Executive Summary: Key Legal and Evidentiary Issues

• Whether 7084421 Canada Ltd., as a mortgagee selling a home under power of sale, is a “vendor” responsible for statutory warranties under the Ontario New Home Warranties Plan Act.

• The applicant’s claim that it was not a vendor but a mortgagee, and that the home was built by the mortgagor for personal use, thus allegedly exempt from warranty coverage.

• Tarion’s determination that the applicant was the vendor and that the home was covered by statutory warranties, supported by the decision in Crown Trust.

• The applicant’s attempt to introduce new arguments and evidence on judicial review that were not raised before Tarion, which the court declined to consider.

• The court’s finding that Tarion’s process was fair, and the applicant’s lack of engagement did not amount to procedural unfairness.

• Dismissal of the application, confirming that parties cannot contract out of the statutory warranty protections, regardless of “as-is” sale terms.

Background and facts

This case concerns the sale of a newly constructed home at 103 Edward Street, Aurora, Ontario. The Town of Aurora issued a building permit for the home in October 2020, and an Occupancy Permit was issued in January 2023. The home was listed for sale in July 2023 as “brand new and never lived in.” The applicant, 7084421 Canada Ltd., was listed as the seller under power of sale. By agreement of purchase and sale dated July 15, 2023, amended August 4, 2023, the applicant sold the home to Elliott Kent, Aleshia Ing, and Gary C. Kent. The sale was completed on August 9, 2023, with the applicant listed as the “transferor” on the sale deed.

Following the sale, the buyers submitted a Homeowner Warranty Eligibility Form to Tarion, identifying the applicant as “the builder and/or vendor of the Home.” Tarion notified the applicant of its investigation into warranty eligibility and requested information. The applicant’s responses to Tarion’s questionnaire were incomplete, with several answers marked as “unknown” and minimal documentation provided. The applicant stated the home was sold under power of sale and that Chris Patterson was the vendor.

Tarion’s investigator attempted to contact the applicant’s principal, Mr. Anthony, who reiterated the position that the applicant was not responsible for the warranty and ended the call. Tarion concluded its investigation and, by letter dated June 6, 2024, advised the applicant that the home was eligible for statutory warranty coverage and that the applicant was responsible for the statutory warranties.

Mr. Anthony responded by email on June 29, 2024, asserting that the buyer purchased the house “AS IS, no warranty of any kind, as is typical of Power of Sale homes,” and that the seller was Chris Patterson. Tarion replied on July 3, 2024, stating that the Act applies despite any agreement to the contrary and that the applicant was the vendor. Tarion referenced the Crown Trust decision, which held that a mortgagee selling under power of sale is a vendor within the meaning of the Act. The applicant disputed Tarion’s decision, and Tarion issued a Decision Letter on August 6, 2024, confirming its findings.

Discussion of policy terms and statutory interpretation

The court reviewed the Ontario New Home Warranties Plan Act, including the definitions of “vendor,” “home,” and “owner.” Section 13(1) sets out the warranties owed by every vendor of a home. Section 1 defines a “vendor” as a person who, on the person’s own behalf, sells a home not previously occupied to an owner. Tarion found that the buyers were “owners,” the home was a “self-contained one-family dwelling,” and the applicant was the “vendor,” having sold the home on its own behalf.

The court relied on the precedent of Re Ontario New Home Warranty Program and Crown Trust, which held that a mortgagee selling under power of sale is a vendor within the meaning of the Act. The court noted that the Act is consumer protection legislation and that, under sections 1.2 and 13(6), its protections apply despite any agreement or waiver to the contrary.

Judicial review and procedural fairness

The applicant commenced an application for judicial review on September 4, 2024, seeking to quash Tarion’s decision. The court declined to consider new arguments and evidence not raised before Tarion, emphasizing that the proper process is for such issues to be first considered by the administrative decision-maker. The court found that Tarion’s process was fair: the applicant was given notice, an opportunity to respond, and a chance to provide evidence but did not fully engage in the process.

Outcome

The Divisional Court found Tarion’s decision was sound in law and reasonable on the facts and record before it. The application was dismissed. Tarion Warranty Corporation was the successful party. No costs were ordered, as Tarion did not seek them. No specific monetary amount was ordered or awarded.