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I highly doubt the vehicle has been branded as that would refer to the ownership which, as Canehda has pointed out, is not possible in Ontario.
Every dealer is different but what has likely been done is the vehicle has been flagged internally by a dealership, and possibly "branded" internally by Subaru. This is mostly done when they notice the vehicle has been tuned, and occasionally done when aggressive or obvious modifications have been done to the vehicle.
Bent42 is right, the dealer must prove the alleged modifications were the cause of the failure and that can either be really easy or really hard for them depending on what modifications were done.
The most logical place for you to start is to contact Subaru Canada and confirm the vehicle has in fact been flagged for modification and then request information on the alleged modifications.
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