Licence Tribunal

Appeal d'appel en Tribunal matière de permis

DATE: 2013-09-09

FILE: 7963/ONHWPA

CASE NAME: 7963 v. Tarion

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-

Second Avenue West Residences Inc. Added Party

REASONS FOR DECISION AND ORDER

ADJUDICATOR: Geneviève Blais, Member

APPEARANCES:

For the Applicant: Self-represented

For the Respondent: Adam Pyne-Hilton, Student-at-law

For the Added Party: Heather Austin-Skaret, Counsel

Heard in Ottawa: August 15 & 16, 2013

REASONS FOR DECISION AND ORDER

This is an appeal by the Applicant to the Licence Appeal Tribunal (the “Tribunal”) from a Decision Letter of Tarion Warranty Corporation (“Tarion”) dated February 26, 2013 with respect to a new residential condominium apartment unit purchased from Second Avenue West Residences Inc. (the “Added Party”), in which Tarion denied the Applicant's claim.

The sole issue to be determined by the Tribunal is whether the Agreement of Purchase and Sale (“APS”) actually or impliedly incorporated a term requiring the Added Party to provide a ceramic tile shower base in the site-built ceramic tiled shower rather than the acrylic base which was actually installed. If the installation of a ceramic tile shower base was part of the APS, by virtue of the applicable regulations, the Added Party was not entitled to substitute an acrylic shower base. By way of a remedy, the Applicant asks for damages in the amount of $1751.50.

FACTS

The Tribunal heard from four witnesses. The Applicant testified on his own behalf and did not call any witnesses. Tony Stinson, Warranty Services Representative testified on behalf of Tarion. The Added Party called Richard Morris, directing principal and an owner of Domicile Developments, the builder/developer of Second Avenue West Condominiums, and an expert witness, Matt Michaluk, a building science engineer.

The Applicant’s unit is referred to as the “Chatham North” suite. On May 9, 2010, the Applicant and his wife signed the APS. The offer was conditional until May 29, 2010. On May 30, 2010, the Applicant and his wife signed a Waiver of Financing and Lawyer Approval and the APS was accepted by the Added Party.

The APS incorporated a “Schedule D” entitled “General construction features and specifications”. Included was a section called “Your suite features” which, among other areas, described features related to bathrooms in various suites and stated:

• The “Barclay” north and south suites include one square acrylic shower stall with ceramic above to the ceiling

• The “Fulton” north and south suites include one spa-inspired combined walk-in ceramic tiled shower and soaker tub behind a clear glass partition with chrome trim.

• The “Chatham” north and south suites include one site-built ceramic shower and a clear glass door with chrome trim.

• All bathroom floors, shower and bathtub walls are finished in ceramic tiles of your choice from our standard selections.

On August 9, 2011, the Applicant and his wife signed an “Interior Colour Selection and Information Sheet” which included the following detail:

CERAMIC WALL TILE

Main field

Pattern Tile Description

Ceramic shower (if applicable)

Shower base

Acrylic

n/a

Wall tiles

Euro 8x10 Angora Capri Classico

Euro Angora Capri 2x2 Mosaic Multi Light

On September 19, 2011, the Applicant did a walk through his unit which was under construction and at the framing stage. He saw an acrylic shower base ready for installation in the main bathroom.

The Applicant took possession of the condominium apartment unit on February 13, 2012. On March 14, 2012, the Applicant filed the 30-Day Statutory Warranty Form which listed, among other items, the main bath shower as an outstanding item. The description of the item on the form stated:

Main bath: shower was supposed to be a “site-built ceramic tiled shower” instead the base is acrylic with tile above to the ceiling.

On February 7, 2013, Tarion’s Representative, Tony Stinson, conducted a Conciliation Inspection in the presence of the Applicant and Rick Morris, the Vendor/Builder’s Representative and issued his Warranty Assessment Report. The report stated that the main bath shower was not warranted for the following reason:

There is no contractual evidence that clearly states that the shower stall base was to be constructed any differently than what was observed at the time of the inspection.

Although the Agreement of Purchase and Sale does not specify the shower base is to be ceramic, the selection sheet signed by you does state that an acrylic base will be installed.

There is no substitution that amounts to a breach of the Substitution Warranty – Specified Item or the Substitution Warranty- Selected item. This item is not referred to in the purchase agreement and is not an item of construction or finishing selected by the owner.

On February 26, 2013, Tarion issued its Decision Letter to the Applicant and denied the claim for a breach of warranty under section 14(3) of the Act.

Evidence of the Applicant

The Applicant, both in his evidence in chief and in cross examination, stated that the APS was very clear. He was to have received a site built ceramic tiled shower. It was his understanding this meant ceramic throughout, including the floor. The Added Party substituted the item referred to in the APS and the substitution is not of equal or better quality. The substitution is a breach of the Substitution Warranty.

Prior to signing the APS, the Applicant stated that he attended the Added Party’s sales centre showroom where he looked at a design book depicting finished units. Some of the pictures included a bathroom featuring a ceramic shower floor which aligned with what he understood was in the APS for his unit. It was one of the features that he liked and an important factor he considered when he purchased the unit. The Applicant acknowledged in cross examination, that none of the finished units in the design book were photos of suites in his building, as the building was yet to be constructed.

In January 2011, the Applicant viewed designs with the Added Party’s representative for his condominium unit. He was surprised to see plans for an acrylic base in the shower area. On March 11, 2011, he requested by email from the Added Party, a clarification of the shower construction. On April 8, 2011, the Added Party’s construction manager responded with the following information:

Other than the small square shower in the Barclay units, which is a one piece acrylic shower stall, every other shower in the project is site-built on an acrylic base. This includes the shower bases of the combined shower/tub in the Fulton units.

The Second Avenue West “Suite Features” do not specifically refer to the shower bases. However, it is Domicile’s policy to use one piece acrylic bases for all site built showers in our wood frame condominium buildings.

For reasons you will no doubt understand, we take special care in selecting fixtures and materials for our wood frame condominium buildings, particularly in dealing with water management, to mitigate future damage to the integrity of the wood structure in the event of water leakage. The selection of “one piece acrylic shower bases” was concluded based on these principles.

We cannot deviate from our policy as it would compromise the water management quality that we must deliver.

From April, 2011 to the date of possession in February, 2012, the Applicant continued to send several emails to the Added Party discussing the issue and stating the acrylic shower base was unacceptable.

In cross examination, the Applicant agreed the APS did not mention the shower base. He acknowledged that he had an opportunity to select ceramic tiles for the shower walls but there was no option to select ceramic tiles for the shower floor. He further agreed that the shower base was not an item on the change order form or the list of potential upgrades. Nevertheless, he insisted there were no ambiguities in the APS. It was clear and a site built ceramic tiled shower should be taken to mean the whole shower. The Selection and Information Sheet he completed and signed in August, 2011 is a separate document and cannot be considered as part of the APS. He conceded that at no time did he receive confirmation from the Added Party that the shower would have a ceramic floor.

In further cross examination by the Counsel for the Added Party, the Applicant acknowledged that he did not review the APS with his lawyer before the agreement was concluded. He accepted that on July 6, 2011, he sent an email to his lawyer in which he spoke about a ceramic shower base he thought he was buying and it was not included in the construction of the unit. The email ended with “Just wanted you to have this information”. Despite this email, the Applicant took no further legal steps to remedy the issue or to terminate the agreement and took possession of the unit in February, 2012. Counsel suggested to the Applicant that he took no further steps as property values had increased. The Applicant responded by stating that he firmly believed the APS was clear and the description of the shower was to be considered as a whole item, not one with ceramic walls and an acrylic base. The Added Party substituted the item for one which was not of equal or better quality and as a result he has suffered damages.

The Applicant stated a ceramic tile shower base is of better quality than an acrylic base. A ceramic tile shower floor looks better and feels better on the feet. He personally likes the look of ceramic and he believes his view is shared by many consumers who are willing to pay more for a ceramic base. Ceramic tile is easier to clean. He identified three cleaning products that are not suitable for acrylic surfaces as they can scratch or damage the surface. For these reasons, he concluded that a ceramic tile floor is of better quality.

The Applicant stated that as a result of the substitution by the Added Party, he has suffered damages. He provided the Tribunal with estimates he obtained from two companies on the installation of a ceramic tile shower floor. The Applicant concluded that he has incurred approximately $1751.50 of damages from the substitution.

In cross examination, the Applicant acknowledged that he obtained the estimates for the cost of installing a ceramic tile shower floor through email correspondence. In his email to the companies he requested a ball park figure estimate for a ceramic base versus an acrylic base. He provided minimal detail to the companies who did not visit his condominium unit to view the shower area.

Evidence of Tarion

Tony Stinson is a Warranty Services Representative for Tarion. He has significant experience in the construction industry, structural repairs and restoration. He has been employed with Tarion for 4½ years. He testified that he inspected the unit in question on February 7, 2013. He concluded that the”suite features” sections in the APS, related to the bathrooms, when read in their entirety, confirmed that the Applicant’s shower is what was described in the APS. The APS showed no contractual evidence of an entitlement to a ceramic base in the shower. The Selection and Information Sheet, which referred to an acrylic base, provided another indication of what type of shower base was to be provided. In considering the two provisions in the APS in Schedule D, the homeowner did not have an option to select a shower base. It was not left open to interpretation. Where there was no clear choice or selection of the item in the APS, the Added Party was entitled to use its construction standard to determine the materials for installation.

Based on his experience, Mr. Stinson testified that acrylic shower bases rarely leak. On the other hand, he has witnessed more instances of leakages in ceramic tile shower bases for a variety of reasons. Mr. Stinson denied the claim as there was no provision in the APS that stipulated the Added Party was to provide a ceramic tile shower floor. He concluded there was no substitution that amounted to a breach of the Substitution Warranty.

Evidence for the Added Party

Mr. Rick Morris is directing principal for the Added Party and since 1986 has been an owner of Domicile Developments, the builder/developer of Second Avenue West Condominiums.

He testified that in the past thirty years the company has constructed various multi unit and single dwellings. He acknowledged that when the Applicant visited the company’s showroom, he was likely shown photos of features in 27 existing buildings and homes constructed by Domicile in the past. Included in the marketing materials was a book called “Domicile”, a retrospective of the company’s projects, which was entered in evidence. He stated that the book is not an exhaustive list of photos from the 27 buildings which include both townhouses and condominium projects.

Mr. Morris stated that Schedule D of the APS makes no reference to either a ceramic shower base or an acrylic shower base when describing the features of the bathroom. The Selection and Information Sheet is the company’s form and used for each project to identify the name of the project and whether it is a townhouse or a condominium.

Mr. Morris stated that Domicile never intended any of the units in the Second Avenue West to have a ceramic tile shower floor. The purchasers of the units had no choice of the type of shower floor. The project contained 70 units. Eight of the units were the “Chatham” model, like the one purchased by the Applicant. All of the 70 units were built with acrylic base showers because of the company’s paranoia with water leaks and the ongoing maintenance obligations.

Mr. Morris stated there was no substitution of the shower base. Domicile provided the Applicant with what was described in the APS. He stated that Domicile lawyers were never contacted by the Applicant’s lawyer at any time before or after the final signing of the APS or before the closing of the transaction, to report the Applicant’s complaint about the shower base.

In cross examination by the Applicant, Mr. Morris agreed that some years ago, Domicile installed ceramic tile on shower floors in some multi unit dwellings. However, Domicile changed its policy and the practice was stopped prior to the building of the Second Avenue West project and in all other multi unit level building construction. In response to questions about the APS, he indicated that the APS is a Domicile document prepared in consultation with their legal branch and includes terms that refer to the Tarion Warranty Program. Domicile believes that purchasers prefer to see these provisions outlined in the agreement. Generally speaking, terms in the APS that may be unclear to a potential purchaser are identified by the purchaser or his lawyer during the 20 day period when an offer is conditional. In response to questions about the Selection and Information Sheet, Mr. Morris stressed that the form serves to specify choices made by the purchaser and to provide additional information relevant to the particular areas.

Mr. Michaluk is a building science engineer employed by Keller Engineering Associates Inc. He was retained by the Added Party to provide a professional opinion on the use of pre-fabricated acrylic pans versus a tile shower base consisting of sloped mortar or concrete bedding, a rubberized liner, and tile.

Mr.Michaluk, a member of the Association of Professional Engineers of Ontario, specializes in post-construction problem investigation, envelope engineering and building science and other areas. The Tribunal accepted his qualifications as an expert in building science. The Applicant did not contest Mr. Michaluk’s qualifications as an expert in that area.

Mr. Michaluk reviewed his report and the following is a summary of his evidence on the installation, performance, maintenance and economic factors of the two systems:

• Pre-fabricated acrylic shower pans are relatively simple to install. Due to their ease of installation, acrylic showers are less prone to installation errors which can result in costly repairs caused by moisture damage.
• Due to the relative complexity of a tile shower base installation which includes a rubberized membrane liner, cement board, mortar and sealants, the tile shower base is more prone to installation errors than an acrylic shower pan.
• If correctly installed, both a pre-fabricated acrylic shower pan and a tiled shower base will perform well and are very durable.
• Pre-fabricated acrylic shower pans require minimal maintenance. Tile shower bases will require minimal to moderate maintenance over their service lives. The deterioration of the grout and sealants alone may not result in moisture damage below; however, infiltration through joints may allow moisture and leakage over the years allowing mould growth.
• In comparing a relatively straight forward 3’ x 4’ shower, with comparable material qualities, tile shower bases are generally more expensive than acrylic shower bases. The cost differential could vary between 0% and 15%.

He concluded that based on the above criteria, the two systems are relatively comparable; however, there is a higher risk for water damage when installing a tiled shower base. If improperly installed or maintained, water damage can occur resulting in costly remedial repairs.

In cross examination by the Applicant, Mr. Michaluk acknowledged that sealants can fail and cracks can occur on both systems. He disagreed with the Applicant who suggested that there is a substantial difference in cost to install a tile base versus an acrylic base. When asked if it was easier to purchase cleaning products for ceramic tile surfaces, Mr. Michaluk stressed that it was important to purchase a cleaning product suitable for whatever surface to enable proper cleaning and maintenance.

In further cross examination by Counsel for Tarion, Mr. Michaluk indicated that an acrylic base is less prone to water leakages and it costs less to maintain.

THE LAW

Section 13 of the Act states in part:

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;

Sections 18 and 19 of R.R.O. 1990, Regulation 892, provide for warranties relating to substitutions in the construction of a new home. The sections state:

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

19. (1) 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.

ISSUES

The Tribunal must determine whether the Added Party has breached a warranty under the Substitution Warranties in section 19 of Regulation 892 of the Act and, if so, what is the appropriate remedy.

APPLICATION OF LAW TO FACTS

The onus of proof, meaning the obligation to prove a particular matter, rests on the

Applicant. The standard of proof is the standard by which the Applicant must establish a claim. The standard in proceedings before the Licence Appeal Tribunal is the civil

standard, being the balance of probabilities. If a breach of warranty is proved, the Applicant is entitled to damages arising from the breach.

The Act is consumer protection legislation and is to be interpreted liberally to provide that protection. In this context the Tribunal has reviewed all of the evidence and carefully considered the evidence, submissions and case law.

The Applicant submitted that the APS was clear. A site-built ceramic tiled shower does not mean a shower with ceramic walls and an acrylic base. The Selection and Information Sheet used by the Added Party to only allow a selection of tiles for the shower walls cannot be considered as part of the agreement. The description of the shower in the APS must be interpreted to mean the shower as a whole. To support his position, the Applicant referred to a decision in 7496 v. Tarion, [2013], O.L.A.T.D which involved an oak staircase in the APS. The Added Party used oak veneer for the risers and stringers. The Tribunal held that an oak veneer staircase is not an oak staircase and found the Added Party breached the warranty in Section 19 of Regulation 892 and ordered damages.

Counsel for Tarion submitted that the 7496 v. Tarion, [2013], O.L.A.T.D. decision cited by the Applicant is not relevant to the matter before the Tribunal. The APS in that matter did not have a provision that limited the location of where oak should be installed. Whereas, in the Applicant’s case, there are distinct provisions in the APS which limit where the ceramic tile should be located and the shower base was not referenced in the provision.

While the Applicant argued that it was reasonable inference that a site-built ceramic tiled shower included a ceramic tile floor similar to the photos in the Domicile’s brochure, Tarion argued that brochures and pictures do not form part of an APS and referred to a decision of this Tribunal in 5072 v.Tarion, [2009] O.L.A.T.D., which stated:

While it may have seemed reasonable to the Applicant to rely on the size of windows of other homes and the brochures for DeHoop models, the reality is that the most effective way to ensure the house is built according to expectations is to ensure all specifications are part of the APS.

The issue before the Tribunal is limited to the APS signed between the parties. The DeHoop brochures and the initial floor plans are not part of the APS and therefore not relevant to the determination before the Tribunal.

Counsel for Tarion argued that the Applicant has relied on a strict reading of a single interpretation of Schedule D of the APS. Tarion submitted that the wording of the two provisions related to the Chatham suite must be read as a whole. One speaks to the site-built ceramic tiled shower and the other speaks to the location of ceramic tiles. The purpose of the tile selection provision was to expressly identify and limit the location of the ceramic tile in the bathroom. The tile selection provision makes no reference to the shower floor. Tarion submitted that the substitution warranty under section 19 of Regulation 892 does not apply in this case.

The Tribunal accepts the submission of Counsel for Tarion that Schedule D must be read and considered as a whole. In support of his argument, Counsel referred to a decision in Eli Lilly and Co. v. Novopharm Ltd. 1998 CanLII 791 (SCC), [1998] S.C.J. No.59, [1998] 2 S.C.R.129 which stated:

The contractual intent of the parties is to be determined by reference to the words they used in drafting the document, possibly read in light of the surrounding circumstances which were prevalent at the time. Evidence of one party’s subjective intention has no independent place in this determination.

Counsel for the Added Party argued that the contractual intent of the Added Party was to limit ceramic tiles to shower walls. The Applicant had the opportunity to review the APS and particularly Schedule D with his lawyer and satisfy himself of the specific terms during the twenty day period when the offer was conditional. No changes or clarifications were requested by the Applicant when the final offer was accepted by the Added Party. Counsel submitted that the Applicant has failed to prove, on a balance of probabilities, that there was a substitution.

The Tribunal finds that Schedule D of the APS has two provisions relating to the item in question and these provisions, which must be read in their entirety, are relevant and apply to the Chatham suite purchased by the Applicant. The Applicant conceded, in cross examination, that the suite features in the APS did not stipulate he was entitled to a ceramic tile shower base. He accepted that his selection of tiles was limited to the walls of the shower and bathtub and the bathroom floors. The Tribunal is puzzled that the Applicant was not more diligent in reviewing the APS to ensure that something that he felt so strongly about, was clearly and explicitly specified.

The Tribunal finds that a ceramic shower base is not referred to in the APS. There is nothing in the APS which can be said to reflect an understanding that a site-built ceramic tiled shower included a ceramic tiled base. None of the units constructed at the Second Avenue West Condominium Development included ceramic tile in the shower bases. The Applicant may have assumed that a site-built ceramic tiled shower for the Chatham unit would be identical to those photographs in the sales brochure he viewed at the showroom. However, none of the photographs were referenced specifically to the Second Avenue West Condominium Development. The Domicile brochure is not part of the APS and the Tribunal has not considered it in its determination.

The Tribunal’s mandate does not extend to authority over contractual claims outside of what the Act specifies. The specificity required for Section 19 of Regulation 892 is absent and therefore Section 19 does not apply.

The Tribunal finds that the Applicant has failed to prove, on a balance of probabilities, that the Added Party breached a warranty under the Substitutions Warranty of Regulation 892. Consequently, the Tribunal will not address the evidence and arguments and case law presented by the parties regarding the item’s relative quality or the Applicant’s request for damages.

In oral submissions, the Added Party moved for costs in this matter. Counsel alleged that the Applicant, who was self-represented, protracted his evidence and frequently repeated questions despite the direction of the Tribunal, thereby unnecessarily lengthening the proceedings and increasing legal fees for the Added Party. Although it was expected that the Applicant would call witnesses, including an expert witness to testify, he did not. Accordingly the proceedings ought to have concluded in one day.

After the close of the proceedings, Counsel for the Added Party learned that the Applicant is a licensed member of the Law Society of Upper Canada and a legal counsel with a public employer. The Added Party provided the Tribunal with supplementary cost submissions alleging the Applicant misled the Tribunal with his apparent unfamiliarity with legal formalities. Subsequently, Tarion provided the Tribunal with written submissions for costs alleging the Applicant relied on his self-represented status and failed to disclose his legal training to gain leniency from the Tribunal.

Under Rule 14 of the Tribunal’s Rules of Practice, the Tribunal has the discretion to award costs where, considering all the circumstances, the Tribunal determines that a party has acted unreasonably, frivolously, vexatiously or in bad faith.

Counsel for the Added Party submitted that the Applicant’s testimony and questions to witnesses were circular, disjointed, argumentative and often entirely irrelevant. In learning that the Applicant is a licenced lawyer, his conduct was extremely disingenuous, misleading and entirely inappropriate in the circumstance.

Tarion alleged that the Applicant relied on his self-represented status and failed to disclose his legal training to gain leniency from the Tribunal. This conduct was highly inappropriate, misleading and unethical.

The Applicant submitted that, as a consumer, he was entitled to bring his appeal before the Tribunal and to self representation. During the hearing, he was respectful of the Tribunal rulings and the other parties while seeking to pursue his case to the best of his ability. At no time did he seek to convey that he did not have legal training. In his reply submissions, he accepted that he was familiar with legal concepts and the accepted norms of practice; however, he was unfamiliar with the manner in which the Tribunal conducted a hearing.

The issue for the Tribunal is whether or not the Applicant behaved unreasonably, frivolously, vexatiously or in bad faith.

The Applicant, who appeared before the Tribunal as self-represented, stated at the start of the hearing that he was unfamiliar and lacked knowledge about the Tribunal’s hearing process. Accordingly, the Tribunal afforded him considerable liberty and time to present his appeal, as well as, appropriately, put limits on the scope of some of his questions. During cross examination by Counsel for Tarion, the Applicant was asked where he was currently employed. The Applicant indicated he worked for the government; however, he objected to being asked his specific line of work. The Tribunal deemed the question not relevant to the proceedings.

Throughout the proceedings, the Applicant was respectful and despite some of his prolonged arguments, he did not abuse the process. Although the Applicant had the benefit of legal training, he chose not to reveal this information to the Tribunal. He was entitled to pursue his appeal vigorously with whatever evidence was at his disposal. No party can be judged unreasonable in doing so. The appeal was scheduled for two days and the proceedings were completed in l½ days.

Although the Tribunal finds the Applicant’s lack of forthrightness about his legal training somewhat inexplicable, and a more candid demeanor would have been expected, his conduct falls short of bad faith. Nor is there sufficient evidence of unreasonable, vexatious or frivolous conduct on the part of the Applicant to justify an award of costs. The Tribunal understands the frustration of the Applicant with the Added Party and the Tarion warranty claim. However, in all the circumstances, there will be no order as to costs.

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

Geneviève Blais, Member

Released: September 9, 2013