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Retired judge’s interim report on Tarion released

|Written By Alex Robinson

An interim report by retired justice Douglas Cunningham examining Tarion Warranty Corp. has left some with lingering concerns.

Former justice Douglas Cunningham’s review outlines concerns he has identified over a perceived conflict of interest arising from Tarion’s dual role as adjudicator and warranty provider.

In Nov. 2015, the provincial government announced the former associate chief justice would lead a review of Tarion — a not-for-profit corporation that is mandated under the Ontario New Home Warranties Plan Act to regulate new home builders and provide warranties on the houses they build.

The review was also set up to examine the legislation and ultimately make recommendations to improve Tarion’s consumer protection, transparency and governance.

The review outlines concerns Cunningham has identified over a perceived conflict of interest arising from Tarion’s dual role as adjudicator and warranty provider.

Other issues the report tackles are accountability and transparency, as well as governance, as there is a perception its board of directors is builder dominated and motivated to favour the construction industry.

James Davidson, a condominium lawyer who participated in the review’s consultations, says he would like to see an independent body created to carry out Tarion’s dispute resolution function.

“The big problem is that Tarion is not independent. It should be independent. They’re in a fundamental conflict of interest,” he says.

Davidson says Tarion’s role as an insurer makes its interests in line with builders, but it is also an adjudicator for warranty claims.

“So it’s not in Tarion’s interest to have those claims honoured. So it’s just a fundamental conflict right there.”

The interim report also offers some potential solutions for the problems identified.
These include placing some or all of Tarion’s functions in separate organizations, introducing multiple warranty providers and diversifying the composition of Tarion’s board. None of these were finalized recommendations.

Cunningham says he met with more than 200 individuals in the consultation process, but Karen Somerville, president of advocacy group Canadians for Properly Built Homes, says she worries the review did not sufficiently consider input from consumers.

“While a number of key issues are included, we remain very concerned that there was woefully inadequate consumer input in this process,” she says in an e-mailed statement.

Cunningham, however, says that having Tarion’s perspective was an important part of the review.

“This whole thing is about Tarion, so I needed to have their perspective and I’ve got it,” he says.

“But I’ve also received the perspective of the consumer advocates, the building industry and all of the other various stakeholders.”

Somerville also notes that the internal document mentions confirming Tarion’s communications strategy as a “next step.”

“Why is the ministry concerned with Tarion’s communications strategy related to this interim report? Meanwhile, consumers are still in the dark,” Sommerville says.
“In the past, the ministry has repeatedly said it is ‘working with Tarion,’ — rather than overseeing Tarion and protecting consumers,” she adds.

“It appears that the interest in Tarion’s communication strategy is another example of the ministry continuing to work with [or] protect Tarion, rather than focus on consumers and consumer protection.”

Christine Burke, a spokeswoman for Minister of Government and Consumer Services Marie-France Lalonde, says this step in the document was about making sure questions about the report were referred to Cunningham.

“The ministry wants to ensure that Tarion has a plan to refer questions about the content of the report to the appropriate party (i.e. Justice Cunningham),” she says in an e-mail.

The government originally announced a final report would be due out by June 2016, but it later revised those deadlines, causing advocates to decry the longer process in Cunningham chalked the altered deadlines up to the shear size of the task at hand in the review. He says the original deadlines were simply not realistic.

“I don’t think of it as delay. I look at it as a more fulsome review than was anticipated,” he said before the report was released.

Cunningham is asking for feedback on his interim report by Oct. 14.

A final report is expected by the end of the year.

  • Dr.

    Linda C
    There is lack of gov't oversight & enforcement for consumer protection. Compare to BC, builders are regulated by BC housing, unlike Ontario where they are supposed to be by Tarion.
    Tarion is a DAA so is not accountable to Ontario laws. It makes own regulations with min. oversight.
    Tarion offers POOR VALUE for consumers and builders. Paid min. claims of 6.2 million vs 37 m paid for admin, salaries, benefits (2015)!
    Government been trying to "work" with Tarion for 40 yr. Meanwhile Tarion hires public relations firm to showcase it as a charity, the "good" one. But Public just wants a build DONE PROPERLY; no other extras, no children wish donations, no builder golf tournaments.
    This review is another delay by govt to avoid address longstanding error in laws.
    Problem is builder organizations only need to control the leader of 50 odd MPP to control all Ont. (political donations) This democracy in Ont. or this Russia?
  • ms

    Carole Mierins
    Well done I

    Three monoliths ...the Ministry,Tarion and the new home building industry seemingly aligned against the lonely consumer.
  • retired engineer

    Ben Collings
    A delay is always good to make the right decisions, but when dealing with Tarion there is no delay and a missed deadline of one day in reporting a problem after the one year warranty period and the consumer loses. The tribunal is held in downtown Toronto at Tarion's convenience and unless you have expert witnesses their lawyers beat you down. This monopoly stacked against the consumer has to be broken up now! The shoddy building construction they are protecting will cause huge problems for home owners in the next 10-20 years.
  • A consumer comments ...

    G.R. Viecelli
    I participated in one of the consultations for consumers...one of a relatively few consumers who did so. Poor attendance at these public consultations was predicted by CPBH...lack of privacy & other reasons. I truly hope that Tarion as a monopoly is eliminated but if it isn't I agree with Mr. Davidson's idea of an independent body created to carry out Tarion's dispute resolution function. If multiple home warranty providers are allowed under new legislation, an independent body for dispute resolution is still a good idea. I had extremely negative experiences as a new town home buyer some years ago ... dealing with the builder and with Tarion. Out of frustration I went to LAT on one issue...a true learning experience. In my opinion, the true cost of LAT falls squarely on the shoulders of Ontario taxpayer.
  • Ms.

    Barbara Captijn
    A government monopoly entrusted with consumer protection which lacks meaningful transparency and accountability isn't fooling anyone anymore. It's 2016, and this legislation has not been seriously looked at in over 40 years. The review must tackle serious and persistent problems with conflicts of interest, lack of effective regulation of builders and lack of fair,timely, balanced, dispute resolution. The consumer voice is the one rarely listened to, and must now be given the loudest microphone.
  • Mr

    Just Sayin
    Thank you for this article, Alex Robinson. This review and changes to the current regime that should follow are of tremendous importance to Ontario's new home buying consumers. Consumers want confidence in builder regulation, enforcement of the building code and warranties that protect consumers, as well as a complaints mechanism that levels the playing field. They have none of this now. Confidence in new home construction is important for the economy. We look forward to more updates on this story from you. JS

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