Licence Tribunal Appeal d'appel en Tribunal matière de permis

DATE: 2011-09-23

FILE: 6503/ONHWPA

CASE NAME: 6503 v. Tarion Warranty Corporation

An Appeal of a Decision of Tarion Warranty Corporation under the Ontario New Home Warranties Plan Act – to Disallow a Claim

Applicant(s)

Applicant(s)

-and-

Tarion Warranty Corporation

Respondent

-and-

Shram Development Inc. Added Party

REASONS FOR DECISION AND ORDER

ADJUDICATOR: ELIZABETH SPROULE, Vice-Chair

APPEARANCES:

For the Applicants: APPLICANT, self-represented

For the Respondent: SOPHIE VLAHAKIS, Counsel representing Tarion Warranty Corporation, Respondent

For the Added Party: ADAM EZER, Counsel representing Shram Development Inc., Added Party

Heard in Toronto: August 15 and 16, 2011

REASONS FOR DECISION AND ORDER

BACKGROUND

The Applicant and her spouse took possession of their luxury home on December 5, 2007. Their home had been registered in the name of another individual as of November 1, 2007, and it is not disputed that this earlier date is the date of possession for the purposes of the statutory warranties.

The Applicant submitted a statutory warranty form for a Major Structural Defect (MSD) on January 13, 2011. The defects were described in that form as being the water heater tank and the connection to all in-floor radiant heating, including a back walkway snow-melt. The radiant floor heating was located in the basement, and in two bathrooms. It is the Applicant’s position that the defects in the water heating system began with defects in work and materials which led to a break down in the hot water installation, which is a major artery of the home, and amounts to a Major Structural Defect.

A MSD inspection of the home was carried out on February 2, 2011. The conclusion reached by the Tarion inspector was that firstly, the problem(s) which occurred with the hot water system was not a result of any defect in work or materials that amounted to a breach of the MSD warranty, and secondly, that the alterations, deletions or additions made by the Applicant to the water heating system barred any MSD warranty claim.

ISSUE

Did the breakdown of the hot water installation amount to Major Structural Defect?

EVIDENCE

The evidence of the Applicant consisted of documentation and the oral testimony of the Applicant and Ron Robinson, an individual with expertise in hydronics. The evidence of the Respondent consisted of documentation and the testimony of Andrew Wilson, the Tarion field claims representative who inspected the Applicant’s home.

The evidence of the Added Party consisted of documentation and the testimony of Al Crawford, Terence Hayward, two individuals with expertise in hydronics, and Eran Shram, the president of the Added Party.

The following is a summary of the relevant evidence:

During the first three years of possession a number of plumbing issues arose in the Applicant’s home. These included issues with water flow, heat flow, hot water flowing into the toilets and calcium deposits. The Applicant had these issues attended to, often by the Added Party’s trades people, and believed that they were routine plumbing issues as she was not advised otherwise. In 2009 the Applicant and her spouse began to hear loud banging noises from their hot water heater. Initially they were told that this too was normal, however, at some point the Applicant was advised that the loud banging noise was not normal and that there was a more significant problem with the hot water installation system. In essence, the problem was that the hot water heating tank was being overloaded and could not meet the demands put upon it.

The hot water tank installed in the Applicant’s home was a “Combi-Cor” (the spelling of this appears to vary) water tank. It was a rented appliance in accordance with the purchase agreement between the Applicant and the Added Party. This tank model was designed to simultaneously heat potable water and provide space heating. In addition to the domestic water supply, the original installed tank serviced approximately 1500 square feet of indoor radiant heating and originally 150 square feet of snow melt under the back outdoor walkway.

The Applicant’s home is a semi-detached home. In 2008 the Applicant and the adjacent owner, decided to replace the wooden steps at the front of their homes with stone steps. The work was arranged by Mr. Shram but was not carried out by the Added Party. The Applicant and neighbour each paid $25,000 to a separate landscape company which performed the work. Snow melts were installed under the front steps for both homes and the Applicant and the adjacent home owner were advised that connecting the second snow melts to their current hot water system was not optimal but could be done. Both the Applicant and the neighbour connected the additional snow melt to their existing systems.

When advised that the banging sound coming from the hot water tank was not normal, the Applicant contacted Direct Energy, the company from which the Combi-cor tank was being rented. When representatives of Direct Energy attended the Applicant’s home and inspected the unit, they advised the Applicant that the tank would need to be removed immediately. The reason indicated on the forms provided was that it was ‘liming’. The tank was replaced by a different type of tank and neither the radiant floor heating system nor the snow melts were connected. The Applicant was told by the installers of this tank that they would not install the radiant floor heating system or the snow melts.

The Applicant testified that without the radiant floor heating the Applicant has experienced cold floors in two of her bathrooms, and in the gym, hallways and guestroom located in the basement. The home has 7 bathrooms, but only two have the radiant in floor heating, others have electrical. Without the snow melts the back walkway, which is used daily, has needed to be maintained by shovelling and salt, and slippery and unsafe conditions have resulted. The Applicant testified that salt is not supposed to be used on the walkway material.

It was noted at the time that the rental tank was replaced that the original tank did not have a Direct Energy approval sticker on it. This is a requirement of the supplier and its absence indicated that it was not inspected or approved at the time of installation. It was also discovered by the Applicant that the gas supplier Enbridge had not inspected or approved the gas equipment, including the water heater, as required. 1 Lastly, in her efforts to track down the approved plans for the radiant heating system the Applicant discovered that there were four building permits that remained open in relation to her home (they have since been closed). The Applicant takes the position that the lack of inspection by both Direct Energy and the gas supplier, and the failure to have the building permits properly closed, were all defects in work which has contributed to the breakdown in the water installation system. Had the proper inspections been carried out, the inadequacy of the hot water tank to deal with the three loads connected to it would have been discovered. In cross examination the Applicant confirmed that when addressing a water pressure issue a water filter was removed from the system and replaced with an ultraviolet mechanism to kill germs.

Mr. Ron Robinson has been in the hydronics business for 35 years and was qualified by the Tribunal as an expert. Mr. Robinson reviewed pictures of the original hot water tank installed, and the manufacturer’s specification, as well as the current replacement hot water tank. In Mr. Robinson’s opinion, the original Combi-cor tank was never approved for the purpose to which it was being applied; specifically it was not approved for out door snow melts. Mr. Robinson based his conclusion on the manufacturers’ specifications which state that the model was suitable for potable water heating and ‘space heating’. The term space heating has not been defined by the manufacturer but in Mr. Robinson’s opinion the appropriate definition of ‘space heating is “the process of adding heat to a building or room to maintain indoor comfort”. The source of this definition is a text authored by one of the leading experts in the hydronics field.2 It was Mr. Robinson’s opinion that any snow melt connected to the original Combi-core tank was a misapplication of the appliance and would result in the system being overloaded. The extreme cold water returning to the tank would cause thermal shock, stress out the internal parts and cause lime deposits. The recommended solution would be to have a water heater for potable water and a boiler for the radiant floor heating and snow melts.

Mr. Andrew Wilson, a Tarion claims representative, testified that at the time of his inspection the Applicant’s original rental water heater had been replaced with a different model and therefore he was unable to inspect the original installation. Other plumbing work had also been completed so that he was unable to observe some of the other complaints regarding the hot water system. He confirmed that the primary heat source of the home is two furnaces and that the indoor radiant heating is supplemental heating: an additional comfort feature. The main complaint expressed by the Applicant was that the snow melts and the in-floor heating were not operational. His conclusion was that these complaints were not consistent with a Major Structural Defect, as they did not relate to any issues of load bearing nor did they materially and adversely affect the use of the building as a home. The home was being lived in and fully utilized.

Mr. Al Crawford was called by the Added Party as one of two expert witnesses in the field of hydronics. Mr. Crawford actually oversaw the installation of the radiant floor heating and both snow melts at the Applicant’s house. He believed that the water quality and the removal of the filter was the most likely cause of the problems with the water heating installation, which in his opinion were all plumbing issues. He also indicated that it would have been his opinion that the addition of a second snow melts would have over taxed the system. When asked in cross-examination why he did not say anything about that at the time the second snow melt was installed, Mr. Crawford indicated that he did not personally do the work and that he did not have any specific recollection of the work.

The evidence of the Added Party’s second expert was, in part, contradictory to both the previous two expert witnesses. Mr. Terence Hayward testified that the removal of the filter would not have had a significant impact on how the system worked. He also disagreed with Mr. Robinson’s conclusion that the Combi-cor tank had been misapplied. In his opinion t the definition of ‘space heating’ relied upon by Mr. Robinson was not determinative. Mr. Hayward was of the opinion that the hot water tank did not fail: it could simply have been cleaned. The reason for the ‘liming’ was the result of a combination of things, including hard water, the Applicant’s running the tank at a temperature below 180 degrees, and the addition of a second ice melt. Mr. Hayward was not able to inspect the original Combi-cor tank.

THE LAW

Relevant sections of the Ontario New Home Warranties Plan Act – R.R.O. 1990, Regulation 892:

s. 15 (2) Every vendor of a new home warrants to the owner,

(a) That the home is constructed in a workmanlike manner and is free from defects in materials including window, door and caulking such that the building envelope of the home prevents water penetration.

(e) that the home is free of major structural defects.

(3) The warranties described in subsection (2) apply only in respect of claims made within two years after the home was completed for possession, in respect of homes that were enrolled, or should have been enrolled, after the 31st

day of December, 1990

s. 16. Where a home was enrolled after the 31st day of December, 1990, the claim for damages because of a major structural defect may be made within seven years of the date specified in the certificate of completion and possession.

Major structural defects’ is defined in section 1 of Regulation 892 as:

(a) Any defect in work or materials that results in the failure of a load-bearing part of the home’s structure or materially and adversely affects its load-bearing function; or

(b) Any defect in work or materials that materially and adversely affects the use of the building as a home.

ANALYSIS AND CONCLUSION

In order to succeed with a claim for a MSD there must be a defect and it must have an impact as described in section 1 of Regulation 892 set out above. In her submissions, the Applicant acknowledged that no load-bearing function has been affected by the defects complained of. She however has argued that the installation of a hot water tank which was not suited for the purposes for which it was installed, and which needed to be removed prematurely, has left her without radiant floor heating and snow melt(s) and this has materially and adversely affected the use of the building as a home.

Although the replacement rental tank was not connected to the radiant floor heating, the evidence before the Tribunal suggests there are hot water tanks available for rent for this dual purpose of potable water and space heating. The evidence is less clear that all three systems, the heating of potable water, the radiant heating system and the snow melts, can be serviced by one tank. The recommendation of the experts would be to add a boiler to service the snow melt(s). A boiler was however, not part of the original agreement. The Applicant takes the position that she is entitled to have a hot water installation that meets

the needs of her home, including the radiant heating and snow melt(s), and that if this requires both a hot water tank and a boiler, then that is what she should be entitled to.

It is not clear from the evidence whether there has been a misapplication of the Combi-cor tank, or whether the snow melt added by the Applicant in 2008 caused the system to overload: in other words whether there was a defect in the work and materials supplied by the Added Party. Assuming for a moment that the Applicant’s alteration did not have an impact, that the original installation involved a misapplication of the Combi-cor water tank: would that amount to a MSD?

It is an undisputed fact that the primary source of heat for the Applicant’s home is two furnaces. The radiant floor heating in the home is supplemental to that. The Tribunal does not doubt that this additional floor heating adds to the comfort of the Applicant and her spouse in using the master ensuite bathroom, powder room, basement gym and guestroom. The Applicant testified she is required to wear something on her feet if in the gym, and that the ensuite bathroom can feel cold. It was not suggested that these areas have not continued to be used, although it was indicated that the guestroom is used for storage only. Although the Tribunal agrees that for a defect to ‘materially or adversely’ affect the use of the building as a home it is not necessary to find that it is virtually uninhabitable or uncomfortable beyond reason,³ it is difficult to conclude in this instance that the absence of the radiant floor heating in this home, given that it is supplemental heating for added comfort, materially or adversely affects the normal use of the home. The same can be said about the back walkway snow melt, although it adds convenience and reduces the need to shovel snow, its dysfunction does not

materially or adversely affect the normal use of the home.

The Tribunal concludes that the facts do not support the finding of a MSD. The Tribunal appreciates the Applicant’s perspective that she paid a substantial amount of money for her home, and she should not have had to deal with a series of plumbing issues and the associated costs to correct and enhance the water heating system installed in her home in order to enjoy the features she feels she contracted for. However, her remedy in the circumstances is not found under the Tarion warranty scheme.

TRIBUNAL

Elizabeth Sproule, Vice-Chair

RELEASED: September 23, 2011

Footnotes

1. 3Grudzinski v. Ontario New Home Warranty Program 1997 CanLII 16252 (ON CTGD), [1997] O.J. No. 291, paragraph 23