N.J. and F.N. v. Tarion Warranty Corporation, 2017 CanLII 144640

Licence Appeal Tribunal

Date: 2017-12-18

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

Between:

N.J. and F.N. Appellants

-and-

Tarion Warranty Corporation Respondent

-and-

Rauti Construction Ltd. Added Party

DECISION AND ORDER

Adjudicator: Avril A. Farlam, Vice-Chair

Appearances:

For the Appellants: N.J., on his own behalf and on behalf of F.N. For the Respondent: Ted Weredynski, Paralegal For the Added Party: Angela Rauti, Agent

Heard in Windsor, Ontario: October 30, 2017

REASONS FOR DECISION AND ORDER

A. OVERVIEW

1The appellants appeal the denial of their claim for the year-end statutory warranty (“warranty”) provided for in the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (“Act”) and regulations for defects in the finished basement of their home as set out in the April 4, 2017 decision letter from Tarion Warranty Corporation (“decision”). The appellants made a claim for defects in the family room, office/study, dining room and two bedrooms, all of which are in the finished basement. Cash settlement resolved the office/study issue. The balance of the basement claim is unresolved. The two items in dispute are:

a. gaps between the flooring and baseboard in the basement which are 3 millimeters or less (“gaps”); and

b. noise in the basement ceiling.

2Tarion’s decision was that gaps which exceed 3 mm are defects covered by the warranty, but gaps which are 3 mm or less are not defects and are not covered by the warranty. The gaps Tarion admits are covered by the warranty are in the bedroom adjacent to the utility room in the closet at each end and underneath a window (both areas referred to as the “closet”). The claim for the closet area remains unresolved because the appellants do not accept the fix proposed by Tarion or the cash offered by Tarion for this warranted claim.

3Tarion’s decision was that the noise in the basement ceiling is not warranted because it results from expansion and contraction of construction materials during normal use and/or climatic changes. The added party, Rauti Construction Ltd. (“builder”) supports the position taken by Tarion on both items.

4The appellants’ appeal is allowed with respect to the gaps in the closet area. The appellants’ appeal fails with respect to the gaps in the rest of the basement and the noise in the basement ceiling because the appellants have not proven these defects fall within the warranty, have not proven damages have resulted from those defects, and have not proven the amount of damages.

5I order Tarion to pay the appellants $429.84 for the gaps in the closet area and deny the balance of the appellants’ claims for warranty.

B. ISSUES TO BE DECIDED

a. Do the defects in the basement of the home fall within the year-end warranty coverage provided by the Act?

b. If so, have damages resulted from those defects?

c. If so, what is the amount of those damages?

C. LAW – THE APPLICABLE TARION WARRANTY

6Section 13(1)(a) of the Act provides that the vendor of a home warrants to the owner that the home is constructed in a workmanlike manner and is free from defects in material, is fit for habitation and is constructed in accordance with the Ontario Building Code.

7Although the Act is consumer protection legislation and should be given a liberal interpretation, the onus is on the appellants to prove, on a balance of probabilities, that the defects in the home fall within the warranty coverage, that damages have resulted from the defects and the amount of those damages. The Tribunal owes no deference to Tarion’s decision. Following a hearing, the Tribunal may, pursuant to s. 16(3) of the Act, order Tarion to take such action as the Tribunal considers Tarion ought to take in accordance with the Act and the regulations, and for such purposes the Tribunal may substitute its opinion for that of Tarion.

8At the hearing, the appellants did not put forward any proof that the home is not fit for habitation. The appellant, N.J., testified the basement is occupied. The appellants did not put forward any proof of violations of the Ontario Building Code. The heart of this appeal is whether the basement gaps and the noise in the basement result from construction that was not done in a workmanlike manner and free from defects in material so as to be covered by the warranty. The Act does not define “workmanlike manner”. I must interpret the term. The correct interpretation of “workmanlike manner” is that the work meets industry standards: Hoffer (Re) [2008] O.L.A.T.D. No. 3, at paragraphs 17-19.

D. EVIDENCE AND ANALYSIS

a. Do the gaps and the noise in the basement fall within the year-end warranty coverage provided by the Act?

Item #6 - Gaps between the flooring and baseboard

9Based on Tarion’s admission in its decision, I find that the gaps in the closet area are covered by the warranty. I order Tarion to pay the appellants $429.84 because I find this to be the reasonable cost to repair the defect. The appellants do not wish to have Tarion fix this defect but have put forward no reliable evidence to prove that another fix is reasonable and have not proven or quantified any damages. Therefore in the absence of any evidence as to quantum from the appellants, who bear the burden of proof, I accept the estimate of Tarion. A larger offer of settlement from the builder was an attempt to resolve the gaps in the entirety of the basement without a hearing and does not reflect the cost of the fix in the closet area.

10I find that the gaps of 3 mm or less in the rest of the basement are not warranted because the construction was done in a workmanlike manner and is free from defects in material within the meaning of the Act.

11N.J. testified that he occupies the home with his family. The basement is finished living space containing two bedrooms, a study, a bathroom and other areas. N.J. testified that the appellants are dissatisfied with the gaps in the entire basement. N.J. believes that the padding under the laminate flooring is missing in many places and this is causing the gap. N.J. stated that the gap should be less than 1 mm. He did not have any reference in the Ontario Building Code, nor any reports or witnesses to support his statement. The 1 mm is his opinion. He said that he had someone from Home Depot look at the basement but they did not give him any report. N.J. has not measured the gaps. He has not taken photographs of the gaps. He does not have a written report or an estimate from anyone about the size of the gaps, the cause of the gaps or on what would be required to fix the gaps. He has not removed the trim and investigated the cause of the gaps and has not asked anyone to do this. The appellant, N.J., testified that he has no residential construction related training or experience. N.J. admitted in cross-examination that he does not expect the concrete floor to be level.

12N.J. testified that Tarion and the builder have proposed shoe molding which he considers to be a crude solution which will only mask the problem. N.J. said Tarion rejected the appellants’ claim based on an irrelevant section in the Construction Performance Guidelines (“CPG”) which relates to kitchen cabinets instead of the flooring section of the CPG. N.J. said the flooring section guidelines in the CPG are more relevant than the kitchen cabinet section Tarion used. N.J. said that to fix the basement, the trim board should be removed, padding put under the laminate, and trim replaced and painted.

13Ronald Salisbury, Tarion Warranty Services Representative, testified that he has approximately 25 years construction experience, is a certified energy auditor and has training with respect to Part 9 of Ontario Building Code. He reviewed the Ontario Building Code and there are no provisions that relate to the gaps. Salisbury explained that the CPG was developed in consultation with stakeholders to outline industry guidelines in residential construction. He testified that the CPG does not deal with every situation which can arise in residential construction and sometimes analogies must be made. With respect to the gaps, Salisbury could not find any relevant guideline in the CPG flooring guidelines. The flooring guidelines address issues such as gaps at the ends or along strips of laminate flooring, and elevation of one strip of hardwood or parquet flooring higher than another, but not gaps between the flooring and baseboard. He used the guidelines in the cabinetry section of the CPG because he equates a hand-finished drywall surface to the cement floor which is also hand finished and equates the cabinetry to the wood trim because both are manufactured to high tolerances. The CPG provides that where cabinets go against drywall, visible gaps in excess of 3 mm are not acceptable; less than that is acceptable.

14In the closet area, he measured the gaps to be 12 mm and decided this closet area was covered by the warranty as stated in the decision. He found padding missing in the closet when he removed the boards. He offered to remove the boards in the rest of the basement but the appellants said they did not want the boards removed in the rest of the basement because they were satisfied. On July 19, 2016 at the conciliation and at a second inspection on December 15, 2016, he measured the gaps to be 2 mm, 2.5 mm and 3 mm in the rest of the basement and took photographs. He said the appellants did not provide him with any evidence of measurement. Shoe molding is used industry wide as a feature and also to hide areas where the floor is not level. Some builders charge extra for it. It is impossible to have a completely level floor surface in a basement. The builder offered to install shoe molding throughout the entire basement at its cost or pay the appellants the $650.00. Tarion offered to install shoe molding in the closet area at its cost or pay the appellants the $429.84 based on quotes Tarion had obtained to do this work. The appellants declined to accept either of these fixes or the cash.

15While the CPG are not binding on me and do not have the force of law, the standard is helpful in showing what is acceptable and common in the residential construction industry. As the floor section has no references to gap size, I accept Mr. Salisbury’s evidence that the most analogous guideline is the cabinetry guideline Tarion used because it provides a guideline for the acceptable gap between a hand-finished surface and a manufactured surface, namely the gap between the hand-finished cement floor and the manufactured baseboard. This guideline is that gaps in excess of 3 mm are not acceptable. The flooring guidelines referenced by the appellants are not about a gap between a hand-finished surface and a manufactured surface and are not the most analogous guideline. The appellants brought forward no evidence of industry standard to support their submission that the gap should not exceed 1 mm. It is not sufficient for the appellants simply to state that they are dissatisfied with a gap that is more than 1 mm and expect the Tribunal to conclude that the workmanship and materials do not meet industry standards because they allege it is so. The burden is on the appellants to bring forward some objective evidence to define the industry standard and to identify how the workmanship and materials fall below that standard. In the absence of any evidence from the appellants about the industry standard, I accept the 3 mm standard in the CPG cabinetry guideline used by Tarion. The appellants brought forward no evidence to prove the industry standard. I accept that the gaps are within industry standard and not caused by defective workmanship or materials. Therefore I find that the gaps (other than in the closet area) are not covered by the warranty.

Item #9 - Noise in the basement ceiling

16By the time of the hearing, the parties agreed that the noise in the basement was coming from the hot water tank piping when the hot water is used. The appellant N.J. described the noise as a thud or a ticking noise. Salisbury described it as a tapping noise. The parties agreed that there is nothing in the CPG or the Ontario Building Code that is applicable.

17The appellant, N.J., testified that he thinks the pipes connected to the hot water tank are not properly secured. N.J. had no report or witness to support his statement. He said that someone from Home Depot told him he needs to open the ceiling to see what is going on but they did not give him any written report. N.J. has not measured the noise level. He did not have a written report or an estimate from anyone about cost to investigate, the possible cause of the noise or the fix. He has not opened the ceiling and investigated the cause of the noise and has not asked anyone to do this. N.J. refused the builder’s offer to open the bulkhead in the utility room ceiling and investigate because the builder wanted to replace the opening with a vent and not put the bulkhead back to original condition. He says the noise is a disturbance, especially at night when the washroom is used.

18Salisbury visited the home on July 19, 2016, at which time the noise could not be heard. Salisbury inspected again on August 19, 2016, at which time hot water was allowed to run and an intermittent ticking could be heard approximately every twenty seconds until a few minutes after the hot water heater vent motor stopped operating. The noise originated in the ceiling in the hall outside the door leading into the utility room and was heard in the bulkhead inside the utility room where the vent pipe from the hot water heater leads to the exterior of the home. The hot water heater was operating fine. After inspecting the hot water heater piping, Salisbury concluded that the noise was caused by expansion and contraction of construction materials during normal use and/or climatic changes, was not a defect and was not covered by the warranty. He testified that expansion and contraction of building materials are beyond the control of the builder and are a product of the materials and the climate. The pipe will expand and contract when hot gas goes through it. Salisbury said there is no problem with the installation of the pipes. Based on his twenty-five years in the construction industry, he is not aware of an industry standard of acceptable ranges of expansion and contraction. Salisbury went back to the home on December 15, 2016 to re-inspect, but the appellant, N.J., said he did not want any further testing of the ticking in the pipes.

19The appellants brought forward no evidence of industry standard to support their submission that the sound from the hot water tank piping is the result of construction not done in a workmanlike manner or from defective material. It is not sufficient for the appellants simply to state that they are dissatisfied with the intermittent ticking noise associated with the use of hot water and expect the Tribunal to conclude that the workmanship and materials do not meet industry standards because they allege it is so. The burden is on the appellants to bring forward some objective evidence to define the industry standard and to identify how the workmanship and materials fall below that standard. In the absence of any evidence from the appellants about the industry standard, I accept that the noise is caused by expansion and contraction of the hot water tank piping and not by defective workmanship or materials. Therefore, I find that this noise is not covered by the warranty.

b. If so, have damages have resulted from those defects?

20Even if the gaps (other than in the closet area) and the noise in the basement could be said to be covered by the warranty, the appellants did not provide evidence of damage. The basement of the home is being occupied.

c. If so, what is the amount of those damages?

21As there has been no proof that any damages have resulted from the gaps or the noise in the basement, it is unnecessary to consider this issue.

ORDER

22For the reasons set out above, I order Tarion to pay the appellants $429.84 for the gaps in the closet area and to deny the balance of the appellants’ claims for warranty as set out in the Decision Letter dated April 4, 2017.