8637 v. Tarion Warranty Corporation, 2015 CanLII 26063

Licence Tribunal

Appeal d'appel en Tribunal matière de permis

DATE: 2015-04-02

FILE: 8637/ONHWPA

CASE NAME: 8637 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 Appellants Appellants

-and-

Tarion Warranty Corporation Respondent

-and-

Richcraft Homes Ltd. Added Party

REASONS FOR DECISION AND ORDER

ADJUDICATOR: D. Gregory Flude, Vice-Chair

APPEARANCES:

For the Appellants: Self-represented

For the Respondent: Danielle Peck, Counsel

For the Added Party: Stephen Black, Agent

Heard in Toronto: July 15 & 16, 2014 and February 12 & 13, 2015

DECISION

1Pursuant to the Ontario New Home Warranties Plan Act, R. S. O. 1990, c. O.31 (the “Act”), the Appellants appeal the decision of Tarion Warranty Corporation (“Tarion”) to deny the claim for warranty set out in Decision Letters dated February 7, 2014 and March 6, 2014. The Added Party, Richcraft Homes Ltd., is the vendor of the home and is liable to either carry out the warranty repairs or to reimburse Tarion for the cost of those repairs in the event this Tribunal finds in favour of the Appellant. The Added Party supports Tarion’s position in this matter.

2There are a number of items in dispute between the Parties:

1. Insufficient attic insulation in the master bedroom.
2. The wall sill plate at the garage foundation wall is not sealed to ensure an adequate barrier against exhaust gases.
3. There are drips from the soffit over the front porch during the winter months.
4. The front porch steps are not level and have an improper rise.
5. There is a crack in the foundation wall around the basement windows.
6. There is defective caulking around the faucet and taps in the shower.
7. The basement handrail has not been properly secured.
8. There are cracks in the basement walls.
9. The escutcheon plate in the main floor washroom has a problem.

PRELIMINARY ISSUES

Items not listed in the Decision Letters

3Claims for warranty under Tarion are made on claim forms mandated by statute. They require a homeowner to itemize each complaint. Should the vendor not rectify a claim within the prescribed repair period, the homeowner may request a conciliation inspection from Tarion. At that inspection, each item is inspected separately and treated thereafter as a discrete claim. In the current appeal, the Appellants have argued that some complaints incorporate other items complained of. They argue, for instance, that item 1 above, missing insulation in the attic above the master bedroom includes their second item of complaint, that the master bedroom is cold and that heat balancing to heat the master bedroom results in other rooms being cold. With respect to item 7, they argue that it includes any complaint they made about sealing the walls in the garage, including point 4 on their original list which they withdrew at the conciliation inspection and item 6.

4The initiating document in an appeal to the Tribunal is a Decision Letter. It is this document that triggers an appellant’s right to appeal. This document defines the dispute between the parties. The Tribunal is bound by the items set out in the Decision Letter and cannot, of its own accord or at the request of the parties without unanimous consent, address items which are not the subject matter of a Decision Letter. There are numerous reasons for this position. Firstly it defines and limits the extent of the litigation between the parties. Secondly, it ensures natural justice by defining the case that the parties have to answer. Thirdly, it prevents an open-ended process where parties endlessly extend the scope of the hearing well beyond the items in dispute.

5It does happen sometimes that findings with respect to items that were addressed in a conciliation inspection are not included in Tarion’s Decision Letter. It is open to a homeowner to request that Tarion issue a Decision Letter to cover any missed items. It is often possible to consolidate hearings on several decision letters for greater efficiency and lower costs. Indeed, in the current case, Tarion issued a Decision Letter on June 19, 2013 addressing the issue of basement wall cracks. The Appellants appealed this Decision Letter to the Tribunal and the Tribunal released a consent order on August 20, 2013. There are two Decision Letters in issue in the current appeal. There is no separate appeal document relating to the March 6 Decision Letter but the Tribunal heard evidence regarding it without objection form Tarion or the Added Party.

Basement Wall Cracks

6It appears from a review of the documentation that the claims regarding cracks in the basement walls are identical to the claims dealt with by the Tribunal in August 2013. In a full and comprehensive settlement, the Parties reached an agreement which was incorporated into an order of the Tribunal. That settlement provided that the Added Party would repair any basement cracks that were leaking water and would provide a one year guarantee on its repairs. The Appellants then withdrew the balance of their appeal regarding basement wall cracks. At the July hearing of this appeal, within the one year builder’s guarantee, the Appellants noted that one of the repaired cracks had cracked again. They specifically stated that there was no water penetration through the crack. The terms of the guarantee were reviewed and the Appellants were informed that they had until October 18, 2014 to advise Tarion if there was water penetration through the crack. They did not do so. Rather, they introduced a new photograph of the exterior of the crack on February 12, 2015 and alleged it had been leaking. They ask the Tribunal to consider the new evidence.

7After the conclusion of the hearing, the Appellants sent further submissions to the Tribunal regarding the wall cracks. These submissions were simply a restatement their submissions made at the hearing. Tarion and the Added Party were given the opportunity to respond to these further. The Added Party did not avail itself of that opportunity despite a lapse of several weeks from notice of the additional submissions. Tarion submitted that the Tribunal should not receive and consider the new submissions. The Tribunal decided to consider the Appellants’ submissions but, as stated above, found that they did not add anything new and gave no particular effect to them.

8The Tribunal is of the view that the attempt to re-litigate the cracks in the basement wall at this hearing is an abuse of process; the matter having been comprehensively dealt with in the earlier appeal. The Appellants argue that they did not intend to settle all of their rights concerning leaking basement wall cracks when they entered into the earlier settlement. Their error is their failure to recognize that it is not the settlement which closed off their rights; it is the fact that the earlier appeal on the issue of basement wall cracks dealt with all of the Appellants’ rights with regard to that issue . It is not open to them to bring a series of appeals on the same issue. The resolution of that appeal, whether by consent order or decision of the Tribunal following the hearing constitutes the whole of the remedy available to the Appellants. The Appellants do not have the right to bring these same issues forward in a subsequent appeal.

9The Tribunal does not accept the Appellants’ suggestion that they did not understand the nature of the settlement they entered into. It was arrived at with the assistance of a member of the Tribunal following a lengthy prehearing. It reflects the give and take necessary to reach a settlement. It has also been reduced to a consent order of this Tribunal. Tarion and the Added Party have fulfilled their obligations pursuant to it. For the current Tribunal member to proceed to adjudicate on this issue again would, in effect, mean that the Tribunal is sitting as its own appeal body. The Tribunal does not have the right to hear appeals from its own orders. That right is reserved to the courts. Accordingly, the Tribunal will not consider the issues raised by Item 8 above regarding cracks in the basement walls.

THE LAW

10The Appellants took possession of their home on February 11, 2010. They made warranty claims within the first year but did not request conciliation inspections with respect to any of the items they listed. Pursuant to the regulatory scheme all of their first year claims are deemed to have been resolved. The current matter addresses 2nd year warranty claims. There are limits on 2nd year warranty claims set out in ss. 14 and 15 of O/Reg 892/90:

14. (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. O. Reg. 9/09, s. 7.

(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.

General

15. (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; (“enveloppe”)

“delivery and distribution systems” include all wires, conduits, pipes, junctions, switches, receptacles and seals, but does not include appliances, fittings and fixtures; (“réseaux de distribution”)

“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. (“habillage extérieur”)

(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.

(2.1) A major structural defect claim in respect of a post June 30, 2012 home does not extend to any damages or claims,

(a) in respect of any elevating device as defined in subsection 1 (1) of Ontario Regulation 209/01 (Elevating Devices) made under the Technical Standards and Safety Act, 2000 but does not include the surrounding structure of the building housing the device;

(b) in respect of any appliances that form part of the heating or cooling apparatus, equipment or system, whether for water, air or other substances, including furnaces, air conditioners, chillers and heat recovery ventilators;

(c) resulting from dampness not arising from failure of a structural load-bearing element of the building;

(d) resulting from acts or omissions of an owner, a tenant, a licensee or invitee;

(e) resulting from acts of civil or military authorities or acts of war, riot, insurrection or civil commotion;

(f) resulting from a flood not caused by the vendor or builder; or

(g) resulting from anything to which a warranty does not apply under subsection 13 (2) of the Act.

(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.

ANALYSIS

11Tarion took the position that a number of the issues raised by the Appellants are 1st year warranty items and denied coverage. The Appellant alleged that they were breaches of the Ontario Building Code (OBC) and addressed health and safety thus bringing them within the 2nd year warranty scheme. Despite these allegations, the Appellants produced nothing more than bare allegations that there were breaches of the OBC and expressed vague concerns of future health and safety problems. For the most part, there was no evidence of a current health and safety issue.

12Item #1 above addresses the lack of insulation in the attic above the master bedroom. Unless there is a breach of the OBC leading to a health and safety concern, this item would be covered by a one year warranty. The Appellants attempted to address the health and safety concern by alleging dampness and mould build up. The Tarion representative, Tony Stinson, noted no sign of frost or dampness and no mould and the Appellants had no evidence to counter his observations.

13The Appellants alleged that the lack of insulation resulted in an inability to keep the bedroom warm. Mr. Stinson took temperature measurements within the house and noted the master bedroom was around 24˚C to 25˚C. The other rooms were at 22˚C. The temperature outside was -20˚C. The Appellants were at pains to point out that the outside temperature had been very low for an extended period of time and that they had cranked up the heat in the master bedroom by closing vents in other rooms. The Tribunal does not fully understand their point. It is clear from all of the evidence that the heating system was able to maintain a comfortable temperature throughout the house in even the coldest weather such that there was no risk to health and safety.

14Item # 2 above addressed a lack of sealant in the garage around a sill plate. The Tribunal heard no evidence about sealant around the sill plate. It heard from the Appellants that the Added Party had carried out other repairs to the walls in the garage prior to the conciliation inspection and as a result they had withdrawn those items from the outstanding repairs list when Mr. Stinson attended to conciliate. They informed the Tribunal that the Added Party’s repairs had subsequently failed. The items complained of are not before the Tribunal on this appeal.

15The Appellants complained of drips from the soffit over the porch on the exterior of the house (Item #3). There is no evidence that whatever is causing the drips is resulting in water penetrating the building envelope. The Appellants allege that the dripping is caused by a lack of weep holes in the wall. They allege this because someone told them that was the cause. They produced no evidence of cause beyond the observation that the soffit dripped.

16Items 6 and 9 on the above list deal with problems with the caulking and finish in the shower and the escutcheon plate. They are both 1st year warranty items. The second year warranty addresses defects in the water distribution system. These two items relate to the finish of the bathroom. The Tribunal has some sympathy with the Appellants with regards to the escutcheon plate. It was not reported on the year end warranty as the Added Party had started and then abandoned a repair with a promise to send a plumber. Notwithstanding the Tribunal’s sympathy, the defect falls outside the scope of the statutory warranty and the Tribunal has no authority to remedy the problem.

17Item # 5 uses wording that suggests there are cracks in the basement wall. What is actually of actual concern is not a crack but a lack of caulking around the cast in place basement window. Caulking is a 1st year warranty item but water penetration may elevate it to a two year warranty. The Appellants did not report water penetration at this location, only a potential for water penetration. Mr. Stinson did not note any signs of water penetration nor did the Appellants point out any signs. On the last day of the hearing, the Appellants suggested that there actually had been signs of water penetration and that they could now get it to leak, but their evidence in this regard contradicts their earlier evidence. The Tribunal finds there has been no water penetration through the basement window frame within the two year warranty period.

18The Appellants had concerns about the handrail leading to the basement (Item #7). Initially, there was no support close to the lower end and that was found by Tarion to be a breach of the OBC. The Added Party installed a support. The Appellants now allege that this support has been improperly installed and creates a safety concern. They state that the OBC requires that the support be screwed into a wood support. They allege that this support is only fixed to the wall by drywall anchors. Mr. Stinson tested the support and noted no movement. In fact, he put his full weight on it. He testified that had it been fixed with only drywall anchors it would have moved with his full weight on it. The Appellant argues that the area behind the wall was accessible and Mr. Stinson should have looked behind the wall. Mr. Stinson is of the opinion that it was not readily accessible. Despite the apparent accessibility, the Appellants produced no photographs of the area to show improper fastening. In the absence of such evidence, this claim must fail.

19The final area of concern is the positioning of the front steps (Item #4). The front steps are not level. They consist of a pre-cast concrete step unit placed on unfinished earth against the edge of the porch. Thus the first rise from the top is from the porch level to a totally independent floating step unit. The Tribunal must determine if the out of level step unit constitutes a health and safety issue. If so, does the exclusion for settlement of the ground deny warranty coverage?

20The Tribunal agrees with the Appellants that the sloping nature of the steps does create a hazard. Without a constant and steady rise between steps, there is a risk of tripping with a fall of several feet. Tarion’s position is that the slope is caused by the ground settling and that coverage is specifically excluded. S. 13 (2) (h) excludes warranty coverage for “subsistence of land around buildings” other than land under footings. The OBC permits floating step units resting directly on the earth. There was no evidence that such a unit requires any foundation pad or “footing,” or was actually resting on a footing. The Tribunal is of the view that, on these facts, the exclusion applies and there is no coverage for the subsidence leading to the sloping steps.

ORDER

21By virtue of the authority vested in it by the Act, the Tribunal orders Tarion to deny the Appellants’ claims for warranty.