Adi Development Group, a Burlington-based condo developer who is the first recipient of a Notice of Proposal to revoke a licence from the The Home Construction Regulatory Authority (HCRA), confirmed today that they are appealing the regulatory action.
In a release dated September 12, Adi, which has operated as a builder in the Greater Toronto Area for 15 years, states an appeal was filed on Thursday, September 8, emphasizing their “disappointment” in what they say has been an abrupt and uncommunicative course of action from the provincial regulator.
“The process undertaken by the HCRA in issuing the Notice has been incredibly disappointing, cursory and arbitrary. Typically, a Regulator is required to exercise their statutory powers with fairness and openness to those under investigation,” said Adi President Tariq Adi, in an emailed statement to STOREYS.
“In our case, we were given no notice of the impending proposal, no understanding of the grounds or documentation for their allegations, and no opportunity to respond or clarify issues before HCRA made the decision to issue a Notice that contained very serious allegations and would have very serious consequences for Adi. Adi Developments’ reputational damage due to this lack of due process and hasty move by the HCRA has been severe.”
In an emailed response to STOREYS, the HCRA stated, "The Home Construction Regulatory Authority is committed to protecting consumers and providing resources to help Ontarians.
The HCRA had made it clear that bad actors in the industry will face severe consequences as a result of the measures introduced by the Ontario government."
On August 25, the HCRA issued a Notice of Proposal to revoke the building licenses of the nine builder/developer entities operating under the Adi Development Umbrella Group, making an exception for three in-progress developments, including the Nautique, a 26-storey condo located on Burlington’s lakeshore.
Under grounds for the proposal, the HCRA alleges that, after selling units in the Nautique between 2015 - 2020, Adi then sought to cancel existing purchase agreements, citing financing issues. The builder then allegedly failed to return consumer deposits, falsified documentation provided to the HCRA, and demonstrated they were relisting the units for a higher purchase price while refusing to issue deposit refunds until a unit was resold.
As a result, “Adi Development Group has demonstrated, through the conduct of its related entities and interested persons, that its corporations should not be licenced builders or vendors under the NHCLA,” states the regulator’s filing.
Revocation or refusal to renew a licence are the most severe consequences for a builder/vendor. Revoking a licence prevents a developer from legally operating in the new home construction sector. Should a builder continue to illegally operate without a licence, the regulator can take additional enforcement steps such as
- Compliance Orders;
- Restraining Orders;
- Freeze Orders; and
- Provincial Offences Act charges
In a statement regarding their appeal, Adi refutes the allegations. “The suggestion that Adi acted unethically or that it provided incomplete or false information to the HCRA as part of this process is ludicrous as well as defamatory,” states the release.
They go on to say the HCRA’s proposal was actually spurred by steps taken by the builder to “ensure the ongoing success and completion of their 26-storey condominium Lakeshore project,” citing increased project costs due to the pandemic and “inflationary pressures”. According to Adi, the cost to build has ballooned to $43M, a 35% increase from the original budget.
“Adi was forced to seek additional financing and to cancel purchase agreements in order to secure the new financing,” states the release.
Adi says it consulted with the HCRA in regards to the situation, and that cancelled purchase agreements were done so lawfully and within the contractual terms and regulations set out by Tarion, as they gave purchasers “alternative options.” The builder refutes the allegations made by the HCRA that original purchasers who agreed to forfeit their purchase would only receive a deposit refund once the unit had been resold and a new deposit obtained.
“At no point did Adi tie the return of deposits to the resale of the units, as HCRA alleged. It shocked Adi that this proposal was the path taken by HCRA in respect of the Lakeshore development without prior notice or discussion and that it included eight other unrelated projects within the Adi group of companies in the regulatory net,” reads their release.
As well, writes the builder, “In a demonstration of good faith and in order to mitigate the impact on purchasers,” it offered former purchasers who were not interested in a new purchase agreement an additional 6% interest on their deposits. Adi also says that for the “majority of purchase agreement holders who did wish to move forward,” they were offered to repurchase their units at 20% below market prices, and were also given $10,000 in “décor dollars” as an incentive.
The builder says they have been working with Lakeshore purchasers on their deposit returns, including interest, claiming that as of September 7, 85% have been returned, totalling more than $9M.
“We have cooperated fully with the HCRA up to this point and remain willing and hopeful that despite the appeal we can reach an expedited resolution on all issues with the HCRA so that we can complete the Lakeshore and other projects,” states Tariq. “Many builders out there require guidance from HCRA in order to get through this, not to have their licences pulled. We feel we have been unfairly singled out.”
Adi's case will now go to the Licence Appeal Tribunal (LAT) for a case conference to reach a resolution, with a hearing to be held if one isn't reached. If the LAT decision upholds the HCRA’s decision and the licensee does not appeal the decision in Division Court, then the licence is revoked.
