Licence Tribunal

Appeal d'appel en Tribunal matière de permis

DATE: 2012-07-09

FILE: 7103/ONHWPA

CASE NAME: 7103 v. Tarion

An Appeal of a Decision of Tarion Warranty Corporation under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O. 31 – to Disallow a Claim

Applicant Applicant

-and-

Tarion Warranty Corporation Respondent

-and-

Crestvale Holdings Inc. Added Party

REASONS FOR DECISION AND ORDER

ADJUDICATOR: Mary Ann Spencer, Member

APPEARANCES:

For the Applicant: Self-represented

For the Respondent: Marshall Reinhart, Counsel

For the Added Party: Brian Barnett, Agent

Heard in Toronto: July 9, 2012

REASONS FOR DECISION AND ORDER

This is an appeal by the Applicant to the Licence Appeal Tribunal (the “Tribunal”) from a Decision Letter of Tarion Warranty Corporation (“Tarion”) dated November 21, 2011 with respect to a new home purchased from Crestview Holdings Inc. (the “Added Party”), in which Tarion denied the Applicant’s claim.

FACTS AND EVIDENCE

The Applicant’s home was completed for possession on April 30, 2009. On April 29, 2011, the Applicant completed Tarion’s Second Year Statutory Warranty Form. On November 2, 2011, the home was inspected by Tarion Field Claim Representative Thomas Hollmann, accompanied by a second Tarion representative, and by Brian Barnett, the representative of the Added Party. Tarion issued a Warranty Assessment Report on November 4, 2011 and its Decision Letter on November 21, 2011. The Decision Letter sets out the items which are the subject of the Applicant’s appeal:

1. Window frames are cracked from outside. Water penetration from roof of house.

2. Large gaps between window frames and wall.

The evidence of the Applicant comprised a book of documents (Exhibit 3) and his own testimony. Tarion’s evidence comprised a book of documents (Exhibit 4), the book of documents filed by the Added Party (Exhibit 5), and the testimony of Tarion Field Claim Representative Thomas Hollmann and of the Added Party’s representative, Brian Barnett.

Thomas Hollmann has been employed by Tarion as a Field Claim Representative for five years. His role is to inspect reported deficiencies and to assess claims for warranty coverage based on his observations, his experience, Tarion’s Construction Performance Guidelines and the Building Code. Mr. Hollmann studied architecture, worked for a builder as a site supervisor before joining Tarion and holds a certificate from the Ministry of Municipal Affairs and Housing in Part 9 of the Ontario Building Code.

Mr. Barnett has been employed as a construction site supervisor for fourteen years by the Added Party. His role is to supervise all aspects of home building, including scheduling and ordering trades at the appropriate stage of construction. Mr. Barnett has direct experience in window installation.

Item One: Cracked Window Frames; Water Penetration from Roof

There is no dispute that two ground floor windows in the Applicant’s home have cracks along the bottom horizontal portion of the outside frames. Photographs submitted by the Respondent show one window frame has an irregularly curved crack and the other has a smaller crack with a small piece broken off the frame. Warranty coverage was denied by Tarion on the basis that “items of damage of this nature are only covered under the first year warranty”.

The Applicant testified that he believed the cracks in the window frames were the result of poor materials and workmanship. He stated that temperature variations were the cause of the cracks and had the frames been properly installed, they would not have broken. He argued that the frames show no evidence of any impact which might have caused the breakage and referred to Tarion’s photographs to support his position.

In response to questions from Mr. Reinhart, the Applicant stated he had no experience in either the construction industry or with window installation and added that while he was not sure of the cause of the window frame cracks, he was sure that it was not impact. He agreed that the cracks had not been included on the Pre Delivery Inspection (“PDI”), the 30 Day or the Year End forms submitted to Tarion. He explained that he did not inspect the outside of the home for the 30 Day report because the property had not been landscaped and it was too muddy to walk outside. He discovered the cracks “about a year later” but because the landscaping was completed in approximately September/October, 2009, winter weather then prevented him from completing a full inspection outside.

Mr. Hollmann testified that he inspected the cracked window frames on November 2, 2011. He stated the cracks on both are consistent with some type of impact or the application of excessive pressure. He pointed out that the unbroken lines of caulking shown in the photographs of the frames demonstrate that the caulking had been applied along an unbroken frame. Therefore, his conclusion is that the frames were damaged some time after installation. He also testified that the Applicant, who was present during the inspection, expressed no concerns relating to water penetration through the cracks. Rather, his concerns were with the breakage itself.

When asked by the Applicant why he did not mention impact in his observations in the Warranty Assessment Report, Mr. Hollmann stated that the cracks in the frames could also be the result of pressure or hail, for example. Referring to the photograph of the frame with a missing piece, the Applicant pointed out that caulking can be seen in the area where the piece is missing and questioned Mr. Hollmann’s statement that the caulking was done before the damage was present. In response, Mr. Hollmann explained that when it was applied, wet caulking would have moved under the gap between the frame and the window.

Mr. Barnett testified that the builder works to repair items that fall under the terms of the Tarion warranty and tries to please the homeowner. On May 16, 2011, “Billy”, a representative of the builder, attended at the Applicant’s home to inspect the items reported by the Applicant on the Second Year form. The builder compiles a service report which lists each reported item and includes the date and time of the service appointment and any notes made by the builder representative (Exhibit 5). With regard to the two cracked window frames, the notes on the May 16, 2011 service report indicate they were not included on the PDI, 30 Day or Year End Report.

The Added Party conducted a follow up inspection on October 13, 2011. Mr. Barnett inspected the window frames as part of the November 2, 2011 inspection. He concluded that the cracks appear to be the result of impact. When asked by Mr. Reinhart to theorize on their potential cause, he stated that because the houses are very close together, the damage could have been caused by a contractor installing a fence or gates between them.

With respect to water penetration from the roof of the Applicant’s home, there is no dispute that a crack in the aluminium valley flashing on the roof of the Applicant’s home resulted in water penetration. At the time of the November 2, 2011 inspection, the flashing had been repaired by the Added Party. However, a water stain on the dining room ceiling had not yet been repaired. The repairs were warranted by Tarion and have now been completed.

The Applicant testified that while both the flashing and ceiling damage have been repaired, he does not know whether the water leak caused damage inside the walls of his home and he believes Tarion should have undertaken further investigation to make this determination. He stated that mould could be growing and this would be a potential health issue. In response to Mr. Reinhart, the Applicant stated that he has not undertaken any investigation himself because of both the expense of opening a portion of the walls and the fact that he would have to live with a hole in the wall for perhaps two to three months.

Mr. Hollmann testified that he observed a water stain on the dining room ceiling at the time of his inspection. In his opinion, the size of the ceiling stain and its slight colour change would result from a minimal amount of water. He indicated that there are cases where destructive testing would be done to determine if mould is present. This type of testing was not performed at the Applicant’s home because the stain was small and the leak was no longer active. Mr. Hollmann did inspect the attic of the Applicant’s home and saw no damage.

On cross-examination by the Applicant, when asked how he could know whether or not mould was present between the walls of the Applicant’s home, Mr. Hollmann stated that he found no indicators, one of which is smell, when he conducted his inspection. He added that, in his experience, if the home had mould, it would have been on the dining room ceiling where the water had accumulated.

Mr. Barnett testified that the water stain on the dining room ceiling was slight and very hard to see. He stated that the only way to determine if damage had occurred between the roof and the dining room ceiling would be to open the walls. He has dealt with mould issues in other homes and his experience has shown that it develops from standing water. He observed nothing in the Applicant’s home to indicate there might be mould present. On cross examination, the Applicant asked Mr. Barnett how long mould takes to develop and how he could be certain there was no mould present. Mr. Barnett responded that it takes some time for mould to form, that there are many factors which contribute to its formation and re-iterated that, in his opinion, there was no evidence of the presence of mould in the Applicant’s home.

Item 2 Gaps between Window Frame and Wall

There is no dispute that there are gaps between the walls and the frames of windows on the second floor of the Applicant’s home and that some of those frames show evidence of water damage. The November 21, 2012 Decision Letter states that the water damage observed was consistent with damage due to condensation. It is also noted that California shutters are installed on the Applicant’s windows and that window coverings can prevent air flow. Tarion denied warranty coverage on the basis that the item falls within the scope of coverage provided for one year after the date of possession and the Applicant’s claim was submitted after the expiry of the one year warranty.

The Applicant introduced photographs which show both gaps of five to eight millimetres between the walls and the frames of windows on the second floor of his home (Exhibit 3, marked pages 5 through 9 of 17) and water damage on the lower horizontal portion of some of the frames. The Applicant testified that he did not believe the window frame gaps are caused by condensation as set out in the Tarion Decision Letter. He uses both a humidifier and a dehumidifier in his home and the humidity levels are kept between 40 and 50%. Further, the Applicant does not believe the installation of California shutters on the windows has caused the gaps. He referred to pictures of identical windows in a neighbour’s home, some of which have no gaps where shutters identical to his are installed, and some of which have similar gaps where no shutters are installed (Exhibit 3, marked pages 10 through 16 of 17).

The Applicant also referred to a photograph (Exhibit 3, marked page 17 of 17) which shows a water mark on the wall below a window and stated the mark is from water penetration resulting from “poor workmanship, bad materials and bad installation”. He introduced a letter dated January 30, 2012 from the installer of the California shutters (Exhibit 3) which states that the shutters are not the cause of the gaps, and a building inspection report, also dated January 30, 3012 which, in summary, states that gaps are present and should be professionally repaired.

On cross-examination, the Applicant agreed that the window frame gaps were not included on the PDI or 30 Day report he submitted to Tarion and therefore were not present at the time the windows were installed. Nor was the claim included on the Year End report. He agreed that his concern was that water was penetrating from outside but stated he had no pictures to support that this was the case because steady rainfall of two to three days would be required for him to record the water entering. He also agreed that he had no report which identified the source of the water damage.

The Applicant stated that when the California shutters were installed in July 2009, he was advised to keep them slightly open to allow air to circulate. In January 2012, when the installer viewed the shutters, the Applicant was told he was maintaining them well. The Applicant agreed with Mr. Reinhart that the installer did not identify the cause of the gaps, but only identified what the cause was not. He then reiterated that humidity and shutters were not the cause of the problem, stating that the shutters at his neighbour’s home, where there are no gaps, were installed by the same company in the same way. He also stated that he has shutters installed throughout his home yet gaps appear only on the second floor windows notwithstanding that humidity should be more of a problem on lower floors because moist air is heavier. The Applicant then suggested that when the windows were installed, moisture in the wood on the second floor would have had less time to evaporate than moisture in the wood on the ground floor. Because the wood on the second floor was “too soggy”, subsequent evaporation has caused the wood to shrink and the gaps to appear. The Applicant indicated that the house was built in winter and the wood likely sat outside in the snow accumulating moisture.

With regard to the home inspection report, the Applicant agreed with Mr. Reinhart that the report neither identified a cause of the window frame gaps nor did it suggest a method or cost of repair. The Applicant advised that the inspector did not perform a water test and agreed that the inspection report provides no indication that water is penetrating from outside. The Applicant agreed he also had no written estimates of the cost of repair but indicated that the inspector had verbally suggested the cost would be $600 to $1000 per window. He also referred to a May 9, 2012 e-mail he sent to Tarion in which he wrote that the cost of repair would be $535 per window (Exhibit 3). Finally, the Applicant agreed that he had no evidence of the cause of the damage or of water penetration and repeated that it would only be possible to obtain this evidence if it rained for two to three days.

Mr. Hollmann testified that the California shutters in the Applicant’s home have been installed using a metal frame which has been attached to wood window frames. Referring to Tarion’s photographs, he pointed out a screw has been driven diagonally into the corners to attach the metal frame to the wood and suggested this method of installation could have caused the frames to torque, resulting in the gaps. Referring again to the photographs, he stated that, in his opinion, it is obvious that the damage to the window frames has resulted from long term exposure to water. He suggested that the metal frame used to install the shutters was creating a dam which would hold water dripping from window condensation and noted the water damage is more severe on the bottom wooden frames. He further noted that the pictures provided by the Applicant of his neighbours’ windows show their shutters were installed by hinges without a metal frame.

With regard to the Applicant’s supposition that the gaps in the frames result from wet wood being used in their construction, Mr. Hollmann stated it was “not possible” in his opinion. Wood would only absorb water if there was excessive exposure. He testified that builders typically order lumber by stage of construction and given short construction time frames, wood would not normally be exposed for any length of time. Further, he noted that the second floor of the Applicant’s home contains bathrooms which typically have higher humidity levels than other room and, that warm air, which holds moisture better than cold air, rises. He stated it was therefore “extremely probable” that the humidity levels are higher on the second floor of the Applicant’s home than on its open concept ground floor.

On cross-examination, the Applicant pointed out that in the third picture submitted by Tarion, there is water damage on the window frame but no gap between the frame and the well. Pointing out that this window has a screw inserted diagonally in the corner to attach the metal frame; he asked why Mr. Hollmann believed the gaps were the result of over torquing. Mr. Hollmann replied that not all windows would have the problem but stated the fact screws were used could result in over-torquing of the wood. When asked what evidence there was to support this view, Mr. Hollmann replied that the gaps themselves are the evidence. When asked how he concluded condensation was the cause of water damage when he had seen no condensation on his November 2, 2011 inspection, Mr. Hollmann replied that condensation occurs only in very hot or cold weather and he based his conclusion on his experience and on the fact that shutters were installed on the windows. When asked if the Applicant’s theory about moisture in the wood was possible, Mr. Hollmann stated that, in his experience, it was not.

Mr. Barnett testified that the Added Party’s Service Notes dated October 13, 2011 (Exhibit 5) note the following with regard to the window frame gaps: “Condensation build up very bad. Humidity water was trapped in frame”. Mr. Barnett testified that based on his experience, water could not have entered from outside. With regard to the Applicant’s theory that wet wood was used to construct the frames, Mr. Barnett stated that lumber is ordered as needed and comes covered by a vinyl tarp. Windows are installed with shims after the roof is constructed, and then bricks and insulation are installed. When asked why the window gaps are worse on the second floor, he stated that this could not be due to construction. He noted that soffits overhang the windows and that it would not make sense that rain water could penetrate through windows on all sides of the house. He stated that with windows on all sides damaged, the more likely cause would be excessive condensation.

On cross examination, the Applicant asked Mr. Barnett if he had personally seen condensation on the Applicant’s windows. Mr. Barnett replied that while he himself had not, another employee of the Applicant had. When asked how Mr. Barnett knows the windows are sealed outside, Mr. Barnett replied that all the windows had been caulked.

THE LAW

The applicable provisions of the Act are 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.

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;

(c) normal wear and tear;

(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.

Term of warranty

(4) A warranty under subsection (1) applies only in respect of claims made thereunder within one year after the warranty takes effect, or such longer time under such conditions as are prescribed.

O. Reg. 892

14. (1) Every vendor of a new home warrants to the owner that there will be no water penetration through the basement or foundation of the home.

(2) The warranty described in subsection (1) applies only in respect of claims made during a two-year warranty period ending on the second anniversary of the date of possession.

15. (1) In this section,

“building envelope” means the wall and roof assemblies that contain the building space, and includes all those elements of the assembly that contribute to the separation of the outdoor and indoor environments so that the indoor environment can be controlled within acceptable limits;

“delivery and distribution systems” include all wires, conduits, pipes, junctions, switches, receptacles and seals, but does not include appliances, fittings and fixtures;

“exterior cladding” means all exterior wall coverings and includes siding and above-grade masonry as required and detailed in the relevant sections of the Ontario Building Code under which the Building Permit was issued.

(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 windows, doors and caulking such that the building envelope of the home prevents water penetration;

(b) that the electrical, plumbing and heating delivery and distribution systems are free from defects in material and work;

(c) that all exterior cladding of the home is free from defects in material and work resulting in detachment, displacement or physical deterioration;

(d) that the home is free from violations of the Ontario Building Code regulations under which the Building Permit was issued, affecting health and safety, including but not limited to fire safety, insulation, air and vapour barriers, ventilation, heating and structural adequacy; and

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

(3) The warranties described in subsection (2) apply only in respect of claims made during a two-year warranty period ending on the second anniversary of the date of possession, in respect of homes that were enrolled, or should have been enrolled, after December 31, 1990.

(4) The warranties described in subsection (2) are prescribed under clause 13 (1) (c) of the Act.

APPLICATION OF LAW TO FACTS

It is the responsibility of the Applicant to prove, on a balance of probabilities, that there has been a breach of warranty by the Added Party.

With respect to the Applicant’s first item in the Applicant’s first claim, cracked outside window frames, there is no dispute among the parties that two frames are damaged.

The Applicant testified that the window frame damage resulted from poor workmanship and materials. He also stated it was due to improper installation and temperature variations. The Applicant did not speak to any issues related to water penetration or damage with respect to the cracked frames. The photographs submitted by Tarion were in fact the only evidence offered by the Applicant in support of his position. The representatives of Tarion and the Added Party both testified that on inspection the damage to the cracked frames appeared to be consistent with either impact or the application of excessive pressure.

The Applicant took possession of his home on April 30, 2009. The cracked window frames were not included on the PDI, the 30 Day, or the Year End forms submitted to Tarion. With respect to defects in materials or a failure to construct in a workmanlike manner, the warranty is set out in section 13 (1)(a)(i) of the Act. Section 13 (4) states that the warranty applies only for claims submitted within one year of the warranty taking effect. Even if the Applicant had provided evidence to support his claim that the damage to the window frames results from poor materials or workmanship, the claim was not submitted within the required statutory time frame. Therefore, the Tribunal finds that there has been no breach of the warranty. Further, because the Applicant presented no evidence of any damage relating to water penetration with respect to the cracked frames, the Tribunal finds that there has also been no breach of the two year warranty coverage related to water penetration set out in section 15 (2)(a) of O. Reg 892.

With respect to the second item in the Applicant’s first claim, water penetration from the roof, the parties agree that a cracked roof valley flashing did result in water penetration and some water damage to the dining room ceiling of the Applicant’s home. Both the flashing and the dining room ceiling were repaired under warranty. The Applicant is concerned that there may be damage inside the walls of his home. While he suggested that mould might be present, he presented no evidence in support of his claim. In fact, he testified that he did not know if there was anything to be fixed, stating that he had conducted no investigation because opening the walls would be expensive and he would have to live with a hole for a period of two to three months.

There must be evidence of damage for a claim to exist. In this case, the Tribunal finds that because the Applicant is only speculating that there may be unseen damage between the walls of his home, the Applicant in fact has no claim and therefore there can be no breach of warranty.

The second of the Applicant’s claims relates to water damage on the frames of windows on the second floor of his home and gaps between those frames and the walls. The parties do not dispute that there are gaps between the windows and the walls and that there is evidence of water damage.

The Applicant testified that he does not know what the cause of the gaps or the water damage is but he does know it is not condensation. He suggested that the use of excessively moist wood in construction could have caused the problem.

The Applicant did not provide any evidence to support his claim that a defect in materials caused the gaps between the window frames and the walls. Although he presented no evidence in this regard, the Tribunal again notes that even if there were evidence, the Applicant’s claim was submitted to Tarion on the Second Year form and therefore outside the statutory warranty period with respect to defects in material or a failure to construct in a workmanlike manner. Therefore the Tribunal there is no breach of the warranty set out in section 13 of the Act.

The evidence that the Applicant did submit was in refutation of the Tarion finding that condensation from excess humidity, exacerbated by the installation of California shutters, was the likely cause of the damage. This evidence comprised photographs of the windows in his home; photographs of the windows in a neighbour’s home with shutters installed but no gaps between the windows and the walls; a letter from their installer stating the shutters did not cause the damage, and a home inspection report that identifies that gaps exist and should be repaired but sets out no cause.

The Tribunal can give little weight to the shutter installer’s letter given the fact that the author was not called as a witness in these proceedings and given that he clearly would have an interest in denying responsibility. The home inspector was also not called as a witness. The Applicant, however, testified that the inspector did not look at the outside of the Applicant’s home nor did he conduct a water test to determine if water was penetrating the windows from outside. Finally, the Applicant testified that it would have to rain for two to three days in order for him to have produced evidence of water penetration.

Both Mr. Hollmann and Mr. Barnett testified that condensation is the likely cause of the water damage to the Applicant’s window frames. Given these witnesses’ experience in the building industry, the Tribunal finds their evidence to be credible; in particular, Mr. Hollmann’s hypothesis that the manner in which the California shutters were installed not only could have caused the frames to torque but also would create a dam trapping condensed humidity. However, it is not the responsibility of Tarion and the Added Party to prove the cause of the damage.

The onus is on the Applicant to demonstrate that the gaps between the window frames and walls and the water damage on the frames is the result of water penetration in order for the second year warranty set out in section 15 (2) of O. Reg 892 to apply. He failed to produce any evidence in this regard and therefore the Tribunal finds there has been no breach of the warranty.

ORDER

Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs Tarion to deny the claims of the Applicant.

LICENCE APPEAL TRIBUNAL

_________________________

Mary Ann Spencer, Member

Released: July 20, 2012