and directors, there are reasonable grounds for belief that the business will carry on in accordance with the law and with integrity and honesty. A reasonable ground for belief is a low bar.

92According to the Supreme Court of Canada in Mugesera v. Canada (Minister of Citizenship and Immigration), 2005 SCC 40 (“Mugesera”) at paragraph 114, reasonable grounds for belief must be more than mere suspicion and will be found to exist where there is an objective basis for the belief which is based on compelling and credible information.

93Further, there must be a nexus between the person’s past conduct and their ability to conduct business as required, considering the interests of the public: See CS v. Registrar, Real Estate and Business Brokers Act, 2002, 2019 ONSC 1652 (Div. Ct.) at paragraph 32. In other words, the past conduct or history being cited as a basis for an objective belief of reasonable grounds must be associated with and/or relate to the type of conduct and abilities that are anticipated by the holder of the licence being sought or applied for, in this case, a vendor licence under the Act.

94I find there is an objective basis for the belief that Sunrise Barrie, under the direction of Mr. Kodwavi and Mr. Hussain, would not carry on business in accordance with the law. However, since Messrs. Hussain and Kodwavi no longer have a hand in the day-to-day management and direction of the Sunrise Barrie project, I find that Mr. Silverberg and Mr. Winer’s past and present conduct carries important weight as to whether there is an objective basis for that belief. That is to say, I must look at the entirety of the past and present conduct of Sunrise Barrie, and not a portion in isolation.

95I find there is a nexus between the conduct that Station Towns has demonstrated and the qualities that are expected of a licensee under the Act.

96I find Station Towns’ involvement with Sunrise Barrie, though not flawless, demonstrates a commitment to abide by the requirements of the Act and its regulations. Where they have become aware of a contravention, they have addressed it. The evidence of email correspondence between Mr. Silverberg and Justin Vetro, of the HCRA, bears that out. In this case, the factual basis for determining if there are reasonable grounds for belief should also consider the conduct of the officers and directors relating to their efforts to bring the corporation into compliance. I find Mr. Silverberg’s conduct in that sense, appropriate, detailed and persuasive.

97Accordingly, I find there is an objective basis, based on credible evidence of the entirety of its past and present conduct, for the reasonable grounds for belief that Sunrise Barrie will be carried on in accordance with the law and with integrity and honesty.

Issue 4: Has Sunrise Barrie or any interested person in respect of it, carried on or are carrying on activities that are in contravention of the Act or its regulations?

98The instances of contravention of the Act and its regulations in relation to Sunrise Barrie have been analyzed in issue 3 above. Accordingly, I find that Sunrise Barrie carried on activities that were in contravention of the Act and/or its regulations.

99I find, however, that Sunshine Barrie is not currently carrying on activities that are in contravention of the Act of its regulations.

100Mr. Kodwavi and Mr. Hussain are interested parties of Sunrise Barrie although their roles in respect of the corporation are currently relegated to that of silent partners in a development. By virtue of their default of the co-ownership agreement, Mr. Silverberg and Mr. Winer as director/officers of Station Towns are fully in control of the corporation’s business activities. I therefore find that, although some of Mr. Kodwavi’s and Mr. Hussain’s past activities appear to have been in contravention of the Act, these past activities are, in the present context, less relevant to the compliance record of Sunrise Barrie.

101I find Sunrise Barrie carried on activities that were in contravention of the Act or its regulations, but those contraventions have been rectified by Station Towns, therefore, Sunshine Barrie is not disentitled to a licence on this ground.

Is granting the renewal of Sunrise Barrie’s licence not in the public interest?

102I find that granting the renewal of Sunrise Barrie’s licence, with conditions, is in the public interest.

103The respondent submits that on the four provisions of s. 38(1) above, the appellants are disentitled to a licence and therefore it is in the public interest that Sunrise Barrie’s licence renewal be refused.

104The respondent submits that there is no evidence homeowners will lose their homes if Sunrise Barrie loses its licence. It submits that consumer protection exists in these circumstances such as deposit protection warranties offered by Tarion.

105The respondent submits that the appellants’ attempts to portray themselves as protecting homeowner interests (by retaining the licence) are not credible. It submits that allowing the appellants, who have flouted their obligations under the Act and regulation, to continue to have licence privileges is itself an affront to the public interest. It submits that allowing licence privileges to continue sends the wrong message to the marketplace, that contravening the Act will not come with serious consequences. It submits that extending licence privileges would defy the consumer protection tenets of the licensing scheme.

106Specific to Sunrise Barrie, the respondent submitted that Station Towns has stated its interest in completing the project then moving on. It submits that Station Towns has no intention to remain and support homeowners in any warranty claims. Further, it submits, the project is on track to a marginal, if any, net profit, which would not leave sufficient resources to support any warranty claims.

107The respondent disagrees with Station Towns’ contention that things will be worse for the homeowners if the licence is not extended and submits there is nothing to suggest homeowners would be better off if the licence were extended.

108The respondent submits that Sunrise Barrie’s principal interest is its self-interest in completing the project without losing any money. It submits this is evidenced by Sunrise Barrie’s proposal that its licence be extended a full year so that unsold units could be marketed. It submits Station Towns’ interest is in avoiding the loss of any money if they face regulatory oversight.

109Mr. Silverberg submits that delivering the homes to purchasers and enabling Tarion to back its warranty program are matters of public interest. He submits that Station Towns and Harbour Equity is committed to working collaboratively with Tarion to ensure that all necessary financial assurances and administrative obligations are satisfied for Sunrise Barrie in its role as vendor.

110Mr. Silverberg submits that they are committed to obtaining in-house staff to meet HCRA’s competency requirements so that Sunrise Barrie can effectively oversee the project through to completion and the closing of the homes.

111Mr. Silverberg submits that Station Towns was not responsible for the issues that gave rise to the NOP and since taking over, their actions have consistently demonstrated accountability, transparency and a commitment to completion in the public interest.

112Mr. Silverberg directed me to the Tribunal decision in Albion Building Consultant Inc. v. Registrar, Home Construction Regulatory Authority, 2023 ONLAT NHCLA 13954 in which, despite the principals of the appellant having made several contraventions of the Act, the appellant’s licence privileges were extended for up to one year in order that the homes currently under construction could be completed. He submits that such an approach is appropriate in the case of Sunrise Barrie so that the homes can be completed using the existing vendor and not further delayed by whatever process might ensue if the licence was not renewed.

113He submits that the builder/developer is also part of the public interest and should be part of the Tribunal’s consideration of this issue. He submits that Station Towns made the commitment to invest more and secure more financing because it saw a path to completion that would allow the purchasers to get into their homes. The alternative would have been to abandon the project and let it go the way of receivership, a step that, in his view, would have created more uncertainty for purchasers and potentially the loss of their home purchase and at least some the monies paid to secure it.

114Mr. Silverberg requests that the Tribunal consider granting a temporary, 9-month extension to the licence of Sunrise Barrie, under Station Towns/Harbour Equity sole control and subject to any conditions the Tribunal may wish to impose. It also seeks to allow Sunrise Homes to retain its builder licence for the purpose of completing the 58 homes under construction, or alternatively, work with HCRA such that Cope could fully assume the builder role under the current vendor.

115I find it is in the public interest that the Sunrise Barrie project be seen to completion. With the homes at 65% completion and the possibility of purchasers starting to take possession in November 2025 and with the financial stability and funding that Station Towns has brought to the project, I find on a balance of probabilities that the public interest is better served by seeing the project to completion with the current vendor, Sunrise Barrie, rather than subjecting it to the uncertainty of securing a new vendor.

116I am persuaded by Mr. Silverberg’s submissions on behalf of Station Towns, that it can secure the competence required to ensure Sunrise Barrie meets its obligations as a vendor and that it has the investment and financing needed to complete the project, including agreement by the vast majority of purchasers to put an additional $87,500.00 toward completion.

117I agree with the respondent that it is in the public interest that contraventions of the Act come with substantive consequences. The licences of Sunrise Patterson and Sunrise Homes will be revoked as a consequence of this order upon the Registrar carrying out its NOP, and the licence of Sunrise Barrie will be subject to conditions so that its continuing activities serve the purposes of the Act and regulations.

118However, the case of Sunrise Barrie differs from its co-appellants largely due to the project being taken over by an equity partner, Station Towns and Harbour Equity, who have not only stabilized the finances of the project, they have brought it into compliance with the Act, confirmed the QFEs, secured the funding needed to finish the project, and demonstrated they have the capacity to carry on the business in accordance with the law and with integrity and honesty.

119In addition, owing to the September 5, 2025 resolution, Station Towns maintains effective control of Sunrise Barrie until such time as Mr. Hussain and Mr. Kodwavi are able to cure the default of the co-ownership agreement. There is no evidence before me to suggest that Messrs. Kodwavi or Hussain intend to or have the financial ability to cure the default with the co-ownership agreement but it seems unlikely. They remain indebted to the Receiver in regard to the $10.5 million settlement agreement and there is no indication that any of it has been paid to date. In addition, any proceeds in favour of Mr. Kodwavi or Mr. Hussain from the Sunrise Barrie project would, according to Mr. Silverberg, be payable to the Sunrise Acquisitions receivers before any proceeds would accrue to them individually.

120Pursuant to s. 43(8) of the Act, I find on a balance of probabilities that the licence of Sunrise Barrie shall be renewed, subject to the following conditions, pursuant to s. 43(9) of the Act:

1. Station Towns and/or its principals shall remain in control of Sunrise Barrie for the duration of the current licence period, and for the full term of the licence after its renewal:

2. Sunrise Barrie shall, within 30 days of the date of this order, address any shortfall of requirements to be a vendor under the Act, including, as necessary, the addition of staff or a consultant to fulfill competency requirements, as directed by the HCRA;

3. That Sunrise Barrie resolve that proceeds of the project payable to Mr. Kodwavi or Mr. Hussain be directed to the receivers of either Sunrise Hwy 7, Sunrise Elmvale, or Sunrise Stayner;

4. That Sunrise Barrie arrange for Cope or another licensed builder to assume responsibility of builder for the project; and

5. Mr. Silverberg and/or Mr. Winer shall be the contact persons at Sunrise Barrie in relation to any and all licensing matters with the HCRA.

Conclusions

121Sunrise Patterson and Sunrise Homes are disentitled to a licence under s. 38(1) therefore their licences should be revoked pursuant to s. 40(2).

122The licence of Sunrise Barrie shall be renewed subject to conditions.

ORDER

123I order the following:

i. The Registrar is directed to carry out the NOP with respect to Sunrise Patterson and Sunrise Homes.

ii. The Registrar shall not carry out the NOP with respect to the licence of Sunrise Barrie but, as I substitute my opinion for that of the Registrar, shall renew the licence subject to the following conditions:

1. Station Towns and/or its principals shall remain in control of Sunrise Barrie for the duration of the current licence period, and for the full term of the licence after its renewal:

2. Sunrise Barrie shall, within 30 days of the date of this order, address any shortfall of requirements to be a vendor under the Act, including, as necessary, the addition of staff or a consultant to fulfill competency requirements, as directed by the HCRA;

3. That Sunrise Barrie resolve that proceeds of the project payable to Mr. Kodwavi or Mr. Hussain be directed to the receivers of either Sunrise Hwy 7, Sunrise Elmvale, or Sunrise Stayner;

4. That Sunrise Barrie arrange for Cope or another licensed builder to assume responsibility of builder for the project; and

5. Mr. Silverberg and/or Mr. Winer shall be the contact persons at Sunrise Barrie in relation to any and all licensing matters with the HCRA.

Released: August 18, 2025

________________________

Bruce Stanton

Adjudicator