Part 36 published on 01/12/11
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
The condominium corporation alleged certain original building deficiencies. Claims had been made to Tarion Warranty Corporation (“Tarion”) under the Ontario New Home Warranties Plan Act in relation to the deficiencies. Tarion had issued decisions and the condominium corporation had appealed those decisions to the License Appeal Tribunal (“LAT”). Before the appeals were heard by LAT, the condominium corporation commenced this Court claim against the developer, Tarion and others involved in the original construction. The developer and other defendants (not including Tarion) moved for dismissal of the claim, based (among other things) upon the following:
a) The Court claim constituted an abuse of process, given the decisions by Tarion;
b) The Court claim was not available because of provisions in the Agreement of Purchase and Sale.
The Court did not agree. The Court said that the Court claim could continue. The Court’s reasons included the following:
- A decision of Tarion is not a final decision or a judicial decision and therefore does not create any issue estoppel. Issue estoppel could apply to an LAT decision but not to a decision of Tarion.
- The Tarion claims process is not exclusive and is therefore not a bar to Court claims.
- The corporation could assert an ordinary Court claim against Tarion. Furthermore, the provision in the purchase agreements purporting to prevent claims against third parties was ambiguous and the ambiguity was to be resolved in favour of the purchasers/condominium corporation.
- The provisions of the purchase agreements did not prevent claims for breach of contract, negligence or breach of fiduciary duty. Those provisions only limited warranty claims to those expressed in the Ontario New Home Warranties Plan Act (ie, the Tarion warranties).
- Although the definition of “major structural defect” (in the regulations under the Ontario New Home Warranties Plan Act) excludes “any defect attributable in whole or in part to damage to drains or services”, this does not include alleged defects in the installation of the sanitary sewers.