Licence Tribunal
Appeal d'appel en
Tribunal matière de permis
DATE:
2011-12-23
FILE:
6598/ONHWPA
CASE NAME:
6598 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
Applicants
-and-
Tarion Warranty Corporation
Respondent
-and-
Steven Machado Demelo
Added Party
REASONS FOR DECISION AND ORDER
ADJUDICATOR:
KENNETH W. KOPROWSKI, Vice-Chair
APPEARANCES:
For the Applicants:
THE APPLICANTS, self-represented
For the Respondent:
MONTGOMERY SHILLINGTON, Counsel, representing Tarion Warranty Corporation
For the Added Party:
STEVEN MACHADO DEMELO, the Added Party
Heard in London:
November 22 and 23, 2011
DECISION AND ORDER
This is an appeal by the Applicants to the Licence Appeal Tribunal (the “Tribunal”) from a decision letter dated April 1, 2011, of Tarion Warranty Corporation (“Tarion”) under the Ontario New Home Warranties Plan Act (the “Act”) denying the Applicants’ claim.
BACKGROUND
The Applicants took possession of a newly-built home on January 13, 2010. The original closing date in the Agreement of Purchase and Sale (the “agreement”) was December 18, 2009. The Applicants completed the 30-Day Statutory Warranty Form in proper time on January 27, 2010 (Tab 4, Exhibit #3). They listed 111 outstanding warranty items. The decision letter dealt with sixty-six claims. After the pre-hearing on September 23, 2011, nineteen items were listed in the pre-hearing Order to be the subject of this appeal. The numbered items in the pre-hearing Order correspond to the numbered paragraphs in the decision letter of April 1, 2011.
During this hearing, the Applicants withdrew their claims relating to items 50 (water heater) and items 54 and 63 (allowance for windows). The remaining sixteen items listed in the pre-hearing Order were the subject of this appeal.
Position of the parties
The Applicants
The Applicants confirmed that Tarion had made a settlement payment of many of the warranty items that they had listed on their Claim Form. The Added Party had failed to remedy some of the problems or the time period for completing some of the seasonal work had already passed.
Of the outstanding issues, some were design problems, some were contractual matters and some involved workmanship issues. None of the outstanding matters involved Ontario Building Code violations. The Applicants stated that either they did not receive what they had contracted for or the Added Party was guilty of poor workmanship.
Tarion
Counsel for Tarion submitted that both the decision letters of April 1, 2011 (Exhibit #1 and Tab 23, Exhibit #3), and the supplementary decision letter of September 2, 2011 (Tab 28, Exhibit #3), were relevant to this appeal. The latter was relevant because it dealt with some items in the decision letter of April 1, 2011 that were seasonal in nature and which the Added Party had additional time to complete. The Tarion Field Claim Representative examined the seasonal work after he wrote the decision letter of April 1, 2011.
Counsel for Tarion also submitted that some of the items being appealed could be covered by warranty only if they were included as a specific item in the agreement to be selected by the Applicants and the Added Party, and breached the provision relating to that item. There was also an issue as to what the position of the Applicants should be if they remedied a matter before Tarion’s Field Claim Representative performed a conciliation inspection. Finally, there was also an issue as to whether the Tribunal should consider the benefit that the Applicants received when the monetary allowance for cabinets that was provided for in the agreement was exceeded, even though the Added Party had not installed some cabinets that the agreement required it to install.
The Added Party
The Added Party submitted that the delay in the closing was caused by a dispute about the amount of extras incurred in constructing the house. Mr. Demelo claimed that the Applicants paid only a portion of the extras and that a large amount remained owing.
Although he was not claiming the difference in the amount of the extras from the Applicants, he maintained that the Applicants exceeded the allowances provided for in the agreement. He could not understand the Applicants’ arguments related to contractual issues.
EVIDENCE
Only the male Applicant gave testimony on behalf of the Applicants. Throughout this Decision, the Tribunal will refer to him as the “Applicant.” The items under appeal will be dealt with separately or as a group, according to the complaints made by the Applicants.
The Added Party gave evidence on his own behalf.
Mr. Robert Sholtanuk gave evidence on behalf of Tarion. Mr. Sholtanuk is a Tarion Field Claims Manager. His Curriculum Vitae is found at Tab 30 of Exhibit #3. The Tribunal does not consider it necessary to set out all his credentials in this Decision. Suffice to say that, since 1976, he has had extensive experience as a building inspector, Senior Building Inspector, Manager of Inspections and Chief Building Official in a large municipality. He joined Tarion in 2004.
He completed training as an architectural technologist and has successfully completed numerous Ministry of Municipal Affairs and Housing Building Code Training Courses. His affiliations include the Building Official Code Administration International, the Ontario Building Officials Association and the Ontario Plumbing Inspectors Association.
The evidence of each of the witnesses relating to each item is summarized under each of those items.
Cement work on driveway and stone work above garage doors - Items 1, 2, 3, 4, 6
Evidence of the Applicant
The Applicant stated that the complaints about these items concerned the poor quality of cutting in the cement work on the driveway and the poor transition between the driveway and the adjoining sidewalk from both sides of the house. The complaints also involved the lack of arched stone work over the garage doors (Item #1).
After the cement was poured on the driveway, the Added Party made cuts. According to the Applicant, while the Added Party was cutting, cracks appeared in the sidewalk and gouges appeared along the cut lines, where cement was chipped away during the cutting.
The Applicant sent an e-mail about both matters to the Added Party, found at page labelled Mc16 in Exhibit #5. The Added Party responded by way of reply e-mail that he noticed the stress crack in the sidewalk, caused when the concrete was curing underneath while the top was still fresh. He stated that the chips along the cut line were common in the type of weather that occurred at the time of the cutting, although he did not describe the weather he was referring to.
The Applicant believed the matter involved a breach of the warranty that the work would be done in a workmanlike manner. He did not believe that the fault was due to heaving because no cement was poured onto the driveway from January, 2010, when the Applicants took possession, until April, 2010. By that time, the Applicant submitted that the sub-structure had enough time to compress, so that the cement did not crack due to heaving. The Applicants offered no evidence to support that assertion.
In the supplementary decision letter on page 184 of Tab 28 of Exhibit #3, Tarion’s Field Claim Representative, Mr. Sholtanuk, denied the warranty on the ground that there was no defect in work or materials that amounted to a breach of the Major Structural Defect Warranty or any applicable warranties.
On the matter of the lack of arched cement work over the garage doors (Item #1), the Applicant stated that they requested the arches. The cement work was, instead, built straight across the top of the garage doors. The Applicant referred the Tribunal to Schedule A of the agreement found on page 5 of Tab 1 of Exhibit #3. The final two paragraphs of that Schedule read as follows:
The Buyer and Seller shall both approve final blueprint prior to construction.
See Schedules A, B (Specifications) and C (preliminary blueprint) attached, forming part of this Agreement of Purchase and Sale.
On the last page of Tab 1 are found plans for the Applicants’ house. The drawing in the top left corner shows cement arches above the garage doors. The drawing appears to be part of Schedule C. The Applicant stated that they talked to the Added Party several times and told him that they wanted the style of arches shown in the diagram and that the Added Party agreed. During the bricking stage, the cement work was built straight across. The Applicant stated that, when he questioned the Added Party about the lack of arching, the Added Party told him that he had timelines to meet and that he was permitted to make changes under the agreement.
The Applicant asked the Added Party to change the cement work above the garage doors because the Added Party had made a design change that the Applicants had not authorized. In support of this request, the Applicant referred to paragraphs 52 and 51 of Schedule B of the agreement, found at page 8 of Tab 1 of Exhibit #3. Paragraph 52 reads as follows:
- No alterations, additions or deletions to the forgoing [sic] specifications shall be made by the Purchaser unless provided for [sic] specification change order duly signed by BOTH parties.
Paragraph 51 of Schedule B reads as follows:
- The builder reserves the right to substitute all materials with that of equal or better quality and also reserves the right to effect construction modifications necessitated by construction techniques or availability of materials. Purchaser to be consulted PRIOR to any changes.
(Emphasis is in the original clauses)
The Applicant testified that, contrary to paragraph 51, the Applicants were not consulted about the construction modifications over the garage doors prior to the changes having been made. The Applicants had not requested any changes pursuant to paragraph 52. If they had, the Added Party should have had the change documented by a specification change order signed by both parties, in accordance with paragraph 52.
The Applicant stated that the Tarion information package indicated that written change orders should be used when making changes. The Added Party did not provide the Tarion information package until after the closing of the transaction.
On cross-examination by Counsel for Tarion, the Applicant stressed that the arched stone work over the garage doors was the one feature of the house that the Applicants particularly wanted. The arched stone work is shown in the plans attached to the agreement, and indicated on page 12 of Tab 1 of Exhibit #3. There were no other plans presented to the Applicants that showed horizontal stone work. He stated that the Added Party did not inform the Applicants, contrary to paragraph 51 of Schedule B, that the stone work would be constructed horizontally across the garage doors, contrary to the plans attached to the agreement.
He strongly disagreed with the suggestion by Counsel for Tarion that the Applicant told the Added Party that the Applicants wanted the stone work to be horizontal and not arched.
Counsel pointed out that there were other final construction features in the house that were different from the plans attached to the agreement. The Applicants did not complain that the Added Party did not comply with Paragraph 51 concerning those differences. The basement was finished, whereas the plans provided that the basement was to be left unfinished. The front door was built with stone accents but the plans did not provide for stone accents. The Applicant responded that the most serious difference that the Applicants noticed was the lack of the arched stone work over the garage doors because that feature was important to them.
Concerning the cement driveway, the Applicant acknowledged that he knew that the reason for making the cuts in the driveway was to relieve pressure and stress from shrinkage. He knew the difference between a stress crack and a shrinkage crack.
On cross-examination by the Added Party, the Applicant acknowledged other final construction features in the house that were different from the plans that were attached to the agreement and for which the Added Party did not seek prior approval pursuant to paragraph 51. The Added Party installed six basement windows although the drawings called for three. The laundry room was placed on the main floor even though the plans showed that it was to be constructed in the basement.
The Added Party suggested that the Applicants had shown him the style of stone work that appeared on another house and that it was that style that the Applicants wanted on their house. The stone work over the garage on the other house was horizontal, not arched. The Applicant denied this. He stated that he wanted only the type of brick that was on the other house, not the style of stone work.
Evidence of Mr. Sholtanuk
Mr. Sholtanuk stated that there was a hairline crack where the sidewalk turns, on both sides of the house. The crack was virtually unmeasurable. He could not insert a feeler gauge or the smallest Allen wrench into it. He referred to Article 14.7 of the Construction Performance Guidelines, found at page 279 of Exhibit #4. That Article provides that cracks are acceptable if caused by factors other than a defect in work or materials provided by a builder. Normal shrinkage of materials caused by drying after construction is not covered by the statutory warranty. In this case, Mr. Sholtanuk believed the cracks were caused by shrinkage and were very slight. He did not consider them to be warranted because there was no defect in workmanship or materials.
As for the stone work above the garage doors (Item #1), he stated that the stone work was not an item of improper substitution because the agreement contained no provision that required the Applicants to select arched stone work over the garage doors. The Tribunal notes that Mr. Sholtanuk did not refer to the diagram on page 12 of Tab 1, Exhibit #3, which showed arched stone work over the garage doors. He also did not refer to the provision in Schedule A that provided that the preliminary blueprint, Schedule C, in which the arched stone work was shown, was made part of the agreement.
The Tribunal questioned Mr. Sholtanuk as to whether the stone work above the garage doors could still be arched after the house was completed. He stated that it could be. Three rows of brick would have to be removed as well as the stone currently in place. Suitable cladding would have to be placed over the face of the wall. It would require about two days’ work for a brick layer. There might be an issue about matching the mortar joints because the existing joints have had two years of weathering. There might also be an issue about matching the colour of the bricks.
Evidence of the Added Party
The Added Party stated that it was his “understanding,” to quote his testimony, that the Applicant showed him and his sales representative what they wanted to be built on their house based on what they showed the Added Party on a nearby house that was already constructed. Using that information, the Added Party instructed his mason to build the Applicants’ house the same way. The stone work over the garage doors was to be horizontal, not arched because the house that he says the Applicants showed him also had horizontal stone work over the garage doors.
The Added Party stated that the lintel over the garage doors with the horizontal stone work cost as much as an arched stone work because the latter does not need a lintel. He gave no figures or other evidence to support that statement.
Concerning the cracks in the cement, the Added Party stated that he has had experience with concrete for over twenty years. It is impossible to know where the stress cracks will occur. He never guarantees that there will be no cracks resulting from shrinkage. He declined to repair the cracks because the cement work complied with the provisions of the Construction Performance Guidelines. The cracks were already there at the time he made the cuts in the cement.
He stated that before he poured the cement, he had offered to install rebar to strengthen the cement, but the Applicants declined to have it installed.
Paint work on garage man door and on French doors - Item 13
Evidence of the Applicant
This item involved the quality of the paint work on the garage man door and on the French doors.
The Applicant stated that Mr. Sholtanuk did not assess this item in his decision letter of April 1, 2011 because the Added Party had not had time to paint the doors due to unsuitable weather.
The Applicant acknowledged that the doors had been primed on the outside, but not yet painted. After the doors had been painted, the Applicants complained that the paint began to peel when they started to use the doors. They asked to have the doors re- painted. Tarion refused. Because the painting of the doors was considered to be a seasonal item, the Applicants could have requested an inspection of the paint work but had not done so within the required time period. At page 186 of Exhibit #3, paragraph 34, Mr. Sholtanuk states:
You did not request an inspection between September 1 and September 31 [sic] 2010 to have this item assessed.
Evidence of Mr. Sholtanuk
Despite the fact that the Applicants had not requested an inspection in the proper time period, Mr. Sholtanuk testified that he inspected the garage man door and the French doors, nevertheless. He noticed that paint was chipped only around the door handle of the garage man door. The Applicant told him that he hit the door with his key at that location, and nowhere else. Mr. Sholtanuk saw no paint chips anywhere else on the doors. He did not see any peeling. He pressed his hand very hard against the door and the paint did not come off.
He did the same test and saw no peeling on the French doors in the master bedroom that opened onto the patio area.
He saw no defect in materials or workmanship. He did not consider the matter to be warranted.
Evidence of the Added Party
The Added Party stated that all the doors were factory primed when installed. At the request of the Applicants, the doors were painted a darker colour than provided for in the agreement. The painter sanded the doors and applied at least two coats of paint.
The Added Party saw no peeling, but did see scratches around the door handles of both doors.
Laundry room cabinets - Items 15 and 55
Evidence of the Applicant
This item involved the Applicants’ complaint that cabinets were not installed in the laundry room as provided for in the agreement.
Paragraph 32 of Schedule B of the agreement, found at page 8 of Tab 1 of Exhibit #3, states as follows:
- Cabinets to be installed in laundry room.
Paragraph 43 of Schedule B, found at page 9, states as follows:
- Cabinet allowance is $13,000 + counter tops.
The Applicants interpreted the above two paragraphs as two separate provisions; that is, the Added Party is to install cabinets in the laundry room. The Added Party is also to provide a kitchen cabinet allowance of $13,000.00 in addition to the cost of counter tops. The Applicant admitted that more than $13,000.00 was spent on cabinets in the house, without the installation of the laundry room cabinets.
The Applicant stated that Tarion denied this claim on the ground that, with the cabinets that the Added Party had already installed in the home, the Applicants had already exceeded their cabinet allowance of $13,000.00 without the laundry cabinets having been installed. Cabinets were not to be provided beyond the dollar value allotted. The matter was not considered to be within the scope of the statutory warranty. Tarion informed the Applicants that, although the claim does not fall within the statutory warranties provided under the Act, the Applicants might have other recourse for this complaint under the agreement.
On cross-examination, Counsel for Tarion referred the Applicant to paragraphs 46, 47 and 48 of Schedule B. Those paragraphs dealt with flooring, and not with cabinets, but Counsel drew an analogy between the provisions for flooring and those for cabinets. Paragraphs 46 to 48 read as follows:
Carpet on stairs and in all finished basement rooms.
Hardwood in all main floor rooms other than bathrooms and mudroom.
Flooring allowance is $13,000 (Lambton Tile One).
The Applicant agreed that the allowance of $13,000.00 in paragraph 48 included the cost of the hardwood, carpeting and tile throughout the house, referred to in paragraphs 46 and 47.
Counsel suggested that, using the same reasoning, paragraph 43, providing for a cabinet allowance of $13,000.00, should be read to include both the kitchen cabinets in paragraph 43 and laundry room cabinets in paragraph 32. The Applicant disagreed. He believed that paragraphs 32 and 43 should be treated separately.
The Applicant claimed the amount of $300.00 for laundry room cabinets, as shown in Exhibit #7, page 1, item #4. The Applicant obtained that figure by viewing a cabinet unit at a local building supply store. He admitted that there were probably cheaper units available.
Evidence of Mr. Sholtanuk
Mr. Sholtanuk testified that he saw no defects in materials or workmanship in the cabinets that were installed, so he did not consider the cabinets to be warranted. He stated that even though the laundry cabinets were not installed, the Applicants obtained a benefit elsewhere within the allowance of $13,000.00.
Evidence of the Added Party
The Added Party stated that the Applicants had dealt directly with a cabinet supplier in another city and spent $16,000.00 on kitchen cabinets. The Added Party paid for that and the Applicants reimbursed that extra amount over the allowance of $13,000.00 to the Added Party.
Since the allowance had already been exceeded, the Added Party did not install the laundry cabinets because he interpreted the phrase “cabinet allowance is $13,000” to refer to all cabinets throughout the entire house. The problem that the Added Party was experiencing was that he quoted a price to build the house at a cost per square foot. The extras that the Applicants had accumulated totalled over $32,000.00 above the estimated cost of the house, of which the Applicants paid only $13,000.00. A dispute arose when the Applicants did not pay the difference. The Added Party was not seeking the difference in these proceedings, but felt that it was unfair to have already installed the extras and to have the Applicants demand more in these proceedings.
In answer to questioning from Counsel for Tarion, the Added Party stated that he was able to find laundry cabinets for $125.00, compared to the cost of $300.00 advanced by the Applicant. No comparative descriptions were given of the differently priced cabinets.
Range hood - Item 16
Evidence of the Applicant
The Applicants purchased a range hood and had the Added Party install it. The Applicants expected the Added Party to reimburse them for the cost of the range hood. They paid $1,100.00 for the item (see Exhibit #6, page Mc29). After the pre-hearing in this matter, the Applicants submitted the lowest price that they could find for such an item in the amount of $999.99, found at page 7 of Exhibit #7, and, with HST added, submitted the figure of $1,300.00 as a settlement amount (Exhibit #7, page 1).
The clause in the agreement that refers to a range hood is clause 36, in Schedule B of the agreement, found on page 8 of Tab 1 of Exhibit #3. Clause 36 reads as follows:
- Hood fan in kitchen supplied and installed by builder.
The Applicant testified that, before buying the range hood, they did not have any discussion with the Added Party. They did not talk to him about being reimbursed at the time they had him install it. The first time that they sought reimbursement was when they completed their 30-Day Claim Form. They believed they should be reimbursed because they purchased a mid-priced range hood.
Contrary to Tarion’s decision letter in which Mr. Sholtanuk stated that the Applicants had withdrawn this claim, the Applicant was adamant in stating that they had not withdrawn it.
On cross-examination, the Applicant admitted to Counsel for Tarion and to the Added Party that he did not know whether the Added Party had one of its own range hoods available to install. He also admitted to Counsel for Tarion that the Added Party could probably have purchased a range hood for a price that was cheaper than the price the Applicants paid.
Evidence of Mr. Sholtanuk
Mr. Sholtanuk stated that a hood fan was installed at the time of his inspection. It was operating properly. He saw no defect in materials or workmanship.
Evidence of the Added Party
The Added Party stated that he is able to obtain range hoods at a cost of $500.00, including shipping. He always has them ready to install when the cabinets are installed. The Applicants asked him to install their range hood and he complied. He did not charge them for the installation. He stated that if he had known that they wanted reimbursement for the cost of their range hood, he would not have installed it because of the difference in cost between his unit and theirs.
In cross-examination by the Applicant, the Added Party acknowledged that he did not tell the Applicants that he had a range hood in his possession. He believed that the provision in paragraph 36 of the agreement spoke for itself.
Three toilets - Items 18, 39 and 66
Evidence of the Applicant
These items involved the cost of three toilets that the Applicants had ordered. The Added Party originally installed them in three bathrooms. After the Pre-Delivery Inspection Form (“PDI”) was completed, the Added Party removed and replaced them with toilets that the Applicants considered to be of lesser quality.
Tarion prepared a Warranty Assessment Report on August 4, 2010, that included this item. The Report is found at Tab 11 of Exhibit #3. The reference to this item is found at page 62 of Tab 11, referenced as item 98.
Tarion denied the warranty claim because the replacement units that the Added Party installed were working properly. There was no defect in workmanship or in materials. The builder switched the toilets because of a dispute over the extras that the Applicants did not pay for. As the Applicants did not pay the extra cost, Tarion held that they were not entitled to the upgrade in toilets.
The Applicant testified that there was no plumbing allowance in the agreement, so that there could not be an issue over extras related to the toilets. He contrasted Tarion’s reasoning about the extras related to this matter with Tarion’s reasoning that required the Added Party to install a faucet in the basement bathroom. That item is found at page 53 of the Warranty Assessment Report (Tab 11, Exhibit #3), referenced as item 92. Regarding the faucet, Tarion held that there was no cost allowance applicable. The Added Party had refused to install the faucet using the same argument that the Applicants had overspent their allowance. Tarion responded by saying that there was no specific allowance for plumbing fixtures in the agreement.
The agreement did say that the basement was to be finished with, among other things, a four-piece bathroom. A bathroom is not finished without the installation of the faucet; the faucet had to be installed because its absence resulted in a defect in materials that amounted to a breach of the One-Year Materials Warranty.
The Applicant reasoned that, if Tarion allowed the installation of a faucet on the ground that there was no allowance in the agreement, there was no reason to deny the warranty claim for the toilets on the ground that the Applicants had exceeded their extras for plumbing. The Applicants considered that both matters related to plumbing, for which there was no allowance in the agreement.
On cross-examination, by Counsel for Tarion, the Applicant acknowledged that he was the person who picked out the three toilets at a cost of approximately $559.00 each, plus tax. The Applicant acknowledged that the agreement did not provide that the Applicants were to select the toilets. The replacement toilets that the Added Party installed cost approximately $200.00 to $300.00 each. The Applicant acknowledged that the replacement toilets worked properly and that there was no defect in material or workmanship related to them.
Evidence of Mr. Sholtanuk
Mr. Sholtanuk testified that the replacement toilets that the Added Party installed were all CSA approved, were operating properly, had no defects and met the standards of the Ontario Building Code. There was nothing in the agreement that required the toilets to be of a particular type. Therefore, he did not consider the matter of the toilets to be warranted. On cross-examination by the Applicant, Mr. Sholtanuk acknowledged that the toilets that were removed were of greater value than the replacement toilets. The Tribunal notes that the agreement does not provide that any particular toilet be provided in the home.
Evidence of the Added Party
The Added Party filed Exhibit #8, a letter from his plumber stating that the Added Party’s usual plumbing costs were greater in the Applicants’ house by $5,725.00. That was the reason that the Added Party removed the more expensive toilets from the Applicants’ house and replaced them with the usual toilets that the Added Party installs in his houses. Those were the only items he could remove to try to reduce the extra plumbing costs that he was incurring in this project.
Shower and shower door - Items 36 and 37
Evidence of the Applicant
These items related to shower costs. Specifically, shower doors were not installed and the Added Party failed to install a larger acrylic shower unit with seat, as required by the agreement. Instead, the Applicants had a build-in ceramic large shower stall installed.
In the agreement, item #60 in Schedule B, found on page nine of Tab 1 of Exhibit #3, provides as follows:
- Ensuite in master to include a 6’ whirlpool tub, vanity with 2 sinks, raised vanity, larger acrylic shower with bench.
The Applicant stated that Tarion denied this claim. The Warranty Assessment Report, at Tab 11 of Exhibit #3 states, at page 61, item 68, that item #60 in the agreement makes no reference to a shower door. There are no change notices indicating that a shower door is to be installed. There is no defect in materials that amounts to a breach of the One Year Materials Warranty.
The Applicant testified that he sent the Added Party a description of the shower unit that the Applicants wanted to have installed in their home. The description of the unit included a door. It is found in Exhibit #7, at the page labelled as Mc32. Although the page was printed on August 24, 2009, there was no evidence as to when it was sent to the Added Party. That unit was not installed because it could not fit through the framing. Consequently, the Added Party had to build a shower in place. It was a tile-walled shower. It was not acrylic, but it had a bench.
The Applicants purchased a door for the shower at a cost of $1,299.50, as shown on the invoice dated January 28, 2011, found in Exhibit #7, on page labelled as Mc38.
The Applicant testified that the Applicants paid $850.00 for the extra tiling costs for the build-in shower, shown as item #69 in their Summary Proposal on page 2 of Exhibit #7. The Tribunal notes that item #69 includes the cost for the complete installation of master bath tile, floor, walls and shower.
On cross-examination, the Applicant acknowledged that, when the Applicants submitted their 30-Day Claim Form, the shower was functioning properly. They were using a shower curtain until they installed a shower door in February, 2011.
The Applicant acknowledged that the agreement did not state that a shower door was to be provided. Although the Applicants showed the Added Party the shower unit that they wanted to be installed, with a door, the Applicant conceded that the agreement did not refer to that particular unit as the one that was to be installed. The agreement did not entitle the Applicants to make a selection of the shower unit. The Applicant further acknowledged that the agreement called for an acrylic shower and that it specified that it was to have a bench but it did not specify that it was to have a door. The Applicant further admitted that he did not know whether the build-in shower cost more than the shower unit for which they contracted.
Evidence of Mr. Sholtanuk
Mr. Sholtanuk confirmed that he did not warrant this item because a shower door was not included in the agreement. He stated that, although the Applicants did not receive an acrylic shower, they did receive a shower that was framed and tiled and that had an acrylic base and a bench. His opinion, based on his years of experience, was that the shower that the Applicants received was of a quality equal to or better than that of the shower provided for in the agreement. Therefore, he considered the build-in shower to be a proper substitution.
Evidence of the Added Party
The Added Party stated that his plumbers installed two shower units but had to rip out both because the Applicants did not approve of them.
The plans found on page 12 of Tab 1 of Exhibit #3 show that the shower was to be four feet wide and a standard 32 inches deep. The shower actually installed was five feet wide and was a “custom” shower because it was tiled. The Added Party pointed out that the agreement does not state that the shower is to be a “custom” shower, but that is what the Applicants received.
On cross-examination by the Applicant, the Added Party acknowledged that he did not install the “Master Shower” that the Applicant had shown to him, found in Exhibit #6, on the page labelled as Mc33. The Added Party and the Applicant discussed the matter and the Applicant did not want to pay the price of the unit, shown to be $6,000.00. It was agreed to install a five foot shower.
The Added Party further acknowledged that there was no plumbing allowance in the agreement, but the Added Party’s plumber always told him what his extras were over the usual costs, as shown in the letter, Exhibit #8.
Installation of flooring - Item 41
Evidence of the Applicant
The Applicant stated that they had to pay an invoice for the installation of flooring even though the Added Party was obligated to install by the terms of the agreement. The Applicant could not understand why they had to pay for the installation when the installation was provided for in item 47 of the agreement.
Item 47 of Schedule B of the agreement, found on page nine at Tab 1 of Exhibit #3 states as follows:
- Hardwood in all main floor rooms other than bathrooms and mudroom.
Item 48 provides for an allowance for flooring as follows:
- Flooring allowance is $13,000 (Lambton Tile One).
The Applicant referred the Tribunal to an invoice from a hardwood installer, found in Exhibit #7, at page labelled Mc30. The amount of the invoice was $3,071.25 for the labour in the installation of 1,300 square feet of maple flooring.
The Applicants were billed for this on closing. The invoice does not state where the flooring was installed, but the Applicant stated that it was on the main floor. The Applicant stated that he had one of the Added Party’s sub-contractors install it. He admitted to Counsel for Tarion that the flooring was not incomplete or defective either in workmanship or materials.
Evidence of Mr. Sholtanuk
Mr. Sholtanuk stated that the Applicants told him that they would withdraw this claim and would deal with it “in litigation”, to quote Mr. Sholtanuk. The only issue relating to this matter was the question of who paid for the item, the Applicants or the Added Party. That issue was not a question of warranty. The Applicants did not challenge Mr. Sholtanuk on that testimony.
Evidence of the Added Party
The Added Party stated that the Applicants dealt with another flooring company and not with the company specified in the agreement. As a result, their flooring costs exceeded the allowance in the agreement. The Added Party stated that he could have stayed within the flooring budget of $13,000.00 if the Applicants had dealt with the company named in the agreement. He paid for the hardwood, so he could not understand why the Applicants maintained that they paid for the installation. The Applicants spent
$21,063.90 for the hardwood. That figure was $8,063.90 over the allowance in the agreement.
On cross-examination by the Applicant, the Added Party acknowledged that the Applicants had paid the extras for flooring.
Noise in ductwork - Item 48
Evidence of the Applicant
This item involved noise in the ductwork that occurred when the furnace came on. The Applicant described the noise as a contraction/expansion type of noise that occurred whenever the heating cycle started. The noise would last about five or ten minutes.
The Applicant complained about it on the 30-Day Claim Form, but the Added Party did nothing about it. In the Warranty Assessment Report, Tarion denied the claim. On page 61 of Tab 11 of Exhibit #3, item 80, the Report states that the Construction Performance Guidelines provide no warranty for duct expansion. There was found to be no defect in materials that amounted to a breach of the One Year Materials Warranty. The materials met the standard of the Construction Performance Guidelines. The Report was done in the summer so the problem could not be tested. The problem would arise when the furnace was turned on and when the outside temperature was about 0 degrees Celsius.
After receiving the Report, the Applicant obtained an estimate for a possible repair of the problem. The estimate is found in Exhibit #7 on the page labelled as McSettlement Document 3 (second-last page in Exhibit #7). The proposed corrective measure involved cutting into the drywall of the finished basement ceiling, cutting into the ductwork and then installing a canvas flexible duct connector in the main trunk line. The estimated cost is $400.00. The cost did not include any drywall repair. No work had been done as at the time of the hearing. The Applicants continue to complain about the noise.
Evidence of Mr. Sholtanuk
Mr. Sholtanuk stated that the noise was in the ductwork, not in the furnace. He heard no noise because, at the time of year that he made his inspection, there was no need to start the furnace. He referred to Article 8.11 of the Construction Performance Guidelines, found at Tab 29 of Exhibit #3. The Article states that ductwork may make noise as it expands and contracts during heating and cooling cycles. Mr. Sholtanuk stated that the noise “just happens,” to use his words. The noise does not represent a defect in workmanship or materials.
In response to questioning from the Tribunal, Mr. Sholtanuk stated that the remedy that is proposed in the estimate which the Applicant presented does not guarantee that the Applicants will be rid of the problem because the expansion may occur somewhere else along the ductwork. There are no guarantees for such a remedy. Tarion does not guarantee perfection in the quietness of the heating system.
Evidence of the Added Party
The Added Party emphasized that the ductwork met the standards of the Construction Performance Guidelines and was approved by the local city inspector.
THE LAW
The sections of the Act relevant to this decision are set out below. The Act states:
- (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.
The Act sets out exclusions to which the warranties in section 13(1) do not apply. The exclusions relevant to the case now before the Tribunal are as follows:
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) …
(d) normal shrinkage of materials caused by drying after construction; …
(g) alterations, deletions or additions made by the owner;
- (3) Subject to the regulations, an owner of a home is entitled to receive payment out of the guarantee fund for damages resulting from a breach of warranty if,
(a) the person became the owner of the home through receiving a transfer of title to it or through the substantial performance by a builder of a contract to construct the home on land owned by the person; and
(b) the person has a cause of action against the vendor or the builder, as the case may be, for damages resulting from the breach of warranty.
(6) In assessing the amount for which a person is entitled to receive payment out of the guarantee fund under this section, the Corporation shall take into consideration any benefit, compensation, indemnity payable, or the value of work and materials furnished to the person from any source.
(7) The Corporation may perform or arrange for the performance of any work in lieu of or in mitigation of damages claimed under this section.
(3) Where a person or owner gives notice in accordance with subsection (2), the Tribunal shall appoint a time for and hold the hearing and may by order direct the Corporation to take such action as the Tribunal considers the Corporation ought to take in accordance with this Act and the regulations, and for such purposes the Tribunal may substitute its opinion for that of the Corporation.
The Tribunal’s remedial powers are set out in the Act and include the power to direct a payment out of the compensation fund or to order Tarion to perform work or arrange to perform work.
Sections 18 and19 of R.R.O. 1990, Regulation 892, provide for warranties relating to substitutions in the construction of a new home. The sections provide as follows:
- (1) Every vendor of a new home warrants to the owner that the vendor shall make no substitutions in those items of construction or finishing for which the purchaser is entitled to make selection pursuant to the purchase agreement without the written consent of the purchaser.
(2) Subsection (1) does not apply where,
(a) the purchaser, having been notified, does not make a selection within thirty days after executing the purchase agreement or within such other time period as may be agreed; or
(b) an item selected under clause (a) is not available and the purchaser does not make a selection within seven days of receiving written notice from the vendor or within such other time period as may be agreed that the item is unavailable.
(3) Every vendor of a new home warrants to the owner that where the purchaser fails to make a selection under clause (2) (a) or (b) that the vendor will make a selection on the purchaser’s behalf that is of equal or better quality than the original selection as set out in the purchase agreement.
- Every vendor of a new home warrants to the purchaser that, where the vendor makes a substitution with respect to an item that is referred to in the purchase agreement that is not an item that is to be selected by the purchaser, the item will be of equal or better quality than the item referred to in the purchase agreement.
APPLICATION OF LAW TO THE FACTS
Cement work on driveway and stone work above garage doors - Items 1, 2, 3, 4, 6
Concerning the cracks in the cement, the Tribunal accepts the evidence that the cracks were in existence at the time the Added Party did the cutting. The Tribunal also accepts the evidence that the cracks were due to shrinkage and not due to defects in materials or workmanship.
The evidence of Mr. Sholtanuk was that the width of the cracks was virtually unmeasurable. Article 14.7 of the Construction Performance Guidelines states that normal shrinkage of materials caused by drying after construction is not covered by the statutory warranty.
Section 13(2)(d) of the Act excludes from the warranties under section 13(1) normal shrinkage of materials caused by drying after construction.
Considering the evidence and the statutory provision, the Tribunal concludes that the cracks in the driveway cement are not warranted.
As for the stone work above the garage doors (Item #1), the Tribunal concludes that the construction of a horizontal stone work instead of an arched stone work is warranted.
The Tribunal accepts the evidence of the Applicants that the arched stone work over the garage doors was the one feature of the house that they particularly wanted. The Tribunal notes that the arched stone work is clearly shown on the plans attached to and made part of the agreement that the Applicants and the Added Party signed. No other plans were provided to the Applicants that altered that feature.
The Tribunal does not accept the Added Party’s testimony that the Applicants instructed him to construct the stone work horizontally. The Added Party states that such instruction was his “understanding.” It is unreasonable and illogical to conclude that the Applicants would have provided that instruction considering that an arched stone work was of particular significance to them.
Counsel for Tarion argued that the Applicants have not shown that the horizontal stone work was a substitution that was not of equal or better quality than the arched stone work, relying on section 19 of Regulation 892, referred to above. The Tribunal disagrees with Counsel’s submission. If a vendor makes a substitution in accordance with section 19, it is the vendor who must warrant that the substitution is of equal or better quality. Section 19 states:
- Every vendor of a new home warrants to the purchaser that…the item will be of equal or better quality than the item referred to in the purchase agreement.
In this case, the only evidence that addresses the quality of the horizontal stone work is from the Added Party who stated that the lintel over the garage doors with the horizontal stone work costs as much as an arched stone work because the latter does not need a lintel. He did not provide any figures to support that evidence. Aside from the cost, there is no evidence before this Tribunal as to the quality of the work that was done. There was no evidence that cost necessarily can be equated with quality, and the Tribunal should not make that assumption.
It has long been held that the Act is remedial consumer protection legislation and should be liberally construed and should be given a fair and liberal interpretation. [see Mandos
v. Ontario New Home Warranty Program 1995 CanLII 3158 (ON CA), [1995] O.J. No. 3647 (Ontario Court of Appeal); Markey v. Tarion Warranty Corporation [2006] O.J. No. 2929 (Ontario Superior Court of Justice, Divisional Court); Cecilio v. Tarion Warranty Corp. [2007] O.J. No. 1692 (Ontario Superior Court of Justice, Divisional Court); Grudzinski v. Ontario New Home Warranty Program 1997 CanLII 16252 (ON CTGD), [1997] O.J. No. 291; 32 O.R. (3d) 376, Divisional Court of the
Ontario Court (General Division)].
The plans in the agreement clearly showed arched stone work. The Tribunal accepts the evidence that the Applicants did not give instructions to make any changes to the plans. The arched stone work was not constructed. Giving the provisions of the Act a fair and liberal interpretation, the Tribunal considers the construction of the horizontal stone work, on the particular facts of this case, to be a defect in workmanship.
Paint work on garage man door and on French doors - Item 13
The Applicant testified that the paint on the garage man door and on the French doors was peeling. His claim was not made in time. Notwithstanding the lateness of the claim, Mr. Sholtanuk made an inspection. He saw no evidence of peeling paint on his inspection. He saw evidence of chipped paint around the door handles where the Applicant admitted hitting the door with his key.
The evidence falls short of proving on a balance of probabilities that there was any defect in materials or workmanship relating to this item.
The Tribunal concludes that the claim for this item is not warranted.
Laundry room cabinets - Items 15 and 55
The Applicants’ complaint was that the laundry room cabinets were not installed as paragraph 32 of Schedule B provided.
The Added Party’s position was that the Applicants had exceeded the cabinet allowance of $13,000.00 without the laundry cabinets having been installed, so that the Applicants already received the benefit of the cabinet allowance. The Added Party did not feel that he had to install any more cabinets.
Mr. Sholtanuk, on his inspection, saw no defect in materials or workmanship in the cabinets that were installed. He did not consider the cabinets to be warranted. The decision letter stated that the matter was not considered to be within the scope of the statutory warranty.
Counsel for Tarion argued, among other things, that the dispute between the Applicants and the Added Party was a contractual dispute and was not a matter involving a warranty under the Act. The Applicants did not complain that the cabinets were defective in materials or workmanship. Their complaint was that the Added Party did not complete the contract. Their dispute was contractual in nature.
In support of his argument, Counsel referred the Tribunal to a decision of this Tribunal, 5506-ONHWPA-Claim, released October 21, 2009. In that case, the learned Vice-Chair states, at page 5:
By virtue of section 16(3), this Tribunal has no over-arching authority to provide redress or remedies outside of the Act. Its authority is limited to actions Tarion can take “in accordance with the Act and Regulations”.
The legislation does not give Tarion the authority to remedy injustice or inadequacy in contracts between homeowners and builders. Its statutory powers do, however, include authority to review homeowner warranty claims. Only where an enumerated warranty breach is verified, may it provide a homeowner with specified methods of redress including payment from the guarantee fund set up under the Act.
Therefore, the fact that the Agreement contained a provision, the fulfillment of which is subject to dispute, is not a matter over which either Tarion or this Tribunal has jurisdiction. It is, rather, a private contractual matter for which redress is available from the courts…
(Emphasis is added)
The Tribunal agrees with the submission of Counsel for Tarion and adopts the reasoning in the above case as applicable to the case now before this Tribunal. The Applicants have presented no evidence of defective materials or workmanship related to the cabinets that the Added Party installed. Their dispute is that the Added Party has not done enough under the contract. Using the reasoning in the above case, that issue is not a matter over which either Tarion or this Tribunal has jurisdiction. It is a private contractual matter for which redress is available from the courts.
The Tribunal concludes that this matter is not warranted.
Range hood - Item 16
The Applicants disregarded paragraph 36 in Schedule B of the agreement that provided that the Added Party would provide and install the range hood. Without informing the Added Party that they would purchase their own range hood, they acquired their own, had the Added Party install it and requested reimbursement for it only at the time the Applicants completed their 30-Day Claim Form.
The evidence that the Tribunal accepts is that the Added Party had a range hood in his possession and ready to install. It was less expensive than the range hood that the Applicants had purchased.
There was no agreement that the Added Party would reimburse the Applicant for the range hood.
Mr. Sholtanuk stated that the range hood was operating properly at the time of his inspection. There was no defect in workmanship.
Considering the above evidence, the Tribunal concludes that this item is not warranted. It is a claim for reimbursement that would not have been necessary had the Applicants permitted the Added Party to proceed in accordance with paragraph 36, as the Added Party was entitled to do.
Three toilets - Items 18, 39 and 66
The agreement did not specify the type of toilets that the Added Party was to install in the Applicants’ house. It did not give to the Applicants a right to select certain types of toilets.
The Applicants’ position is that there was no plumbing allowance stipulated in the agreement. Counsel for Tarion argued that the absence of an allowance combined with the absence of the right to select a particular item does not give the Applicants the freedom to select any item they wish at any price and expect the Added Party to install it and remain within the purchase price agreed upon by the parties in the agreement. The Tribunal agrees with that submission.
At the time of his inspection, Mr. Sholtanuk stated that the units that the Added Party installed were functional, were all CSA approved, and complied with the Ontario Building Code. There were no defects in materials or workmanship.
The Applicants may have an objection to the type of toilets that the Added Party installed to replace those that the Applicants purchased, but the agreement did not specify the type to be installed and did not give the Applicants the right of selection. In the absence of any evidence that there was any defect in materials or workmanship in the toilets that the Added Party installed, the Tribunal concludes that this item is not warranted.
Shower and shower door - Items 36 and 37
The Tribunal accepts the evidence that the agreement did not contain a provision that a shower door was to be provided and that the agreement was not altered. Paragraph 60 in Schedule B is silent on the matter.
Counsel for Tarion submitted that paragraph 60 is specific enough to provide for a bench. Had a door been intended, the paragraph would have been specific about that item as well. The Tribunal agrees with that submission.
The Applicants used a shower curtain for a year before they obtained a shower door. The shower was functional for that year. The Applicant admitted that on cross- examination. There was no evidence of any breach of warranty of workmanship or materials.
As for the shower itself, the agreement did not entitle the Applicants to select a particular shower unit. The build-in tile shower was five feet long, making it a large shower. It had a bench. Mr. Sholtanuk considered that the build-in shower was of a quality equal to or better than that of the shower provided for in the agreement. It was, therefore, a proper substitution. There was no defect in materials or workmanship.
Considering all the above evidence, the Tribunal concludes that this item is not warranted.
Installation of flooring - Item 41
The Applicants provided no evidence to the Tribunal that there were any defects in workmanship or materials related to the flooring that was installed in their home.
The only dispute related to this item involved the obligation to pay for the flooring. The Applicants state that they paid for it. The Added Party states that he paid for it. That dispute is not a matter over which the Tribunal has jurisdiction to adjudicate.
As stated earlier in these Reasons, relying on 5506-ONHWPA-Claim, this issue involves a private contractual matter and does not involve the statutory warranties under the Act.
For the above reasons, the Tribunal concludes that this item is not warranted.
Noise in ductwork - Item 48
The Tribunal accepts the evidence of Mr. Sholtanuk, who has had many years of experience as a building inspector. He stated that the contraction/expansion noise that the Applicant described does not represent a defect in materials or workmanship. The warranties under the Act do not provide for a perfect or silent heating system. Article
8.11 of the Construction Performance Guidelines confirms that ductwork may make noise as it expands and contracts during heating and cooling cycles.
The Applicant offered a solution by way of the estimate from a heating and air conditioning business at a cost of $400.00. A representative of that business was not present to give evidence of the possible effectiveness of the proposed remedy. Mr. Sholtanuk stated that the proposed remedy is no guarantee that the Applicants will be rid of the problem. The expansion may be transferred somewhere else along the ductwork.
The Applicants have not proved, on a balance of probabilities, that the noise in the ductwork is a breach of warranty of workmanship or materials. Accordingly, the Tribunal concludes that this item is not warranted.
CONCLUSION
The Applicants have the onus of proving their case on a balance of probabilities. The Tribunal concludes that they have failed to satisfy that onus except with regard to the claim related to the stone work above the garage doors (Item #1). Save for that one item, there was no evidence of a defect in workmanship or materials or of a violation of the Ontario Building Code relating to the other claims.
Having regard to the particular facts of this case and the applicable statutory and regulatory provisions, and the cases referred to, the Tribunal concludes that the construction of the horizontal stone work above the garage doors instead of an arched stone work (Item #1), is a defect in workmanship and, therefore, a warranted item that requires repair.
ORDER
For the reasons stated above, and pursuant to the authority vested in it by section 16(3) of the Ontario New Home Warranties Plan Act, the Tribunal dismisses the appeal related to all claims except the claim related to the stone work above the garage doors (Item #1), and orders Tarion Warranty Corporation to disallow the remaining claims of the Applicants as not warranted.
For the reasons stated above, and pursuant to the authority vested in it by section 16(3) of the Ontario New Home Warranties Plan Act, the Tribunal allows the appeal of the Applicants as it relates to the stone work above the garage doors (Item #1) and holds that that item is a warranted item and directs Tarion Warranty Corporation to have repairs made and to have an arched stone work constructed over the garage doors and to afford to the Applicants the statutory warranties that relate to the new construction to which the Applicants are entitled under the Act.
LICENCE APPEAL TRIBUNAL
Kenneth W. Koprowski, Vice-Chair
RELEASED: December 23, 2011