Lessons for Tarion from the SRL PhenomenonNSRLP
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.
- 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.
- 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)
- “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?
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.