Bob Aaron - Guest Columns (TWO!)

Warranty plan could be election issue

In April I wrote about Joe and Joanne West, who bought a new home built in Hamilton without a building permit.

As a result of numerous defects in the house and their discontent with the resolution attempts of the Tarion warranty program, the Wests decided to bypass the Licence Appeal Tribunal. They are suing the City of Hamilton and the builder for $1.5 million.

In that column, I asked for reader opinions on whether unhappy new homeowners should have to resort to the courts to get the house they expected.

I received almost 70 emails, letters and faxes – more than I've ever received from any column in the past seven years. With the exception of one letter supporting Tarion, the responses were all negative and many were angry or hostile or both.

Of course, the responses I received would not count as a scientific sampling. The majority of new home buyers never register a claim with Tarion and some of the emails I received are from homeowners who are on the mailing list of Canadians For Properly Built Homes, a vocal lobby group based in Ottawa.

But the number of emails and the intensity of the feelings expressed indicate that there are a great many unhappy buyers of new homes out there. This reflects poorly on the industry and the government that sets the warranty rules.
Typical of the responses I received was one from Brigette Mark, who emailed, "I have learned my lesson the very hard way and I would never recommend anyone buy a new home unless they are into having long battles and unanswered and outstanding repairs."

Ottawa lawyer Heather Austin-Skaret noted, "A revised Tarion program would be better for consumers rather than having to launch a court action."
From Nepean, Ann LeBlanc wrote, "Tarion must be made accountable for ensuring that all homeowners do not have to endure `patch-and-run' quick fixes that builders so often use. We need better management of Tarion."
Dave Wark of Guelph emailed, "After battling with them for two years, we think they stink and the whole rotten organization needs a complete overhaul. Like mortgage fraud, the government is way behind the reality curve."

"Consumer protection in Ontario is a joke!" exclaimed Shahed Nasrullah. "The McGuinty government has made it worse! Why should new homebuyers, who are expected to be protected under the Ontario New Home Warranty Plan Act, have to turn to the courts for remedy? The purpose of the Act should be to mitigate, in a timely manner, the inconveniences and risks a homeowner faces due to the negligent act of a new home builder. The manner in which Tarion operates suggests that it is the homeowner who is guilty and hence they have to prove themselves innocent before the various levels of the judicial system. Is this what we call a society based on rule of law?"

"The worst part about all of this," wrote Walter Pick, from Dundas, "is that I had to pay for this absolutely useless warranty program. I didn't have a choice. If I had a choice I wouldn't have paid a nickel into this program."

Mary McAllister-Diks emailed to say that, "The reality of the situation is, it would be better to know you have no support and are standing alone from Day 1, than to put your faith in a system that has no interest in getting to the root of the problems, or at the very least, fixing the problems."

Based on my flood of emails, public discontent with Tarion is palpable. It could well become an issue in the fall election campaign.

Bob Aaron is a Toronto real estate lawyer.

He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.

Visit the column archives at www.aaron.ca/columns/toronto-star-index.htm.


Ruling may have major impact on TARION

An appeal decision by the Ontario Divisional Court released in April could result in a significant change in the way homeowner claims are treated under the Ontario New Home Warranties Plan Act (ONHWPA).

Joao Luis DaSilva Cecilio purchased a new home from a builder back in June 2000. After closing, he was unhappy with the quality of the house and made numerous deficiency claims to the Tarion warranty program.

Tarion responded to the complaints in July and October 2005. Cecilio was dissatisfied with their position and appealed to the Licence Appeal Tribunal (LAT) in November that year.

One main complaint was that he heard too much noise from his neighbour's house through the shared wall between their homes. The Tribunal had to decide whether the wall complied with the Ontario Building Code requirements for limiting sound transference.

In January 2006, the Tribunal ordered Tarion to conduct testing to check for any Code infractions and to repair the party wall, if necessary.

Tarion's position was that it had no obligation or authority to do testing after the house was completed and it appealed the LAT decision to a three-judge panel of the Ontario Divisional Court.

At the appeal hearing, Cecilio's lawyer, David J. McGhee, argued that Tarion's position was contrary to the underlying purpose of the legislation, which is intended to protect the homeowner against breaches of the warranty.

Tarion's interpretation, he told the court, "gutted" the protections meant to be in the Act and freed Tarion from its duties under the Act to inspect and test and, if necessary, do work to mitigate the breaches of warranty.

The three-judge panel, in a decision written by Justice Dennis Lane, ruled Cecilio's "submissions make sense out of the Act, whereas the Tarion interpretation does not."

Justice Lane wrote, "(Tarion's) warranties only begin when the construction has been completed. It makes no sense that the power of inspection would exist only during construction ... I conclude that (the legislation) authorizes inspections and tests for all purposes of the Act and is not confined to the construction period."

The purpose of the Tarion legislation, the court wrote, "is clearly remedial consumer protection legislation and should be liberally construed ... Tarion has taken the side of the builder in opposing the homeowner."

The court ordered the case to be sent back to the Tribunal to consider whether the builder or the homeowner ought to have the test performed by an independent tester and the report distributed to the parties.

Janice Mandel, Tarion's vice-president of corporate affairs, says Tarion won't appeal the Divisional Court decision.

As I see it, the Cecilio case is a watershed decision, which should affect the way many Tarion claims are dealt with in the future. It could also open the floodgates of claims for similar noise complaints.

The decision clearly implies that future Tarion decisions, which do not "make sense" in light of the consumer protection mandate of the program, will be reversed by the courts.

The case also establishes that Tarion's inspection obligations extend beyond the completion of the house, and that post-completion inspection and testing could result in a finding of responsibility by the program. I also read the Cecilio decision as a criticism by the appeal court of Tarion's interpretation of the legislation.

The case could well point the way to a sea change in the way consumers are treated under the ONHWPA legislation – if not by Tarion, then definitely by the courts.

Bob Aaron is a Toronto real estate lawyer.

He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.

Visit the column archives at www.aaron.ca/columns/toronto-star-index.htm.