Licence Appeal Tribunal

Tribunal d'appel en matière de permis

DATE: 2015-10-30

FILE: 9272/ONHWPA

CASE NAME: 9272 v. Tarion Warranty Corporation

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

The Appellant Appellant

-and-

Tarion Warranty Corporation Respondent

-and-

Maurice-Garden Developments Inc. Added Party

REASONS FOR DECISION AND ORDER

ADJUDICATOR: D. Gregory Flude, Vice-Chair

APPEARANCES:

For the Appellant: Self-represented

For the Respondent: Andrea Hill, Counsel

For the Added Party: Ron Sleightholm, Counsel

Heard in Toronto: April 13, July 6 and 7, September 22, 24 and 25, 2015

REASONS FOR DECISION AND ORDER

INTRODUCTION

1The Appellant appeals to this Tribunal from the denial of his claim for warranty coverage under the Ontario New Home Warranties Plan Act, R. S. O. 1990, c. O.31 (the “Act”). Tarion is the corporation that administers the new home warranty program. Its denial of the Appellant’s claim is set out in a Decision Letter dated November 21, 2014. The Added Party is the successor corporation to the corporate vendor of the building in question and, in certain circumstances, may be liable for the cost of any repairs the Tribunal finds are necessary. It supports Tarion’s denial of the Appellant’s claim.

2The Appellant purchased the building in question six years after it had been first occupied. The Act provides that warranty coverage is available to successors in title to the original purchaser, but, after two years from first occupation, the Act limits the available warranty to coverage for major structural defects. The Appellant argues that the defects discovered in the construction of his home constitute major structural defects. Tarion argues that they do not. Further, Tarion argues that, even if the defects in question may be considered to be structural in nature, the Appellant embarked on an extensive repair scheme and had expended approximately $155,000.00 before even involving Tarion thereby denying Tarion the ability to examine the original state of the building and determine what repairs, if any, were necessary. He then expended another $100,000.00 after Tarion’s inspection but before receiving Tarion’s decision. In Tarion’s view, the self-help remedy undertaken by the Appellant is, in and of itself, sufficient to disqualify the Appellant from coverage under the statutory warranty scheme.

3Having considered all of the evidence, the Tribunal is of the view that the Appellant’s claim must fail.

FACTS

4The Appellant purchased the property in 2013, approximately six years after it was first occupied. The property has retail space at street level, a basement, and residential floors above the retail space. It was the Appellant’s intention to make changes to the basement with a view to running his business from there.

5Prior to purchasing the property, the Appellant retained the services of a home inspector. The inspector noted several areas in the basement with high relative humidity. The basement had a musty smell. In one corner in particular, the humidity reading was 100% and the inspector recommended further investigation to determine the cause. The Appellant noted that the carpet in that corner had an area about the size of a hand where it was crusty. He noted no other explicit signs of water ingress on the floor.

6Following up on the home inspector’s advice, as well as planning for basement renovations for his business, in November 2013, the Appellant hired the services of a contractor. The contractor started with the wall above the crusty area in the carpet. When he removed the drywall, he discovered evidence of water penetration over a long period of time. There was mouldy and rotting wood, particularly floor joists. The Appellant decided to investigate by removing the drywall along the south wall of the basement. That further investigation highlighted a number of other areas where the water penetrated the exterior basement cinder block wall along the south side of the building. In another area, the blocks had a large crack in the grout with blocks horizontally displaced.

7The drywall was stripped from the whole of the basement. The contractor, David Plourde, testified that they discovered numerous breaches of the Ontario Building Code (OBC) in other areas of the property. Two areas were of particular note. A main load bearing component of the building, called an LVL beam, was supported by two 2 x 4 wooden studs. There was engineering evidence that it should be supported by the foundation wall, either by being set directly on top of that wall or by being attached to the wall by a hanger. A second area of concern was a “knee wall.” The engineering evidence from both the Appellant’s witness, Alison Orr, a consultant structural engineer retained by the Town of Oakville to inspect the building in light of issues raised by the Appellant, and from Tarion’s expert engineering witness, Biljana Marinkovic, was that lateral structural support for foundation walls against the pressure of exterior backfilling is provided by the main floor framing bracing the top of the wall against inward forces. In one area of the rear of the south wall, the foundation wall does not reach the level of the main floor. There is a short wood frame knee wall above the foundation wall onto which the floor joists are fastened. Thus, there is no bracing at the top of the block foundation wall against the stress created by the backfill.

8Extensive excavations were carried out on the exterior of the building. To fully appreciate the evidence of the exterior work and findings, it is necessary to understand that the building is a zero lot line building. That means that the exterior wall abuts directly onto the neighbouring lot. This fact created special conditions during the building phase and certainly created difficulties during the remedial phase. It is also necessary to understand that until very recently the Town of Oakville was unable to find the approved engineering drawings for this property. In the absence of these drawings, assumptions were made about the structural integrity of the “as built” wall that ultimately appear to be unfounded.

9In her testimony, Ms Marinkovic explained that construction requires shoring to support the edge of the basement excavation while the foundation wall is being built. With zero lot line construction, she stated that it is normal for this shoring to remain in situ as it is impossible to remove it after the foundation wall is built without encroaching on the neighbouring land.

10In order to gain access to excavate the exterior wall to find the source of the water penetration, the Appellant had to seek the permission of his neighbour. The neighbour, not surprisingly, put conditions on that access, including a requirement that no heavy machinery be permitted on the property. The earth in the area is hard packed clay and the excavation had to be undertaken largely by hand. It turned into a very expensive proposition.

11The initial excavation started in late 2013 or early 2014 at the front corner of the building. Its focus was to determine the source of the water penetration in the corner of the basement. It was quickly determined that the source of the water penetration was the shoring structure that had been left in the ground. In particular, running just under the brick cladding, there was a horizontal, non-structural I-beam left over from the construction phase acting as a duct to divert water to the front of the basement wall where it was entering the basement. There was no flashing under the brick course to direct water beyond the beam. Over the years, water had been conducted into the front basement area causing the wood to rot.

12David Plourde recommended that the Appellant retain the services of a structural engineer. Mr. Plourde retained Rocky Chew of Structural Edge Engineering Inc. on the Appellant’s behalf. The Appellant tried to get the engineering drawings of the property from the Town of Oakville. They could not be found. The contact at the Town of Oakville was David Silva, the Manager of Building Inspection. In his testimony, Mr. Silva stated that he attended the property on a number of occasions. He identified a number of concerns. He was concerned with the lack of support for the LVL beam. He was also concerned with the knee wall. In the absence of drawings, he was concerned that the basement block wall had not been reinforced properly and proceeded on the assumption that it was not reinforced. He made his concerns known to Rocky Chew and David Plourde and felt that interior bracing was the answer. Notwithstanding his concerns, he did not feel the building was in danger of immediate collapse nor did he feel it necessary to recommend to the Chief Building Officer of the Town the issuance of an order to vacate the premises as unsafe.

13As stated above, the Town of Oakville had been unable to find engineering drawings for this project until very recently. They were entered as Exhibit 10 and were put to Mr. Silva. He acknowledged that they contain a drawing that the structural engineers for the builder during construction, AIM Engineering, had submitted to the Town detailing reinforcement of the southern block wall. Also part of Exhibit 10 is a letter from AIM dated January 22, 2007 which states:

The footings (including unit no. 10 [the unit in question] with the weeping tiles placed inside foundations), foundation walls, steel support structure, composite garage decks are also properly cast and framed.

Generally, work is proceeding in a satisfactory manner, the workmanship is good, conforms to the work drawings and complies with the requirements of the OBC and the project.

Mr. Silva acknowledged that this letter is the type of notice he would generally expect confirming that the foundation wall had been reinforced as per the drawings submitted earlier. Mr. Silva would have told the Appellant that the wall was reinforced if he had had the Ex. 10 documents available to him at the time.

14In an around April 2014, the decision was made to excavate the exterior of the whole south wall to the footings to determine the cause of water seepage along that wall. This decision necessitated an extension agreement with the Appellant’s neighbour. It was a term of that agreement that the work was to be completed by August 1, 2014. A trench some seventy feet long by eleven feet deep was excavated. It exposed a number of issues.

15Working from the original retaining wall inwards, the Appellant found that the waterproof membrane had been attached to the retaining wall. This resulted in a small gap between the original retaining wall and the block wall. The builder had pumped a concrete grout into this space. It was uneven and had voids. Many hours were spent during the excavation chipping the concrete off to expose the wall. Apparent from the outset, but exposed more completely as the excavation proceeded, were the vertical steel posts that had been part of the steel frame holding the retaining wall in place. The builder had recessed the block wall around these posts by cutting the blocks in half. There were also numerous voids in the mortar between the blocks, especially around these posts that permitted water to enter the building envelop.

16Perhaps the most egregious of the defects, in the view of the Appellant, concerned an area originally designed to be a cold room. There was a niche in the basement wall to make space for the cold room, but, for some reason, a decision was made to close off the cold room opening. From the inside of the basement there was no evidence to suggest the existence of the cold room. There was, however, a displaced crack in the block wall and the Appellant undertook further investigation. On removing some of the blocks, the Appellant discovered that the space behind was largely empty. There were a few feet of rubble in the bottom of the space and a makeshift ladder. When the space was fully exposed, the Appellant discovered a discontinuity in the outer load bearing wall. The builder had filled the gap with wood. There was also an open entry point for cabling and signs of water flow on the wall below that opening.

17The excavations were completed and the steel vertical posts and horizontal I-beam had been removed prior to the Appellant’s claim to Tarion and the ensuing conciliation inspection. Tarion was first contacted about the issue in late May 2014. The Tribunal was given no explanation as to why the Appellant waited for almost six months before he contacted Tarion.

18Thomas Hollmann, a Tarion Warranty Service Representative, attended the property on June 24. He acknowledges that he had the ability to view the exposed basement wall both inside and out, although he refused to closely inspect the exterior of the wall because the excavation 11’ deep excavation was not shored in any way. In his view, it constituted a dangerous work environment. During his inspection, he asked the Appellant how much the work so far had cost and was told it was $155,000.00. No repairs had yet been undertaken. He was made aware of the time limit imposed by the Appellant’s neighbour of August 1 to complete repairs.

19Following his inspection, Mr. Hollmann gathered as much engineering documentation as was available. In particular, he received the drawings and a repair scheme proposed by Mr. Chew. He then retained the services of an approved Tarion contractor who, in turn, retained the services of Ms Milankovic. He did not receive Ms Milankovic’s report until late October and issued the Decision Letter denying the Appellant’s claim in early November.

ENGINEERING EVIDENCE

20The Tribunal had three sources of engineering evidence available to it. Alison Orr and Biljana Marinkovic gave viva voce evidence. Ms Orr attended once, on April 9, 2014, when only several feet at the top of the south wall had been exposed. She was retained by the Town of Oakville to inspect the property and give her opinion on its structural integrity. Her role, she testified, was to point out red flags. She did so in a verbal report to Mr. Silva and did not prepare a formal written report. She concluded that there were several areas of concern: the unreinforced block wall, the LVL beam, rotting joists and the knee wall. She was not concerned that there was an imminent risk of structural failure. She would have reported any such concerns to the Town.

21Biljana Marinkovic was called by Tarion to give expert testimony. She earned a Master’s Degree in Applied Science from the University of Belgrade in 1982 and has worked as a structural engineer since graduating. She came to Canada in 1987 and formed her current engineering consulting firm in 1991. She received her Professional Engineer designation in Ontario in 1993 and has worked on numerous projects since that time. The Tribunal recognized her as an expert in structural engineering.

22By the time that Ms Milankovic was retained, in late summer 2014, the repairs to the property had been completed so she did not conduct an onsite inspection. She reviewed the drawings that were available at the time and concluded that there were no major structural defects. She did not deny that there were structural defects. She agreed that the LVL beam and the knee wall were both questionable, but given the lack of evidence of movement in these structures under stress, she concluded they were not in imminent danger of failing. Imminent danger of failure was the lens through which she analyzed the information. In her view, cracks in drywall or cracks in the basement block wall would indicate some movement of the building that warrants further examination.

23The other source of engineering evidence consisted of a number of engineering reports prepared by Rocky Chew, the structural engineer retained by the contractor, David Plourde. In his July 6, 2014 report, Mr. Chew set out eight points that needed to be addressed. Ms Milankovic addressed each point in turn. Her answers were as follows:

1. I-beam from original shoring along the south wall:

May have been in breach of the OBC but it was not a structural element, a fact that is indisputable since it was removed by the Appellant.

2. Absence of flashing at the bottom of the brick veneer:

Clearly not a structural element

3. Absence of exterior wall sheathing at the bottom of the wood stud wall:

Not a structural element

4. Presence of organic material (wood strapping) against foundation wall:

Deals with shoring during construction not the current structure

5. Weeping tiles did not appear to be installed:

Not a structural element

6. Lack of reinforcement and integrity of the block wall due insets around steel posts:

In her approach to this question, Ms Milankovic adopted the opposite stance to Mr. Silva. Instead of assuming that the wall lacked reinforcement, her view was that it should be presumed to meet with OBC requirements because the drawing would have been available to the inspectors inspecting the property during construction in 2005 and 2006, otherwise the issue would have been raised then.

7. The gap in the cold room wall:

Ms Milankovic recognized that this gap needed to be repaired, but did not consider it a major structural defect. She acknowledged in cross-examination that water penetration over a prolonged period had the potential to cause loss of structural integrity, but did not consider failure imminent in this case.

8. LVL Beam

With respect to the LVL beam, Ms Milankovic acknowledged that it was a major structural component, but pointed out that it had been in place for seven years with no signs of failure such as a deflection of the main floor. It was doing its job.

24What is interesting with respect to the engineering evidence is the degree of convergence. Ms Orr red flagged three areas of concern for further investigation: the unreinforced block wall (subsequently determined to be properly reinforced), the knee wall at the rear of the foundation wall and the LVL beam. Ms Milankovic did not take issue with the structural issues represented by the knee wall and LVL beam but was of the opinion that neither was in danger of imminent collapse. In fact, all three professional engineers agree with the limited number of structural issues involved in the matter. In his March 2015 letter responding to questions put to him by the Appellant, Mr. Chew states:

Question: Would you classify the home as having any major structural defects?

The laterally unsupported foundation of the rear half of the building is the only area I would consider is a major structural issue. The area has the potential of the wall being pushed in (at the top) over time.

The LVL beam being inadequately supported is also a structural deficiency. This can have potential structural problems if the load applied actually reaches that of the design loads.

The other deficiencies, while non structural [sic] in nature, are OBC infractions. Please bear in mind that while some are not structural in nature, these deficiencies have the potential for serious impact on the performance of the home and its components. OBC infractions are not to be taken lightly as the rules and regulations set out are done for the purpose of ensuring public health and safety.

25The consensus among the engineers, then, is that the LVL beam and the knee wall represent major structural issues. The Appellant then argues that a major structural issue as used by Mr. Chew has the same meaning as major structural defect as used in the statutory scheme. Tarion’s witness argues that, without signs of movement of the structure leading to an imminent collapse, these issues are not major structural defects as that term is used in the legislative scheme.

26The remedial work for the two identified deficiencies was set out by Mr. Chew in a series of drawings attached to his July 2014 report. With respect to the knee wall, the installation of an internal 2” x 6” frame was recommended. According to the Appellant and David Plourde, the use of 2” x 6” inch studs required the rear stairs to be moved. The remedy with respect to the LVL beam was to attach it to the foundation wall with an appropriately load rated metal hanger. Both of these repairs were accomplished from the inside of the house and did not require the extensive excavation that was done on the outside.

CONTRACTOR’S EVIDENCE

27Mr. Plourde testified about the extent and cost of the work. The final bill dated July 14, 2014 was in an amount of $252,597.94 which amount included $29,059.94 in HST. The difficulty for the Tribunal is that the bill does not break down the cost of each phase of the work in any detail. There is no attempt to separate structural issues and the cost of their remediation from general OBC issues. Mr. Plourde had specifically not broken the cost of each job down because, he said, he had not been asked to do so. During his testimony, he gave very general estimates of what any given repair might cost but these estimates were not of sufficient specificity to assist the Tribunal in arriving at a reasonable estimation of the cost of the remedial work. In cross-examination, Mr. Plourde stated that once the initial problem was discovered in November 2013, he and the Appellant embarked on an investigation to find OBC breaches “from basement to roof” that included stripping the basement of drywall. By the end of the work, Mr. Plourde stated the building was OBC compliant.

APPLICABLE LEGISLATION

28The Act and associated regulations represent a complete code for the Tribunal when considering claims for warranty coverage. There are three warranty periods. The first is a complete warranty for a period of one year set out in s. 13 of the Act:

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.

Term of warranty under subs.(1)

(4) A warranty under subsection (1) applies only in respect of claims made thereunder within one year after the warranty takes effect, or such longer time under such conditions as are prescribed.

Privity of contract

(5) A warranty is enforceable even though there is no privity of contract between the owner and the vendor.

29The impact of s. 13 (4) is that there is a one year warranty period for all defects unless that period is extended by regulations. The warranty under s. 13(1)(b), the major structural defect warranty has been both defined and extended by regulation to seven years. The applicable definitions are set out in s. 1 of O/Reg 892:

“major structural defect” means,

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

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

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

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

“major structural defect claim period” means,

(a) the period beginning immediately after the date of possession and ending on the seventh anniversary of the date of possession.

30The evidence in this matter did not support the contention that there was an actual failure of a load bearing portion. Rather, it focussed on potential failures. In light of this fact, the wording provides two grounds upon which a major structural defect claim may be founded. Under subsection (i) there is coverage for any defect in work or materials, if the defect materially and adversely affects the load bearing function of a portion of the building. Subsection (ii) provides warranty coverage for any defect in work and materials that materially affects the use of the building for the purpose for which it was intended.

ANALYSIS

31In order to be successful in his appeal, the Appellant must establish, on a balance of probabilities, that there is a defect in the construction of his property that falls within the warranty coverage provided by the Act, that damages flow from that defect, and the quantum of those damages. In the current case, he must show that there is a major structural defect in the construction of his home.

32Tarion argues that the proper test for determining if there is a major structural defect is set out in Kennedy v. Ontario New Home Warranty Program (1982), 11 C.R.A.T. 109. In Kennedy, the Commercial Registration Appeal Tribunal, the predecessor of this Tribunal, stated that for a defect to be a major structural defect the property must be "virtually uninhabitable, uncomfortable beyond reason, unsafe or in a state of imminent collapse." Tarion’s expert, Ms Milankovic, used the “imminent state of collapse” standard when giving her evidence. Mr. Hollmann used that term in his evidence. While the Tribunal acknowledges that subsection 1(1) the regulations does address the actual failure of a load bearing and therefore a danger of imminent collapse, it also incorporates a different standard, that the defect in workmanship or materials materially affects the load bearing function of the structure. The Tribunal is of the view that this second part of the subsection incorporates a different standard from Kennedy.

33According to the second branch of the subsection, it is sufficient if the ‘as built’ structure has a defect that materially affects its ability to carry the structure above it, without awaiting the necessity of imminent collapse and all of the danger such a test entails. Not to correct a known structural problem because the use made, so far, of a building has not tested its design limits invites the disaster of a sudden catastrophic failure on any occasion when it does reach those limits. Suppose the original design limit is reached when there is a gathering of people above the weakened floor structure. Should the weakened floor collapse suddenly, there may be untold injuries. It is for this reason, to ensure that buildings meet their design load limits and to protect public safety, that the second part of the definition addresses material and adverse impairment of the structure.

34There is support for the Tribunal’s position in the decision of the Divisional Court in Grudzinski v. Ontario New Home Warranty Program, 1997 CanLII 16252 (ON SC). In its analysis, the Court states:

I disagree with the Program's position that the homeowner, to rely on this aspect of the definition, must show the home, i.e., the entire home, is "virtually uninhabitable, uncomfortable beyond reason, unsafe or in a state of imminent collapse": Kennedy v. Ontario New Home Warranty Program (1982), 11 C.R.A.T. 109.

35While the Tribunal recognizes that the Grudzinski decision deals with the second arm of the definition of major structural defect, and thus the above comment is obiter dicta, the Court carefully analyzed the wording of the definition and determined that homeowners do not need to satisfy a test as stringent as that outlined in Kennedy. In accepting a more permissive definition than the Kennedy test, the Tribunal is cognizant of recent case law that holds that the Act is consumer protection legislation that should be given a broad and liberal interpretation.

36There was a consensus among the engineers, both the two who testified and Mr. Chew who provided written reports, that two areas were structurally deficient: the knee wall and the LVL beam. To use Mr. Chew’s wording, they were major structural issues. In light of this evidence, the Tribunal concludes that these two areas had defects in workmanship or materials that materially and adversely affected a load bearing portion of the building. In the words of Vice-Chair Laurin in Fuller (Re) [2006] O.L.A.T.D. No. 347 at paragraph 95: “The warranty purports to provide remedies to those owners…who have major problems that the building is structurally at risk.” The inadequate support of the main beam and of a portion of the basement wall have been identified in the evidence as major problems.

37Grudzinski dealt with the second arm of the definition of major structural defect, that the defect in work or materials affected the use of the building for its intended purpose. In that case, there was evidence from the Appellant’s engineer that the house was settling causing basement cracks in both the walls and the concrete floor. In periods of thaw, the basement had pools of standing water such that the basement was unusable for any purpose. The Appellant argues that the current fact situation is on all fours with Grudzinski. With respect, the Tribunal does not agree.

38The Appellant’s evidence was that the only sign of water penetration when he purchased the property was a small area of crustiness in one corner of the basement carpet and high humidity readings in several areas along the wall. There was no pooling that prevented the use of the basement for any purpose as was the case in Grudzinski. The Appellant’s intention was to renovate the basement for use as office space. He started the renovation project in November. There is no evidence about the Appellant’s inability to use the basement prior to the commencement of the renovation project. There was also no evidence from the previous owner of the building or the tenant that the basement was unusable. The Tribunal finds there is insufficient evidence to conclude that there was a defect that materially and adversely affected the use of the property for its intended purpose.

39The finding that there are two defects that meet the definition of major structural defect triggers the enquiry into the costs of remediation. The difficulty for the Appellant is that he has provided no evidence. His approach, and that of his contractor David Plourde, was to investigate breaches of the OBC and remedy them. Instead of calling Tarion in, in November 2013 when the first area of water penetration was exposed, they embarked on an investigation costing approximately $155,000.00, without Tarion’s knowledge or consent. The Appellant now asks Tarion to pay for that work. Indeed, he asks Tarion to pay for that work when the engineering evidence discloses that the two major structural defects are accessible from inside the basement and the external excavation, while disclosing OBC violations covered by the one year warranty and water penetration issues covered by the two year warranty, did not disclose any further structural issues.

40It must also be borne in mind that it was the Appellant’s intention from the outset to renovate the basement. Thus, it is impossible to distinguish between costs associated with the renovation project and costs associated with remedial work on the LVL beam and the knee wall. When it was assumed that the whole of the block wall required bracing with an internal 2” x 6” frame, Mr. Chew considered that the use of a 2” x 6” frame was incremental to the Appellant’s intention to use 2” x 4” studs in any event, apparently as part of the renovations. In his March 15, 2015 letter he states:

Because the basement was going to be strapped with 2” x 4” wood studs anyway, reinforcing the wall using 2” x 6” studs made sense rather than spending money on X-ray just to conclude that the bars were still inconclusive and still had to reinforce the wall with 2” x 6”.

41The Tribunal confronted the issue of an owner commencing remedial work prior to contacting Tarion in the case of 8232 v. Tarion Warranty Corporation, 2013 CanLII 83569 (ON LAT). In that case, homeowners made a claim for, inter alia, defective windows and entered into an agreement to replace them prior to the Tarion conciliation inspection. They sought the replacement cost for those windows from Tarion. The Tribunal reviewed the legislative scheme and recognized that it created rights on the part of vendors and Tarion with concomitant obligations on homeowners. Chief among Tarion’s rights is the right to be notified of a defect, the right to conduct an inspection and to determine the scope of necessary repairs if it finds that there are warranted items. On the part of the homeowner, there is a concomitant obligation to contact Tarion as soon as a defect is alleged so the alleged defect may be investigated before work is undertaken. At paragraph 19 of the decision, the Tribunal states:

19Tarion also has rights and obligations under the legislation. Tarion has an obligation to conduct a conciliation inspection in response to homeowner complaints made in a timely manner. When the vendor fails to carry out the required remedial work, Tarion has an obligation to enter into settlement discussions with the homeowners and either arrange for remedial work to be carried out or pay a cash settlement. Central to the remediation scheme is Tarion’s right to inspect and determine the scope of work necessary for the repair.

42Mr. Hollmann, in his evidence, put this right in a slightly different context. He pointed out that the warranty is given by the vendor with Tarion acting as a guarantor should the vendor be unable or unwilling to carry out the work. When the Appellant stripped away the interior drywall, excavated the exterior and removed the steel posts and beam, Tarion was unable to determine to what extent the vendor had been in breach of its warranty obligations and to what extent those breaches constituted a major structural defect.

43The Appellant points to the deadline of August 1, 2014 imposed by his neighbour as the reason for the need to carry out extensive work before receiving Tarion’s Decision Letter in November 2014. While this argument may have some force given the delay between Tarion’s attendance in June and the issuance of the Decision Letter in November, it does not explain why the Appellant did not contact Tarion between November 2013 and late May 2014, a period of six and a half months during which he incurred a bill of $155,000.00 and which he now expects Tarion to pay. Had Tarion been involved earlier in the process, it is likely that the issues before this Tribunal would be greatly simplified and focussed on potential interior repairs. By denying Tarion its inspection right, the Appellant has rendered it impossible for, firstly, Tarion and, latterly, the Tribunal to determine which of his costs are justified to remediate the structural defects and which were incurred to remedy items covered by the first and second year warranties.

ORDER

42Having considered the evidence and the submissions of the Parties, the Tribunal orders Tarion to deny the Appellant’s claim for warranty as set out in the Decision Letter dated November 21, 2014.

LICENCE APPEAL TRIBUNAL

_________________________

D. Gregory Flude, Vice-Chair