8549 v. Tarion Warranty Corporation, 2015 CanLII 59625

Licence Tribunal

Appeal d'appel en Tribunal matière de permis

DATE: 2015-09-17

FILE: 8549/ONHWPA

CASE NAME: 8549 v. Tarion Warranty Corporation

An Appeal of a Decision of Tarion Warranty Corporation under the Ontario New Home Warranties Plan Act – to Disallow a Claim

Appellants

Appellants

-and-

Tarion Warranty Corporation

Respondent

-and-

Polmat Group Inc.

Added Party

REASONS FOR DECISION AND ORDER

ADJUDICATOR: Patricia L. Cassidy, Vice-Chair

APPEARANCES:

For the Appellants: Self-represented

For the Respondent: Brent J. Arnold, Counsel

For the Added Party: Daniel Mc Conville, Counsel

Heard in Toronto: September 23, 25, October 8, 20, 21, 22, 23, November 26, 27 ,and 28, 2014, January 8, March 18, 19, 23, 24, 25, April 1, 2, 7, 9, 10, 13, 14, May 6, 7, 8, 2015

REASONS FOR DECISION AND ORDER

This is an appeal by the Appellants to the Licence Appeal Tribunal (the “Tribunal”) from Decision Letters of Tarion Warranty Corporation (“Tarion”) dated December 20, 2013 and May 28, 2014 which relate to a new home purchased by the Appellants from, Polmat Group Inc. (the “Added Party” or “Builder”), in which the Appellants’ claims were denied, in part.

BACKGROUND

This appeal was originally scheduled for 10 days of hearing; however, by the time the hearing commenced, there were a number of preliminary motions to be determined. In total, 13 preliminary motions were considered. The hearing of this appeal commenced on September 23, 2014. The date of November 24, 2014 was a scheduled hearing date; however, on the consent of the parties, that day was utilized to attempt to mediate the issues raised in this appeal. In total, there were 26 hearing days in addition to two days devoted to hearing the preliminary motions and the November date when the parties engaged in mediation.

This was a lengthy hearing compared to most appeals under the Ontario New Homes Warranties Plan Act. It spanned several months from the preliminary motions determined in early September 2014 to the submissions received in early June 2015. Given the large number of claim items under appeal and the difficulty in coordinating the schedules of the parties, their representatives and the Tribunal, scheduling additional days as they became necessary led to this hearing having to extend beyond what anyone would consider ideal. This decision is also lengthier than one might normally expect, due, in part, to the desire to assure the parties that they all were heard and their evidence considered as well as the reality that there was an inordinate amount of evidence received, over a span of more than eight months, to review. The amount of time it took to complete the hearing of this appeal and the length of this decision might better be appreciated by reviewing the scope of the appeal at this point, rather than after reviewing the evidence as is the norm in these decisions. It is also worth noting that the parties in this appeal were very acrimonious. This contributed to both the complexity and the delay. The Appellants were self-represented and not trained or experienced in the rules and procedures of administrative law. At various points during the hearing they expressed significant frustration with the process.

SCOPE OF THIS APPEAL

The December 20, 2013 Decision letter (Exhibit 1 and also Exhibit 20, Tab1) dealt with 139 items. Fifty-two of those claim items were withdrawn by the Appellants after the commencement of the hearing. Several of the items had been resolved by the builder prior to conciliation while other items were withdrawn by the Appellants. Item 87 was initially withdrawn by the Appellants and no evidence was led by them regarding it; however, during the cross-examination of Ryan Haley, on behalf of Tarion, the Appellants asked that they be permitted to cross-examine him regarding item 87. Since the Appellants were self-represented and not familiar with the process or the rules, this concession was granted. The Respondent Tarion, was given the opportunity to re-open their examination-in-chief of Mr. Haley so that the Appellants could then cross-examine him on item 87.

There were 20 duplicate items; items claimed more than once and dealt with under other claim items.

There were four claim items for which no evidence was received. Consequently, of the 139 items addressed in the December 20, 2013 Decision Letter, 64 items remained to be determined plus the one item which was the subject of the Decision Letter dated May 28, 2014, entered as Exhibit 20, Tab 2. That item was by far the most complex issue as well as the most significant single item in terms of cost. In total, there were 65 items to be determined in this appeal.

The Tribunal heard from 7 witnesses during 26 days of hearing. While the Tribunal has carefully considered all of the testimony, these reasons will not set out all the details, and will focus on the evidence that is required to make the decisions on each of the items. The relevant evidence with respect to the individual items under appeal is addressed in the findings and analysis section of this decision.

EVIDENCE

The Appellants’ Evidence

The Appellant J.F. testified in chief for more than six days. Where appropriate, the Tribunal granted the Appellants significant leeway in how they presented their evidence. As an example, despite the objections of counsel for the Respondents, J.F.’s evidence in chief took the form of a presentation with him reading from prepared notes. In the course of his testimony, he often made submissions as opposed to providing evidence. He was cross-examined for two and a half days and was combative under cross-examination. He often refused to answer questions and would decline to agree with non-contentious statements. He was often argumentative and repeatedly chose not to follow the direction of the Tribunal to answer questions directly and with courtesy.

The witness confirmed the date of possession for the house was November 30, 2012 and that the purchase price of the house was $800,000.00

The witness identified Exhibit 3, pages 40 to 53 and asserted they represented the Agreement of Purchase and Sale (APS). Those pages contain one schedule, that being Schedule Z which says it overrides all other schedules. J.F. confirmed that Exhibit 21, Tab 1, also contains the APS and actually includes several more pages than the copy provided at Exhibit 3 by the Appellants. He acknowledged that page 1 of the APS provides that Schedules A, S, W and Z all form part of the contract, that the APS also included Schedules B and C but that the Appellants had not filed all of those Schedules with Tarion or with LAT.

J.F. testified that he and his wife, the Appellant A.F., wrote some parts of the APS. Specifically, they had prepared the final draft of Schedule Z with input from the witness’s brother and also from his father-in-law. Once it was prepared, he and A.F. met with the Builder at A.F.’s father’s home and signed the agreement. He is a teacher and his wife is a physician; they do not have any formal training in engineering or the trades. J.F. testified that he had never been involved in building a new home from scratch before and that he had relied heavily on his father-in-law who had a lot of experience. He agreed that his father-in-law had attended the house on numerous occasions without him, that both the Builder and his father-in-law were of Polish ancestry and spoke Polish to one another on several occasions. His evidence was that his father-in-law was very involved in assisting them in this project.

The witness maintained that Schedule Z overrides all of the other Schedules and was, therefore, the most important schedule. He was reluctant to respond to questions pointing out items provided in the copy of the contract produced at Exhibit 21, Tab 1 that were not included in the copy of the contract filed by the Appellants. He persisted in stating that Schedule Z overrides all other Schedules and implied that it actually negated all other Schedules. J.F. stated that Schedule Z contained no disclaimers which might provide Tarion the right to deny warranty for any item. He asserted that Tarion had, however, refused the warranty of many items in the APS and that the builder had failed to act in good faith. He stressed that if something was in the APS it had to be covered by the warranty and, if an item was warranted, the Appellants were absolutely entitled to compensation.

J.F. testified that he believed the last statement in Schedule Z which states, “Diagrams detailing exact locations of above-described items will be provided by the Purchasers”, permitted the Appellants to make choices as to colour, materials and specific items which the Appellants wanted, whether or not those items were specified in the APS. He would not concede that the provision did not say anything about such choices. The witness was referred to Exhibit 4, pages 380 to 383, and asked if the list produced at page 380 constituted a diagram for the purposes of Schedule Z. He replied that it did.

In cross-examination, it was suggested that the witness had met with the Builder’s “kitchen guy” and had made certain selections which he was not entitled to make and was told those items were upgrades which would cost about $20,000.00 more. J.F. responded that, according to their contract, he and A.F. were entitled to make selections and they went to Sillman and made choices. When asked if, hypothetically, he chose a sink worth $5,000.00, he would believe he was entitled to have it, the witness stated the contract does not exclude that possibility.

Further, J.F. testified that he did not believe there was a deadline regarding when choices or selections were to be made and acknowledged that the end result of his interpretation could be that the Builder would spend more money than the contract was for and that the builder could be required to make changes forever.

The witness stated a pre-delivery inspection was signed on November 26, 2011; yet he and A.F. filed Appendices to the contract even after the work was completed and, he stated, there was nothing in the contract that said they could not continue to do that forever. When asked if he expected the Builder should be required to do something to rectify the complaints without being paid by the Appellants to do so, he replied in the affirmative. J.F. was asked that if he sent further requests to the Builder in July 2015, would he expect the Builder to fix them and he replied that he would. He elaborated that, “In the context of the law and according to the contract, he has to do it.” He continued by stating he and his wife “... also have insurance through the Ontario New Home Warranty Plan Act and if the Builder doesn’t do what he’s supposed to do, Tarion has to back stop that.” He elaborated that the Builder is responsible to fix things at his own expense whenever the homeowners submit an Appendix or request to him, and that he has to keep fixing things and adding things as long as he is asked to do so. It is the Appellants’ understanding that is what the Builder agreed to when he signed the contract, including their Schedule Z.

The witness was directed to Exhibit 9, page 1044 and testified that Appendices AA through to II were submitted to the Builder on November 22, 2013, a year after the Appellants took possession of the house and that Appendix VV was delivered to the Builder on February 7, 2014. He acknowledged that some of the Appendices were delivered to the Builder after the 30 day form had been completed and that some diagrams had been submitted after the work was done but he maintained that Schedule

Z permitted them to do so.

When asked if some diagrams were submitted because they wanted the Builder to fix things they felt he had gotten wrong, J.F. was evasive and stated simply that they wanted the items resolved. They knew some things were not fixable but they wanted compensation for them. He stated he knew some things could be fixed and that some things could not. He elaborated, “We know what the reality is.”

The witness conceded the Builder did many things the Appellants asked him to do but not everything. When it was suggested the Builder did not accept the contention that the Appellants could continue to submit diagrams and demands even after the title of the home had been transferred, J.F. declined to comment.

He testified that he had accepted $120,247.00 to settle some warranted items and he was aware there was a statutory cap of $300,000.00 for compensation under the Ontario New Home Warranties Plan Act, but it was his opinion that this Tribunal could order a greater amount, in excess of the cap prescribed by the Act.

J.F. testified he had contacted the municipality many times about the house and he complained that the Building Code had not been followed. He agreed that the City was responsible to enforce the Code; however, where the City had signed off on items which the Appellants were not satisfied with, they did not accept the City’s decisions. J.F. met with the Mayor of the City of Mississauga about his concerns.

The witness further testified that on February 3, 2014, the Builder offered to buy back the house for the sum of $850,000.00. He and his wife declined this offer.

The witness identified Exhibit 1 as the Decision Letter from Tarion, dated December 20, 2013. For the majority of items addressed in that Decision Letter, the Appellants’ evidence consisted of J.F.’s testimony that the item in question was requested in the APS, that it was not provided or it was substituted without authorization and the Appellants are seeking monetary compensation for the alleged errors or deficiencies pursuant to quotes contained in Exhibit 9. Alternatively, the Appellants alleged poor workmanship or breaches to the Ontario Building Code, even where the City had found no violation. Beyond J.F.’s testimony, there was not a great deal of evidence provided by the Appellants.

J.F. confirmed the following chronology:

• May 10, 2013, a conciliation inspection was scheduled

• July 18, 2013, the conciliation inspection was done

• August 23, 2013, Tarion issued a Warranty Assessment Report on the 30 day form submitted by the Appellants and the Appellants were advised, by letter (Exhibit 3, page 128), that the Builder should resolve the warranted items by September 23, 2013 but he did not.

• October 25, 2013, Tarion issued another Warranty Assessment Report and advised (Exhibit 4, page 205) they would compensate the Appellants for the warranted items, but they did not and, therefore, J.F. alleges Tarion breached a contract with the Appellants to pay them compensation.

• November 22, 2013, Ryan Haley, on behalf of Tarion, sent the Appellants an email (Exhibit 7, page 795) advising that Tarion had requested quotes from two contractors, Burkes and UBS, and wanted to meet with the Appellants on November 28, 2013 at 10 a.m.

• November 28, 2013, the Appellants met with Tarion and were presented with a quote from UBS for item 109, the flooring, in the amount of $149,353.00 plus tax (Exhibit 7, page 801). At the same meeting, they were presented with a quote from Burke’s for item 109 in the amount $133,340.00, plus tax (Exhibit 7, page 804). The Appellants had also obtained a quote from Hammerschlag Construction for item 109, for the sum of $154,954.00 (Exhibit 7, page 815).

• January 24, 2014, the Appellants received an email from Tarion (Exhibit 7, page 824) saying a settlement offer would be forthcoming by the end of February 2014.

• February 3, 2014, the Appellants attended a meeting at Tarion and were presented with the settlement table which appears at Exhibit 7, page 833. That document outlines the quotes obtained by the parties for the items which had been warranted by Tarion. The table indicated, however, that items 109, the flooring, and item 186, the laundry room window were not included in the proposed settlement. With regard to item 109, Tarion advised they wanted to do another inspection. The Appellants were not pleased; they did not want another inspection. J.F. stated Tarion gave the Appellants compensation for all of the items listed in the settlement table, pursuant to the UBS quote, except for item 109, the missing scratch coat, and item 186 in the Warranty Assessment Report, the laundry room window. They accepted the amount of $97,076.00 for the other items listed in the table.

• February 21, 2014, the parties attended a pre-hearing at the Licence Appeal Tribunal and an order was made requiring that a further inspection take place on February 27, 2014.

• February 27, 2014, the inspection ordered on February 21, 2014 was done by Terrazzo, Tile and Marble Association of Canada (TTMAC). Their report is at Exhibit 20, Tab 7.

J.F. identified the Decision Letter of May 28, 2014, entered as Exhibit 20, Tab 2. This Decision Letter dealt only with item 109, the tiled flooring in the house. Specifically, the Appellants had stated in Schedule Z of the APS, under the heading “Interior Finishes”, that they wanted ¾” scratch coat with wire net under the tiles. They did not receive that and rely on this provision to support their contention that the Builder made an unauthorized substitution of a selected item. Since the substitution was not authorized, he believes the item ought to be warranted and compensation paid.

This item was warranted by Tarion but no compensation was paid to the Appellants for it and, consequently, J.F. believes Tarion breached an agreement, which he persisted in calling a contract, to pay the Appellants the sum of $149,353.00 plus taxes for this item.

J.F. asserted, in summing up his evidence on item 109, that what they got was not what they had contracted for, and they want to be compensated for the unauthorized substitution made by the Builder. He testified that Tarion had accepted a quote from USB as being fair and had agreed to pay the cost of replacing the floor; however, in cross-examination he agreed that Tarion actually had never committed to paying anything for this item, had not agreed on a quantum of damages, or even that there were damages, nor had Tarion confirmed a date by which a payment would be made.

J.F. testified that an email from Ryan Haley on behalf of Tarion, entered as Exhibit 7, page 795, constituted a contract between the Appellants and Tarion. On cross-examination, however, he agreed that the document simply said an offer would be made but it did not say the parties would reach an agreement. He agreed the email merely provided a process but he testified that, with respect to previous items, the process had been simple – the Appellants had accepted the amount that Tarion had offered them for the items. With regard to the item 109, however, Tarion had not made an offer. J.F. stated that, to date, the Appellants have accepted $120,247.00 to settle warranted items; however, he and his spouse have not applied the funds received to address many of the deficiencies.

J.F. stated that the Appellants’ expectation was that their house would be built according to their interpretation of the contract and it is the Builder’s problem that it was not. He elaborated that the Appellants expected Tarion would warrant their claims but they did not. Consequently, he testified they now expect this Tribunal will award them damages but, if it does not, then they expect that a Court of Appeal will give them a fair award.

J.F. stated the Appellants want damages that exceed the cap of $300,000.00 referred to by Counsel for the Builder and by Counsel for Tarion, as well as by the Tribunal. He stated the Appellants do not agree that there is a legislated cap, necessarily, and that it is entirely up to this Tribunal to determine.

Gerry Egberts, M.Eng. P.Eng. was affirmed, qualified and accepted as an expert witness. He stated he received a Bachelor of Engineering degree in 1975 and a Master of Engineering degree in 1980, both from the University of Toronto. He is a civil engineer who specializes in structures. He is the principal at Egberts Engineering Limited, consulting engineers, and participates in a provincial group resolving Building Code disputes. His report was entered as Exhibit 6, pages 730 to 740.

Mr. Egberts attended at the Appellants’ home for approximately 2.5 hours on July 25, 2014 with regard to concerns the Appellants had about improper construction of their tiled floor which relates to item 109 on the Appellants’ 30 day form and which is the subject of the May 28, 2014 Decision Letter.

Mr. Egberts acknowledged that he did not consult Tarion’s guidelines in giving his opinion in this matter, notwithstanding that this hearing arises out of two Decision Letters prepared by Tarion. Further, the evidence is that Mr. Egberts was not provided with the Decision Letter dealing with the Appellants’ floors. He acknowledged that his report essentially responds to whether or not there was a breach of section 13 of the Ontario New Home Warranties Plan Act, but he did not mention sections 18 or 19 of the Act and did not know, specifically, under what section(s) Tarion’s decisions were made.

The witness stated that, when he attended the Appellants’ home, items of concern other than the tiled floor were revealed to him by the Appellants. Accordingly, he made observations and proffered opinions about those items as well. In total, Mr. Egberts made 15 observations, 11 of which related to the flooring complaints arising out of item 109 on the Appellants’ 30 day form. He did not testify about his observations numbered 12 and 13.

Observations 14 and 15 in Mr. Egberts’ report dealt with two windows which were cut into the basement foundation after the foundation was poured and relate to items 7 and 139 in the Decision Letter dated December 20, 2013. He testified that two of the basement windows were cut after the basement walls were cast, therefore reinforcing steel could not be present as required by the permit plans; however, he had no concerns about the strength of the wall based on what is present. At observation 15 on page 3 of his report, the witness stated, “The specified additional reinforcing around the windows (i.e. per drawings) would not be present but the wall, when reviewed with respect to the current OBC 2012 would be compliant based on a height of 9 ft. and concrete thickness of 10”, without reinforcing steel.” He did not refer to these windows in the balance of his report and made no recommendations with regard to them.

Mr. Egberts testified that the relevant version of the Ontario Building Code (the “Code”) is the 2006 version based on the information he was given about when the building permit was issued. His evidence was that whatever version of the Code is in effect when the building permit is issued is the version that governs the construction. Therefore, the 2006 version of the Code is what he used when doing his inspection of the property and in conducting his subsequent evaluation.

With regard to the 11 observations pertaining to the floors in the house for which he reached conclusions and made recommendations, Mr. Egberts observed that the building plans required ½” mortar bed with mesh reinforcement under the floor tiles on the wood framed floors. His evidence is that Section 9.30.6 of the Code requires that the support for tiles be 1.25” thick mortar bed, as opposed to the ½” called for in the plans, or, an additional layer of plywood should be added over the main sheathing. He opined that, “This is generally consistent with recommendations in the TTMAC manual…” and that both the TTMAC recommendations and the Code require a separation sheet under the mortar bedding. In his report, he clarified that this separation sheet, sometimes referred to as a coupling membrane, is referred to as polyethylene in the TTMAC manual and as asphalt sheathing paper, felt or polyethylene film in the Code. He observed that the mortar bed option was used to set the tiles on the wood framed floors in the subject house, but that it was observed to be only 3/8” thick, rather than 1.25” thick, and that the polyethylene film was not present.

Mr. Egberts further observed that the tile in the basement was laid directly on the concrete slab with a “non-measureable thickness of bonding or adhesive material.” He states in his report that section 9.30.6 of the Code is “…somewhat unclear in discussing tile installation on concrete slab but one may infer from OBC 9.30.6.4 that a minimum of ½” thick mortar bed is to be used with diamond wire mesh.” In cross-examination, he agreed that if adhesive is used, section 9.30.4 of the Code would apply and, in such case, less mortar can be used.

The witness testified that the polyethylene film was missing. He observed that there was no polyethylene visible under the tiles on the basement floor where it might have been observed at the floor drains. He stated there is an option to use the membrane where radon or soil gas is known to be present, although, on cross-examination, he conceded there was no evidence that any gas was or is present in the soil or was or is coming through the floor. He stated that the basement slab was not in compliance with the building plans, but that it was compliant with the building permit. His evidence was that he did not test the basement slab floor; he simply relied on the permit. The witness elaborated that a thicker slab tends to be more resistant to moisture transmission and cracks less easily.

Mr. Egberts testified that the marble tiles installed on the ground floor in the house were not consistent with the tiles that had been selected by the Appellants; that the installed tiles had more colour and more veins than the tiles the Appellants had shown to him as being representative of the tiles they had selected. He testified that the presence of veins can weaken marble tiles and decrease the tile’s ability to resist cracking. He further testified that the setting of marble tiles had uneven grout colouring as well as uneven and inconsistent mortar joints. He acknowledged, on cross-examination, that this is not a structural engineering issue but rather, a question of aesthetics.

The witness observed that there was a smooth transition between the marble tiles and the hardwood flooring, as requested by the Appellants, but that if the required setting bed had been used to lay the tiles, an extra layer of plywood would have been required under the hardwood floors to achieve that level, smooth transition. He testified that the hardwood was laid directly on the subfloor which is not unusual, but that, if the tile bedding requested by the Appellants had been used, it would have required more plywood under the hardwood.

Finally, Mr. Egberts observed that the permit drawings did not comply with the Code or with TTMAC specifications with regard to tile setting.

Based on his observations, Mr. Egberts concluded that the Code requires that buildings be constructed to survive; that one should design a house according to the Code so that the building will perform for many years. He further concluded as follows.

• The marble tile setting and the flaws in the tiles did not represent work done in a workmanlike manner.

• A reduced setting bed for tiles will reduce floor stiffness and may lead to cracking.

• Elimination of a separation sheet under tiles will permit shrinkage or settlement of the floor structure and promote cracking of tiles. Cracking of tiles may result depending on the loads applied, but if you do not have the ability to separate the tiles from the subfloor, it is more likely than not that they will crack.

• No wire mesh means less strength and may promote cracking of tiles; however, while he did not see any diamond mesh where he looked, he cannot conclude with certainty that it was not used or, if it was used, that it would increase the strength of the setting bed.

• Incomplete and incorrect drawings were submitted to the building department to obtain the building permit; however, he cannot say whether or not it impacted the floors.

• The tiles installed were not those selected or approved by the Appellants. On cross-examination, he acknowledged that marble is a naturally occurring product and that a wide variation in colour and markings is possible.

• The basement floor slab does not comply with the permit plans and performance might be affected; however, the floor may comply with the Code even if it does not comply with the permit plans. You cannot do less than the Code requires, but plans may call for more than the minimum Code requirements

Mr. Egberts recommended that the tiles in the basement and those on the upper floors of the house be removed and replaced with tiles consistent with the approved samples selected by the Appellants and that they be laid with the required bedding, reinforcement and separation sheet. He further recommended that the Builder obtain and submit correct framing plans for the house. He acknowledged that there is no legal requirement for this, but opined it would be “good business” and the “politically correct thing to do”.

Mr. Egberts was a credible witness but not particularly helpful to the Tribunal due, in part, to the restrictions placed on him by the Appellants and also due to the fact that he did not have all of the information he might have benefitted from having. He was hired to prepare a report in response to the Decision Letter of May 28, 2014, but he was not given a copy the Decision Letter. Neither did he look at the Construction Performance Guidelines which Tarion is known to use. He did not address the issue of damages because he was not instructed to do so. While Mr. Egberts did impress this Tribunal as being credible, his contribution to this hearing was weakened by the restrictions placed on him by his clients. He did not provide any evidence with regard to damages nor did he respond to questions, in cross-examination, regarding changes which have been made to the Ontario Building Code as the other expert witnesses did.

All of Mr. Egberts’ testimony was received on January 8, 2015. Following the completion of his cross-examination that day, the Appellants rested their case and advised they would not be calling any further witnesses despite their initial advice they would be calling eight witnesses in this proceeding. Consequently, the Respondent was not prepared to commence its case immediately, without notice. Further, it was determined by the Tribunal that, since the Respondent’s first witness would take more than one day to give his evidence, it was not reasonable to require the witness to begin his testimony on January 9, 2015 when the next scheduled hearing date was not until March 18, 2015. In the result, the date of January 9, 2015 was vacated and the hearing was adjourned to March 18, 2015 for continuation.

The Respondent’s Evidence

Ryan Haley is currently a Manager with Warranty Services at Tarion but that at the time of the inspection of the subject property, he was a Warranty Service Representative. As a Warranty Service Representative, his role was to assist in the resolution of claims and conduct conciliations between home owners and builders in an attempt to resolve claims. He stated that by the time he conducted the conciliation meeting in the present case, he had done between 1,000 and 1,200 conciliation meetings for Tarion. Mr. Haley testified that in order to conduct a conciliation meeting, an inspection of the home had to be completed and, at the inspection, he and the Appellants sat down and discussed the process and he explained their right to appeal. At that time, he also explained that photos would be taken during the inspection and a report would be prepared.

Mr. Haley identified the photos contained at Exhibit 15, Tab 3 as those taken during the inspection on the 30 day claim of the subject property and he identified those photos contained at Exhibit 15, Tab 4 as the photos taken at the initial conciliation for the 30 day claim.

The witness identified Exhibit 1 (also Exhibit 20, Tab 1) as the Decision Letter, dated December 20, 2013, which he wrote. He explained that for each Decision Letter item, there is a Claim number which appears in round brackets beside the Decision Letter item and those Claim numbers are the numbers appearing in the top right corner of the corresponding photo(s) in Exhibit 15, Tab 4.

Mr. Haley then identified the document at Exhibit 3, pages 128 to 199, as the Warranty Assessment Report, dated August 23, 2013 which he prepared, outlining the items which were assessed as warranted and those items which were assessed as not warranted under the Act. The cover letter, at Exhibit 3, page 128, explains that the Builder should resolve the warranted items by September 23, 2013 except in specific situations where that timeline might not be reasonable. His evidence was that, following the Warranty Assessment Report, he then drafted two Decision Letters which appear at Exhibit 20, Tab 1, which is dated December 20, 2013, and at Tab 2, which is dated May 28, 2014.

Mr. Haley testified about the individual Decision Letter items, beginning with the Decision Letter dated December 20, 2013, but he did not give evidence regarding those items which the Appellants had withdrawn or those items which had been reported more than once and were, therefore, duplicate claims. He elaborated that when something is reported twice, it is only addressed once. He stated that some duplicate items in the Decision Letter had actually been warranted as other items notwithstanding the Decision Letter indicates the duplicate items are not warranted. That is, according to Mr. Haley, the way the system works.

In cross-examination, the witness confirmed the chronology of events leading to this hearing, including:

− January 8, 2013 – Appellants’ 30-day form (Exhibit 3, page 113) was received and it listed item 109 and raised the issue of the ¾” scratch coat with wire net as well as the acknowledged fact that the APS, in Schedule Z, required that all the floors be level. More specifically, it required that the hardwood and the tiles be flush. The transition from one type of flooring to another was to be level.

• July 18, 2013 – A conciliation inspection was carried out by the witness and he observed that the mortar bed was not 3/4” but was 3/8”. He stated he observed this at the floor vents and, consequently, he determined this item to be warranted. He elaborated that the concerns the Appellant J.F. testified to with regard to sound carrying and insulation were never raised or discussed at conciliation and that he heard of them first at this hearing.

• August 23, 2013 – A Warranty Assessment Report, prepared by him, was issued to the Appellants (Exhibit 3, page 138). He referred to the Warranty Assessment Report at Exhibit 3, page 140, and testified that his original assessment that the flooring was warranted was based on section 18 of the Act. Since the APS specified 3/4” scratch coat and the Appellants received 3/8” scratch coat he had initially determined it to be a substitution and, accordingly, the Builder was provided with the opportunity to repair within 30 days. The Builder did not address the issue, however, and, Mr. Haley testified, it then became Tarion’s responsibility. He stated a scope of work had to be prepared in order to obtain an estimate of the cost to address the issue and, during the course of preparing the scope of work, he determined it was appropriate to deal with the issue as a section 19 substitution rather a section 18 substitution since the item had been specified in the APS. He elaborated that Section 19 of the Act permits a builder to substitute an item referred to in the APS that is of equal of better quality.

− October 11, 2013 – A claim inspection was completed.

− October 25, 2013 – A Claim Warranty Assessment Report was issued to the Appellants wherein item 109 was warranted (Exhibit 4, page 214) as well as a number of other items for which compensation was paid in February 2014.

− November 22, 2013 – The witness sent an email to the Appellants advising that Tarion had requested quotes from Burkes Restoration and from UBS. The witness identified Exhibit 7, page 795, as the email wherein he set out the scope of work. On page 796, there appears a quote review which says a cash settlement would be offered. The witness testified this was not a contract but a review of the process which Tarion uses to determine claim items. He testified that no cash settlement was ever offered for item 109 and, at the time this email was sent, Tarion had not received any numbers back from any contractors. He stated that requests had been made for quotes, but no responses had yet been received. He elaborated that if an offer of settlement had been made and not accepted, Tarion could have denied the claim and issued a Decision Letter but they didn’t get that far.

− November 28, 2013 (on or about) – Burke’s Restoration and UBS both attended the Appellants’ house to assess the work to be done and prepare quotes.

− December 20, 2013 – A Decision Letter issued regarding items from the Appellants’ 30-day form which had been assessed as not warranted. (Exhibit 20, Tab 1).

− January 5, 2014 – A Notice of Appeal filed wherein Appellants appealed the December 20, 2013 Decision Letter to the Tribunal.

− January 23, 2014 – Tarion advised the Appellants, via email, that further investigation was required regarding the scope of work for item 109 (Exhibit 18, page 104).

− January 31, 2014 – Tarion provided the Appellants with quotes received from UBS and Burke’s Restoration (Exhibit 7, page 327).

− February 3, 2014 – Mr. Haley, Michael Doyle, and Trudy Napoleone, all from Tarion, met with the Appellants and provided them with a table (Exhibit 7, page 830) showing the quotes from three different contractors for the warranted items from the 30-day form.

− February 5, 2014 – Tarion agreed to resolve some outstanding warranty claims in the amount of $97,076.00 pursuant to the scope of work outlined in Exhibit 7, page 833 for items which had been warranted except for item 109, the scratch coat, and item 186, the laundry room window. Those items were excluded from this settlement offer because they were not considered finalized at the time the settlement offer was made.

• February 14, 2014 – A further offer of settlement was made to the Appellants for an additional sum of $8,364.00. In total, Tarion paid the Appellants settlement funds of $120,247.00.

− February 21, 2014 – The first pre-hearing was held in this matter and an Order was made providing for the inspection of item 109 by experts retained by Tarion and by the Builder. The resulting reports were to be exchanged by April 26, 2014.

− April 25, 2014 – A report from TTMAC was delivered to the parties. Tarion had retained TTMAC to conduct an inspection of the house and provide a report. That report was received on April 24, 2014 and forwarded to the other parties the next day.

− May 13, 2014 – A peer review report prepared by Norman Lee and Associates was received and delivered to all the parties.

− May 13, 2014 – A second peer review report prepared by Halsall Associates was also received and delivered to all the parties.

− May 14, 2014 – A second pre-hearing was held resulting in an Order requiring the delivery of a second Decision Letter containing Tarion’s observations and a decision with respect to item 109 and provided that these be included and become part of the 30-day form.

The witness testified that in reviewing the reports obtained from TTMAC, consulting engineers Norman Lee & Associates and from Halsall Associates, Tarion was looking to see if what was installed by the Builder was equal to what was requested. He stated that in reviewing and assessing the reports received, Tarion determined there were no damages with regard to item 109. He communicated this to the Appellants in the Decision Letter dated May 28, 2014 in which he stated:

…the evidence does not demonstrate that the discrepancy between the mortar bed depth referred to in the purchase agreement and the as-built condition on the main and second floors presents any material, detrimental impact on flooring performance or service life. While scratch coat/mortar depth differs from the purchase agreement specification and is not compliant with the prescriptive OBC requirement in effect at the time, all of the evidence indicates that the installation in question is equivalent in terms of performance and service life.

With regard to the basement flooring, he stated at page 9 of the Decision Letter:

…Tarion concludes that there is no evidence of any discrepancy, nor of any material, detrimental impact on flooring performance or service life. There is no evidence that the owners have incurred any damages and therefore no entitlement to compensation.

Mr. Haley testified that item 109 generated a very complicated scope of work reflecting about 1/6 the value of the house. The evidence is the house was purchased for $800,000.00. Exhibit 7, page 833 shows the quotes obtained for item 109 range from $118,000.00 to $154,954.00. Repairs would have involved taking out the flooring in the kitchen, the bathrooms and the powder room as well as the tiles in the basement, but, given the determination that the as built floor is equivalent to the floor requested in performance and service life, it was determined there were no damages. Given the determination of no damages, the claim was denied and the assessment of this item remains the same: the item was warranted but there were no damages and, consequently, no compensation to the homeowners.

During lengthy cross-examination by the Appellant J.F, the witness was asked many questions about the flooring and other matters. With respect to the flooring, he testified that he was unable to discern if there was any felt, or any type of a membrane, under the tiles since he was not present when they were installed and he has not seen the floor demolished. He did, however, look at the heating vents; a number of openings were inspected and a consistent measurement was obtained. He testified that he did not see any type of a membrane but he cannot confirm if one is present or not. When asked if the Appellants’ tiled floor required a membrane, the witness replied that he could not be certain without checking the Code but that its absence was never reported by the Appellants, and therefore it was not something he looked for at his inspection.

The witness testified that his observation was that the marble tile was closer to 3/8” and not 1/2” thick as asserted by the Appellants. The witness also testified that he observed that the Appellants have a 3/8” scratch coat or a mortar bed with mesh under their marble tiles. Within that, there is adhesive. He did not know exactly what was used to adhere the tiles to the sub floor but he observed they appeared to be properly adhered. The Appellant J.F. suggested that the reports commissioned by Tarion failed to take into account the relevance of the thickness of the scratch coat, but Mr. Haley disagreed. He stated the authors of the reports were tasked with determining whether the scratch coat provided by the Builder was sufficient. The witness testified that while the floor did not appear to meet the requirements of section 9.30.6.4 in Ontario Regulation 350/06 of the Building Code Act, 1992, it is still mandatory to show damages, even in the face of an apparent breach of the Code. He again stated item 109 is a warranted item for which there are no damages, and therefore, there is warrantable claim.

The witness stated that there was discussion with the Appellants regarding damages and he referred to the May 28, 2014 Decision Letter where he advised the Appellants they would need to establish damages to be entitled to compensation. At page 5 of that Decision Letter, he stated:

“Regardless of which of the various warranties has been breached, the Act governs entitlement to compensation, and an owner must show damages in order to be entitled to compensation.”

The Appellant, J.F. concluded his cross-examination on item 109 by asking Mr. Haley if he believed that none of Tarion’s warranties with regard to this item were breached. The witness responded that it is the Builder’s warranty, not Tarion’s and while there was a breach and the item was warranted, there are no damages. He reiterated this item amount to a substitution which was warranted, but it was determined there were no damages. In redirect examination, Mr. Haley stated his decision on item 109 would not be affected if it was warranted under section 18 or 19 of the Act because the end result would be the same; in either situation, damages have to be established and they have not been.

Mr. Haley stated he believed the Builder had been registered with Tarion for about five years, that there had not been any previous conciliations and there have not been any Licence Appeal Tribunal or other adjudicative decisions related to this Builder.

Mr. Haley was an exemplary witness. He was clear, concise, and forthright and, at all times, he remained patient and respectful of the Tribunal, the other parties and the process. He endured very lengthy cross-examination by the Appellant J.F., much of which was repetitive and confrontational. He showed no emotion at any time and held his position. He was very persuasive.

Jay Robert Leedale, P. Eng. was affirmed, qualified and accepted as an expert witness. He holds a Bachelor of Engineering degree which he obtained at McMaster University in 1982. He did two further years of graduate studies at McMaster, studying structural design and earthquake standards. He is employed by Halsall Associates and was contacted by Tarion and mandated to review information regarding the general composition of the floors in the Appellants’ house. Halsall Associates were to conduct a peer review of the reports completed by TTMAC, dated April 24, 2014 (Exhibit 20, Tab 17) and the Architectural Services & Construction Management Report dated April 25, 2014 (Exhibit 20, Tab 20) and were also to provide an opinion on what they thought the performance of the floor would be. The witness identified Exhibit 20, Tab 19 as the report from Halsall Associates signed off by him as the project principal and by Greg Morris as the project manager.

The witness testified under cross-examination that he has produced about 10 reports favourable to Tarion and about 50 reports “against” Tarion. He described the process of putting together a report as one where one person drafts it, and then it gets reviewed by others. In this case, he stated the report was primarily produced by him and Greg Morris, but they did consult with other colleagues in preparing the report

In terms of the methodology they employed, the witness stated they had reviewed the above noted reports and formed opinions on what they said. They also reviewed the Ontario Building Code, both the 2006 and the 2010 versions, and looked at the industry standards for the relevant installation. He elaborated that there is team of individuals who reviewed the reports; they discussed them and then reached a consensus. The witness stated they did not do a site visit, but they reviewed photographs showing the same cracks in the tiles that had been seen by others.

Their observations were that the tile reinforcement in the house was typical of some marble tiling. He stated they had no mapping of cracks or sounding of the floor, but they saw photos which showed random cracked tiles. He stated the cracks appeared isolated to the individual tiles themselves. He elaborated that if you see a crack going from one tile to another, it can be indicative of an underlying issue, but seeing one tile cracked appears to be an isolated and specific problem rather than a systemic one. His evidence was that he did not see any photos of cracks going through adjoining tiles and that the cracks seemed to be isolated to the individual tiles and the natural fissures in those tiles.

Mr. Leedale testified that the marble tile in the house has a relatively low flexural strength and elaborated it is not’ particularly strong and needs to be well supported to be “successful”.

Addressing the Ontario Building Code, Mr. Leedale stated that most of the restrictions in the 2006 Code have since been removed and that it wasn’t particularly helpful for the subject floor in any event. He stated the 2006 Code speaks about ceramic tile but this house has mostly natural stone tile with a weak flex strength so they had to look elsewhere to see what options there were. His evidence was that the option of a mortar bed like that used in this house is one of the possibilities.

The witness stated there is nothing to correlate the cracks in some of the tiles to the structure below and that the floor structure is consistent with the guidelines for installing this type of floor.

In addressing the scratch coat, Mr. Leedale stated that, when it comes to stiffness of the floor, the difference in the depth of the scratch coat, in this case, would not make much difference. He stated he did not know if any tiles have been removed to determine proper bedding and he cannot conclude much without further review, but that the floor in question appears “adequately stiff”. His opinion is that a change in depth of the scratch coat does not have an impact on the stiffness of the floor.

In cross-examination, Mr. Leedale testified that he reviewed the APS and acknowledged the Appellants had selected 3/4” scratch coat but stated it was difficult to compare how the difference in the thickness of the mortar bed might affect the floor. When asked if the floor was built to industry standards, the witness stated the Appellants’ floor system is different from some other approaches, but there are different approaches and the Appellants’ floor is but one of them. He stated it comes down to how the floor performs. He stated he believes the thickness of the mortar bed affects stiffness only marginally, that you need enough mortar to make sure the mesh is embedded in the mortar and that there is enough spread to carry the load.

In addressing the absence of an uncoupling membrane or separation sheet, the witness stated that he can’t find any information or evidence on whether or not the floor system would work any better with one. He stated that it really comes down to how well the flooring system works and it is very possible this floor will be fine. It has been a few years now and he does not expect any structural or continuous cracks to develop, elaborating that if they were going to occur, they would have by now. He concluded by saying it is about load bearing; that interaction between tiles and subfloors is what causes cracking and the home has been through a few years and several seasons and that has not happened.

In cross-examination, the witness stated a separation sheet or slip sheet or uncoupling membrane, all terms used interchangeably in this hearing, can be useful but its absence does not mean the floor will fail. He further stated he could not say it would help if a membrane was present.

In regard to the 2006 Ontario Building Code, the witness testified it relates to ceramic tile and the floor in question is not ceramic. Consequently, the Code is not helpful. He stated there really isn’t a section in the Code that relates to the Appellants’ floor and he felt it would be better to follow relevant standards in the guides by associations with experience with marble floor tiles.

Mr. Leedale stated Halsall did not make any recommendations in its report; that they weren’t asked to do so. He reiterated that the report was a peer review and not an in depth review of the Appellants’ house.

Mr. Leedale stated has testified against Tarion in the past but he was persuasive and consistent in stating he does not expect any structural issues or continuous cracking of the Appellants’ tile floors. He gave his evidence in a straightforward manner and responded to questions put to him in an impartial and convincing manner.

Norman Lee, P. Eng. was affirmed, qualified and accepted as an expert witness. He received a Bachelor of Engineering degree from the University of New Brunswick in 1981 and a Master of Engineering degree from the University of Waterloo in 1983. He is a designated consulting engineer specializing in structure and building science which includes floor systems.

The witness testified he reviewed the installation and construction system with regard to the tile floor at the Appellants’ house. He identified his report as that contained at Exhibit 20, Tab 18 and testified Tarion provided him with TTMAC report at Exhibit 20, Tab 17 and the report from Donato DiCicco at Exhibit 20, Tab 20 and that he was asked to review them. The photographs contained in his report are pictures he was provided with by Tarion. He was also provided with the floor plans and the joist information about the house by Tarion.

In cross-examination, the witness confirmed he had never been to the Appellants’ house and was not aware that any professional engineer had inspected their house. He stated he has been in business for 30 years and the report he submitted had not been peer reviewed. His company has prepared a number of reports for Tarion over the years and this is the third time his company has testified for them. He elaborated that, in his experience, things usually get resolved.

Mr. Lee testified that, other than a few cracks in tiles in the kitchen, the tiles are in good condition and he concluded that the as-built floor system is stiffer than that which was specified in the APS. He referred to page 5 of his report, under the review and analysis section, and testified the thicker plywood which the Builder provided made for a stiffer floor than a thicker mortar bed, as requested by the Appellants would have. He referred to Tables I and II on page 5 of his report in this regard. The witness explained that, when a floor is built, the tile and the mortar bed are what is referred to as “dead load”; walking upon it, furniture placed on it, etc., is referred to as “live load” which produces vibration and bouncing. His evidence was that if the Builder had provided the floor described in the APS, the vibration would have been greater than it is in the floor he actually built.

Mr. Lee stated that it was his opinion that the Ontario Building Code provides help in analyzing a situation that does not comply with what the Code requires. He stated that, in the present case, the 2006 Code would prescribe a ¾” mortar bed and that was not provided. He stated one should have regard for the spirit and intent of the Code, even where the prescriptive section of the Code is not met. It was his opinion that the as-built condition of the floor in the Appellants’ house met the objective of the Code.

The witness testified that section 9.30.6.2 of the Code deals with ceramic tiles and does not apply to the floor in question. Not only are the tiles used in the Appellants’ house not ceramic, but they are thin tiles and do not require the heavy mortar bed prescribed by this provision which would impose an unnecessarily heavy dead load on the house structure.

The witness testified that his company contacted the Ministry of Municipal Affairs and Housing and asked why they had removed the conditions from the 2006 Ontario Building Code. Their response confirmed his belief formed over years of reviewing tile floors. As stated at the bottom of page 7 of Mr. Lee’s report (Exhibit 20, Tab 18), the Building and Development Branch of the Ontario Ministry of Municipal Affairs and Housing stated:

The 2006 Ontario Code required that ceramic tile be attached to a reinforced subfloor and laid on a mortar bed. These methods are not current practice within the construction industry and are deemed to be excessive. Ceramic tiles, attached with a suitable adhesive to the subfloor, has been industry practice in Canada and throughout Ontario without significant incidences of failure.

It was his opinion that stone tile, such as marble tile in the Appellants’ floor, have naturally occurring veins and those veins are weak spots. He stated if cracks occur, they usually occur at the vein locations. He referred to the TTMAC report which reported the presence of tiles with cracks, but no cracks in the grout lines. Mr. Lee’s evidence is that, if the floor had not been properly installed, you would expect cracks in the grout line; cracks in tiles can occur even when a floor is properly installed. He stated that it is really all about the load and that marble tile can have inherent weakness – some has veins, it is quite soft material – and even with perfect installation, you can develop cracks.

Mr. Lee stated that the Ontario Building Code does not cover every possible thing and he concluded that the existing as-built floor is satisfactory and would not have any adverse effect on the performance of the floor system or its longevity.

Under cross-examination, Mr. Lee testified that a reduced setting bed will not reduce the strength of the floor and, while a thicker system would give better sound protection, the degree of improvement would be insignificant. He further testified that in his opinion a thicker scratch coat would not necessarily provide better fire protection but would provide better insulation, although the difference would be negligible. He stated thicker scratch coat plus a membrane would also be insignificant.

Mr. Lee stated that he did not refer to the issue of a membrane in his report because he was asked to look at the flooring system, as built, and determine its longevity. Mr. Lee stated that there are bonded systems and there are floating systems and, in a thin application, you are better to use a bonded system and strengthen the floor. He stated the Appellants have a bonded system and, consequently, the sheet or membrane would be of no use to them because you do not use a separation sheet on a bonded system. He stated the presence of a membrane is not considered in his report because it is irrelevant. It would not affect the stiffness of the floor and it would not affect the strength of the floor. Mr. Lee testified that plywood is much stiffer than wire mesh and, if you want to increase the stiffness of your floor system, you are better off to increase the thickness of the plywood. Wire mesh is not stronger than wood; if used as a subfloor, you would go right through it. Further, he stated that mortar bed has no stiffness on its own and that you need to look at the whole system and not at any single element therein. The reason for the mortar bed is load transfer; it spreads the load. A membrane has nothing to do with spreading the load. Nor would a membrane necessarily help prevent gases from entering the house from the ground; to offer this protection the membrane would need to be laid below the concrete.

He determined that the floor system, as built, will function as it is intended to function. He stated that, in practice, what was described in the 2006 Ontario Building Code was not practically correct and that is why the Code was amended. His conclusion was that the floor will function as it was intended and elaborated that there are many ways to install a floor and the Code cannot dictate what is best in every possible situation.

Mr. Lee gave his evidence in a very straightforward manner. He responded well to questions and came across as very professional, knowledgeable and impartial. He testified that he has made many recommendations to Tarion, in the past, to settle disputes. He was a very credible witness who remained firm in his assertion that the existing, as-built floor is satisfactory.

Robert Bortolotti was affirmed and qualified as an expert in marble tile and marble tile flooring. He is presently an inspector with TTMAC which is a national association. He stated TTMAC will do inspections for anybody. He does the inspections in most of the Toronto area.

Mr. Bortolotti stated he has done 5 or 6 reports for Tarion, but once the report is submitted, he doesn’t necessarily know what happens with it. He has testified as a witness for Tarion on one other occasion and does not know what the end result was.

Mr. Bortolotti testified he met Mr. Haley, from Tarion, at the Appellants’ house and inspected the kitchen and washroom floors. He was asked to inspect the setting method only. He identified his report at Exhibit 20, Tab 17 which includes photographs he took. He stated he got a set of drawings for the house and marked the areas of stone and tile flooring and, with that, determined the amount of product used. He could not determine the details of the sub-floor, but stated Mr. Haley advised it consisted of tongue in groove plywood that was screwed down and glued.

The witness testified he observed cracks in individual tiles, but that the cracks were not continuous which would have led to concern about the sub-structure. The cracks were confined to individual tiles leading him to conclude the weakness was in those tiles and not due to a structural failure.

The witness stated a small area in the basement of the house does have ceramic tiles as opposed to marble. His evidence was that the ceramic tiles are set on the concrete floor slab and a thin set which is quite acceptable when applying tile on concrete. He stated one should use a 1/8” setting space and the tiles adhere to the concrete. It is the recommended way to do it and results in very few problems.

Mr. Bortolotti stated that the installation methods used in the Appellants’ house are used in a lot of residential construction. He stated the floor is performing well, according to his observations. He saw no loose tiles, no continuous cracking.

When asked about the possibility adding additional concrete to the basement, the witness stated it is not necessary. He stated it would result in the bottom step being too short and would create a trip hazard. There is the additional concern of whether or not an additional layer of concrete would adhere to the existing layer and, he reiterated, it just is not necessary.

With regard to the issue of a thicker scratch coat, the witness stated that adding scratch coat is adding weight and that the floor the Appellants wanted would not match what he recommends. He elaborated that he was not asked to comment on structure under the setting; that is something an engineer would need to do.

The witness stated he was hired to do an inspection by Tarion and his scope was very specific and he reported on it – the setting method.

The witness stated he did not know if a membrane was required for the Appellants’ floor to be compliant with the Code. He elaborated that the only time they use a membrane is on a floating floor. He stated he did not think there was membrane on the Appellants’ floor since he did not see one when he looked, but stated that, in his opinion, the floor does not need one.

When asked if the presence of a membrane layer would prevent shrinkage or settlement, the witness stated it would not. He also stated a membrane does not help with horizontal movements or plane unless it is used with a floating floor. The witness agreed that a reduced setting bed, from 3/4” to 3/8” would reduce the stiffness of the floor but did not agree with the Appellants’ suggestion it would also lead to cracking. When asked if the reduced setting bed would have an effect on sound, he stated he would doubt it and, if it did, it would negligible.

Several times throughout the cross-examination, the witness had to reiterate that he was hired to look only at the setting method. He could not comment on issues like deflection. He looked at the method of tile installation. He stated that neither the as-built floor nor the floor the Appellants wanted meets the TTMAC standards; however, the installation used in the Appellants’ house is used often in residential construction and, he observed, the Appellants’ floor, as built, is performing well.

Mr. Bortolotti was very credible. He impressed as extremely knowledgeable about marble tile and marble flooring and refused to speculate on items that fell outside his area of expertise. He stated he has testified against Tarion many times but remained steadfast in his opinion that the Appellants’ as-built floor is performing well. He was persuasive.

The Added Party’s Evidence (Polmat Group Inc.)

Pawel Materski, was affirmed and testified that he came to Canada in 1988 and began working with his uncle as a labourer, then a bricklayer. He started his own company as a bricklayer in 1989 and had as many as 120 employees. He began building cottages and then houses. His evidence was that he has never had any issues with Tarion and that he has never had any matter go to conciliation, until the present case. He has built in excess of 15 houses through Tarion.

Mr. Materski testified that the subject property is one of a small seven house subdivision and that he has not had any issues with any of the homes in the subdivision, except for the Appellants’ house. He stated that the houses in the subdivision are all similar but that the Appellants’ home is one of the best houses in the subdivision given the upgrades including marble tiles, granite, crown moulding, large casings, etc.

Mr. Materski testified that he first met the Appellants through A. F.’s father (V.F.) who had been a frequent visitor to the model home he built. Mr. Materski testified that V.F. advised him his daughter, the Appellant A.F., wanted to buy one of his homes. Since the model home had already sold, V.F. asked him to prepare a package for lot #4 in the subdivision, which he did. He met with the Appellants and A.F.’s parents one evening at the parents’ home and the parties discussed what the Appellants wanted. It was, according to Mr. Materski, at this meeting that the Appellants asked if they could prepare their own Schedule.

Mr. Materski identified Exhibit 21, tab 1 as the entire the Agreement of Purchase and Sale he entered into with the Appellants. Schedule Z at pages 29 to 32 is the Schedule prepared by the Appellants. The witness acknowledged it forms part of the contract he had with the Appellants. He described pages 33 to 38 as copies from a brochure and that the writing on those pages was done at the initial meeting at A.F.’s parents’ home and initialled by the parties. He confirmed they form part of the APS.

Mr. Materski confirmed the Agreement of Purchase and Sale was signed on April 25, 2012 and that construction of the home began soon afterwards. He testified that throughout the construction of the home, there were numerous visits to the site by the Appellant J.F. and also by his father-in-law. He recalled one occasion when even a grandfather of the Appellant A.F., who was visiting from Poland, attended the site. Mr. Materski’s evidence is that there were never any complaints or concerns expressed at any of these site visits about the progress or construction of the house except on one occasion when the Appellant J.F. asked him to put windows in the basement. In this regard, Mr. Materski referred to the APS (Exhibit 21, tab 1), page 36 and indicated the windows drawn on the diagram of the basement plan. He testified J.F. asked him to put these windows in and he did. He did whatever he could to satisfy the Appellants.

The witness stated a pre-delivery inspection was done before the Appellants moved into the house, but that it was done only by the Appellant J.F. and his father-in-law. According to Mr. Materski, they did not want him to do the walk through with them so he remained in the kitchen and, a few days later on November 18, 2012, he received a list (Exhibit 25) containing 88 items from the Appellant J.F. of alleged outstanding items. Mr. Materski testified that he tried to address as much as he could and that he sent his supervisor, Richard, to the house but only the Appellant A.F. was there and when he asked her to point out the incomplete items she advised that everything looked good to her, but that he should speak with her husband, J.F. The witness stated that shortly afterward, on November 26, 2012, another list (Exhibit 5, pages 495 to 600) was received from the Appellants containing a further 154 items.

The witness testified that although the Appellants forwarded many diagrams to him, the only one he received prior to closing and which was not included in the documents making up the Agreement of Purchase and Sale (Exhibit 21, tab 1), was the diagram for the pot lights,(Appendix II at Exhibit 4, page 347). The witness was asked to identify which of the more than 50 appendices prepared by the Appellants he received prior to the closing of the purchase transaction for the house. He testified he did not recall receiving any of them other than the diagram for the pot lights which he had requested so he could provide it to the electrician.

The witness identified Exhibit 21, tab 4 as an email, dated September 5, 2012, which he received from the Appellant J.F. after he sent the Appellants to select the colour and handles for the cabinets, elaborating that they went beyond the scope of the contract. All they were entitled to select were the colour of the cabinets and the hardware, but they made selections beyond what they were entitled to make pursuant to the APS.

The witness stated that there was more than one conciliation meeting with the Appellants. He stated the Appellants were not happy with the first conciliation meeting with an individual he referred to as Mr. Boyd and that a second conciliation meeting was held with Ryan Haley, from Tarion. Mr. Materski stated he attended this meeting along with his 77 year old architect, but the Appellants stated the architect was not invited and told him to leave. Mr. Materski stated he was very upset at how the Appellants treated his elderly architect and felt very sorry for him. Despite this, Mr. Materski stated he remained and participated in the meeting for four hours.

Mr. Materski stated he had tried to do a good job for the Appellants. He stated they are all Polish and part of the same small community. This entire ordeal has been very hard on him especially in light of the small community to which they all belong. He stated it has been an embarrassment for him and that it has affected his health. He would very much like to resolve this matter, but he does not know what the Appellants want from him. He stated he has made offers to settle, without prejudice. He elaborated that on February 3, 2014 he offered to buy the house back from the Appellants for $850,000.00 which included the original purchase price of $800,000.00 including HST as well the land transfer tax, moving expenses and a profit for the Appellants, but they did not accept the offer, entered as Exhibit 22, tab 34. The witness testified he made a further offer to settle (Exhibit 26) wherein he offered to purchase the house for $825,000.00, including HST, in addition to the approximate $120,000.00 the Appellants had already received from Tarion. That offer was also refused. He stated he simply did not know what the Appellants wanted or what more he could do to satisfy them.

Under cross-examination by the Appellant J.F., Mr. Materski testified he did not seek any permission or direction regarding alternative compliance for the tiled flooring because he did not think he had to. He testified that, at every stage of construction, he called the building inspector and he determined the house was being constructed pursuant to the Code. His evidence is that the scratch coat he used does not require a sheathing membrane; that one can be used, but it is not necessary. The witness elaborated that he hires contractors and then calls the City for inspections. His evidence is that he, personally, does not need to know the Code inside and out.

The Appellant J. F. suggested the Appellants had selected items they wanted in their house by showing the witness around his father-in-law’s house. Mr. Materski acknowledged that he met with the Appellants at A.F.’s parents’ home to sign the APS. At that time, he went into the basement of the house and looked at how it was finished but that the Appellants did not select anything from A.F.’s parents’ house; that is not where their selections were to be made. He disagreed with the suggestion they had selected items they wanted in their house by showing the witness around the Appellant J.F.’s father-in-law’s house.

Mr. Materski testified he followed the APS and his brochures and agreed the Appellants could provide him with diagrams for the location of items agreed to in the APS. He acknowledged that the last line in Schedule Z of the APS provides, “Diagrams detailing the exact locations of above-described items will be provided by Purchasers” and he gave the example of the pot lights which he was to install and required direction from the Appellants as to their location. He stated that he felt the Appellants had gone way too far in that regard, however, and had sent diagrams for items not selected pursuant to or in mentioned in the APS.

When asked if he had obtained written authorization for the finishing work, the witness stated he had obtained authorization for all the finishing work; the Appellants had made all of the selections and he regretted not having had them sign off. He testified: “You asked me to move a window and I did it. I didn’t get it in writing.” The witness stated that there is no window to the right of the fireplace in in the basement because the Appellants asked him to move it into the bathroom.

Mr. Materski repeatedly stated he tried to do, “everything the best he could” to please the Appellants while following their contract and the Code. He stated that the building department had approved the drawings and he didn’t have to put rebar in the foundation but he did; he chose to do so. He stated he tried to fix many things for the Appellants and elaborated that he supplied the laundry tub and other items after closing. The Builder denied he was unavailable to the Appellants to give instructions to him. He stated he was always available when it was time for selections to be made, elaborating that that is his job; he has to be available. Mr. Materski stated most his meetings with the Appellants were on site but that the Appellants also attended at the office to bring cheques. He stated he met with the Appellants when it was time to choose the brick, the tiles and other selections.

The witness was repeatedly asked why he did not provide receipts to the Appellants for various items such as the paint used in the house and the plumbing parts and materials. The witness testified that he did not have receipts for items purchased by contractors. Rather, the contractors buy the material and parts they need, do their job and bill him. He elaborated the receipts are not his; he does not buy the items. All he can provide are copies of the invoices he received from the contractors.

The Appellants alleged the house was smaller than it was supposed to be and Mr. Materski testified he sold the Appellants a house that was to be 2060 sq. ft. of finished area and that the contract specifically provided that the actual floor space could vary by more than 2% of the agreed 2060 sq. ft. The witness declared he provided a house that was well within that allowable 2% margin.

The Appellant J.F. implied the Builder rushed the building of the house, and Mr. Materski stated the contract was for him to build the house for $800,000.00. He said he did not know specifically how long it took him to build the house but that he built it according to the contract and according to the Ontario Building Code. He stated an occupancy permit was obtained, the City was satisfied and he got his $500,000.00 deposit back.

In cross-examination, the witness was referred to the offer to settle he made dated February 3, 2014 (Exhibit 22, tab 34) and the offer to settle he made dated April 10, 2015 (Exhibit 26) and was asked why the Appellants should enter into another agreement with him when he didn’t honour their first agreement. The witness responded that if he didn’t fulfil his obligation to pay the money proposed in the offer to settle, then the transfer of title to house would not be completed. He elaborated that this entire ordeal has been very hard on him. It has cost him financially, socially and health wise and he felt his only recourse was to try to buy the house back, re-sell it and move on, but the Appellants would not sell the house back to him.

Essentially, the position of the Added Party Builder is that there is no basis for any of the items which the Appellants have claimed in this appeal. He concurs with the assessment made by Tarion and their assessment with regard to damages.

THE LEGISLATION

1. The Ontario New Homes Warranties Plan Act

This appeal is governed by the Ontario New Homes Warranties Plan Act (the” Act”). The applicable provisions of the Act are as follows:

Warranties

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;

(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.

Compensation

14. (1) Subject to the regulations, a person who has entered into a contract to purchase a home from a vendor is entitled to receive payment out of the guarantee fund for the amount that the person paid to the vendor as a deposit to be credited to the purchase price under the contract on closing if,

(a) the person has exercised a statutory right to rescind the contract before closing; or

(b) the person has a cause of action against the vendor resulting from the fact that title to the home has not been transferred to the person because,

(i) the vendor has gone into bankruptcy, or

(ii) the vendor has fundamentally breached the contract. 1998, c. 19, s. 185 (1); 2000, c. 26, Sched. B, s. 15 (2).

Same, construction contract

(2) Subject to the regulations, an owner of land who has entered into a contract with a builder for the construction of a home on the land and who has a cause of action against the builder for damages resulting from the builder’s failure to substantially perform the contract, is entitled to receive payment out of the guarantee fund of the amount by which the amount paid by the owner to the builder under the contract exceeds the value of the work and materials supplied to the owner under the contract. 1998, c. 19, s. 185 (1).

Regulation 892 of the Act addresses the administration of the Ontario New Home Warranties Plan Act. Part II.I of Regulation 892, section 6 provides, in part:

Limits of Liability

6. (3) In the case of a home of a type referred to in clause (a) or (b) of the definition of “home” in section 1 of the Act, the maximum amount payable to an owner out of the guarantee fund in respect of a claim made under subsection 14 (3) or 14 (4) of the Act is,

(c) $300,000 if the claim relates to purchase agreement, or a construction contract, under which the home has a date of possession on or after July 1, 2006. O. Reg. 246/04, s. 1 (1); O. Reg. 343/06, s. 1 (1).

Part VI of Regulation 892 provides, in part, that:

Substitutions

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. R.R.O. 1990, Reg. 892, s. 18 (1).

(2) Subsection (1) does not apply where,

(a) the purchaser, having been notified, does not make a selection within thirty days after executing the purchase agreement or within such other time period as may be agreed; or

(b) an item selected under clause (a) is not available and the purchaser does not make a selection within seven days of receiving written notice from the vendor or within such other time period as may be agreed that the item is unavailable. R.R.O. 1990, Reg. 892, s. 18 (2).

(3) Every vendor of a new home warrants to the owner that where the purchaser fails to make a selection under clause (2) (a) or (b) that the vendor will make a selection on the purchaser’s behalf that is of equal or better quality than the original selection as set out in the purchase agreement. R.R.O. 1990, Reg. 892, s. 18 (3).

19. 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. R.R.O. 1990, Reg. 892, s. 19.

ISSUES

a) Nature of Review

The Tribunal has broad powers under the Act to hear evidence and order Tarion to take such actions as it considers appropriate and, where necessary, to substitute its opinion for that of Tarion. The Tribunal has the ability to consider the evidence before it and to make its own determination as to what an appropriate order is under the statutory regime. In carrying out its power to decide whether a deficiency is warranted, the Tribunal owes no deference to Tarion or the decision it made while carrying out its investigation and conciliation powers (Re Ontario (8138/ONHWPA) , 2014 O.L.A.T.D. No. 76).

b) Burden of Proof

Breach of the Warranty

The Appellants have the burden of proving a breach of their warranty on a balance of probabilities. Counsel for Tarion referred the Tribunal to the decision in Re Ontario (8149/ONHWPA) released by the Licence Appeal Tribunal (LAT) on January 23, 2014. In that case, Vice-Chair Flude stated at paragraph 9:

It is trite law to state that in proceedings under the Act the burden of proof lies on the Applicant. The Applicant must prove that an item in dispute falls within the warranty protections in the Act. It is insufficient to simply allege a defect. The Applicant must prove the existence of such a defect and how the defect falls short of the acceptable standard.

Where the Appellants have not discharged the burden of proving their claims, those claims must fail.

Proving Damages

In addition to having to prove the items they have claimed are defects and fall short of the acceptable standard, the Appellants also must prove damages. Even where a claimed item has been warranted as a defect, the Appellants still must prove damages. If they do not do so, their claim must fail. Counsel for Tarion referred the Tribunal to the case of Re Hoffer, released by LAT on January 8, 2008. In that decision, Vice-Chair Pannu stated at paragraph 20:

Even where there is defect, the Applicants must establish the existence and quantum of damages and where they fail to do so, the claim fails..... The Applicants have the onus of proving both elements of their case: first that there was a breach of warranty and, second, the quantum of the damages that flow from the breach.

As stated by this Tribunal, at paragraph 16 of the case of Re Muller, released February 5, 2008:

The onus is on the Applicants to show that the item they have claimed should be warranted, that the warranty has been breached and that they have suffered damage as a result of the breach.

The Appellants have difficulty accepting they must establish they have suffered damages. They believe that it should be sufficient to establish a breach and that some type of penalty should flow as a direct consequence of a breach, whether there are damages or not.

This leads to the issue of substitutions. Counsel for Tarion referred the Tribunal to the case of Re Smyth, a decision of LAT’s predecessor, the Ontario Commercial Registration Appeal Tribunal. In Re Smyth, the builder contracted to build a house with a clay brick exterior. Instead, he built a house with part clay brick and part aluminum siding exterior. The Applicants in that case had the burden of establishing that the aluminum siding was not of an equal or better quality than clay brick and they did not do so. In disallowing the claim, the Tribunal stated:

There has been no evidence placed before the Tribunal as to whether aluminum siding is of equal or better quality than clay brick as called for by the Agreement. This failure by the Applicants leaves the question of damage or loss due to substitution as not proven and accordingly, the Applicants’ claim must fail.

The foregoing case deals with the same challenge the Appellants in the present case face, particularly with regard to Item 109, the subject of the Decision Letter dated May 28, 2014.

In addition, some of the claims the Appellants have made, such as the alleged burn mark on the furnace pipe (Decision letter item 9), the outlet for the central vacuum (Decision Letter item 35), the blemish on the inside of the cold room door near the upper hinge (Decision Letter item 5) and the absence of a towel bar (Decision Letter item 41) which Counsel for Tarion characterizes as “de minimus”. There is considerable case law which suggests relatively minor items such these ought not to be covered by warranty. Counsel for Tarion referred the Tribunal to Re Ontario (4645/ONHWPA), released July 21, 2008, paragraphs 66 and 67 for a brief summary of these cases. At paragraph 66, the Tribunal in that case considered Tharmathurai (Re) [2001] O.L.A.D. no. 466, where the Tribunal adopted the reasoning in Breen (1999) CRAT, released April 15, 1999, which provided:

A microscopic examination is not the appropriate standard of testing. In law this type of mark could be considered “de minimus (sic) not curat lex” meaning that the law does not take notice of nor care about very small or trifling matters.

At paragraph 67 of Re Ontario (4645/ONHWPA), the Tribunal also adopted the reasoning in Teitelman, (1987) 16 CRAT, at page 18, in acknowledging that certain items were a source of irritation to the homeowners but , “...they must accept the fact that no house, new or old, is perfect or is warranted to be perfect.”

This Tribunal is mindful of the significant sum of money which has already been paid to the Appellants as well as the fact that they have not spent any of those funds to rectify any of the items they received compensation for, as admitted by the Appellant J.F. . The uncontroverted evidence is that the Appellants have not made any changes to the items complained about, notwithstanding the monies they received as compensation for same.

Counsel for the responding parties both suggested that where a reasonable offer to settle is made and refused, a party is not entitled to damages. Counsel for Tarion referred the Tribunal to the case of Re Manolis, released May 30, 2005. At paragraph 52, the Tribunal considered other cases where offers to settle were refused by homeowners and stated:

Baldassare (Re), [1998] O.C.R.A.T.D. No.83 In this case the homeowner refused to allow the builder to repair four items of defect in the home in the manner the builder sought to carry out the repair, and had refused a cash offer in lieu of repair...

The Tribunal found that the offer of settlement was a reasonable one, and that by refusing to either allow the repairs or accept the offers of settlement the homeowner had denied the Program the opportunity to mitigate damages; that consequently there were no damages to compensate; and that, in effect, the homeowner had disentitled himself to further warranty coverage.

In Re Manolis, the Tribunal also considered other cases where reasonable offers to settle were refused. In Migliano (Re), [1994] O.C.R.A.T.D. No. 137 the homeowner was dissatisfied with varying shades of brick on his house. The builder had attempted to rectify the situation by applying treatments to the brick; then he offered to remove and replace some of the brick or make a cash settlement in lieu of making the repairs. The homeowner refused the offers and, in the end:

The Warranty Representative agreed with the builder, as did the Tribunal after considering the expert evidence of both the homeowner and the builder at the hearing, and both concluded that the builder was therefore not in breach of any warranty obligation so long as the homeowner continued to refuse the builder’s offer of repair or compensation in lieu of repair.

In the present case, the Builder corrected many of the deficiencies complained of and, in addition, the Appellants also accepted the sum of $120,247.00 from Tarion in settlement of the majority of the warranted items. Ultimately, in an effort to resolve this matter and mitigate his losses, the Builder offered to buy the house back for $825,000.00, notwithstanding the fact the Appellants purchased the house for $800,000.00 and had already received $120,247.00 from Tarion as compensation for deficiencies they have not rectified. The evidence clearly established the Builder did everything possible to fulfill his warranty obligations and resolve this matter.

c) The Contract

Many of the items being appealed arise from a fundamental disagreement between the parties on what their contract included. The Appellants contend that the contract they had with the Builder permitted them to continue making changes and additions to their deal up to the conclusion of the real estate transaction and continuing thereafter, without end. The Builder disagrees and stated the contract is what was entered as Exhibit 21, Tab 1, including Schedule Z. The biggest disagreement about what the rights and obligations of the parties are under the contract arises from the interpretation the parties place on the very last line of Schedule Z which states, “Diagrams detailing exact locations of above-described items will be provided by Purchasers.” The Appellants interpret that to mean they could provide the Builder with unlimited diagrams of items they wanted in the house. More significantly, they interpret the provision to permit them not only to indicate where items were to be located but also to add and delete items not negotiated.

The Builder interprets the provision to mean the homeowners could submit diagrams to him to show him where items, which had been agreed he would provide, were to be located. He denies it permits the homeowners to specify characteristics of items which were not specifically identified in the APS. For example, Schedule Z of the contract provides the Builder was to provide “Wood deck or precast steps at rear door”. The evidence establishes he did in fact provide a wood deck, measuring 3’ x 5’ at the precise location the contract required him to provide a “wood deck or precast steps”. The Appellants rely on their ability to submit diagrams detailing the exact locations of items specified in Schedule Z to enable them to require the Builder to replace what he had provided with a deck measuring 10’ x 12’ and then change that request to a deck measuring 20’ x 12’ notwithstanding the fact that no dimensions were specified in the contract and the contract did not specify that a deck of any kind had to be provided. Pursuant to the contract, it would have been sufficient if the Builder had provided “precast steps” at the rear door.

There are far too many such items at issue between the parties to deal with them one by one. It is not reasonable for the Appellants to believe they can continue to make demands of the Builder forever. They cannot continue to change their minds and expect the Builder to provide them with items because they provide him with a drawing or a list or a photograph; however, that is what J.F. testified he believes the contract permits. In cross-examination, J.F. would not concede that an invoice or a photograph were not diagrams. Some items the Appellants claim they submitted under this perceived “loophole” give descriptions, not locations, of things like towel bars and robe hooks which are not specified in the contract. It is the Appellants’ subjective interpretation, but the plain words of the clause say that diagrams may be provided in order to detail the exact location of items described in Schedule Z. It doesn’t speak of colour or style, size or design, texture or material. It clearly states “locations”.

The Appellants contend that numerous Schedules and Appendices which they forwarded to the Builder form part of the contract. J.F. confirmed they filed Appendices to the contract after the work was completed and he stated there was nothing in the contract that said they could not continue to do that forever. When asked if he expected the Builder should be required to do something to rectify the complaints without being paid, he replied in the affirmative. When asked whether he would expect the Builder to fix items if he sent further requests to the Builder in July 2015, he replied that he would and elaborated that, “In the context of the law and according to the contract, he has to do it.” He continued by stating he and his wife “... also have insurance through the Ontario New Home Warranties Plan Act and if the Builder doesn’t do what he’s supposed to do, Tarion has to back stop that.” He elaborated that the Builder is responsible to fix things at his own expense whenever the homeowners submit an Appendix or request to him, and that he has to keep fixing things and adding things as long as he is asked to do so. It is the Appellants’ understanding that is what the Builder agreed to when he signed the contract, including their Schedule Z.

The interpretation of contracts is an objective exercise. Essentially, we must ask, “What would a reasonable person say that it says?” The presumption is that the contract is commercially reasonable. It is patently unreasonable to expect a party to a contract to respond to changes and additions and deletions forever, long after the event for which the contract was required (i.e., the purchase and sale of a home) is concluded. Many of the Schedules and Appendices on which the Appellants rely were submitted to the Builder after the house was built and certainly after they had taken possession of it. What they really amount to are things the Appellants did not like or things they wanted changed or added. The contract between the parties is the document entered as Exhibit 21, Tab1. It consists of the APS, Schedule A, Schedule S, Schedule W, Schedule B, Schedule C, Schedule Z, all initialed or signed by the parties, as well as pages 33 through to and including 38 consisting of diagrams from the Builder’s brochure which have also been annotated and initialled by the parties.

The position being taken by the Appellants on the interpretation of the contract is unreasonable and does not square with common sense.

d) Scope of the Warranty

Regulation 892 of the Act covers the administration of the Ontario New Home Warranties Plan. Section 6 of the Regulation addresses the limits of liability and, pursuant to section 6 (3) the maximum possible amount payable out of the guarantee fund in the present case would be $300,000.00.

In addition to the multiple items the Appellants claim as deficiencies, unauthorized substitutions and poor workmanship, they have also claimed legal fees, expert fees and disbursements in this appeal. They stated that these fees and disbursements amounted to both damages and costs and seek to be reimbursed for them. Subsection 6 (6) of Regulation 892 provides, however, that the warranty only applies to the home and not to ancillary items like expert and legal fees and disbursements.

FINDINGS AND ANALYSIS

The Tribunal has carefully considered the evidence presented and concludes as follows:

1. There was no evidence led by the Appellants regarding Decision Letter (December 20, 2013) items 21, 60, 61 and 83. Consequently, the Appellants have not met the burden of proof required of them and those claims are denied. Likewise, there was no evidence to support the claim that the Builder failed to provide two light bulbs in the vanity light fixture in the master bedroom bathroom. Simply saying it is not sufficient. Consequently, the claim made at Decision Letter item 57 is also denied.

2. Item 98 in the December 20, 2013 Decision Letter was not properly before this Tribunal. This item had not been assessed by Tarion at the time the Decision Letters giving rise to this appeal were written. The evidence establishes that this item is considered a special seasonal item and the warranty period had not expired at the time the Decision Letters were written. Accordingly, this claim is denied.

3. This Tribunal has no jurisdiction to determine items which do not fall within the statutory warranties provided under the Ontario New Home Warranties Plan Act. It is not within the jurisdiction of the Tribunal to determine Decision Letter (December 20, 2013) items 3, 4, 13, 35, 36, 47, 48, 90 and 102.

Item 3 – The Appellants allege that the hook-ups for the washer and dryer in the basement laundry room should be reversed to allow for easy transfer of the laundry from one appliance to the other. The witness testified that the washer is beside the sink, but that the homeowners wanted the appliances flipped because of the direction which the doors open on their front loading appliances. The Respondent relies on Exhibit 3, page 46 which forms part of the APS and shows the washer and dryer in the positions in which they were installed. The Appellant J.F. agreed that the appliances in his laundry room are in the same location as indicated in the diagram in the APS but referred to a later diagram, also delivered after closing, showing the location of the washer and dryer having been switched.

Item 4 – The Appellants allege the ceiling in the basement is too low in places. The Agreement of Purchase and Sale calls for 9 foot ceilings in the basement and in certain areas it is less. They want the ceiling height raised so that it is no less than 9 feet high in all areas of the basement. Mr. Haley confirmed that the APS does call for 9 foot ceilings but that it is not possible to have 9 foot clearance everywhere in a basement where there is duct work, door entrances and an HRV unit. His evidence was that Tarion’s process for measuring the height of a space is to measure from the floor to the underside of the finished surface and that 9 foot ceilings do not necessarily mean 9 feet of clearance throughout.

The Builder testified that he provided the Appellants with 9 foot high ceilings in the basement, as required by the contract. His evidence was that the contract does not provide for 9 foot high basement ceilings under duct work or other mechanical fixtures. He stated that that it simply is not possible; it would require the basement ceilings to be too high. He elaborated that the Appellants did not complain about the ceiling height of the basement until after the real estate transaction had closed.

Item 13 – The Appellants claim the HRV unit, adjacent to the furnace in their utility room, is hanging too low and does not comply with the APS which stipulates there are to be 9 foot ceilings in the basement. Mr. Haley testified the homeowners wanted the HRV unit raised to comply with the requirement for 9 foot ceilings. His evidence is that there is 6 foot clearance under the HRV unit and that to have 9 foot clearance under the unit would require a measurement of 11 feet from the concrete to the joists. He stated that there are areas where reduced clearance is acceptable and that this is one of those areas. The witness stated the HRV unit is deemed a utility in an unfinished utility room. It is not considered a substitution of a finishing item of construction and does not fall within the statutory warranties provided under the Act.

With regard to the ceiling height issues raised in items 4 and 13, Appellant J.F. said the 9 foot ceilings stipulated in the contract means the clearance should be 9 feet everywhere and if that means the HRV unit would require the basement to have a 12 foot ceiling everywhere else, then that is what is required. He conceded that he advised the Builder of the concern regarding the ceiling heights on November 22, 2013, notwithstanding they took possession of the house almost a full year earlier, on November 30, 2012.

Item 35 - The Appellants claim the central vacuum outlet is located too close to the closet door in the main floor foyer. Mr. Haley referred the Tribunal to Appendix Y to the Agreement of Purchase and Sale located at Exhibit 4, page 336 to support his assertion that the APS indicated a general location for the outlet but it did not give dimensions. He testified that there was no functional difference in a minor variation of the outlet’s location and given that no dimensions were specified, only a general location, the location used was acceptable.

Items 47 & 48 – The Appellants allege there are two missing electrical outlets in the master bedroom and there is more space between outlets than permitted by Code. Mr. Haley testified that the diagrams give general locations for electrical outlets but no specific dimensions. His evidence was that the required receptacles are all there and that there is no breach of the Electrical Code or of the Building Code and that no inspection made any reference to any breach. He testified that Appendix DD, which appears at Exhibit 4, and specifically pages 341 and 349, thereof depict different locations for the electrical outlets. Consequently, the locations were deemed to be general and the item was not warranted. There was nothing from the Electrical Safety Authority confirming there is any violation. The Builder testified he hired an electrical contractor who has to follow the Building Code. He stated the electrician knows what he can and cannot do and he could not legitimately do what the Appellants asked for. There was no documentation or other evidence to indicate that there was any non-compliance with either the Building Code or the Electrical Code.

Item 90 – The Appellants claim that all of the switches for the lights and the fans for the bathrooms are on the outside of the wall and they ought to be on the inside of the bathrooms. Mr. Haley testified that Schedule Z of the APS does provide that all of the switches and receptacles were to be white Decora and it also provides that diagrams detailing their exact locations would be provided by the homeowners to the Builder. He elaborated that those diagrams were provided and they do indicate the switches are to be on the inside. Mr. Haley testified that the Builder advised they were installed pursuant to the Electrical Safety Associations (“ESA”) standards and that, in some locations, they were able to be installed pursuant to the homeowners’ wishes but in others, they would have been too close to the sinks and not compliant with the ESA requirements. He elaborated that, in the powder room, the switch is on the inside of the room but that in the other bathrooms, all of which are adjacent to a bedroom, the switches are in the bedrooms, outside the bathroom entrances for the ensuite.

Item 102 – The Appellants claim that the curb cuts, at the end of their driveway, are too narrow and do not line up with the garage door. Mr. Haley’s evidence is that the homeowners had an expectation that the driveway would be double wide from end to end, but that the driveway dimensions were not specified or selected in the APS. He also testified that the curb cut is on municipal property and beyond the jurisdiction of Tarion but elaborated his understanding is the Builder has done a cut and addressed the issue in any event.

It is possible that the Appellants may have a remedy elsewhere for the above items 3, 4, 13, 35, 47, 48, 90 and 102 but they do not have a remedy at this Tribunal for these items. Accordingly, these claims are also denied.

4. The evidence does not establish any defect of workmanship amounting to a breach of the one year workmanship warranty as alleged in claim items 5, 9, 10, 19, 30, 62, 75, 108, 115, 121,126 and 131of the December 20, 2013 Decision Letter.

Item 5 – The Appellants claim is that there are dents on the exterior of the door leading to the storage room which they want fixed. The Respondent’s witness, Ryan Haley, testified that on inspection there were no dents on this door. He testified there was a blemish on the interior of the door near the top hinge but there were no dents on the outside of the door identified at the conciliation.

Item 9 - The Appellants claim the intake and exhaust pipes used on their furnace are used and want them replaced. Mr. Haley testified he observed some slight discolouration on one of the exhaust pipes connected to the furnace, but there was nothing to indicate the pipe had failed and it was determined there was no defect. The issue was cosmetic and did not affect the function or integrity of the vent.

Item 10 – The Appellants claim there should be insulation around the door frame in the cold room off the laundry room in the basement. Mr. Haley identified photographs number 5(d) and 16(a) in Exhibit 15, tab 4 showing insulation was installed. His evidence is that there is insulation in place between the concrete and the door frame as well as above the door in the cold room and there is also a vapour barrier installed between the cold room and the insulation on the laundry room side. He testified that what he observed is what he expects to see and what he looks for. He determined there was no defect in workmanship amounting to a breach of the APS or the Code.

Item 19 – The Appellants allege there is a missing piece of granite, about 3” x 30”, that should be between the range and the tiled wall in their kitchen. Mr. Haley testified that the kitchen appliances, including the range, were provided by the homeowners. They chose a slide-in range that should have either a metal or a plastic filler strip to fill the gap between the range and the wall. Mr. Haley stated it is standard for manufacturers of ranges to include a strip for roll in ranges without raised backs, but he cannot say whether or not the Appellants’ range came with one or not. Regardless, it is not for the Builder to provide a strip of granite behind the range. He testified that to cut such a small piece of granite would be difficult because it would be fragile and easily broken. Further, his evidence was there was nothing in the APS that relates to this issue and, in his experience, a granite strip is never in that location. His assessment was that there was no deficiency in workmanship.

The Builder testified that is not usual to install granite behind a range; that many stoves come with a raised back and the granite would be an obstruction. He stated the Appellants had chosen their range without any input from him and, further, that granite is difficult to cut in narrow pieces such as that which the Appellants want between their slide-in range and the wall. He confirmed that such pieces are very fragile.

Item 30 – The Appellants claim the marble tile in front of the main floor powder room door is stained and they want it replaced. Mr. Haley observed there is some tonal difference, but he did not assess it as being stained. Rather, he determined it to be naturally occurring. He noted there are light and dark tones throughout the tile and, given that marble is not a made-made material, colour variation cannot be controlled. He elaborated that this item was reported as a stain and not a substitution. He observed it was not a stain, that there was no defect in workmanship amounting to a breach; the workmanship met the standards required by the Construction Performance Guidelines and the item was not warranted.

Item 62 – The Appellants claim there is a loose security wire under the skylight and they want it fixed. Mr. Haley testified that Schedule Z, which forms part of the APS calls for a roughed in security system and he determined this constitutes just that. Consequently, this item was not warranted.

Item 75 – The Appellants claim the handrail on the staircase from the basement to the second floor was too sharp and they want it smoothed out and repainted. Mr. Haley testified that he observed a dent in the handrail which was warranted, but the alleged roughness was not sufficient to amount to a defect; there is some texture to the wood but the finish was deemed acceptable.

Item 108 – The Appellants claim there are two spans of their fence that are over 8 feet and they want those distances reduced to 8 feet or less. The posts along the east and south line of the property are not at the same distance apart. Mr. Haley stated two spans are measured at 9 ft. 8 inches and 9 ft. 1 inch. He observed that there has been no failure of the fence and that the Builder had explained that ground conditions, including rocks and pipes, determined where the fence posts had to go. Given there has been no failure of the fence, he did warrant this item despite the fact there is more than 8 feet between some posts.

Item 115 – The Appellants want the gas line outlet for their barbeque relocated; they find it inconvenient. Mr. Haley’s evidence is that, initially, it was installed near the staircase at the back of the house, but the Appellants claimed it was a trip hazard, so the Builder re-located it. The Appellants are not satisfied with the new location. Mr. Haley testified he observed the re-located gas line and determined it to be in a suitable location. He testified there are no defects of workmanship and the current location is fine. His evidence is that there is nothing about this item in the APS and there are no guidelines. Neither, according to Mr. Haley, is there anything to suggest the current location is inappropriate. The witness stated it is a matter of preference whether or not someone wanted to turn the valve off each time they barbeque and, if that is the Appellants’ preference, they could step off their deck and turn off the valve. Referring to Exhibit 5, page 482, the witness stated the sketch showing where the Appellants want the gas line was made after they took possession of the house and after the Builder had already re-located the outlet once.

The evidence of Mr. Materski is that he moved the gas receptacle at the request of the Appellants, but he could not re-locate it to the exact location they wanted because behind the stone façade at that location there is solid wood. As a result, he relocated it approximately 10” from where the Appellants had asked him to move it and they find it inconvenient. He stated it is something that usually gets connected once and then is generally left.

Item 121 – The Appellants claim there is stone missing on the exterior wall of the house by the front steps. Mr. Haley testified the area is depicted at Exhibit 15, tab 4, photo 201 and that it shows stonework resting on the foundation. There is a small area where the foundation is exposed, but he did not observe any defect in workmanship and determined it is consistent with foundations being exposed and it did not require any stone cladding.

Item 126 – The Appellants claim the metal exterior lintels above the windows and doors are not painted and they should be. Mr. Haley testified that they are not painted and they are not required to be; they are finished with a factory applied primer and are not required to be painted.

Item 131 – The Builder raised a portion of the front porch as required by the municipality and the Appellants allege it is not graded properly. Mr. Haley stated he has put a level on the relevant portion of the porch and observed that it slopes away from the house; the remedy required by the municipality rectified the drainage concern.

In consideration of the foregoing, claim items 5, 9, 10, 19, 30, 62, 75, 108, 115, 121, 126 and 131 in the December 20, 2013 Decision Letter are denied.

5. The Appellants allege breaches of the Ontario Building Code in several items addressed in the December 20, 2013 Decision letter.

Item 15 – There is exposed insulation in the cold cellar and the homeowners want a

vapour barrier installed. Mr. Haley testified that what is in place is insulation above and beside the door on the inside of the cold cellar. On the warm side of the wall between the cold cellar and the laundry room, there is insulation sealed with a vapour barrier but, on the cold side – the cold cellar side – there is exposed insulation which, he testified, is acceptable. According to the witness, the area in question is described in the APS as a cold cellar; the area was purchased as a cold room or cold cellar and is not meant to be finished.

The Builder testified that a cold cellar does not require insulation; it is a cold cellar. He stated the rest of the basement was fully insulated, but he could not insulate the cold cellar because, if he did so, it would not have passed inspection and the Appellants would not have obtained an occupancy permit. He emphasized it is a cold cellar and it is supposed to be cold; it is not part of the insulated basement.

Item 130 – The Appellants claim the height from the concrete porch to the door sill at the front entrance of the house is too high and they want the porch raised. Mr. Haley’s evidence was that the measured distance from the landing to the sill is 7 7/8” and the depth of the sill is 4”. He testified that he spoke with the Building Inspections Supervisor, Mr. Nikiforos who confirmed that it was inspected and the City of Mississauga directed the Builder to raise the porch to a distance 7 7/8” from the sill, which was completed and it has been inspected and approved. Mr. Haley further testified that the Appellants presented this concern as a Building Code violation and, since the municipality is the agency concerned with Building Code violations, he had gone to the City for information.

The Builder testified the porch was passed by the City building inspector but, notwithstanding the evidence of Mr. Haley that the drop from the sill of the door to the porch is compliant and that the City has been satisfied, the Appellants maintain that the drop is too great and want the Builder to reduce it.

Item 133 – The Appellants requested an extension of the handrail at the outside front entrance. Mr. Haley testified that the installation of a walkway made the handrail compliant, but the Appellants removed the walkway. That alteration by them is not the Builder’s problem. The witness identified Exhibit 15, tab 5 showing the landing or walkway as the Builder had left it. The handrail was compliant. Mr. Haley stated that the fact the Appellants removed the walkway does not create an obligation on the Builder. There was no violation as the Builder had left it.

Item 134 –The Appellants claim there is a safety hazard created by the fact the handrail does not extend to the bottom of the steps. Mr. Haley stated his observations for this item are the same as for item 133 above. He stated the Appellants may be correct that the current condition might represent a safety hazard since they removed what the Builder had done. The witness stated the condition the Builder had left this in, however, did not create a safety hazard.

There is no evidence of a breach of the Ontario Building Code, as alleged by the Appellants for items 15, 130, 133 and 134 of the Decision Letter dated December 20, 2013. In fact, items 130, 133 and 134 were inspected by the City of Mississauga and approved which is evidence that these items were, in fact, compliant with the Code. Consequently, these claims are also denied.

6. In item 26 of the December 20, 2013 Decision Letter, the Appellants alleged the valence lighting in the kitchen is a fire hazard and interferes with their food storage because the lights get too hot and, therefore, they wanted LED lights installed. Not only were LED lights not specified in the contract, but there was no evidence whatsoever to support their contention that the lights produced so much heat that it raised concern about food storage or safety. The evidence of Mr. Haley was persuasive and, there being no defect in materials amounting to a breach of the one year materials warranty, this claim is also denied.

7. The evidence establishes that many items claimed were not mentioned in the APS and there is not sufficient evidence that these items were ever specifically contracted for.

Item 1 – The Appellants complain there is no ground fault current interrupter electrical receptacle over the sump pump but there is no mention of one in the APS and there was no requirement for one pursuant to the Code. The Appellants gave no evidence of any electrical violation, there was no substitution and therefore the item was not warranted. Mr. Haley was referred to a document entitled “Appendix O” in Exhibit 4, page 326 where there is a notation regarding 2 ground fault current interrupter electrical outlets and he testified that while the Appellants assert that Appendix O forms part of the APS, Tarion disagrees with that assertion. He also stated that Tarion has no jurisdiction to interpret the Electrical Safety Code or its requirements. Rather, the Electrical Safety Authority has to be satisfied of a breach of the Electrical Safety Code for Tarion to act on it. Since there is no evidence the Electrical Safety Authority had any concern and the receptacle was not part of Schedule Z of the APS, the item was not warranted.

Item 2 – The Appellants allege there are inadequate outlets for the washer in the basement laundry room and claimed an “Oatey offset” water outlet should be installed for their washer. Mr. Haley testified that this was not included in the APS, that Schedule Z does specify, “Plumbing for automatic washer”, but it does not specify that the Appellants wanted any particular type of outlet. The Appellant, J.F. conceded that the Oatey Offset outlet was not specifically mentioned in Schedule Z. This was not considered a substitution or a selected item and, therefore, it was not warranted.

Item 7 – The Appellants state the basement window, under the kitchen window, was cut after the foundation had been poured and rebar installed and want to have rebar installed around the window. Mr. Haley testified that the Builder missed two windows in the basement during construction and that they were cut afterward. He testified he observed no signs of failure and stated the Builder provided documentation confirming the structural integrity of the wall framing, that the wall is structurally sound and compliant with the Code. He referred to the letter at Exhibit 18, tab 98, from AIM Engineering in this regard and testified that he did not determine this to amount to a substitution.

Item 12 – The Appellants claim there is no cover on the electrical panel in the basement, but Mr. Haley testified he observed that the panel is in the utility room and it does include a cover. He elaborated that the switches are exposed but there is a cover protecting the wiring. The item is not referred to in the APS and is not an item selected by the Appellants. He stated there is no information that the Electrical Safety Authority has any concerns about the electrical box. Mr. Haley concluded this item did not form part of the APS, there was no substitution and the claim was not warranted.

Item 18 – The Appellants claim the countertop in their kitchen is not the correct colour. Pursuant to the APS, a cream coloured granite countertop was to be installed. No specific brand was specified in the contract and the Respondent assessed the installed countertop to be cream in colour. Mr. Haley testified that the Construction Performance Guidelines which Tarion and other building and construction industries have compiled to give guidance on common issues provides at section 12.35 that granite is a natural product and colours and appearances can vary from one slab to another. Accordingly, Mr. Haley determined that the Builder did provide cream coloured granite as specified in the APS.

The Builder testified that the Appellants selected from a 5” x 5” sample and that he installed what they had selected. Mr. Materski stated that the Appellants got what they had selected – they chose the granite and the finish on the edges. He stated he had provided samples and installed what the Appellants chose from the samples provided by him.

Item 20 – The Appellants allege that the cabinet containing the kitchen sink is designed to accept a 36” sink but a smaller sink was installed. Mr. Haley testified there is nothing in the APS that specifies the size of the kitchen sink. He determined there was no substitution and this was not a selected item therefore the claim was not warranted.

The Builder testified that the Appellants visited another house which he had built with a similar kitchen to theirs and then requested several upgrades which were not part of the deal they had negotiated. He stated he advised them that all he could provide them was what was included in the model home which was their agreement. There was no specific mention of the kitchen sink in the purchase agreement and the larger sink would be an upgrade.

Item 22 – The Appellants claim the range hood above the stove is incomplete because it does not have an exhaust fan. Mr. Haley testified that there is a fan above the stove and it is working but that the Appellants indicated to him that they wanted a particular model installed. Mr. Haley testified that the APS does not specify any particular model, there was no substitution and the claim was not warranted.

The Builder testified that the exhaust fan was installed after the Appellants moved into the house. It is considered an appliance and not required for the occupancy permit. It is in place and has been since soon after the Appellants moved into the house.

Item 23 – The Appellants claim there are four wooden lazy susans with rotating trays missing from their kitchen. Mr. Haley testified there was nothing in the APS, including Schedule Z that specifies lazy susans were to be installed. The Appellant J. F. testified that the contract provided for “easy access corner cabinets” or “accessible storage”, but there is no evidence that those terms are synonymous with “lazy susan”. According to Mr. Haley, “easy access” is what, in his experience, was provided by the Builder. The corner kitchen cabinets were to have easy access to the space. Mr. Haley testified that typically, corner cabinets are deeper at a certain point although they are the same depth as the adjoining cabinets. He stated easy access means they are easily accessible; that you can open the door and take out what you need. He stated that if the Appellants think easy access means the provision of a lazy susan, then it would apply to the upper corner cabinets as well and they did not include these in their complaints. He elaborated that the Appellants wanted lazy susans after visiting a cabinet supplier, but Tarion looks at the contract which said they were to have easy access and that is what was provided. The Appellant J.F. conceded that lazy susans were not specified in the APS but that he and his wife had gone to Sillmans and selected them and were entitled to receive them.

The Builder stated the contract provided he was to supply the kitchen as in the model home and that is what he did, including the easy access cabinets. He elaborated that Sillman kitchens has many options, including various lazy susans for corner cabinets, but that was not an option the Appellants paid for nor were they entitled to choose them. He stated they received easy access cabinets like those in the model home, as required by the APS.

Item 25 – The Appellants claim the lighting in the kitchen valance is not L.E.D. lighting which they specified in their diagrams and therefore which they were entitled to pursuant to the APS. Mr. Haley testified that the APS does not refer to L.E.D. lights nor does it say that the Builder was obliged to supply them. It is not an item of construction or finishing selected by the owner and, therefore, not warranted.

Item 28 – The Appellants claim the niche shelving in the living room of the home does not match the design they had approved. Mr. Haley testified his observations of this item were that Schedule Z of the APS does not address “niches”, that there is no description of niche features or shelving materials. He determined this is not an item of construction or finishing selected by the Appellants, pursuant to the APS and that there was no substitution amounting to a breach of the warranty.

Item 29 – The Appellants claim the ceiling height in what they call their mudroom is too low. Mr. Haley testified that on assessing this item, he was brought to the stairway landing, several steps down from the main floor of the house where the door to the garage is situated. The Appellants call this area the mudroom. The witness observed this area is part of the stair system and not a room. His evidence is that Schedule Z of the APS requires 10 foot ceilings on the first floor of the house and he measured the ceiling height in this area to be 7 ft. 8 ½” ; however, as part of the stair construction, it is not necessary to have 10 foot ceilings. He testified that Tarion and the Appellants view the area to be different things. Tarion considers it to be part of the stair system and has treated the issue from that viewpoint. Mr. Haley testified that the head height in that particular area is determined to be head height in the staircase and not as a room on the main floor, requiring a 10 foot ceiling. It is an area between the main floor and the basement; a landing area within the stair system and he measured the height to be an acceptable 7 ft 8.5”.

The Builder also testified that this area is actually a landing in and part of the stairway system. His evidence was that he does not know specifically what the ceiling height is there, but that it passed inspection and was compliant with the Code.

Item 41 – The Appellants complain there is no towel bar in the master bath and allege there ought to be one provided by the Builder. Mr. Haley testified that Schedule Z of the APS addresses the types of finish bathroom fixtures were to have, but that there is no reference in Schedule Z or elsewhere in the APS to a towel bar in this particular location.

The Builder testified that the contract required him to provide brushed nickel fixtures in the bathrooms and he did so. He stated that towel bars are not bathroom fixtures and he did not have to provide one. He elaborated that the shower door has a 24” handle which could be used as a towel bar if the Appellants did not install one.

Item 45 – The Appellants claim that the shower in the bathroom for bedroom 3, on the second floor of the house, is not a “frameless glass shower” and it should be. Mr. Haley testified that the bathroom in question has a combination shower/bathtub, that it is, essentially, a bathtub with a shower fixture and that it is not referred to as a shower in the contract. He referred to Schedule Z of the APS and testified that showers, and this particular bathtub enclosure, were identified separately with regard to tiles and that Tarion took the position that frameless shower stalls referred to walk-in showers and not to bathtubs with shower fixtures.

Item 54 – The Appellants claim the shelving in the niche in the master bedroom does not match the shelving design which they approved, which they allege is an unauthorized substitution. Mr. Haley testified that the APS, including Schedule Z, does not address specific finishes. Schedule Z of the APS states that diagrams detailing the exact locations of certain items would be provided by the purchasers but it does not address materials or niche features. While the Builder did provide shelving for the niche, there is nothing in the APS relating to niche features or shelving in the APS.

Item 59 – The Appellants complain that there is no robe hook in the master bathroom and ask that one be provided. Mr. Haley testified that there is no provision for robe hooks in the APS or Schedule Z and, consequently this item was not warranted since it was not contracted for.

Item 67 – The Appellants claim their house is smaller than what they contracted for. They allege their agreement specifies the house is to be 2060 sq. ft. but it is only 2008.57 sq. ft. and, therefore, is 51.43 sq. ft. smaller than what it should be. Mr. Haley testified that the Appellants rely on a copy of the municipal construction drawings which show a gross floor area of 2008.57 sq. ft. but that Tarion relies on the architect who provided calculations and measurements confirmed on site and based on what was actually constructed. Those calculations give a gross floor area of 2022.61 sq. ft. Tarion considers the signed and stamped drawings provided by the architect to be an accurate description of what was built and considers them more reliable than construction drawings which do not consider minor changes made during the construction process. Mr. Haley referred to Exhibit 16, tab 18 which shows the “as built” dimensions of the house. Drawing 2 gives a summary of the first floor and second floor and totals 2022.61 sq. ft.; the basement and the garage are excluded from the measurement. Drawings 4 and 5 give a more detailed breakdown of how the calculations Tarion relies on were made. It is Mr. Haley’s evidence that the difference between what the APS provided and what has been built is 37.39 sq. ft. which is well within the allowable difference of 2%. He referred to Bulletin 22 and the APS, Schedule Z, in stating the finished house falls within the allowance prescribed.

Item 68 – The Appellants allege the Builder did not use the correct paint for the interior of their house and garage because they only wanted Benjamin Moore “Aura” paint and the Builder did not use it throughout. Mr. Haley testified that the APS, at Schedule Z, provides that Benjamin Moore premium quality latex paints were to be used. The Builder stated that is what he used and it was Mr. Haley’s observation and conclusion that the contract had been complied with. The Appellant J.F. acknowledged that Schedule Z simply provides that the Builder use Benjamin Moore premium quality latex paint; it does not say “Aura” and he agreed that the Builder was not advised the Appellants wanted “Aura” until after the contract was signed. The contract did not specify that “Aura” brand was to be used throughout and, therefore, there was no breach, no substitution and the item was not warranted.

Item 72 – The Appellants claim that incorrect cabinets were installed in the bathrooms, powder room and laundry. They claim the cabinets should be the same as the cabinets in the kitchen and they are not. Mr. Haley testified that there is nothing in the APS about cabinet colours or style other than in Schedule Z which provides that the bathroom cabinets were to be as in the model home and were to be raised panel maple vanity cabinets. He observed the colours of the cabinets varied; the kitchen cabinets were cream in colour, the laundry was white and the bathrooms were brown. Given that the colour of the cabinets was not specified in the APS, but that the APS did specify the cabinets were to be as in the model home, this item was not warranted as a substitution.

Item 74 – The Appellants claim the heating ducts had not been professionally cleaned although Schedule Z of the APS stated they were to be cleaned prior to the closing of the real estate transaction. Mr. Haley testified that the Builder had his employees clean the ducts using very strong vacuums prior to closing and, as such, he provided what was stated in the agreement. Consequently, this item was not warranted.

Item 76 – The Appellants claim the contact sensors for the security system have not been installed on the windows and doors. Mr. Haley testified that, originally, this had been considered a warranted item because Tarion felt the sensors were not properly installed; however, this item had been reassessed on December 16, 2013. The APS provides for a roughed in security system and that was provided by the Builder whereby the wiring was run to the windows, but an installer would be required to pull the wires and connect the sensors.

The Builder testified that the agreement provided that he was required to rough in the security alarm system, but that it was not his job to finish it. He elaborated that he was to bring the wires to the windows on the main floor of the house; that he was to provide the roughed-in security system and this is what he did.

Item 78 – The Appellants claim that casing is missing around the fireplace niches. They rely on Schedule Z of the APS which states “Painted white wood casing on all windows, doors, opening and archways”. Mr. Haley testified that a niche is not considered an opening and was not included as such in the APS; therefore, the item was not warranted.

Item 84 – The Appellants claim there is missing wood shelving in the closets on the main floor and second floor of the house where they want second and third rows of shelving installed. Mr. Haley testified that Schedule Z of the APS provides that all closets were to have wood shelving and they do. He stated the additional wood shelving being requested was not in the contract. Consequently, this was not warranted.

The Builder testified that the contract stated that he was to provide wood shelves in the closets and he did so. The contract did not specify how many shelves were to be provided, just that they were to be wood and that is what they got.

Item 116 – The Appellants claim that a pre-cast, one-piece, decorative lintel should be above the sliding door at the rear of the house but it is missing. Mr. Haley testified there is nothing in Schedule Z of the APS about this and while there is a diagram in the APS depicting decorative trim over the rear sliding door, they are depicted as, and stated to be, artist impressions and subject to change. He identified Exhibit 15, tab 4, photo 195 as a photograph of the relevant area showing bricks, in a soldier pattern, above the sliding door. He testified that the decorative lintel was not referred to in the contract and therefore he determined this is not a substitution and the item was not warranted.

Item 118 – This item is similar to Item 116 except it deals with the Appellants’ claim that there are missing decorative lintels over the windows of the house. Mr. Haley testified that there are decorative lintels above the windows on the front of the house but not above the windows at the side or rear of the house. Again, Mr. Haley testified that the diagram in the APS depicting decorative lintels is an artist impression only, it is identified as such and it is subject to change. He identified Exhibit 15, tab 4, photos 196a and 196b as depicting the windows on the house and showing the Builder installed brick, in a soldier pattern, above the windows at the rear and side of the house. His evidence is that Schedule Z of the APS makes no reference to decorative lintels over the windows.

The Builder testified that the Appellants made their selections from the brochure. He elaborated that they made changes to the brochure, made selections on the brochure and that is what was followed. When the Appellants suggested that Schedule Z refers to diagrams and therefore such diagrams form part of the contract, and Schedule Z overrides all other schedules, the Builder stated the relevant brochure pages are attached to Schedule Z and form part of the contract and those are what were followed in the construction of the house.

Item 124 – The Appellants claim there should be two additional downspouts from the eaves. Mr. Haley testified that Schedule Z does address downspouts, but not the specific number of them. His evidence is that nothing has been provided by the Appellants to indicate that additional downspouts are required. Mr. Haley observed there are four downspouts, located at the corners of the house; there are no reported problems related to them and the number of downspouts was not mentioned in the APS. Consequently, this item was not warranted.

Item 128 – The Appellants claim the downspouts are not securely affixed to the building and they want a third fastener installed on each of them. Mr. Haley testified there is nothing in the contract about this and his observation is that the downspouts are sufficiently secured with two fasteners on each of them. He determined this is this not in the APS, there has been no substitution and this is not warranted.

Item 132 – The Appellants complain the precast concrete step, below the poured stairs of the porch does not extend the full width of the porch steps. Mr. Haley testified that Decision Letter items 133 and 134 relate to this same item. He stated components were reported separately by the Appellants but they were all addressed under this item. His testimony was that the contract called for a concrete slab walkway to the front steps. He identified Exhibit 15, tab 5 as a photo of the repair provided by the Builder and stated he considered this to be a walkway although some might call it a landing. Mr. Haley testified that he conferred with the Building Inspections supervisor, Mr. Nikiforos and he confirmed this specific installation had been inspected and approved by the City of Mississauga. The Appellants, however, removed it, thereby reverting the area back to what is currently there – one precast step sitting in front of the poured steps and narrower than the poured steps. Given that the owner removed the municipally approved precast walkway, this was deemed an owner alteration whereby Tarion cannot assess what the Builder had done. Consequently, this was not warranted.

The Builder testified the Appellants claim the first two steps leading to their front porch are too narrow and do not allow for the use of the handrail. The APS required a poured concrete front porch and stairs as well as a precast concrete slab walkway from the driveway to the front entrance. Mr. Materski testified that the contract requires a landing below the stairs, but, before he put in the landing, he put in temporary stairs and intended to wait until the spring to put in the landing. He testified that the pre-cast stone walkway could only be done after the grading was done and he was waiting until then. However, the Appellants were not prepared to wait so he provided the walkway or landing depicted in Exhibit 22, tab 31 and the Appellants demolished it. His evidence was that the grading is now completed to the satisfaction of the City but there is no room to install a concrete walkway. He elaborated that the Appellants changed the plan and widened the driveway and now that that has been done, there is no room for the planned walkway.

Item 135 – This item also deals with the front steps of the house. The Appellants want four extra front steps poured below the poured porch and stairs that are there now. Mr. Haley testified that item also relates to item 132. His evidence is that the APS calls for poured front stairs and what is presently in place has been inspected by the City of Mississauga and found to be compliant. He testified that the number of stairs leading to the front door is dictated by site conditions, the height of the basements, etc. and this area was compliant with the Code and with the APS, as the Builder had left it. There is nothing in the APS which speaks to the number of stairs, only that they are to be poured. The witness determined there have been no substitutions and the item was not warranted.

Item 136 – There is a wood support pillar on the front porch of the house which the Appellants claim should be stone and brick. The witness testified that Schedule Z of the APS provides the house was to be all stone and clay brick per elevation drawings and the elevation drawings in the APS make no reference to stone or brick materials for the front support column; they depict the pillar as being painted. That is evident in the first and fifth elevation drawings attached to Schedule Z which depict the front of the house and include the support pillar. It is not depicted as clad in stone or brick.

Item 137 – The Appellants claim the vanity mirror and the light fixture in the powder room are too low. Mr. Haley testified that the APS does not specify the height of the mirror or the vanity lights. His evidence is that the Builder installed the mirror and the vanity lights above the vanity and Tarion had no concerns with how they were installed.

Item 139 – This item has to do with one of the basement windows cut after the foundation was poured. Specifically, this item deals with the window located in the roughed in bathroom area. The Appellants want rebar installed around the window. Mr. Haley testified that Tarion’s assessment is that it has not been shown there is requirement for rebar to be installed around the window. The Builder has stated rebar was installed in the pouring of the foundation and that it was cut when the window was cut. The Code does not require rebar for window installations, therefore, Mr. Haley did not determine this to be a substitution and it was not warranted.

Consequently, no breach of the warranty has been established and claim items 1, 2, 7, 12, 18, 20, 22, 23, 25, 28, 29, 41, 45, 54, 59, 67, 68, 72, 74, 76, 78, 84, 116, 118, 124, 128, 132, 135, 136, 137 and 139 in the December 20, 2013 Decision Letter are denied.

8. It is undisputed that Item 109, the subject of the Decision Letter dated May 28, 2014, is not what the Appellants contracted for, and therefore, it is a warranted item pursuant to section 19 of the ONHWPA. There is a distinction made in the Act between items that are specified in the contract and items which the contract provides are to be selected. Section 18 of the Act provides that the vendor cannot substitute an item of construction or finishing for which the buyer is entitled to make a selection unless he gets the buyer’s written consent. Section 19 of the Act refers to items specified in the contract. Mr. Haley testified that this item was specified in the contract at the time of signing the contract and, as such, was determined to be a specified item pursuant to section 19 of the Act and the Appellants did not receive what they specified in the APS. That alone, however, is not sufficient to attract an award for damages.

The Decision Letter dated May 28, 2014 deals exclusively with item 109 from the Appellants’ 30 day form and relates to the tiled floors in the Appellants’ house.

Mr. Haley testified that his understanding of the complaint was that the scratch coat below the tiles was not ¾” as specified in the APS. He described scratch coat or mortar bed as a type of mortar compound which is placed below tiles to support them and to adhere them to the subfloor. He stated the Appellants’ concern is as stated in the decision letter:

(109) Interior – Other – Stairs – Other – 20. Raise the nosing for the stairs to accommodate for adding “3/4 scratch coat with the wire net under tiles.” (Schedule Z). Schedule Z of our agreement also states “All floors are at the same level (hardwood is flush with thresholds and tiles).”

The Builder, Mr. Materski, testified that the contract provided that he was to match the height or level the flooring between the tiled portions and the hardwood portions of the floor such that there was a smooth transition from one floor covering to the next. Turning to Exhibit 21, tab 1, page 31, he identified item 16 under the sub-heading “interior finishes” which required a “¾” scratch coat with wire net under tiles”. The witness stated that was not possible. He elaborated that scratch coat is liquid cement applied over wire mesh. He was required to make a level transition from the tiled floor to the hardwood floor and stated that is achieved that by varying the depth of adhesive used. He stated the Appellants had requested 5/8’ plywood underlay and he provided ¾” plywood underlay which was thicker and stronger and that he did level the floors to provide a smooth transition by adjusting the depth of the adhesive. He stated that he did whatever the contract required of him, or better.

The Appellants’ expert, Mr. Egberts, testified that he did not comment on the issue of damages in his report because he was not asked to do so by the Appellants.

The Respondent’s experts, Mr. Leedale, Mr. Lee and Mr. Bortolotti, all opined that the as-built floor is performing well and none of them had any concerns about its structural integrity. Mr. Leedale testified he does not expect there to be any structural issues nor any continuous cracking of the tiled flooring. Mr. Lee testified that the as-built floor was actually stiffer than the floor that the Appellants wanted would have been due to the thicker plywood used by the Builder. He testified the as-built floor is performing well and is satisfactory. Mr. Bortolotti also stated the floor is performing well and testified there are no structural issues.

Having established a breach of the warranty, the Appellants must then establish they have suffered compensable damages and they have failed to do so. The evidence suggests that the substitution in the as-built floor resulted in the Appellants having stiffer floor than what they had asked for, which would reduce the possibilities of cracking. Certainly there was no evidence that the as-built floor was in any way inferior to the floor requested by the Appellants. In the result, there being no damages, this claim is denied.

9. With regard to item 112 of the December 20, 2013 Decision Letter, the evidence of the parties is contradictory regarding what the deal was. The evidence clearly establishes that many things were discussed and agreed to that never got reduced to writing; however, the parties disagree about where the window, which is the subject of item 112 was supposed to be installed. The Appellants say the window was to be installed beside the fireplace, in the family room area of the basement and the Builder says there are diagrams showing it was to be in the area roughed in for a future bathroom. Tarion asserts that the Appellants gave the Builder two different sets of instructions regarding the location of the window.

The Builder testified that the contract he had with the Appellants is that which was entered as Exhibit 21, Tab 1 in this appeal, containing pages 1 through 38, excluding the Tarion pages, which did not form part of the contract and were not initialed or signed by the parties and the Tribunal has determined that to be the case. Exhibit 21, Tab1 represents the fullest, most comprehensive, version of the contract entered into evidence. It includes the APS plus Schedules A, S, W, B, C and Z and five diagrams from the Builder’s brochure which were annotated. All of these pages were initialed by the Appellants and by the Builder. As stated, the Tribunal has determined this to be the contract between the parties.

Given the disagreement among the parties regarding the agreed location of the subject window, the most persuasive evidence is the contract itself. While Schedule Z does mention the windows, it does not specify where they are to be located. It does, however, provide that diagrams detailing the location of items described in Schedule Z would be provided and the pages attached to Schedule Z do indicate the location of the window. The Builder stated pages 33 to 38 of the contract are copies from his brochure which were written on at the initial meeting, initialed by the parties and included as part of the contract. Page 33 of the contract shows two windows drawn onto the brochure diagram, one to the south of the fireplace and another to the north of the fireplace where the roughed in bathroom is located. The window to the south of the fireplace is circled and measurements provided. That appears to be the window in question and it is clearly marked on the east wall, south of the fireplace. Page 36 shows the same window drawn in and also located on the east wall, south of the fireplace. There is no window shown in the roughed in bathroom on page 36. Page 38 also shows the window to be installed on the east wall, south of the fireplace and no window in the roughed in bathroom. Pursuant to the contract which the Builder stated represents the deal he had with the Appellants and which this Tribunal accepts as the contract between the parties, the window which is the subject of item 112 in the December 20, 2013 Decision Letter was not installed as provided in the contract.

The Tribunal awards the Appellants the sum of $3,500.00 plus HST, as claimed, for this item.

ORDER

For all of these reasons and pursuant to the authority vested in it by section 16(3) of the Act, this Tribunal directs Tarion Warranty Corporation to pay the Appellants the sum of $3,500.00 plus HST for item 112 in the December 20, 2013 Decision Letter and to disallow all of the remaining claims of the Appellants.

Lastly, the parties were provided with an opportunity to make submissions on the issue of costs and all of them did so. All of the parties requested costs be awarded to them in this proceeding. The Tribunal will issue a separate Order and reasons on the issue of costs subsequent to the release of this decision.

LICENCE APPEAL TRIBUNAL

Patricia L. Cassidy, Vice-Chair

Released: September 17, 2015