Licence Appeal Tribunal
FILE: 8856/ONHWPA
CASE NAME: 8856 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: 8856
-and-
Respondent: Tarion Warranty Corporation
-and-
Added Party: Cardel Homes Limited Partnership
REASONS FOR DECISION AND ORDER
ADJUDICATOR: Alex McCauley, Member
APPEARANCES:
For the Appellants: Self-represented
For the Respondent: Danielle Peck, Counsel
For the Added Party: Richard White, Agent
Heard in Ottawa: October 23, 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 May 5, 2014, and Supplementary Decision letter June 3, 2014, with respect to a new home purchased from, Cardel Homes Limited Partnership (the “Added Party”), in which Tarion denied (in part) the Appellants’ claim.
BACKGROUND
In its decision letter of May 5, 2014, two items in the claim by the Appellants were left in dispute. These were claims 1-8 and 2-1 as submitted pursuant to s. 14(3) of the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “Act”). Both items were denied as they were items that would only be considered on the first year warranty and they are not eligible for warranty to be assessed on the Second-Year Form.
In its supplementary Decision letter of June 3, 2014, a claim is listed as number 5 under Year-End Terms which stated that “Interior garage ceiling, no strapping (1x3 16”) was installed on the trusses. Drywall is directly placed underneath the trusses at 24” center. This should be rectified.”
Tarion denied this claim as it is their position that strapping is not required in situations where drywall has been installed. No evidence was provided, such as evidence from a building official, that strapping is required.
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.
Notice of decision under s. 14
- (1) Where the Corporation makes a decision under section 14, it shall serve notice of the decision, together with written reasons therefor, on the person or owner affected.
Notice requiring hearing
(2) A notice under subsection (1) shall state that the person or owner served is entitled to a hearing by the Tribunal if the person or owner mails or delivers, within fifteen days after service of the notice under subsection (1), notice in writing requiring a hearing to the Corporation and the Tribunal.
Powers of Tribunal
(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.
EVIDENCE
The first issue is outlined in the decision letter of May 5, 2014, and this dealt with issues 1-8, water penetration in the basement, and 2-1, fogging up of windows in the master bedroom and living room windows fogging up between the panes. The Appellants had asserted that this was caused by high humidity in the home associated with water penetration in the basement.
One of the Appellant testified. He maintained that the basement area of his home has extremely high humidity, which in his estimation, is caused by moisture seeping into the basement. He maintains this increased humidity is partially to blame for the fogging of his windows.
He stated that improper back-filling material used by the contractor is at fault. He stated that he only discovered this material when digging holes for a fence. He could not list this defect on the first year warranty because he was not aware of it. He was prohibited by contract for one year from doing any type of excavation.
In the Appellants’ book of documents (Exhibit 4), there are photographs of material piled up ready to be used as backfill, and photos of material extricated by the Appellant which show oversized rocks and inappropriate material such as clay which appears to have been used in the backfilling of his house.
In cross-examination, the Appellant admitted that he did not indicate the items in dispute from the May 5, 2014, letter in his Year-End report. He further stated that he had not mentioned these items in the 30 day report.
In further cross examination, it was suggested that if he had photographs of the material to be used in backfilling he must have had concerns, yet he did not indicate these concerns to the builder or to Tarion in the first year report or the 30-day report.
It was established through the testimony of the Tarion representative Perry Hart that the fogging of the windows was the result of a broken seal between the panes. The Appellant agrees with that diagnosis.
The Appellant admits that the windows are warranted for five years by the manufacturer Grandor. Grandor would charge $285.00 for replacing the defective material. Under Tarion’s warranty, the windows are only warranted for one year. The Year-End report was signed July 29, 2012. At that time there was no indication of fogging of the windows. This would have been a requirement of the Year-End report.
The next issue dealt with the Supplementary Decision Letter from Tarion dated June 3, 2014, item 5 from the year-end report for year two, relating to the lack of 1x3 strapping on the trusses in the garage. The area had the drywall attached to the trusses directly. Tarion agreed that the matter was within the proper time period but denied the warranty because in Tarion’s view, strapping is not required where drywall has been installed. There was never any evidence presented that strapping was required.
The Appellant gave evidence that the issue of strapping was clearly outlined in the plans for the home. This document is outlined at 5/5 of the Appellants’ Book of Documents (Exhibit # 4). The Appellant pointed to section 9.29.3.1 of the Ontario Building Code which indicates strapping is to be used, 1x3” at 16” centres.
Richard White, the Agent for the Added Party, gave evidence that this is quite a common occurrence – that is, that this strapping is left out of areas such as the garage, unless it is required for load bearing or other essential needs. He went on to state that homeowners don’t fully understand these concepts or procedures.
Perry Hart, the Warranty Service Representative for Tarion, gave evidence. Mr. Hart has over 20 years experience in the construction industry and is very familiar with the Ontario Building Code. He has inspected the Appellants’ home. In his view, there is no evidence of water penetration in the basement area. There has to be actual running water through the basement area to justify water penetration. High humidity is not sufficient. He also did not see any structural defects on the basement walls and no water penetration. He observed no breaches of the two year warranty.
With regard to strapping in the garage, his position is that this is not always required. Furthermore, there was never any evidence tendered that the strapping was required in this case. The structure is three years old and there have been no problems in the garage due to lack of strapping on the trusses.
Regarding section 9.29.3.1 in the Building Code referred to, he stated that this only becomes a condition if strapping is required; in this case, it was not.
SUBMISSIONS
In summation, the Appellant states that the backfill matter should be warranted as he had no opportunity to claim it in the first year, because of restrictions against any excavations during the first year. He maintains the house was not built as per contract with the builder and they should be held accountable.
With respect to the glass issue, the Appellant submitted that Tarion should stand behind this as the manufacturer has warranted the product.
In regard to the strapping in the garage, the Appellant maintains that this is a contractual obligation of the builder which has not been carried out.
In summation, Tarion Counsel pointed out that the Appellants have the burden of proof to succeed on appeal. They must show that they have suffered damages as a result of the alleged warranty violations. She referred the Tribunal to two decisions at tabs 4 and 5 of Tarion’s Book of Authorities.
The first decision referred to was file 7207/ONHWPA, [2012] O.L.A.T.D. No. 287. The relevant part of the decision was at page 3, paragraph 7, which dealt with the onus on the Appellant to establish:
(a) There was a breach of warranty by the Added Party.
(b) Damages flowed from that breach; and
(c) The quantum, of those damages.
The second decision referred to file 5213/ONHWPA, [2009] O.L.A.T.D. No. 285. The relevant aspect of the decision is at paragraph 79: the Appellants bear the onus of establishing, on a balance of probabilities, that the deficiencies they allege constitute breaches of warranty under the Act. As well, they are required to demonstrate the damages suffered by them as a result of such breaches.
Counsel submitted that Tarion does not have the discretion to extend time limits on warranted items.
Counsel for Tarion also submitted that the backfill items referred to by the Appellant are not second year items, they are all first year items. There is no evidence of water penetration in the basement or any evidence that the backfill in question is a problem. There is no breach of warranty as the backfill issue must be reported in the first year report.
In response to the Appellant’s position that he could not respond to the backfill issue in the first year because of the prohibition against any excavating in the first year, Tarion’s Counsel pointed to the photos in Exhibit 4 which indicated that the Appellant was aware of the material that might be used in the backfill. This was well within the allowable time periods, but the Appellant failed to mention his concerns.
Regarding the fogging of the windows, Counsel submitted that this is not a breach of the second year warranty. This is a break of the window seal and is a matter warranted for first year. The Appellant has recourse under the warranty from the window manufacturer.
Regarding the 1x3 strapping for the garage, Counsel pointed out that there was no evidence this was required. The Ontario Building Code, section 9.29.3.1, referred to by the Appellant, refers only to “If” the strapping is required. In this case, there is no requirement. She submitted that there is no evidence that the integrity of the garage roof has been affected in any way without the strapping installed. The structure is now over three years old. Section 14 (3)(b) of the Act clearly states the requirement that the homeowner must suffer damages as a result of the breach. There are no damages in this case.
APPLICATION OF LAW TO FACTS
Dealing with the matters outlined in the decision letter of May 5, 2014, item 1-8, water penetration, the Tribunal is satisfied that there is no water penetration in the basement. There was no evidence from the Appellant or the Tarion Warranty Service Representative about any water running through or seeping into the basement. Mere high humidity is not proof of water seepage or structural defects in the basement.
The backfill seems problematic, but it is clearly a first year warranted item. It is the view of the Tribunal that in spite of a perceived one year prohibition on excavating, the Appellant could have made his concerns known within the required time frames. He had photos of the backfill allegedly used before it ever went in the ground.
Regarding the claim under 2-1, the Tribunal finds that the evidence is very clear that the fogging of the windows in question is the result a break in the seal between the panes. The Appellant acknowledged this fact. He has recourse through the manufacturer’s warranty. This is not an item that is warranted at the second year report and therefore is not eligible for warranty.
The final matter deals with item 5 contained in Tarion’s Supplementary Decision Letter of June 3, 2014, which deals with the lack of 1x3 strapping of the trusses in the garage. Based on the evidence heard, the Tribunal is satisfied that this strapping is not required in this instance. The builder has discretion in this regard. Further, there is no evidence of damages suffered by the Appellant as required under section 14 (3)(b) of the Act. The Tribunal finds this matter is not a warranted item under the circumstances.
In conclusion, the Tribunal is satisfied that there have been no breaches of warranty in any of the items brought forth in this appeal.
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
Alex McCauley, Member
Released: November 19, 2014