Licence Tribunal

Appeal d'appel en

Tribunal matière de permis

DATE:

2013-08-27

FILE:

7911/ONHWPA

CASE NAME:

7911 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-

Highmark (Orchards) Inc.

Added Party

REASONS FOR DECISION AND ORDER

ADJUDICATOR:

Jane Weary, Vice-Chair

APPEARANCES:

For the Applicants:

Self-represented

For the Respondent:

Neil S. Abbott, Counsel

For the Added Party:

Joseph Messina, Agent

Heard in Toronto:

July 24th, 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 January 23, 2013 with respect to a new home purchased from, Highmark (Orchards) Inc. (the “Added Party”), in which Tarion denied (in part) the Applicants’ Claim.

FACTS

In August 2010 the Applicants entered into an Agreement of Purchase and Sale (the “APS”) with the Added Party for a detached home (Exhibit 4, Tab 4). Prior to possession the Applicants had completed a Pre-Delivery Inspection (the “PDI”) with the Added Party where outstanding construction issues were noted. While a number of these were eventually resolved, others remained outstanding when the Applicants supplied Tarion with their 30 Day Form detailing new home warranty complaints for which they required Tarion’s assistance to resolve. Two such items concerned the Applicants’ position that the fireplace in the home was both off centred and not sufficiently recessed into the outer wall; and that the upstairs hall foyer had been removed. Of the other defects claimed, only one remains at issue in this proceeding and that concerns alleged “fraying” of the hardwood flooring.

On January 29, 2013 Tarion released a formal Decision Letter setting out conclusions reached by its Field Claims Inspector, Brian Haley, in his Warranty Assessment Report of December 3, 2012 (Exhibit 4, Tab 2). The Applicants appealed to this Tribunal by Notice of Appeal on February 6, 2013 (Exhibit 1). Following a Settlement Conference, the issues for this appeal were:

A, Whether the placement of the fireplace amounts to a warrantable item under the Act for which the Added Party is responsible

b. Whether the removal of the upstairs foyer amounts to a warrantable item under the legislation for which the Added Party bears responsibility; and

c. Whether the condition of the hardwood amounts to a warrantable item for which the Added Party bears responsibility.

d. In the event of any of the above, what are the damages and remedy available to the Applicants.

At the commencement of the Hearing it became apparent that significant email communication had occurred between the Applicants and the Added Party and that the relationship had become mired in negativity by the time of these proceedings. Various references to one another’s failings in the negotiation and settlement discussions were declared inadmissible to the Appeal and their references were not entered as evidence.

The Applicant represented himself and his wife. He was the only witness for the appeal. For Tarion, Mr. Haley appeared as the sole witness. The Added Party did not present evidence.

A. Placement of the Fireplace

The fireplace location is shown in the APS as Schedule F which illustrates its positioning as centred on the interior of the outside wall in the family room located outside the kitchen area (Exhibit 3, Tab 1). The Applicant testified that changes to the construction requested by him and his wife involved a mirroring of the kitchen and family room illustrated in an amended floor plan diagram signed by the Applicants in January of 2012, some 4 months prior to possession. This amended Plan also illustrates the fireplace in the middle of the family room wall. The Applicant stated that the windows, despite still illustrated in the amended Plan, were removed at his request. An earlier diagram amendment was presented (Exhibit 4, Tab 12) initialled by the Applicants in August, 2011. Again, the location of the fireplace is centered to the family room outer wall. The diagram bears a notation not on the 2012 sketch that the fireplace “bump out” is removed. It also shows that part of the fireplace as erased. The Applicant queried the veracity of these notations on that document.

The Applicant stated that when he and his wife had advised the Added Party back in August of 2011 that they wanted the family room windows changed from the original APS Plan, they had also asked for the fireplace to be centred to the kitchen, as opposed to the living room wall. An email (Exhibit 3, Tab 9) from the Applicant to his wife dated November 30, 2012 was relied upon to demonstrate such a conversation had occurred. The email makes no reference to whether the Added Party had agreed to this change in fireplace location. Nor does the email demonstrate this recollection of a conversation was in fact passed on to the Added Party as no evidence was provided that it was sent.

The Applicants’ claimed that the fireplace bump out was improperly changed on the amended sketch and further denied having initialled the change as it appears on Exhibit 4, Tab 12. The Applicant stated that the fact that the bump out was removed resulted in the fireplace now jutting further into the family room thereby negatively impacting the space.

In cross examination, the Applicant allowed he had approved other changes noted in the August, 2011 diagram. He acknowledged that notations setting out all such amendments or modifications, including the reference to the fireplace bump out removal, appeared to be in the same handwriting. He also conceded that none of the diagrams illustrating floor plan lay-out included dimensions as to location of fireplace, neither along the family room wall, nor the protrusion into the family room itself.

Mr. Haley explained he was the holder of a Certificate from George Brown College in Architectural Design and has been employed for five years as a Field Claim Representative with Tarion. His responsibilities include conciliating and inspecting new homes on home owner warranty claims. He has performed such inspections on countless occasions and is familiar with the Ontario Building Code and the Construction Performance Guidelines. Following such an inspection in November of last year, he prepared the Warranty Assessment Report on which the Decision Letter was based in this instance.

Mr. Haley had noted that the APS Schedules and amendment diagrams on which the design of the construction was predicated did not contain any specifications as to dimensions, sizes or measurements of the fireplace in the family room. He also noted that the APS contains a specific builder exclusion clause in section 3 (f) whereby the Parties agree to accept builder deviations and changes from that shown on the “brochure and renderings” (Exhibit4, Tab 4).

In reference to the complaint of centring, Mr. Haley noted there were no documents or any independent evidence of the Added Party agreeing to the alleged request to centre the kitchen to the fireplace. Further, all the documentation provided by both parties was consistent in demonstrating that the fireplace was off-centre to the kitchen but on centre to the family room. As this was what he observed in the home, he was unable to uphold the Applicants’ Claim of builder error or failure.

As concerns the alleged wrongly provided removal of the bump out, Mr. Haley referenced Schedule B of the APS (Exhibit 4, Tab 4) where the reference is made to the inclusion of a fireplace in the APS, noting that no dimensions or design features relevant to the outer wall are specified. He concluded that there was thus no substitution in the product that was made by the Added Party which would provide the Applicants with specified warranty.

In cross examination he conceded he was neither an architect nor an engineer.

He re-iterated his conclusion that, even were the bump out of the fireplace a substitution by the Added Party, which he was not persuaded was the case, he had no reason to believe it was thereby warrantable as an inferior change given that no measurements had ever been provided – as to the original layout of the family room, or the changed lay out.

B. Hallway Foyer

The Applicant advised he was unhappy that the home no longer had an upper hallway due to replacement of the master bedroom doors. He acknowledged that the replacement was at his request. He noted that this change was not illustrated on the January, 2012 diagram, though conceded it was referenced in the earlier August, 2011 sketch.

Mr. Haley confirmed the discrepancy testifying that such omissions/discrepancies were common and one reason why sketches and deigns were, absent other evidence, not accepted by Tarion as legally binding amendments to the original APS documentation, but rather illustrative of design considerations only. He concluded that the Plans illustrated where the original doors had been as well as their altered location. There was no reference to any specifically preserved or any added hallway in either document.

C. Hardwood Flooring

The Applicants presented photographic evidence of numerous mars on hardwood flooring (Exhibit 3, Tab 13). It was the Applicant’s belief that the marks were due to a manufacturing failure.

The photographs were taken by the Applicant at some point after possession. They were not dated and he was uncertain as to when they were taken, although he did agree that the floors at the time were “lived in”. He advised his children were aged 6 and 7 and lived in the home.

The Applicant believed that one of the photos (photo 3) was of an area of the upstairs hall; all other photos he conceded were from the kitchen floor.

The Applicant rejected the separate conclusion of the Added Party’s floor installer that the markings were consistent with wear and tear. Nor did he accept the Tarion Field Claim Representative’s similar conclusion in the Decision Letter. The Applicant argued neither review was objective. He claimed that, given the photos were illustrative of less traffic-high areas of the home than simply the kitchen, wear and tear could not be the cause of the markings.

In cross examination he acknowledged Tarion’s suggestion he obtain an independent evaluation and that he had contacted the National Wood Flooring Association following the Warranty Assessment Report in this regard. Given the fees quoted for the evaluation, he decided not to request their assistance in preparing and presenting this appeal. He acknowledged in cross-examination that Tarion had told him that any such fees would be re-imbursed by Tarion were the evaluation to conclude the marks were caused by manufacturing failure.

Mr. Haley testified that he had inspected only the kitchen floor area as this was the only area specified as defective by the Applicants on the 30 Day Claim. It was his opinion that the markings shown to him by the homeowner were more likely attributable to wear and tear than to any defect. He based this conclusion on the fact that the kitchen was clearly a high-traffic area; that there was an outside door which led directly into the room; and, that the markings were in at least two cases directly connected to other wear markings – in one case a scratch; in another small indents. His evidence on this was corroborated by photos taken by him at the time of the inspection (Exhibit 4, Tab 12).

THE LAW

The applicable provisions of the Act are as follows:

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;

(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,

(c) normal wear and tear;

(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.

Regulation 892 under the Act reads in part:

18. (1) Every vendor of a new home warrants to the owner that the vendor shall make no substitutions in those items of construction or finishing for which the purchaser is entitled to make selection pursuant to the purchase agreement without the written consent of the purchaser. R.R.O. 1990, Reg. 892, s. 18 (1).

(2) Subsection (1) does not apply where,

(a) the purchaser, having been notified, does not make a selection within thirty days after executing the purchase agreement or within such other time period as may be agreed; or

(b) an item selected under clause (a) is not available and the purchaser does not make a selection within seven days of receiving written notice from the vendor or within such other time period as may be agreed that the item is unavailable. R.R.O. 1990, Reg. 892, s. 18 (2).

(3) Every vendor of a new home warrants to the owner that where the purchaser fails to make a selection under clause (2) (a) or (b) that the vendor will make a selection on the purchaser’s behalf that is of equal or better quality than the original selection as set out in the purchase agreement. R.R.O. 1990, Reg. 892, s. 18 (3).

19. Every vendor of a new home warrants to the purchaser that, where the vendor makes a substitution with respect to an item that is referred to in the purchase agreement that is not an item that is to be selected by the purchaser, the item will be of equal or better quality than the item referred to in the purchase agreement. R.R.O. 1990, Reg. 892, s. 19.

19.1 Revoked: O. Reg. 166/08, s. 3.

ISSUES

The issues for the Tribunal are those set out earlier:

1. Does the location of the Applicants’ fireplace amount to any warranty liability under the legislation?

2. Does the lack of the upper hallway amount to any such warranty liability?

3. Do the markings on the hardwood amount to any such liability?

APPLICATION OF LAW TO FACTS

1. Fireplace

(a) centering:

The Applicants’ argument rests on his assertion of a verbal collateral agreement to the written contract between the parties, consisting of the APS and design sketches, all of which – without exception – demonstrate that the fireplace was centered to the outside wall and never to the kitchen.

Other than the Applicants’ allegation and the evidence of much later dated email correspondence between the Applicant and his wife alluding to a verbal discussion of the fireplace positioning, there is no evidence before the Tribunal on the issue.

There are, however, a number of documents, amended sketches and other emails between the Added Party and the Applicants post-dating the alleged verbal agreement, none of which allude to any such understanding or commitment on the issue by either. Of particular note is the amended diagram of 2011, maintaining the original positioning of the fireplace, which is initialed by the Applicant on the very date he claims to have entered into an agreement with the Added Party as to its re-positioning.

This is inadequate evidence on which to conclude there existed such an agreement. It infringes the Rule against parole evidence for the very reasons that the Rule exists – that the oral assertions, being undocumented, are inherently unreliable in the face of a clearly written different rendition of the Parties understanding.

Even were I to find that there was indeed a discussion as appears to have been remembered months later by the Applicant, that does not bind the Added Party to a particular concept of the details of such an amendment. There was no allegation that altered dimensions or measurements were canvassed at the time. Any such discussion would, as a consequence, been open to fundamental and fatal misunderstandings as to specifics.

For these reasons, the Applicants’ Claim on this issue must fail.

(b) recess:

The Applicants’ evidence was that there existed no amendment to their APS agreeing to alter the recessing of the fireplace. As a consequence, the unilateral decision by the Added Party to remove the bump breached the APS, which in the design documents formed part of the APS by Schedule. Although not specifically argued, it appeared the Applicants based their consequent Claim for damages on the allegation that the removal of the bump out meant the fireplace then bumped in such that it projected further into the living space than they had expected. No measurements were provided to support this allegation and no evidence was present to illustrate how, and to what extent, this impacted on their enjoyment or use of the space.

In considering the evidence, I am unable to conclude that there was no agreement to change the design of the fireplace as alleged. The evidence is that a document was created in August, 2011, signed by the Applicants, which does clearly reference that the fireplace bump out was to be removed. Further, and in support of the wording, the bump out has been erased in the sketch. The Applicants denied the veracity of this document. A subsequent drawing of the floor plan dated January 2012 did not include the same reference. This was the design sketch upon which the Applicant relied.

Given the contradiction in these documents, I cannot conclude that there was in fact no agreement by the Parties to change the recessing of the fireplace as urged upon me by the Applicants. The evidence is consistent with their both being an agreement to the change, and there not being such an agreement.

However, in the event there was no such agreement, then the Added Party’s change is subject to the Act’s Regulation sections concerning substitution. Since the fireplace was not an item of selection under the APS, Section 19 governs. Consequently, to establish liability, the Applicants must demonstrate that the substitution was of an inferior quality to that originally contracted. This they failed to do. Nothing was presented to the Tribunal on this matter save for the opinion of the Applicant witness. As stated by this Tribunal in 2010 Markay v. ONHWPA, a purely subjective opinion on a matter of aesthetic is insufficient to found a claim of inferior substitution. Some independent or objective corroborative evidence is necessary in order for the Tribunal to conclude on the merit of such an argument. No such evidence was presented.

For these reasons the Applicants’ claim must fail on this issue.

2. Upper Hallway:

The fact is that the Applicants themselves requested changes to the original design of the second floor where a hallway into the bedroom area was illustrated on the design attached to the APS as Schedule F. The changes were noted in both amended drawings – the one dated August, 2011; the other January, 2012. In neither is any reference made to the resulting impact on loss of hall space, nor any stipulation as to maintenance of earlier hall space, nor is there any reference to dimensions or measurements to ensure such space.

Contrary to the suggestion made by the Applicant, nothing on any design drawing explains the meaning attributable to the double dotted lines appearing on Schedule F. There is therefore nothing to support his assertion that their existence indicates some obligation on the Added Party. I reject his assertion there was thus an obligation to supply the hallway.

The Applicants’ claim on this issue also fails.

3. Hardwood Flooring:

Again on this ground of appeal, the evidence did not support the Applicants’ claim. The Applicant’ own photographs establish the existence of the markings confined to the kitchen area. The one photograph alleged by the Applicant to be of another area of the home appeared in every respect to be but a close up of a photograph of an identical kitchen floor area. He himself was vague on the location. He was also vague on the time of the photos. The evidence showed that the complaint made on the 30 day form limited to the complaint to the kitchen area as was stated by Mr. Haley.

Given the clear indication of other wear markings on the hardwood in the kitchen, the fact that the kitchen is a high use area and the fact that there is a door to the outside which leads from the kitchen, I have no reason to disagree with the reasonableness of the conclusion of the Tarion Field Claims Representative. He is experienced in such inspections but readily allowed that, were the Applicant to provide independent evidence otherwise, he would ensure the cost of doing so was covered. The Applicant chose not to take the financial risk, opting to appear before this Tribunal armed with only speculative, self-interested opinion evidence. Clearly this is inadequate.

Given the evidence before me on this issue, I am not able to conclude that the marks on the floor are more like the result of a manufacturing defect than wear and tear. For this reason, this Claim too, fails.

ORDER

Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs Tarion to deny the claim in full.

LICENCE APPEAL TRIBUNAL

Jane Weary, Vice-Chair

Released: August 27, 2013