Part 41 published on 01/02/13
Condominium corporation could pursue ordinary Court claims (in relation to building deficiencies) despite decisions by Tarion. Condominium corporation could also assert ordinary Court claim against Tarion. Appeal dismissed.
The plaintiff condominium corporation alleged that there were serious original construction deficiencies. Tarion Warranty Corporation (Tarion) gave decisions denying the condominium corporation’s warranty claims under the Ontario New Home Warranties Plan Act. Instead of appealing Tarion’s decisions to the License Appeal Tribunal, as it was entitled to do, the condominium corporation instead launched a court action against the developer, as well as Tarion and others involved in the original construction, for breach of statutory warranty, negligence, breach of fiduciary duty and breach of contract.
The developer asserted that the Court action should be dismissed as an abuse of process because Tarion’s decisions finally determined the matter, unless those decisions were appealed to the License Appeal Tribunal. The developer relied upon the doctrine of issue estoppel and on the rule against collateral attack. The motions Judge rejected the developer’s application and ordered that the Court action could proceed. [See Condo Cases Across Canada Part 36, December 2011.]
The developer appealed and the appeal was dismissed. For somewhat different reasons, the Court of Appeal agreed with the motions Judge. The Court of Appeal said that, although decisions of Tarion are judicial and are final, a claimant can still pursue ordinary court claims respecting the same deficiencies (for which Tarion has rendered a decision) because issue estoppel does not apply to decisions of Tarion. The Court of Appeal said that applying issue estoppel to decisions of Tarion would “work a real injustice” and would be inconsistent with the consumer protection purposes of the Ontario New Home Warranties Plan Act.
The Court of Appeal was also careful to add the following:
My conclusion is limited to the effect of Tarion’s decisions. If, for example, a homeowner appealed a Tarion decision to the License Appeal Tribunal and the Tribunal dismissed the appeal, a Superior Court action seeking the same relief may well be met with a successful plea of issue estoppel. That scenario is not before us and need not be decided because (the condominium corporation) elected to abandon its appeal on the sanitary sewer system and its appeal on the EIFS has been stayed.
The Court of Appeal also confirmed that a court action against Tarion for payment out of the guarantee fund under the Ontario New Home Warranties Plan Act was permitted. The Court of Appeal said that such Court Claims against Tarion would of course be limited to “the prescribed compensation for breach of the statutory warranties” under the Ontario New Home Warranties Plan Act and Regulations. The Court of Appeal said that “an appeal to the License Appeal Tribunal is meant to be permissive – not the exclusive forum in which a homeowner may seek relief for an adverse Tarion decision on warrantabilty”.
The Court of Appeal also held as follows:
- Provisions in the original Agreements of Purchase and Sale limited all warranties only to those given under the Ontario New Home Warranties Plan Act. However, such provisions dealt solely with warranties of workmanship and materials. Those provisions did not preclude any action by the condominium corporation against the defendants for breach of contract, negligence or breach of fiduciary duty.
- Alleged defects in the sanitary sewer system were not necessarily excluded from the definition of major structural defect under the Ontario New Home Warranties Plan Act.