8659 v. Tarion Warranty Corporation, 2014 CanLII 70043

Licence Tribunal

Appeal d'appel en

Tribunal matière de permis

DATE:

2014-11-13

FILE:

8659/ONHWPA

CASE NAME:

8659 v. Tarion Warranty Corporation

Appeal of a Decision of Tarion Warranty Corporation under the Ontario New Home Warranties Plan Act, R. S. O. 1990, c. O.31 to Disallow a Claim

The Appellant

Appellants

-and-

Tarion Warranty Corporation

Respondent

REASONS FOR DECISION AND ORDER

ADJUDICATOR:

D. Gregory Flude, Vice-Chair

APPEARANCES:

For the Appellant:

Self-Represented

For the Respondent:

Gena Argitis, Counsel

Heard in Toronto:

October 24, 2014

DECISION

1The Appellant appeals the decision of Tarion Warranty Corporation (“Tarion”) to deny a claim for warranty set out in a Decision Letter dated February 14, 2014. The Appellant is the second owner of the home but does not dispute the fact that the home was completed for occupancy on January 31, 2007. As a result of the lapse in time between occupancy and the Appellant’s claim, the statutory warranty scheme leaves only a warranty for major structural defect.

2The Appellants’ right to warranty coverage is set out in s. 13 of the Ontario New Home Warranties Plan Act, R. S. O. 1990, c. O.31 (the “Act”):

Warranties

13. (1) Every vendor of a home warrants to the owner,

(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.

O/Reg 892 defines “major structural defect” as follows:

“major structural defect” means,

(b) in respect of a home that is enrolled after December 31, 1990 and that is not a post June 30, 2012 home, any defect in work or materials, including any defect that results in significant damage due to soil movement, major cracks in basement walls, collapse or serious distortion of joints or roof structure and chemical failure of materials, if the defect,

(i) results in failure of the load-bearing portion of any building or materially and adversely affects its load-bearing function, or

(ii) materially and adversely affects the use of such building for the purpose for which it was intended,

but does not include any defect attributable in whole or in part to a Year 2000 compliance problem, flood damage, dampness not arising from failure of a load-bearing portion of the building, damage to drains or services, damage to finishes, malicious damage or damage arising from acts of God, acts of the owners or their tenants, licensees or invitees, acts of civil or military authorities or acts of war, riot, insurrection or civil commotion;

3The facts are not in dispute. The Appellant purchased the house in 2012. It has a finished basement that comprises among other things, three bedrooms, a kitchen and a bathroom. The Appellant’s sister and her children occupy the basement. On January 11, 2014, there was a significant influx of water into the basement and water dripped into the dining room from the top of the window frame. The Appellant made a claim on her insurance policy but her insurers told her that she should make a warranty claim to Tarion since the house was relatively new. She made the claim to Tarion and a Senior Warranty Service Representative, Karin Gaupholm, attended her home to conduct an inspection.

4During the inspection, Ms Gaupholm noted that there was a crack in the basement wall extending above grade. She could not look at the inside of the basement wall because the basement was finished but stated that the area where water was first found in the basement corresponded with the location of the crack. She also noted that water was draining down the exterior wall of the home from the roof, flowing across a balcony and then down into the basement crack. She noted no deformation or displacement of the wall around the basement crack. She concluded that the basement crack resulted from the normal curing of the concrete and the defect was not structural in nature. It was her evidence that the cause of the water inside both the basement and the dining room were the result of ice damning.

5Ice damning, according to Ms Gaupholm, is a condition that may occur during freeze and thaw cycles where ice backs up under the shingles beyond the installed ice/water barrier. The Ontario Building Code (OBC) requires an ice/water barrier to extend from the lower edge of the shingles for a distance of three feet up the roof. In normal years, the ice damning does not exceed the three foot barrier, but very occasionally, in exceptional years, it might. She characterized the period in December and January of the winter of 2013/2014 as exceptional. A multi day ice storm just before Christmas was followed by snow and thawing. The photographs Ms Gaupholm took of the eavestroughs above the areas show a lower ice build-up layer with a significant snow layer above. There are also large icicles above the areas where the leaks occurred. These photographs support Ms Gaupholm’s analysis about the weather conditions. Ms Gaupholm found nothing to suggest a breach of the OBC in the roof installation.

6The Appellant testified that her sister and family had moved upstairs following the basement flooding. She hired a contractor to seal the crack. There has been no further leakage. Her concern is that the contractor informed her that the basement crack was structural in nature and that he was unsure if his sealant job would provide a permanent solution. She is worried about future years. Her sister has not, as yet, moved back downstairs to the basement, not because the area is currently wet, but out of concern about possible future flooding. The furniture and carpets that were in the basement remain there, although they have been moved away from the area that flooded.

7The wording of the definition of a major structural defect includes major cracks in basement walls. It does not stop there, however. It goes on to require that the cracks result in the failure of the load-bearing portion of the building or materially and adversely affects its load-bearing function, or materially and adversely affect the use of the building for the purpose for which it was intended. Other than advising the Tribunal that a contractor or contractors had said the cracks were structural in nature, the Appellant put forward no evidence to indicate that the basement crack has materially or adversely affected the load bearing capacity of the basement wall. Ms Gaupholm testified that cracks are common in concrete basement walls, so much so, that there is a two year warranty if there is water penetration through such cracks. She noticed no indicia of structural failure such as displacement of the wall on either side of the crack or widening of the crack along its visible length. In the absence of evidence of structural failure, the Tribunal is forced to conclude that the first part of the major structural defect test set out in the definition has not been satisfied.

8The second part of the test takes into consideration the use of the building for its intended purpose. The intended purpose in this case is as a home. The issue for the Tribunal is to determine if the single incident of flooding on January 11, 2014, has rendered the basement unusable for the purpose for which it was intended. Intention, in this context, is intention at the time of construction since the warranty arises out of new home construction. No evidence was put before the Tribunal concerning when the basement was finished, whether as part of the original construction or as part of a renovation by the first owner. Given that there is a bathroom and a kitchen in the basement, the Tribunal will accept that these were roughed in as part of the construction and that there was an intention that the basement be finished for occupation. Can it still be used in that manner?

9The Appellant’s evidence is that, while her sister and family have moved upstairs for the time being, the basement is currently dry and has been since the sealant was put into the crack. Other than the January 11, 2014, incident, there have been no other occasions when it has leaked. The basement may currently be used as a residence for the Appellant’s sister and family but, out of an abundance of caution, they have decided not to move downstairs. There are concerns of possible mould build-up with health effects for the children. The Tribunal was given no evidence of mould contamination or of any mould spots on surfaces. Based on the evidence before it, the Tribunal can only conclude that the basement may continue to be used for its intended purpose. Accordingly, the Appellant has failed to satisfy the second branch of the definition of major structural defect.

ORDER

10By virtue of the authority vested in it by the Act, the Tribunal orders Tarion to deny the Appellant’s claims for warranty.