Lessons for Tarion from the SRL Phenomenon

Lessons for Tarion from the SRL Phenomenon

It’s time to write about Tarion

Tarion – the corporation responsible for Ontario government’s new home warranty program as well as the appointed regulator of the building industry – has been in the news for the last 6 months (see for example, http://www.thestar.com/business/personal_finance/2015/06/02/couple-fights-tarion-for-home-warranty-roseman.html). There have been complaints about slow and bureaucratic procedures that seem to favor builders both substantively and as a matter of practice (inevitably Tarion staff work repeatedly with industry representatives).

I have held off blogging about Tarion until now because the many structural, political and legal issues raised are not simply, or even mostly, about the problem of self-representation.

But as this blog will show, they are not unrelated either. 

Self-representation at the Ontario Licensing Appeal Tribunal

Among many criticisms of Tarion’s management of new home warranty claims against Ontario builders, one is the stark reality that any homeowner appealing Tarion’s decision (to the Ontario Licensing Appeal Tribunal or LAT) will almost certainly find themselves self-representing (counsel familiar with the LAT and Ontario’s New Home Warranty Plan Act generally charge about $2,000 a day) while facing legal counsel for both Tarion and their builder.

NSRLP has been collecting SRL accounts of chronic imbalance at the LAT for the past year or more. These stories illustrate all the typical problems of pitting a party who cannot afford a lawyer against a party with experienced counsel.

Part of the reason for holding back on writing about Tarion was the concern that many LAT adjudicators have expressed about this imbalance. NSRLP has been working with tribunal members and members of the public in an effort to promote dialogue between them.

The other reason for holding back on writing about SRLs at the LAT was that it seemed that the real source of the problem lies in the very structure of the of Tarion’s dispute resolution procedure for home warranty claims.

The LAT only sees a small fraction of these claims. Most are adjudicated and “resolved” via Tarion’s “conciliation” process (actually an adjudication by a Tarion staff person who conducts a property inspection with the homeowner and builder), with only about 20 cases being appealed to the Tribunal each year.

Given this apparently high rate of “resolution” by Tarion, why are we hearing so much about dissatisfied homeowners and structural problems with the Tarion set up?

21st century consumer culture and the lessons for Tarion

This week Tarion announced the appointment of Genevieve Chornenki, an experienced mediator and dispute resolution specialist, to review their warranty dispute process. Given the extent of public criticism, this is a welcome step – it also makes this an appropriate time for NSRLP to weigh in on Tarion.

We believe that there are many lessons for Tarion from NSRLP’s ongoing research and data collection on the experience of SRLs as modern-day consumers of “dispute resolution” and “justice” processes. The three findings highlighted below are substantiated by data much broader and deeper than the experience of just Tarion homeowners. But they are absolutely key to a review that accurately identifies the problems with the New Home Warranty Act and its current procedures.

And while many of Tarion’s problems (lack of public credibility, self-interest, conflict of interest, broad statutory exemptions, regulations that seem to protect builders at the expense of homeowners, and more) are beyond the scope of this blog (and well-documented elsewhere; see for example http://www.torontosun.com/2015/02/21/time-to-shine-light-on-tarion), the serious and persistent nature of these complaints makes it even more critical for Tarion to address what we are learning about the SRL phenomenon in the external review.

 

  1. Consumers are less deferential and more empowered than 10 years ago

Programs which may have been accepted 10 years ago as satisfactory recourse for disputes are much more likely to be criticized today by better educated and informed users.

“Lumping it” – a term used by sociologists to describe individuals who give up on disputes because they feel powerless to do any better – is still the path taken by some many dissatisfied consumers. But it is abundantly clear from NSRLP data that our parents’ generation was far more likely to “lump it” than our children are. There is more cultural and normative support for pursuing dissatisfaction, and less for shrugging and giving up, today than ever before.

Consumers – whether they are family court litigants or the owners of newly built homes – are much more savvy than a generation ago, and have higher expectations of recourse for grievances. They want to know “why?” – or “why not?” – when their claims are denied. They want a second opinion if they do not like the first. Along with this decline in deference for decision-makers comes a greater awareness of procedural justice – a desire to feel heard and fairly treated in something other than a pro forma fashion.

 

  1. 21st consumers will question neutrality and impartiality

Declining deference also means that as more individuals self-represent and observe judicial decision-making close-up, there is an increasing questioning of neutrality and impartiality. Complaints to the Canadian Judicial Council – and public dissatisfaction with the Canadian Judicial Council’s complaints procedure – rise every year.

Similarly decision-makers with other forms of authority (Tarion is established under statute) are no longer accepted without question. Instead, users are looking for evidence of fairness and are quick to notice conflicts of interest (one of the critiques is Tarion’s close relationship with the building industry).

This means that instead of assuming acceptance of their authority, decision-makers must now demonstrate their fairness and willingness to listen to all sides. And if they do not, there will be complaints.

This is the eclipsing of the “trust us” culture by the “show us” (that you can be fair) culture. And Tarion has dismal ratings; to give just one example from their own data, just over half those homeowners who had a “conciliation” said they were satisfied with the process (from the 2013 Annual Report, available at https://www.tarion.com)

 

  1. “Resolution” does not equate with satisfaction

If just 20 cases get appealed to the LAT each year, does this mean that Tarion is doing a terrific job of resolving these claims?

Not necessarily.

We know this from many studies of litigated cases that are settled (often at the last minute, after a large expenditure of money and energy, and for significantly less than the plaintiff had hoped; see for example Kiser et al (2008)).

Of course, homeowners have a dismal record of success at the LAT. This is unsurprisingly since they are usually self-represented and the builder and Tarion both have legal counsel. Those who take their chance at the LAT are either extremely determined, or naive about their chances of success.

Tarion itself reports that the number of homeowners even proceeding to the conciliation stage is falling (from 12% in 2008 to just 5% in 2013). Many have presumably given up before then. This does not mean that they are satisfied.

Some may believe they can do no better and have decided to “lump it”. Others are mad – and they are showing up at Tarion Board meetings, writing to their MPPs and the Premier, and organizing (for example Consumers Reform Tarion at http://consumersreformtarion.com/).

Consumer expectations for dispute resolution in the 21st century

A combination of factors including far greater access to information via the Web, higher levels of education, a culture of consumer empowerment, and the erosion of expert roles have contributed to new expectations for dispute resolution in the 21st century.

Litigants and consumers alike are no longer willing to assume that established expert-created and managed processes – whether by courts or legislatures – will produce fair results. Tradition and authority are no longer enough. In place of trust there is skepticism – in place of deference there is now DIY justice.

SRLs and Tarion homeowners alike expect to be able to participate in a resolution process, expect it to be fair, transparent and function without vested interests, and are angry if this is not the case.

The anger and frustration of SRLs and Tarion homeowners does not mean that they are mentally ill, or dangerous radicals. It just means that their expectations are not being met.

When Tarion’s external review takes place, it will be critical to track the experience of users. Tarion’s own survey data already reveals the extent of dissatisfaction – just 57% of homeowners buying from “medium volume” builders in 2013 were very or extremely satisfied with their dealings with Tarion3, down 7% from 2012.

To properly understand how to design a 21st century dispute resolution system for a for a more challenging generation of consumers, the Tarion review must walk in the shoes (via detailed case studies of individual experiences) of Ontario homeowners who turn to Tarion – or the LAT – for help to fix problems with their new homes.

This is a real opportunity to improve an important dispute resolution system. What we are learning from studying the self-representation phenomenon is highly relevant to Tarion’s problems – and can help Tarion do a much better job of meeting the needs and expectations of Ontario homeowners.

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Comments (18)

  • Marion

    Brilliantly and well written

    June 9, 2015 at 1:37 pm
  • aferenc

    The process of fighting for justice is definitely not fast. It’s been 3 years since we signed the contract for our new home and 32 days since the last day of our hearing at the LAT and we are still waiting for a decision. Make Tarion Accountable! https://www.facebook.com/maketarionaccountable

    June 9, 2015 at 2:09 pm
  • nicole lalonde

    The author has obviously ” astutely ” pierced individual cases and has a great grasp of the problems , THANK YOU , far from general and empty statements made in letters from Safety, Licensing Appeals and Standards Tribunals Ontario resulting from homeowners reporting dissatisfaction and requesting code of conduct investigations of their adjudicators !!

    June 9, 2015 at 2:22 pm
  • bcaptijn

    Reblogged this on CONSUMERS' REFORM TARION.

    June 9, 2015 at 2:22 pm
  • Andy

    Thank you – but 90% of the problem is still hidden
    You wrote: Part of the reason for holding back on writing about Tarion was the concern that many LAT adjudicators have expressed about this imbalance.
    MANY?? I have carefully studied 100’s of LAT decisions and the systemic bias is PALPABLE. The chairs, vice chairs, adjudicators call this a “DISCONNECT” – yet they do not follow their own rules, ignore common law, statutes and the SUPREME COURT. They call this “DISCRETION”. The rules were just changed and protection for SRL’s was removed. The ONHWPA is consumer protection so inclusions are to be broad & liberal exclusions narrow. LAT “decisions” do not reflect this.
    I challenge anyone to look at almost ANY LAT ONHWP claim and show me how there was a meaningful chance of success by ANY homeowner – even those that “won”. Anyone at the LAT care about the reputation of the LAT’s administration of justice?

    June 9, 2015 at 2:42 pm
  • bcaptijn

    Thank you, Dr.Julie Macfarlane, for your insight, and your respect for individual consumers.
    Many new home buyers have simply given up on the LAT, some calling it a “kangaroo court”, many others discouraged by the dismal failure rate for consumers. Many have taken their cases to other provincial courts where Tarion is not a party. Builders, when held directly accountable for breach of contract in other courts seem to act quite differently. Without Tarion to shield them from accountability, the outcomes are very different from those of the LAT. Tarion does not track the number of cases consumers take to other courts for resolution.

    Tarion saying there are only 20 cases which go to the LAT is misleading: they ignore the number of cases consumers take to other courts to get resolved. There is no mention of these cases on the builder’s Tarion record, which also give prospective buyers a false view of the builder’s performance.

    Tarion has over $400 million in investment income, pays itself about $26 million in salaries, while paying out only about $3.5 million in claims (2013). If consumers fail to see the value in the Tarion warranty and the LAT as a problem-solver, maybe the Tarion warranty should be a choice, not an obligation under Ontario law. To many consumers, this warranty and the LAT have cost more than they’re worth. Not to mention what the LAT is costing taxpayers.

    A dispute resolution expert working for Tarion, hired and paid by Tarion, seems like the fox guarding the chicken coop. Again. In order to gain the confidence of consumers, this position should be demonstrably impartial and independent of Tarion.

    June 9, 2015 at 2:52 pm
  • Daniel Emery

    My counsel wanted another $20K to go the distance with Tarion. This, after giving him about $10K thus far. To be succinct, the County where my home was built, and my insurance company clearly see that there was Ontario Building Code violations. These violations negated the issuance of my Final Occupancy Permit, to legally inhabit my home, for over four years. No permit to inhabit, means no insurance means no mortgage..The bank foreclosed. I lost my home. No final decision letter from Tarion, nothing. No chance to appeal. Tarion will not deal with me any longer, because I no longer own the home? Tarion reps, did however, say, “You should be glad its over, you can get on with your life”. This new home was constructed to replace my original home, destroyed by fire. Little did I know, I would lose the one built to replace it, due to a total lack of Tarion honoring their mandated warranty provisos. Tarion clearly has the interests of their member builders first and foremost. The consumer is left to twist in the wind. A truly biased opinion, yet, I would like to see Tarion, in my case, act as a warranty provider. By that. I mean, Hire the Canada wide law firm of Gowlings to represent me, their customer. Let the builder twist in the wind. As it stands now, consumers face THREE OPPONENTS in LAT hearings, Tarion, their lawyers, and the builders lawyers, and rules that seem to change on the fly, to fit Tarion interpetations of the ONHWP Act. Tarion lawyers have been known to say, I paraphrase, “The Ontario Building Code has no relevance to these hearings” If I ever get pulled over for speeding, I will tell the Officer, “The Highway Traffic Act has no relevance here”. There are clearly defined provisos in Sec 14 of the ONHWP Act, regarding compensatory relief for consumers such as myself, who have apparently fell down the Tarion “Rabbit hole”. As you say, I am not a malcontent, nor am I crazy. I lost a $250K home, because Tarion “tripped, stumbled, and fumbled the ball”. A new home purchase is the largest outlay of cash a consumer makes in their life. My home is gone, but not forgotten.

    June 9, 2015 at 4:09 pm
  • Zeppieri Angelo

    Tarion must be abolished as it has no interest in protecting New Home/Condo Buyers, 5 years of dealing with Tarion over an issue that should have been resolved the first time it was reported. I was ridiculed and bullied by condescending Tarion Inspectors. I also received the same treatment advising me that the only recourse I had was to go through the LAT. New Home Buyers do not have the time or the money to go through this process. We also don’t have a choice of warranty providers instead we are forced by law to purchase a warranty that is mostly funded by builders and represented by builders.

    June 9, 2015 at 4:31 pm
  • bcaptijn

    What about simply making shoddy builders accountable for their defects, instead of having Tarion use the LAT to get them off the hook? This is the 900-pound gorilla in the room.

    The building industry, with its money and political connections,- is the one no one want to hold accountable. Tarion acts as a shield to shoddy builders, and the LAT seems complicit.

    Its not so much that we have more savvy or demanding consumers today as the prevalence of social media which has enabled ordinary consumers to communicate freely and openly with eachother, and exchange information on exactly what’s going on. Information is power, and the information is troubling.

    June 10, 2015 at 12:06 am
  • reevolved

    The builders inability to consistently provide high quality homes is the root cause of consumer complaints, and Tarion enables and perpetuates this problem.
    Since the 1980’s worldwide industries of every realm have mastered practices such as “Zero Defects”, and many aim for a “Six Sigma” level of quality where defects are measured per billion.
    Working to minimum standards of a building code is ridiculous in this day and age, and that model, with such antiquated standards, will never deliver the levels of quality consumers expect.

    June 10, 2015 at 6:19 pm
    • nicole lalonde

      Truer words were never spoken !! Our builder AND THE MUNICIPAL INSPECTOR, when faced with the engineer report on code violations they allowed to our house, kept repeating ” the OBC is minimum standard ” !!!!!!!!!!!… what is it about their NOT meeting OBC Standards made the building LESSER than minimum standard do they not understand ???/ just goes to PROVE the state of the building industry in Ontario …how can the good builders want to be
      ” mixed ” with the bad, corrupt and negligent ???

      June 12, 2015 at 3:28 pm
  • James Ferland

    Well thought out article. It appears you understand what is really going on. Thank you for this article.

    June 11, 2015 at 4:16 pm
  • CPBH (@CPBH01)

    Thank you for this blog, and the opportunity to contribute to this important discussion. However, rather than focusing on “Lessons for Tarion from the SLR Phenomenon”, this response will primarily focus on “Lessons for the Government of Ontario regarding the Licence Appeal Tribunal (LAT) from the SLR Phenomenon”.

    Ontario is embroiled in a very serious situation concerning the lack of adequate consumer protection for the largest purchase most consumers make – a new home. The Government of Ontario has failed to establish an appropriate and effective new home warranty program. This has been recognized by many: hundreds of thousands of consumers, journalists, members of the Ontario Legislature, and by the office of the Ombudsman of Ontario, which has been calling for jurisdiction over Tarion since 1986 – almost 30 years now. The issues concerning the mandatory monopoly Tarion Warranty Corporation are serious and numerous. It is critical to recognize that Tarion not only supposed to provide warranty, Tarion is also the regulator of the building industry. The media continues to report very serious issues concerning shoddy construction in Ontario. Homeowners continue to suffer due to shoddy construction. There are Tarion-approved poor and marginal builders operating in Ontario. But consumers still have no reliable, objective means of knowing who the good builders are, and who the poor and marginal builders are. And Tarion appears to be either unwilling or unable to effectively address those poor and marginal builders it has licensed to operate in Ontario.

    Recently Tarion has been touting its new corporate social responsibility plan while it continues to bank tens of millions of dollars in mandatory consumers’ fees each year. Sadly, this Ontario mandatory monopoly called Tarion seems very misguided as it strays further and further from its fundamental consumer protection mandate. Corporate social responsibility seems like a completely irrelevant focus to those consumers who have had their warranty claims denied by Tarion.

    Some time ago, CPBH concluded that the only thing that will sufficiently impact Tarion’s operations and provide adequate, fair consumer protection is new legislation that is properly enforced. A number of bills have been tabled in the past decade to try to address the serious problems with the existing legislation (The Ontario New Home Warranty Plan Act) but none have reached the stage of voting in the Ontario Legislature. Bill 60, the Tarion Oversight and Accountability Act, a private member’s bill, tabled by MPP Jagmeet Singh on Dec. 10, 2014, if passed, will be an important step in helping to resolve many of these issues. We remain cautiously optimistic that Bill 60 will pass, so the remainder of this post will focus on the LAT and the Government of Ontario.

    Canadians for Properly Built Homes’ (CPBH) volunteers have been analyzing and reporting on LAT decisions concerning Tarion for almost a decade now. We have communicated with thousands of consumers since the founding of CPBH eleven years ago. Here is a link to our 2014 report re the LAT: http://www.canadiansforproperlybuilthomes.com/html/whatsnew/2015/march/2014LATanalysisFinal.pdf .

    It is clear that new legislation is also required concerning appealing Tarion’s decisions as Ontario has also failed to provide an appropriate appeal mechanism related to Tarion’s decisions. The quasi-judicial LAT does not provide a fair and balanced dispute resolution forum for consumers appealing Tarion’s decisions. Safety, Licensing Appeals and Standards Tribunals Ontario (SLASTO), to which the LAT now reports, recently acknowledged serious process issues at the LAT, which will be discussed later in this document. To further exacerbate this problem, the two “watch dog” organizations that have jurisdiction over the LAT, and that could do something about these serious LAT process issues – the Ombudsman of Ontario and the Auditor General of Ontario – have thus far refused to investigate those process issues at the LAT. (More on that as well later in this post.)

    While Minister Orazietti (the current minister responsible for consumer protection and the oversight of Tarion) has claimed that the reduction in the number of cases at the LAT reflects Tarion’s “progress” in resolving disputes, there is certainly evidence that consumers have lost confidence in the LAT as a fair and effective means of resolving their disputes with Tarion, and this is why there has been a significant decline in cases at the LAT. For example, CPBH has heard directly from a number of homeowners that they see no point in proceeding to the LAT given the recognized process issues with the LAT. Social media has also reported that sentiment, for example, on the Make Tarion Accountable Facebook site:

    “Don’t be intimidated by the Tarion circus. That’s all it is because when you get them in front of a real judge in a real court they buckle immediately and suck up to the judge and say they have been “working with you”. Skip this whole LAT b……t and go straight to court. Don’t waste your time on kangaroo court……
    (Homeowner Nancy Benko, posted August 31, 2014)

    Here is another on-line example:

    “…Those crazy and energetic enough to really push the fight end up at the LAT, a twisted tribunal of non-experts who see the same Tarion lawyers daily and who rarely if ever side for the homebuyer. I’ve been a lawyer and seen the trail of tears for 20 years – and I can say in my experience Tarion is essentially a fraud on the public…”
    (Ottawa lawyer and University if Ottawa law professor, Christopher Arnold, on-line in response to an Ottawa Citizen article published May 16, 2015)

    As another example, in a letter dated October 7, 2014 from Ministry of Government and Consumer Services Assistant Deputy Minister Denton to the Tarion CEO Howard Bogach, Denton said: “…A less litigious and adversarial process would also address concerns the ministry has heard from homeowners that they are dissuaded from pursuing LAT appeals because the existing processes are not transparent, and are complicated, time-consuming, costly and unbalanced…” Given this letter from ADM Denton, Minister Orazietti’s responses (or lack thereof) also raise a number of serious questions and concerns.

    Instead of proceeding to the LAT, consumers have a number of other options including: fixing the construction defects out of their own pockets, living with the construction defects, going to the regular court system, and “patching and running”. (“Patch and run” is an illegal activity in which the homeowner knowingly puts the home on the real estate market without disclosing the construction defects to the next unsuspecting consumer. CPBH regularly hears from consumers who are contemplating this strategy of “patch and run”. In the summer of 2013, a self-described “patch and run victim” took his case to an Ontario courtroom and won against the first owner of that home. Here is a link to an article published in Real Estate Magazine about “patch and run” almost a decade ago, and it is still very relevant today: http://www.canadiansforproperlybuilthomes.com/html/HVAC/pdfs/Dec2006Patch_Run.pdf .)

    In the fall of 2014, CPBH heard from SLASTO’s Executive Chair, Ms. Linda Lamoureux, about CPBH’s 2013 report. This led to a meeting on Dec. 9, 2014, during which Ms. Lamoureux shared some of the serious LAT process issues with CPBH board members, including:
    • Training is required for the LAT’s adjudicators, particularly given the nature of self-represented parties.
    • The LAT needs to better inform consumers of what to expect at the LAT and how to prepare.
    • LAT performance measurements and standards need to be developed. The LAT has started to measure its efficiency and effectiveness but this requires further effort.
    • The LAT needs to become more transparent to the public in relation to its performance, e.g., against performance standards.
    • The LAT has resource issues, e.g., a “terrible” website, and insufficient information technology and related systems.

    We found Ms. Lamoureux’s candor both surprising and refreshing. It took CPBH board members a little time after the meeting to digest what actually was said in that meeting. There have been numerous communications back and forth between CPBH and Ms. Lamoureux since that Dec. 9, 2014 meeting. We have also confirmed with the Attorney General’s office that the SLASTO budget was not increased in the recent Ontario budget.

    Here is where the issues currently stand from CPBH’s perspective:
    • CPBH has communicated serious objections to SLASTO, the Attorney General and Premier Wynne about SLASTO trying to “fix” these serious process issues at the LAT while continuing to accept and process consumers’ appeals concurrently. This has been compared to replacing all engines on an airplane while the plane is in midflight, filled with passengers and crew.
    o In the Dec. 9, 2014 meeting, Ms. Lamoureux said she would need 12-18 months to fix these problems. Others familiar with that situation has said that this is a significant underestimation of the length of time to address these issues, including the need for a fundamental culture change at the LAT.
    o From CPBH’s queries related to the recent budget, it appears that the LAT still has insufficient resources to do the job properly.
    • CPBH has also raised concerns to SLASTO, the Attorney General and the Premier about all of the cases where consumers lost their cases at the LAT, likely at least in part due to these same serious LAT process issues. Some have suggested that an Inquiry is warranted into this situation. To date, no substantive responses have been received from the Attorney General or the Premier.
    • Ms. Lamoureux appears to be closed to CPBH’s input since the Dec. 9, 2014 meeting, but she did say that she would invite us back for another meeting in Dec. 2015.
    • CPBH received a letter from Auditor General Bonnie Lysyk dated May 4, 2015, that said that her office would be reviewing the material provided by CPBH in determining the audits they will be conducting in the next two years.
    • CPBH met with representatives of the Ombudsman of Ontario’s office on June 1, 2015, and they said that they would advise us within a month what they are prepared to do in relation to LAT process concerns (and CPBH’s position that the Ministry of Government and Consumer Services is not providing proper oversight of Tarion).

    I apologize for the length of this post, but we have found that these are complex issues that most Ontarians do not recognize and or understand.

    To conclude, we offer six Lessons for the Government of Ontario regarding the LAT from the SLR Phenomenon:
    1. SLASTO’s approach of trying to “fix” the LAT while continuing to accept and process cases concerning Tarion is clearly inappropriate, and needs to be immediately and properly addressed.
    2. A thorough investigation is required by a qualified, non-conflicted independent body to determine what ALL of the LAT process issues are.
    3. New legislation is required immediately to replace the LAT as the forum for appealing Tarion’s decisions.
    4. An Inquiry is required to determine what should be done concerning all of those cases in which consumers have lost the appeals at the LAT, likely at least in part due to those same process issues at the LAT.
    5. All organizations need to be properly resourced to carry out the mandate they have been given.
    6. A serious independent review is required to determine why the two “watch dog” organizations (the Auditor General of Ontario and the Ombudsman of Ontario) have not investigated these serious LAT process issues much earlier. As one example, some have suggested that both of these organizations also have serious resource issues.

    Ontarians need – and deserve – a fair, efficient and effective mechanism for appealing Tarion decisions related to the largest purchase most Ontarians make: a new home. We are currently cautiously optimistic that someone is finally going to demonstrate the courage and integrity that it will take to properly address this very serious situation relating to the LAT.

    Respectfully submitted,
    Dr. Karen Somerville (PhD)
    President, Canadians for Properly Built Homes

    CPBH’s Vision: Healthy, safe, durable, energy efficient residential housing for Canadians.

    http://www.canadiansforproperlybuilthomes.com Twitter: @cpbh01
    Facebook: https://www.facebook.com/pages/Canadians-for-Properly-Built-Homes/1613240682226191

    Canadians for Properly Built Homes (CPBH) is a national, not for profit corporation dedicated to healthy, safe, durable, energy efficient residential housing for Canadians, and is the only organization of its kind in Canada. Working for consumer awareness and protection, CPBH is run by a volunteer Board of Directors and is supported by a volunteer Advisory Council of industry experts and other key stakeholders. CPBH earned “partner” status with the Canadian Consumer Information Gateway (Industry Canada).

    June 20, 2015 at 6:01 pm
  • CPBH (@CPBH01)

    Thank you for this blog, and the opportunity to contribute to this important discussion. However, rather than focusing on “Lessons for Tarion from the SLR Phenomenon”, this response will primarily focus on “Lessons for the Government of Ontario regarding the Licence Appeal Tribunal (LAT) from the SLR Phenomenon”.

    Ontario is embroiled in a very serious situation concerning the lack of adequate consumer protection for the largest purchase most consumers make – a new home. The Government of Ontario has failed to establish an appropriate and effective new home warranty program. This has been recognized by many: hundreds of thousands of consumers, journalists, members of the Ontario Legislature, and by the office of the Ombudsman of Ontario, which has been calling for jurisdiction over Tarion since 1986 – almost 30 years now. The issues concerning the mandatory monopoly Tarion Warranty Corporation are serious and numerous. It is critical to recognize that Tarion is not only supposed to provide warranty, Tarion is also the regulator of the building industry. The media continues to report very serious issues concerning shoddy construction in Ontario. Homeowners continue to suffer due to shoddy construction. There are Tarion-approved poor and marginal builders operating in Ontario. But consumers still have no reliable, objective means of knowing who the good builders are, and who the poor and marginal builders are. And Tarion appears to be either unwilling or unable to effectively address those poor and marginal builders it has licensed to operate in Ontario.

    Recently Tarion has been touting its new corporate social responsibility plan while it continues to bank tens of millions of dollars in mandatory consumers’ fees each year. Sadly, this Ontario mandatory monopoly called Tarion seems very misguided as it strays further and further from its fundamental consumer protection mandate. Corporate social responsibility seems like a completely irrelevant focus to those consumers who have had their warranty claims denied by Tarion.

    Some time ago, CPBH concluded that the only thing that will sufficiently impact Tarion’s operations is new legislation that is properly enforced. A number of bills have been tabled in the past decade to try to address the serious problems with the existing legislation (The Ontario New Home Warranty Plan Act) but none have reached the stage of voting in the Ontario Legislature. Bill 60, the Tarion Oversight and Accountability Act, a private member’s bill, tabled by MPP Jagmeet Singh on Dec. 10, 2014, if passed, will be an important step in helping to resolve many of these issues. We remain cautiously optimistic that Bill 60 will pass, so the remainder of this post will focus on the LAT and the Government of Ontario.

    Canadians for Properly Built Homes’ (CPBH) volunteers have been analyzing and reporting on LAT decisions concerning Tarion for almost a decade now. We have communicated with thousands of consumers since the founding of CPBH eleven years ago. Here is a link to our 2014 report re the LAT: http://www.canadiansforproperlybuilthomes.com/html/whatsnew/2015/march/2014LATanalysisFinal.pdf .

    It is clear that new legislation is also required concerning appealing Tarion’s decisions as Ontario has also failed to provide an appropriate appeal mechanism related to Tarion’s decisions. The quasi-judicial LAT does not provide a fair and balanced dispute resolution forum for consumers appealing Tarion’s decisions. Safety, Licensing Appeals and Standards Tribunals Ontario (SLASTO), to which the LAT now reports, recently acknowledged serious process issues at the LAT, which will be discussed later in this document. To further exacerbate this problem, the two “watch dog” organizations that have jurisdiction over the LAT, and that could do something about these serious LAT process issues – the Ombudsman of Ontario and the Auditor General of Ontario – have thus far refused to investigate those process issues at the LAT. (More on that as well later in this post.)

    While Minister Orazietti (the current minister responsible for consumer protection and the oversight of Tarion) has claimed that the reduction in the number of cases at the LAT reflects Tarion’s progress in resolving disputes, there is certainly evidence that consumers have lost confidence in the LAT as a fair and effective means of resolving their disputes with Tarion, and this is why there has been a significant decline in cases at the LAT. For example, CPBH has heard directly from a number of homeowners that they see no point in proceeding to the LAT given the recognized process issues with the LAT. Social media has also reported that sentiment, for example, on the Make Tarion Accountable Facebook site:

    “Don’t be intimidated by the Tarion circus. That’s all it is because when you get them in front of a real judge in a real court they buckle immediately and suck up to the judge and say they have been “working with you”. Skip this whole LAT b……t and go straight to court. Don’t waste your time on kangaroo court……
    (Homeowner Nancy Benko, posted August 31, 2014)

    Here is another on-line example:
    “…Those crazy and energetic enough to really push the fight end up at the LAT, a twisted tribunal of non-experts who see the same Tarion lawyers daily and who rarely if ever side for the homebuyer. I’ve been a lawyer and seen the trail of tears for 20 years – and I can say in my experience Tarion is essentially a fraud on the public…”
    (Ottawa lawyer and University if Ottawa law professor, Christopher Arnold, on-line in response to an Ottawa Citizen article published May 16, 2015)

    As another example, in a letter dated October 7, 2014 from Ministry of Government and Consumer Services Assistant Deputy Minister Denton to the Tarion CEO Howard Bogach, Denton said: “…A less litigious and adversarial process would also address concerns the ministry has heard from homeowners that they are dissuaded from pursuing LAT appeals because the existing processes are not transparent, and are complicated, time-consuming, costly and unbalanced…”

    Given this letter from ADM Denton, Minister Orazietti’s responses (or lack thereof) also raise a number of serious questions and concerns.
    Instead of proceeding to the LAT, consumers have a number of other options including: fixing the construction defects out of their own pockets, living with the construction defects, going to the regular court system, and “patching and running”. (“Patch and run” is an illegal activity in which the homeowner knowingly puts the home on the real estate market without disclosing the construction defects to the next unsuspecting consumer. CPBH regularly hears from consumers who are contemplating this strategy of “patch and run”. In the summer of 2013, a self-described “patch and run victim” took his case to an Ontario courtroom and won against the first owner of that home. Here is a link to an article published in Real Estate Magazine about “patch and run” almost a decade ago, and it is still very relevant today: http://www.canadiansforproperlybuilthomes.com/html/HVAC/pdfs/Dec2006Patch_Run.pdf .)

    In the fall of 2014, CPBH heard from SLASTO’s Executive Chair, Ms. Linda Lamoureux, about CPBH’s 2013 report. This led to a meeting on Dec. 9, 2014, during which Ms. Lamoureux shared some of the serious LAT process issues with CPBH board members, including:
    • Training is required for the LAT’s adjudicators, particularly given the nature of self-represented parties.
    • The LAT needs to better inform consumers of what to expect at the LAT and how to prepare.
    • LAT performance measurements and standards need to be developed. The LAT has started to measure its efficiency and effectiveness but this requires further effort.
    • The LAT needs to become more transparent to the public in relation to its performance, e.g., against performance standards.
    • The LAT has resource issues, e.g., a “terrible” website, and insufficient information technology and related systems.

    We found Ms. Lamoureux’s candor both surprising and refreshing. It took CPBH board members a little time after the meeting to digest what actually was said in that meeting. There have been numerous communications back and forth between CPBH and Ms. Lamoureux since that Dec. 9, 2014 meeting. We have also confirmed with the Attorney General’s office that the SLASTO budget was not increased in the recent Ontario budget.

    Here is where the issues currently stand from CPBH’s perspective:
    • CPBH has communicated serious objections to SLASTO, the Attorney General and Premier Wynne about SLASTO trying to “fix” these serious process issues at the LAT while continuing to accept and process consumers’ appeals concurrently. This has been compared to replacing all engines on an airplane while the plane is in midflight, filled with passengers and crew.
    o In the Dec. 9, 2014 meeting, Ms. Lamoureux said she would need 12-18 months to fix these problems. Others familiar with that situation has said that this is a significant underestimation of the length of time to address these issues, including the need for a fundamental culture change at the LAT.
    o From CPBH’s queries related to the recent budget, it appears that the LAT still has insufficient resources to do the job properly.
    • CPBH has also raised concerns to SLASTO, the Attorney General and the Premier about all of the cases where consumers lost their cases at the LAT, likely at least in part due to these same serious LAT process issues. Some have suggested that an Inquiry is warranted into this situation. To date, no substantive responses have been received from the Attorney General or the Premier.
    • Ms. Lamoureux appears to be closed to CPBH’s input since the Dec. 9, 2014 meeting, but she did say that she would invite us back for another meeting in Dec. 2015.
    • CPBH received a letter from Auditor General Bonnie Lysyk dated May 4, 2015, that said that her office would be reviewing the material provided by CPBH in determining the audits they will be conducting in the next two years.
    • CPBH met with representatives of the Ombudsman of Ontario’s office on June 1, 2015, and they said that they would advise us within a month what they are prepared to do in relation to LAT process concerns (and CPBH’s position that the Ministry of Government and Consumer Services is not providing proper oversight of Tarion).

    I apologize for the length of this post, but these are complex issues that most Ontarians do not recognize and or understand.

    To conclude, we offer six Lessons for the Government of Ontario regarding the LAT from the SLR Phenomenon:
    1. SLASTO’s approach of trying to “fix” the LAT while continuing to accept and process cases concerning Tarion is clearly inappropriate, and needs to be immediately and properly addressed.
    2. A thorough investigation is required by a qualified, non-conflicted independent body to determine what ALL of the LAT process issues are.
    3. New legislation is required immediately to replace the LAT as the forum for appealing Tarion’s decisions.
    4. An Inquiry is required to determine what should be done concerning all of those cases in which consumers have lost the appeals at the LAT, likely at least in part due to those same process issues at the LAT.
    5. All organizations need to be properly resourced to carry out the mandate they have been given.
    6. A serious independent review is required to determine why the two “watch dog” organizations (the Auditor General of Ontario and the Ombudsman of Ontario) have not investigated these serious LAT process issues much earlier. As one example, some have suggested that both of these organizations also have serious resource issues.

    Ontarians need – and deserve – a fair, efficient and effective mechanism for appealing Tarion decisions related to the largest purchase most Ontarians make: a new home. We are currently cautiously optimistic that someone is finally going to demonstrate the courage and integrity that it will take to properly address this very serious situation relating to the LAT.

    Respectfully submitted,
    Dr. Karen Somerville (PhD)
    President, Canadians for Properly Built Homes

    CPBH’s Vision: Healthy, safe, durable, energy efficient residential housing for Canadians.

    http://www.canadiansforproperlybuilthomes.com Twitter: @cpbh01
    Facebook: https://www.facebook.com/pages/Canadians-for-Properly-Built-Homes/1613240682226191

    Canadians for Properly Built Homes (CPBH) is a national, not for profit corporation dedicated to healthy, safe, durable, energy efficient residential housing for Canadians, and is the only organization of its kind in Canada. Working for consumer awareness and protection, CPBH is run by a volunteer Board of Directors and is supported by a volunteer Advisory Council of industry experts and other key stakeholders. CPBH earned “partner” status with the Canadian Consumer Information Gateway (Industry Canada).

    June 22, 2015 at 4:27 pm
  • nicole lalonde

    This summary by Dr. K. Somerville sums it up more than adequately.in terms of placing the consumer perspective/experience on display .. what else can consumers who have had real live confrontation with the lack of consumer protection in Ontario say or do , other than provide testimony and unshakeable support for long overdue change ?

    June 25, 2015 at 7:22 pm
  • bcaptijn

    Dr. Somerville’s analysis of the Tarion/LAT problems is absolutely accurate. Many of us still struggle to believe this is actually happening in a democracy like Canada. The industry supposed to be being regulated has ‘captured’ the regulatory body itself. A government-granted monopoly with no meaningful oversight has created a monster.

    June 25, 2015 at 11:18 pm
  • The Mess that is Tarion: Conflict of Interest, Uneven Contests, and Failure to Act – NSRLP

    […] NSRLP has for some time expressed grave concern about this imbalance that is typical of almost all hearings before the LAT (see here). […]

    September 15, 2016 at 11:02 am
  • ViolatingVictims

    Excellent insight in this article but the problem is not strictly specific to the Tarion process.
    Government mandate has been used to enable using legal process to silence consumers experiencing Ontario Building Code violation.
    It is a very abusive “public protection” process to members of the public that enter the process expecting to have Ontario Building Code and Government protection.
    Mediation should not be permitted to silence, victimize or to hide from the public that builders or Tarion knowingly did not correct Ontario Building Code violation.
    Legal process should not permit manipulations such as permitting favoured parties to ignore Chair orders just to generate added legal expenses to a victim.
    Legal process should not be a tool used to cover up Ontario Building Code violation.
    This Government enabled process uses Judicial process and Court to put future members of the public at risk.
    The problem was a whole network of individuals working together throughout the whole Consumer Protection process where a preagreed course of action was being enacted; A predecided course of action that can be manipulated to use legal process to remove Builder responsibility for construction while protecting Municipalities from full liability for existing as built construction Ontario Building Code violations.

    April 10, 2017 at 8:40 am

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