A developer that had been facing the potential of more than $30 million in fines from Ontario’s Home Construction Regulatory Authority (HCRA) has had all counts against it dropped.
In the biggest case ever brought before the HCRA’s discipline committee, Briarwood Development Group was accused of violating the province’s code of ethics for home builders by coercing 142 buyers into paying more for pre-construction homes, for which they had already paid deposits and signed agreements, ultimately extracting more than $18 million.
The counts against Briarwood were all dismissed or withdrawn last month, after the HCRA failed to prove its case and bring forward substantial evidence.
Briarwood’s lawyers are celebrating the result, and insist the developer acted ethically and transparently with buyers.
Many buyers and advocates, however, say the outcome shows the HCRA is failing to regulate the industry and are calling on the province to step in. Some buyers who refused Briarwood’s price increase say they remain in limbo years later, still without their homes.
“This is a horrible precedent for future buyers,” said Toronto real estate lawyer Bob Aaron, who has represented clients who purchased homes with Briarwood. “Buyers need the confidence that what they sign for is going to be what they get.”
Allegations date back to 2022
Briarwood was facing allegations related to pre-construction developments in four Ontario communities: Stayner, Angus, Quinte West and Georgina.
CBC first reported in 2022 about buyers who had already signed agreements with Briarwood and then faced demands from the developer for more money. The buyers said they were presented with two options: pay more or end the sales agreement altogether.
Briarwood has said the price increases were due to supply chain issues and rising costs during the COVID-19 pandemic.
After receiving many complaints, the HCRA alleged 142 buyers were coerced into paying more. The regulator alleged that was in violation of the code of ethics under the New Homes Construction Licensing Act, which requires builders to “treat every person the licensee deals with fairly, honestly and with integrity.”
The HCRA brought its allegations to its discipline committee, which acts independently of staff.
If the committee had agreed that Briarwood violated the code of ethics, the developer could have been forced to repay the more than $18 million to the affected buyers, and could have also faced additional fines of up to $100,000 per count, altogether coming to a total of more than $32 million.
Buyers — both those who had paid extra, and those who had refused — were anxiously awaiting the outcome.
“I was hoping that [the] regulatory authority will force them to honor the contract because [a] contract is [a] contract and their wording must be honored by both parties,” said Jagat Patel, who along with his wife have refused to pay an extra $175,000 for the house in Stayner for which they signed an agreement, which six years later is still not complete.
HCRA failed to provide evidence
Instead, Patel is disappointed, and unsure where to turn next.
During the discipline committee hearings, the HCRA’s case fell apart. Its expert witness, who was set to speak about the impact of the COVID-19 pandemic on developers, was disqualified after Briarwood’s lawyers successfully argued he did not have relevant expertise related to residential construction.
The HCRA presented the committee with evidence related to 14 of the properties, including from six witnesses who were purchasers of five of the properties. However, it did not show direct evidence relating to the remaining 128 properties.
When Briarwood’s lawyers asked HCRA’s acting manager of inspections, Justin Vetro, about several specific buyers, he revealed he had not directly spoken with them to gather evidence. He also said he didn’t know if the regulator had reached out to any of the remaining 128 purchasers.
Justin Nasseri, one of Briarwood’s lawyers, told CBC News that buyers had the “time and space” to make decisions and signed the amendments freely. He also argues his client was being “proactive” by being honest with buyers about its financial challenges, and trying to reach agreements that would work for everyone. He said the potential fines would have bankrupted his client and “been a death sentence” for the developments.
“It was surprising to see them [HCRA] take that aggressive of a position when they did not have witnesses that were testifying to any even alleged misconduct for the majority of the allegations,” Nasseri said.
Briarwood’s lawyers submitted a non-suit motion for 128 of the counts, citing lack of evidence. The committee accepted that motion, dismissing those counts.
The remaining 14 counts were withdrawn days later by HCRA as part of a resolution. Neither HCRA nor Nasseri would say what the resolution involved.
Regulator defends investigation
Learning of the outcome, Aaron, the real estate lawyer, says he believes HCRA “dropped the ball very badly” by failing to gather and prepare adequate evidence.
HCRA declined CBC Toronto’s interview request. Asked why staff did not gather evidence from the majority of buyers, communications director Tess Lin said in an email “we followed the process diligently and brought forward the facts available to us.”
Lin said the outcome was “disappointing” but said the regulator “will apply lessons learned from this case to strengthen how we approach future referrals.”
MPP Tom Rakocevic, the NDP critic for public and business service delivery and procurement, says he was “shocked and disappointed” by the outcome, and is concerned the regulator is not adequately protecting home buyers.
“Perhaps they need to change members of their team and staff to be able to carry this forward. How is it that they are not having sufficient evidence?” said Rakocevic.
Ontario Premier Doug Ford has previously vowed to crack down on home builders that hike prices for pre-construction buyers. CBC Toronto contacted his office to ask if he’s satisfied that the HCRA is operating as it should to protect home buyers. Ford’s office did not respond, but forwarded the request to the Ministry of Public and Business Service Delivery and Procurement. In an email, a spokesperson noted the HCRA operates at arm’s length from the government, and directed questions to the regulator.
Litigation last option for buyers
Jagat Patel, the home buyer who refused to pay extra, is unsure if he will ever get the house he dreamed of in Stayner. He and his wife were looking forward to moving out of their Brampton home and into a more affordable house and community so they could enjoy a quieter lifestyle and help finance their children’s education.
Patel is among those buyers who complained to the HCRA. Now that the discipline proceedings have concluded, the regulator says there is no further action it can take.
Patel said Briarwood has not returned his recent emails.
Nasseri said he could not comment on ongoing discussions between Briarwood and any individual buyers.
Nasseri said every buyer always has a third option, if they refuse both a price increase and the option of signing an agreement to end the contract.
“You can insist on your contract,” Nasseri said. “You can litigate.”
Patel says hiring a lawyer will likely be his next step, though he isn’t sure they’ll be able to afford one.
