Licence Appeal Tribunal

Safety, Licensing Appeals and Standards Tribunals Ontario

Tribunal d’appel en matière de permis Tribunaux de la sécurité, des appels en matière de permis et des normes Ontario

Date: 2020-09-04

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

Between:

N.P. and S.N. Appellants

and

Tarion Warranty Corporation Respondent

And

Bradford Capital Holdings Inc. Added Party

DECISION AND ORDER

ADJUDICATOR: John Kromkamp, Adjudicator

APPEARANCES:

For the Appellants: In person

For the Respondent: Ryan Schell, Counsel

For the Added Party J Pellicciotta

Held by teleconference: June 23, 2020

INTRODUCTION

1Under the Ontario New Home Warranties Plan Act (the Plan”) every vendor of a home warrants to the owner that, amongst other requirements, the home is constructed in a workmanlike manner and is free from defects in material. There are exclusions to coverage. For example, normal wear and tear, shrinkage of materials caused by drying after construction and damage caused by dampness or condensation due to failure by the owner to maintain adequate ventilation are not covered.

2When a homeowner makes a claim under the Act, Tarion Warranty Corporation (“Tarion”) is obliged to decide whether the alleged defect is covered by the warranty. If the homeowner disagrees with that decision they may appeal to the Tribunal for a further hearing. Tribunal may direct Tarion to take such action that it determines appropriate and for such purposes the Tribunal may substitute its opinion for that of Tarion.

OVERVIEW

3N.P. and S.N. purchased a home in a new subdivision in Bradford Ontario. The added party constructed their new home. On completion, the new owners had a number of complaints regarding what they viewed as deficiencies in the finished product. Many of their concerns were resolved to their satisfaction, others were not. As a result, pursuant to the Plan, the appellants filed several warranty claims with Tarion over the next two years.

4These two appeals arise out of the Appellants’ challenge to Tarion’s decision to disallow their claims as set out in decisions issued on September 28, 2018 by Mr. Joseph Casci, a Warranty Service Representative, and further confirmed in the decision issued on December 3, 2018 by Ms. Karin Gaupholm, a Senior Warranty Service Representative.

5As noted, the alleged complaints were set out in statutory warranty forms submitted by the appellant seeking redress from Tarion. These were submitted on August 17, 2017, August 23, 2017, February 4, 2018, and June 1, 2018. Many of the items set out in these warranty forms were resolved or withdrawn by the appellants.

6The balance of the items that remain under appeal arise out of the following warranty forms submitted by the appellants and rejected in the decision of December 3, 2018:

• Year-end statutory warranty form received by Tarion on Aug 17, 2017 , items 7, 67, 69, 70, 73, 114, and 115;

• Second-year statutory warrant form received by Tarion on August 23, 2017 : items 1- 1and 6-1;

• Second-year statutory warranty form received by Tarion on February 14, 2018: items 1- 1, 1- 2, 1- 3, and 8- 1;

• Second-year statutory warranty form received by Tarion and June 1, 2018 item 5- 1

7The remaining outstanding issues related to four general areas:

• problems with the basement “cold room”,

• problems with property grading to the rear of the home,

• problems with the roof rainfall handling at the rear of the home and

• a problem with the furnace, in that the installed furnace did not meet the heating strength promised in the agreement of purchase and sale

8At the commencement of the hearing, counsel for the respondent pointed out that the issue regarding the furnace had not yet been decided in the decision of December 3 and was therefore not properly before the Tribunal for hearing at this time. The appellants agreed. Accordingly, there are only three issues left to be considered.

EVIDENCE

The cold room

9Mr. N.P. testified on behalf of himself and his wife, the appellants. Mr. Joseph Casci and Ms. Karin Gaupholm, testified as to the reasons that they rejected the claims asserted by the appellants. Both Tarion witnesses have extensive experience in the construction business and have conducted many inspections over the years. Mr Andy Minatel and Mr. Chris Rosenthal testified on behalf of Bradford Capital Holdings Inc.

10Mr. N. P. provided an extensive photographic record dealing with the interior of the cold room. The photographs demonstrate that there appeared to be significant condensation and frost on the interior walls and ceiling of the cold room. Included were photos of some apparent water damage to one of the interior basement walls adjacent to the cold room and two cracked tiles near the doorway to the cold room. He testified that one winter the sump pump’s out flow line had frozen resulting in some leakage in the cold room. It was later replaced or repaired by the builder. He feared that the problem would manifest itself again. He testified that he believed that the cause of the frost, condensation and cracked tiles was water seepage through the basement wall.

11Mr Casci advised that he had inspected the appellants’ home. He found no signs of water penetration in the cold room. He noted that the sump pump had frozen on one occasion, causing some leakage, but this had been repaired and damage to the wall adjacent to the cold room had been repaired by the builder. The sump line had been insulated to help prevent future problems. Additionally, he could not identify the cause of the cracks in the tile, but noted that they had been replaced by the builder, and cracks had not reoccurred. He observed condensation in the cold room but also noticed that the door to the room was not closed tightly. He concluded that the condensation was caused by humidity from the basement finding its way into the cold room.

12Ms Gaupholm also inspected the home. To address the suggestion that the cold room problems stemmed from leakage through the basement wall, she conducted some standard tests, designed to establish the fitness of the walls in preventing penetration of moisture. Her tests showed that there was no evidence to support the allegation that the condensation, frost and water in the cold room were caused by water penetration through the walls. Like Mr. Casci, she attributed the moisture problem to indoor humidity touching the cold walls and ceiling. She suggested that it could be resolved with fans and/or a dehumidifier and proper closure of the internal door. The problem with the sump freezing has not reoccurred. As a result, she concluded that the condensation problem was not attributable to the construction of the building and was therefore not warranted under the plan.

13Mr Rosenthal described the repairs to the cold room when the system had frozen. A check valve was replaced, and insulation added to the pipe. Repairs were made to the wall that had been water damaged and two cracked tiles were replaced. He was not aware of a problem since then.

Grading of the lot

14Mr N.P. testified that he had purchased a premium lot and was disappointed with the slope and aesthetics of the grading as completed by the builder. He indicated that, because of the slope, the water flow would cause damage to the fence at the end of his lot. He testified that the grading should be redone to reflect the higher price he had paid for the lot and to prevent ponding at the fence.

15Ms. Gaupholm testified that the Plan is designed to warrant proper construction of new homes. Its mandate does not extend to landscaping or interference with the grading of the property. The general grading of the property falls within the jurisdiction of the municipality through its control over approval of the subdivision plan.

16She testified that the Plan is only engaged when the grading is such as to cause problems to the integrity of the structure itself. As a result, the Plan only covers what has been described as perimeter grading to ensure that water is directed away from the foundation. Grading that does not otherwise threaten the integrity of the building is beyond the scope of the Plan and is not warranted.

17Mr Minatel referred to the agreement of purchase and sale which set out that the lot was to be graded according to municipal requirements. He then referred to exhibit 4 which certified that the grading had complied with all municipal requirements.

18Mr Rosenthal advised the fence at the rear of the property was not part of the subdivision but had been built by the owner of the adjacent property on its own land. As a result, the builder had no obligation to ensure its maintenance and the homeowner had no interest in its condition.

Eavestrough

19The appellants provided video of the performance of the gutters forming the eavestrough system of the roof. Mr. N.P. testified that downspouts were originally installed at the rear corners of the home, as per the original architectural drawings and plans for the building. Subsequently they were removed by the builder and the resulting holes patched. Where the downspouts had been removed and patched over the video clips taken during rainfall periods showed significant overflow at the corners of the home. The clips showed a steady and significant stream of water falling adjacent to the corners of the home.

20Ms. Gaupholm told the Tribunal that the Building Code does not require that homes have eavestroughs. However, if eavestroughs are installed they have to be installed properly. She was aware that the downspouts had been removed and that the trough had been patched. She testified that the plate the did not leak and that she did not observe any other defects in the work. She testified that it was the homeowner’s obligation to engage in enough maintenance to prevent overflow of the eavestroughs by removal of snow, ice, leaves and other debris.

21Mr. Minatel advised that the municipality had required that all drainage had to be directed to the front of the property. This necessitated the removal of the downspouts at the rear of the house as they were draining to the back of the property. Mr. Rosenthal advised that the downspouts at the rear of the house had been removed and properly sealed. He testified that the eavestroughs were working properly.

ANALYSIS

The cold room

22While there is no doubt that there is frost and condensation on the walls and ceiling of the cold room, the appellants have not established that the presence of moisture there is the result of penetration of water through the foundation of the building. The evidence is uncontradicted that standard tests conducted to determine whether the foundation walls were sound established that there was no penetration. This conclusion is fortified by the fact that there does not appear to be water penetration in any other part of the basement. Water damage arising from the earlier incident has been addressed and has not recurred.

23Since moisture is not coming from the outside of the building then it must be coming from inside the building. The evidence is that the presence of condensation and frost are consistent with moisture from the heated basement of the home making its way into the cold room. The problem may be addressed by installation of fans and or a dehumidifier and ensuring that the room is properly sealed. The Act specifically excludes from the warranty any damage caused by the failure by the homeowner to provide adequate ventilation or dehumidification.

24While one might wonder why a sump pump is installed in a cold room where temperatures are likely to be low, Ms. Gaupholm advised the Tribunal that this is often done for aesthetic reasons to make the living space in the basement more attractive. She advised that the Building Code does not preclude such an arrangement and that she had not observed any problems with it during her many years as an inspector. As a result, the appellants have not established that the problems with condensation and frost in the cold room are caused by a defect covered by the Plan.

Grading of the lot

25The grading of the appellants’ lot may have been a disappointment to the appellants from an aesthetic point of view given that they believed they were purchasing a premium lot. However, the agreement of purchase to sale does warn them that the grading will be done in accordance with municipal requirements. The municipality’s control over grading through its subdivision control leaves the builder with little room to maneuver. There was no evidence as to whether the property could have been graded in a more attractive way and still be in compliance with municipal requirements. The performance guidelines regarding new homes provided by Tarion to builders and consumers makes clear that general grading of the property is not covered by the Plan. As indicated, the only occasion where the Plan might be engaged is where the grading is such as to cause a risk to the integrity of the building itself. That was not the case here. Any complaints about how the lot was graded are beyond the scope of the Plan.

Eavestrough

26The original plans for the home involved four downspouts from the eavestroughs—two at the front and two at the rear of the home. Because the municipality advised that it would not permit drainage to the rear of the property, the builder had a problem. That is where the downspouts were to drain according to the architectural design. It solved its problem by simply removing the downspouts and putting a patch over the resulting holes. As a result, the home designed to have four downspouts is now dependent on only two downspouts for rainfall drainage. Regardless of what efforts were made by the builder to minimize the problem, the videos provided by the appellants make clear that the two downspouts cannot handle what was intended to be dealt with by four. The builder solved its problem but created one for the homeowners. There is no evidence that the water flowing over the eavestroughs at the corners of where the downspouts formerly were located, is caused by an accumulation of ice, snow, leaves or other debris. There is no evidence that this problem is a maintenance issue. The Act states that the builder warrants that the home is constructed in a workmanlike manner. Because of the solution chosen by the builder, I find that the water drainage system for rainfall handling has not been constructed in a workmanlike manner. The appellants are entitled to have a rain drainage system that works as well as originally intended and originally constructed.

CONCLUSION

27The appeals from the decisions of Tarion to reject the claims regarding the cold room are dismissed. The appeals from the decisions of Tarion to reject the claims regarding the grading of the lot are dismissed. The appeals from the decisions of Tarion to reject the complaints regarding the eavestroughs and downspouts are allowed. Tarion is directed to find and implement a solution that provides for adequate drainage from the roof without breaching municipal requirements.