B.E. and S.E. v. Tarion Warranty Corporation, 2018 CanLII 107936

Date: 2018-08-07

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

Between:

B.E. and S.E.

Appellants

and

Tarion Warranty Corporation

Respondent

and

Oakdale Village Homes Inc.

Added Party

DECISION and ORDER

Adjudicator: Stephen Scharbach, Member

Appearances:

For the Appellants: B.E., Self-represented

For the Respondent: Michael Owsiany, Counsel

For the Added Party: Cory Libfeld, Owner

Heard in Toronto, ON: May 28 & 29, 2018

Overview

1The appellants appeal a decision by the Tarion Warranty Corporation (“Tarion”) to deny their claim for losses due to a major structural defect (“MSD”) because the claim was submitted after the expiry of the prescribed 7-year claim period.

2The appellants request that the claim time period be extended to allow them to submit their claim.

3The appellants state that they brought the defect to the attention of Tarion within the claim period but were misled by Tarion who told them that given the nature of the defect (sewer line blockage with recurrent back-ups), the issue was not a MSD and suggested that the appellants instead work with the builder to resolve the problem.

4The appellants state that they involved the builder but by the time the builder finally told them it would not fix the problem, the 7-year claim period had expired.

5Tarion has discretion to extend the claim period if it determines that the warranty claim involves “extraordinary circumstances”. The appellants state that extraordinary circumstances exist in this case, namely that Tarion provided them with misleading information which caused them to refrain from submitting a claim within the claim period.

Issue

6Did Tarion mislead the appellants in a way that caused them to refrain from submitting their MSD claim on time and if so, does that amount to extraordinary circumstances that warrant extension of the claim period?

Decision

7I have concluded that Tarion did not mislead the appellants and extraordinary circumstances do not exist that would warrant extension of the claim period.

The Legal Framework

8The Ontario New Home Warranties Plan Act (“Act”) provides that every vendor of a new home warrants to the owner that, among other things, the home is free of “major structural defects” as defined by the regulations.

9In the case of the appellants’ home, Ontario Regulation 892 (“regulation”), defines a major structural defect as;

…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 or 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 … damage to drains or services…

10The regulation also sets out the requirements for making claims, including the forms and the time periods within which claims shall be made.

11With respect to MSDs, the relevant section of the regulation (s. 4.6(2)), states;

In order to make a claim…the owner shall complete and submit to the Corporation a major structural defect form during the major structural defect claim period.

12The major structural defect claim period is defined in the regulation to be 7 years from the date of possession.

13However, the regulation allows Tarion to extend the time period for submitting a claim in certain circumstances. Section 5.10 of the regulation states:

The Corporation may, in its sole discretion, extend or abridge any time specified in sections … 4.6 …if it determines that:

(a) the vendor is unable or unwilling to repair or resolve the claim items covered by a warranty;

(b) the warranty claim,

(i) relates to items involving health and safety, seasonal repairs or an emergency, or

(ii) involves other extraordinary circumstances; or….

14Finally, where, as in this case, Tarion denies an owner’s claim under s.14 of the Act, the owner may appeal that denial to this Tribunal by requesting a hearing.

15Under s. 16(3) of the Act, the Tribunal may, after holding a hearing, order Tarion to take such action as the Tribunal considers that Tarion ought to take in accordance with the Act and regulations.

16The parties agree that the appellant submitted their MSD form after the expiry of the 7-year MSD claim period. The claim period expired on June 19, 2017 and the appellants’ MSD form was received by Tarion on September 2, 2017.

The Sewer Drain Problem

17The appellants took occupancy of their home on June 18, 2010. When the appellants took possession, they received a homeowner’s package which contained information about the Tarion warranty, how to submit a claim, and the timelines for submitting claims, and copies of the claim forms.

18The appellants submitted the 30-day form, the year-end form and the second-year form within the time requirements. Apparently, some items contained on those forms were not resolved to the appellants’ satisfaction and, after a conciliation meeting with Tarion officials and the builder, Tarion denied the appellants’ unresolved claims. The appellants appealed that denial to this Tribunal where those claims were ultimately settled without a hearing.

19According to B.E., the appellants first experienced a blockage of the sewer drain resulting in back flow in March, 2013. The blockage was temporarily cleared but the problem re-occurred in November 2013 and once or twice per year after that.

20The appellants purchased a home maintenance package from Enercare. Invoices from that company indicate that it attended at the appellant’s property to deal with blockages in August, September and November, 2016.

21The August, 2016 invoices contain notes which indicate that a camera was inserted into the sewer drain and the blockage was due to a “dip” in the pipe which started on the homeowner’s side of the property line and continued into City of Toronto property.

22The appellants got in touch with the City of Toronto who attended at the property late August/early September, 2016 and ultimately concluded that the problem was on the appellants’ side of the property line. The City’s employees suggested that the appellants get in touch with Tarion for assistance.

Contact with Tarion

23According to B.E., around that time she called and spoke with someone at Tarion. She told the Tarion representative about the sewer drain issue and asked about the MSD form. According to B.E., she was told that MSDs are issues like cracks in foundations and her sewer drain blockage problem was not a MSD. Rather, it was something that should have been claimed on the two-year form. According to B.E., the Tarion representative advised her to get in touch with the builder and request that the problem be addressed.

24This was the conversation that the appellants claim misled them into refraining from submitting a MSD form within the claim period. According to B.E., she understood from that conversation that the sewer drain problem was not a MSD and that instead of submitting a MSD claim she should work with the builder to get the problem fixed.

Subsequent Attempts to Resolve Problem

25After her telephone conversation with Tarion, B.E. got in touch with the builder who arranged for the sewer line to be scoped by a private company in October, 2016. According to B.E., the employee who conducted the scoping confirmed there was a dip in the sewer pipe and suggested that she talk to the builder about getting it fixed.

26According to B.E., she got in touch with R.E., a senior employee of the builder, who told her that the builder was looking for a contractor to fix the problem and that it would be fixed before the winter of 2016.

27B.E states that she got in touch with R.E. several times by telephone during the fall of 2016 and into 2017. No action was taken before the winter and once winter started no work could begin until the spring.

28By July 2017, she started to call the builder’s customer care department who at first assured her that R.E. was going to arrange for the problem to be addressed. According to B.E. she spoke to customer care several times in July and August. However, on August 29, 2017, customer care informed her that the builder would not fix the problem. No reason was given.

29On that same day, B.E. got in touch with Tarion’s ombudsperson. According to B.E., she was told that there was a possibility that the sewer drain problem may be a MSD but that the time period for submitting a MSD claim expired on June 19, 2017. It was suggested that she submit the MSD claim to Tarion, which would likely deny it as being out of time, and that denial could then be appealed to this Tribunal. The appellants followed that approach and their MSD form was received by Tarion on September 22, 2017.

Did Tarion Mislead the Appellants causing them to refrain from Submitting a MSD Form on Time?

30The onus is on the appellants to establish that the claim involves extraordinary circumstances. The appellants argue that this test is met because Tarion misled them in a way that prevented them from submitting the MSD form on time. The appellants must establish that fact on a balance of probabilities.

31On the facts presented, I cannot conclude that Tarion misled the appellants.

32B.E. testified that she telephoned Tarion in September, 2016 and spoke to a Tarion representative who told her that the sewer drain blockage was not a MSD and, relying on that information, the appellants did not submit a MSD form until after expiry of the warranty period. B.E. did not document that conversation and apparently recalled it from memory.

33Ms. Patricia Lutz, Tarion’s Director of Customer Service, testified that Tarion’s call centre staff log all homeowner contacts. Notes of each telephone contact are made and those notes cannot be altered afterwards. A printed copy of B.E.’s contacts regarding this issue was placed into evidence.

34That call log indicates that B.E. spoke to centre staff twice in September, 2016 and brief notes were made of those conversations. Ms. Lutz testified that she contacted both staff members and they have no recollection of their conversation with B.E. beyond what is contained in the call log notes.

35According to Ms. Lutz, call center staff are trained to assist homeowners in making claims and providing general information. They will provide information about the claim forms and can determine a homeowner’s claim expiry dates but they are trained not to discourage claims or express opinions on whether an item is warrantable. They are supposed to encourage claims so that Tarion can make a proper assessment and determine warrantability.

36The call log indicates that B.E. telephoned the call centre on September 8, 2016 and the log notes state:

HO [homeowner] called and said that she has severe issue with the pipe in the basement backup under the foundation. Went over MSD and she said that the foundation is being buckled.

37B.E. called the call center again on September 20, 2016 and the log notes state:

HO has a sewage back-up every 6 months and she has contacted the city who advised to contact Tarion as the builder had mistakenly put a dip in the pipe causing the sewage back-up.

38The log entries confirm B.E.’s testimony that that she called Tarion, described her sewer drain problem and in that context the call centre staff “went over” major structural defects.

39However, the logs contain no detail about the content of the MSD discussion. B.E. states that she was told on the phone that MSDs involve items such as foundation issues and that her sewer drain problem does not qualify as a MSD That is generally similar to the MSD definition which states that MSDs include defects that result in the failure of load bearing components of a building and that damage to drains are excluded, which suggests that the discussion involved at least to some degree the definition of what constitutes a MSD.

40I accept Ms. Lutz’ testimony that call centre staff are trained to provide general information and not to express opinions on whether an item is warrantable. I think it more likely than not that on September 8, the call centre staff brought to B.E.’s attention the definition, or at least the essential components, of a MSD but I cannot conclude on the basis of the available evidence that B.E. was told that her problem was not warrantable. Even if that representation was made, it was made by a call centre staff member and the appellants would know from their previous experience in making claims and appealing a Tarion decision that any assessment made by a call centre staff person would not be the last word on warrantability.

41I conclude that the appellants received information from the call centre about what constitutes a MSD, including the fact that damage to drains is specifically excluded from the definition of a MSD. I think it more likely than not that once the appellants learned from the call centre that damage to drains was not included in the MSD definition, they themselves decided not to submit a MSD claim and instead attempted to resolve the matter directly with the builder.

42According to B.E. the builder intentionally stalled her until after the claim period expired. This appeal is from Tarion’s decision to deny her claim as being beyond the warranty period and I make no finding on the appellant’s criticisms of the builder’s conduct.

43However, it was open to the appellants to submit a MSD claim form to Tarion at any time before the claim expiry date. The claim process, the forms and the expiry dates were all made known to the appellants in both the homeowner’s package that was provided upon taking possession and on Tarion’s My Home portal on its website for which the appellants registered.

44The appellants knew, or ought to have known, that they could have made a MSD claim within the claim period to preserve access to their warranty in case the builder failed to resolve the issue.

Conclusion

45The onus is on the appellants to establish on a balance of probabilities that extraordinary circumstance exist that warrant an extension of the MSD claim period in their case.

46In my view, they have not met that onus. I cannot conclude that the appellants were misled by Tarion staff in a way that caused them to refrain from submitting a MSD claim on time. I think it more likely than not that the appellants obtained information from Tarion’s call center and decided not to pursue a MSD claim.

Order

47Pursuant to s. 16(3) of the Ontario New Home Warranties Plan Act, I direct Tarion to deny the appellants’ claim.