Licence Tribunal -

Appeal d'appel en

Tribunal matière de permis

DATE:

2012-03-01

FILE:

6685/ONHWPA

CASE NAME:

6685 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-

Kieffer Homes Ltd. Added Party

REASONS FOR DECISION AND ORDER

ADJUDICATOR:

DOUGLAS R. WALLACE, Vice-Chair

APPEARANCES:

For the Applicants:

APPLICANT, on his own behalf and on behalf of the other Applicant

For the Respondent:

MARSHALL REINHART, Counsel representing Tarion Warranty Corporation

For the Added Party:

MARK KIEFFER, Agent representing the Added Party, Kieffer Homes Ltd.

Heard in Belleville:

January 18, 19 and 20, 2012

REASONS FOR DECISION AND ORDER

BACKGROUND

Section 16 of the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “Act”) requires Tarion Warranty Corporation (“Tarion”) to decide whether alleged defects in the construction of a new home are covered by a warranty as defined by the Act and Regulations, and grants homeowners the right to appeal any decision by Tarion denying them coverage by way of a hearing by this Tribunal. In conducting this hearing the Tribunal exercises its own judgment, independent of any prior decision by Tarion.

FACTS

The following facts are set out in the Books of Documents filed as exhibits and were not in dispute:

1. The Applicants, (Homeowners), took possession of their new home on June 16, 2009.

2. The Applicants filed a 30-Day Statutory Warranty Form on July 28, 2009 listing a number of incomplete or unsatisfactory items. (No issue was taken respecting the timeliness of this of this form, presumably as a result of the undisputed claim by the Applicants that the Builder failed to comply with the requirement in Bulletin 42 to provide homeowners with an information package on the date of possession.)

3. They filed a Year-end Statutory Warranty Form on June 14, 2010. This form listed some 33 items the Builder had not rectified to the Applicants’ satisfaction. The items include the six items forming the subject matter of this Hearing.

4. Tarion’s Claims Representative inspected the items listed on November 19, 2010 and January 27, 2011. The first inspection was in the presence of the Applicants and the second in the presence of both the Applicants and the Builder’s representative. The results of the inspections were set out in Warranty Assessment Reports dated November 22, 2010 and January 31, 2011.

5. A Decision Letter was issued on May 25, 2011. The decision was that all items claimed which had not been resolved by the Builder were warranted in whole or in part. Tarion offered compensation for many of the items and indicated steps it the Builder was to take to rectify the remaining items. Of the 10 items in the Decision Letter, three were settled before the Hearing and one was settled at the Hearing, leaving six items to be decided by the Tribunal.

6. The six items before the Tribunal are as follows: (1) exterior siding and soffit boards, (2) exterior water proofing membrane, (3) exterior garden door, (4) exterior step entrance, (5) living room fireplace hearth and (6) basement subfloor.

THE LAW

The first year warranties applicable to new homes are set out in section 13 of the Act

as follows:

Warranties

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

(a) that the home,

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

(ii) is fit for habitation, and

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

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

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

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. R.S.O. 1990, c. O.31, s. 13 (2).

Tarion rules in the first instance on any claim by homeowners that their Builder breached a warranty provided in the Act. If the homeowner is unhappy with Tarion’s decision he may request a hearing by this Tribunal, as the Applicants have done here. The Tribunal conducting the hearing is authorized by section 16 of the Act to direct Tarion to take such action as the Tribunal considers Tarion ought to take in accordance with the Act. “Such action” includes a payment out of the guarantee fund provided by the Act or the undertaking of necessary repairs. In its decision the Tribunal exercises its own discretion and is not bound by Tarion’s findings. The Act allows Tarion to arrange for work to be done in whole or partial satisfaction of any amount it may be ordered to pay out of the guarantee fund.

ISSUES

The issue before the Tribunal is whether the complaints listed in the Decision Letter of May 25, 2011 are warranted under section 13 of the Act and, if so, what is the appropriate remedy.

EVIDENCE

Evidence produced by the Applicants consisted of a number of documents and photographs filed as an exhibit and the oral testimony of the male Applicant. Tarion’s evidence consisted of a Book of Documents, filed as an exhibit, and the oral evidence of its Field Claims Representative. Mark Kieffer gave evidence on behalf of the Builder and called four witnesses to support his case.

The evidence submitted by all parties is summarized under the heading of each complaint.

1) Exterior Siding and Soffit Boards

The Applicant indicated that the soffit and siding was manufactured by Cape Cod and that the Builder had not followed the manufacturer’s recommended installation practices in several respects. When installing soffits, Cape Cod recommended the use of their stainless steel fasteners and directed that if the surface of the boards was broken when installing the boards the broken surface should be filled and repainted. Photographs introduced by the Applicant showed that stainless steel fasteners had not been used and that the Builder had used a nail gun which was not recommended by the manufacturer.

With respect to the siding, the Applicant testified that the joints between the boards were covered with 1” x 3” battens, rather than the 1¼” x 3” recommended by the manufacturer. He also indicated that some of the siding was installed with ends two inches closer to the ground than the recommended six inches and that there was less breathing room in some places between the interior side of the boards and the cement than the one-half inch recommended. Finally, there were approximately ten boards with splits in them and photos showed that the nailing was not spaced exactly as recommended by the manufacturer.

In cross-examination, the Applicant agreed that filling the nail holes and covering them with a little paint would correct the soffit complaint. He also agreed that the only evidence that he had to show that the siding was not installed in a workmanlike manner was that it was not installed in the method recommended by the manufacturer. He had no evidence that the method used was inferior to that recommended by the manufacturer. His position was that all the siding and soffit should be removed and replaced.

Both Tarion’s Field Claims Representative and the Builder’s witness, Dan Lazure, agreed with the Applicants’ assessment that the method of installing the soffit and siding failed to follow the manufacturer’s guidelines but did not agree that a total removal and replacement was necessary. Mr. Lazure, a local contractor, testified that he is familiar with the three most commonly used board and batten siding manufacturers. He has installed Cape Cod siding on approximately 21 houses over the last eight years, and often represents that manufacturer at trade shows. He examined the Applicants’ house in January 2012 and agrees that the items brought to his attention at that time need to be corrected. In particular, he noted that: (1) five boards were cracked and should be replaced, (2) 12 battens were cracked and should be replaced, (3) a couple of battens at the back of the house should be removed, realigned and refastened, (4) in a small area, siding came closer to the ground than the six inches recommended and should be shortened, (5) some siding boards were installed without the recommended breathing space between them and the concrete, (6) there were some defects in the nailing and

(7) some trim should be removed and replaced. With respect to the soffit, he noted that the nail holes should be filled and painted. He indicated that he would be prepared to do all work necessary to correct these deficiencies and could provide a full manufacturers’ warranty for $1,500.00.

Mr. Kieffer fully agreed with Mr. Lazure’s assessment.

Finding

Based primarily on the undisputed evidence of Mr. Lazure, the Tribunal finds that the defects noted by the Applicants are the result of defective material or poor workmanship and are consequently covered by the warranty provided in section 13 (1) (a) (i) of the Act.

The Tribunal heard no evidence other than the Applicant’s personal opinion, that a total removal and replacement of the siding and soffit was necessary to resolve the deficiencies noted. Further, it was impressed both with Mr. Lazure’s qualifications and the frankness he displayed in giving his evidence. As an example, he had no hesitation in noting some areas where the trim required removal and replacement that went beyond the defects noted by the Applicant. In the circumstances, the Tribunal has no hesitation in accepting this witnesses’ estimate of the fair cost of correcting all defects under this heading.

2) Exterior Water Proofing Membrane

The Applicants testified that the water proofing membrane attached to the exterior of the cement foundation had three defects: it was not properly sealed at the top, improper fasteners were used to attach it to the foundation and it remained exposed to the sunlight for three years due to a lack of backfilling. As a result of directions given to the Builder following Tarion’s inspection in November 2010, the Builder provided the necessary sealing at the top of the membrane. The two other defects remain uncorrected to date.

Leslie Shannon was called as a witness by the Builder. He is a distributor of the membrane used on this home and has seven or eight years experience installing it. He considers the manufacturer’s instructions regarding fasteners guidelines only but admits that the upper portion of the membrane should not have been left unexposed for as long as it had been. To rectify this, he would remove the part of the membrane extending above the present grade, replace it with a new sheet of membrane extending six inches below grade and add landscaping as necessary level with the top of the membrane. He estimated the cost at $400.00 or “a little bit more” including landscaping.

Finding

The Tribunal finds that the failure to backfill up to the level of the top of the membrane demonstrates poor workmanship and constitutes a breach of the warranty in section 13(1) (a) (i). It accepts Tarion’s estimate of the fair cost to rectify this condition in the amount of $445.00.

3) Exterior Garden Door

The Homeowners testified that the construction agreement specified the use of JELD- WEN doors, but they noticed after a number of months that the door going out to the garden was by MDL, a different manufacturer. Although the door performed just as well as the JELD-WEN doors in the rest of the house, when he learned that MDL doors sold for up to $1,000.00 less than JELD-WEN doors he became concerned that the quality of the MDL door might be less than the quality of the door specified.

Dean Timson, Project Co-ordinator at COLE’S TIM-BR Mart, supplied the materials to be used in the Applicants’ house. He sells both JELD-WEN and MDL doors and considers their steel, vinyl-clad doors to be of equal quality. He supplied JELD-WEN doors for the entire house except for the door leading to the garden. In this location he was forced to substitute an MDL door as JELD-WEN does not make a steel, vinyl-clad terrace door. In his opinion the MDL door supplied was as good or better quality as a JELD-WEN door. It was his evidence that if the Applicant found a $1,000.00 price difference between a JELD-WEN door and a MDL door, they were not comparing identical models.

Finding

The Tribunal finds that a substitution of products of similar or superior quality does not constitute a breach of warranty and accepts the opinion of Mr. Timson that the substitution in this case was indeed of equal or superior quality.

4) Exterior Step Entrance

The Applicant introduced photographs showing that the posts supporting the deck of the rear entrance were place directly on cement sono tubes without saddles, and off centre.

He thought this was probably poor workmanship but could point to no standards or provision in the Ontario Building Code precluding either practice.

Andrew Smith graduated from the University of Waterloo with degrees in both Engineering and Architecture. He has been designing custom homes since 1997 and designed the Applicants’ house. He testified on the Builder’s behalf that the rear entrance was over-designed if anything. There was no need, in his professional opinion for the supporting posts to be held off the cement in the sono tubes with metal saddles or to be centered on the tubes.

The Applicants did not question Mr. Smith’s evidence.

Finding

In the absence of any evidence supporting the Applicants’ opinion, the Tribunal finds that they have not satisfied the onus resting on them of showing that the rear entrance was constructed in breach of the warranty provided in section 13 of the Act.

5) Living Room Fireplace Hearth

The fireplace hearth in the living room was constructed of recycled bricks to preserve the heritage tone of the house. The Applicant testified that the hearth was not entirely square and introduced photographs to support his claim. Mr. Kieffer indicated that the Builder originally thought that the problem could be corrected with the relaying of the first two rows of bricks but now agrees that additional bricks need to be removed, cleaned and re-laid. He indicated that a fair price for this work was $100.00.

Finding

The Tribunal accepts the evidence of both the Applicant and the Builder that the hearth demonstrates poor workmanship and finds that the cost suggested by the Builder of removing and re-laying the bricks is fair and reasonable.

6) Basement Subfloor

The Applicant testified that the basement subfloor was sloped, not properly supported by shims and not secured by tap cons to prevent movement. He estimated the cost of lifting the carpet and adding the necessary shims and tap cons at $2,000.00. Mr. Kieffer testified that he was present when the subfloor was put in and that if shims had been necessary they would have been put in. He agreed, however, that tap cons were not used and may have been required. He estimated the cost of providing the necessary tap cons at $400.00.

Finding

The Homeowners were not present when the subfloor was laid and are in no position to

state categorically that shims were not used as required. Nor did they produce any evidence to support their estimate of the cost of correcting any “bounce” they detected in the floor. In the absence of such proof, the Tribunal accepts the word of Mr. Kieffer who was present at the time the subfloor was laid that all that is required is the addition of a number of tap cons to secure the subfloor to the concrete. It also accepts the Builder’s estimate that $400.00 is a fair and reasonable price for this work.

ORDER

Pursuant to section 16 (3) of the Act the Tribunal orders that Tarion make a payment to the Homeowners of $2,445.00 in full satisfaction of all claims by the Homeowners.

LICENCE APPEAL TRIBUNAL

Douglas R. Wallace, Vice-Chair

RELEASED: March 1, 2012