Licence Appeal Tribunal
Appeal d'appel en Tribunal matière de permis
FILE: 7398/ONHWPA
CASE NAME: 7398 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
Applicants Applicants
-and-
Tarion Warranty Corporation Respondent
-and-
Whitby by the Lake Inc. Added Party
REASONS FOR DECISION AND ORDER
ADJUDICATOR: Mary Ann Spencer, Member
APPEARANCES:
For the Applicants: Self-represented
For the Respondent: Danielle Peck, Counsel
For the Added Party: Margaret Donaldson, Agent
Heard in Toronto: October 19, 2012
REASONS FOR DECISION AND ORDER
This is an appeal by the Applicants to the Licence Appeal Tribunal (the “Tribunal”) from a Decision Letter of Tarion Warranty Corporation (“Tarion”) dated April 30, 2012 with respect to a new home purchased from, Whitby by the Lake Inc. (the “Added Party”), in which Tarion denied the Applicants’ claim.
FACTS AND EVIDENCE
The Applicant’s home was completed for possession on November 16, 2010. On December 16, 2010, Tarion received the Applicants’ Statutory Warranty Form and the home was inspected on June 3, 2011. The April 30, 2012 Decision Letter (Exhibit 1) sets out the item which is the subject of the Applicant’s appeal:
- Interior stairs / Various runs and unsmooth finish on stairs.
The Tarion Decision Letter sets out the scope of work to correct the defects in the finish on the Applicants’ stairs. The scope includes sanding and refinishing various spots on the stairs totalling five square feet. In respect of this work, Tarion offered a cash settlement in the amount of $652.30 which was declined by the Applicants.
At the outset of the hearing, Ms Peck advised the Tribunal that Tarion had accepted the opinion contained in an expert report prepared for the Applicants by Steven Vasconcelos, a Wood Floor Inspector certified by the National Wood Floor Association (Exhibit 3). Mr Vasconcelos’ inspected the staircase on August 27, 2012 and his report was forwarded to the other parties and the Tribunal on September 13, 2012. The recommendation set out in Mr. Vasconcelos’ report is that the staircase be completely refinished. Therefore, the sole issue now before the Tribunal is the cost of refinishing the staircase.
In addition to the expert report, the evidence of the Applicants comprised a book of documents (Exhibit 5) and the testimony of one of the Applicants. Tarion’s evidence comprised a book of documents (Exhibit 4), the testimony of Tarion Field Claim Representative Ryan Haley, and an estimate of the cost of repair (Exhibit 6).
During his testimony, the Applicant requested that the Tribunal adjourn the proceedings in order for him to obtain more information on the cost of refinishing the stairs, stating he had not had time to request detailed quotes. Ms Peck objected to the adjournment. The Tribunal denied the adjournment request on the basis that the Applicants had sufficient time to prepare for the hearing given that the expert report was dated August 27, 2012, more than seven weeks before the hearing date.
Applicants’ Evidence
The Applicant testified about the quotes which had been obtained for work on the staircase (Exhibit 5). The first, dated April 25, 2012, proposes to strip and refinish the entire staircase at the cost of $5,500.00 plus Harmonized Sales Tax (“HST”) and $600.00 to $700.00 for materials. This quote was provided by the company without inspection of the staircase. A second quote dated May 8, 2012 provides a per unit cost of $200.00 per tread and $30.00 per riser. This quote was also provided without inspection of the staircase. With the assistance of Mr. Haley, the Applicant indicated the total estimated cost of this quote was in the $5,000.00 range. The third quote was provided on May 7, 2012 following an inspection of the staircase and totals $13,500.00 plus HST.
On cross-examination, Counsel for Tarion asked the Applicant if he agreed that the second quote at $200.00 per tread and $30.00 per riser was actually to install new treads over the existing ones and to replace the risers and that the company also quoted $100.00 per tread to refinish them. The Applicant agreed but emphasized that the company had not seen the stairs.
Counsel for the Respondent also asked the Applicant if he agreed that the cost to install and stain the staircases in the Applicants’ home as set out in the Purchaser’s Estimate Request appended to the Applicants’ Agreement of Purchase and Sale (Exhibit 4) was $7,627.50, the total of items 1, 20, and 25 through 28. The Applicant acknowledged that this was the original installation cost.
Tarion’s Evidence
Ryan Haley has been employed as a Field Claims Representative by Tarion for approximately four years. Before joining Tarion, he studied architecture. Mr. Haley’s duties include inspecting homes and determining if a builder is in breach of warranty. He estimates he has conducted over 1,000 inspections.
Mr. Haley testified that he sees issues relating to wood stains approximately once a month. He indicated that since seeing the Applicants’ expert report, Tarion accepts that the staircase needs refinishing. To determine the cost of refinishing the staircase, Mr. Haley asked Tarion’s staff estimator, Doug Lappan, to prepare a quote which is produced using Xactimate software. The quote represents the retail value of the work, taking the location of the home into account. Mr. Haley provided the scope of work to the estimator. In this case, he indicated that the scope included protecting the hardwood floor, providing dust protection, and refinishing treads and risers, the size and number of which he provided. Mr. Lappan’s quote totals $5,187.37 before HST, including a 10% allowance for each of overhead and profit (Exhibit 6).
Mr. Haley indicated that the scope he provided to produce Tarion’s estimate was similar to the scope set out in the first quote of $5,500.00 provided by the Applicant. He then stated that Tarion’s position was that it was prepared to offer the Applicant $5,500.00 plus $700.00 for materials which was also quoted to the Applicant on April 25, 2012.
On cross-examination, the Applicant asked Mr. Haley if the estimating software took detail such as banister type into account. Mr. Haley indicated it did not. The Applicant also asked how the software addressed veneer risers: did it consider their potential replacement as opposed to refinishing? Mr. Haley stated that in his opinion there is no significant price differential between replacing or sanding and staining veneer. The Applicant asked if there is a labour differential involved in removing light or dark stain. Mr. Haley indicated that dark stain would not necessarily be completely removed before re-staining. Finally, Mr. Haley was asked if Tarion considered that repairs to the staircase lowered its expected lifespan and therefore its value. Mr. Haley responded by stating that repairs may not be 100% perfect. However, he noted that sanding would remove only approximately 1/32 to 1/16 of an inch of surface and the lifespan of the staircase should not be adversely affected.
LAW
The applicable provisions of the Act are as follows:
Warranties
- (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.
Notice of decision under s. 14
- (1) Where the Corporation makes a decision under section 14, it shall serve notice of the decision, together with written reasons therefor, on the person or owner affected.
Notice requiring hearing
(2) A notice under subsection (1) shall state that the person or owner served is entitled to a hearing by the Tribunal if the person or owner mails or delivers, within fifteen days after service of the notice under subsection (1), notice in writing requiring a hearing to the Corporation and the Tribunal.
Powers of Tribunal
(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.
Parties
(4) The Corporation, the person or owner who has required the hearing and such other persons as the Tribunal may specify are parties to proceedings before the Tribunal under this section.
ISSUES
The sole issue to be considered in this appeal is the cost to be paid to the Applicants with respect to refinishing the staircase in their home.
ANALYSIS
The Applicants’ staircase was inspected by their expert, Mr. Vasconcelos, on August 27, 2012. His report states that “from a standing position and most vantage points, the staircase appeared to be in good condition” but goes on to state that deficiencies were found on further inspection: colour variance, drip marks on various stringers and risers, excessive stain on treads, cross grain sanding marks, areas of missed stain and an unfastened section of quarter round. Mr. Vasconcelos’ recommendation is “It is my professional opinion the staircase undergoes complete refinishing to resolve the aforementioned.” Tarion accepts Mr. Vasconcelos’ recommendation.
The Applicant testified that the quotes the Applicants obtained were for general discussion purposes only and that there had not been time to obtain more detailed estimates given the expert report was received in “late September, early October”. The Tribunal notes that Mr Vasconcelos’ inspection report is dated August 27, 2012 and was in fact forwarded to the Tribunal by the Applicants on September 13, 2012. Notwithstanding the fact that the inspection predated the hearing by more than seven weeks, the Applicants did not provide the Tribunal with any cost estimates which had been prepared after it took place. Mr. Vasconcelos’ report does not provide an estimated cost of repair nor did he attend the hearing.
The Applicants provided only one estimate which was produced by someone who had seen the staircase. This $13,500.00 estimate dated May 7, 2012 includes the following scope of work: “replace all new handrail and pickets, more cost effective than trying to strip them; replace all new vinear (sic) stringers; strip down all the treads/steps & noiseings (sic); re-stain entire staircase”. This estimate does include replacement of some components of the staircase, a greater scope of work than that recommended by Mr. Vasconcelos whose report does not mention replacement. The qualifications of the individual who provided the estimate are unknown. The $13,500.00 cost significantly exceeds the cost of installation of the staircases in the Applicants’ home which testimony indicated totalled $7,627.50. The Tribunal notes that a further item of $1,205.00 for railings was not included in this cost. However, even adding this amount, the cost of repair exceeds the cost of installation by more than 50%. The Tribunal therefore rejects this estimate as being excessive.
The estimate produced by Tarion staff using the Xactimate software totals $5,183.37 before HST. The Applicant expressed some concern that the software did not take into account the fact that some veneer risers might require replacement rather than refinishing. The Tribunal notes that replacement of veneer is not mentioned in Mr. Vasconcelos’ report. However, it also notes that Mr. Haley testified that the cost of replacement would be similar to the cost of sanding and refinishing should any replacement be required.
The Applicants’ April 25, 2012 estimate is for $5,500.00 labour plus HST and $600.00 to $700.00 for materials. The scope of work quoted in this estimate is almost identical to that which Mr. Haley testified he provided to Tarion’s estimator to produce the Xactimate estimate and includes stripping all treads, spindles, risers, stringers, handrail and newel posts, re-staining, and masking all adjacent areas to protect them.
The final estimate provided by the Applicants dated May 8, 2012 is difficult to compare given there is no explicit scope of work set out in it and it is quoted on a cost per unit basis.
It is unfortunate that the Applicants did not obtain quotes after they received Mr. Vasconcelos’ report. The Tribunal has before it two similar estimates for a similar scope of work, one provided by Tarion, the other provided by the Applicant. Mr. Haley testified that it was Tarion’s position that it was prepared to pay the Applicants the costs set out in their April 25, 2012 quote, the higher of the two similar estimates. The Tribunal therefore orders Tarion to pay to the Applicants a total of $6,915.00, comprised of $5,500.00 labour, $715.00 HST, and $700.00 for materials.
ORDER
Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs Tarion to pay the Applicants $6,915.00.
LICENCE APPEAL TRIBUNAL
Mary Ann Spencer, Presiding Member
Released: October 26, 2012