Tarion Review – Final Report from Justice Cunningham
As readers will know from my previous blogs on this issue, Tarion is under review.
Justice Douglas Cunningham has released his final report containing over three dozen recommendations about new home warranties in Ontario and about Tarion, the non-profit corporation that currently administers Ontario’s new home warranty program.
Here are some of the key findings and recommendations in Justice Cunningham’s report:
1. Under the current arrangement, Tarion plays all of the following roles:
⋅ Provider of the Warranty Coverage
⋅ Administrator of the Warranty Program
⋅ Adjudicator of Disputes
⋅ Regulator of Builders and Vendors
⋅ Maker of Rules respecting the types and levels of Warranty Coverage
Justice Cunningham says that this “multiplicity of roles, at a minimum, gives rise to a perception of conflict of interest and can also result in actual conflicts of interest”
2. A new not-for-profit corporation should be established to manage the warranties for homes currently enrolled with Tarion. This new not-for-profit corporation could also participate as a warranty provider in a new competitive model (described in 3 below).
3. In terms of warranty providers: Justice Cunningham says: “Warranty coverage would move from today’s monopoly, with Tarion as the only provider, to a multi-provider insurance system. The warranty coverage should be an insurance product” (as exists now in other provinces). Homeowners, would be required to deal with the warranty provider chosen, for their home, by the Builder.
4. The warranty provider would still attempt to resolve warranty claims (just as insurance adjusters do in relation to other types of insured claims). But unresolved disputes would be taken to an independent, neutral adjudicator. Justice Cunningham says: “Where there is a dispute, a dispute resolution process must not only deliver justice but also be seen to deliver justice”.
Justice Cunningham says there should be an independent dispute resolution body that has a process for engaging a neutral adjudicator from a roster of adjudicators having practical knowledge of disputes relating to new home construction. The independent adjudicator would decide the dispute. Costs of the process (for the homeowner) would be limited to relatively-low administration fees (that would be fully refundable if the homeowner succeeds on only one claim). [The report also says that special procedures, costs and timelines might apply to warranty claims involving condominium corporations – recognizing the larger size and complexity of such claims.]
[Many commentators – including me – had recommended that there be independent adjudicators for warranty disputes.]
5. The claimant should only be required to prove the symptom resulting from a defect – not the specific cause – and “if an expert is required, an adjudicator should be able to engage the expert directly at no cost to the homeowner. The expert would be engaged in a neutral capacity to provide input to the adjudicator and not as an advocate for one or the other of the parties. As with the selection of the adjudicators, experts should be neutral and preferably drawn from a roster established independently of the warranty providers.”
[I particularly like these recommendations about the use of experts. In my experience, input from an expert, like an engineer, architect or other building scientist, can be extremely beneficial – often essential – to determining the full nature and extent of a building deficiency, and to determining a complete and reasonable repair. At present, thorough input from an expert is often lacking, simply because the claimant can’t afford it. (This was another of my comments to Justice Cunningham – and I’m sure others made similar comments.)]
6. The warranty claims process should continue to be simpler and speedier than ordinary Court claims. But claimants should have the right to pursue ordinary Court claims if they wish. Furthermore, the limitation period (for commencement of ordinary Court claims) should be suspended during any statutory warranty claims process.
7. Builder and vendor regulation should be delivered through a new regulator – a provincial administrative authority operating separating from, but in cooperation with, the warranty providers.
8. There should be a code of ethics for Builders and Vendors; and there should be required continuing education for Builders and Vendors.
9. Information about Builders and Vendors should be more accessible and more transparent.
10. Rule-making respecting the types and levels of warranty coverage should be subject to greater government oversight. Government should make the final decisions in these areas (after thorough consultation with the new home construction sector and with consumers).
11. There should be enhanced consumer education about Home Purchasing and Home Ownership, including education about the Warranties and about the Warranty Process.
12. New home deposit protection should be reviewed / increased to reflect current markets.
We don’t yet know for sure what steps the province will take in light of Justice Cunningham’s report; but initial indications are that the province may well implement many of Justice Cunningham’s recommendations. At a speech given on March 28th, Government and Consumer Services Minister Tracy MacCharles had the following to say: “The new home building sector is an important driver of Ontario’s economy and, quite frankly, I believe it deserves a stand-alone regulator” and “We believe that consumers can be better protected by giving government the lead in making rules and setting standards.” See also the Ministry’s Press Release from the same date.
The province is expected to present a draft bill in the coming months. For more information, go to the Ministry’s website.
Stay tuned to Condo Law News for more blogs about the changes to Tarion.
