Licence Tribunal
Appeal d'appel en Tribunal matière de permis
DATE: 2013-05-27
FILE: 5485/ONHWPA
CASE NAME: 5485 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
Applicant
Applicant
-and-
Tarion Warranty Corporation
Respondent
-and-
Townwood Homes Inc.
Added Party
ORDER
ADJUDICATOR: Laurie Sanford, Vice-Chair
APPEARANCES:
For the Applicant: Elaine Gordon, Counsel
For the Respondent: Marshall Reinhart, Counsel
For the Added Party: Michael Cohen, Counsel
Heard in Toronto: May 18 & 19, 2010; November 6, 13 & 14, 2012; April 2, 4, 8, 9 & 11, 2013
REASONS FOR DECISION AND ORDER
This is an appeal by the Applicant (the “Homeowner”) to the Licence Appeal Tribunal (the “Tribunal”) from Decision Letters of Tarion Warranty Corporation (“Tarion”) dated May 8, 2009 and July 7, 2010 denying certain of the Homeowner’s claims. The builder of the home in question is Townwood Homes Inc. (“Townwood Homes”) and the builder has been added as a party to these proceedings. Almost three years have passed since this hearing began and in that time some of the claims initially made by the Homeowner have been settled or withdrawn. Seven claims remain, some of which are related.
Claims 6 and 21 – Two way fireplace, pilot light, tub and faucet
There is a two way gas fireplace located in the wall between the master bedroom and the ensuite bathroom. One side of the fireplace faces into the master bedroom and on the wall beside the fireplace is a switch which turns the flame on and off. The other side of the fireplace faces into the ensuite bathroom and looks over the foot of the bathtub. The faucets are about six inches below the flame and the bathtub is about 6 inches below the frame of the fireplace. The pilot light is on this side of the fireplace at the bottom of the frame. The pilot light is accessed through a panel at the bottom of the fireplace frame. In order to ignite the pilot light, one button must be held down while another switch provides the spark.
The Homeowner has several complaints about this set up. First, the Homeowner testified that she must stand in the bathtub in order to turn on the pilot light. The Homeowner believes this is a safety risk. She is aware that the operating manual for the fireplace recommends that the pilot light be kept on but she prefers to keep it off and only turn it on when she wishes to use the fireplace. She believes that the pilot light consumes costly amounts of gas, although she was unable to quantify how much gas the pilot light uses. She also believes that gas adds to the heat of the two rooms in the summer. She testified that she could feel the warmth of the pilot light flame in the winter.
The Homeowner also complains that the faucets get hot when the fireplace is switched on. She was unable to say how hot they become but she testified that she was not comfortable turning them on and off as a result. Finally, the Homeowner complains that the tub is wrong for the design of the bathroom but did not provide specifics. She believes that the fireplace should be turned around so that the pilot light is on the master bedroom side. She believes that the tub should be replaced with one which is designed for the location or moved somehow and she also testified that she wanted the faucets moved to the other end of the tub away from the flame of the fireplace.
The Homeowner’s claims concerning the fireplace and tub must fail. There is no convincing evidence of a defect in the fireplace, the tub or the faucets. Concerning the pilot light, the Homeowner chooses to ignore the fireplace manufacturer’s recommendations to leave the pilot light on. She is, of course, entitled to do this but she is not entitled to refuse to follow the manufacturer’s operating recommendations and at the same time to claim that the design of the fireplace must be faulty for a reason directly related to how she chooses to operate it. She bases her safety concerns about the pilot light on what several “fireplace people” and electricians who have come to the house have told her. She did not call any of these people to give evidence. The home inspector who did testify on her behalf, Mr. Mario Nigro, said he was not aware of any restrictions on where a pilot light may be placed. The Tarion Field Claim Representative, Mr. Sandro Nevicato, gave evidence that there is no safety hazard to standing in the tub, even with water in it, and turning on the pilot light and the Tribunal accepts this evidence. Mr. Nevicato also testified that the faucets will not overheat as they are below the flame in the fireplace and heat rises. The Homeowner’s testimony did not conflict on this point as she testified that she had never run the fireplace long enough so that the faucets became too hot to touch. Mr. Nevicato testified that while the glass cover of the fireplace might become warm, this reflective heat would not cause a safety issue for a metal faucet located about six inches below the flame. This evidence is convincing and the Tribunal accepts it. Concerning the tub, there was no persuasive evidence that it was the wrong design or in the wrong location in the house. As Mr. Reinhart, Counsel for Tarion, noted in closing argument, whether the foot of the tub ought to face the fireplace or away from the fireplace is entirely a matter of personal taste.
Claims 8 and 13 – ceiling in kitchen lumpy – possible water stain
The Homeowner’s evidence was confused on this issue. She did complain that the ceiling in the kitchen was lumpy despite one attempted repair by the builder Townwood Homes. She also testified that there was evidence of water leaking through the ceiling. It was not clear from her testimony whether this was one complaint or two. Mr. Nigro, the home inspector who testified for the Homeowner, made no mention of lumps in the kitchen ceiling but did address the issue of a possible leak into the ceiling. His testimony was that he had observed a water stain on the kitchen ceiling and, on measuring it with a moisture meter, determined that it was a wet, or fresh, leak. He located what he believed to be the source of the leak under one of the sinks in the master bathroom. He conceded in cross examination that a pail could have been placed under the leak to prevent water from going through to the kitchen ceiling until a plumber could be called.
Mr. Nevicato testified that the master bathroom is not over the kitchen and he used the floor plan drawings of the house to demonstrate this. He concluded that any leak from the master bathroom was unlikely to drip into the kitchen. It was his opinion that a more probable source of the leak was a heating vent in the master bedroom which is directly over the part of the kitchen showing the leak. There was evidence of water staining around the vent which led Mr. Nevicato to conclude that at some point liquid had been spilled in this area and had leaked through to the kitchen. Mr. Nevicato’s theory of where the leak originates is more probable but regardless of the source, the Homeowner’s claim for damages due to a leak penetrating her kitchen ceiling must fail. If the leak is coming from the pipes under her master bathroom sink, then it is her responsibility as a homeowner to put a pail or basin under the drip until a plumber can be called to assess and repair the damage. If the leak originated when water was spilled into the heating duct, then there is no evidence that this was done by the builder. On the contrary, the fact that the kitchen ceiling is moist suggests the leak is very recent. The Homeowner has been in the house for almost seven years. The Homeowner’s claim fails because she has not demonstrated that there is any breach of warranty for which Townwood Homes can be said to be responsible.
Claim 10 – Foundation concrete chipping
The Homeowner complains that the brush coating over the concrete blocks is chipping and Tarion agrees that the brush coating is separating from the foundation wall. Mr. Nevicato distinguished between “parging” which is an application which may be required under the Ontario Building Code in certain circumstances and “brush coating” which is designed as a cosmetic covering for concrete block foundations. Pictures were entered as evidence which show that the brush coating is peeling and unsightly. The Tribunal finds that there has been a breach of the warranty in section 13 of the Act regarding the brush coating. The cosmetic coating has failed and has created an obviously unappealing exterior. Thus it is a defect in workmanship that fundamentally undermines the purpose for which the brush coating was designed.
Although the Homeowner has demonstrated a breach of warranty, she has not produced any evidence of the cost to either repair the brush coating or to remove it. Ms. Gordon, counsel for the Homeowner, was explicitly advised by the Tribunal in the fall of 2012 that the onus was on the Homeowner to quantify her damages. She has failed to do so here. In the absence of any evidence of what the cost would be to either re-apply the brush coating or remove it, the claim must fail.
The Homeowner alluded in her testimony to a more serious problem with the concrete in the foundation crumbling in spots. However, there was no further reference to this concern until the closing argument. If this was a claim by the Homeowner, it must fail due to lack of evidence.
Claim 11 – Subfloor should be plywood, not chipboard
The Homeowner was led to believe by someone, whom she did not identify, that the subfloor, which is Oriented Strand Board or “OSB”, should have been plywood. She was also told by “several flooring people”, whom she did not name, that the subfloor might be the cause of the cupping problem with the floor, which will be addressed below. This appears to be the only basis for her claim for damages concerning the subfloor. Her own flooring expert gave no evidence about the subfloor, did not characterise it as defective and did not identify it as a possible cause of the cupping problem on the floor. Mr. Nigro, the house inspector called by the Homeowner, does not recall being asked to inspect the subfloor and did not.
Tarion called Mr. Chad Frenette as its flooring expert. Mr. Frenette inspected the subfloor and found no defect. He gave as his opinion that the subfloor would not have caused the cupping problem with the floor. The Tribunal accepts the evidence of Mr. Frenette about the subfloor. Thus there is no evidence to support the Homeowner’s complaint about the subfloor.
Claim 21 – Main floor – wood floor cupping
The major claim in this matter, in monetary terms, is the wood floor on the main level of the house. The Homeowner complains that the floor is cupping, that is that the edges of the floor boards curve up, creating a cup or trough at the bottom of the board. She characterised the problem as serious and covering approximately 75% of the main floor hardwood. The Homeowner’s sister gave evidence and testified that the hardwood floor was “lumpy” and “ugly” and had been that way since the Homeowner moved in. The Homeowner reported the matter in her year-end claim, stating that the strip floor was “curved” and “lumpy”. The Homeowner also testified that she had reported this problem to Townwood Homes and was told that the problem would settle down when the home had been lived in. The problem persisted and in December, 2006, Townwood Homes wrote to the Homeowner and said that the company would not be doing anything about the floor until the humidity level was brought down in the home. Townwood Homes repeated this position in a letter to Tarion in November, 2007. The Homeowner testified that Townwood Homes did not measure the humidity in her home and so could not know that it was a problem. She feels it is the builder’s responsibility to check the humidity and accordingly, she has refused to measure the humidity in her home. Despite this, she insists there is not a humidity problem in the house. She owns a portable de-humidifier but has no air conditioning. Although the Homeowner was a creditable witness, her testimony that there was no humidity problem in the house cannot be accepted because she never measured it. The Tribunal prefers the evidence of Townwood Homes that refers to a humidity problem in the home on or before December, 2006. The Homeowner testified that Mr. Nevicado in one of his early inspections of the house advised her to better control the humidity in her home by moving her portable de-humidifier from the basement to the main floor. This tends to support the evidence of Townwood Homes that there was an on-going humidity issue.
The Homeowner called Mr. Amir Aslani, who is certified by National Wood Flooring Association as a wood flooring inspector and installer, as an expert witness. Mr. Cohen, counsel for Townwood Homes, moved to have Mr. Aslani denied qualification as an expert on the grounds that Mr. Aslani lacks the requisite independence. Mr. Cohen submitted that Mr. Aslani has a conflict of interest in that he is a competitor of the company which installed the hardwood floor at the Homeowner’s house. Mr. Cohen submitted both case law and a self-authored paper on the subject of expert independence and the Tribunal is grateful for his assistance. Mr. Cohen and Mr. Reinhart both submitted that, regardless of the ruling on whether or not Mr. Aslani was properly qualified as an expert, his evidence should be given little or no weight because, they assert, he has lost the independence required of an expert and has become biased in favour of the Homeowner. The Tribunal reserved ruling both on the question of Mr. Aslani’s qualifications as an expert and on the weight that should be given to his evidence.
Concerning whether Mr. Aslani should be qualified as an expert for the purposes of this hearing, the Tribunal concludes that he should. At the outset of Mr. Cohen’s cross examination, Mr. Cohen asked Mr. Aslani whether he is was a competitor of the company with supplied the hardwood to the home in question. Mr. Alsani said “kind of”. When pressed, Mr. Aslani explained that he bumped into the other company but that they worked in two different sectors of the business. Mr. Alsani supplies to builders of custom homes and the other company works primarily with builders of subdivisions. Mr. Aslani conceded that it could happen that the two companies might bid on the same project. Mr. Cohen submits that this is sufficient evidence of a lack of independence that would disqualify Mr. Aslani. Mr. Reinhart argued against disallowing Mr. Alsani to testify on these grounds. Mr. Reinhart noted that the world of hardwood flooring experts in Ontario is a small one and the possibility of finding two experts who never competed against each other would be remote. Mr. Reinhart suggested that if all competitors were to be eliminated, only retired flooring experts would be eligible to testify. Mr. Reinhart suggested that the test for whether Mr. Aslani was a competitor of the company which installed the hardwood should be whether Mr. Aslani planned to compete with the other company in the future; it is the potential competitor status which is relevant, in Mr. Reinhart’s submission.
The Tribunal, in allowing Mr. Aslani to be qualified as an expert notes that during his testimony Mr. Aslani did not offer an opinion as to the quality of the workmanship of the installation. In fact, Mr. Aslani specifically said he could not give an opinion as to the original cause of the cupping which he observed in the house. Given that and given the fact that Mr. Aslani competes in a different segment of the housing market from the company which installed the floor in question, the Tribunal finds that Mr. Aslani does have the necessary independence to qualify as an expert in this matter.
Concerning the question of weight, the Tribunal did not find Mr. Aslani’s evidence to be biased in favour of the Homeowner. On the contrary, there were occasions when Mr. Aslani’s evidence undermined the Homeowner’s case. Mr. Cohen based his submissions as to weight primarily on two incidents. First, in showing Mr. Aslani pictures of the floors in question, Mr. Cohen interpreted Mr. Aslani’s refusal to acknowledge that there was no cupping visible in the photographs as evidence of Mr. Aslani’s bias in favour of the Homeowner. However, the Tribunal agreed with Mr. Aslani that the photographs were not as clear as they should have been to permit a conclusion to be reached about cupping in the floor. Second, Mr. Cohen considered two pictures from Mr. Aslani’s own photographs which were not originally submitted as evidence. Mr. Cohen submitted that Mr. Aslani had selected the photograph that showed the worst cupping and had included only that picture in his report, ignoring the other two. The Tribunal examined all three photographs and it concludes that the picture which most clearly shows cupping in the floor was one of those omitted from Mr. Aslani’s report. It would appear that Mr. Aslani choose to include the photograph which is in the middle of the three in terms of the clarity with which it showed cupping on the floor. This choice is unobjectionable. There is no reason of bias to lessen the weight of Mr. Aslani’s evidence.
Mr. Aslani noted what he described as “subtle cupping” in the wood floor of the Homeowner. Subtle cupping is the mildest form of cupping in his opinion. He could feel it when he dragged his feet over the boards but it was not uncomfortable to walk on. The cupping was mainly in front hallway by the staircase and at the entrance to familyroom/den and in kitchen and living area. Mr. Aslani was unable to give an opinion as to what proportion of the floor was cupped.
Mr. Aslani explained that cupping in the floor is caused by moisture imbalances in the wood. The most common causes of moisture imbalances are moisture excesses in the bottom of the board and these can be caused by a moist subfloor, excessive moisture in the basement, a lack of acclimatisation of the wood prior to installation and improper maintenance of the floor after installation. Mr. Aslani noted that the manufacturer of the wood called for the wood to be acclimatised onsite to ensure that the moisture imbalance between the wood floor and the subfloor was minimized. Mr. Aslani had hearsay evidence that this was not the practice of the installer in question but he did not have the opportunity to interview the installer. Given that over six years had passed since the installation, Mr. Aslani could not give an opinion as to the cause of the cupping.
On the question of whether improper installation could cause cupping in the floor, Mr. Aslani gave conflicting evidence. At one point he said that a properly installed floor should not cup but he later acknowledged that even a properly installed floor might cup if there were moisture imbalances in the home. When cupping is evident on installation, Mr. Aslani testified, if the problem is detected early enough and if the source of the moisture imbalance can be eliminated and the humidity controlled to 30 to 50%, then the wood should correct itself. If the problem is not addressed, then after a couple of seasons the wood is permanently cupped. Mr. Aslani measured the relative humidity on the main floor in several locations. His testimony was that the relative humidity was within the National Wood Flooring Association guidelines. However, the specifications of the flooring manufacturer are more stringent, requiring a constant relative humidity of 45%. Mr. Aslani’s measurements show a relative humidity of 33 to 35% in February, 2013. Mr. Aslani did not measure the relative humidity in the basement and did not offer an opinion as to whether there were on-going moisture or humidity imbalances in the home.
Mr. Frenette was qualified as a flooring expert and gave evidence on behalf of Tarion. He noticed slight cupping in the hallway and family room on the main floor of the house. This was cupping he could see from a standing position. In other areas of the main floor, he could detect cupping only by kneeling down to observe it.
Mr. Frenette measured the relative humidity on the main floor and in the basement and found that the moisture in both locations was too high, being over 50% when the manufacturer’s specifications call for a constant humidity of 45%. The differential in humidity between the basement and the main floor was also significant, in Mr. Frenette’s opinion, and was a possible cause of the cupping. Mr. Frenette testified that the lack of air conditioning in the home, particularly in the basement, might explain the excessive humidity, given that Mr. Frenette’s inspection was done in the summer. Mr. Aslani measured the relative humidity during the winter and his humidity reading was significantly lower. The significant differential in the humidity levels between the winter readings of Mr. Aslani and the summer readings of Mr. Frenette is, in Mr. Frenette’s opinion, evidence that the humidity in the home is not being properly maintained. The Tribunal prefers Mr. Frenette’s evidence on the relative humidity in the home. Mr. Frenette measured the humidity on both the main floor and the basement and Mr. Aslani did not. Mr. Aslani did not explain the swing in relative humidity readings between his report and that of Mr. Frenette while Mr. Frenette did and his explanation is consistent with the measurements of Mr. Aslani. This evidence is also consistent with the evidence of Townwood Homes that there was an on-going humidity issue in the home.
Mr. Frenette agreed with Mr. Aslani that in this case, given the passage of time, it was not possible to identify the original cause of the cupping. His evidence was that when cupping is identified in a new home, he recommends installing a de-humidifier in the basement and possibly a humidifier on the main floor to remove the moisture imbalance. He has seen these steps correct a cupping problem.
The Tribunal accepts the evidence of the Homeowner and her sister that they saw cupping in the floor when they took possession. Both Mr. Aslani and Mr. Frenette were of the view that cupping detected immediately after installation was usually the result of improper acclimatisation of the wood. Therefore, the Tribunal concludes that the cupping observed in the home was most probably the result of moisture imbalances that could have been eliminated with proper acclimatisation of the wood prior to the installation. Thus the responsibility for the initial cupping lay with the builder. In support of this conclusion is the Homeowner’s testimony that Townwood Homes acknowledged the problem and suggested that it would correct itself when the home had been lived in. Later, in December, 2006, Townwood Homes implied that it would take action when the Homeowner had controlled the humidity in her home. However, the Homeowner both refused to measure the humidity in her home and refused to take any further steps to control it beyond having a portable de-humidifier that she did not run all the time.
It is clear from the experts’ evidence that cupping is more analogous to a process than an irreversible event. Cupping may occur as a result of one precipitating event, in this case most probably the installation, but may be mitigated or exacerbated by other factors, such as maintaining the proper relative humidity in the home. The Tribunal requested submissions from counsel on the question of whether responsibility for damages due to the cupping could be allocated between the parties. The Tribunal appreciates the submissions made. The Tribunal accepts the submissions of Mr. Reinhart that the correct way to approach the issue in this situation is to determine whether the damages that might be awarded to a homeowner should be diminished because the homeowner has failed in some responsibility. In this case the failure might be either the failure to properly maintain the home by controlling the humidity or the failure to mitigate damages due to cupping in the floor by removing the moisture imbalances in the home – both the moisture imbalance between the basement and the main floor and the relative humidity differential between the humidity in the home during the summer and the winter. The Homeowner’s expert testified that if the cupping is identified soon enough, the moisture imbalance is removed and the humidity controlled then the cupping “should” correct itself. Mr. Frenette gave essentially the same opinion. Neither man testified that the problem would always be corrected if these measures were taken but it was clear from their evidence that these actions would be recommended first steps. Unfortunately, the Homeowner took none of the remedial steps so we cannot determine whether the problem would have been fixed in this case or not.
The Tribunal concludes that while responsibility for the original cupping rested with Townwood, the Homeowner’s failure to regulate the humidity in her home, even after being specifically requested to do so by the builder, has caused the problem to persist. It is important to note that this is not a case of the builder creating a problem and the homeowner being held responsible for fixing it. Here, the Homeowner had a positive obligation, in accordance with the flooring specifications, to control the humidity in her home and she has failed to do so. In addition to her responsibility to maintain the home, the Homeowner had a clear opportunity to mitigate her damages by eliminating the humidity imbalance in her home and by avoiding the swings in humidity levels from winter to summer. She failed to take the necessary action. While the Homeowner might have had a claim for improper installation of the floor, her claim has been extinguished by her own inaction. However, the Tribunal notes that Townwood Homes would have been well served if someone on their staff had instructed the Homeowner very specifically on how to determine the humidity in her home and how to control it. Townwood Homes apparently told the Homeowner that the flooring problem would be corrected when the home was lived in without being more specific.
Costs
Finally, Townwood Homes has moved for costs in this matter. The patience of both Townwood Homes and Tarion has been sorely tested during this hearing. This case might reasonably have been expected to take about four days. Instead, it has dragged on for ten. Not all of this delay has been the Homeowner’s fault. She has not been well served by the consultants she has retained. Her first lawyer left the country at the outset of the hearing without finding a replacement for her. The Homeowner attempted to represent herself but concluded she was not comfortable without counsel. She then required a lengthy adjournment in order to save the money to pay for new counsel. The flooring expert she originally retained did not suggest to her that she begin controlling the humidity in her home. Had that recommendation been made, the Homeowner would have had three years in which to properly regulate the humidity. Whether that would have been sufficient to correct the problem is unknowable but this was a measure well worth taking. The original flooring expert then left the business and a further delay was required to find a replacement.
It is fair to say that the Homeowner did contribute to the delays. She kept uncovering new evidence she wished to enter long after the disclosure period had ended. However, the conduct of her counsel, Ms. Gordon, was also a contributing factor. Ms. Gordon did not know until the case was well under way that she did not have a flooring expert ready to testify. She persistently waited until the hearing resumed before attempting to enter new evidence rather than disclosing it to the other parties as soon as she received it from her client. She did not properly schedule her witnesses which caused multiple delays. In deciding whether the Homeowner should bear some part of the costs incurred by Townwood Homes, the Tribunal must consider all the circumstances. In this case, there has undoubtedly been excessive delay and both Townwood Homes and Tarion have been put to expense as a result. However, it is difficult to avoid the conclusion that the Homeowner has paid dearly both for her own failings and for the inadequacies of her counsel. Despite being specifically advised by the Tribunal of the onus the Homeowner bore in this case, her lawyer failed to put forward all the elements necessary for her to succeed in her claim for the foundation issues and did not put forward any convincing evidence on her claim regarding the subfloor. The intent of the Act is thwarted when counsel fails to present all the elements of a claim. The Tribunal went to extraordinary, if ultimately futile, lengths to avoid this result. The Tribunal acknowledges that its efforts to give the Homeowner an opportunity to present all the elements of her claims contributed to the delays in this matter. In the result, the Homeowner has failed in all her claims. To impose costs in addition would not be appropriate in this case.
ORDER
The Tribunal, acting under the authority of subsection 16(3) of the Act, directs Tarion to disallow the Homeowner’s claims listed in Tarion’s Decision Letter of May 8, 2009 as Claim Numbers 6, 8, 10, 11 and 13, and the Homeowner’s claims listed in Tarion’s Decision Letter of July 7, 2010 as Claim Numbers 20 and 21.
The motion for costs is denied.
LICENCE APPEAL TRIBUNAL
Laurie Sanford, Vice Chair
Released: May 27, 2013