Liddiard et al. v. Tarion Warranty Corporation et al. [Indexed as: Liddiard v. Tarion Warranty Corp.]
99 O.R. (3d) 656
Ontario Superior Court of Justice,
Divisional Court,
Matlow, Low, Linhares de Sousa JJ.
November 17, 2009
Sale of land -- New home warranty program -- Appellants owning home when they made claims under Ontario New Home Warranties Plan Act and when they appealed denial of those claims to Licence Appeal Tribunal -- Appellants ceasing to own home prior to completion of appeal -- Right to warranty relief running with land -- Appellants ceasing to have standing to continue with appeal when they ceased to own home -- Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31.
The appellants made certain claims under the Ontario New Home Warranties Plan Act which were denied by the respondent. They appealed to the Licence Appeal Tribunal. Although they owned the home when they made the claims and when they launched their appeal, they ceased to own the home prior to the completion of the appeal, as it was sold by the mortgagee under power of sale. The tribunal held that the appellants ceased to have standing to continue with the appeal when they ceased to own the home. The appeal was dismissed. The appellants appealed. [page657]
Held, the appeal should be dismissed.
Per Low J. (Linhares de Sousa J. concurring): The tribunal did not err in finding that the appellants did not have standing to continue the appeal when they no longer owned the home. The right to warranty relief runs with the land. Therefore, for purposes of enforcement of the warranty, the right to claim or to continue the claim vests in the person who currently owns the property. Moreover, the appellants were seeking damages for the diminution in value of their property said to result from breach of warranty. Any loss or damage that is derivative of the failure to construct in accordance with s. 13(1) of the Act is secondary damage and is excluded under s. 13(2)(b) of the Act.
Per Matlow J. (dissenting): The Act is consumer protection legislation and should be given a broad and liberal interpretation to give effect to the clear intention of the legislature to provide added protection to purchasers of new homes. The tribunal applied a rigid, restrictive approach to its interpretation of the Act and interpreted it, unnecessarily, in a way that eliminated the rights of the appellants and advanced the respondent's interest. The tribunal's interpretation also offended the presumption against interference with vested rights. The appellants' entitlement to the benefit of the warranty became vested in them when they made their initial claim in the prescribed manner.
APPEAL from a decision of the Licence Appeal Tribunal.
Cases referred to Charles v. Paradise Homes Inc., November 9, 1999, Court File No. 96-CU-108078 (Ont. S.C.J.), apld Other cases referred to Avoll Services Inc. v. Tarion Warranty Corp., November 18, 2005, Court File No. 05-CV-287644PD2 (Ont. S.C.J.); Berger (Re), [1996] O.C.R.A.T.D. No. 91 (Comm. Reg. App. Trib.); Lonergan v. Ontario (Licence Appeal Tribunal), [2008] O.J. No. 2246, 168 A.C.W.S. (3d) 7 (Div. Ct.); Seary (Re) (1983), 12 C.R.A.T. 204 (Comm. Reg. App. Trib.); Smith (Re), [1998] O.C.R.A.T.D. No. 280 (Comm. Reg. App. Trib.); Wallace (Re), [2007] O.L.A.T.D. No. 299 (Lic. App. Trib.) Statutes referred to Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31, ss. 1, 13(1), (2)(b), (5), (6), 14(3) [as am.], (4) [as am.], (6) [as am.], (7) [as am.] Rules and regulations referred to Administration of the Plan, R.R.O. 1990, Reg. 892, ss. 4.2 [as am.], 4.3 [as am.], 4.4 [as am.], 4.6 [as am.], 5, (3), 6(6) Authorities referred to Sullivan, Ruth, Driedger on the Construction of Statutes, 4th ed. (Markham, Ont.: Butterworths, 2009)
Applicants/appellants, in person. David Outerbridge, for respondent Tarion Warranty Corporation. Marshall Homes Corporation, unrepresented.
LOW J. (LINHARES DE SOUSA J. concurring): -- [page658] The Decision Appealed From
[1] This is an appeal from a decision of the License Appeal Tribunal (the "LAT") dated January 13, 2009.
[2] The decision arose in the course of an appeal to the LAT by the appellants, Mr. and Mrs. Liddiard, from the denial by the respondent Tarion Warranty Corporation ("Tarion") of certain claims that the appellants had made under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the "Act").
[3] Vice-chair Laurie Sandford of the LAT held that the appellants ceased to have standing to continue with the appeal when they ceased to own the home. Although the appellants owned the home when they made their claims with Tarion and when they launched their appeal from Tarion's decision, they ceased to own the home prior to the completion of the multi-day appeal which spanned several months. The home had been sold by the appellants' mortgagee under power of sale prior to the completion of the appeal hearing.
[4] The issue to be decided on the appeal to this court is whether a person who did own but who no longer owns a home which is subject to warranty may continue an appeal under the Act to the LAT from a denial of a claim by Tarion.
[5] The Act establishes a statutory warranty scheme which applies to new home construction in Ontario. It is intended to provide consumer protection and a simple and inexpensive mechanism for resolution of warranty disputes. The Relevant Statutory Provisions
[6] The following are the relevant provisions in the Act:
- In this Act, . . . . .
"owner" means a person who first acquires a home from its vendor for occupancy, and the person's successors in title; . . . . .
13(1) Every vendor of a home warrants to the owner, (a) that the home, (i) is constructed in a workmanlike manner and is free from defects in material, (ii) is fit for habitation, and (iii) is constructed in accordance with the Ontario Building Code; (b) that the home is free of major structural defects as defined by the regulations; and [page659] (c) such other warranties as are prescribed by the regulations.
(2) A warranty under subsection (1) does not apply in respect of, . . . . . (b) secondary damage caused by defects, such as property damage and personal injury; . . . . .
(5) A warranty is enforceable even though there is no privity of contract between the owner and the vendor.
(6) The warranties set out in subsection (1) apply despite any agreement or waiver to the contrary and are in addition to any other rights the owner may have and to any other warranty agreed upon. . . . . .
14(3) Subject to the regulations, an owner of a home is entitled to receive payment out of the guarantee fund for damages resulting from a breach of warranty if, (a) the person became the owner of the home through receiving a transfer of title to it or through the substantial performance by a builder of a contract to construct the home on land owned by the person; and (b) the person has a cause of action against the vendor or the builder, as the case may be, for damages resulting from the breach of warranty.
(4) Subject to the regulations, an owner who suffers damage because of a major structural defect mentioned in clause 13(1)(b) is entitled to receive payment out of the guarantee fund for the cost of the remedial work required to correct the major structural defect if the owner makes a claim within four years after the warranty expires or such longer time under such conditions as are prescribed. . . . . .
(6) In assessing the amount for which a person is entitled to receive payment out of the guarantee fund under this section, the Corporation shall take into consideration any benefit, compensation, indemnity payable, or the value of work and materials furnished to the person from any source.
(7) The Corporation may perform or arrange for the performance of any work in lieu of or in mitigation of damages claimed under this section.
[7] Also relevant is s. 6(6) of R.R.O. 1990, Reg. 892 (Administration of the Plan):
6(6) Liability under subsection (3) or (4) is limited to damage to the home only and liability under subsection (5) is limited to damage to the common elements only and there is no liability for any other damage, direct or indirect. The Standard of Review
[8] The facta filed on this appeal were silent on and no argument was advanced by the parties on the standard of review. The issue to be decided is a question of law. In light of the [page660] decision in Lonergan v. Ontario (Licence Appeal Tribunal), [2008] O.J. No. 2246, 168 A.C.W.S. (3d) 7 (Div. Ct.), at 3 (QL), we are satisfied that the standard of review is that of correctness. The Factual Background
[9] The appellants bought a new home from the respondent, Marshall Homes Corporation ("Marshall"), and took possession in January 2006.
[10] Prior to the end of their first year of ownership, the appellants advanced a number of claims to Tarion relating to the construction of the home and asserting that the identified defects were warranty matters. Tarion inspected the home and addressed the claims but denied a number of them on the grounds that the alleged defects were not warrantable items. Most significant among the unresolved claims was a claim concerning the HVAC system. The appellants appealed to the LAT and asserted additional claims during the pendency of the appeal.
[11] On February 27, 2008, a prehearing conference was held by the LAT. Orders were made that, inter alia, required Tarion to arrange for an independent HVAC inspector to attend at the home and perform an inspection. The LAT required the builder, Marshall, to arrange for an inspection of the installation and function of the solar panels to determine the cause and cure and the cost of the cure of the appellants' complaint. The appellants were ordered to make documentary disclosure and to organize their materials for the hearing.
[12] A further prehearing conference was held on April 22, 2008.
[13] It is apparent that the parties were working toward a resolution of certain of the appellants' claims but Tarion held to its view that the subject matter of some of the claims were unwarrantable.
[14] The hearing of the appellants' appeal before the LAT was scheduled to start on August 11, 2008, and was anticipated to occupy three days.
[15] In the meantime, the appellants had defaulted on their mortgage in the spring of 2008. Around the end of June or the beginning of July 2008, the appellants gave up possession of the home to the mortgagee. By the time of the commencement of the appeal hearing in August 2008, the appellants were no longer in possession of the property, but there was, as yet, no sale of the property under power of sale.
[16] At the commencement of the hearing on August 11, 2008, Tarion brought a motion to dismiss the appeal on the grounds that the appellants lacked standing or, alternatively, to stay the [page661] appeal until the property was either sold under power of sale or the appellants redeemed their mortgage.
[17] The LAT released its decision on September 3, 2008, denying Tarion's motion for dismissal for the reason that the appellants had an unextinguished equity of redemption. There had been no foreclosure, and in the absence of a sale by the mortgagee it was still open to the appellants to redeem the mortgage.
[18] The appeal before the LAT did not conclude within the three days allotted for it in August 2008, and a further block of three days was set to commence on December 15, 2008 to complete the hearing.
[19] In the intervening time, the appellants did not redeem the mortgage and, prior to the hearing recommencing on December 15, 2008, the property was sold by the appellants' mortgagee under power of sale. The sale under mortgage was completed on December 10, 2008.
[20] Therefore, when the hearing resumed on December 15, 2008, the appellants did not own the property and the person or persons who owned the property on that date were not parties to the appeal.
[21] On completion of the appellants' evidence at the resumption of the hearing on December 15, 2008, but before the respondents adduced any evidence, Tarion launched a second motion for dismissal of the appeal on the grounds that the appellants were no longer the owners of the home and thus no longer had standing to pursue enforcement of the warranty. Tarion relied on the additional ground that the damages the appellants were now seeking, namely, damages representing the diminution of value of the property, were secondary or consequential damages not available under the Act.
[22] Marshall brought its own motion to dismiss the appellants' appeal on the grounds that the appellants were improperly seeking secondary damages and that the appellants had engaged in improper conduct during the appeal process.
[23] In its decision released on January 13, 2009, the LAT dismissed the appeal, following Charles v. Paradise Homes Inc., November 9, 1999, Court File No. 96-CU-108078 (Ont. S.C.J.), per Lax J., which held that the right to warranty relief runs with the land. Therefore, for purposes of pursuing enforcement of the warranty, the right to claim or to continue the claim vests in the person who currently owns the property. While Vice-Chair Sandford followed Charles on the basis of the principle of stare decisis, she expressed dissatisfaction with the result. [page662]
[24] In light of the result of the motion brought by Tarion challenging standing, the motion brought by Marshall did not have to be decided although the LAT held, in the course of dealing with the question of costs, that the appellants had behaved vexatiously in failing to comply with the prehearing orders to organize their materials and that their misconduct had caused a delay in the absence of which the hearing might have been completed prior to the home being sold. The Appellant's Position
[25] The appellants' position that it is unfair that they not be permitted to pursue compensation under the warranty -- now in the nature of a claim for damages for diminution of value -- because it is they who suffered the inconvenience of breaches of warranty and loss of value in the home by reason of the construction defects.
[26] It is their position that the purpose of the statute is to protect members of the public who purchase new homes and to ensure that statutory standards of workmanship and materials are met. Where they are not, the purchaser should have a remedy under the Act. They assert that where the purchaser loses his remedy under the Act by transferring or, in this case, losing ownership by reason of sale under power of sale, the purpose and intention of the Act is not met.
[27] The appellants acknowledge that in the event that the defects of which they have complained are held to be warranty items (an issue which has not yet been determined), and the warrantors make good on the warranty by putting right the defects pursuant to s. 14(7) of the Act, the beneficiary of that work would be the current owner and not the appellants who no longer own the property.
[28] The appellants acknowledge that while their claim had been for rectification of the defects or for the cost of so doing, the nature of their claim has changed now that they no longer own the home; it is now a claim for damages for diminution of the value of the home resulting from the alleged construction defects. Discussion and Conclusion
[29] The issue of whether a former owner retains a right to pursue rights under a warranty has not yet been the subject of a decision of this court.
[30] The decision in Charles v. Paradise Homes Inc., a brief endorsement on the record, arose in the context of a motion for summary judgment to dismiss a civil action against the house builder, the Ontario New Home Warranty Program and others. [page663] As in the case at bar, the plaintiffs had been owners when they first asserted a claim against the program but there had been a subsequent foreclosure and by the time they launched the civil action, they no longer owned the home. Lax J. held:
The record demonstrates that there were foreclosure proceedings and in 1995, the mortgagees took possession. In order to have access to the compensation fund, for breach of a s. 13 warranty, the claimant must be an "owner" as defined. It is clear from the definitions of "owner" and "vendor" under the Act, that the protection afforded by the Act is available only to those who acquire a home registered under the Act and to their successors in title. In other words, the warranty runs with the home. Accordingly, upon the transfer of title from the Plaintiffs to their successors in title, any right to compensation passed from them: Royal Trust Corporation of Canada, (1984), 14 C.R.A.T. 146; Ontario New Home Warranties Plan Act, Section 1.
[31] Similarly, in Avoll Services Inc. v. Tarion Warranty Corp., November 18, 2005, Court File No. 05-CV-287644PD2 (Ont. S.C.J.), Spence J., in a very brief endorsement, struck out the claim as disclosing no reasonable cause of action on the basis that the plaintiff was no longer an owner and the damages claimed (diminution in value) was not available under the Act.
[32] There is jurisprudence of the LAT arriving at the same conclusion: see Seary (Re) (1983), 12 C.R.A.T. 204 (Comm. Reg. App. Trib.); Berger (Re), [1996] O.C.R.A.T.D. No. 91 (Comm. Reg. App. Trib.); Smith (Re), [1998] O.C.R.A.T.D. No. 280 (Comm. Reg. App. Trib.); and Wallace (Re), [2007] O.L.A.T.D. No. 299 (Lic. App. Trib.).
[33] In my view, the LAT did not err in law in following Charles v. Paradise Homes Inc. and the view expressed in Charles that the warranty runs with the land was correct.
[34] I come to this conclusion upon an examination of the Act for its aims and purposes and for the scheme and mechanisms devised by the legislature to carry out those aims and purposes.
[35] That the Act aims to protect consumers is common ground. It imposes a set of statutory warranties that are in addition to any contractual warranties between a purchaser of a new home and the builder or seller of such a home. A seller may contractually be responsible to his purchaser for more than is stipulated under the statutory warranties but the statutory warranties are the minimum and cannot be waived by agreement (s. 13(6)).
[36] However, the consumer that the legislation seeks to protect is not only the original purchaser of a new home who buys from a vendor, but also those who acquire ownership subsequently during the term of the warranty. This is apparent not only from s. 13(5) providing that a warranty is enforceable although there [is] no privity but also from s. 13(6) nullifying the effect of agreements to waive. Thus, any contractual enticements [page664] that might move an original purchaser to agree to waive cannot prejudice subsequent owners during the warranty period by denying them warranty rights. The set of members of the public sought to be benefited is all owners who own during the warranty period.
[37] What is the primary and specific benefit conferred by the Act? In my view, the benefit sought to be conferred by the Act is delivery of construction of the home in conformity with the warranties. The primary remedy sought to be conferred where there is breach of a warranty is rectification of the construction defect -- in short, having the property built in the manner in which it should have been done in the first instance. This is apparent from s. 14(7) of the Act, as well as from ss. 4.2, 4.3, 4.4, 4.6 and 5 of the Regulation. The aforementioned sections of the Regulation set out the formal requirements that the owner must comply with in giving notice of and asserting a claim at the different stages of the life of the warranty. In the cases of the 30-day, year-end and second- year claims dealt with under ss. 4.2, 4.3 and 4.4, the first response is to be from the vendor to "repair or resolve" the claims asserted. It is where the vendor "does not repair or resolve all of the claim items listed" on the form that the owner becomes entitled to seek conciliation by Tarion. Under s. 5, governing conciliation of disputes, subsection (3) provides:
5(3) If the Corporation determines that the remedial work will require time to complete, the Corporation shall continue to conduct such inspections of the home as the Corporation considers necessary until the work has been completed.
[38] Tarion's role is, inter alia, to administer the guarantee fund and to conciliate claims. It is not primarily a repairer of construction. Nevertheless, even where a call on the guarantee fund is engaged, s. 14(7) of the Act provides that Tarion is entitled to perform or arrange for the performance of any work in lieu of or in mitigation of damages claimed.
[39] The present and successive owners of a property are the intended beneficiaries of remedial work that puts the property right and an award of monetary compensation to an owner making a warranty claim will not benefit subsequent owners who acquire the property during the warranty period unless the monetary compensation is used to have the remedial work performed. Hence the emphasis on remediation in the Act and in the Regulation.
[40] The emphasis in the Act and in the Regulation on putting the property right through remedial work in conjunction with the elimination of the requirement for privity for purposes of warranty enforcement suggests that the focus of the legislation [page665] is on ensuring the property's compliance with the minimum statutory standards and not on monetary compensation for breach of warranty.
[41] When a property under warranty is transferred, the acquiring owner acquires warranty rights under the Act. To the extent that there are warranty claims which can be launched in compliance with the time limits set in the Regulation, those claims can be asserted by the acquiring owner. To the extent that there are warranty claims which have been asserted by the disposing owner but not determined by Tarion or, on appeal, by the LAT, the treatment of such claims that would most accord with the purpose of the Act to confer on owners a property in compliance with statutory standards is one which permits (but does not require) claims started by the disposing owner to be continued seamlessly by the acquiring owner. Such a treatment would hold the vendor to its obligations to put the property right and yet would not entail additional burden upon the vendor or on Tarion.
[42] The issue of an acquiring owner having received compensation for warrantable defects by way of diminution of the price he pays the disposing owner for the property has been raised as a rationale for either denying or significantly diminishing any warranty compensation to the acquiring owner in any warranty claim by him in favour of awarding monetary compensation to the disposing owner assuming there is only "one pool" of damages to be had. In my view, such an argument presupposes that there has been an element in the price paid that the parties consciously identified and intended to address the construction defects that constitute warranty breaches. It presupposes also that the warranty is treated as having no value in arriving at the purchase price. More significantly, it ignores the effect of s. 14(7) which entitles Tarion to remedy the defects, a right which continues to be related to the property despite change of ownership.
[43] It is open to disposing and acquiring owners who purchase during a warranty period to address explicitly the value of a warranty defect in negotiating the price at which the property is to be sold. Buyers and sellers are similarly at liberty to address the value of the warranty and to fashion their agreement of purchase and sale to take into account the contingencies of success or failure in obtaining warranty redress. There is no impediment to a mortgagee selling under power of sale addressing warranty issues in similar fashion.
[44] Because it is open to disposing and acquiring owners to address unresolved warranty claims in their agreements of [page666] purchase and sale and to tailor their bargains accordingly, it is not unfair that the right to pursue warranty claims pass with title to the property. As well, the original purchaser who acquires the home from the vendor has contractual remedies against the vendor whereas a subsequent owner has only statutory warranty rights.
[45] The key lies, in my view, in the statute's focus on putting the property right. The warranty is attached not to the owner but to the property, and s. 14(7) of the Act does not limit Tarion's right to perform or arrange for the performance of remedial work only to the period of ownership by the person who first acquires a home from its vendor for occupancy. Accordingly, the language adopted by Lax J. in Charles that the warranty runs with the home is apt and correctly characterizes the rights of disposing and acquiring owners of a property during the warranty period.
[46] The foregoing is sufficient to dispose of the appeal but there is as well a second reason for so doing -- the nature of the claim itself.
[47] The appellants seek damages for the diminution in value of their property said to result from breach of warranty. They do not seek rectification of the construction defects as such a remedy would not now benefit them. They also do not seek a sum of money representing the cost of putting the construction defects right if any should be found and there is no suggestion that if such a sum were awarded, it would be used toward correcting construction defects.
[48] Under s. 13(2)(b) of the Act, "secondary damage caused by defects, such as property damage and personal injury", are exclusions under the warranty.
[49] The term "secondary" is not defined in the statute. The seventh edition of Black's Law Dictionary defines "secondary" as "subordinate or subsequent". The two opening entries for the word in the 1993 edition of the New Shorter Oxford English Dictionary on Historical Principles define the word as (1) not chief or principal; of minor or second importance; subordinate and (2) derived from, caused by, based on or dependent on something else which is primary; not original, derivative.
[50] The meaning of the word in the context of this Act can be gleaned, however, from the two examples provided in the section: property damage and personal injury and, in my view, the term "secondary" is not connected, in this context, with either the importance or the magnitude of the loss or damage, but rather with the character of it. Clearly, the term "personal injury" encompasses very grave loss and harm, if not death [page667] itself. It is difficult to envisage damage of greater importance and yet that type of loss is excluded. I therefore conclude that the drafters intended the term "secondary" to mean that which is derivative. Accordingly, the immediate result of the breach of warranty is covered and all that is derivative is excluded.
[51] The warranty is set out at s. 13(1). The primary and immediate result of breach of warranty is construction that is not done in workmanlike manner and free from defects in material or is not fit for habitation or is not constructed in accordance with the Ontario Building Code or is not free of major structural defects or is in breach of some other warranty prescribed by the regulations.
[52] What is conferred by the warranty is the right to have done that which should have been done correctly in the first instance or a sum of money to purchase the labour and materials to do so. Any loss or damage that is derivative of the failure to construct in accordance with s. 13(1) is secondary and therefore excluded. Even assuming that causation can be shown, loss of value on sale of a property is derivative and thus secondary and excluded.
[53] For the foregoing reasons, I would dismiss the appeal.
[54] Costs submissions may be made within 30 days from the date of release of these reasons.
[55] MATLOW J. (dissenting): -- With respect, I am unable to agree with the disposition of the majority. I would set aside the decision of the LAT and would remit the appellants'appeal to the LAT with a direction to resume and complete the hearing of the appeal. I would also provide for the disposition of any claim for costs in the same manner as Justice Low has done.
[56] There is nothing in the Act [Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31], the applicable Regulation [Administration of the Plan, R.R.O. 1990, Reg. 892] or the documentation which expressly called for the dismissal of the appellants' appeal and the denial of their claim in the circumstances in which it occurred. Nor, in my view, was there anything that, by implication, should have led to that result.
[57] Upon the completion of the purchase of their new home in January 2006, the appellants became entitled to the benefit of the vendor's statutory warranty from Marshall and the added statutory warranty from Tarion. Tarion's warranty was set out on the warranty certificate issued by Tarion to the appellants in the following language;
TARION WARRANTY CORPORATION (TARION) hereby confirms that the home identified above has the benefit of the warranty set forth in the Ontario New Home Warranties Plan Act, R.S.O. 1990, c.O.31. [page668]
[58] There is no dispute between the parties regarding the following. After the purchase of their new home, the appellants became the "owner" of the home within the definition of "owner" in the Act and were entitled to the benefit of the warranties provided by both Marshall and Tarion. From the time that the appellants became dissatisfied with the work done by Marshall up to the time when their appeal to the LAT was dismissed, they did everything that was required of them to advance their claim against Marshall and Tarion. After they asserted their claim, both Marshall and Tarion sent representatives to examine the appellants' home and the defects which were the subject of their claim. The only event which caused the LAT to dismiss their appeal was the subsequent foreclosure and sale of their home by a mortgagee in December 2008, which the LAT held, in effect, deprived the appellants of their previous status of "owner".
[59] It is important to emphasize that the Act is a statute which falls into the category of consumer protection legislation and, as such, should be given a broad and liberal interpretation to give effect to the clear intention of the legislature to provide added protection to purchasers of new homes. However, in order to arrive at the interpretation which led the LAT to dismiss the appellants' appeal, the LAT applied a rigid restrictive approach to its interpretation of the Act and interpreted it, unnecessarily, in a way that eliminated the rights of the appellants and advanced Tarion's interest. That approach eliminated Tarion's statutory liability to the appellants, persons who were intended to receive the protection of the Act. That approach, with respect, should not be approved by this court.
[60] The interpretation of the Act by the LAT also offended another principle of statutory interpretation, namely, the presumption against interference with vested rights. In Sullivan and Driedger on the Construction of Statutes, 4th ed. (Markham, Ont.: Butterworths, 2002), this principle is set out as follows, at p. 568:
The common law presumption. It is presumed that the legislature does not intend legislation to be applied in circumstances where its application would interfere with vested rights.
[61] At p. 569, the authors continue as follows:
If the application of a provision would interfere with vested rights, the courts refuse to apply it unless there is evidence that it was meant to apply despite its prejudicial impact. And further down the page:
Reasons for presumption. The primary justification for the presumption against interfering with vested rights is explained by Duff, J. in Upper Canada College v Smith 1920 SCC 8, 61 S.C.R. 413 at 417; [page669]
. . . speaking generally it would not only be widely inconvenient but "a flagrant violation of natural justice" to deprive people of rights acquired by transactions perfectly valid and regular according to the law of the time".
To deprive individuals of existing interests or expectations that have economic value is akin to expropriation without compensation, which has never been favoured by the common law.
[62] In my view, the appellants' entitlement to the benefit of the Tarion warranty became vested in them when they made their initial claim in the prescribed manner. It was entirely possible that, at some time before December 2008, when the foreclosure of their property occurred, their claim might well have been settled and Tarion would have fulfilled its warranty obligations as it was then clearly required to do. It was only because the appellants and Tarion were not able to reach a settlement of the appellants' claim that it became necessary for the appellants to appeal to the LAT and it was only because of the unusual length of the appeal hearing that the foreclosure took place before the appeal was completed.
[63] What resulted from this unforeseeable sequence of events was, in essence, the retroactive confiscation of a right that the appellant's had already obtained for which they had done nothing to justify its confiscation. The legal issue that led to this result was understandably not addressed by the legislature by the language of the Act and, consequently, had to be determined by the LAT in accordance with established principles of statutory interpretation. The interpretation given by the LAT then resulted in the appellants' being denied the right to pursue their appeal only because of the timing of the foreclosure and sale of their home, matters over which they had absolutely no control. If justice were to be done, surely the timing should not have been determinative of the appellants' rights.
[64] Justice Low, in her reasons for judgment, has, in my respectful view, relied on matters which have led her to uphold an incorrect result. For example, she has expressed her concerns about the inability of Tarion, subsequent to the foreclosure, to gain admission to the house as a matter of right for the purpose of making repairs required by its warranty and has viewed that as a factor supporting her interpretation of the Act. She does not address the fact that Tarion has already had ample opportunity to inspect the home and make repairs and, if it should be determined that it is still required to make repairs following the completion of the appellants' resumed appeal hearing, Tarion could hardly complain if it is required to pay damages to the appellants instead of making the required repairs. The right of the appellants to obtain the relief to which they may be entitled [page670] should, in my view, take priority to the right of Tarion to gain admission to the home and make repairs.
[65] The decision in Charles v. Paradise Homes Inc., November 9, 1999, Court File No. 96-CU-10 (Ont. S.C.J.) (Lax J.) is contained in a brief handwritten endorsement and does not contain sufficient information about the facts of that case to enable me to determine the extent of its holding. In any event, even if it were in some way applicable to the facts of this case, I would, with respect, decline to follow it.
[66] The panel of the LAT which heard and dismissed the appellants' appeal was composed of one person only. The difficulty which the panel experienced in endeavouring to reach a fair and just decision is reflected in the following excerpt, taken from p. 10 of the panel's decision and order:
The present case is one illustration of the injustice that results from a statutory interpretation that only the current owner can pursue a claim for compensation under the Act. Here the Applicants have been in possession of the home for almost three years and have been pursuing their claims under the Act for almost two of those years. They point out that they have done nothing wrong. They followed the process. They paid for warranty coverage and they filed the appropriate claim forms in a timely fashion. Regulation 892 sets out reasonably rigid timeframes in which claims may be made and imposes a burden on claimants to comply with the requirements of what, to a layman, is a fairly complex system. If Tarion denies a claim and the matter is pursued before the Tribunal, then the burden on the claimant increases significantly. The Applicants in this case had the burden of proving that there was a warranty breach and that they had suffered damages as a result. Not all damages are recoverable under the Act. The
Applicants must demonstrate that the specific damages they claim are among those covered by the Act and they must quantify those damages.
Here the Applicants have made an effort to do all of these things. However, now they must be denied not only any compensation to which they might have been entitled, they must be denied even the satisfaction of a decision as to the merits of their case because they no longer own the home.
The purpose of the Act is to protect members of the public who buy new homes in Ontario by giving them assurance that the homes they buy comply with the standards of workmanship and materials set out in the Act. If the home falls short of these standards and if the damages suffered by the purchaser as a result fall within the purview of the Act, then the purchaser ought to have a remedy under the Act. The statutory purpose has not been met in this case.
This situation calls out for reform, whether by judicial clarification, legislative amendment, or both. In the meantime, several actions are needed. First, it is important that purchasers of new homes in Ontario be advised that their rights to make a claim or pursue an appeal will be extinguished if they transfer title of the home, voluntarily or otherwise, before their claim is concluded. At present, Tarion makes no mention of this in their literature or on their web site. It will be up to Tarion to determine whether and how to [page671] address the possibility of a private assignment. Secondly, when an appeal is made to this Tribunal and mortgage foreclosure or power of sale proceedings are begun, then the appeal should be expedited and the Tribunal confidently expects Tarion's full co-operation in this expediting. It will be open to Tarion to argue that repair of the home, rather than damages is the most appropriate remedy, but the original purchasers must have an opportunity to pursue their claim in a timely way.
The Tribunal is sympathetic to the situation in which the Applicants find themselves, but has no choice but to grant Tarion's motion to dismiss this appeal as it relates to the Applicants.
[67] There can be no clearer demonstration than this excerpt of why LAT's own interpretation of the Act was wrong. I have, by these reasons for judgment, tried to provide the "judicial clarification" sought by the LAT. I also join with LAT in calling for legislative reform.
[68] The dismissal of the appellants' appeal and the denial of their claim against Tarion by the LAT was, in my view, an unwarranted and draconian result based on an incorrect interpretation of the Act. As I stated above, I would set it aside.
Appeal dismissed.