Added Party

REASONS FOR DECISION AND ORDER

ADJUDICATOR:

D. GREGORY FLUDE, Vice-Chair

APPEARANCES:

For the Applicants:

THE APPLICANTS in person

For the Respondent:

GREGORY W. BANKS, Counsel, for Tarion Warranty Corporation

For the Added Party:

NAT BRIOSCHI, Agent, for the Added Party, Arista Homes (Boxgrove) Inc.

Heard in Toronto:

July 5 and 6 and

September 21, 2010

REASONS FOR DECISION AND ORDER

Pursuant to the provisions of s. 16 of Ontario New Home Warranties Plan Act

R.S.O. 1990, Chap. O.31 (the “Act”), the Applicants appeal from the decision of Tarion to deny warranty coverage with respect to a number of items in their new home. The right of appeal to this Tribunal is triggered by the issuance of a decision letter. In this case there are two decision letters, both dated February 2, 2010 and both denying the disputed claims. They differ with respect to the observations and reasons recorded in the applicable sections of a number of the disputed claims. The Applicants argue, by way of a preliminary motion, that the Tribunal should disregard the second of these decision letters. Tarion also brought a preliminary motion seeking to exclude from the hearing any evidence relating to the hardwood flooring throughout the house.

PRELIMINARY MATTERS

The Applicants argue strenuously that the Tribunal should ignore the second of the two decision letters. They advanced two grounds. The first ground advanced was that the second letter was never served on them or the Added Party. The second ground advanced by the Applicants was that Tarion did not have the legal capacity to amend its first decision letter. In the view of the Applicants, the first decision letter was a “legal document” that was immutable once delivered. It is the position of the Applicants that, by attempting to alter a “legal document,” Tarion was committing a fraud that was then compounded by its failure to serve the document under separate cover.

Tarion conceded that the second letter was given to the Applicants as part of its brief of documents and it was not sent under separate cover. It argued that there was no attempt to mislead or defraud since it included both versions of the February 2 letter in its document brief. It conceded that the second decision letter should not have borne either the title “Decision Letter” or the date of February 2, 2010. Rather it should have been entitled “Supplemental Decision Letter” and carried its date of issue. It argues that the failure to change the title and date are simply clerical errors arising out of the now common practice of using previously generated computer documents as templates for later documents.

The Tribunal can find no support for the proposition that Tarion deliberately attempted to mislead the Applicants with respect to the second decision letter. While it may have been brought to the Applicants’ attention more clearly if served under a separate cover, its inclusion in the document brief several months before the hearing ensured that the Applicants were able to fully review it and prepare for the hearing. From their submissions regarding the two decision letters it is clear that the Applicants know the contents of both documents very well. They were able to address every difference between the two documents in argument.

The Tribunal cannot accept that a decision letter is analogous to a deed or a contract where a unilateral change may amount to fraud. Rather, in the Tribunal’s view, it is more analogous to a pleading in a civil action. It sets out Tarion’s decision and the reasons and observations of the Tarion representative in arriving at that decision. Those reasons and observations are then subject to scrutiny before this Tribunal leaving the Tribunal to accept, reject or modify Tarion’s decision. If the Tribunal were to accept the Applicant’s position then it would be beyond Tarion’s power, having issued a decision letter, to reconsider its position in the light of new evidence and decide to warrant a previously unwarranted item. In the Tribunal’s view, this result is neither sustainable nor desirable. Indeed, as this hearing progressed, Tarion decided to warrant two disputed items without demur from the Applicants.

The greater concern to this Tribunal when faced with an amendment to the document that originated the appeal process is to guarantee that there is no prejudice or unfairness to either party. Fairness, in this context, is procedural fairness. As a quasi-judicial tribunal, the Tribunal must ensure a fair procedure consistent with its rules of practice, enabling statutes and the Act. To ensure fairness, the Tribunal must be prepared to extend such time as a party may reasonably require to digest and respond to new or amended allegations. A proceeding before this Tribunal should not amount to an ambush. The parties must have sufficient time to review and respond to the amended allegations.

On the facts before it, the Tribunal decided to admit into evidence both decision letters. The Applicants did not allege that they were prejudiced in any way by reference to the later decision letter. They demonstrated an excellent knowledge of its contents. They had several months between service of the document brief prior to the pre-hearing in this matter and the commencement of the hearing in which to examine and fully respond to any changed content.

The second preliminary matter concerned hardwood flooring. This is the second time Applicants have been before this Tribunal. Under the system governing warranty claims under the Act, new home owners may make a claim for items not finished to their satisfaction at the end of their first 30 days of occupancy. They may then make a claim at the end of the first year. The current appeal addresses claims made at the end of the first year. The Applicants appeal Tarion’s decision on their 30 day claim to the Tribunal. One of the items on the earlier appeal addressed alleged deficiencies in the hardwood floor. The complaint cited cupping, unevenness and gaps. At page 12 of the 30 day decision, Vice-chair Weary finds:

The Tribunal finds in evidence nothing to support a finding that the flooring fails to comply with the requirements of section 13 of the Act.1

In their year-end claim form, the Applicants set out their complaint regarding the hardwood flooring as follows:

Hardwood floor on main floor with cupping/gapping at the same time at both seasons. Hardwood floor with defective strips. Nail head visible on 1st starting side to the finished side. All these existed since PDI/closing. It should be totally replaced. [Emphasis added]2

The Applicants assert that Vice-Chair Weary advised them that, notwithstanding that she had found against them with respect to the alleged defects on the

1 5425-ONHWPA-CLAIM Licence Appeal Tribunal decision released December 16, 2009 at page 12 The decision may be found at Tab 8 of Exhibit 5

2 Ex 3 Tab 4

hardwood flooring, they might bring the hardwood flooring issue forward again on the year-end claim. There is nothing in her decision to suggest that her findings as to the hardwood floor were anything but final and fully dispositive of all of the issues before her. The claim form itself indicates that the Applicants are attempting to re-litigate an issue previously decided against them. Based on these facts, the Tribunal declined to hear evidence concerning the hardwood flooring or to consider the issue of the hardwood floor.

Statutory Provisions

The statutory provisions governing the warranty of new homes are set out in section 13 of the Act as follows:

Warranties

13. (1) Every vendor of a home warrants to the owner,

(a) that the home,

(i) is constructed in a workmanlike manner and is free from defects in material,

(ii) is fit for habitation, and

(iii) is constructed in accordance with the Ontario Building Code;

(b) that the home is free of major structural defects as defined by the regulations; and

(c) such other warranties as are prescribed by the regulations. R.S.O. 1990, c. O.31, s. 13 (1).

While subsection 2 sets out exclusions, none are applicable to the current facts.

Review of Evidence and Warranty Findings

The Tribunal heard evidence from each of the Applicants, Leighton Brown, the Tarion Field Service Representative, and Bruno Cirillo, the site service manager for the Added Party. Rather than summarize the evidence of each witness, the Tribunal shall review the evidence on an issue by issue basis.

As stated above, during the course of the hearing Tarion decided to warrant two outstanding items. It also decided to partially warrant a third item. The remaining items in dispute are:

1. A crack on the external wall that penetrates through to the basement.

Repairs have been made to this crack but the Applicants question the repair method;

2. The repair method used by the Added Party to address issues with the stipple ceilings on the main floor. Throughout, the word “stipple” was used in evidence interchangeably with the word “stucco;”

3. Exposed areas on the front porch where the concrete finish has detached exposing the concrete and aggregate interior;

4. Curling roof shingles. Tarion warranted one shingle during the hearing but the Applicants still assert that the roof is defective on the front of the house; and

5. Problems with water “streaming” in the swale between the Applicants’ house and the neighbour’s house.

Dealing with item 1 above, the Applicants drew the Tribunal’s attention to a crack above grade on the foundation wall. At Exhibit 4, pages 44 and 45 there are photographs of the crack. It was the female Applicant’s evidence that the measurement shown on page 44 was taken by her husband, the male Applicant. The Applicants raised the problem with this crack on their 30 Day Form citing their belief that it was a structural defect. The Tribunal found no evidence of a structural defect. At this hearing the Applicants concern was that the parging of the crack shown at page 51 failed to take into account the continuation of the crack below grade and that the crack was a leak risk.

Page 49 of Exhibit 4 shows the interior of the basement where the crack propagates through the wall. On that photograph, while the main crack has been repaired, there is a water leak from a secondary crack. It was not disputed in evidence that this water leak has now been repaired and there is no water leaking into the basement through in this area. The Applicants alleged that they do occasionally see dampness on the wall but provided no photographic evidence in support of this statement. Mr Brown, Tarion’s representative, saw no evidence of water or dampness.

Mr. Cirillo testified concerning the steps taken by the Added Party to address water leaks arising out of this crack. He stated that the industry standard is to repair foundation walls from the inside by injecting epoxy resin into the crack. He drew the Tribunal’s attention to a number of vertical white marks on the otherwise black repair material around the main crack running from the insulation to the floor. He stated that these five or six vertical white marks show places where the crack had been drilled to permit injection of the epoxy. The epoxy penetrates the crack from the inside to the outside to form a seal.

Mr. Cirillo stated that the Added Party attended three times to address water leakage issues. The first time repairs were carried out on the main crack. The second time repairs were carried out to the right of the main crack. On the third occasion, a secondary crack was discovered giving rise to the leakage visible on page 49. This crack was repaired and the Applicants have not complained to Mr. Cirillo about defects in this area since then.

Notwithstanding that the question of a structural defect was decided against the Applicants at the earlier hearing, Mr. Cirillo went on to advise the Tribunal that, on each visit to the Applicants’ home to deal with this crack, he had taken into account the possibility of a structural defect. He had seen no evidence of movement of the foundation wall around the crack. There was no cracking of the brick course above the crack - something he would have expected if the foundation wall was structurally defective. He determined to his own satisfaction that there is no structural defect in this area. He characterized the crack as a normal consequence of drying concrete.

The exact wording of the Applicants’ claim with respect to this item is:

Crack on foundation wall at east under laundry room developed new cracks to north foundation wall of garage causing water penetration. The large crack 10cm wide has to be exposed outside for investigation of structural defects and root cause and repaired.

It is clear from the evidence that no water is currently leaking into this area. The Tribunal is satisfied that the repairs carried out by the Added Party have been effective. There is no evidence of a structural defect in this area. There is no displacement of the foundation wall or cracking of the brick course above the crack to indicate that the foundation wall is not supporting the structure as it was designed to do. This item is not warranted.

The second item concerns repairs done to the stipple ceilings. Mr. Cirillo testified that the contract with the Applicants included stipple ceilings on the main floor except in certain specified areas. While painting the area around the stipple, paint got on to the stipple. According to Mr. Cirillo the ceilings looked bad and he agreed to repair the damage. The repair method was to apply latex paint to the stipple. The stipple itself is a latex based product. Paint was applied using a paint roller. Mr. Cirillo discussed the repair method with the female Applicant who accepted it as an appropriate repair. A painter attended at the Applicants’ house for at least half a day and completed the work. The female Applicant raised no objection to the repair method with the painter.

The substance of the Applicants’ complaint is that the stipple ceiling is now shedding dust onto the floor and the dining room table. It was her evidence that she needed to clean the dust every day. For his part, Mr. Brown did not see evidence in support of the Applicants’ position when he attended the home. Mr. Cirillo does not have a clear recollection of seeing dust but was of the view that if shedding had been significant he would have noted it.

The Applicants want the whole ceiling to be redone. They point to one area where the Added Party decided to reapply stipple. Mr. Cirillo stated that this area, in front of the basement steps, was an area where the stipple had been rubbed off. The only repair was to redo it. As for the balance of the stipple, Mr. Cirillo testified that over-painting with latex paint is the standard industry repair.

The latex paint, according to Mr. Cirillo, is harder than the stipple finish and has the effect of strengthening it.

On the evidence before it, the Tribunal can find no defect in workmanship or materials with respect to the stipple ceiling. The Tribunal accepts Mr. Cirillo’s evidence that the repair already carried out is industry standard. It also accepts Mr. Brown’s evidence that he did not note excessive dust from the ceiling on his visit. While the concept of excessive dust is highly subjective when it comes to personal space, the Tribunal notes that Mr. Brown’s training is to consider alleged defects in accordance with an average homeowner. Accordingly, this item is not warranted.

The Applicants complain that the concrete finish on the front porch has worn away exposing aggregate. They have provided photographs of their complaint at Exhibit 4 pages 78 and 79. Mr. Brown denied the claim on the basis of his belief that the damage to the front porch and similar damage to the front steps that is now warranted arose from snow clearing activity by the Applicants. Mr. Brown was of the view that they used de-icers such as salt and possibly used an ice scraper to dislodge stubborn ice. Mr. Cirillo is of the view that the Applicants used de-icers. He observed that the finish on the pre-fabricated front steps was worn away in a manner similar to the front porch. Given the dissimilarity between the finishes and the methods of production, Mr. Cirillo felt that the common denominator was the manner in which the Applicants treated the porch and steps. The Applicants for their part stated that they used neither de-icers nor scrapers on the front steps. They were of the view that the concrete finish was defective.

While the Tribunal accords some weight to the opinions expressed by Mr. Brown and Mr. Cirillo in accordance with their experience, the fact remains that only the Applicants have direct knowledge of snow clearing activities on their steps last winter. The Tribunal also notes that there is no evidence of scrape marks on the porch to support the allegation that they used an ice scraper. Finally, the Tribunal notes that the front porch surface has failed after exposure to a single Ontario winter. It is inconceivable to the Tribunal that a porch constructed in a workmanlike manner using proper materials would fail to withstand normal snow clearing activities for a single year. Accordingly, the Tribunal finds this item to be warranted.

In their 30 day Form and again on their Year-End Form, the Applicants have complained about curling roof shingles. The complaint at the 30 day hearing addressed curling on the roof at the back of the house. The Tribunal found against the Applicants on that issue. The current complaint addresses the roof on the front of the house. Exhibit 4 shows the alleged defects in the photographs at pages 83 and 83. During the hearing Tarion decided to warrant the defect shown on page 82 leaving the alleged defects on page 83 in issue.

There appear to be two areas of complaint shown on page 83. Both address the area around the valley. The Applicants complain that the shingles at the top of the valley curl. Mr. Brown and Mr. Cirillo point out that the alleged curling is in a position where ridgelines meet. The area has several layers of overlapping shingles creating an appearance of curling. Mr. Brown testified that this condition is perfectly normal. The male Applicant pointed out other areas on page 83 stating they indicated curling shingles but, despite the male Applicant’s best efforts, the Tribunal could not see any curling shingles on the photograph.

The second area focuses on the joints along the metal guttering in the valley. On the left side of the valley there are two gaps where metal guttering overlaps. The Applicants submit this is a defect in workmanship and materials. Mr. Cirillo explained that the Added Party uses metal in the valley to give greater strength. Being metal, it expands and contracts and the gaps are a function of expansion and contraction. On any given day, gaps may be apparent or not depending on temperature. Mr. Cirillo pointed out that the roof performs the function for which it is designed, to keep water out of the building envelop. He detailed a number of visits by the roofing contractor to address the Applicants’ concerns. He stated that, with very minor exceptions, the roofing contractor found no defects in the roof.

The test for warranty is, of course, a defect in workmanship or materials. The Tribunal can find neither on the evidence before it. The roof carries out its function of keeping the house dry. It has some minor gapping in metal joints to permit expansion and contraction but those gaps do not represent a defect in either workmanship or material. Accordingly, the Tribunal finds this item to be unwarranted.

The last item concerns water between the houses. The complaint is set out in the Year-End Form thus:

Stream of water on surface of gravel between house, sometimes even on a sunny day.

Exhibit 7 shows the Applicants’ concern. On the gravel between the houses there appears to be a stream of water draining towards the grass at the top of the picture. Of note is the fact that the water is well away from the foundation wall. The Applicants did not complain about water build-up at or near the building other than in the swale between the buildings. They did not allege that there is any leakage into the basement from this water, but it concerns them that the basement wall may be wet as a result. It is not clear from the Applicants’ submissions what remedy they seek to address conducting rainwater away from the house.

Mr. Cirillo testified that site grading is the responsibility of the developer and the municipality. He stated that builders are given elevations for the construction of the buildings. Following final grading of the site a survey is prepared by the developer to indicate conformance with the overall site grading plan and the municipality signs off if the grading is satisfactory. He stated that the municipality had accepted the grading of the Applicants’ house.

It was also Mr. Cirillo’s evidence that he had attended at the Applicants’ house with the Added Party’s grading contractor. They measured a two and one half foot elevation drop from the rear to the front of the house and noted that rainwater was draining to the front of the house as it should.

The evidence is clear that the swale between the houses is doing its job, conducting rainwater away from the foundation walls and to the front of the house. The fact that it is functioning as it should is clear from the very wording of the complaint – “stream of water on surface.” The swale is in accordance with the overall site grading plan. There is no defect in workmanship in the construction of the swale or ponding at or near the building. Accordingly, this item is not warranted.

ORDER

Pursuant to the provisions of ss. 16(3) of the Act, this Tribunal orders Tarion to carry out repairs to the finish on the front porch decking. It also orders Tarion to carry out the repairs Tarion decided were warranted during the hearing, that is, replacement of the front porch steps, replacement of one shingle on the front of the house as shown on page 82 of Exhibit 4 and installation of damp-proofing and a drainage membrane on the foundation wall north of the laundry room. All other claims for warranty coverage appealed to this Tribunal arising out of the Year-End Claim form are dismissed.

Released: October 6, 2010