Licence Tribunal
Appeal d'appel en Tribunal matière de permis
FILE: 7741/ONHWPA
CASE NAME: 7741 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
REASONS FOR DECISION AND ORDER
ADJUDICATOR: Keith Penner, Member
APPEARANCES:
For the Applicants: Self-represented
For the Respondent: Montgomery Shillington, Counsel
For the Added Party: No one appearing
Heard in London: April 10, 11, & 12, 2013
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 October 30, 2012 with respect to a new home purchased from Cameron Properties, Inc., (the “Added Party”), in which Tarion denied the Applicants’ claim.
PRELIMINARY MATTERS
Tarion filed a Supplementary Decision Letter, dated March 28, 2013, and requested that it be made a part of the proceeding. The Supplementary Decision Letter was further to the Decision Letter of October 30, 2012, but is not part of the existing notice of appeal. The parties requested that it be dealt with in the context of the current appeal. The Tribunal granted the request.
BACKGROUND
The Applicants’ dwelling was completed for possession on July 24, 2008. Tarion received the Applicants’ Warranty Form on August 5, 2010 and inspected the dwelling on September 23, 2010 and several times subsequently. The September 23, 2010 visit was conducted on an emergency request basis to investigate a claim that there was mould in the home. A Warranty Assessment Report followed on February 10, 2011.
The Assessment Report concluded that the mould condition in the home, likely caused by a basement window leakage, was warranted and remediation was required.
The Vendor Builder, Cameron Properties Inc., went into bankruptcy as of January, 2011. Following the Assessment Report of February 10, 2011, Tarion reviewed all reports and information and took action to remedy the mould situation in the home.
When the remedial work was completed, Tarion considered the home to be safe, habitable and that the mould problem was resolved in accord with the mould clearance certificate dated March 1, 2011.
On March 21, 2012, the Applicants requested from Tarion a formal Decision Letter, stating: “Due to your non response with our concerns and your non-compliance with the completion of the scope of work your office previously forwarded to us”. As well, the Applicants indicated that the amount offered for the cleaning and laundering of their clothing and for damaged personal effects was inappropriate.
A pre-hearing in this matter was conducted on December 18, 2012. The pre-hearing order dated January 11, 2013, stated:
“2. Tarion shall arrange to have the Applicants’ entire home and contents tested for mould by an independent qualified entity to determine if the mould remediation performed to date has eliminated the mould issue in the home.”
In response to this Order and to the concerns of the Applicants, Tarion had a further mould test conducted by Pure Balance Environmental Inc. Their report, dated January 29, 2013, was subsequently relayed to the Applicants. Based on the findings of this report, Tarion is prepared to do further mould testing as outlined in the Supplementary Decision Letter filed with the Tribunal at the commencement of this hearing.
The Applicants’ Evidence:
The Applicants are husband and wife and both gave evidence. A summary of their testimony follows:
They spoke of the turmoil and the nightmare they had been subjected to for the past three years. In 2009, they first noted mould growth in the basement bedroom which then spread throughout the basement. The builder removed some of the drywall and found that a window was leaking. Some foam was applied around the window and then a steam company sprayed a mould prevention substance on the wood frame before the bedroom was refinished. In 2010, they noticed that the mould problem had returned and that the smell was unbearable.
When Tarion did visit the residence for an emergency meeting, the Applicants allege that the appropriate action was not taken at the time. They argued that a simple water test then would easily have identified the problem and prompt remedial action would have avoided all of the difficulties that ensued. The Applicants see this failure of a pro-active approach to the problem to be an example of Tarion’s negligence.
Delays in acting and failure to follow Tarion’s own policies and procedures, the Applicants argued, resulted in a worsening of the situation before Tarion finally brought in an independent contractor to confirm what the homeowners had been saying. When the remedial work was started, the Applicants believe that there was too much cost-cutting and not enough consultation with them. They saw the working relationship between Tarion and the contractor as constituting a conflict of interest on the part of Tarion. They insisted that they should have been much more involved in the remedial process.
The Applicants made reference to their health problems, which they contend have been partly caused and certainly worsened by the mould problem in their home. Concerns were expressed about the effect of the mould on their young child and whether the environment in the house was safe for the Applicant wife, who is expecting a second baby.
They fear that as a result of this mould contamination, the value of their home has decreased. They felt that maybe the home should be condemned as not fit for habitation.
Because of the mould level in the home, the Applicants say that they were forced to move to their parent’s house while remedial work was being done. Much of their clothing was contaminated with mould spores and had to be placed in plastic bags and stored in the garage. New clothing had to be purchased and they face the cost of dry cleaning and laundering for the bagged items.
The Applicants feel strongly that in having been denied access to their home for a period of time and in facing mould contamination in their home and to its contents, they have been deprived of their human rights. They noted that Tarion denied their claim for too long before getting expert opinion and beginning the necessary remedial work.
The Applicants continue to believe that the home is not yet a safe place to live and that the process used to clean it was unsatisfactory. It was stated that the work performed should be done to the satisfaction of the homeowners without any extra costs to them. They are not convinced of the validity of the test results regarding the concentration of mould contamination in their residence. They stated that there were damages to some of their household items in addition to the clothing. They were seeking additional compensation to cover these costs. They indicated that the amount offered by Tarion was inappropriate.
THE RESPONDENT’S EVIDENCE:
The first witness for the Respondent was Mr. Mike Hanas. Mr. Hanas has been with Tarion for the past fifteen years and currently holds the position of manager of licencing and underwriting. Previously, he had been manager of claims.
Mr. Hanas outlined the procedures that were followed with the respect to the Applicants’ claim. In this case, it was determined that an emergency situation existed and health and safety concerns were evident. The claim was further complicated with the bankruptcy of the builder.
Tarion investigated the mould claim in the home and issued a Warranty Assessment Report on February 10, 2011. The report noted that a mould inspection had been performed by Tarion consultant UBS. Mr. Hanas noted that Tarion does not have an in-house group of experts and so relies on outside companies to provide such services.
The report concluded that the mould condition in the house was warranted as was the leak in the basement window. Professional repairs and remediation work were required along with reinstatement of the basement bedroom finish. The owners were reminded that mould on their contents was secondary damage and was not covered under the statutory warranty wherein these items are listed as exclusions.
Despite the statutory exclusions, Tarion may and does, on occasion, make discretionary payments to claimants. Mr. Hanas explained that this was sometimes done because warranties are not all inclusive. In some cases, it is done in the interest of fairness or perhaps to avoid litigation.
In the case of the Applicants, such a discretionary payment was made to reimburse them for accommodation costs A further such payment was offered for clothing cleaning costs and for damaged articles that were disposed of during remediation.
This latter offer was rejected by the Applicants.
Mr. Hanas testified that some of the work contracted for in the basement of the Applicants’ home was not completed by UBS. He said the reason for this was that the owners had lost confidence in the contractor
The second witness for the Respondent was Mr. Bob Sholtanuk, who is the manager of warranty services and has ten years of experience with Tarion. He testified that he became involved with this claim when the Applicants requested a Decision Letter. He saw his task as that of determining the grounds for the appeal. In particular, the witness said that he inquired as to whether the mould problem had reappeared.
Mr.Sholtanuk said that when it was established that the rationale for the Decision Letter was completion of the scope of work previously outlined for the Applicants and a reconsideration of the amount offered for clothing laundry and cleaning and damaged personal effects, the Decision Letter was issued on October 30, 2012.
In the Decision Letter prepared by Mr. Sholtanuk, it was noted that Tarion had remediated the mould and repaired the home. A mould remediation certificate proved that work done was successful. In addition, Tarion noted that no secondary damages would be paid to the Applicant in that the Ontario New Home Warranties Act excludes payment for such damages.
The witness then noted that when the Applicants appealed this decision, a pre-hearing was held which then ordered that more testing be done to determine if the remediation work done to date had eliminated the mould issue in the home. When asked, the witness stated that reference to “the entire home” in the Pre-Hearing Order, meant the habitable area of the house. It did not include the garage. Further, he indicated that there was a methodology for testing contents. This involved selective testing in various areas of the home to determine the spore count. He added that furniture did not need to be removed from the home while the testing was being done. The exception was the contaminated playpen in the basement which the Applicants could safely remove themselves, wrap plastic around it and put it out for garbage disposal.
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,
(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
Should further testing for mould in the Applicants’ home should be carried out by Tarion?
Are the Applicants entitled to compensation for the cost of cleaning and laundry of damaged personal effects from Tarion, pursuant to the statutory provisions?
APPLICATION OF LAW TO FACTS
Regarding the first issue, the Tribunal notes that in its Supplementary Decision Letter, dated March 28, 2013, Tarion states that in response to the Applicants’ concerns, it is prepared to do further testing in the home. In making this offer, Tarion maintains that the remediation work conducted in 2011 resulted in the warranted claims being resolved, and that the mould that is currently present in the home is not due to any action or inaction on Tarion’s part. However, Tarion is prepared to do this testing in order to provide greater certainty, and further assurances to the Applicants, that the home is safe and habitable.
Regarding the Applicant’s claim for payment for the cleaning of clothes and for damage to personal effects, the Ontario New Home Warranties Plan Act at 13 (2)(b) states that the warranty under subsection (1) does not apply in respect of secondary damages, such as property damage. The statutory wording is clear. The Tribunal has no jurisdiction to order such a payment.
It is true that Tarion made and offered gratuitous or goodwill payments to the Applicants. The Tribunal has no jurisdiction to review or amend such decisions.
ORDER
Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs Tarion to deny the claim as set out in the Decision Letter dated October 30, 2012 which is the subject matter of this appeal.
The Tribunal notes that the Supplementary Decision Letter dated March 28, 2013, became a part of the proceeding, but not a matter of appeal. Upon hearing the submissions from the parties regarding the issues addressed in that letter, the Tribunal directs Tarion to proceed with the work referenced in this letter, namely:
a. Conduct destructive testing on the two exterior walls of the basement bedroom (north-east corner) to determine whether there is any active mould growth behind the walls that is the cause of the mould in the air. If active mould growth is found behind the walls, then it will be remediated. The room will be restored to the condition existing prior to the destructive testing.
b. After the destructive testing is conducted, Tarion will perform the recommendations outlined in section 6 of Pure Balance’s report dated January 29, 2013. These recommendations will be performed even if no active mould growth is found as a result of the destructive testing performed.
c. Once the remediation has been performed as outlined above, Tarion will have a further mould test conducted to ensure that the mould levels in the home are within the tolerances in order to be habitable.
LICENCE APPEAL TRIBUNAL
Keith Penner, Presiding Member
Released: April 30, 2013