7663 v. Tarion Warranty Corporation, 2013 CanLII 27302

Licence Tribunal

Appeal d'appel en

Tribunal matière de permis

DATE:

2013-03-10

FILE:

7663/ONHWPA

CASE NAME:

7663 v. Tarion Warranty Corporation

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

The Applicants

Applicants

• and -

Tarion Warranty Corporation

Respondent

• and -

Ed Robinson Homes Ltd.

Added Party

DECISION AND ORDER

ADJUDICATOR:

D. Gregory Flude, Vice-Chair

APPEARANCES:

For the Applicants:

Self-Represented

For the Respondent:

Kyle Magee, Counsel

For the Added Party:

Drew Bowyer, Counsel

Heard in Hamilton:

April 17 – 19 and 22, 2013

REASONS FOR DECISION AND ORDER

1The Applicants appeal from the decision of Tarion Warranty Corporation (“Tarion”) set out in a Decision Letter dated September 19, 2012 to deny their claim for warranty. The vendor of the home, Ed Robinson Homes Ltd. (“ERH”), has been added as a party to these proceedings and supports the position taken by Tarion.

2S. 13(1)(a) sets out the applicable statutory 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;

3The Tribunal heard evidence from each of the Applicants, Steven Allaire, a home inspector retained by the Applicants and Mark Bodogh, the Tarion Warranty Services Representative who carried out a number of inspections of the Applicants’ home.

4The Applicants are spouses. They entered into an Agreement of Purchase and Sale with ERH on or about April 10, 2010 to build a custom home on their own property (Ex 4 Tab 14). The agreement was a costs plus agreement: the Applicants were to pay all of the costs associated with their new home plus a fee of $48,000.00 to ERH. In his testimony, the male Applicant stated that the reason they entered into a cost plus contract was to remove any incentive on the part of ERH to cut corners. ERH’s fee would be $48,000.00 regardless of how much or how little material or labour went into the new home construction.

5During the construction, the Applicant attended the site from time to time and requested that certain features be incorporated into the house. In particular, the Applicant asked that ERH use more aggregate under the basement slab when he was of the opinion that there was insufficient aggregate. He also asked that concrete surfaces have pronounced slopes to ensure water drained efficiently. His standard was the manner in which water drains off a city sidewalk without accumulating even during heavy rain. He wanted to be assured that water in the basement drained towards the two drains and that water in the garage, front decorative planter and back porch drained quickly.

6None of the specific features discussed with ERH were included in the Agreement of Purchase and Sale. Nor were these discussions reduced to writing in the form of a change order or work order. The Applicant’s evidence was that, since the home was a custom home and the Applicants were to pay for all of the associated costs, he should be able to request such ongoing modifications from ERH. There was no cost to ERH for doing as the Applicant asked. ERH did not make the changes requested by the Applicants. In assessing the applicable standards, Tarion applied the standards found in the Construction Performance Guidelines (“CPG”) (Ex. 7) and not the higher standards the Applicants feel are applicable because the home is custom built and specific performance standards were requested.

7The Decision letter cites 21 unwarranted items. Of these, Tarion advised the Tribunal that it had reassessed one of those items and now considered it to be warranted. During the hearing, the Applicants withdrew another item. The hearing proceeded on the 19 remaining items.

8The defects address concrete issues, door issues, and the finish of a granite countertop. The concrete issues may then be subdivided into issues dealing with drainage and a cracking issue with the basement slab. With respect to the doors, it is the Applicants’ position that each of the 10 doors has been improperly hung. The hinges are misaligned and no pilot holes were used to install hinges with the result that there is stress on the door jambs and cracking in the doors around the screw holes. The granite on the kitchen counter was scored by ERH employees during construction when it was used as a work bench and the ogee molding along the edge has a ripple. A number of attempts to buff out the scratches and the ripple have been ineffective.

9The first item considered by the Tribunal was the width and location of the vent holes in the exterior masonry. During the hearing, the Applicant conceded that the vent holes were a proper width, were properly located and properly spaced, but he was concerned that they permitted water to enter into the basement. He presented no evidence to support his contention that water from the vent holes in the front planter was leaking into the basement. In addressing this issue in his evidence, Mr. Bodogh stated that any water entering vent holes would simply exit from another hole. The top of the foundation wall would be flashed to prevent water penetration of the building envelope.

10The second issue the Applicants were concerned about is the fact that the vent holes do not have rodent guards. It was the male Applicant’s testimony that they could hear mice scratching within the walls. The Applicants are of the view that good building practice, especially with respect to a custom built home rather than a subdivision home, requires the installation of rodent guards. No evidence was presented to indicate that rodent guards over vent holes are required by the Ontario Building Code (“OBC”). Further, other than the male Applicant’s testimony that he had observed rodent guards in many newly built homes, there was no evidence of normal building practice requiring rodent guards.

11The Applicants apparently have a water penetration issue in their basement which is being addressed in a second year warranty claim. This Tribunal finds that the masonry vent holes are located properly and are the proper width. The Tribunal finds that there is no requirement in the OBC for rodent guards nor is there any evidence that it is normal building practice to install such guards. While the installation of rodent guards may be widely practiced by other builders, the Tarion warranty enforces a minimum acceptable standard, not the best practice in the industry. The Tribunal makes no finding with respect to water leaking from the vent holes into the building envelope. That issue is better addressed in the investigation of the second year claim.

12There were issues regarding the slope of various concrete surfaces. The Applicants expressed dissatisfaction with the slope of the concrete in the front decorative planter, the back porch and the garage floor. The also expressed concerns about the slope in the immediate area of one of the two basement floor drains. The Applicant testified that he had seen sloping concrete surfaces in various new homes he had visited. He stated that he observed that the slope was evident to the naked eye and that such a slope was normal modern building practice. He stated that he had attended during the construction of his house, particularly during the pouring of the concrete, and had specifically asked that the various concrete surfaces have an extreme slope to ensure water drained quickly away for the house. As stated above, his standard was that of a city sidewalk. He pointed out that during a rain storm, water does not pool on city sidewalks.

13Both the Applicant and Mr. Bodogh took a number of measurements in the same location. With respect to the garage, his measurements indicated a positive slope away from the back wall, but in the opinion of the Applicant, it was insufficient. The slope as measured by the Applicant is less than that found by Mr. Bodogh, but at the measuring site it was still positive. The Applicant criticized Mr. Bodogh’s methodology at the hearing, particularly his belief that the area where measurements were taken, garage bay 1, was the most sloped area. It is of interest to note that that is also the area where the Applicant chose to measure. The Tribunal has no measurement evidence concerning the slope in the other two garage bays.

14In his evidence, Mr. Allaire stated that he has observed that it is not uncommon for outside concrete surfaces and garage floors to have a noticeable slope away from the building. He stated that, in such houses: “It is like walking uphill.” He measured the Applicants’ concrete surfaces and found areas, particularly in the garage where the slope was negative, that is, it sloped towards the building, not away from it. He used a one foot level to take local slope readings.

15Mr. Allaire conducted a water drainage test in the garage. He ran water from a hose onto the garage floor and then allowed it time to drain. He noted an area of pooling that he stated might freeze and constitute a safety hazard. He took photographs of the area (Ex 4 Tab 5 Photos 7A). The rest of the water had drained to the outside. He measured the slope of the front planter in areas and found that it sloped towards the outside wall of the house, not towards the weeping holes into the flower beds.

16Mr. Bodogh was not permitted by the Applicants to conduct a water test on the garage floor during any of his inspections. He took measurements with a 4 foot level and determined that, overall, the floor sloped towards the outside. He was allowed to flood the planter. After flooding the planter, he went and examined other areas. He then returned to the planter and noted that all of the water had drained through the weep holes as it was supposed to do. He noted that there was minor pooling against one wall of the house in one corner. He described the amount as incapable of being measured. He took measurements of the back porch and found there was a slope away from the house. He stated that the only requirement applicable to such surfaces in the OBC is a requirement that they slope away from the building.

17It was generally agreed by the Applicants and Tarion that concrete floor will have surface undulations. They are poured by hand and perfection is not possible. Mr. Bodogh drew the Tribunal’s attention to the CPG. The CPG was prepared by Tarion following consultation with various trade and industry groups to provide guidance on acceptable construction performance. He stated there was no specific standard applicable to the finish of exterior concrete surfaces, but that he applied the standard applicable to garage floors to all the concrete surfaces. The relevant standard is 14.6 and it states:

Acceptable Performance/Condition

Provided garage floors are sloped to drain to the exterior, minor variations in the surface of the floor may impede drainage and are acceptable.

18The Tribunal notes that the CPG does not carry the force of regulation. The statutory warranties set out in s. 13 of the Act provide that construction will be carried out in a workmanlike manner, be free from defects in material and construction will comply with the OBC. This standard is not one of perfection and variations may be expected. The CPG provides a good first guide for builders and consumers in delineating acceptable variations provided always that they do not lose sight of the fact that the test is “workmanlike manner.” The danger is that the CPG be treated as an ultimate and inflexible authority without using the common sense that is urged upon its users in the opening words of the section entitled “Scope of the Construction Performance Guidelines.” In the current case, the Tribunal accepts Mr. Bodogh’s approach of applying the garage floor standard to other areas where there is a large expanse of concrete. The similarities in construction methods dictate that the same analysis should apply.

19The dispute between Tarion and the Applicants can be reduced to the fact that the Applicants expected all exterior concrete surfaces to be sloped in such a manner that water would drain instantly and completely. Mr. Allaire’s evidence shows that there are areas of variation in the slope, but his use of a 1 foot level identifies only local variations. Mr. Bodogh’s use of a 4 foot level establishes that, overall, concrete surfaces slope in the correct direction. The Tribunal accepts that in periods of heavy and continuous rain, water may accumulate in the planter and, in certain wind conditions, enter the garage, but it is satisfied that the water drains out as it is designed to do, albeit not at the rate the Applicants thought they were entitled to.

20Water penetration of the garage through the bottom of the garage door was an issue raised by the Applicants in their claim. Exhibit 5 contains a number of photographs of such water penetration. The evidence disclosed that the garage door faces east and during heavy rainfall with strong east winds water will penetrate as is shown. The Applicants assert that the quantity and flow indicate an improperly sloped garage floor. One photograph on page 3 and both photographs on page 6 of Ex. 5 show clearly that the bulk of the water has drained with some damp areas consistent with localized surface undulations as provided for in the CPG.

21The Applicants did not seriously advance a claim regarding leakage under the garage door. The leakage was used to argue an improperly sloping garage floor, rather than breach of a standard concerning watertight garage doors. No evidence was advanced to establish that the OBC requires watertight garage doors. The applicable provision of the CPG, s. 14.5, states: “Garage doors are not required to be weatherstripped and may allow snow and water to enter the garage.” Applying the Applicants’ expected standard, water entering under the garage door would have no dispersal pattern. It would remain in a narrow strip against the bottom of the door. Considering the fact that garage doors do not have to be watertight but garage floors must have a positive slope, the Tribunal finds that water entering the garage under the vehicle door may disperse over the floor provided that, once the weather conditions improve, the water will drain out again. Ex. 5 seems to support the fact that the garage floor drains as expected. Accordingly, there is no warranty with respect to garage floor drainage.

22The basement floor of the Applicants’ home is a single concrete slab of just less than 2400 square feet. It has developed a number of cracks. In some instances there is a vertical face to the cracks. Both Tarion and the Applicants agree that concrete slabs tend to crack as they cure. Tarion takes the position that this is normal shrinkage of the materials and is not warranted. The Applicants argue that there is a defect in the concrete pad and that it either needs to be excavated and replaced at a cost of $28,800.00 plus HST or remediated at a cost of $12,384.80 plus HST (Ex 4 Tab 6 p 16&17).

23The Applicants presented a number of photographs to show the extent of the cracking (Ex 4 Tab 6). Only one of those photographs (4-B) shows an actual measurement. The crack width is 1/12^th of an inch or approximately 2mm, the measurement taken by Mr. Bodogh during his visits. The Applicants testified that the cracks had worsened since Mr. Bodogh’s inspection and provided photographic evidence. In cross-examination, the male Applicant admitted that he had taken pictures of the worst cracks. He urged the Tribunal to interpolate the width by comparison with objects placed next to the whole to indicate the depths of the cracks rather than their width (Ex. 4 Tab 6, 4-R, 4-W, & 4-X). Having examined these photographs closely, the Tribunal cannot conclude that they indicate the width of the cracks with any degree of accuracy.

24The Applicants also complained about heaving of the floor producing vertically displaced cracks. The Applicants produced evidence to indicate that areas in the floor had domed around these cracks to the extent of ½ inch elevation above the surrounding floor elevation. Mr. Bodogh did not measure the height of the uplift of the heaving. He measured the height of the crack at the point of cracking and found the elevation at the fracture surface to be 1-2mm.

25The CPG sets out a standard for cracks in concrete floors. It does not distinguish between width and height. It provides that cracks in excess of 6mm in width are not acceptable. As stated above, the Tribunal has no reliable evidence of the width of the worst cracked areas to indicate that they exceed 6mm.

26The Applicants are of the opinion that the heaving and cracking of the basement concrete slab is due to improper construction techniques and insufficient aggregate and concrete. The male Applicant testified that when he attended on the day the aggregate was delivered, he observed bare areas. He asked ERH to order another load of aggregate. They did not do so. They ordered and poured the concrete. He believes that they ordered insufficient concrete.

27At page 11 of Exhibit 4, Tab 14 is a much reduced cross section plan of the Applicants’ home. The plan is incorporated into the Agreement of Purchase and Sale as a schedule. It provides for a “Minimum of 4” of concrete” in the basement. The OBC requires at least 75mm or 3” of concrete. The Applicant testified that 19 cubic meters of concrete were poured in his basement (Ex. 4 Tab 6, 4-I). The Applicant then carried out a mathematical calculation to determine there was insufficient concrete to provide for the 4” depth. The Tribunal is equally capable of doing the calculation. To meet to the OBC requirement to a depth of 3 inches, over a floor with an area of 2400 square feet requires 17 cubic metres of concrete. 4 inches requires 22.65 cubic metres. The Applicants’ received enough concrete to meet the building code requirements. The Applicants had core samples taken. They observed the measurement of these samples at their home but did not commission a full report on the findings. According to the Applicants, the samples ranged in thickness from 2 inches to 4 inches, again, largely consistent with OBC requirements allowing for local thickness variations as the concrete was poured.

28Having reviewed the evidence, the Tribunal finds that there has been no breach of the OBC with respect to the thickness of the concrete slab in the basement. The Tribunal also concludes that the cracks in the basement floor are normal shrinkage and it has no evidence that that shrinkage is excessive and requires repair.

29The Applicants are concerned that, of two drains in the basement floor slab, one drain is set in such a manner that the concrete slopes away from the drain in its immediate vicinity. They provided one photograph of the drain at Ex 4. Tab 7. The photograph shows no standing water. It does show what appears to be water stains in the concrete and the male Applicant testified that these stains were left by pooling water that did not flow into the drain. Mr. Bodogh determined that the water did flow towards the drain. He noted that the drain cover was raised thereby permitted water to flow into the drain around its sides. In his view, the requirements of the OBC, that “the floor surface shall be sloped so that no water can accumulate,” have been met in this case. In his view, should the basement become inundated, the drains are situated in such a manner that the water will drain away. Any residual water arising from local floor variations can then be brushed into the drains.

30The Tribunal has insufficient evidence before it to conclude that this drain is not functioning as it should or does not comply with the OBC. The only pictorial evidence is inconclusive. No evidence of the extent or depth of any pooling was presented to the Tribunal. Accordingly, the Tribunal cannot conclude that the drain and local floor are not constructed in a workmanlike manner or that there is any defect in materials.

31The Applicants complain that their stainless steel range hood was scratched by the installers. According to the Applicants, they were unaware of the scratches until they were cleaning it some months after moving into the house. The scratches are six feet above the ground and not readily visible. The Applicants purchased the range hood and assisted in the initial installation. According to the evidence, the hood was not scratched when hung initially. It was then the Applicants’ responsibility to arrange for their HVAC contractor to install the vent to the outside. In this endeavor, they were assisted by ERH’s handyman and electrician. The Applicants seek to apportion all of the blame for the scratches on the assistance provided by ERH and ignore the fact that the purchase and installation of the hood was their responsibility and their contractor was involved. Indeed, this very situation is addressed in their Agreement of Purchase and Sale at page 4:

The Contractor shall not be responsible for any loss or damage to any supplies, fixtures, appliances or materials left at or installed in the dwelling by the Owner.

Further, s. 13(2)(a) of the Act specifically excludes defects in materials, design and work supplied by the owner.

32The Applicants complain that each of the ten doors in their home has been improperly hung. They provide a number of photographs showing diffuse light penetration around several doors and testified that this was a common condition around all ten doors (Ex 4 Tab 10 photos 10-A to 10-D). They testified that the hinges were improperly aligned such that the doors make a clicking sound when operated and stress from the misalignment is causing cracks to propagate. The initial source of the cracks, according to the Applicants, is the fact the carpenter never drilled pilot holes before screwing the hinges into the doors and door jambs. One door will open on its own if left unlatched.

33Mr. Bodogh examined the doors and noted that the doors all closed flush with the door stops. He considered the diffusion of light at times of extreme light contrast between the inside and outside of the room to be normal. The doors, according to Mr. Bodogh, functioned exactly as they were supposed to do. With respect to the cracking around the hinges, Mr. Bodogh found it to be very minor and to be caused by normal drying of the wood. He noted the very slight clicking in the hinges when a door was operated for the first time but also noted that the sound disappeared with further operation. To hear the clicking, Mr. Bodogh stated that everyone in attendance had to be extremely quiet. The clicking intrigued him. When he went home that evening, he tested his own door a heard the same sound. He did not consider it to be anything unusual.

34Mr. Bodogh assessed the doors, keeping in mind the provisions of s. 10.7 and 10.8 of the CPG. 10.7 which state:

The width of the gap may vary on different sides or edges of the door. On any specific side or edge, the door and jamb shall be in general visual alignment; variance in the gap shall not exceed double the narrowest dimension along that side or edge.

He noted that the doors are in general visual alignment and that the gaps were consistent with the guideline. His observations are confirmed by the photographs provided by the Applicants. On the evidence before it, the Tribunal cannot conclude that the doors have been installed in anything other than a workmanlike manner or that they have a defect in materials. No breach of the OBC is alleged.

35The final area of concern for the Applicants is damage to the granite countertop in the kitchen. There are two areas of concern. The first is the ogee molding along the edge has been milled with a ripple and not smooth. The second is that ERH’s employees decided to use the countertop as a workbench without putting any protective covering on it and caused several scores in the surface. Attempts to polish the surface have been unsuccessful.

36In conducting his inspection, Mr. Bodogh took the position that the scoring issue had not been reported in a timely manner and, therefore, did not conduct as complete an inspection as he otherwise would. He observed that the area had been buffed but made no other findings. The Applicants’ wording on their claim form is: “Granite not finished well and full of marks (edges are wavy).” Mr. Bodogh construed that wording narrowly and concluded the only complaint concerned the wavy edges. The Tribunal cannot agree with this narrow interpretation. The complaint is about the lack of finish and that it is full of marks, this is, those marks left by the builders cutting tools. The reference to wavy edges is almost an afterthought. Accordingly, the Tribunal finds that the Applicants’ complaint was before Tarion and was not a newly added item at the time of the inspection.

37The Added Party chose to lead no evidence. The only evidence before the Tribunal of the source and repair efforts regarding the granite comes from the Applicants. It establishes that an ERH employee used a knife on the unprotected surface of the granite island and, in doing so, he left several deep scores. Attempts to buff out these scores have left a large dull area. This area is well highlighted in Ex 8 in photograph 14 A. The Applicants were told by the granite contractor that the only remaining solution would be to remove the granite from the island area and rework it on a CNC (Computer Numerical Control) Router at another granite company. The removal and reworking will cause possible damage around the sink area as everything has now been installed. They would also be without a countertop and sink while repairs were being carried out.

38The Tribunal finds Mr. Bodogh’s reasoning with respect to the ripple on the ogee molding problematical. The Applicants went to kitchen stores to look at granite tops and edge finishes. They did not see a granite top made by their specific countertop company. Mr. Bodogh takes the position that a ripple in the ogee molding is outside the scope of the warranty because it falls under the design exception in s. 13(2)(a). The Tribunal notes that there is no general exception for design defects. The exception is for design defects supplied by the owner. There is no question that the Applicants did not supply the granite countertops, therefore design defects do not operate to negate the warranty. ERH remains responsible to warrant any defects in the material it supplied, and in this case, that defect includes a rippled finish. Mr. Bodogh admitted that the ripple was not an intentional feature of the ogee molding or part of the design. Therefore it is a defect. The Tribunal concludes that Tarion should have warranted the granite countertop. Buffing having failed, the remedy is the removal of the countertop and machining on a CNC Router.

39The Applicants have held back $12,000.00 from the $48,000.00 management fee payable to ERH. The Act addresses this issue in s. 14 (6):

(6) In assessing the amount for which a person is entitled to receive payment out of the guarantee fund under this section, the Corporation shall take into consideration any benefit, compensation, indemnity payable, or the value of work and materials furnished to the person from any source.

The Applicants have benefitted to the extent of $12,000.00, a sum far in excess of their estimate of replacing the countertop. In the light of this, the Tribunal finds that it cannot order Tarion to repair the defective countertop. It is open to the Applicants to carry out the repair and deduct it from the sum outstanding to ERH but that discussion is beyond the scope of this hearing and beyond the Tribunal’s jurisdiction.

ORDER

40For the foregoing reasons, the Tribunal directs Tarion to deny the Applicants’ claim for warranty.

LICENCE APPEAL TRIBUNAL

D. Gregory Flude, Vice-Chair