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