Licence Tribunal

Appeal d'appel en

Tribunal matière de permis

DATE:

2011-01-17

FILE:

6080/ONHWPA

CASE NAME:

6080 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

Applicants

-and-

Tarion Warranty Corporation

Respondent

-and-

Added Party

REASONS FOR DECISION AND ORDER

ADJUDICATOR:

E. ALAN GARBE, Vice-Chair

APPEARANCES:

For the Applicants:

THE APPLICANTS, unrepresented

For the Respondent:

ELLIE CHOI, Counsel, representing Tarion Warranty Corporation

For the Added Party:

TREVOR WHIFFEN, Agent, representing the Added Party

Heard in Toronto:

December 8, 2010

ORDER

This is an appeal by the Applicants from the decision letter of Tarion Warranty Corporation (the "Respondent") dated May 3, 2010, to disallow the claim of the Applicants made pursuant to the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31, as amended, (the "Act") with respect to their home built by the Added Party.

BACKGROUND

This is the second hearing before the Tribunal by the Applicants with respect to a claim or claims arising from the purchase of their house (the "Residence"). The previous hearing was held on February 22 and 23, 2010, before Vice-Chair Sproule (the "February Decision").

In the February Decision, the Tribunal dealt with two issues: should the Respondent be responsible for repairing the outstanding warranted deficiencies and if money is to be paid, what amounts are the Applicants entitled to receive. The Tribunal ruled that the Respondent would not be directed to perform or arrange to perform the warranted work and found that the amount the Applicants were entitled was $35,972.90.

By letter dated March 1, 2010, the Applicants raised the issue of water penetration in two storage areas in the basement of the Residence and cracks in the foundation walls. An inspection was conducted and a Warranty Assessment Report issued dated April 16, 2010. Based on the Warranty Assessment Report, the decision letter, dated May 3, 2010, was issued denying the claims of the Applicants on the basis that there is no defect in work or materials that constitutes a breach of the Major Structural Defect Warranty.

At the commencement of the hearing, the Applicant in attendance (the "Applicant") advised the Tribunal that he was withdrawing the claim with respect to the cracks in the foundation wall and therefore the hearing proceeded with the claim regarding water penetration only.

ISSUES

The issue to be determined in this hearing:

is there water penetration into the two storage rooms of the Residence and, if so, does such penetration constitute a major defect.

For reasons which will be discussed later in this decision, the Added Party sought costs against the Applicants.

EVIDENCE AND ANALYSIS

At the commencement of the hearing the Respondent's Book of Documents was admitted as Exhibit 3 and the Respondent's Supplementary Book of Documents was admitted as Exhibit 4.

The evidence of the Applicants consisted of the testimony of the Applicant and a series of photographs taken by the Applicant on or about February 20, 2010, which were admitted as Exhibits 6 (A) through (M) in these proceedings.

The Applicant testified that problems with moisture in the two storage rooms has been an on going issue since he purchased the Residence and no one has been able to determine the cause of the problem. The Applicant stated that the rooms were originally finished as storage rooms, however items stored in either room became covered with mold and could not be used.

The Applicant testified that after the rooms were stripped to the bare walls, it was possible to see moisture on the walls and ceilings.

The Applicant stated that the proposal to allow air to circulate through the storage rooms by opening the windows in the rooms is unworkable.

The Applicant testified that he owns a business called Rainbow Waterproofing and Tarping Systems and has been in business for 20 years. He stated that, notwithstanding his work in this area, he could not identify the cause of the moisture in the storage rooms.

It was the Applicant's position that the exterior walls should be torn down and replaced at a roughly estimate cost of $50,000.00.

Under cross examination, the Applicant acknowledged that he had received $4,830.00 with respect to the issue of moisture in the storage rooms, but stated that this payment was for the costs of materials to restore the rooms to their previous finished condition. The Applicant stated that this work could not be done until the moisture problem was solved.

The Applicant stated the storage rooms were not being used and when shown the photograph at Exhibit 3, Tab 4, page 1, stated that the items in the lower left hand corner of the photograph were moldy and had just been left there.

The Respondent called Donald Butwell who stated that he is employed by the Respondent as a field claims representative and had previously worked for the City of Toronto for 6 years as a building inspector. The witness stated that he has a BA degree from the University of Toronto in urban planning and environmental science.

The witness testified that he was the person who attended at the Residence on April 14, 2010 and conducted the warranty assessment inspection of the two storage rooms.

The witness stated that at the time of his inspection the walls of the rooms were bare and that there was no standing water, no pooling and no running water in either room. The witness testified that he inspected the rooms in the presence of the Applicant and that he did not detect any mold or mildew in either room.

The witness testified that there was no evidence of a failure of a load bearing wall or that any portion of the basement was unuseable.

Under cross examination, the witness stated that at the time of his inspection the walls were dry and there was no evidence of water in the rooms.

When it was suggested to the witness that the photograph at Exhibit 3, Tab 4, indicated moisture, the witness testified that he disagreed that the photograph showed signs of moisture and stated that when he ran his hand over the walls they were not wet.

At this juncture, the Applicant indicated that he had photographs which he wished to refer to in his cross examination of this witness.

In order to accommodate the Applicant, it was agreed between the Parties that the hearing would adjourn for lunch and that the Applicant would be allowed to retrieve the photographs from his vehicle and provide them to the Respondent and the Added Party for their review.

At the recommencement of the hearing, the Parties agreed that, if properly introduced, the photographs could be entered as exhibits. The Applicant returned to the stand and having acknowledged that he was under oath stated that he had taken the photographs two days before the February hearing. The Applicant identified the 10 photographs and they were entered as exhibits.

The Applicant stated that the photographs showed marks of water penetration not condensation and that this was the same problem which had existed since he bought the Residence.

Mr. Butwell was recalled to continue his cross examination and was reminded that he was still under oath. The Applicant presented several of the photographs to the witness who disagreed that the pictures show discolouration of the walls which indicated water penetration. The witness did acknowledge that certain photographs show some form of staining which did suggest the presence of moisture.

When shown Exhibit 6 (B), the witness agreed that it showed moisture on the ceiling but stated that this was due to sweating or condensation not penetration.

The witness testified that he had seen similar situations and that when the space was properly ventilated the problem disappeared.

THE LAW

The relevant sections of the Act are as follows:

(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

Exclusions

(2) A warranty under subsection (1) does not apply in respect of,

(a) defects in materials, design and work supplied by the owner;

(b) secondary damage caused by defects, such as property damage and personal injury;

(d) normal shrinkage of materials caused by drying after construction;

(e) damage caused by dampness or condensation due to failure by the owner to maintain adequate ventilation;

(f) damage resulting from improper maintenance;

(g) alterations, deletions or additions made by the owner;

(h) subsidence of the land around the building or along utility lines, other than subsidence beneath the footings of the building;

(i) damage resulting from an act of God;

(j) damage caused by insects and rodents, except where construction is in contravention of the Ontario Building Code;

(k) damage caused by municipal services or other utilities;

(l) surface defects in work and materials specified and accepted in writing by the owner at the date of possession. R.S.O. 1990, c. O.31, s. 13 (2).

CONCLUSIONS AND ORDER

It is difficult to understand why this matter is once again before the Tribunal. In the February Decision, the Tribunal stated at page 3, in the forth paragraph that

The scope of repairs warranted are well understood and documented.

However the Applicant believes there is a further issue for consideration and the Respondent issued a decision letter denying the claims as set forth above.

The Applicant expressed, in a passionate fashion, that the problem with moisture in the storage rooms had not been addressed in the February Decision and was therefore open to appeal.

The Added Party believed that all issues with respect to the Residence had been settled when they agreed to pay the Applicants the sum of $25,000.00. They believed that when the issues went before the Tribunal in February 2010, that was the end of the matter. That the Added Party is once again before the Tribunal with respect to an issue which the Added Party believed had been settled twice is the reason the Added Party is seeking costs.

The burden of proof that there is a major structural defect falls upon the Applicants and the Applicant produced no evidence to support his claim that there is water penetration. In fact, the Applicant admitted he does not know the source of the moisture in the storage rooms.

It is the view of the witness for the Respondent that the moisture is due to condensation which, pursuant to sub section (2) (e) of the Act, is an exclusion from the warranties.

In conclusion, the Tribunal finds that the Applicants failed to prove that there was a warranted defect.

Accordingly for the reasons stated above and pursuant to the authority vested in the Tribunal by Section 16 (3), the Tribunal confirms the decision of the Respondent to disallow the Applicants' claim.

REQUEST FOR COSTS

Although the Tribunal understands the frustration of the Added Party in these proceedings, it finds that it is not appropriate to award costs. The conduct of the Applicants in this matter is not of such a degree that an award of costs would be appropriate and dismisses the Added Party's request for costs against the Applicants.

LICENCE APPEAL TRIBUNAL