Licence Tribunal
Appeal d'appel en Tribunal matière de permis
2014-10-21
FILE:
8686/ONHWPA
CASE NAME:
8686 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
Appellants
Appellants
-and-
Tarion Warranty Corporation
Respondent
-and-
Mattamy (Hoover Park) Limited
Added Party
REASONS FOR DECISION AND ORDER
ADJUDICATOR:
Mary Ann Spencer, Member
APPEARANCES:
For the Appellants:
Self-represented
For the Respondent:
Sophie Vlahakis, Counsel
For the Added Party:
Bill Papaikonomou, Agent
Heard in Toronto:
September 29, 2014
REASONS FOR DECISION AND ORDER
This is an appeal by the Appellants to the Licence Appeal Tribunal (the “Tribunal”) from a Decision Letter of Tarion Warranty Corporation (“Tarion”) dated March 3, 2014, in which Tarion denied the Appellants’ claim with respect to a new home purchased from Mattamy (Hoover Park) Limited (the “Added Party”).
The Appellants in this case are spouses, and one of them acted as the representative for both. This representative shall be referred to as “the Appellant” in this Decision.
BACKGROUND
The possession date of the Appellants’ home was March 14, 2011. On January 8, 2013, the Appellants completed Tarion’s Second Year Statutory Warranty Form. On July 11, 2013, the home was inspected by Tarion Senior Warranty Services Representative Karin Gaupholm and a Warranty Assessment Report was issued the same date. Following a request for re-inspection, the Appellants’ home was inspected on January 27, 2014 by Senior Warranty Services Representative William Romasanta. Tarion issued a further Warranty Assessment Report on January 30, 2014 and a Decision Letter on March 3, 2014. The Decision Letter sets out the item which is the subject of the Appellants’ appeal:
- Claim (1) | Every year seasonal flooding occurs between December and February in the cold cellar. The water comes from the cold cellar ceiling.
FACTS AND EVIDENCE
The evidence of the Appellant comprised his testimony and a book of documents (Exhibit 3). Tarion’s evidence comprised books of documents (Exhibits 4 and 5) and the testimony of Karin Gaupholm and William Romasanta.
The Appellant advised the Tribunal that he had not received Exhibit 4. Ms. Vlahakis noted that she had a courier receipt verifying its delivery. She further advised that this book of documents, prepared for the hearing, with the exception of the addition of one page comprising an Internet print out of temperature readings, was identical to the book of documents disclosed for the purposes of the pre-hearing in this matter. To assist the Appellant in following page references, the Tribunal therefore entered the pre-hearing book of documents as Exhibit 5.
Appellant’s Evidence
The Appellant testified that the ceiling in his cold cellar, which is located under the front porch of his house, is damp, with water drops forming on the ceiling in summer and ice forming in the winter. Tarion has observed these conditions but has “decided to do nothing”.
At the suggestion of Ms. Gaupholm, the Appellant installed dehumidifiers which he uses in accordance to the manufacturer’s instructions. Referring to photographs (appended to Exhibit 3), he pointed out what he described as ceiling damage. Photograph 5 shows that he has blocked the room’s air vent to the outside which he did because this was “made mandatory” by the manufacturer of the dehumidifiers. He referred to a section of the manufacturer’s manual (Exhibit 3, pages 31-33) which states “The dehumidifier must be operated in an enclosed area to be most effective. Close all doors, windows and other outside openings to the room”. He also referred to the problem “Performance decreased” in the “Troubleshooting” section and highlighted “Room windows and doors open” under “Possible Cause” and “Close room windows and doors” as the “Corrective Action”.
The Appellant questioned the observations made by the Tarion representatives at their inspections and suggested that Tarion has a conflict of interest because it represents both builders and home owners. He referred the Tribunal to the sections of the Decision Letter which state respectively “The concrete ceiling showed signs of dampness” and “Evidence of minor frost build-up was observed on the front end (south side) of the concrete ceiling” and noted that these observations indicate that his problem is not seasonal in nature. He also noted that the relative humidity readings taken at the re-inspection on January 27, 2014 were 49% on the dehumidifier and 44% on a separate digital humidity/temperature indicator when the temperature was 12 degrees Celsius and questioned how it was possible to have frost in that temperature. He then stated that “this proves the cold cellar is a lemon”. He concluded by stating that Tarion decided to side with the builder because builders are “repeat customers”. He then alleged that the pictures contained in Tarion’s exhibits had been altered and suggested this was evident because a picture of his home’s exterior (Exhibit 4, Tab 16) did not clearly show the cold cellar air vent. He noted that this was important because it was indicative of a “fraudulent intent to deceive”.
The Appellant referred to his cold cellar as a “hazard” and stated that his family has refused to move into the house. He is requesting $900,000 in damages, the estimated resale value of his home which he has estimated using Internet-published information with respect to the sale of a neighbouring home (Exhibit 3, page 36).
The Appellant believes that the concrete used in his cold cellar was improperly cured. He has based this on his own Internet research. He referred the Tribunal to printouts relating to concrete curing from the Portland Cement Association (Exhibit 3, pages 20-25) and the American Society for Testing and Materials (Exhibit 3, pages 26-27).
He then cited an Internet article from about.com (Exhibit 3, page 28) and highlighted a section which states “the curing process is vital to quality and has a strong influence on concrete properties such as durability, strength, water tightness, resistance, volume, and freezing and thawing resistance”, stating these are the “same things as I see in my cold cellar”. On cross-examination, the Appellant agreed that he was not a structural engineer and had no construction experience.
On cross-examination, the Appellant testified that he first noticed water on the cold cellar ceiling in the winter of 2012. He reported it on both his Year-End and Second-Year forms. While he first noticed it in the winter months, it has never dried. Asked why he reported it as “seasonal flooding between December and February”, he stated that he did not initially fully understand the problem because his family lives in a different municipality and he himself travels back and forth between his two homes. He reiterated that the cold cellar is not a seasonal problem now.
The Appellant agreed that following submission of his Year-End form, the Added Party conducted a water test, discovered that water was penetrating the cold cellar through the air vent, and addressed this issue by caulking the vent. However, he continued to notice water on the cold cellar ceiling and filed a Second-Year claim. The Added Party then conducted a second water test, which included spraying the porch directly above the cold cellar. There was no water penetration. On July 11, 2013, Ms. Gaupholm conducted an inspection and also conducted a water test which showed no water penetration. The Appellant stated “it was the wrong test”; and that while there was no water dripping from the ceiling, the ceiling was damp. He agreed that Ms. Gaupholm measured the relative humidity in the cold room at 75% and advised him to install a dehumidifier. He subsequently installed one in the centre of the general basement area and one in the cold cellar. When the dehumidifier did not work, he plugged the air vent. He agreed that Ms. Gaupholm advised him to provide ventilation and noted the dehumidifier has a fan. Asked if Ms. Gaupholm referred him to the CMHC website providing information on humidity, he stated he remembered looking at guidelines.
The Appellant also agreed that Mr. Romasanta conducted a re-inspection on January 27, 2014, a day on which the temperature measured -20 degrees Celsius. The cold cellar temperature was 12 degrees Celsius and the relative humidity measured by the Appellant’s dehumidifier was 49%. The Appellant considers this to be low. Based on the information provided by the appliance’s manufacturer, he believes a humidity level less than 55% would be low. The Appellant noted that while Mr. Romasanta’s report stated that frost was on the ceiling in the “furthest area” from the blocked air vent, Mr. Romasanta was “selective” in his examination of the ceiling.
The Appellant then reiterated his belief that the problem in his cold cellar stems from improperly cured concrete. He did not witness the Added Party pour the concrete and has no expert opinion, stating there “is no need for it” since he has seen the after effects. Asked if the concrete is crumbling, he stated “we will reach that point in the future” and stated he could rub concrete dust from the ceiling onto his fingers. However, he had no evidence to support that there was a violation of the Ontario Building Code.
Respondent’s Evidence
Karin Gaupholm has been employed by Tarion as a Senior Warranty Services Representative for three and a half years, having previously been a Field Claim Representative for approximately six and a half years. Her role is to inspect reported deficiencies and to assess claims for warranty coverage.
Before joining Tarion, Ms. Gaupholm was a property claims representative at an insurance firm. Ms. Gaupholm holds certification in Part 9 of the Ontario Building Code. She estimated that she has conducted 1,000 to 1,500 inspections and she has experience conducting inspections with respect to both condensation and water penetration in cold rooms.
Ms. Gaupholm testified that she did not warrant the Appellants’ claim because in her opinion the condition in the Appellants’ cold cellar is the result of condensation. She noted that concrete takes time to cure and this initially increases humidity. When warm water vapour hits a cold ceiling, it condenses. The solution is to reduce humidity and increase ventilation. She noted that she recommends using fans to keep air circulating.
When Ms. Gaupholm inspected the Appellants’ home on July 11, 2013, she was inspecting for water penetration as set out on the claim in the Appellants’ Second-Year Form. She inspected the cold cellar and saw signs of moisture but no water droplets. She conducted a water test by spraying the front porch and sides of the house but saw no evidence of water penetration. She observed no cracks in the foundation of the house or any issues with the concrete in the cold cellar. She therefore concluded that there was no violation of the Ontario Building Code. However, she measured the relative humidity at 66% in the central basement and 75% in the cold cellar. She testified that because the cold cellar is neither heated nor insulated, the ceiling will become cold in winter and warm, humid air will rise and form water droplets. To prevent this, humidity needs to be lowered and ventilation increased. She recommended that the Appellant run both a fan and a dehumidifier to circulate the air. Asked if the air vent should be kept open, she stated that it should in order to improve air circulation.
William Romasanta has been employed by Tarion for eight years, the last three as a Senior Warranty Services Representative. Before joining Tarion, Mr. Romasanta spent fifteen years as a residential general contractor. Mr. Romasanta also holds certification in Part 9 of the Ontario Building Code. Mr. Romasanta estimated he has conducted between 1,500 and 2,000 inspections including those related to condensation in cold rooms.
Mr. Romasanta testified that condensation results in cold cellars when warm air hits the cold ceiling. To lessen the impact, relative humidity must be maintained and the room should be ventilated. When Mr. Romasanta inspected the Appellants’ home on January 27, 2014, he observed that the air vent in the cold cellar was plugged with cloth. There was frost on the ceiling, primarily on the south side, approximately six feet from the air vent (Exhibit 4, Tab 16). He measured the relative humidity at 44%.
The Appellants’ humidifier in the room displayed a relative humidity reading of 49%. Mr. Romasanta noted that CMHC recommends maintaining a relative humidity of 30 to 45% in winter and noted that a plugged air vent prevents air circulation, even with the fan on a humidifier operating. He was not advised of any water penetration issues and he observed no water stains or any crumbling or cracking of concrete in the cold cellar. He observed no evidence of mould. It was his conclusion that the frost was caused by condensation due to excess humidity and he assessed the Appellants’ claim as not warranted.
THE LAW
The applicable provisions of the Act are as follows:
Warranties
- (1) Every vendor of a home warrants to the owner,
(a) that the home,
(i) is constructed in a workmanlike manner and is free from defects in material,
(ii) is fit for habitation, and
(iii) is constructed in accordance with the Ontario Building Code;
(b) that the home is free of major structural defects as defined by the regulations; and
(c) such other warranties as are prescribed by the regulations.
Exclusions
(2) A warranty under subsection (1) does not apply in respect of,
(a) defects in materials, design and work supplied by the owner;
(b) secondary damage caused by defects, such as property damage and personal injury;
(c) normal wear and tear;
(d) normal shrinkage of materials caused by drying after construction;
(e) damage caused by dampness or condensation due to failure by the owner to maintain adequate ventilation;
(f) damage resulting from improper maintenance;
(g) alterations, deletions or additions made by the owner;
(h) subsidence of the land around the building or along utility lines, other than subsidence beneath the footings of the building;
(i) damage resulting from an act of God;
(j) damage caused by insects and rodents, except where construction is in contravention of the Ontario Building Code;
(k) damage caused by municipal services or other utilities;
(l) surface defects in work and materials specified and accepted in writing by the owner at the date of possession.
Term of warranty
(4) A warranty under subsection (1) applies only in respect of claims made thereunder within one year after the warranty takes effect, or such longer time under such conditions as are prescribed.
Breach of Warranty
- (3) Subject to the regulations, an owner of a home is entitled to receive payment out of the guarantee fund for damages resulting from a breach of warranty if,
(b) the person has a cause of action against the vendor or the builder, as the case may be, for damages resulting from the breach of warranty.
(4) Subject to the regulations, an owner who suffers damage because of a major structural defect mentioned in clause 13 (1) (b) is entitled to receive payment out of the guarantee fund for the cost of the remedial work required to correct the major structural defect if the owner makes a claim within four years after the warranty expires or such longer time under such conditions as are prescribed.
Sections 14 and 15 of R.R.O. 1990, Regulation 892 set out additional prescribed warranties:
- (1) Every vendor of a new home warrants to the owner that there will be no water penetration through the basement or foundation of the home.
(2) The warranty described in subsection (1) applies only in respect of claims made during a two-year warranty period ending on the second anniversary of the date of possession.
- (1) In this section,
“building envelope” means the wall and roof assemblies that contain the building space, and includes all those elements of the assembly that contribute to the separation of the outdoor and indoor environments so that the indoor environment can be controlled within acceptable limits;
“delivery and distribution systems” include all wires, conduits, pipes, junctions, switches, receptacles and seals, but does not include appliances, fittings and fixtures;
“exterior cladding” means all exterior wall coverings and includes siding and above-grade masonry as required and detailed in the relevant sections of the Ontario Building Code under which the Building Permit was issued.
(2) Every vendor of a new home warrants to the owner,
(a) that the home is constructed in a workmanlike manner and is free from defects in materials including windows, doors and caulking such that the building envelope of the home prevents water penetration;
(b) that the electrical, plumbing and heating delivery and distribution systems are free from defects in material and work;
(c) that all exterior cladding of the home is free from defects in material and work resulting in detachment, displacement or physical deterioration;
(d) that the home is free from violations of the Ontario Building Code regulations under which the Building Permit was issued, affecting health and safety, including but not limited to fire safety, insulation, air and vapour barriers, ventilation, heating and structural adequacy; and
(e) that the home is free of major structural defects.
(3) The warranties described in subsection (2) apply only in respect of claims made during a two-year warranty period ending on the second anniversary of the date of possession, in respect of homes that were enrolled, or should have been enrolled, after December 31, 1990.
(4) The warranties described in subsection (2) are prescribed under clause 13 (1) (c) of the Act.
Section 6 of R.R.O. 1990, Regulation 892 sets out the limits of liability under the Act. In this respect, it states:
- (6) Liability under subsection (3) or (4) is limited to damage to the home only and liability under subsection (5) is limited to damage to the common elements only and there is no liability for any other damage, direct or indirect.
APPLICATION OF LAW TO FACTS
The Appellant submitted that he does not accept Tarion’s theory that condensation is the cause of water droplets and/or frost forming on the ceiling of the cold cellar in his home. The humidity levels in his home are those that are noted as being comfortable in the manual provided by the manufacturer of his dehumidifiers and he has done nothing wrong but has followed what the manufacturer, who he described as an expert, recommends. He stated that he was correct to plug the air vent in the cold cellar. He submitted that he has suffered real damages: his family refuses to move into the home for fear of diseases caused by mould.
Ms. Vlahakis noted that the second year warranty is limited and submitted that the Appellants’ claim should be denied. There is no evidence of water penetration in the Appellants’ cold cellar. Nor is there any evidence of any problems with the concrete. Rather, the condition in the Appellants’ cold cellar is the result of condensation caused by poor maintenance, which the Act specifically excludes from warranty coverage.
The onus is on the Appellants to prove, on a balance of probabilities, that there has been a breach of warranty. The basic warranty with respect to defects in materials and workmanship set out in section 13(1) of the Act applies only in the first year following possession of the home which, in the Appellants’ case, was March 14, 2011. The Appellants’ claim was made on the Second Year Statutory Warranty Form and was received by Tarion on January 14, 2013. Therefore, the Appellants must prove that one of the specific two-year warranties or the warranty with respect to major structural defects applies to their claim. In making its decision, the Tribunal has relied on the evidence of the parties and has considered the authorities submitted by Counsel for Tarion.
Specifically, the Appellants’ claim states: “seasonal flooding occurs between December and February in the cold cellar. The water comes from the cold cellar ceiling”. While the Tribunal does not doubt that the Appellant has seen water droplets and/or frost on the concrete ceiling of his cold cellar, he presented no evidence to support that this was caused by water penetration. The Appellant agreed that after he initially submitted this claim on his First Year Statutory Warranty Form, the Added Party conducted a water test and discovered water was infiltrating the cold room around its air vent. This was repaired by caulking the air vent. The Appellant testified that after the claim was included on their Second Year Form, the Added Party conducted another water test and found no water penetration. Ms. Gaupholm testified that when she inspected the Appellants’ home in July, 2013, it was for water penetration. She also conducted a water test; she also saw no evidence of water penetration. Finally, Mr. Romasanta testified that he saw no water stains or other evidence of water penetration when he conducted the re-inspection in January, 2014. There is no evidence of water penetration into the cold cellar. Therefore, the Tribunal finds that the Appellants have not proven their claim with respect to the two-year warranties relating to water penetration.
The Appellant did allege that the water and/or frost he saw on the ceiling of his cold cellar resulted from improper curing of concrete, a substantial difference from the specific reference to “seasonal flooding” set out in the claim. He explained that with more experience living in the home, although on a part time basis, he now realizes that the problem is not seasonal. However, he presented no evidence to support this allegation, stating there was no need to provide any expert opinion since the “after effects” could readily be seen. While he did present a number of Internet printouts related to the curing of concrete, the Tribunal cannot accept these as authoritative without their authors present to speak to their content. Moreover, on cross-examination, the Appellant agreed that he is not a structural engineer, has no expertise in this area, did not know how the Added Party cured the concrete and had no evidence to support that there is a violation of the Ontario Building Code. He conceded that the concrete is not crumbling but stated “we will reach that point”. Both Ms. Gaupholm and Mr. Romasanta testified they saw no evidence of any problems with the concrete in the cold cellar. The Tribunal therefore finds that there is no evidence of any defect with the concrete.
The Appellant’s comments with respect to its future condition are speculative and he has failed to prove that any of the warranties set out in section 15(2) of O. Reg. 892 apply to his claim.
Both Ms. Gaupholm and Mr. Romasanta testified that they assessed the Appellants’ claim as not warranted after concluding that the conditions observed in the cold cellar were the result of condensation due to excess humidity. After measuring a humidity level of 75% in the cold cellar, Ms. Gaupholm recommended that the Appellant install a dehumidifier and run a fan. He did install the dehumidifier but, after he concluded it was not working, he plugged the air vent to the room, as Mr. Romasanta observed in January, 2014. At that re-inspection, the humidity level displayed on the dehumidifier was 49% and Mr. Romasanta measured it as 44%. He therefore advised the Appellant to increase the ventilation in the room and referred him to the CMHC guidelines on winter humidity.
The Appellant refuted the Tarion representatives’ conclusions and referred to extracts from the dehumidifier’s manual (Exhibit 3) as “expert opinion”. He stated he had followed the manual’s instructions; the humidity levels that the inspectors measured and described as being high were in fact those recommended as “comfortable” in the manual. In the “Troubleshooting” section, he pointed out an instruction to “Close room windows and doors” to address the problem identified as “Performance decreased” as being one he had followed. However, he did not point out the next potential cause that the manual lists under “Performance decreased”, which the Tribunal notes is “Obstacles to air outlet or air inlet” with the solution “Remove obstacles”. The Appellant insisted that he did nothing wrong by plugging the air vent to the cold cellar. Both Tarion representatives have certification in Part 9 of the Ontario Building Code and many years of experience in conducting field inspections, including those relating to condensation and water penetration in cold rooms. The Tribunal accepts their evidence with respect to the humidity levels in the cold cellar causing condensation and concludes that the homeowner failed to maintain the required ventilation in his home. Section 13(2)(e) of the Act specifically excludes from warranty coverage damages caused by condensation due to the failure of an owner to maintain adequate ventilation.
In this case, there is no evidence of any warrantable defect in or relating to the Appellants’ cold cellar. The Tribunal notes that even if the Appellant had proven that the water droplets and/or frost were the result of a warrantable defect, and not the result of condensation as the Tribunal has concluded, he did not present any evidence to support that there was in fact any actual damage in his home. Rather, he stated that his damages comprised the fact that his family refused to move into the house for fear of diseases caused by mould, no evidence of which was presented. He requested $900,000, the estimated value of his home.
For the information of the Appellant, the Tribunal notes that payments in respect of breach of warranty are specific to damages to the home stemming from the breach and generally represent the cost of repair. Liddiard v. Tarion Warranty Corporation, 2009 CanLII 65801 (ON SCDC), [2009] O.J. No. 4912; 99 O.R. (3d) 656 (Div. Ct.) at paragraph 52, sets out what is covered by the warranty:
What is conferred by the warranty is the right to have done that which should have been done correctly in the first instance or a sum of money to purchase the labour and materials to do so. Any loss or damage that is derivative of the failure to construct in accordance with s. 13(1) is secondary and therefore excluded.
Finally, the Appellant maintained that Tarion was in a conflict of interest position and alleged that the photographs contained in Tarion’s books of documents had been altered with the intent to deceive. The Tribunal notes that the area of the air vent location in the specific photograph to which the Appellant referred is shaded. There is no basis for the Appellant’s conclusion that it had been altered. The Tribunal finds the Appellant’s allegations to be completely unsubstantiated.
ORDER
Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs Tarion to deny the Appellants’ claim.
LICENCE APPEAL TRIBUNAL
Mary Ann Spencer, Member
Released: October 21, 2014