CITATION: Ashcroft Homes v. Tarion Warranty Corporation, 2023 ONSC 6527

DIVISIONAL COURT FILE NO.: DC-23-2805 DATE: 20231123

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

J.A. Ramsay, Varpio and Leiper JJ.

BETWEEN:

Ashcroft Homes - Capital Hall Inc. Applicant

– and –

Tarion Warranty Corporation Respondent

Alexander Bissonnette and Filip Szadurski for the Applicant David Outerbridge and Shalom Cumbo-Steinmetz for the Respondent

HEARD at OTTAWA: November 17, 2023 by videoconference.

THE COURT

[1] The Applicant, a builder and vendor, seeks judicial review of the decision of Tarion Corporation under s.14 of the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31, ordering it to pay $7,500 compensation to the purchaser for delayed occupancy. Tarion is the Respondent. The standard of review is reasonableness.

Evidence that was not before the decision-maker

[2] Tarion objects to the use of new information filed by the Applicant contained in portions of the affidavit of Manny DiFilippo sworn December 10, 2022. Mr. DiFilippo’s affidavit includes evidence about the background of the epidemic and evidence concerning the impact of the dismissal of this application on the Applicant’s business.

[3] The evidence about the pandemic is more than mere background. It could have been placed before Tarion if due diligence had been exercised. The evidence about the impact of Tarion’s ruling on the Applicant’s business is not relevant to whether the decision was reasonable. We would not have admitted it as fresh evidence.

[4] Our decision is based on the record before the decision-maker. It would not be in the interest of justice to allow the Applicant to expand the record. This is a review of the reasonableness of a decision. There is no complaint about the procedure followed by the decision-maker. There has been no application to admit fresh evidence. The Applicant is not entitled to do the evidence over on review: Lovell v. Ontario (Minister of Natural Resources and Forestry), 2022 ONSC 423 at paras. 5-7 (Div. Ct.).

Background

[5] The Applicant is a builder. On February 7, 2016, it entered into an agreement of purchase and sale with the purchaser for a condominium unit. The Applicant provided a “Statement of Critical Dates” as follows: March 1, 2018, for first tentative occupancy; August 31, 2020, as the outside occupancy date; and September 30, 2020, as the date of the purchaser’s termination period.

[6] On April 30, 2018, there was a fire at the condominium complex. It required remediation.

[7] On May 10, 2018, the Applicant wrote to the purchaser about the fire and notified him that the fire would cause an unavoidable delay and estimated that it would add 120 days to the previous occupancy dates. Ultimately, the delay in completion lasted until July 14, 2021. The Applicant sent updates to the purchaser during this period as follows:

a. August 29, 2018 – a letter informing the purchaser about the significant smoke damage and estimating that completion would be in spring 2019 at the earliest.

b. April 15, 2019 – a letter advising that the remedial work for the smoke damage was done, the Applicant was working with its insurer, and estimating that completion would be between May and September 2020.

c. May 25, 2020 – a letter saying that the Applicant’s construction department would be setting a completion and occupancy schedule within “the coming weeks”.

d. August 10, 2020 – a letter mentioning the uncertainties caused by COVID-19 and outlining the progress to date, pushing the anticipated closing to summer 2021.

e. March 18, 2021 – an email with a letter attached revising the Statement of Critical Dates, including July 14, 2021, as the firm occupancy date. This is the key notice in question. The letter provided revised critical dates, including July 14, 2021 for occupation, although, as it said, “the unavoidable delay has yet to be declared over.”

f. May 21, 2021 – a letter setting the final closing date as November 12, 2021.

[8] Section 14 (5.0.3) of the Act deals with compensation for delayed occupancy or closing. There is a delayed occupancy warranty provided for under O. Reg. 165/08. The Regulation requires that the Tarion addendum form part of the agreement of purchase and sale. The addendum says that the vendor must pay the purchaser $150 per day (up to $7,500) as delayed occupancy compensation, subject to certain exceptions. One such exception is where there is unavoidable delay and the vendor complies with the notice requirements.

[9] Unavoidable delay is defined in s. 5 of the addendum as “an event which delays Occupancy which is a strike, fire, explosion, flood, act of God, civil insurrection, act of war, act of terrorism or pandemic, plus any period of delay directly caused by the event, which are beyond the reasonable control of the Vendor and are not caused or contributed to by the fault of the Vendor.”

[10] The notice requirements which Tarion considered and applied in this claim read as follows:

(b) If the Vendor wishes to extend Critical Dates on account of Unavoidable Delay, the Vendor shall provide written notice to the Purchaser setting out a brief description of the Unavoidable Delay, and an estimate of the duration of the delay. Once the Vendor knows or ought reasonably to know that an Unavoidable Delay has commenced, the Vendor shall provide written notice to the Purchaser by the earlier of: 20 days thereafter; and the next Critical Date.

(c) As soon as reasonably possible, and no later than 20 days after the Vendor knows or ought reasonably to know that an Unavoidable Delay has concluded, the Vendor shall provide written notice to the Purchaser setting out a brief description of the Unavoidable Delay, identifying the date of its conclusion, and setting new Critical Dates.

[11] Here, the purchaser’s occupancy was delayed by more than three years, ultimately taking place on July 14, 2021. After closing, the purchaser filed a delayed occupancy claim with Tarion. Tarion concluded that the notice was ineffective because it failed to provide a brief description of the unavoidable delay and failed to specify its end date.

Issues on Review

[12] The Applicant submits that the decision was not reasonable and raises the following three issues:

a. Was the decision reasonable in concluding that the March 2021 letter did not identify the concluding date for unavoidable delay?

b. Was the decision reasonable in concluding that the March 2021 letter did not provide a brief description of the unavoidable delay?

c. Did Tarion fetter its discretion by applying the plain requirements in the addendum in a rigid, arbitrary or incomplete manner?

[13] There is a fourth issue. Tarion held that the Applicant did not provide sufficient evidence to show that the delay was directly caused by the events and that the Applicant did not cause it or contribute to it. On this issue, the Applicant’s position is that this finding was not necessary to the decision. That is, the decision was based only on the ineffectiveness of the notice. Furthermore, the evidence consisted of a statutory declaration that was filled out by the Applicant on a form supplied by Tarion. It is submitted that it was unreasonable for Tarion to find that it was not enough to fill out its own form.

Was the decision reasonable in concluding that the March 2021 letter did not identify the concluding date for unavoidable delay and did not provide a brief description of the unavoidable delay?

[14] The Act and the addendum exist to protect purchasers of new homes. Purchasers are at the potential mercy of unscrupulous builders and the legislature saw fit to provide purchasers with the ability to seek compensation from such a builder.

[15] The addendum contains a penalty clause whereby a buyer is entitled to $150 per day, up to a maximum sum of $7,500 in situations where the builder delays closing. The addendum also enables the builder to deduct unavoidable delay from the delay period, thereby reducing the builder’s penalty – and the buyer’s compensation - for a delayed closing. Section 5 of the addendum demands that the builder provide the purchaser with notice regarding the unavoidable delay so that purchasers can make decisions regarding whether they wish to file a claim.

[16] The Applicant’s letter of March 18, 2021 did not fix an end date for the unavoidable delay. In fact, its letter states that the unavoidable delay is ongoing. In 5000933 Ontario Inc. v. Mahmood et al., 2022 ONSC 4726; affirmed 2023 ONCA 58, the court found that while the notices sent by the builder in question did not specify the exact date of termination of the unavoidable delay, the information provided enabled the purchaser to calculate the date when the unavoidable delay ended – thereby enabling the purchaser to determine whether it should engage the remedial provisions of the Act.

[17] In contrast, and contrary to the submissions of the Applicant’s counsel, the March 18, 2021 letter provides no context from which the purchaser could calculate the termination date for the unavoidable delay. The letter states that the unavoidable delay “has yet to be declared over” but nonetheless provides the purchaser with critical dates including occupancy and closing dates. The Applicant did not indicate when remedial work from the fire was expected to be completed. The Applicant did not provide information of any sort (i.e., contractor completion dates, inspection dates, etc.) that might have permitted the buyer to calculate the end date of the unavoidable delay. This left the purchaser in a complete vacuum as to whether the purchaser could – or should – engage the addendum’s remedial provisions.

[18] Based upon the March 18, 2021 notice and the builder’s other communications (which we use as context to understand Tarion’s decision), the only thing that a purchaser can determine with certainty is that the unavoidable delay would end sometime between March 19, 2021 and July 14, 2021. If the unavoidable delay ended on March 19, 2021, it appears that a purchaser could engage the addendum’s remedial provisions.

[19] Tarion, in its decision, stated:

Tarion has determined that the Vendor’s second notice (March 15, 2021) does not comply with the requirements of Section 5(c) relating to the conclusion of the fire for the following reasons:

The letter of March 15, 2021 does not provide a brief description of the Unavoidable Delay.

The letter of March 15, 2021 states that the Unavoidable Delay has yet to be declared over and does not specify a date that the Unavoidable Delay concluded;

The practical consequence of this non-compliance is that the March 15, 2021 letter does not allow the Purchaser to assess the length of the Unavoidable Delay Period, including whether the March 15, 2021 letter was provided within 20 days of the end of the Unavoidable Delay, as required.

[20] The Applicant’s argument therefore fails because the builder did not provide the purchaser with any notice of the end date for unavoidable delay, whether explicit or constructive. The Applicant also did not specify the nature of that continuing unavoidable delay on March 18, 2021 (i.e., the contractors were late, the fire damage was more extensive, COVID made fixing the problem more difficult, etc.). In the complete absence of this notice information, Tarion’s Decision was entirely reasonable.

Did Tarion fetter its discretion by applying the plain requirements in the Addendum in a rigid, arbitrary or incomplete manner?

[21] The Applicant submits that the addendum is not “law,” but that Tarion applied it as if it were, in a “rigid, arbitrary or incomplete manner.” The Applicant analogizes the addendum to the policy documents in issue that were created pursuant to statute in Latimer v. Canada (Attorney General), 2010 FC 806 and in Gordon v Canada (Attorney General), 2016 FC 643 and argues that this amounted to Tarion fettering its discretion in applying the relevant provisions to the facts before it.

[22] We disagree. The addendum is required by the Regulation to form part of every purchase agreement for a new home in Ontario. It is a mandatory contract prescribed by law.

[23] Tarion applied these requirements to the record before it. Tarion is responsible for the “administration of the Ontario New Home Warranties Plan.” Tarion does not have discretion to ignore express requirements of the warranties, including the Delayed Occupancy Warranty. It was not unreasonable for Tarion to require strict compliance with the consumer protection elements of s. 5(c) of the addendum as to the effectiveness of notice. We conclude that Tarion did not fetter its discretion by applying the requirements of the addendum.

Was Tarion’s decision that the Applicant had not provided sufficient evidence to show that the delay was not caused directly by the event, without contribution by the Applicant, decisive and reasonable?

[24] The Applicant filed a statutory declaration that was ambiguous as to the cause of the delay. In paragraph 3, the declarant says that the delay was caused by the fire and in paragraph 8, “The aggregate period of delay caused by the impacts of the fire” was 869 days. In paragraph 10, he declares that the delay was caused by “the pandemic.” In its reasons, Tarion quoted the statutory declaration filed by the Applicant before it and said:

The Applicant submitted documentary evidence to Tarion along with the completed Statutory Declaration and it included each notice and update issued to the purchaser in this report. The Vendor did not provide any evidence or documentation to rationalize what impacts occurred due to the fire and how the impacts delayed the occupancy of the new homes.

[25] The Corporation concluded:

The Vendors’ submissions to Tarion did not include sufficient evidence to support that the entire delay period between April 30, 2018 to July 14, 2021 was solely caused by the fire and not caused or contributed to by the fault of the Vendor.

[26] This is a finding of fact that was open to Tarion on the evidence. It is owed deference. Tarion was not obliged to accept the Applicant’s unsupported assertion that the delay was entirely attributable to the fire and the pandemic. The reasoning in Tarion’s decision is logical and transparent. The Corporation was not convinced by the unsupported assertion in the solemn declaration that the delay was unavoidable within the meaning of the addendum, therefore it awarded compensation.

[27] The Applicant points out that the statutory declaration was on a form provided by Tarion. Therefore, it was unreasonable for Tarion to have concluded that the information provided by the Applicant using that form was insufficient. We disagree. At paragraph 4 of the form, the Applicant was invited to attach evidence “in support of impacts set out [above]”. It was reasonable for Tarion to expect such evidence and to take into account the absence of such evidence.

[28] We do not agree that the conclusion quoted above (at paragraph 25) was obiter. It was an alternate basis for the decision. It was also decisive standing alone. If Tarion was not satisfied that the delay was caused by the events, as opposed to the Applicant, compensation was payable whether the notice was effective or not.

Conclusion

[29] Tarion does not seek costs. The application is dismissed without costs.

___________________________ J.A. Ramsay J.

Varpio J.

Leiper J.

Date: 23 November 2023

DIVISIONAL COURT FILE NO.: DC-23-2805

DATE: 20231123

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

J.A. RAMSAY, VARPIO AND LEIPER JJ.

BETWEEN:

Ashcroft Homes v. Tarion Warranty Corporation

REASONS FOR JUDGMENT

THE COURT

Date of Release: November 23, 2023