Licence Appeal Tribunal File Number: 17123/ONHWPA

Appeal from a Decision of Tarion Warranty Corporation under s.14 of the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 to Deny a Claim.

Between:

Mary Meredith

Appellant

and

Tarion Warranty Corporation

Respondent

DECISION AND ORDER

ADJUDICATOR: Bernard Trottier

APPEARANCES:

For the Appellant: Mary Meredith, Self-Represented

For the Respondent: Amanda Cutinha, Counsel

Court Reporter: Elizabeth Pilbrow, Veritext Legal Solutions

Heard by videoconference: December 1 and 2, 2025

OVERVIEW

1Mary Meredith (the “Appellant”) appeals from a Decision Letter of Tarion Warranty Corporation (“Tarion” or the “Respondent”), dated April 24, 2025, under s. 14(3) of the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “Act”), regarding the Appellant’s claim on her Financial Loss Claim Form dated September 17, 2024. The Appellant claimed compensation under s. 14(2) of the Act, because she claims that Lex Construction (the “Builder”) failed to substantially perform the contract to build a new home at 457 Walkinshaw Road in Shuniah, Ontario (the “home”).

2The Appellant filed a Notice of Appeal with the Licence Appeal Tribunal on May 14, 2025.

ISSUES

3The issues in dispute are as follows:

1. Has the Appellant proven that her claim of financial loss is warranted under the Act?

2. If so, what is the Appellant’s entitlement for damages or other relief with respect to the claim of financial loss?

RESULT

4The Appellant has not demonstrated that she has a cause of action against the Builder for damages resulting from the Builder’s failure to substantially perform the contract.

5The Appellant has not proven that her claim of financial loss is warranted under s. 14(2) of the Act.

6I direct Tarion to deny the Appellant’s claim of financial loss.

PROCEDURAL ISSUE

7At the case conference of July 7, 2025, Tarion requested that the Builder be added as a party to the proceeding, because of its financial and reputational interest in the outcome. The Appellant consented to Tarion’s request, and the Builder was added as a party.

8At the start of the hearing, the Builder requested to be removed as a party. Darryl Lex, Director of Lex Construction, stated that he would be participating in the proceeding as a witness, and that it would be unnecessary for him to make submissions and to cross-examine other witnesses. The Appellant and Tarion consented to the Builder’s request.

9Because the request was on consent and because it would make for a more efficient hearing, I granted the Builder’s request to be removed as a party.

ANALYSIS

The Statutory Warranty

10Under s. 14(2) of the Act, an owner of land who has entered into a construction contract, and who has a cause of action against the builder for damages resulting from the builder’s failure to substantially perform the contract, is entitled to receive payment out of the guarantee fund of the amount by which the amount paid by the owner to the builder under the contract exceeds the value of the work and materials supplied to the owner under the contract.

11To demonstrate damages and to be entitled to compensation under s. 14(2) of the Act, an owner must satisfy each of the following four requirements:

1. The owner must show that they had a contract with a builder for the construction of a home.

2. The owner must show that the builder failed to substantially perform the contract. According to s. 2(1) of the Construction Act, R.S.O. 1990, c. C.30, a construction contract is substantially performed when the building is ready for use or is being used for the purposes intended, and the building is capable of completion at a cost of not more than 3% of the first $1,000,000 of the contract price.

3. The owner must show that they have a cause of action against the builder for damages resulting from the builder’s failure to substantially perform the contract.

4. The owner must show that the total paid to the builder under the contract exceeds the value of the work and materials provided by the builder.

12Under s. 6(1)(b)(ii) of R.R.O. 1990, Reg. 892: Administration of the Plan (the “Regulation”), the maximum amount payable by Tarion for a claim of financial loss in relation to a construction contract is $40,000.

13According to the Canadian Legal Information Institute Glossary, 2nd ed., 2022, a “cause of action” is the “factual or legal grounds that give reason or justification for a Court proceeding to be commenced and remedy to be sought by the Court.”

14The onus is on an appellant to prove on a balance of probabilities that they satisfy each of the requirements to demonstrate damages above, and the monetary amount of any such damages pursuant to s. 14(3) of the Act. The Tribunal owes no deference to Tarion’s decision.

15Following a hearing, the Tribunal may, pursuant to s. 14(19) of the Act, order Tarion to take such action as the Tribunal considers Tarion ought to take in accordance with the Act and the Regulation, and for such purposes the Tribunal may substitute its opinion for that of Tarion.

Background

16The Appellant testified that there was only a garage and some outbuildings on the property in mid-2021, when she met with the Builder to discuss building a two-bedroom home, to her specifications, on the home’s property. The Appellant testified, further, that she suffers from mobility challenges and sought a one-storey home with a basement, with minimal steps to access the main floor.

17Darryl Lex testified that he has been building homes for about 25 years, and that he was introduced to the Appellant by a former client. He testified that after meeting with the Appellant, he engaged Ray Hunnakko, architectural technologist, to develop blueprints for the home, which Lex then reviewed with the Appellant. Lex testified that the cost of the blueprints to the Appellant was $2,500, inclusive of Harmonized Sales Tax (“HST”). After receiving approval on the blueprints, Lex testified that he then drafted a contract and reviewed it with the Appellant.

18The following background information was provided in Tarion’s Conciliation Assessment Report dated March 7, 2025 and in Tarion’s Decision Letter dated April 24, 2025, and it was not disputed at the hearing.

19The Appellant and the Builder executed the contract for the construction of the home on December 17, 2021. The contract included the construction of the home, based on the blueprints dated “December, 2021”. The contract stated that the cost of the home was $415,000 plus HST, for a total of $468,950, and that the price was subject to change as material cost inflation may occur, unless payment was received in full prior to the start of construction.

20The contract detailed a payment structure for the $468,950 as follows:

Initial deposit: $110,000

Upon basement framing: $110,000

Upon roofing installation: $110,000

Exterior completion: $40,000

Drywall install: $40,000

Flooring/trim completion: $20,000

Kitchen cabinets completion: $14,000

Upon full completion: $24,950

Total: $468,950

21On December 24, 2021, the Appellant provided an initial payment of $110,000.

22The Municipality of Shuniah issued a building permit on May 25, 2022, after it received the blueprints, as well as the plumbing and the heating, ventilation and air conditioning schedules.

23On June 7, 2022, the building inspector for the Municipality of Shuniah attended the site and provided an inspection report, indicating that the pressure-treated wood foundation (PWF) framing was complete and constructed as per the approved drawings. The Appellant provided further payments of $110,000 and $10,000 on June 10, 2022.

24The Appellant issued a verbal stop work order on July 25, 2022, after she and the Builder could not resolve their disagreement about the rear entry door not being at ground level.

25On July 29, 2022, the Builder faxed the Appellant to offer the solution of installing a platform lift at the rear entry door so that she could avoid any slopes or stairs. The Builder offered to add a 10’x10’ entry way at ground level at no additional cost to the Appellant, except for the cost of her selected platform lift, which he had estimated would cost $7,000 to $10,000.

26On the same day, the Appellant rejected the Builder’s offer, and the Builder stopped work on the home. At that time, the home was framed, with the roofing, soffits and fascia installed. The windows had not been installed. The Appellant had paid the Builder $230,000 by that date.

Did the parties have a contract?

27The parties do not dispute that they had a contract, signed December 17, 2021, to build the home to the specifications on the blueprints dated December, 2021. In their submissions, the parties directed me to only one version of the contract and one version of the blueprints, with no amendments. I find that under s. 14(2) of the Act, the Appellant had a contract with the Builder for the construction of the home.

Did the Builder fail to substantially perform the contract?

28I find that the Builder failed to substantially perform the contract. I note the contract included labour and materials for:

1. Framing as per blueprints
2. All vinyl windows and vinyl exterior siding
3. Metal roof
4. Aluminum soffit and fascia
5. Drywall and ceiling/painted finishes
6. Trim/painted medium-density fibre (MDF) trims (up to 3½”)
7. Baseboard/painted MDF trims (up to 4½”)
8. Interior doors and jambs/painted MDF finishes
9. Laminate flooring allowance $3.50/sq. ft.
10. Kitchen and bathroom cabinet/countertop allowance install and materials of $14,000.

29Also included in the contract were: excavation, rock required and sand fill, septic field (if lift station was required, an additional cost would be billed accordingly), and two loads of “A” gravel for driveway top-up (including spreading). Anything outside of the above list would be an additional charge. Hydro service to the house was not included.

30Tarion directed me to its Conciliation Assessment Report dated March 7, 2025, where it indicated that it completed a Percentage Completion Assessment, demonstrating that the Builder completed 30.5% of the contract at the time the contract ended.

31I accept Tarion’s finding that the Builder completed 30.5% of the contact, which is less than the 97% required under the Construction Act to qualify as substantial completion. The Appellant did not dispute Tarion’s finding that the builder completed only 30.5% of the contract.

32I find that, under s. 14(2) of the Act, the Builder failed to substantially perform the contract.

Does the owner have a cause of action against the builder for damages?

33I find that the Appellant has not demonstrated, on a balance of probabilities, that she has a cause of action against the Builder for damages resulting from the Builder’s failure to substantially perform the contract.

34The Appellant testified that it was her intention to have a house built with the main floor at ground level, with no steps to the main floor, and a full basement with 8-foot ceilings. The Appellant testified, further, that she had a contract with the Builder, but that he did not build what was in the contract. For this reason, the Appellant argues that she has a cause of action against the Builder for damages.

35The Appellant testified that the Builder did not excavate the foundation to a full 8 feet to allow the main floor to be at ground level. She testified that the Builder only excavated the basement to 4 feet, resulting in the main floor being higher than specified on the blueprints.

36The Appellant directed me to the signed inspection report of June 7, 2022, where it indicates that the foundation is “constructed higher out of the ground than what the approved drawings show, roughly 2’6” – 3’0” higher”. The Appellant argues that because the foundation was built higher than what was specified, she required several steps to access the main floor, making it inaccessible for her.

37The Appellant directed me to a fax to the Builder, dated July 25, 2022, where she indicated that she raised her concern about the height of the main floor above the surrounding grade on June 12, 2022. In the fax, the Appellant demanded that the Builder propose a solution to rectify the situation, with a response no later than July 29, 2022.

38The Appellant argues that because the Builder did not build what she wanted, she cannot ask him to complete the home. She argues that she suffered a financial loss because the home is less than half built, and she cannot sell the home.

39Ellen Chambers, a friend of the Appellant, testified that she discussed the design of the home with the Appellant before engaging the Builder, and that the Appellant always indicated that accessibility was a primary design consideration for the home, because of the Appellant’s mobility challenges. Chambers testified that the several steps to enter the rear door make the home inaccessible for the Appellant.

40Taryn Morris, Warranty Services Analyst with Tarion, wrote the Decision Letter on behalf of Tarion. Morris testified that, following receipt of the Financial Loss Claim Form from the Appellant, she reviewed the contract, the blueprints, building permit, inspection reports, proof of payments and subsequent communications between the Appellant and the Builder.

41Morris testified that, in her review of the documentation, she saw that the foundation construction has passed the building inspection of June 7, 2022. She concluded that the foundation was built according to the contract, the blueprints and the building permit. Morris testified, further, that in her review of the communications regarding the dispute over the height of the main floor above ground level, she concluded that the Builder offered solutions including the installation of a platform lift. She concluded, therefore, that the Builder wanted to continue with the construction of the home, and that the Appellant terminated the contract. In the Decision Letter to the Appellant, Morris wrote as follows:

Although the Builder proposed solutions to address your concern and was willing to continue work, it was not provided with an opportunity to substantially perform the contract. Therefore, you have not proven that it was the Builder’s fault that the construction contract was not substantially performed.

42Morris concluded in her Decision Letter that, because the Appellant had not met the requirement of proving a cause of action against the Builder, the Appellant had not proven all of the requirements to receive financial compensation under s. 14(2) of the Act.

43Gregg Gigliotti, Chief Building Official for the Municipality of Suniah, testified that he approved the building permit for the home on May 25, 2022, and performed the building inspection on June 7, 2022. Specifically, Gigliotti provided testimony about his comments on the inspection report regarding the height of the foundation being 2’6” to 3’0” higher than what the approved drawings showed. Gigliotti testified that the drawings showed minimum and maximum allowable backfill heights, with the backfill defined as the height from the base of the foundation to the surrounding grade. Gigliotti testified that the minimum backfill height, governed by the Ontario Building Code (“OBC”), is 4’6”, which was the minimum backfill height specified on the blueprints. The maximum backfill height, governed by the Ontario PWF manual, is 7’10’, which was also specified on the blueprints. Gigliotti submitted that the foundation passed his inspection because it met the required waterproofing requirements and the backfill was within the required range. He testified that his comment on the inspection report was that, instead of the entrance being only two steps above grade, it would be higher than what the blueprints showed but that it still met the requirements of the OBC, the PWF manual, and the building permit.

44The Builder testified that, in his initial discussions with the Appellant before the contract was signed, she asked that the main floor be at the height of the surrounding grade to minimize the need for any steps. He testified that basement windows were added to the blueprints to provide egress in the event of an emergency.

45Darryl Lex testified that, when he met with the Appellant, along with her son Scott Meredith on July 19, 2022, the Appellant rejected the solution of ramps or a platform lift, and she insisted that the only solution was to tear the house down and start over.

46I find that the Appellant has not demonstrated that the Builder failed to build the foundation to the specifications in the contract, because the Builder constructed the height of the foundation within the range specified on the blueprints.

47I assign little weight to the testimony of the Appellant and Ellen Chambers, that the Appellant always wanted a home with the main floor at ground level, because the contract and blueprints do not capture this information, so this was never part of the contract.

48I find that the testimony of Taryn Morris, Gregg Gigliotti and Darryl Lex is consistent, in that the home’s foundation depth and main floor elevation were built within the range specified on the blueprints and the building permit. For this reason, I find that the Builder was not in breach of the specifications for the foundation in the contract.

49I find that the Appellant’s refusal to accept alternatives to address her mobility concerns, regarding access to the main floor, did not allow the Builder to continue with the construction of the home. I find that the Appellant did not allow the Builder to substantially perform the contract. Because the Appellant terminated the contract, the Appellant does not have a cause of action against the Builder.

50For these reasons, I find that the Appellant has not demonstrated, under s. 14(2) of the Act, that she has a cause of action against the builder for damages resulting from the builder’s failure to substantially perform the contract.

Does the total paid to the Builder under the contract exceed the value of the work and materials provided by the Builder?

51Tarion determined, in its Percentage Completion Assessment, that the home was 30.5% completed. Based on this assessment, Tarion determined that the value in place at the time the contract ended was $126,575 plus HST (or $143,029.75).

52The amount paid to the Builder was $220,000, inclusive of HST, which was $76,970.25 more than the assessment of the completed value.

53I find that the Appellant has demonstrated that the total paid to the Builder under the contract exceeds the value of work and materials provided by the Builder.

Is the Appellant entitled to compensation under s. 14(2) of the Act?

54I find that the Appellant has demonstrated that she satisfies the following three requirements under s. 14(2) of the Act:

1. She had a contract with the Builder.

2. The Builder failed to substantially perform the contract.

3. The total paid to the Builder exceeds the value of the work and materials provided by the Builder.

55I find that the Appellant has not demonstrated that she satisfies the following requirement under s. 14(2) of the Act:

1. That she has a cause of action against the Builder for damages.

56To be entitled for compensation under s. 14(2) of the Act, the Appellant must demonstrate that she has met all four requirements. Because she has not demonstrated that she has a cause for action against the Builder for damages, the Appellant has not met her onus to prove that she is entitled to compensation for damages for financial loss.

57Having found that the Appellant has not met her onus to prove that she is entitled to compensation for damages for financial loss, it is not necessary to consider the amount of damages.

ORDER

58The Appellant has not proven that her claim of financial loss is warranted under the Act.

59I direct Tarion to deny the Appellant’s claim of financial loss