Licence Tribunal
Appeal d'appel en Tribunal matière de permis
DATE: 2012-11-19
FILE: 6834/ONHWPA; 6836/ONHWPA
CASE NAME: 6834 & 6836 v. Tarion Warranty Corporation
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-
Port Union Homes Ltd.
Added Party
REASONS FOR DECISION AND ORDER
ADJUDICATOR: Elizabeth Sproule, Vice-Chair
APPEARANCES:
For the Applicants: Self-represented
For the Respondent: Neil Abbott, Counsel
For the Added Party: Jack Marcoccio and Corey Libfeld, Agents
Heard in Toronto July 17, 18, 20, 30, August 21 and 22, 2012
REASONS FOR DECISION AND ORDER
This is an appeal by the Applicants to the Licence Appeal Tribunal (the “Tribunal”) from two Decision Letters of Tarion Warranty Corporation (“Tarion”) dated July 26, 2011 and July 20, 2011 with respect to two new attached homes purchased from Port Union Homes Ltd., (the “Added Party”), in which Tarion denied the Applicants’ claim for water penetration.
PRELIMINARY MATTERS
Motion to Dismiss
At the commencement of the proceedings the Added Party made a motion to have the Applicants’ appeal dismissed on the basis that they had failed to provide any expert evidence in accordance with the pre-hearing order of this Tribunal and on the basis that they had denied access, in that they refuse to allow a water test to be performed, contrary to their obligation.
On review of the Tribunal’s pre-hearing order, it became apparent that the Added Party was mistaken as to the order made by this Tribunal which simply set out the timelines for disclosure of expert evidence if any of the parties would be relying upon the same. Mr. Libfeld indicated to the Tribunal that he had not intended to misstate what had been in the Tribunal’s pre-hearing order.
With respect to the second basis for the motion, the Applicants indicated that they had valid reasons for not complying with the Added Party’s requests. Counsel for Tarion indicated that a failure to provide access was one of the grounds for the denial of the Applicants’ claim but conceded that it would be difficult to make findings with respect to this issue without hearing evidence from the parties.
The Tribunal’s Rules of Practice at Rule 2.10 outlines that the Tribunal may dismiss a proceeding without a hearing if it finds:
(1) it is frivolous, vexatious or is commenced in bad faith;
(2) it relates to matters that are outside the jurisdiction of the Tribunal;
(3) some aspect of the statutory requirements for bringing the proceeding has not been met, or;
(4) the party filing the appeal has abandoned the proceeding.
The Tribunal must give notice of its intention to dismiss the proceedings and the reasons for the dismissal. Parties must be informed of their right to make written submissions within 10 days with respect to the dismissal.
The Tribunal concluded that there was no basis to deny the Applicant a hearing of their appeal. The denial of access was an issue that the Tribunal had to determine and which could only be done fairly after hearing the evidence of the parties.
Objection to Joint Supplementary Book of Documents of the Respondent
The Applicants did not consent to the Joint Supplementary Book of Documents of the Respondent being entered into evidence at the outset of the proceeding on the basis that it was not disclosed in accordance with the timelines set by the Tribunal. Counsel for Tarion acknowledged that the documents were served late. After some discussion with the Applicants, it was not clear that there was any objection other than the late service. It was the Tribunal’s decision not to admit the Supplementary Book into evidence in its entirety at that time but to deal with the admissibility of the individual documents contained therein if and when they were introduced by the Respondent.
After giving this ruling to the parties, Mr.Libfeld, on behalf of the Added Party objected to not being called upon to make submissions on this issue. The Tribunal explained its ruling again, that the admissibility of the documents would be dealt with as they arose and there would be an opportunity for all parties to make submissions at that time. In the end, there were no objections made to any of the documents introduced from that book of documents.
Request for Adjournment
Mr. Libfeld had been out of the hearing room for sometime when at approximately 11:30 am on the first morning, stuck his head in the hearing room door with his phone to his ear and indicated to the Tribunal that he needed an adjournment. He indicated that his spouse had been in an accident and that he needed to go and make sure that she and their child were unharmed. He indicated that he may be back, possibly in an hour.
The Tribunal appreciated Mr. Libfeld’s desire to go to his family however his indication that he may be back in an hour suggested to the Tribunal that he knew that the situation was not grave. Given that Mr. Marcoccio was in attendance as a formal representative of the Added Party, and had been the representative in constant attendance, the Tribunal sought a reasonable explanation as to why Mr. Marcoccio could not continue in attendance. Mr. Libfeld stated that he made the decisions and that “he did not have to provide a reason” why Mr. Marcoccio had to leave. Mr. Marcoccio was asked directly if there was any reason he could not remain but he did not respond, instead Mr. Libfeld spoke for him, saying simply that he had to go.
The Tribunal had been led to believe that Mr. Marcoccio was there to act as agent; otherwise he would have been treated simply as a witness. In the absence of any explanation, reasonable or otherwise, as to why both agents had to leave the Tribunal concluded that Mr. Libfeld was not being reasonable and declined to grant the adjournment and disrupt the proceedings further. There had been earlier disruption of the proceedings due to Mr. Libfeld’s conduct.
Counsel for Tarion agreed that in the event that the Applicant gave evidence outside of that included in the written Notice of Appeal that it would be noted and brought to the attention of the Added Party in the event that they chose to return after the lunch break. After the lunch break, for the benefit of the Added Party, the Applicant repeated that portion of his evidence relating to the exhibits attached to his Notice of Motion. Mr. Abbott confirmed on the record that Applicant’s repeated evidence was the same as previously stated.
Motion to Recuse
The Agents for the Added Party returned to the proceedings after the lunch break on day one. Mr. Libfeld indicated to the Tribunal that he was back as his spouse and child had not been injured in the accident. He then made a motion asking that the Chair to recuse herself on the basis of being biased and unfair. Mr. Libfeld was asked to provide some particulars of the basis of the motion and he indicated that it was ‘the whole thing’, which the Tribunal understood to mean all that had occurred in the first two hours of the proceeding and in particular the refusal to grant an adjournment. The proceeding was recessed in order for the motion to be considered.
After a brief recess, the Tribunal returned to deliver its ruling, however, MrLibfield continually interrupted delivery of the reasons, as a result, the Tribunal stated that the motion was dismissed with written reasons to be issued. Those reasons follow.
The test for reasonable apprehension of bias was set out in Committee for Justice and Liberty v. Canada (National Energy Board),[1978’ 1976 CanLII 2 (SCC), 1 S.C.R. 369, in its dissenting judgment at page 13, it provides:
The reasonable apprehension of bias must be a reasonable one held by reasonable and right minded person, applying themselves to the question “what would an informed person, viewing the matter realistically and practically and having thought the matter through conclude?”
This test was approved by the Supreme Court of Canada in R. v. S.(R.D.), [1997] 1 S.C.R. No. 84, where the Court further stated that the “presence or absence of an apprehension of bias is evaluated through the eyes of the reasonable, informed, practical and realistic person who considers the matter in some detail.” The test has a two-fold objective element: the person considering the alleged bias must be reasonable and the apprehension of bias itself must also be reasonable in the circumstances of the case. The court goes on to state that
“the jurisprudence indicates that a real likelihood, or probability of bias, must be demonstrated and that a mere suspicion is not enough. The existence of a reasonable apprehension of bias depends entirely on the facts. The threshold for such a finding is high, and the onus of demonstrating bias lies with the person who is alleging its existence”.
The facts in this case are that the Added Party was unsuccessful in having the Applicant’s appeal dismissed without a hearing, the reasons for which are set out above. The Tribunal finds that a reasonable, informed person, considering these facts realistically and practically, would not conclude that the refusal to dismiss the Applicant’s case without a hearing, would give rise to a reasonable apprehension of bias.
The Added Party was not called upon in the preliminary discussion of the admissibility of the Joint Supplementary Book of Documents filed by the Respondent. No ruling was made excluding any evidence, rather the issue was set aside to be further discussed when and if the additional documents were to be introduced. The Tribunal finds that an informed person, viewing the matter realistically and practically, would not conclude these facts could give rise to reasonable apprehension of bias.
Lasty, with respect to the refusal to grant an adjournment, it is entirely within the discretion of the Tribunal whether to grant an adjournment or not. In the present situation, the Agents of the Added Party refused to provide any explanation as to why one of its representatives could not remain in attendance. In the absence of any explanation, the Tribunal concluded that there was no reasonable explanation as to why one of the two representatives of the Added Party could not continue in attendance and therefore why the proceeding should be adjourned. The Added Party held out to the Tribunal that both individuals in attendance were there as agents for the Added Party.The Tribunal should be able to rely upon that representation. The Tribunal finds that a reasonable and right minded person, applying themselves to the question ‘what would an informed person, viewing the matter realistically and practically and having thought the matter through’ would conclude that these facts would not give rise to a reasonable apprehension of bias.
EVIDENCE
Evidence of the Applicants
The evidence of the Applicants consisted of documentation and the testimony of Applicant C, Applicant L and Andy Psang, a Registered Building Technologist. The following is a summary of the relevant evidence.
This case involved two town homes, Unit23 which is owned by Applicant C and Unit 21 which is owned by Applicant L, his spouse. Applicant C took possession of Unit 23 on March 12, 2008. He and Applicant L live in this unit. Applicant L took possession of Unit 21 on April 30, 2008. Applicant L’s elderly parents live in Unit 21.
On December 9th, 2009, water penetrated at the bottom of the living room balcony doors at both Units 23 and 21. The water penetration of Unit 21 was detected by Applicant L’s father who observed that the carpet felt wet. The Applicants then confirmed that water penetration had occurred in the same area in Unit 23. The Applicants reported the water penetration to the Added Party.
On the same day that water penetration occurred at the balcony doors of both units, water also penetrated into the master bedroom of Unit 21. This was also reported to the Added Party.
On December 26, 2009, there was a second incident of water penetration. The water penetration of the living room of the two units was confirmed by the Added Party and the balcony doors of both units were replaced in February of 2010. No repairs were done with respect to the master bedroom of Unit 21.
The Second-Year Form for Unit 21 was submitted April 28, 2010. Applicant L indicated that there was water penetration in the master bedroom and living room of Unit 21. Applicant L also included in this section the statement that “after balcony flashing replaced, water still penetrate (sic) to the porch brick wall below”. On the Second-Year-Form for Unit 23 submitted March 12, 2010, water penetration is described as “to wall and floor” and the same comments appear as stated above for Unit 21, that water continues to penetrate from the balcony to porch brick below.1
In response to the Second-Year Form, it would appear from the Second Year Sign-off form for Unit 21 that the Added Party recommended that a water test be done and that a roofing company and brick company service the house.2 On July 13, 2010, a representative of the roofing company attended and did not find anything wrong and suggested to the Applicants that it was a brick flashing issue.3 No further repairs were done. The Applicants were not satisfied that the water penetration issue had been resolved.
In anticipation of a Tarion inspection of Unit 23 scheduled for September 15, 2010, Mr. Marcoccio of the Added Party attended at Unit 23 to review the second year items. He set out his observations in writing. Unit 23 was first inspected by a Tarion Field Claims Representative, Donald Butwell, on September 15th, 2010. Mr. Butwell produced a Warranty Assessment Report 4 indicating that he did not note any moisture or dampness in the carpet surface or beneath the carpet when checked at the floor register near the balcony door. He concluded that there was no water penetration through the building envelope of the home that amounted to a breach of the Two Year Water Penetration Warranty. No water test was done by Mr. Butwell.
In anticipation of a Tarion inspection of Unit 21 scheduled for November 2, 2010, the Added Party made arrangements to attend at Unit 21 to address Applicant L’s concerns on October 5 and 14, 2010. Mr. Marcoccio attended the Unit and carried out a review of the issues raised in the second year form. Mr. Marcoccio set out his observations in writing. 5 His written notes on the complaint about water penetration include the comment that the “homeowner provided a photo of water penetration to the sub-floor unable to verify a defect in work or material from photo”. No repairs were carried out on these two dates set aside for the Added Party’s attendance. Applicant C testified that they were told by Mr. Marcoccio that the master bedroom problem was due to heavy rain from a winter storm and therefore no action would be taken. Mr. Marcoccio made a note that the “homeowner claims it was not from snow and does not believe it was a cause (sic) of wind driven rain”. No water test was requested or attempted by the Added Party at this time.
Unit 21 was first inspected by a Tarion field Claims Representative, Sedin Heric, on November 2, 2010. Mr. Heric was provided with photos showing water on the floor in front of the living room balcony door as well as on the floor in the northeast corner of the master bedroom – the photos were dated December 26, 2009. Mr. Heric produced a Warranty Assessment Report 6 in which he states, with respect to the area around the living room door, that no water penetration or water staining was observed. With respect to the master bedroom northeast corner, Mr. Heric states in his report that that area was inspected and he found no signs of water penetration or water staining on the sub-floor, carpet and carpet underlay when the carpet was pulled up. Nor was their staining or evidence of water on the wall above this area. His conclusion was that there was no water penetration through the building envelope of the home that amounted to a breach of warranty.
On November 16, 2010, water penetration again occurred at Unit 23. Applicant C called Mr. Butwell and was told to do a water test. The Applicants conducted a water test on the balcony door area of both Units on November 27, 2010, and found that water penetrated both units under the balcony doors.
Mr. Butwell attended Unit 23 for a second time on January 27, 2011, and indicated in his subsequent report that further investigation of the water penetration issue was necessary. The Applicants were told that a water test could not be undertaken at the time due to the weather conditions: sub zero temperatures.7 Water tests were subsequently scheduled for both units. Unit 23 was to be tested on May 25, 2011 and Unit 21 on June 2, 2011.
The water test on Unit 23 was conducted on May 25, 2011, in the presence of Tarion representative Danny Conte and the Added Party representative Jack Marcoccio. The balcony door was tested once, some adjustments were done to it and it was tested again and water did penetrate the glass of the balcony door. Tarion found there was a breach of the Two Year Water Penetration Warranty and the Added Party was ordered to replace the glass insert. As a result of the item being warranted, Tarion refunded the $262.50 conciliation fee to Applicant C.
The replacement of the glass insert for the balcony door of Unit 23 was scheduled for the same day as the water test for Unit 21, June 2, 2011. The work on Unit 23 was completed at approximately 8:45 a.m.. The water test of Unit 21 was scheduled for 10 am. Prior to the arrival of the Tarion representative, the Added’s Party’s representative Mr. Marcoccio asked Applicant L if he could enter Unit 21 and look at the balcony door. As this was prior to the scheduled time and the Tarion representative was not there, this request was refused. When the Tarion Representative Mr. Heric arrived, he, two employees of the window supplier and the Added Party’s representative Mr.Marcoccio entered Unit 21. At one point, Applicant L went upstairs with Mr. Heric to discuss the masterbedroom water penetration issue. This was at same time that Applicant C went to the basement to find a hose to carry out the scheduled water test. In the absence of both Applicants, Mr. Marcoccio began caulking the edges of the glass panel of the door about to be water tested, and the window company staff began tightening some screws. When Applicant C saw this work being done, he voiced his concern that it should not be done prior to the water test. Mr. Heric was asked if these repairs should be done prior to the test but he did not respond. These events were very troubling to the Applicants as they believe they tainted the outcome of the water test, which was negative.
The Applicants were disappointed that Mr. Heric did not advise them of their rights on June 2, 2011, when asked. Applicant C testified that he was told by Mr. Heric after this event that the builder has the right to perform repairs and to refuse would jeopardize the warranty, further that a homeowner can refuse to allow repairs, and that by the Applicants not refusing, they had given approval to the repairs. The Applicants were also told by Mr. Heric that the work done by the builder was not repairs, but was maintenance and that the balcony door issue was not warranted and the conciliation fee was not refundable.
The Decision Letters for Units 21and 23 were issued July 20, 2011, and July 26, 2011, respectively. The Applicants filed their appeals August 8, 2011. A pre-hearing was held in November of 2011. On December 1, 2011, Applicant L received a call from Mr. Marcoccio to follow up to see if there had been any water penetration as a result of the rain and wind which occurred on November 29, 2011. Applicant L replied that there had not been. The Applicants then received a letter from the Mr. Libfeld of the Added Party stating that since they had not been contacted by the Applicants to report any water penetration, and as there has been no re-occurring water entry, he trusted that these concerns were resolved to the Applicants’ satisfaction. The Applicants clarified in writing that the issue had not been resolved to their satisfaction.
By letter dated March 4, 2012, Mr. Libfeld on behalf of the Added Party wrote to the Applicants thanking them for their letters dated January 12, February 24, and March 1, 2012, documenting the occurrences of water penetration of Units 21 and 23. These letters detailed findings and photographs of water penetration resulting from rain on January 12, February 24 and February 29, 2012, respectively. The Added Party indicated in its letter that its representatives, along with the Tarion Warranty Corporation, would like to investigate these concerns on April 4, 2012.
In response to this letter Applicant C wrote to Tarion’s Counsel asking for information about this scheduled investigation. The information the Applicant requested included confirmation of Tarion’s participation, the particulars of who all would be in attendance, which items on the Decision Letters would be investigated, and how Tarion’s decision following the investigation would be communicated. As well, the Applicant asked, if there was an amendment to the Decision Letters what the action plan would be and what was the purpose of the door company’s presence.
By letter dated March 19, 2012, Counsel for Tarion confirmed that Tarion would attend on April 4, 2012, that the two field claim representatives along with Corporate Counsel would be there, (Counsel was in fact was not able to attend), and that Tarion understood the focus to be on item 1 (being the master bedroom and living room water penetration). In response to the question of how Tarion would communicate its decision, Counsel wrote:
“Tarion stands by its warranty assessments set out in the July 20, 2011 Decision Letter. However, Tarion will consider any new evidence relating to the warrantability of the items in light of the pending hearing before the Licence Appeal Tribunal.”
In response to the Applicant’s question as why the window representative would be attending, Tarion Counsel indicated that the Applicant’s should speak to the Added Party.
On April 4, 2012, a number of people were in attendance at the Applicants’ home: Mr. Butwell, Mr. Heric, Mr. Marcoccio and an individual from the window supplier. Applicant C testified that he stepped outside on the porch of Unit 23 where these individuals had gathered and before he said a word, Mr. Butwell told him that they (Tarion) were there to observe only and they would not have any comment. Applicant C took this to mean that Tarion was not going to comment on the result of the investigation, and that there would not be a report. At that point, Applicant C permitted everyone but the door company manager in the unit. He did not allow this individual in because of his experience on June 2, 2011, (with the unauthorized repairs), and he was “not going to let that happen again”.
Given the comments of Mr. Butwell that Tarion was there just to observe, the Applicant C viewed what was happening as a builder’s investigation. During the investigation of Unit 23,it was either suggested by Mr. Heric that the Added Party be allowed to do a water test, or that the Added Party requested that they be allowed to do a water test.In any event, Applicant C responded “not today”. He asked to be given a report of Tarion’s findings and he would seek legal advice. He explained in his testimony that he believed Tarion had already decided there was no warrantable item, other than the glass in the center of the door, and that this was not going to change. Applicant C’s only evidence with respect to Unit 21 was that Mr. Butwell took pictures.
After the events of April 4, 2011, Mr. Libfeld sent a letter to Applicant C, on behalf of the Added Party, recording that Applicant C would not allow access to the representatives from Newmar Windows who were in attendance to provide an expert opinion and stating “we were prepared to complete a thorough investigation of the water penetration areas which would have included extensive water testing however, Applicant C advised that he would allow a visual inspection only, with no water testing.” Mr. Libfeld went on to write “As our experts were not allowed to conduct their inspection we consider this a denial of access”.
In cross-examination by Tarion, Applicant C clarified that Mr. Heric did not ask to do water test: the builder’s representative asked to do a water test not Tarion. It was Applicant C’s understanding that Tarion was no longer investigating. Mr. Butwell told him that they were there to just observe and Applicant C took that to mean that they were not participating. Applicant C explained it made a difference to him who did the water test. Tarion’s representative is an independent party with no vested interest in the outcome. In Applicant C’s mind, the test should have been done by Tarion. When asked how Tarion could do any assessment if the Applicant would not allow a water test, he indicated it was tested in June of 2011 and notwithstanding the negative result the problem still exists.
Applicant C confirmed that he has not replaced carpet or baseboard, or repainted the areas complained of. Further, the Applicant C confirmed that water penetration has taken place on the following dates in the following areas:
December 9, 2009 - balcony door of Units 21 and 23, master bedroom of Unit 21
December 26, 2009 – balcony door of Units 21 and 23, master bedroom Unit 21
November 16, 2010 – balcony door area of Unit 23
April 16, 2011 - master bedroom of Unit21
January 12, 2012– balcony door Unit 21
February 24, 2012 – balcony door and master bedroom Unit 21
February 29, 2012 – balcony door both Units 21 and 23
June 1, 2012 – balcony door of Unit 21 and 23, master bedroom #21
Applicant L testified that she provided Mr. Heric with pictures of the water penetration of the living room and master bedroom of Unit 21 at the time he carried out his inspection on November 2, 2011. She assumed that would be sufficient to show that there was a problem.
The Applicants obtained a free quote from Mr. Andy Psang who was summoned to appear. Mr. Psang went into both units and was provided with pictures of past water penetration. He did not carry out any tests. His quote was an estimate of what it might cost to find the cause of the water penetration and potentially what it might cost to make repairs, which involved the re-roofing of the units.8 Mr. Psang had not made a determination of the source of the problem when preparing the quotes.
Evidence of Tarion.
The evidence of Tarion consisted of documentation and the testimony of field claim representatives Daniele Conte, Sedin Heric and Donald Butwell. The following is a summary of the relevant evidence.
Mr. Conte has been a field claims representative for 7 years. He testified that Tarion’s test for water penetration is a water test: it does not do destructive testing. It is done in accordance with the Construction Performance Guidelines (CPG). Typically, water tests are done with the builder present although he testified he has had a situation when the builder has done the test. He would normally hold the hose with the builder standing beside him.
With respect to the water test on Unit 23, Mr. Conte confirmed that he did a water test on the balcony door on May 25, 2011, as that was the item of claim. It was found that water did penetrate the door. The builder had a representative of the door company there. Mr. Conte testified that the homeowner asked him to go to Unit 21 and do a water test on the roof area but this was not an item that he was there to attend to so he declined.
Mr. Heric has been a Field Claim Representative for 5 years. He first inspected Unit 21 on November 2, 2010. He did not do a water test at the time of this inspection. He did not see any staining in the corner of the master bedroom, which the homeowner had pointed out. It was his evidence that in instances where water penetration is minor, staining may not be seen. He also testified that he did not do a water test on November 2, 2010, because of the weather. His written report of the inspection makes no mention of this fact.
Mr. Heric was in attendance on June 2, 2011, at Unit 21. It was his evidence that the builder has the right to make repairs and that having repairs or maintenance done to the door prior to the test does not affect how he views the results of the water test on the door. Mr. Heric went on to testify that he would not characterize the work done on the door before the water test as repairs – it involved tightening screws and caulking.
With respect to the water test done relating to the complaint of water penetration in the master bedroom, the actual test was done by the builder’s representative Mr. Marcoccio as Mr. Heric could not fit through the window. Tarion does not generally go on a roof although there are exceptions. There were no leaks detected as a result of the water test. Mr. Heric indicated that Tarion has to observe water penetrating into the home, to warrant such a claim and a water test must be performed. This is not true for a decision to not warrant a claim for water penetration, that decision can be reached without a water test.
Mr. Heric was also in attendance at the Applicants’ home on April 4, 2012. According to his understanding, the Builderhad requested an investigation prior to the hearing to “see if there is a problem”. He confirmed that Mr. Butwell explained to the Applicants at the outset of the investigation that the Tarion representatives were there to observe only. When asked if he had offered to do a water test on that day, Mr. Heric replied that the Applicants had an issue with the Builder doing a water test. He indicated that it would not make a difference who did the water test and that it was his intention to stay while the builder did the test. He further stated that the reason he was there was to observe a water test by the Builder. He was told to attend by Tarion’s Counsel, Mr. Camp.
In cross examination, Mr. Heric indicated that Tarion does not let a homeowner know if they are doing a water test or not. Mr. Heric was asked whether it is the end of a matter if not warranted. Mr. Heric response was that it doesn’t mean it is the end of the matter; if contacted Tarion can do a re-inspection that may require a water test.
Mr. Heric testified that generally, for water penetration, he looks for staining as it is most likely to occur, although in there is always the odd chance that there is not staining. He went on to say that “we look for defects from a normal viewing position – 2 m away”. If investigating for certain things, he may look closer but generally from standing position. However, he indicated in the case of the Applicant’s home, he took a closer look.
The witness was shown the Service-Order of the Added Party, signed February 10, 2010, relating to Unit 21 and water penetration at the door to the balcony from the living room. The Service-Order notes that the carpet/underpad around and along the door was extremely wet. Mr. Heric indicated that he remembered looking at the area but did not see any stains.
In redirect, Mr. Heric confirmed that he took pictures on April 4, 2012. He did go to the areas that had concerns and did not make any observations that suggest there was ‘active’ water penetration. He did not see any water staining on the underpad, floor, or carpet.
Mr. Butwell testified that it is the practice of Tarion representatives to follow the guidelines for tests regarding warranted or not warranted items. In the case of Unit 23, he did not find the builder resistent and believed they have fulfilled their obligations. With respect to the homeowner’s obligations, Mr. Butwell testified they are to identify the defect and to point it out, provide access and continue to provide access if the item is found warrantable. Mr. Butwell when on to describe the purpose of the access and continued access as to “look for capability of having proper viewing on the interior and on the exterior”.
During Mr. Butwell’s first appointment at Unit 23, he was advised that the item of concern had been repaired but that Applicant C was sceptical that the problem was resolved. Eventually a water test was carried out by Mr. Conte and the repair item failed, proving the Applicant to have been correct.
Mr. Butwell understood that the meeting on April 4, 2012, was to investigate and determine the root of the problem. He believed, based on the knowledge of the issues, that a water test would be done. The homeowner allowed only the Added Party and Tarion representatives to come in. The homeowner identified the areas of concern. The homeowner was requested to peel back the carpets and did so. When Mr. Butwell got down on his hands and knees, he saw that some water had been there. Mr. Marcoccio wanted to do a water test and Applicant C said no. Mr. Butwell testified without the water test there was nothing more that could be done for the homeowners “supposed” claim. Applicant C indicated the Parties could investigate and said both Tarion and the Builder could take pictures. Mr. Butwell confirmed it was the Added Party’s appointment to investigate. The decision to come was made between Mr. Butwell, his manager and legal counsel. Tarion was not required to attend because it was a builder’s investigation.
Mr. Butwell inspected Unit 23 on September 15, 2010. He found that there was no moisture or dampness in the area complained of and concluded that there was no water penetration that amounted to a breach of warranty.
Evidence of the Added Party
The evidence of the Added Party consisted of documentation and the testimony of Corey Libfeld, President of Custom Care, Jack Marcoccio, Custom Care Manager, and Richard Derbecker.
Mr. Libfeld testified he sent the letter of March 5, 2012, setting a time to attend Units 21 and 23, as a result of previous letters received by the Applicants. The intent was to review at the alleged concerns that the Applicants had. At that point in time, he thought it was important to contact Tarion and legal counsel to discuss the matter. He stated that the Added Party was willing and able and “if this concern really existed and we can re-address to determine if exists, we were prepared to deal with the remedies for it”.
The letter sent by the Added Party to Applicant C dated April 11, 2012,9 set out what transpired on April 4th. The letter states:“We were prepared to complete a thorough investigation of the water penetration areas which would have included extensive water testing however, Applicant C advised that he would allow a visual inspection, with no water testing.” It goes on to say “As our experts were not allowed to conduct their inspection we consider this a denial of access.” The final comment was “Based only on our visual inspection of your water penetration concerns at both homes, there were no apparent defects in the workmanship or material that would indicate water entry.”
Mr. Libfeld testified to the terms of the Applicants’ agreement of purchase and sale with the Added Party. In particular, sections 4.01 and 4.02 relating to the Vendor’s warranties being limited to those written in the agreement and those administered by Tarion. Reference was also made to sections 8.01 and 8.02, the latter which sets out the purchaser’s obligation to (b) “arrange at times convenient to the Vendor for entry into the dwelling or onto the lot for the Vendor or its trades to examine any alleged deficiency, missing items or complete work and/or to remedy the same:” Based on this contractual term and the homeowner’s obligations under the Act, Mr. Libfeld’s conclusion was that the homeowner was obligated to allow the Added Party to go in and review the matter, which the homeowner did not allow.
Mr. Libfeld testified as to his involvement with the development of the CPG. Mr. Libfeld was involved with the first edition and subsequently was asked by Tarion to assist in the review of items for the second edition. He was honoured, and concluded that they must have thought a lot of his input to ask him to be involved in the second edition. According to the witness, the review committee spent a good deal of time discussing the test to be applied to determine water penetration. Mr. Libfeld read from the Third Edition of the Construction Performance Guidelines,10 which he testified is the same as currently in effect, under the section dealing with how to conduct a water test. It states “A water test shall be performed to confirm water leaks, both above and below grade”.
Mr. Jack Marcoccio, currently the Customer Care Manager with the Added Party, is involved in visiting homes and evaluating concerns. He visited both Units 21 and 23 several times. One of his duties is to deal with water penetration. If he had any doubt of the source of water penetration, he would perform a water test as it is the most economical and accurate way to locate the problem. He has performed hundreds of water tests.
Mr. Marcoccio was in attendance when Mr. Conte did a water test on the balcony door at Unit 23 on May 25, 2011. That test determined there was a leak from the window insert. It was resealed and when retested,it leaked again. He explained that if silicon is applied when a surface is wet, it will not work.
Mr. Marcoccio testified that on April 4, 2012, he was prepared to do an extensive investigation and water test of the Applicants’ home. The Added Party had a representative of the window company present because it was their product and they were there to defend it. He was there to do a water test to see if there was a problem with the door or window system.
When asked what he thought the April 4, 2012 appointment was for, Mr. Marcoccio testified “If there was a problem we were there because we wanted to resolve the problem if something there”. He went on to say “we still stand with the position that nothing is wrong with the product.” The Added Party wanted Tarion to observe that the Added Party was doing a water test and to see it done properly. Further, Mr. Marcoccio testified that he discussed this file with Mr. Libfeld and it was determined that the Added Parted needed to attend “to do a water test to see if the alleged concern was actually true”. This step was seen as a means of avoiding the hearing. It was his evidence that a conclusion could not be drawn from pictures. The Applicants did allow the carpets to be pulled up and pictures taken, but there was no evidence that anything looked “out of the ordinary”.
The Added Party’s Service Order of July 13, 2010, referred to by the Applicants in their Notice of Appeal, and suggesting that there was an issue with the brick flashing on Unit 21, was in Mr. Marcoccio words inconclusive. He felt the roofing company was simply speculating as they saw nothing wrong, assumed the homeowner has a problem, and so pointed a finger to the brick layer. Ultimately, he believes the water test on April 4, 2012 would have established if there was or was not a concern.
In cross-examination, Mr. Marcoccio indicated that he did not know if any work was done by the bricking company. He also explained that he attended Unit 21 on October 5, 2010, (one of the two days booked with the Applicant L), because he wanted more history and more clarity. He produced a full copy of his memo of that inspection, part of which was included in the Notice of Appeal of Applicant L. 11 In that document, Mr. Marcoccio describes the homeowner’s claim that there was water penetration in the master bedroom which Applicant L claimed was not from snow or wind driven rain, but believed there is a defect in work and/or materials. He also notes that the homeowner provided a photo of water penetration to the subfloor buthe was unable to verify a defect in work or material from the photo. Mr. Marcoccio’s last written comment on this point was “Homeowner feels that it is not normal”. Mr. Marcoccio testified that only he was in attendance on October 5, 2010, and that no repairs were planned.
Mr. Marcoccio was asked about the required frequency of maintenance. He indicated that it has to be looked at all the time, that there was no exact science. With respect to caulking, it should be checked every year between seasons, once or twice a year. He believed the water penetration which occurred on May 25, 2011, was because of a lack of maintenance. This water penetration was the result of the water test conducted by Mr. Conte and led to the finding that there was a breach of warranty.
Expert Evidence
At the outset of day four of the hearing, the Added Party requested that they be permitted to call expert evidence regarding water tests. After some discussion, the Tribunal ruled to allow this evidence with the stipulation that any prejudice to the Applicants was to be addressed by allowing them, if they so chose, to call an expert witness in reply. After reviewing the expert’s written opinion and hearing his testimony, the Applicants indicated that they would not call any expert evidence.
Mr. Richard Derbecker works for the company Construction Control Inc. His academic training was described on his Curriculum Vitae as four years at Ryerson Polytechincal Institute, in Architectural Science, Major Building Science. He has been employed in the area of building sciences/technology since completing his education in 1989. He has done work for the Added Party’s parent corporation over a number of years and has worked extensively in dealing with problems of water penetration. The Tribunal was satisfied that Mr. Derbecker should be qualified as an expert.
Mr.Derbecker provided his opinion that a water test is required to determine the location of a leakage of water through a building envelope.It is standard practice in the industry to do a water test of the suspect area. He stated in his report “destructive investigation used to inspect the concealed components does not provide confirmation of a location of water penetration without a water test to confirm the area being looked at is the source of entry.”
In his testimony, Mr. Derbecker described how a water test would usually start below and work way up as water wicks up. He went on to say that the problem could be 2 or 3 stories from where the water comes in. If there is no success in finding the leak using the typical test, a ‘blower door’ may be required. This depressurizes a house to draw the water in. He indicated that it is often difficult to isolate a leak. The standard Tarion test uses a spray method only.
THE 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,
(c) such other warranties as are prescribed by the regulations.
Exclusions
(2) A warranty under subsection (1) does not apply in respect of,
(f) damage resulting from improper maintenance;
The applicable provisions of Regulation 892
- (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; (“envelope”)
(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;
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.
ISSUES
1.Should theApplicants’ claim for water penetration be warranted under the Act?
- Did the Applicants’ failure to consent to a water test being done by the Added Party on April 4, 2012,amount to denial of access which voidstheir warranty for water penetration under the Act?
APPLICATION OF LAW TO FACTS
The two Decision Letters under appeal contain decisions relating to items other than items of water penetration, however, no evidence was lead in support of the Applicants’ appeal of those items. Having failed to any defect in relation to work or materials with respect to these claim items, Tribunal finds that they are not warranted. The claims with respect to water penetration are dealt with below.
Issue 1: Should the claims for water penetration be warranted?
There is no dispute that the Applicants’ claims for water penetration were made within the applicable warranty period. The warranty for water penetration relates to water penetrating the building envelope. A home is to be constructed such that the elements, rain and snow and that in between, are kept out, The Applicants have included, in their claim for water penetration, a claim that water is leaking from the balcony area down the front of the bricks underneath. There was no evidence that this complaint involves water coming into the home, or penetration of the building envelope, and therefore it is not warrantable.
With respect to water coming into the home, the facts are that water penetration occurred at both Units 21 and 23 on December 9 and December 26, 2009. In both units, there was water penetration in the living rooms by the balcony doors. These facts are not disputed. The Added Party responded to this water penetration by replacing the balcony doors in both units in February of 2010. Notwithstanding the replacement doors, the Applicants reported water penetration on their second year forms for both units, as it was still a concern to them.
Unit 23 – Balcony door
The Added Party attended Unit 23 in August of 2010 in anticipation of the conciliation inspection to investigate the complaint, but did only a visual inspection and did not find any defects. Mr. Butwell attended September 15, 2010, and after making a visual inspection only, concluded that there was no water penetration. On November 16, 2010 however, the Applicants reported water penetration at Unit 23 to Mr. Butwell. He suggested they themselves do a water test. They did so, and water penetration occurred in the balcony door area. Mr. Butwell re-inspected Unit 23 on January 27, 2011and concluded that the complaint of water penetration required further investigation. A follow up water test was done in on May 25, 2011, and water penetration did occur, even after adjustments were made to the door. The claim was then warranted and the glass insert for the door was replaced. There is no evidence that there was ever a finding,or suggestion by Tarion or the Added Party that there had been improper maintenance of the balcony door of Unit 23.
It was the Applicants’ evidence that water penetration occurred again, in respect of Unit 23, on February 29, 2012, and on June 1, 2012, at the balcony door area. The Applicants provided photographic evidence of water seeping into the unit through the building envelope. Based on the evidence, the Tribunal finds that there has been water penetration of Unit 23, by the balcony door area, twice in December 2009 prior to any repairs, in November of 2010, in February of 2012,, and in June of 2012 after after the entire door was replaced and repaired. The Tribunal also finds that there is no evidence that water penetration has been as a result of poor maintenance on the part of the homeowner at any time.
Tarion argues that even if water penetration has occurred, a fact which the Tribunal understood Tarion Counsel to concede, the infrequency, on average once a year, and the fact that it has not lead to any damages, renders the breach so minor as to not be warrantable. There was no evidence before the Tribunal that the water penetration has been the result of any extraordinary weather conditions. Water leaking into a home is not a cosmetic issue and the fact that it has not ruined the carpet or walls, to date, is not, in the Tribunal’s opinion, a very persuasive argument as to why it should not be fixed. It may be that the repairs done todate have partially corrected the problem, but the Tribunal finds that there has been and still is water penetration of Unit 23 which has not been corrected by those repairs and finds that Applicant C’s claim in this regard is warranted.
Unit 21 – Master bedroom
With respect to the master bedroom of Unit 21, based on the evidence submitted, the Tribunal finds that there has been water penetration in the master bedroom, twice in December of 2009, once in April of 2011, once in February 2012, and once in June 1, 2012. Water has seeped into the corner of the bedroom at the bottom of the wall. Clearly this is not normal and there is an issue here. There was no evidence that there was any maintenance issue or any extraordinary weather systems occurring at the times of the water penetration. The Tribunal notes that a water test carried out by Mr. Marcoccio on June 2, 2011, while theTarion representative remained in the house, provided negative results. However, the facts are that there have been two occurrences of water penetration since this water test. The Tribunal concludes that this test was unsuccessful in identifying the source of the leak, it is not proof that there is not one as there is clear evidence to the contrary. The Added Party’s expert evidence suggests that what may have been needed, to properly detect the source of the problem, was a more thorough water test. There is no evidence that repairs have ever been undertaken to correct this problem, it is therefore not surprising it continues to exist. The Tribunal finds that Applicant L’s claim for water penetration of the master bedroom of Unit 21 warranted.
Unit 21 – Living room
With respect to the balcony door area of the living room in Unit 21, the Tribunal finds that there has been water penetration in this area twice in December of 2009, prior to repairs, and four times after repairs, on January12,, February 24, February 29 and June 1 of 2012.
Despite photographic evidence of previous water penetration, the Tarion representative attending November 2, 2010, could not detect any evidence of water penetration. There were no comments that any observations were made of any maintenance deficiencies in the assessment report of the November 2, 2010 investigation. Mr. Marcoccio of the Added Party did his own assessment of the alleged defect prior to this investigation and he provided no evidence of any improper maintenance. The Tribunal therefore concludes that there were no maintenance issues at that time.
The Applicants conducted their own water test on this area on November 27, 2010 and found that there was similar water penetration in both Units. This appears to have laid the ground work for the belief that there were similar problems with the two units. The belief that there was something wrong with Unit 23 was vindicated on May 25, 2011, with the water test conducted by Mr. Conte. It can be understood how the Applicants formed the opinion that the repairs carried out without Applicant L’s approval on the balcony door of Unit 21 on June 2, 2011, interfered with the outcome of the water test.
The Warranty Assessment Report provided by Mr. Heric, after the June 2, 2011, inspection indicates that “The builder did adjust the door sweep of the balcony door as well as add some caulking on the day of the re-inspection just prior to the water test”. There is no indication that the door was inspected by Mr. Heric prior to this work being done and there is nothing in his report that indicates that these repairs were required because of the Applicants’ failure to maintain. These repairs were quite possibly needed to correct part of the water penetration problem, but there is no evidence that they were needed as a result of any improper maintenance.
Based on the evidence before it, the testimony of the Applicants and the photographic evidence of the water penetration, the Tribunal finds that water penetration has occurred four times since the June 2, 2011 investigation and negative water test results. The Tribunal concludes that the water test undertaken was not successful in identifying all the sources of water penetration affecting the area complained of. The Tribunal finds there to be a breach of warranty, which is not too minor for the same reasons set out above for Unit 23, and therefore Applicant L’s claim for water penetration of the living room of Unit 21 is warranted.
Issue 2 – Was the Applicants’ warranty voided by not allowing the Added Party
It is argued by the Added Party that the Applicants’ claims should be denied on the basis that their refusal to allow the Added Party to conduct a water test on April 4, 2012, amounted to a denial of access and voids their warranty protection.
In support of this argument, the Added Party relies on s. 8.02 of the Agreement of Purchase and Sale for both units which provides that the purchaser is obligated to “arrange at times convenient to the Vendor for entry into the dwelling or onto the lot for the Vendor or its trades to examine any allege deficiency, missing items or complete work and/or to remedy the same:”
With respect to Unit 23, the evidence indicates that the Added Party was provided access to carry out repairs after the first incidents of water penetration. Access was also provided to examine alleged deficiencies in August of 2010, and again during the conciliation inspection of September 15, 2010. On neither occasion was a water test suggested or undertaken. The Added Party and Tarion had the opportunity to examine the alleged deficiencies again in January of 2011. Further investigation was carried out on May 25, 2011, including a water test, and it was found that there was in fact a problem with water penetration. The Added Party was permitted to carry out repairs on June 2, 2011. From December 2009, when water penetration first occurred, to the commencement of this appeal, there is no evidence that the Add Party was ever denied access to either examine the alleged deficiencies in Unit 23 or to remedy them.
With respect to Unit 21, the Added Party had an opportunity to inspect and carried our repairs in February of 2010. It was then given two further days, October 5 and 14, 2010,to access the Unit and examine the alleged deficiencies. Mr. Marcoccio attended but no water test was requested. Mr. Heric attended on November 2, 2010, and Mr. Marcoccio was again in attendance. Photos of previous water penetration were provided; no water test was requested or undertaken by either Tarion or the Added Party. There was no notation in the warranty assessment report produced that a water test had been contemplated or that weather had been an issue. Mr. Heric testified that the weather had not permitted it. The Tribunal did not find his evidence persuasive. His detailed written report made close to the time of the inspection, did not mention adverse weather on November 2, nor did it indicate that there would be follow up in better weather, which would be expected if, in fact, it had been the intent. Both Tarion and the Added Party were permitted to attend on June 2, 2011, and water tests were conducted on both areas of complaint. The Added Party carried out repairs, although without the prior consent of the Applicants, on June 2, 2011. From December 2009, when water penetration first occurred, to the commencement of this appeal, there is no evidence that the Add Party was ever denied access to either examine the alleged deficiencies in Unit 21 or to remedy them.
With respect to April 4, 2012, the facts are not disputed. The Applicants agreed to the date. Upon hearing Tarion would be in attendance, they sought clarification in writing who would be attending and what would be happening. They were not told there would be a water test. The Applicants were told that Tarion would just be there to observe. The Added Party’s representatives were permitted in the home, carpets were rolled back, and pictures were taken. This was what took place when the Added Party attended prior to the conciliation inspections to examine the alleged deficiencies and when Tarion carried out its conciliation inspection.
Section 8.02 of the Agreement of Purchase and Sale requires that the Purchaser allow “the Vendor, or its trades, into examine any deficiencies and to remedy them”. By its argument, the Added Party is suggesting that ‘examine’ should be interpreted to include ‘conduct a water test’. It is not clear to the Tribunal that this is a reasonable interpretation of ‘examine’, as clearly from the evidence it is in fact not consistently done. Mr. Marcoccio and the Tarion representatives attended the Applicants’ units on a number of occasions, to examine the alleged defects, where a water test played no part. Applicant C made specific inquiries as to what would take place on April 4, 2012, and no mention was made of a water test. If that had been the intent, and Tarion was going to take the position that if the Applicants did not allow it their warranty would be voided, they should have advised the Applicants of that fact. At the time of the April 4, 2012, meeting, the Applicants were engaged in a process which clearly was adversary in nature and understandably did not want to allow anything done improperly which would be prejudicial to them.
The only person not permitted access on April 4, 2012, was the window company representative. The Added Party refers to this individual as being their ‘expert’ in their correspondence to the Applicants of April 11, 2012, however, there is no evidence that this individual was an expert in doing water tests. Mr. Marcoccio in his testimony described the window company representative as being there to ‘defend their product’. They clearly were not there as an independent expert to find the source of the leaks complained of and the Applicants, not surprisingly, did not want to have them involved given their past experience of June 2, 2011, when unauthorized repairs were done which led to the Applicants’ not being refunded the fee they were charged for requesting a conciliation inspection.
With the exception of the first two occurrences of water penetration, it would appear that the Added Party has taken the position throughout that if there was a problem, it was fixed. Even after the commencement of these proceedings, the Added Party was quick to write to the Applicant that the problem was resolved because the Applicant L indicated on the phone that their homes had not leaked on a particular day that the Added Party inquired about. The Added Party has not conceded there is a problem of water penetration. There is no evidence they were ever denied access to complete repairs. The position the Applicants took on April 4, 2011, that they did not want a water test conducted by the Added Party, who has not acknowledged the legitimacy of their complaint and is an opposing party in an ongoing legal proceeding with an obvious vested interest in the outcome of any water test, was understandable and not unreasonable. The Tribunal does not find that the Applicants were in breach of any obligation either under the Act or their Agreement of Purchase and Sale with the Added Party which would void their statutory two year warranty for water penetration.
ORDER
The expert testimony in this proceeding made it clear to the Tribunal that the determination of the cause of water penetration can be very difficult and may require testing beyond that set out in the CPG.
The Tribunal finds as a fact that there has been water penetration of Unit 21 and Unit 23, in the areas around the living room balcony doors in both units and in the Master bedroom of Unit 21. Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs Tarion to carry out the necessary steps to determine the cause of this water penetration, which the Tribunal has found to be a fact, with the understanding that this may require the involvement of persons with expertise in the investigation of water penetration issues such as the Added Party’s expert. Tarion is further directed to ensure that the necessary repairs, to correct the water penetration problems, are completed.
LICENCE APPEAL TRIBUNAL
Elizabeth Sproule, Vice-Chair
Released: November 19, 2012