Mark and Laurie Ragoobar v. Tarion Warranty Corporation, 2022 CanLII 46851

Mark and Laurie Ragoobar v. Tarion Warranty Corporation

Date: 2022-05-25

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:

Mark and Laurie Ragoobar Appellants

and

Tarion Warranty Corporation Respondent

and

O’Dwyer Fine Homes Ltd. Added Party

DECISION AND ORDER

Adjudicator: Kevin Lundy, Member

Appearances:

For the Appellant: Patrick Pacheco, Paralegal For the Respondent: Ted Weredynski, Paralegal For the Added Party: Adam Raikes, Counsel

Heard by Videoconference: April 11 - 13, 2022

A. Overview

1On November 7, 2019, Tarion Warranty Corporation (‘Tarion’) issued a Decision Letter denying the claim filed by the Appellants, Mark and Laurie Ragoobar, for warranty coverage as set out in their Second Year Form. The Added Party, O’Dwyer Fine Homes Ltd. (‘O.F.H.’), is the vendor and builder of the Appellants’ single family detached house and may be liable to either effect repairs or reimburse Tarion for the cost of repairs in the event that the claims are found to be warranted. On December 17, 2019, M.R. filed a Notice of Appeal to the Licence Appeal Tribunal (the ‘Tribunal’) with respect to Tarion’s decision.

2The hearing commenced on April 11, 2022 by videoconference and continued on April 12, 2022 and April 13, 2022. As requested by the parties and ordered by the Tribunal, a court reporter was present. Mark Ragoobar (‘M.R.’), Rod Ponkin (‘R.P.’), Ron Salisbury (‘R.S.’), Tim Semenuk (‘T.S.’), Gordon O’Dwyer (‘G.O.’), Jordan Miller (‘J.M.’), Gerry Spina (‘G.S.’), Audree Shikter (‘A.S.’) and James Buren (‘J.B.’), testified at the hearing. M.R., T.S. and G.O. attended the full three days as instructing clients to their counsel while the other witnesses were excluded until their evidence was called.

B. Issues

3The appeal related to the following three items that Tarion deemed unwarranted in the Decision Letter:

(1-2) Interior - Basement – Hallway – Water penetration of basement or foundation – Water damages created mold, this was repaired, however the mold is back.

(1-3) Interior – Basement – Water penetration of basement or foundation – office had water damages mold, this was repaired and the mold is back.

(6-2) Exterior – Roof (Exterior) – Building Face/Exterior – Exterior cladding defects (e.g. exterior wall coverings, including siding and above grade masonry) – Front door entrance – flashing needs to be added, water has been leaking under shingles for 2 years. [Emphasis in original]

4As a result, the issues to be determined at the hearing were:

a. Was there a breach of one or more of the warranties under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the ‘Act’)?

b. If so, did the Appellants suffer monetary damage as a result of the breach or breaches?

c. What is the amount of these damages?

C. RESULT

5For the following reasons, and having considered the evidence and submissions, I find that the Appellants failed to demonstrate a breach of warranty on the balance of probabilities.

D. PRELIMINARY MATTERS

6While the Decision Letter listed both homeowners, the appeal was filed only in M.R.’s name. As I find that M.R.’s spouse, Laurie Ragoobar (‘L.R.’), has an interest in the proceedings, the appeal was amended to add L.R. as a party. M.R. participated in the hearing on her behalf.

7The parties had filed a number of motions prior to the hearing that were addressed at the start of the proceeding on the first day of the hearing.

Appellants’ Motion to Exclude Tarion’s Book of Authorities

8The Appellants moved to exclude Tarion’s Book of Authorities, alleging that Tarion had contravened the Tribunal’s Case Conference Report and Order that required all parties to serve and file their respective evidence at least ten days before the first day of the hearing. Tarion served and filed its Book of Authorities only seven days before the first day of the hearing. The Appellants relied upon Rules 9.2 and 9.4 of the Common Rules of Practice and Procedure Version I (October 2, 2017) (the ‘Rules’) in support of their motion.

9A plain reading of these Rules clearly indicates that they are intended to address the documents, photographs, invoices and similar items specific to a particular proceeding that may not be otherwise available to a party absent an order for disclosure. By contrast, a Book of Authorities usually includes copies of statutes, regulations and caselaw, none of which is captured by Rules 9.2 and 9.4. Therefore, I do not find that Rules 9.2 and 9.4 support the Appellants’ motion. Even if I am wrong, Rule 9.4 empowers the Tribunal to admit a document not served or filed in compliance with Rule 9.2. For all of these reasons, I dismissed the motion.

10All three representatives were invited to rely upon any caselaw that they believed to be persuasive in their submissions by citation regardless of prior inclusion in a Book of Authorities. While counsel for O.F.H. availed himself of this option, counsel for the Appellants ultimately did not.

11On the subject of caselaw, at the hearing, M.R. took the position that no caselaw should be considered that predated the October 2019 Special Audit of the Tarion Warranty Corporation. However, he offered no authority for this assertion and the referenced report was not evidence before the Tribunal. The Tribunal also lacks any jurisdiction over legislative policy. Even putting aside the Appellants’ failure to file this request in advance of the hearing as a motion in accordance with Rule 15, I find no basis for limiting the caselaw or other authorities for this purpose.

Appellants’ Motion to Exclude Testimony of Two of O.F.H.’s Expert Witnesses

12The witness list filed by O.F.H. included J.W., who would have offered evidence regarding his work framing the house in response to allegations raised by the Appellants and F.B., a roofer who would have offered a similar scope of testimony with respect to the roof construction, also in response to allegations raised by the Appellants.

13The Appellants filed a motion to exclude the testimony of these witnesses on the basis that O.F.H. was attempting to call witnesses who were “qualified to provide professional information and technical information based on opinion, special knowledge and experience” in the absence of the required documentation under Rule 10. Specifically, Rule 10.2 imposes strict informational requirements with respect to expert witnesses so that opposing parties may have a reasonable opportunity to review and investigate their qualifications prior to the hearing:

10.2 EXPERT WITNESSES (IDENTIFICATION AND DISCLOSURE)

A party who intends to rely on or refer to the evidence of an expert witness shall provide every other party with the following information in writing:

(a) The name and contact information of the expert witness;

(b) A signed statement from the expert, in the Tribunal’s required form, acknowledging his or her duty to:

(i) Provide opinion evidence that is fair, objective, and non-partisan;

(ii) Provide opinion evidence that is related to matters within his/her area of expertise; and

(iii) Provide such additional assistance as the Tribunal may reasonably require to determine a matter in issue;

(c) The qualifications of that expert witness, referring specifically to the education, training and experience relied upon to qualify the expert;

(d) A signed report that sets out the instructions provided to the expert in relation to the proceeding, the expert’s conclusions, and the basis for those conclusions on the issues to which the expert will provide evidence to the Tribunal; and

(e) A concise summary stating the facts and issues that are admitted and those that are in dispute, and the expert’s findings and conclusions. [Emphasis in original]

14Counsel for O.F.H. stipulated that he had no intention of calling the proposed witnesses to offer expert evidence, but instead to testify to their direct observations as “lay witnesses” with respect to their respective roles in the construction of the Appellants’ house. As a result, there was no necessity to provide the information required by Rule 10.2.

15As I find nothing to support the Appellants’ assertion that the proposed testimony regarding direct observations of construction inherently falls under the category of expert testimony, the motion was denied in part. O.F.H. was free to call either or both witnesses to testify to their direct observations, but not to offer expert evidence. O.F.H. ultimately elected not to call either witness.

O.F.H.’s Motion to Strike ‘Overview and Timeline’ filed by Appellants

16The Appellants filed a document entitled “The Overview and Timeline of the Matter,” which O.F.H. viewed as implied assertions as fact. As the parties had not arrived at any agreed statement of facts, counsel for O.F.H. took the position that the Appellants had unilaterally included this document in their materials in an attempt to circumvent their duty to prove the allegations in their appeal and taint the matter before it was heard by the Tribunal.

17However, counsel for the Appellants readily acknowledged that the statements in this document were intended to function similarly to an opening statement rather than as an agreement of facts. There was no dispute that the Appellants bore the evidentiary onus to prove all elements of their appeal on the balance of probabilities including the timeline of events.

18As I find that the basis of the motion was moot, it is denied.

O.F.H.’s Motion for an Order Limiting Evidence to only those Issues under Appeal

19Counsel for O.F.H. noted that the Appellants have previously indicated that it is their intention to litigate issued contained in the 30-Day Statutory Warranty Form and the Year-End Statutory Warranty Form as well as the Second-Year Statutory Warranty Form.

20As noted at paragraph 3 above, the Appellants listed only items 1-2, 1-3 and 6-2 of the Tarion Decision dated November 7, 2019 in their Notice of Appeal filed on December 17, 2019. These items relate solely to the Second Year Form. As a result, the appeal process does not permit the Appellants to resurrect other issues from prior forms or add other items not included in any form.

21As the Tribunal has no jurisdiction to issue an order in relation to issues not under appeal, the motion was granted.

22That having been said, this limitation should not be confused with an exclusion of evidence on the necessary historical context of the three items in dispute since their emergence predated the submission of the Second Year Form. As events from the first year of occupation had direct consequences upon the warrantability of two of the disputed items, evidence regarding this context was necessarily admissible.

O.F.H.’s Motion to Strike the ‘Engineer Expenses’ Brief filed by the Appellants

23The Appellants sought compensation or damages for amounts allegedly incurred to commission expert opinions and reports. However, like legal costs, such expenses represent secondary damages, which are excluded under Act and its related regulations.

24Subsection 13(1) of the Act sets out the general warranty provided by the vendor to the owner of a new home in Ontario:

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.

25However, this general provision is subject to a host of exclusions specifically enumerated in subsection 13(2) of the Act, the most relevant to the Appellants’ Engineer Expenses Brief being paragraph (b), which states:

13. (2) A warranty under subsection (1) does not apply in respect of,

(b) secondary damage caused by defects, such as property damage and personal injury…

26As the somewhat nebulous term “secondary damage” in paragraph (b) of subsection 13(2) of the Act is not defined in the Act, the scope of this exclusion has been the subject of analysis by both the Tribunal and the Courts. In Liddiard v. Tarion Warranty Corporation, 2009 CanLII 65801 (ON SCDC), the appellant homeowners sought compensation for the diminished value of their home allegedly resulting from the breach of warranty.¹ The Ontario Divisional Court considered the meaning of “secondary” in this context as follows:

The term “secondary” is not defined in the statute. The seventh edition of Black’s Law Dictionary defines “secondary” as “subordinate or subsequent”. The two opening entries for the word in the 1993 edition of the New Shorter Oxford English Dictionary on Historical Principles define the word as (1) not chief or principal; of minor or second importance; subordinate and (2) derived from, caused by, based on or dependent on something else which is primary; not original, derivative.

The meaning of the word in the context of this Act can be gleaned, however, from the two examples provided in the section: property damage and personal injury and, in my view, the term “secondary” is not connected, in this context, with either the importance or the magnitude of the loss or damage, but rather with the character of it. Clearly, the term “personal injury” encompasses very grave loss and harm, if not death itself. It is difficult to envisage damage of greater importance and yet that type of loss is excluded. I therefore conclude that the drafters intended the term “secondary” to mean that which is derivative. Accordingly, the immediate result of the breach of warranty is covered and all that is derivative is excluded.²

27The Court went on to clarify that when read together, subsections 13(1) and (2) of the Act serve to limit the scope of liability to repair the issues not constructed pursuant to the factors listed in paragraph (a) of subsection 13(1) of the Act or a sum of money required to purchase the labour and materials to do so:

The warranty is set out at s. 13(1). The primary and immediate result of breach of warranty is construction that is not done in workmanlike manner and free from defects in material or is not fit for habitation or is not constructed in accordance with the Ontario Building Code or is not free of major structural defects or is in breach of some other warranty prescribed by the regulations.

What is conferred by the warranty is the right to have done that which should have been done correctly in the first instance or a sum of money to purchase the labour and materials to do so. Any loss or damage that is derivative of the failure to construct in accordance with s. 13(1) is secondary and therefore excluded. Even assuming that causation can be shown, loss of value on sale of a property is derivative and thus secondary and excluded.³

28Following the decision in Liddiard, the Tribunal has specifically held that other costs indirectly related to the construction of the home fall squarely under “secondary damage” and are therefore excluded. For instance, in Xin (Melissa) Chang v. Tarion Home Warranty Corporation, 2020 CanLII 12761 (ON LAT), the Tribunal characterized the issue as a jurisdictional matter:

Taking a step backwards then, the Tribunal’s jurisdiction can only come from things about which Tarion can make a decision. Namely, warranty. Section 13 of the Act outlines what is warranted, and section 13(2) outlines specifically what is excluded. Secondary damage, including personal injury and property damage, is excluded. Case law put forward by Tarion supports the proposition that ‘secondary damage’ is interpreted to mean any damage that is not a direct breach of warranty.

This, in my opinion, excludes the appellant’s claims for $100,000 in damages, aggravated damages for personal injury, and recovery of legal and other costs related to the construction of the home. The Tribunal, therefore, cannot consider these issues because Tarion cannot consider these issues.

With respect to the declarations and injunction sought, the Tribunal is not a court of equity. The Tribunal as a creature of statute, cannot venture outside of the boundaries of the statute to bestow itself with powers that the statute does not confer.

The appellant argues that the Act is consumer protection legislation and should be interpreted broadly and liberally to give that effect. I agree. And I sympathize that the appellant feels she has been treated unjustly, unfairly, and in some cases discriminatorily. However, interpreting a statute broadly and liberally does not mean inventing the power to do something where that power does not exist in the statute, particularly where there is a specific exclusion in that regard.⁴

29As the filed “Engineer Expenses” Brief does not relate to the substance of the items under appeal, namely 1-2, 1-3 and 6-2 of Tarion's Decision dated November 7, 2019, the Tribunal lacks jurisdiction to award the relief for these secondary damages.

30As a result, the motion was granted.

O.F.H’s Motion to Exclude Expert Report by Appellant’s Witness, R.P.

31In the Appellants’ February 4, 2022 Request to Adjourn, their counsel stated, “our clients are currently waiting on an expert report that will be necessary in presenting the appropriate evidence with regards to the roof construction.”

32Expert evidence presented to the Tribunal should be, and should be seen to be, the independent product of the expert uninfluenced as to form or content by the party offering it.

33However, both O.F.H. and Tarion expressed grave concerns with respect to the admissibility of the purported expert report on the basis that M.R.’s inappropriate level of contribution to its creation severely undermined its status as independent and impartial expert evidence. As counsel for O.F.H. noted, M.R. signed the report with R.P. and may have generated much of its content, thereby rendering it biased. They submitted that the report was tainted, among other things, by the controlling influence of M.R. and his desired outcome to the appeal.

34As a result of this influence, O.F.H. took the position that R.P. was incapable of complying with or fulfilling his primary duty to provide impartial expert opinion evidence that is fair, objective and non-partisan, contrary to Rule 10.4 of the Common Rules.

35That R.P.’s company, RJeneration London Roofing and Renovations (‘RJeneration’), also served as a quoting party on the cost of repairs of the roof and the window well further undermined the independence of the report as RJeneration has a direct financial interest in the outcome of the appeal.

36As a result, both O.F.H. and Tarion submitted that the report should be excluded as evidence at the hearing. In support of this position, counsel for O.F.H. relied upon Justice Binnie’s warning in R. v. J.-L.J., 2000 SCC 51, with respect to questionable expert evidence:

In the course of Mohan and other judgments, the Court has emphasized that the trial judge should take seriously the role of “gatekeeper”. The admissibility of the expert evidence should be scrutinized at the time it is proffered, and not allowed too easy an entry on the basis that all of the frailties could go at the end of the day to weight rather than admissibility.⁵

37However, prior to the commencement of the hearing, the precise proportion of the contributions from M.R. versus R.P. to the creation of the report were not sufficiently clear. In the very next paragraph in the above decision, Justice Binnie noted that the same gatekeeper function must afford the parties the opportunity to put forward the most complete evidentiary record consistent with the rules of evidence.⁶

38In White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, the Supreme Court of Canada described the threshold for exclusion as follows:

This threshold requirement is not particularly onerous and it will likely be quite rare that a proposed expert’s evidence would be ruled inadmissible for failing to meet it. The trial judge must determine, having regard to both the particular circumstances of the proposed expert and the substance of the proposed evidence, whether the expert is able and willing to carry out his or her primary duty to the court. For example, it is the nature and extent of the interest or connection with the litigation or a party thereto which matters, not the mere fact of the interest or connection; the existence of some interest or a relationship does not automatically render the evidence of the proposed expert inadmissible. In most cases, a mere employment relationship with the party calling the evidence will be insufficient to do so. On the other hand, a direct financial interest in the outcome of the litigation will be of more concern. The same can be said in the case of a very close familial relationship with one of the parties or situations in which the proposed expert will probably incur professional liability if his or her opinion is not accepted by the court. Similarly, an expert who, in his or her proposed evidence or otherwise, assumes the role of an advocate for a party is clearly unwilling and/or unable to carry out the primary duty to the court. I emphasize that exclusion at the threshold stage of the analysis should occur only in very clear cases in which the proposed expert is unable or unwilling to provide the court with fair, objective and non-partisan evidence. Anything less than clear unwillingness or inability to do so should not lead to exclusion, but be taken into account in the overall weighing of costs and benefits of receiving the evidence.⁷

39During the preliminary motions phase of the hearing, it was not possible to assess R.P.’s apparent commitment to his proper duties as a proposed expert and, as a result, his potential for bias was unclear. As a result, I opted not to exclude the impugned evidence prior the hearing and to instead assess the evidence as it was presented, assigning it the appropriate probative weight. The motion was therefore denied.

E. LAW

40Given the detailed nature of much of the evidence presented, a brief overview of the statutory context for the role of Tarion in the warranty process for new homes may be useful for the issues in this appeal.

41Tarion is a private, non-profit corporation designated by the Lieutenant Governor-in-Council to administer the Act and manage its warranty scheme. Each new home constructed in Ontario for sale or built by a builder who contracts to carry out all of the construction on the home on behalf of the owners, must be enrolled with Tarion with an enrolment fee paid prior to the commencement of construction.

42Tarion does not operate as an insurance company. Instead, its role is to ensure that builders comply with the statutory warranties set out in the Act. The warranties are those of the builder, not Tarion. The builder is also required to respond to warranty claims as submitted by homeowners to Tarion within certain defined time periods. A homeowner may ask Tarion to intervene by requesting a conciliation only if a builder fails to complete warranty repairs in a timely manner and the homeowner believes that one or more warranted items have not been repaired or resolved within the allowed time limits. At this stage of the process, no finding has been made for or against either the builder or the homeowner.

43When a homeowner requests a conciliation, Tarion schedules an inspection and notifies the builder. The builder is given a further period after the date the homeowner requests the conciliation inspection to repair or resolve all of the claim items. Unless the homeowner requests that the conciliation inspection be cancelled, a warranty services representative from Tarion will attend, review the homeowner’s claims and issue a Warranty Assessment Report (‘WAR’) that includes findings of warrantability or non-warrantability for each disputed item.

44If Tarion determines that at least one item in the WAR is warranted, barring some specific exemptions, the conciliation will be deemed chargeable against the builder’s record. The builder is then permitted a further period to conduct repairs, failing which, Tarion will then schedule a claims inspection with the homeowner. In such circumstances, the only issue to be determined is whether the builder has carried out repairs to those items determined to be warranted in the WAR. If not, Tarion will arrange to carry out the repairs or provide cash compensation to the homeowner from its Guarantee Fund.

45With respect to the provisions of the Act relevant to this appeal, subsections 13(1) and (2) have been reproduced above. In addition, subsection 14(1) to (4) address compensation from the guarantee fund:

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 or other payment 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.

(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.

(3) Subject to the regulations, an owner of a home is entitled to receive payment out of the guarantee fund for damages resulting from a breach of warranty if,

(a) the person became the owner of the home through receiving a transfer of title to it or through the substantial performance by a builder of a contract to construct the home on land owned by the person; and

(b) the person has a cause of action against the vendor or the builder, as the case may be, for damages resulting from the breach of warranty.

(4) Subject to the regulations, an owner who suffers damage because of a major structural defect mentioned in clause 13 (1) (b) is entitled to receive payment out of the guarantee fund for the cost of the remedial work required to correct the major structural defect if the owner makes a claim within four years after the warranty expires or such longer time under such conditions as are prescribed.

46Section 14 and subsection 15(2) of Reg. 892 are also relevant with respect to the general parameters of the builder’s warranty to the owner for claims submitted within the two year warranty period:

14. (1) Every vendor of a new home warrants to the owner that there will be no water penetration through the basement or foundation of the home.

(2) The warranty described in subsection (1) applies only in respect of claims made during a two-year warranty period ending on the second anniversary of the date of possession.

15. (2) Every vendor of a new home warrants to the owner,

(a) that the home is constructed in a workmanlike manner and is free from defects in materials including windows, doors and caulking such that the building envelope of the home prevents water penetration;

(b) that the electrical, plumbing and heating delivery and distribution systems are free from defects in material and work;

(c) that all exterior cladding of the home is free from defects in material and work resulting in detachment, displacement or physical deterioration;

(d) that the home is free from violations of the Ontario Building Code regulations under which the Building Permit was issued, affecting health and safety, including but not limited to fire safety, insulation, air and vapour barriers, ventilation, heating and structural adequacy; and

(e) that the home is free of major structural defects.

47Lastly, subsection 14(19) of the Act sets out the orders available to the Tribunal following the hearing:

14. (19) After holding a hearing, the tribunal may,

(a) by order, direct the Corporation to take the action that the tribunal considers the Corporation ought to take in accordance with this Act and the regulations; and

(b) for the purposes of the order, substitute its opinion for that of the Corporation.

F. EVIDENCE AND ANALYSIS:

Background

48The Appellants’ house is a two-storey detached single family dwelling with a basement. The garage is located to the left side of the front of the house. The foundation plan of the house was substantially unchanged in the completed structure other than the deletion of a few minor elements. The basement office, hallway and other locations that are the subject of part of this appeal remained consistent with the original design plan.

49With respect to builder in this matter, G.O. is the operator of O.F.H. and has worked in the field of home renovations and construction for the past thirty-four years since he was seventeen. He does not hold any professional certifications or diplomas and has not undertaken in any formal apprenticeships. After he graduated from high school, he operated a series of companies with his father and later his brother-in-law, building kitchens and bathrooms. In 2010, he limited his business primarily to home building with some renovations for past clients. He conservatively estimated that he has worked on at least one hundred homes over the course of his career and has constructed approximately thirty-five to forty houses from scratch. He was licenced as a builder during the relevant period under this appeal.

50He stopped building houses in 2019. While M.R. and his counsel repeatedly referred to this termination as G.O. “going out of business,” the Appellants offered no clear or reliable evidence with respect for the reason for this transition.

51M.R. has been employed in the insurance industry for twenty-three years and holds a Building Code Identification Number (‘B.C.I.N.’), which as he explained, designates him as knowledgeable under Section 9 of the Ontario Building Code.

52M.R. and G.O signed an Agreement of Purchase and Sale for the home on May 18, 2016. Construction was originally scheduled for completion in November, 2016. However, after four delays, the Appellants obtained possession of the house on April 12, 2017. M.R. acknowledged that he reluctantly consented to at least two of these postponements. G.O. explained that the delays were not out of the ordinary and recalled that one related to problems with the availability of various trades and another with changes to the design drawings, as well as a routine postponement to the electrical walkthrough. While none of these impediments directly relate to the issues under appeal, they offer a narrative context to the later breakdown of the relationship between the Appellants and their builder.

53G.O. provided a brief but highly detailed overview of the preliminary stages of residential house construction from the initial design phase through municipal approvals to the installation of the irrigation system around the foundation prior to backfilling. There was no evidence that work on the site failed any required building inspection or that any inspections were not completed.

54From early 2017 onward, the Appellants received regular information from Tarion with respect to the process for reporting warranty items, keeping track of key dates related to the warranty, filling out forms online, receiving email reminders for important warranty deadlines and contacting Tarion for further information. M.R. acknowledged receipt of these forms and readily agreed that they provided information to contact Tarion in the event of difficulties or any confusion with the process.

The Pre-Delivery Inspection and Other Matters

55M.R. testified at length with respect to delays in completing the Pre-Delivery Inspection report (the ‘P.D.I.’) prior to the closing and his attempts to book follow-up appointments with G.O.

56Subsection 2(7) of Reg. 892 requires that “On the pre-delivery inspection date, the vendor shall complete and sign a certificate of completion and possession form and a pre-delivery inspection form approved by the Corporation and deliver a copy of the completed and signed forms to the purchaser or owner.” Similarly, subsections 2(2) and (12) of O. Reg. 637/20 require that vendor agreements contain provisions which amongst other requirements respecting covenants to address obligations regarding pre-delivery inspections.

57However, whether or not O.F.H. complied with these provisions of the Regulations, is separate and apart from the issues raised in the present appeal. I do not find that the Appellants demonstrated on the balance of probabilities that the absence of a completed P.D.I. had any material impact on Tarion’s decision to deny warranty coverage for the three items referenced in the November 7, 2019 Decision Letter. Also, unlike the 30-Day Form and the two later yearly forms, the PDI form, although useful, does not activate the claims process. Even in the absence of that form, the Appellants’ remedy was to file the 30-Day Form, which M.R. did on May 10, 2017, roughly one month after delivery.

58Subsection 25.0.1 of the Statutory Powers Procedures Act (the ‘SPPA’) permits the Tribunal to determine its own procedures and practices and make orders with respect to the procedures and practices that apply in any particular proceeding. However, this does not grant either Tarion or the Tribunal discretion to exceed their statutory jurisdiction.

Water Penetration in the Basement

The April 2017 Flood

59Although the present appeal only directly relates to Tarion’s denial of items on the Second Year Form, with respect to items 1-2 and 1-3 on that form, the Appellants sought to demonstrate that one or more floods in the basement within one week of the closing date in 2017 directly led to mould growth in the basement that remained unresolved to the date that the Appellants submitted their Second Year Form. As a result, some consideration of the events leading to the submission of the Second Year Form is necessary.

60There is no dispute that on or about April 11, 2017, there was a flood in the basement of the house. At the hearing, G.O. testified that any construction site may be subject to flooding, but agreed that this was obviously not ideal. In the present case, he determined that the O-pipe in the window well in the office had filled with water and emptied into the basement through the window and down the face of the interior wall below. He used a squeegee and a mop to clean up the water on the floor and set up a fan to dry out the flooring. He estimated that approximately fifteen gallons of water had entered the basement. However, he found no other points of water

61into the house.

62M.R. testified that when he attended at the house on April 12, 2017 specifically for the closing, he discovered water had entered the basement through the window well and that the window in the basement had flooded with dirty water from a downspout on the adjacent model home. He noticed the mop and bucket still present in the basement and concluded that G.O. must have been aware of the flood although the builder was not then present in the house.

63While there was some dispute regarding the date that G.O. discovered the flood relative to his notification to M.R., between G.O.’s inconsistent timeline and M.R.’s more consistent and logically persuasive evidence on this issue, I prefer M.R.’s account and find on the balance of probabilities that G.O. discovered the flood on April 11, 2017, made some efforts to clean up the water, but may not have advised M.R. of the problem until the following day. This version of events is also consistent with G.O.’s apparent nonchalance over the issue of flooding in an active construction site.

64While M.R. estimated that the damp flooring indicated that the flood must have occurred three of four days earlier, he offered no objective evidence to support this speculation. As it was raining on the day that G.O. discovered the water entering the window well and there was no evidence of any prior flooding or similarly inclement weather during the days immediately preceding April 11, 2017, I find on the balance of probabilities that the flooding event was likely limited to April 11, 2017 only.

65The parties’ disagreement with respect to when the flooding occurred relative to M.R.’s discovery of it is significant not because the floor may have been wet for more than one day, but because the interval, however long, served to sow the initial seeds of distrust between M.R. and G.O. It also related to the weather conditions later determined necessary for water to penetrate the building envelope.

66M.R. testified that G.O. had assured him that he would dig a trench to address the grading that G.O. believed had caused the problem. While no water testing occurred at this time, as of April 2017, the immediate source of the water penetration was far from a mystery. They discussed the best steps to dry out the basement flooring and G.O. suggested to M.R. that the floor should be allowed to dry before the carpet was installed. Under cross-examination, M.R. testified that it was his understanding that G.O. preferred to dry out the floor rather than tearing it out and replacing it. G.O. emphasized that water accumulation in the basement of a house during construction was not an uncommon event.

67However, M.R. testified that when he attended at the house two weeks later, he found that the same leak had recurred and that O.F.H. had not yet graded the property. He opted to mitigate the damage by finishing cleaning up the water himself. He testified that when he called G.O. a second time to express his concerns, G.O. did nothing about it. As a result, M.R. decided to dig a trench outside the window himself to prevent a third flood from occurring.

The 30-Day Form

68On May 10, 2017, M.R. filed his 30-Day Form with Tarion, including these and numerous other outstanding issues. The above issues were described on the Form as items 6 and 7 respectively under ‘Outstanding Items’ in the basement as follows:

Rip out wall where water damages have occurred since Oct/2016 â?? [sic] Mold located – water leak must be found

Inspect for mold in office (flooded twice) moisture can be seen on dry wall from under stairs – cut out access hole moisture located

69Tarion informed him by a letter dated May 11, 2017 that his 30-Day Form had been received and that the builder had until September 11, 2017 to resolve the issues in the form, failing which he could request a conciliation inspection that would allow Tarion to assess the issues. He requested the conciliation and agreed at the hearing that it took place on November 20, 2017.

70G.O. believed that they were working together to resolve the outstanding issues on the 30-Day Form. However, while M.R. testified that G.O. became increasingly difficult to contact, G.O. was emphatic that he always answered M.R.’s calls and attended at the property when his presence was requested. M.R. did not rely upon any written emails or text messages to support his allegation that G.O. appeared to be avoiding him. As the Appellants’ evidence on this issue was no more persuasive than that offered by O.F.H., I find that the Appellants failed to demonstrate on the balance of probabilities that G.O. failed to communicate with them.

71Nevertheless, in mid-May 2017 after he filed the 30-Day Form, M.R. dug a trench outside the basement office window well. G.O. did not tell M.R. to take this action and testified that M.R. made the decision to undertake this work himself. To prevent further water penetration, O.F.H. then had the window capped and sealed by its window contractor. G.O. then cut off the Big O pipe in the window well so that the flooding would not happen again. He also testified that he installed the carpeting on June 14, 2017.

72Well before the scheduled conciliation, M.R. expressed concerns to G.O. over the potential for mould in the basement. After he came to believe that G.O. did not share this apprehension, M.R. telephoned Tarion to inquire whether it would be appropriate to open the walls in the affected areas to check for mould. He stated that he did not receive a straight answer to this inquiry or recall with whom he spoke. At the hearing, he testified that the person on the other end of the call had replied with some hesitation that this was not something that he could not do.

73As the unknown declarant did not testify at the hearing, his or her statement to M.R. was hearsay. The essential defining features of hearsay are an out‑of‑court statement adduced to prove the truth of its contents in the absence of a contemporaneous opportunity to cross‑examine the declarant. The unknown declarant apparently never attended at the house and the parameters of M.R.’s query to prompt this alleged response were not disclosed. The statement was also not reduced to writing.

74The function of the trier of fact is to guard against undue reliance on hearsay evidence which is unnecessary or the reliability of which is neither readily apparent from the trustworthiness of its contents nor capable of being meaningfully tested at the hearing.

75I find that to assign this hearsay statement the same evidentiary value as direct testimony without allowing the other representatives any means of cross examining the declarant on the basis of his or her statement or qualifications to provide it would be unduly prejudicial under the circumstances. While subsection 15(1) of the SPPA permits admission of unsworn hearsay statements and allows the adjudicator to assign it the appropriate probative weight, for the evidentiary concerns I have outlined above, I would assign this evidence substantially reduced probative weight.

76M.R. advised G.O. that he intended to open the basement wall himself and if he found no mould, he would bear the expense of repairing the damaged drywall. G.O. agreed that if mould was found behind the drywall, O.F.H. would compensate him for the cost to restore the opened wall. M.R. stated that he found a substantial amount of mould in both of the two areas where he removed the drywall, in some places from the floor to the ceiling; in others as high as two feet and “all over the baseboards.” G.O. agreed that there was mould on the removed drywall as M.R. showed him the discarded sheets. As a result, and pursuant to their agreement, O.F.H. paid for the new drywall to be installed.

77M.R. stated that G.O. proposed replacing the removed drywall in approximately two to three weeks and then begin the mudding. However, he was not confident in O.F.H.’s mould remediation expertise and suspected that the wood inside the wall was still wet. As a result, he postponed installation of the new drywall for approximately four months.

78In the interim, M.R. hired EXP Services Inc. (‘EXP’) to conduct air quality tests on August 22, 2017 despite the pending conciliation three months later. He explained that he did so to mitigate the damage to the house due to concerns over the possibility of mould spreading to the rest of the house. However, he did not explain why he directed G.O. to replace the drywall before ensuring that any mould issues within the wall had been resolved.

79While he stated that some of EXP’s tests revealed readings of 25% moisture and the company collected samples, their data was not explained as the Appellants opted not to call the author of the submitted report from EXP to offer expert evidence with respect to the methods and procedures used or to explain their results. M.R. did not claim any expertise to interpret or explain the contents of the report himself.

80Nonetheless, it is worth noting that according to the EXP report, the scope of that company’s investigation was a mould and moisture investigation with visual reviews of parts of the house with air sampling, all of which was conducted on August 22, 2017. The resulting report, dated September 13, 2018, did not state who had conducted the remedial work as of the date of their inspection. However, it concluded with a recommendation that the homeowners “retain the services of a mould abatement company to clean and disinfect the Basement Office and have the area resampled to ensure that the concentrations of interior mould spores are generally lower inside of the house when compared to the exterior environment of the building.”

81When asked why he chose not to follow this recommendation, M.R. stated that this should have been properly O.F.H.’s responsibility, not his. He also could not recall when or even if he sent this report to Tarion to keep the Respondent informed with respect to developments on the issues raised in his 30-Day Form. While he testified that had “attempted” to provide a copy of the report to O.F.H., he offered no explanation for his failure to do so, particularly as both parties’ contact information remained consistent throughout this period and thereafter.

82Shortly thereafter, M.R. finally contacted G.O. to replace the drywall. At M.R.’s request, in September 2017, G.O., installed the new drywall and applied the first coat of paint. G.O. emphasized that the replacement materials installed in the basement were new. He also explained that when drywall is delivered to a house, it is stored on blocks off the floor surface and installed promptly thereafter. In the present case, there was no evidence to suggest materials used to construct the basement wall were exposed to saturation or contaminants prior installation.

The 2017 Conciliation

83R.S. has been employed by Tarion since early 2014, starting as a warranty services representative in the freehold division and moving to another department in February, 2018. He completed Building Code training for a B.C.I.N. and is qualified under Part 9 of the Building Code. When he was still assigned to the freehold division, he conducted conciliations, contacted homeowners, issued reports and settled claims and related duties. He estimated that he conducted approximately two to three conciliations per week.

84He conducted the conciliation with M.R. with respect to the Appellants’ 30-Day Form on November 20, 2017. He estimated that the conciliation was approximately three to four hours in duration. R.S. recalled that while both Appellants attended the conciliation, G.O. was not present.

85R.S. testified that when he inspected the basement office during the conciliation inspection, most of the old drywall had already been removed and replaced with new sheets, as confirmed by photographs he took during his inspection. He felt the carpeting for moisture but found none. M.R. advised him that there had been a flood caused by grading issues while the house was under construction and that there had been a recurrence of water penetration prior to the inspection. From this conversation, R.S. was led to believe that the removal and replacement of the drywall had been a collaborative effort between M.R. and O.F.H. He observed no indications of mould, though acknowledged that he could not confirm whether there was any mould behind the new drywall.

86M.R. also directed R.S. to the basement wall opposite to the office where the fireplace had been installed. The wall was open, with some insulation partially pulled out of the cavity where the drywall had been removed. Although M.R. informed him that there had been water penetration in this area, R.S. detected no signs of a leak. M.R. advised that because he was not confident in G.O.’s work, he did not want O.F.H. to close up the opened wall. Given the near freezing temperature outside, R.S. opted not to conduct a water test for this area and the item was therefore not assessed in his report. He advised M.R. that Tarion would return in the spring to conduct the water test.

87M.R. did not provide the EXP report to Tarion in advance of the conciliation. R.S. recalled that M.R. advised that he had the report and would email to him later, which he did on November 29, 2017. After he received and reviewed the report and a number of photographs emailed by M.R., R.S. consulted with a mould remediation specialist and issued his report. The mould specialist advised that there was no further need to test for mould as the affected materials had been removed:

At the request of the Tarion representative the report was reviewed by a professional with credentials in mould assessment and remediation. Based on the test results and findings in the report provided by the homeowner, the levels of mould in the home were considered to be moderately elevated at the time the samples were taken. As the affected drywall has been removed, it is the opinion of the mould professional that no further mould testing is necessary at this time.

88While the mould specialist did not testify at the hearing, his or her statement to R.S. was not tendered for the truth of its contents, but rather as a statement upon which R.S. relied in his analysis. However, the salient point is that because of M.R.’s fait accompli in replacing the affected materials, the issue of further testing was rendered moot.

89R.S. issued his W.A.R. on January 5, 2018. With respect to M.R.’s assertion that an air quality test was required, in his report R.S. considered the contents of the EXP report and the assessment of the mould specialist and denied this item as he detected no visible mould during his inspection. He noted that he expected that the builder would normally be responsible for repairs as described above and advised the Appellants to contact Tarion if this did not occur. Since the mould issue appeared resolved, but the building finishes were incomplete, R.S. warranted Item 7 so that O.F.H. would be responsible for restoring all interior finishes to their original condition.

90During this same period, M.R. chose not to advise Tarion that his relationship with O.F.H. had deteriorated or that he was experiencing ongoing difficulties contacting G.O. He also contracted with a number of third parties to conduct work on the property and generated his own accounting of expenses for tasks he had unilaterally initiated for prospective compensation with his own hourly rate of labour, none of which he communicated to Tarion. In an email sent to D.K., an employee with Warranty Services at Tarion, on November 21, 2017, after the conciliation, M.R. stated the following comparatively cheerful assessment of his experience working with G.O.:

I just want to be clear here that Gord and I speak regularly and the wheels are in motion to have these tasks completed, yes some of it will have to be done next year to it being seasonal however I am patient. When going through the process there is a statement that it says if you do not respond then all matters are considered settled, and this is why I have requested an appointment, this far I have had no issues with Gord and he has been a pleasure to deal with.

91When asked about why this contemporaneous statement appears to contradict his testimony at the hearing, he explained that he was attempting to “build a bridge” to keep all parties happy and was reluctant to bother O.F.H. as G.O. had expressed some displeasure at the sheer number of unresolved items on the 30-Day Form and the statutory $1,000.00 cost to his company for each conciliation. At the hearing, G.O. agreed that he had been “upset” with M.R. over M.R.’s request for Tarion’s intervention and the resulting fees since he believed that it was “not necessary to go down that road.”

92Through early 2018, M.R. nonetheless offered a positive and harmonious portrait of the ongoing progress on the outstanding items to Tarion, with emails sent on February 16, 2018 confirming that issues were being addressed and that he was working with O.F.H. to resolve further items in May, 2018.

93At the very least, the above email and similar communications would have misled Tarion to the reasonable belief that there were no serious conflicts with the builder that may require intervention. M.R. also repeatedly insisted that his recollections at the hearing were more accurate and reliable that his contemporaneous recall over four years earlier without any explanation for this seemingly illogical claim.

The First Year Form and 2018 Conciliation

94On April 9, 2018, the Appellants filed their Year End Form, the receipt for which was acknowledged by Tarion the following day. Despite the apparent resolution in the W.A.R. issued on January 5, 2018, on April 9, 2018, Item #12 in that form included a brief description of the then state of the drywall in the basement office:

The office had flooded twice from the window well filling, as a result mold was located, wall need another coat of compound & paint

95T.S. has worked for Tarion for almost twenty-one years. While at the time of the hearing, he was employed in a new capacity, in 2018, he remained a warranty service representative and had taken carriage of the Appellants’ file after R.S. was transferred to his new position. He also completed the examination for Section 9 of the Building Code and is registered as an independent designer.

96On June 4, 2018, T.S. attended at the property to conduct a conciliation inspection with respect to the First Year Form. Once again, G.O. was absent, but T.S. testified that he had no idea why.

97Although Tarion intended to conduct a water test during this meeting, M.R. agreed that he had indicated to Tarion that such a test was not necessary. T.S. recalled that M.R. met him at the door on June 4, 2018 and informed him that he would work with the builder and that the water test was not necessary at that time. M.R. testified that the scheduled test would have related to water penetration on the other side of the house, an unrelated issue that had been resolved. He repeatedly maintained that the June 4, 2018 test was not intended to address the water leaks from the window well area, an interpretation apparently shared by R.S. However, since the issues in the basement office had been included in the conciliation inspection, T.S. advised M.R. that if any outstanding issues were not resolved, he could request another conciliation. provided that such a request was made by September 10, 2018. No request for this conciliation was made.

98Despite some disagreement with respect to the dates of specific events, the parties agreed that the repairs to the basement were completed by July, 2019. However, shortly thereafter, M.R. testified that he noticed black spots that he believed to be mould recurring in the same areas as mould had been found previously. As a result, he included these issues in the Second Year Form.

The Second Year Form and 2019 Conciliation

99On April 11, 2019, M.R. submitted the Second Year Form. Although Item 1-4 of the Outstanding Items contained a description that indicated that damage in the basement had been caused by a “leak that was never found,” M.R. explained at the hearing this notation was intended to convey that the source of the leak had yet to be confirmed as of that date. The Appellants then requested a conciliation with respect to this form.

100M.R., T.S. and G.O. attended the October 9, 2019 conciliation inspection at the property. M.R. showed T.S. the dark staining along the bottom of a baseboard in the basement, on the office wall under the window and on the cold room door and advised him that this substance was mould. T.S. testified that the spots were quite minor in size and advised M.R. that he could simply wipe them away. He detected no evidence of a water leak inside the cold room itself or moisture in the carpeting. He also found no further evidence of mould on the baseboards in the basement. He expressed confidence in this assessment as he removed the baseboards and found no signs of moisture on their surface or on the wall behind them; there was also dry dust from drywall on these surfaces and noted that this material would have been damp or clumped if there had been water penetration. Similarly, G.O. testified that he also observed no signs of water penetration during this inspection and also noted the presence of dry powdered dust from the drywall on the flooring, indicating an absence of moisture.

101T.S. did not conduct more intrusive investigations of the interior of the walls as warranty service representatives typically do not engage in demolition work. As well, there would have been no basis for such an investigation as the Appellants had not alleged any damage to the internal structure of the walls in their Second Year Form.

102T.S. recalled that M.R. reported no flooding since the original events around the time of occupancy in 2017. He was not aware of any indication of repeated flooding in the same area of the basement. He authored the Decision Letter of November 7, 2019 that forms the basis of the present appeal.

The Element Report

103Despite M.R.’s stated dissatisfaction with T.S.’s advice regarding removal of the spotting on the wall, as noted above, he did not retain another company to remediate the mould issue as recommended by EXP. However, in the fall of 2020, the Appellants retained Element Forensic Engineering (‘Element’) to attend at the property and conduct an investigation into the problem. According to their report, issued on November 25, 2020, the scope of the resulting investigation was as follows:

Element Forensic Engineering was retained to conduct an independent engineering assessment of water and resulting mould damage that occurred from water intrusion within the building located at the above noted address. Our office was tasked to comment on the current conditions in relation to the moisture damage.

104Again, the Appellants opted not to call either of the authors of this report to testify at the hearing with respect to their observations or conclusions. The absence of direct expert testimony and the opportunity for cross-examination undermined the reliability of the evidence offered in the report. Significantly, the other representatives were unable to explore the effect to which M.R.’s apparent dictation of the origins of the moisture as fact may have biased the investigators’ conclusions. For instance, under the heading ‘Observations and Discussion,’ the authors described some of the information upon which they based their report:

It was reported that moisture damage resulting from water ingress through the building envelope had occurred on various dates, at multiple locations, including, but limited to, the window well along the west elevation, the fireplace exhaust along the east elevation, and the west garage elevation. It was further reported that, prior to our attendance, the building deficiencies, which led to the water ingress had been addressed.

105M.R. confirmed that he was the source of this information. While Element determined a cause for the mould, specifically, “improper abatement, ongoing water ingress, or a combination of the two,” it fell short of offering an independently confirmed explanation for the source of the water that may have fed it. While M.R. insisted that the report provided this information under the above passage, on his own evidence, this section simply reiterated his own opinion given to the investigators as a starting point for their analysis and this hypothesis was never tested or confirmed in the body of the report. As with the report provided by RJeneration discussed below, I find that on the balance of probabilities, M.R.’s own exercise of control over the parameters of the Element investigation served to diminish the reliability of its conclusions.

106In their conclusion to the report, the engineers confirmed that they never identified the source of the water ingress:

We recommend any ongoing, if present, underlying deficiencies that lead to water intrusion be identified, addressed, and rectified. This report represents an opinion based on the information available at the time of our attendance. Within moisture damaged buildings, the possibility of changing conditions and the potential of hidden mould may exist. All work to remediate moisture damaged materials should be completed by a restorer that has been adequately trained and experienced in completing work of this nature. Should additional evidence become available, Element Forensic Engineering reserves the right to review said information and provide further comment.

107Once again, the Appellants opted not to follow the above recommendations, retain profession mould remediation services. M.R. acknowledged that as of the date of the present hearing, no “adequately trained and experienced” restorer had been retained to remediate the mould in the house.

The Safetech Mould and Water Damage Report

108J.M. is a senior project manager employed by Safetech Environmental Ltd. (‘Safetech’), an environmental consulting firm. He has been an occupational hygienist for approximately fifteen years, focussing on mould investigations as well as hazardous materials such as asbestos. He received a Bachelor of Science in environmental biology from the University of Guelph. After that, he attended at Conestoga College for a post graduate certificate in environmental engineering applications and a continuing education certificate in occupational health and safety. Since joining Safetech in 2014, he has performed assessments for water damage and mould associated with catastrophic events. While he has been trained in mould remediation techniques, he does not have practical experience conducting mould remediation himself. J.M. was qualified as an expert witness.

109On January 28, 2021, at Tarion’s request, Safetech performed an assessment for mould growth and water damage at the property. Both M.R. and T.S. were present, but G.O. was not. J.M.’s inspection lasted “a few hours,” but was limited to the basement office area and a section of the hallway leading from the basement office to the furnace room.

110He testified that he observed some staining that indicated that water had been present at some time. He also found mould growth in both the basement office and in the hallway on the drywall and the baseboards.

111As part of his investigation, he conducted a peer review of the Element report. He stated that in terms of the locations of mould growth in the house and recommendations to remediate, the Element report was in line with his own findings at the site. However, he noted that the Element investigators came to certain conclusions without providing sufficient data in their report. For instance, in the Element report, the authors offered the following conclusion:

Based on the available evidence to date, including our visual assessment and laboratory results, the mould present at the time of our attendance was a result of improper abatement, ongoing water ingress, or a combination of the two. Based on this information, we recommend the areas of concern be adequately exposed to conduct a more comprehensive assessment.

112However, in his report, J.M. detailed how Element did not conduct a sufficient assessment to confirm that there was an ongoing water ingress. As noted on the first page of the Element report, the scope of their investigation was limited to reported moisture damage without a comprehensive assessment of the building and therefore, they conducted no tests to determine if water ingress remained an ongoing factor. As noted above, they simply accepted ongoing water ingress as fact, based upon M.R.’s description of problems with the house, thereby allowing this unproven theory to serve as a foundation for their ultimate conclusions.

113In terms of his specific steps taken during his own investigation, J.M. took air samples from the basement, then commenced a more thorough study of the mould growth as he found it in the office on the drywall, on the baseboard and in the hallway. He used a moisture meter to collect readings of the drywall, the baseboard and the carpet to determine if anything was wet on the date of the inspection. Nothing was found wet at that time. He also took readings of humidity and relative temperature, determining that the conditions in the investigated areas were not sufficiently humid to create a condition in which mould would spontaneously grow. Specifically, he stated in his report as follows:

Psychrometric readings within the basement indicated that temperature and relative humidity were within recommended ranges. Temperature was measured to be 21.5° C and the relative humidity was measured to be 41.3%. Mould growth may occur on surfaces when relative humidity in the air is >60%.

114He explained that at levels of relative humidity greater than approximately 60%, there is a risk that the moisture in the air will be enough water that the pressure will push condensed water onto the drywall itself and this will be sufficient to cause mould growth. Below this threshold, this process is very unlikely to occur.

115He cut out a portion of the drywall below the basement office window as this area may have been the source of the issue and discovered a minor amount of staining on the foundation wall. He noted that this staining was consistent with water entering the building at some time. While M.R. advised him of the flood the day before the closing, he found that the staining observed did not in and of itself indicate it was the product of that event or ongoing water entry. He also stated that this staining was likely caused by wicking from below.

116He ultimately concluded that there was evidence of moisture and mould growth in the areas investigated. However, he was unable to determine a direct cause for the mould growth as of the date of the inspection, given the absence of any evidence of ongoing moisture penetration. As he stated in his report:

Mould requires a source of food and moisture in order to grow (amplify). It is therefore understood that a sufficient amount of moisture was present in the areas where mould growth was observed, at some point. However, during our assessment, all moisture measurements indicated that building materials were dry. As such, moisture measurements could not be utilized to trace the source of moisture. Furthermore, visual assessment of structural components, such as the foundation wall, concrete slab, and wood framing did not show evidence of repeated or ongoing wetting, though they did contain moisture staining consistent with a single wetting event, such as the water infiltration event reported during construction in 2017.

117J.M. explained that drywall provides an excellent food source for mould as it contains paper, binding and gypsum and therefore it is very susceptible to mould growth, provided that sufficient moisture is also present. However, the only water penetration reported to him was M.R.’s description of the 2017 flood. J.M. recalled that M.R. had also shown him photographs, presumably of the aftermath of this flood. Although the Appellants’ counsel questioned J.M. with respect to some of these images at the hearing, as none of this evidence was authenticated though witness testimony, there was no evidence presented with respect to when the images were created. Even if J.M. had speculated on whether the water depicted in the photographs would have been sufficient to cause mould growth, such speculation would carry virtually no probative weight.

118Safetech ultimately found mould growth in the same locations as the investigators for Element. However, while the Element report did not provide any moisture measurements or identify any previous abatement methods, it concluded that ongoing water damage and improper abatement was the cause of the mould growth. As a result, J.M. determined that the conclusions that Element drew in their report were not supported by the evidence in that same report.

119With respect to the Appellants’ theory that rushed replacement of the drywall had instigated the mould growth, J.M. offered a detailed and balanced assessment:

The theory that mould growth may have been caused by installing materials too soon after the original water loss in 2017, without proper drying is supported by the report of aged mould growth, the location of identified mould growth along the path of water migration for that event (i.e. the west wall of the office and the wall adjacent to the furnace room), and the lack of reported moisture losses since then. However, the timeline of events is not entirely consistent with that theory since the loss happened in 2017, and materials present at that time were removed and replaced by new materials which were reported to be finished in 2019. The building materials present after the loss would not have retained sufficient moisture for that length of time.

120It is also worth noting that, unlike the Element report, J.M.’s summary of his conversation M.R. was included simply as one of many sources of information rather than as the factual underpinning for his conclusions.

121After J.M. completed his assessment, he could not conclusively determine the source of the water and in turn the resulting mould growth. He therefore recommended that a building envelope assessment be completed to determine if moisture was indeed continuing to infiltrate the building, thereby explaining the mould growth. He recommended level 2 mould remediation protocols pursuant to the Environmental Abatement Council of Ontario, which refers to levels of between one and ten square meters of mould growth.

The Safetech Limited Moisture Assessment

122To that end, Safetech returned to the property six months later at Tarion’s request to conduct a Limited Moisture Assessment. The resulting report, dated June 25, 2021, was prepared by project manager and engineer, Taylor Porter (‘T.P.’) and engineer in training, A.S. A.S. testified at the hearing with respect to the findings of their investigation and Safetech’s recommendations.

123A.S. graduated from Carlton University in 2016 with a bachelor’s degree in Civil Engineering with a major in structural engineering. His eight-month co-op placement involved overseeing renovations to the CN Tower, while also designing condominiums and other dwellings for clients. He also worked at Polar Racking, in charge of designing the solar racking for multiple projects, including rooftops and ground pile systems, along with the related wind tunnel study analysis for these structures.

124Under the supervision of T.P. at Safetech, he has served as a project manager writing building science reports in relation to moisture infiltrations and building envelope deficiencies in residential, commercial and mixed-use structures. Essentially, his job was to study how and why moisture was entering a structure, what the scope of the entry was and how it affected the structure, particularly in terms of the useful life of the area. These investigations involved completing building envelope reviews and designs in order to resolve various moisture infiltration scenarios.

125His professional engineering designation has been delayed by restrictions related to the ongoing COVID-19 pandemic; however, he has completed all required examinations and, as of the hearing, his designation was in the final review phase. A.S. was qualified as an expert.

126A.S. and T.P. attended at the property on June 7, 2021; M.R., G.O. and an engineer from Element were present. They were directed to the basement where M.R. expressed his moisture concerns. Specifically, M.R. identified the exterior window well as a potential source of leaks. On the interior, they discovered that the baseboards had already been removed prior to their arrival. A.S. observed discolorations on the baseboards and suspected that it may be mould; however, he did not voice this theory as he is not an expert in mould.

127Prior to water testing, he measured the moisture readings. To the right of the interior window, he used a protimeter probe, used for cellulose structures such as drywall, to take a measurement of 12%, which he explained was indicative of a ‘dry’ condition. A second reading taken along the same wall yielded a reading of 16%, which indicated an ‘at risk’ condition. They also noted a pre-existing hole under the window but could not comment on how long this opening had been present. A.S. also used a Tramex moisture meter, for measuring moisture in concrete, to obtain a reading of 3.5% on the foundation wall, representing a ‘dry’ condition. He explained that any reading below 5.0% or 5.5% for concrete represents dry conditions.

128He and T.P. then returned to the exterior of the house and examined the window well, confirming that it included a drain and that it was covered with a sock. Upon examining the structure of the window, they discovered that the sealant was delaminating or missing in various points around the window and was in very poor condition. They also noted moisture staining along the weeping holes of the window itself. On the inside of the window, moisture staining was evident along the track. This was significant as they had not yet conducted the water test and there had been no precipitation that day.

129When they conducted the water test, they stood approximately 1.0 to 1.5 meters from the dwelling to simulate wind driven rain, not striking the window directly, but instead aiming the hose at the area above the window. Only four minutes into the test, they stopped the water flow as they could observe water pooling directly above the drain and entering the dwelling. After the water was stopped, A.S. observed water in the lower track of the window, confirming that the water had penetrated the window; he also noted the track was in poor condition and had not been cleaned.

130While water tests typically involve ten minutes of spraying, they ended the test early to avoid damaging the inside of the dwelling. In the Safetech report, he stated that “the window well drain was observed to provide poor drainage indicating potential blockage of the drain.” Had they continued the test past four minutes, they may have determined to what extent the window drain was functioning or not; however, continuation would have risked permanent damage to the basement interior. As a result, A.S. was able to determine that the water pooled on top of the drain as its path was blocked by something unidentified. Although he could not state for a certainty that the drain was obstructed, in his opinion, this was likely. When asked about the cause of the blockage, he opined that such an obstruction may have been caused by a buildup of silt or clay or perhaps the consequence of cleaning issues. He acknowledged that he did not use a camera or any other device to examine the interior of the drain.

131He then asked G.O. to enlarge the opening below the window to examine the wall cavity. They removed the insulation and the Tyvek moisture barrier was cut to observe the condition of the concrete foundation wall. They observed that water had clearly entered the dwelling as confirmed in the related photograph in the report. There was also water from the test coming down the face of the concrete foundation wall. Readings on the Tramex meter indicated increased wet conditions at 5.7%. The moisture on the foundation wall would not normally affect the humidity in the rest of the house as the wall would have been sealed with moisture barrier and drywall. There was also evidence of historical water staining replicated by the four minute water test. A.S. noted that there was a colour difference between the older staining and the new marks, though there was no means of determining when the older stains were created. Historic moisture staining also does not offer information on the frequency of past water penetration.

132Ultimately, Safetech found the following with respect to the source of the water in the basement office, with reference to the photographic evidence in the report:

Figure A8 identifies deficient/deteriorated caulking along the north western basement window and is suspect of facilitating moisture ingress during wind driven precipitation events. Furthermore, the sheet metal frame around the window appeared to be poorly assembled and poorly detailed to prevent intrusion at the sill’s corners.

133Fortunately, they found no evidence of cracks in the foundation. Rather, the water had travelled through the underside of the window and along the face of the concrete foundation wall. Although they determined that the water had entered through the bottom of the window, A.S. observed that the caulking on all four sides of the window was in poor condition. He added that the ingress would likely only occur during wind driven precipitation since the rain would not have struck the window well area without wind to force it into this area.

134They also removed and examined the baseboard trim in the hallway. According to their report, the moisture staining observed was the result of poor water remediation practices, specifically the minimal work done by G.O. to clean up the original pooled flood in April 2017:

The building disclosed during the on-site interview that the baseboards and 12” of the lower drywall were removed within the basement office subsequent to the closing day (April 2017) of the dwelling. Water that had penetrated the window and observed on the basement floor was mopped and squeegeed into the furnace floor drain. A single air mover was noted to be utilized in an attempt to dry out the building materials. Furthermore, it was noted that the baseboards leading to the furnace room removed during the water restoration efforts, however the drywall was not removed. The baseboards were then installed and painted, prior to confirming the sill plate and insulation behind the drywall in the area were dry. The moisture staining observed upon the removal of the baseboards in the hallway (Figure A19) are, in our opinion, a result of poor water remediation practices.

135Although the opposite southeastern side of the basement was not a concern for the investigation, M.R. asked them to examine this area. Moisture readings taken in this area indicated dry conditions. The entire investigation lasted approximately three hours after their arrival at 9:00 a.m.

The December 2021 Home Inspection

136J.B. originally worked in construction with his family’s firm over forty years ago, involving both residential and commercial renovation projects. In 1993, he obtained a B.A. in International Development and Environmental Studies from the University of Guelph. On the strength of that degree and his past construction experience, he was hired by GreenSaver in 1993. He was eventually trained as an Energuide advisor, delivering and coordinating energy and water conservation strategies in residential and high-density residential settings, training inspectors to do the same. He eventually established his own home inspection business twenty-five years ago. He was also trained with the Durham College Equivalency in 1997 through GreenSaver.

137Since then, he has conducted over 7,000 home inspections. He also had a fifteen month tenure with Mike Holmes Inspections doing the “Holmes Approved Homes” stages of construction inspections with Empire Builders and Mason Homes. He is presently on the education programs committee of the Ontario Association of Home Inspectors and serves as a director of the Board of Directors for that organization.

138He has been hired by homeowners at the 30-Day and subsequent intervals, but not for Tarion. He does not hold a Building Code designation. With that qualification, he was qualified as an expert.

139At the request of the counsel for O.F.H., he was asked to attend at the Appellants’ house and to inspect and identify defects in the interior basement hallway, office and the exterior roof and cladding at the front door entrance and provide an opinion regarding remediation. Although the name of O.F.H.’s counsel appears on his report, he clarified that he authored the entire contents of the report and included Mr. Raikes’ name strictly as the retaining client responsible for its receipt. Unlike the situation with R.P., J.B. clarified that counsel for O.F.H. was not involved in the drafting of the report.

140He testified that his report represents a “holistic device” reflecting his inspection of each of the items investigated. He followed the Ontario Home Inspectors’ Standards of Practice and used Home Gauge Inspection Software.

141On December 22, 2021, J.B. attended at the property and performed moisture tests in the basement and checked humidity levels, obtaining a reading of 59% relative humidity, which he characterized as higher than recommended for residential dwellings.

142He also noticed repairs to the basement that had not been fully completed and observed some lumber with black speckling apparent on its surface, as well as some white powdery material on a removed baseboard. He could not offer an expert opinion on the identity of these substances as he is not an expert on mould remediation and environmental concerns are beyond the scope of a home inspector’s practice. While he can send samples for laboratory analysis and offer clients advice with respect to air quality remediation strategies based in part on the results of such analyses, he was no aware of any testing performed in the present instance. He also did conduct any destructive investigation to identify any concerns behind the walls.

Roof and Exterior Cladding Issue

143M.R. testified that from the time that he and L.R. took possession of the house, they observed water running down the side of the brick near the front door. At the hearing, he described this as a defect with drainage and the flashing on the roof and cited numerous provisions of the Building Code for the related deficiencies. However, as noted above, the only defect cited in his Notice of Appeal related to the flashing.

144He agreed that O.F.H. installed gutter protection grills through its subcontracted siding company. He testified that the water penetration had nonetheless occurred on both sides of the doorway, although his photographic evidence included images of staining only on the garage side. He stated that the effects of the water penetration became visible only after approximately one hour of rainfall. This precipitation need not be a torrential downpour, but could be a “regular rain” or even a mere drizzle. He speculated that the water was entering the building envelope and went somewhere within the structure before eventually finding its way out.

The 2019 Conciliation

145Prior to the October 2019 conciliation inspection, G.O. went up on a ladder, lifted up the flashing and applied a bead of silicone down the face so that if any water was entering under the flashing, it would collide with the silicone and be redirected down towards the eavestroughs. He denied that the material used was construction adhesive as M.R. alleged and stated that the clear silicone would not break down like construction adhesive and would instead stick to both the shingles and the flashing. He acknowledged that he did not return to re-examine the flashing to confirm that the silicone repair remained in place.

146M.R.’s skepticism over the efficacy of G.O.’s repair was in part because G.O. did not perform an inspection of the roof before applying the adhesive material as a solution. Also, neither G.O. nor T.S. used a ladder to go onto the roof on the day of the inspection, with T.S. unhesitatingly accepting G.O.’s solution as sufficient. M.R. nonetheless speculated that sealing the flashing could not have resolved the issue since the water was emerging from underneath the soffit and down the brick, leading him to conclude that the source of the leak must be at the top of the brick wall and therefore must be leaking down both sides of the wall on both sides of the entrance.

147In his report, dated October 14, 2019, T.S. made the following finding with respect to warrantability:

Tarion Construction Performance Guideline 5.4 indicates roof flashings shall prevent leaks into the home. The condition reported is that water runs off the edge of the roof and runs down the brick wall. No leaks were reported inside the garage.

There is no defect in the exterior cladding of the home resulting in detachment, displacement or physical deterioration and, therefore, no breach of the Two-Year Cladding or Water Penetration Warranties. [Italics in original]

148T.S. testified that he did not enter or inspect the garage as he was not made aware of any openings in this area. In addition, G.S. did not test the other side of the house as there was no allegation of leaks on this part of the house. G.O. testified that it was not raining on the date of this inspection.

149With respect to the Construction Performance Guidelines referenced above, T.S. explained that these serve as informational policies on common construction conditions that Tarion has observed in claims from homeowners and the expectations involved in those particular conditions. They set out what may be deemed a warranted condition as well as observable and measurable factors related to these conditions. For instance, described physical conditions may indicate the difference between water accumulation and the visual signs of water penetration through such evidence as water staining in basements.

150While T.S. was not personally involved in the creation of these Guidelines, he testified that Tarion had consulted with stakeholder industry organizations such as roofing associations and building code experts to arrive at a mutual agreement on the appropriate Guideline standards. Relevant to the present issue were involvement of the Residential Roofing Contractors Association of Greater Metropolitan Toronto.

151While M.R. hoped to prompt a follow-up to the cladding issue by adding as an uncompleted item on the Second Year Form, no such follow-up occurred and Tarion deemed the issue unwarranted in the November 7, 2019 Decision Letter. By late 2019, M.R. no longer attempted to contact O.F.H. over repeated cancelled appointments and scheduling conflicts. He stated that he had largely given up on working with G.O. and had no confidence or faith in him to resolve the issues with the house.

152He stated that Tarion instructed him to obtain two estimates to address suspected mould issues within the roof. When Tarion concluded that the Appellants lacked evidence to support this aspect of their claim, he received information that he should obtain a report from an engineer. At the hearing, he stated that an unnamed engineer informed him that such a report would not be possible without removing the roof to inspect the area under the roofing materials. Presumably, this information was provided verbally by the Element investigators when they attended at the house on October 28, 2020 as their report tangentially referenced reported water intrusions to the garage area, as quoted at paragraph 103 above.

153On December 10, 2020, M.R. sent the following email to the Tribunal, T.S., his representative’s law firm and O.F.H.:

Hello Parties

Please see attached engineers report for the mold (1-2(1-3), a report for the exterior cladding (6-2) could not be completed without removal of the shingles and sheathing, a second opinion from a roofing contractor will be provided prior to our upcoming hearing.

154As of the hearing, the shingles and sheathing had not been removed as suggested to obtain confirmation of M.R.’s theory that the source of the water penetration originated within the roof.

The RJeneration Report

155R.P. has close to thirty years experience in the roofing industry. Although he has approximately eight employees, he takes all calls and prepares quotes himself. He testified that he attended at the Appellants’ house at least four to five times with inspections lasting between twenty minutes to over one hour.

156Prior to R.P.’s initial inspection, M.R. instructed him to inspect the roof for deficiencies regarding the water that was penetrating the house and to prepare a quote for the cost to repair the roof. These instructions were not submitted at the hearing as they took the form of a telephone conversation. R.P.’s first attendance to the property occurred on May 4, 2020. While he inspected the roof on this visit, he did so from the ground without ascending onto the roof itself. R.P. returned to the house on three or four subsequent occasions for the same purpose. R.P. provided a quote on or about the second visit to the property. As a result of the disclaimer he had received from the engineer, the information that comprised this quote was later repurposed to serve as an expert opinion on water penetration into the roof. R.P. confirmed at the hearing that he was not approached to provide an expert report until November 2021.

157In his report, dated February 25, 2022, R.P. took the position that the roof was inadequately designed to prevent water from entering the building envelope for several reasons.

158First, the roof saddles located above the front door entrance have design deficiencies rendering the roof susceptible to water penetration and ice damming. He explained that roof saddles are required to divert water and snow from being trapped on or within the roof structure. If the roof saddles are too short, they will be ineffective in channelling rainwater and melting snow away from vertical structures such as a parapet wall, an element present on the Appellants’ house. Water may penetrate directly into the parapet as there would be nothing to deflect it away from the parapet wall.

159He stated that the saddle above the garage should have extended several inches beyond the wall to prevent the water becoming trapped against the parapet wall. He viewed this as the result of incorrect framing, stating that the saddles should have been installed during the framing with the same pitch as the adjacent roof and extended beyond the parapet wall with metal valleys installed to divert water from the parapet wall. In the present assembly, the trapped moisture will contribute to the abnormal wear to the roof sheathing and structure.

160He added that metal valleys should have been installed that rise up the parapet wall and under the vinyl siding and extend two inches past parapet wall. In the present case, the saddles were observed to end twelve inches short and therefore would be ineffective in diverting the water away from the building envelope.

161He testified that he observed “a lot of staining” on the brickwork and on the wood in the attic area above the garage, but readily acknowledged that he had not conducted much water testing over the course of his career. While the stained areas in the garage attic were dry at the time of his inspection, he believed that the staining represented evidence of multiple events of wetting over a period of time. These observations related to photographs taken on September 21, 2021 and included in the report.

162During his second visit to the property on November 8, 2021, R.P. went onto the roof to conduct a closer examination of the flashing. He noted in his report that a missing end cap on the garage side of the roof allowed more water to flow to an area under the flashing. This would increase water shedding towards the area where the water penetration was believed to be occurring with increased velocity due to the steep pitch of the garage roof. He suggested that an end cap should have been installed with proper down pipe locations to divert the water from the above canopy roof away from the building envelope.

163The eavestrough to the left and right of the parapet also lacked end closures, allowing water from the upper roof to exit the eavestrough onto the adjacent surface of the roof and drain down the roof directly into the parapet wall. A downpipe should have been installed to divert the collected water from the eavestrough down off the roof and away from the building envelope. Metal flashings would also prevent water penetration along the seams of the shingles. He estimated that approximately 40% of roof surface was draining into the affected area near the parapet wall. He stated that with so much water draining from second floor roof to the steeply pitched roof on the garage, a 6-inch eavestrough should have been installed around the garage.

164M.R. recalled that all eavestroughs observed on the house were five inches in width, whereas in his opinion, they should have been six inches given the large surface area on the main roof shedding water to the eavestroughs. However, he cited no Building Code authority to support this preference. Similarly, although he described the roof pitch as “9-12” at the hearing, this figure appeared nowhere in the report.

165He also testified that in areas that are sheltered from the sun, accumulation of organic growth such as algae may accelerate deterioration of the roof materials as the shingles will not have sufficient time to dry after precipitation. For example, in areas under the soffits, roofing materials may break down more quickly than in other areas due to organic growth. He did not however suggest that the presence of such sheltered areas was the result of design defects, acknowledging that it is not possible to control where the sun shines on the roof surface. He also did not propose a solution to this issue.

166R.P. testified that if the builder had built a proper saddle and with a pitch matching the rest of the roof, the water would have been diverted away from the building envelope via metal flashings. In the present case, O.F.H. used shingles in a “closed valley” to divert the water rather than metal valleys that would lessen the deterioration of the shingles, eventually resulting in their failure. He noted that no metal valleys had been installed on the roof. He explained that the wet areas on the roof evident in the photographs in the report supported his assessment that the water was being trapped rather that being properly diverted.

167Although not mentioned in his report, at the hearing, he testified that some portion of the siding was removed during one or more of his inspections and that he observed moisture trapped inside. He testified that trapped moisture will eventually cause mould to accumulate and the wood will decompose, resulting in the failure of these areas, thereby compromising the integrity of the structure.

168To resolve these issues, he stated that the shingles and the siding would have to be removed and the underlying structure would have to be reframed and extended over the parapet wall with metal flashings to divert water outside the building envelope. He testified that the same problems were evident on the roof on opposite side of the garage with water channelled directly into the parapet wall above the mud room. Again, he attributed the issue to improper framing and inadequate saddles.

169With respect to G.O.’s insertion of adhesive under the flashing, he testified that a proper repair would have involved removing all of the flashings to determine the extend of water and ice intrusion and installing step flashing. He stated that here, the flashing was not installed correctly and was the incorrect type or size for the structure. He did not elaborate on how the flashing installed was improper, but noted that he would be able to supply and install replacements.

170While he criticized the design of the house, he acknowledged that he never consulted the plans for the structure. Similarly, he offered no authority beyond his own experience and building practices for his statement that 3-4 inch saddles were required leading to the parapet wall.

171R.P.’s third visit coincided with the water test carried out by Tarion. While R.P. observed this test, he was not involved in it. R.P. took the position that the water test preferred by Tarion in its Construction Performance Guidelines of only ten minutes of continuous directed flow was insufficient in duration to pinpoint a water leak in the structure of this house, particularly as the leak was coming down the side of the house. However, he conducted no water tests of his own, despite subscribing to M.R.’s view that Tarion’s tests were far too brief to yield reliable data.

172RJeneration also provided a construction quote dated April 21, 2021 with respect to the roof. By this point in time, the Appellants had not received any expert report with respect to the roof. As with the quote for the window well, I find that it would be reasonable for RJeneration to know the accurate scope of the work to be conducted to provide an accurate report. While M.R. asserted that R.P. was the expert, it should not be overlooked that he was originally retained only to provide a quote for repairs in May, 2020, information that was later repurposed in late 2021 to serve as an expert opinion and report for the present proceedings. No invoice was generated for the initial attendance in May, 2020 when R.P. simply inspected the roof from the ground to generate a quote for repairs.

173With respect to the creation of the report, M.R. acknowledged that he provided the photographs included, wrote the observations and typed up the final report. When asked under cross-examination with respect to R.P.’s actual contribution to the report, his response was somewhat evasive, explaining that R.P. was not particularly “computer savvy.” He agreed that he “dictated” the observations in the report to R.P. He nonetheless characterized the report as a “collaboration” and noted that R.P. had offered to conduct any ordered repairs to the roof as well as any follow-up work on the window well. Significantly, R.P. acknowledged that he took no notes at all during his initial inspection in May, 2020 and offered the rather vague explanation that his recollections were the product of multiple visits to the property.

174With respect to images in the report of the garage ceiling, R.P. was not present when these photographs were taken, let alone when M.R. cut the holes in the ceiling depicted in the report. Since this evidence was not put to M.R. in his testimony, R.P.’s interpretation of the images was of limited probative value as it was substantially dependent on whatever M.R. had told him. Similarly, the Appellants’ counsel advised R.P. that a photograph under discussion depicted ice, though this is not readily apparent from the image and no caption accompanied the image. As a result, testimony that the image depicted ice damming represented evidence of a highly reduced probative value.

175R.P. acknowledged that although M.R. took all of the photographs in the report, he provided the included opinions on the deficient workmanship and the necessary work to address the damage. Specifically, he provided his notes on a piece of paper to M.R. and M.R. assembled the report using a combination of both of their observations and some of his wording. He took no photographs of his during his various inspections of the property. When asked under cross-examination which portions of the text were the product of his notes, he was unable to answer as M.R. was in possession of the only copy of these notes. In the absence of these original notes, he was largely unable to clarify which of the observations set out in the report were his own versus those added by M.R.

176One notable exception was the inclusion of the reference to section 9 of the Building Code, which he stated that both wished to include in the report. Earlier in his evidence, he stated that he contributed the references to the Building Code included in the report, but denied that he was aware of any formal training available in section 9 or otherwise, explaining that uses this material as a guideline only.

177M.R. acknowledged that he understood the basis the other parties’ concerns over bias in the RJeneration report, but explained that he believed that it was necessary “to have all of the information up front” to ensure that R.P. had all of the relevant facts he needed to offer an opinion, as well as to preserve some degree of transparency with respect to its creation. He stated that he had no prior relationship with RJeneration or R.P. and had found the company on the internet.

178It is also worth noting that counsel for the Appellants never tendered R.P. to be qualified as an expert. However, this may have been simply the result of a procedural oversight.

The December 2021 Home Inspector Report

179J.B. also did not ascend the roof during his inspection on December 22, 2021. Instead, he examined the roof from the edge of a ladder, likely for the same weather related reasons as described in G.S.’s testimony. In his report, J.B. noted that the shingles and components of the northeast garage roof received little if any direct sunlight. As a result, he stated in his report that “ideally the shingles would be replaced with a modified bitumen (torched on) membrane along with wall cladding modifications.”

180In his criticism of the roof design, he offered an assessment of the roof structure strikingly similar to that provided by R.P. with the respect to the potential for drainage problems. For instance, he observed that the closed valley design in the northeast part of the roof, wicking of moisture upwards below the shingles will be more likely than in an open valley. With the area being in virtually perpetual shadow, the subject area will be very vulnerable to snow and ice accumulation and possible ice damming through the roof or into the walls. There could be hidden damage which would only be detectable through disassembly of the cladding materials.

181Furthermore, he stated in his report that given the way that it has been designed, the roof and adjacent walls will run a higher risk of water intrusion during extreme precipitation events. Water could be driven into the wall system behind the vinyl siding and large volumes of water may drain around the wall and spill onto the lower brick veneer wall or enter the garage wall system. He also took issue with the length of the flashing as its present configuration could lead to water penetrations during extreme weather. He explained that due the slope of the roof with its configuration of multiple surfaces converging to one location, a large volume of water directed to this post could be pushed up under or over the flashing, allowing it to enter the building.

182He testified that the configuration of the roof system combined with the installation of the materials as assembled was problematic from his experience. While he described the above assembly as not proper construction, he acknowledged that it is currently the most common installation in the industry.

183At the hearing, he briefly outlined the following recommendations for modification included in his report to correct the above issues:

It is my opinion that this triangle of roof, unseen from the ground, should have had either a metal roof material like that used in an open valley, or better, it would have had a torch applied modified bitumen membrane with an uninterrupted (e.g. not a step flashing) metal flashing with a counter flashing above it and with the wall cladding materials installed to within one-inch of the roof.

1.1 (2) Where the roof meets the walls it is required that step flashing be installed. In spite of current design choices - where wall cladding is installed in direct contact with the shingles - it is still considered better building practice to terminate the wall finishes at least one-inch above the shingles. This would enable visual inspection and confirmation of the step flashing being present and would ease the task of shingle replacement in the future. A more important consideration for leaving a gap is that leaving a gap along the bottom edge will reduce the likelihood of water wicking into the spaces below and behind the materials either during heavy rain or in winter from snow and ice-damming. [Emphasis in original]

184On the date of the inspection, it was not raining. J.B. also agreed that he did not actually observe any wicking as this is a slow and gradual process. He also did not lift up any of the shingles to examine the materials below as the temperature on December 22, 2021 was below 0°C.

185Although internal damage may have been present, he could only testify to the elements he was able to observe and did not conduct any disassembly of the roof for internal examination. Nonetheless, he stated that the exterior parts of the roof, specifically the shingles and siding would need to be removed to determine what was installed underneath and reconfigure the roof in a more watertight fashion.

186He also examined damage in the garage below the area where the reported leaking had occurred. M.R. had informed him that he had cut the access hole in the garage ceiling. In this area, J.B. found staining, but no water present. He did not know the cause of the staining, but later attributed it to the same poor design and assembly as the roof.

187In the garage attic space and at the bottom of the adjacent wall, water damage was apparent and rusty bolts were visible. He testified that it was possible that water entering the garage attic may have travelled to the foundation below; however, as the house was no longer new and he did not know how long the wall system was open, he could not necessarily state a cause and effect relationship between the two observed areas of staining. He also could not speculate with respect to how much water could have travelled the eight to ten feet from the attic to the foundation of the garage.

188With respect to the flashing to the right of porch, he noted the installation of “counter flashing,” in other words, multiple surfaces converging and no visible step flashing or gap along the bottom of the siding to accommodate water. He stated this is incorrect and may have directed water into the wall along with the water directed against the wall from the adjacent roof surfaces. Out of concern for potential hidden damage behind the shingles and vinyl siding, he recommended removal of the roof and wall materials, followed by installation in the correct fashion.

189He stated that this application of addition cladding appeared to serve no function other than to obscure the roofing finishes and the terminations. However, he described no specific harm posed by the present assembly and acknowledged that it may assist in shedding water from the sheltered area under the eaves.

190Ultimately, he stated that given the multiple design errors, multiple trades would need to be engaged to remedy these issues, including a roofer, an exterior siding profession and possibly a carpenter. He disagreed that it would be necessary to rebuild both sides of the garage roof for the sake of consistency. While he did not determine that there were multiple and extensive issues with the roof construction, he did find multiple issues with exterior finish applications. However, if not corrected these problems could theoretically lead to future roof deterioration.

191However, in his report, he denied that the leak presented any threat to structural integrity as there is not enough water to cause decomposition prior to the next set of roof shingles are ordered. Although he recommended removing the roof and cladding to reverse the design and assembly errors, no action was required specially to address the leak.

The December 2021 Water Test

192G.S. graduated from the Construction Engineering (Management) Technology program at Fanshawe College in 1986. He was a general contractor for twenty-five years specializing in disaster clean-up and restoration in buildings, mainly residential. Much of his experience related to intrusive water entry in basements and roof leaks. He has also been certified in a number of related areas such as mould remediation, including as a water restoration technician, which appears on his curriculum vitae as a master water restorer with I.I.R.C. certification in 1995. G.S. was qualified as an expert.

193G.S. was asked by T.S. to inspect the roof and conduct a water test of the northeast slope of the garage roof where that part of the roof meets the siding at the masonry wall, otherwise termed “the valley.” He conducted this inspection on December 22, 2021. While this inspection was originally scheduled for September, M.R.’s requests for confirmation of G.S.’s qualification and his liability insurance, as well as general scheduling issues necessitated the delay. While J.B. was also present, Tarion did not ask him to provide an opinion with respect to the water tests.

194He explained that the water test was conducted only in the valley over the garage, to the left of the front door, to determine if there was any water intrusion to the residence. He had conducted roughly five past water tests prior to the present investigation. A qualified roofer, R.G., assisted with this test. Although he observed a hole in the interior garage ceiling, he did not cut this access and was not aware of who did.

195The inspection began with a brief interview with M.R., who advised G.S. that water had been leaking through the valley and into the garage. M.R. had informed him of G.O.’s repair to the flashing, but that the area continued to leak into the garage. At that time, M.R. did not allege to him that the water leaked anywhere else.

196He visually inspected the valley and the saddle area. He was not able to stand on the roof due to the freezing weather that day, but, like J.B., he was able to examine the roof from a ladder. He also inserted a ladder into the access hole in the garage ceiling to look for water staining, dampness and mould. He observed no mould but did find staining that in his experience was the result of water intrusion; however, the staining was not indicative of repetitive or created over a long period of time. Had the situation been otherwise, there would have been mould present, likely black in colour.

197G.S. conducted two water tests, the first approximately five minutes in duration and the second approximately thirteen minutes. However, he observed no water entry into the garage or its attic area. He did not use a moisture meter and neither he nor R.G. were able to stand on the roof to conduct the water test. However, R.G. was able to apply the water directly to the valley. As he noted, often one has to adapt to the physical circumstances of a given site or conditions. In the present instance, the cold ambient temperature and the resulting likelihood of the water directed at the valley freezing precluded safely standing on the roof.

198In his report issued on January 6, 2022, he summarized his findings as follows:

In conclusion, the staining to the drywall and framing appears to be the result of water entry at some point in time. It is unknown when and how often the water entry occurred; however, the current condition is not indicative of repetitive or multiple occurrences of water entry. Further, no water entry was observed in those areas for the duration of our water test.

199Although he was not asked to investigate the staining on the masonry at the front of the house, G.S. described this occurrence as “not abnormal.” While he speculated that it was the result of an overload of water from the eavestroughs, he could not be certain from the photograph shown to him during the hearing.

200As noted above, R.P. deemed the water tests performed by G.S. inadequate. Specifically, he testified that the tests should have been conducted from the second floor roof because this would have been the source of the majority of the water. During heavy rainfall events, water will flow from the roof into the lower portions of the roof and enter the damaged sections after striking all areas of the roof.

201He took issue with the duration and the volume of the water as well as the height from which it was directed at the structure, stating the following in his report:

The nature of this leak as described by the homeowner is that after rain fall of more than an hour, the leak makes its way into the garage above the roof along the sill and structure to the top of the brick and then down both sides and continues to leak for days. The inspection performed could not have identified the issues brought forward by the homeowner as the conditions created ice damming, the length of time was not sufficient to reproduce the leak, lastly the volume of water from the second-floor roof, running down a steeply pitched garage roof was not duplicated.

It is in my opinion the water leak test had major flaws and would not be able to duplicate the homeowners’ concerns based on the location of the water applied and the temperature that was below the freezing point.

202The wording of the above passage also underscores the concerns expressed by opposing counsel with respect to R.P.’s impartiality as the purpose of the testing in R.P.’s view was apparently to replicate the conditions described by M.R. rather than an objective assessment of possible water penetration to the structure.

203However, when asked under cross-examination with respect to the appropriate volume of water, he replied that two inches per hour would be preferable, but acknowledged that he could cite no authority for this claim beyond his “gut.” Similarly, he could not explain why the height selected by R.S. would have failed to produce reliable results.

204As for the duration of the test, he asserted that no less than eight hours of continuous flow would yield reliable results. When questioned on the basis of this claim, he offered no objective authority, but conceded that perhaps four hours was sufficient, again offering no objective authority for this assertion.

205R.P. also never conducted any water tests to the house himself, explaining that he would require several individuals on the roof running multiple hoses to obtain meaningful results. He also never inspected the roof during active precipitation, but expressed confidence in his speculation, despite acknowledging his conclusions as such.

206In contrast to R.P.’s vague and unsupported assertions on water tests, Tarion’s Construction Performance Guidelines set out detailed parameters for such assessments:

5.1 Above Grade

Use a standard garden house and sprayer attachment. The sprayer attachment should be set on “shower” or similar dispersal pattern. Spray the area to be tested for not more than 10 minutes from a minimum distance of 2 m. Have another person checking inside for the point of origin and the length of time it takes for water to appear. Areas to be investigated should be kept dry prior to the test. [Emphasis in original]

207The preamble to the above passage explained that this test is intended to simulate an average wind driven rainfall and therefore should not be conducted with full pressure single stream devices such as a pressure washer at flashings as this pressure can force water through building assemblies and flashings not intended for high pressure or high-volume water saturation. As the test was intended to simulate precipitation on the roof assembly, the alternative below grade test intended to detect foundation leaks was not applicable.

208Although counsel for the Appellants repeatedly suggested that aiming the hose at the highest elevation of the valley could have yielded different results, G.S. was unshaken in his evidence that since there was only one valley area in this section of the roof, the area exposed to the water test was the only region that would have captured any water that could have entered the structure. G.S. also explained that since the water test is intended to replicate the effects of wind driven rain, the distance the hose is held from the roof is irrelevant provided that the water is directed at the surface. As the staining observed in the garage attic could only have been caused by water entering through the valley, there was no need to direct the water elsewhere on the roof as counsel for the Appellants suggested. Similarly, there was no evidence submitted to support M.R.’s speculation that the water entered at some distant point and travelled about under the roof’s structure before exiting over the garage.

Analysis

Water Penetration in the Basement

209Despite his acknowledged awareness of the claims process and lack of difficulty in otherwise communicating with Tarion, M.R. opted not to consult with Tarion before taking unilateral steps to excavate the area outside the basement office window and to remove the drywall.

210Although he offered extremely vague testimony with respect to having inquired about the advisability of undertaking such work, even on his own evidence, the anonymous employee contacted apparently did not offer an enthusiastic endorsement of his plan, instead responding with a hesitant acknowledgement that Tarion could not prevent M.R. from undertaking the planned work. As a result, on the balance of probabilities, I do not find that M.R. offered persuasive evidence that he took any meaningful steps to consult with Tarion before interfering with these items or allowing a warranty service representative to attend and assess the items in their original state, let alone that this work was undertaken with Tarion’s approval.

211At the same time, he offered a misleading portrait of his relationship with O.F.H., stating that it was a pleasure to work with G.O. and that “the wheels are in motion.” He failed to disclose his enhanced concerns regarding potential mould in the basement or that he had already altered the site, thereby depriving Tarion of an accurate assessment of the situation.

212While it is understandable why he chose to remove the remove the drywall and dig the trench himself, his actions interfered with Tarion’s ability to perform its own assessment of the site with respect to the drywall and the suspected mould. When R.S. attended at the house on November 20, 2017 to assess the issues for the conciliation, he was unable to inspect the area of the reported mould as M.R. had already removed and replaced the drywall.

213Although M.R. took the position that he mitigated his losses by moving ahead with his own work as soon as possible, since he lacked any qualifications to undertake mould remediation, the proper course of action to prevent further damage would have been to inform Tarion of the problem before taking unilateral action. He also waited until mid-May 2017 to commence either project, thereby undermining any suggestion that this intervention represented an emergency that could not wait for an inspection by Tarion. That he never hired a profession mould remediation company despite multiple recommendations to do so also strongly undermines his mitigation argument.

214M.R. was aware that Tarion’s role was to assist, especially with timely notice of potential issues. His decision to remove and replace the drywall served to frustrate Tarion’s right to inspect the basement for itself in order to determine whether the items were warrantable. The Tribunal considered this right in 9272 v. Tarion Warranty Corporation, 2015 CanLII 72280 (ON LAT):

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:

[19] Tarion 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.⁸

215Paragraph (g) of subsection 13(2) the Act excludes warranty coverage for “alterations, deletions or additions made by the owner.” As a result, M.R.’s replacement of the basement drywall before Tarion could perform an inspection served to vitiate the warranty with respect to these items. After M.R. stripped away the compromised drywall and covered the affected area with replacement materials, Tarion was unable to determine to what extent O.F.H. may have been in breach of its warranty obligations and to what extent those breaches constituted a major structural defect.

216As the Tribunal noted in 8232 v. Tarion Warranty Corporation, 2013 CanLII 83569 (ON LAT):

By accessing a self-help remedy, the Applicants took themselves out of the legislative warranty scheme. The Tribunal denies the claim for replacement windows on the ground that it was made outside of the one year warranty period. If it can be established that there was water penetration around some windows such that it might be considered under the two year warranty, the Applicants’ actions of replacing the windows themselves rather than giving the Added Parties and Tarion the right to inspect and remedy vitiates any applicable warranty coverage. The carpet defects are clearly items that fall within the scope of the first year warranty. The Applicants’ failure to make this claim in a timely manner is fatal to them. Their claim in this regard is denied.⁹

217While the Tarion deemed the mould and water penetration issues resolved in he earlier 30 Day and First Year Forms, these same problems persisted to the period covered by the Second Year Form. However, so too did the “butterfly effect” caused by M.R.’s interference in 2017 upon the eventual warrantability of these items.

218The effect of the excavation outside the basement window upon warrantability is less intuitively obvious since two defects were found in the basement window that permitted water to infiltrate the dwelling. When M.R. dug the trench without consulting Tarion, he did so in response to the April 2017 flood not in advance of it. Based upon the uncontested evidence of when this work occurred relative to the flooding, his trench could not have caused the initial water penetration issue.

219M.R. effectively bypassed Tarion and O.F.H. by digging the trench, after the first confirmed flood on April 11, 2017 and a possible second flood shortly thereafter. With respect to this second flood, M.R. described this water intrusion as having occurred approximately two weeks after the first flood and attributed to the same source. Although he did not offer any further specifics on the second flood, this aspect of his evidence was not challenged under cross-examination and the possibility of a secondary penetration event shortly after April 11, 2017 was not directly put to any of the other witnesses.

220According to M.R., he only excavated the trench outside the window after this second flood, explaining that he did so to prevent a third flooding event and because he believed that the preliminary grading outside the house in conjunction with the downspout on the adjacent model home was the cause of the penetration. As with the removal of the drywall, M.R. waited approximately one month before taking unilateral action and without any meaningful cooperation with Tarion.

221Collectively, the evidence presented by the two Safetech witnesses offer the only cogent explanation for mould in the basement. While J.M. attributed the presence of mould to an unknown water source, six months later, A.S. complemented J.M.’s evidence by tracing the same water penetration to the defective window. Moreover, A.S. confirmed through a water test that the window did not function as it was intended due to poor assembly, compromised seals and poor drainage.

222Although the Element report also attributed the water penetration a number of speculative sources including the window, between that report and the evidence offered by J.M. and A.S., I prefer latter as their testimony was available to cross-examination, while the Element report was simply submitted without being tendered through a witness. As well, J.M. detailed several concerning logical problems with the facts purporting to support the conclusions in the Elements report that were never reconciled.

223As the Tribunal held in Hoffer v. Tarion Warranty Corporation et al:

The failure to produce an expert for cross-examination has the result that any report presented should be given less weight than the oral testimony of a witness at a hearing because the expert authors cannot be subjected to cross examination.¹⁰

224As a result, I find that the evidence of J.M. with respect to this issue represents the better evidence on the balance of probabilities. Both J.M. and A.S. testified in forthright and direct manner and fulfilled their obligations as experts. Consequently, I accept their evidence that water penetration through the defective window lead to the growth of mould in the basement.

225A.S. offered an expert opinion with respect to the immediate cause of the pooling of water in the well during the test on June 7, 2021, specifically that there may be an obstruction to the drainage system in the window well that prevented or delayed drainage away from the building envelope. It is worth noting that he acknowledged that he could not be certain that this was the cause for the pooling. However, no other cause for this drainage issue was proposed. When that possible obstruction was introduced to the window well drainage system remains unknown.

226The same water test established that the frame of the window failed to prevent water from entering the basement. However, paragraph (g) does not require that the “alterations, deletions or additions made by the owner” have any measurable effect on the operation of the disputed item, positive, negative or even neutral. It is sufficient only that they were unilaterally imposed by the homeowner and thereby deprived Tarion of its right to accurately assess the subject of the claim. While the window may or may not have permitted water to enter the house independent of the drainage problem, this is irrelevant to whether the exemption applies.

227As a result, pursuant to paragraph (g) of subsection 13(2) of the Act, I find that the Appellants voided the warranty for items 1-2 and 1-3 by altering these items themselves, thereby preventing Tarion from assessing the builder’s possible liability.

Roof and Exterior Cladding Issue

228With respect to the remaining item in the appeal, the wording of Appellants’ Second Year Form is significant as this forms the sole basis of this part of their appeal of Tarion’s Decision Letter:

(6-2) Exterior – Roof (Exterior) – Building Face/Exterior – Exterior cladding defects (e.g. exterior wall coverings, including siding and above grade masonry) – Front door entrance – flashing needs to be added, water has been leaking under shingles for 2 years. [Emphasis in original]

229The above complaint refers to water running off the edge of the roof and down the brick wall at the entrance of the house. Water staining on the exterior of the house is not covered by the warranty. Conversely, nothing in the Second Year Form filed by the Appellants above relates to water penetration into the house or the garage.

230As the Tribunal held in 6834 & 6836 v. Tarion Warranty Corporation, 2012 CanLII 71132 (ON LAT), in a similar fact scenario, the absence of evidence of water penetration into the building envelope removes this item from warrantable status:

The warranty for water penetration relates to water penetrating the building envelope. A home is to be constructed such that the elements, rain and snow and that in between, are kept out, The Applicants have included, in their claim for water penetration, a claim that water is leaking from the balcony area down the front of the bricks underneath. There was no evidence that this complaint involves water coming into the home, or penetration of the building envelope, and therefore it is not warrantable.¹¹

231As in the above case, the Appellants in the present matter did not submit a claim on the Second Year Form alleging that a defect in the roofing or even the flashing had resulted in water penetration to the house or the garage.

232The definition of “building envelope” in subsection 15(1) of Reg. 892 is somewhat ambiguous:

“building envelope” means the wall and roof assemblies that contain the building space, and includes all those elements of the assembly that contribute to the separation of the outdoor and indoor environments so that the indoor environment can be controlled within acceptable limits

233However, since the walls of a garage walls contribute to the separation of the outdoor and indoor environments to no less a degree than those enclosing the living portions of the house, this part of a house seems to fall within the definition. That the garage serves as part of the “wall and roof assemblies that contain the building space” lends even more support for its inclusion.

234After their claim was denied by Tarion’s Decision Letter, the Appellants attempted to retroactively expand the scope of their claim at the hearing to include leaks into the garage as the implied logical cause of the visible staining – essentially reverse engineering a warranted cause for the unwarranted stains on their masonry. However, since the scope of the appeal is limited to the four corners of the denial in the Decision Letter and a claim over leaks into the building envelope was not included in that letter, this issue cannot now serve as grounds for the appeal.

235Similarly, although M.R. speculated that whatever caused the leak over the garage roof would logically affect both sides of the roof over the garage, this was also not an issue under appeal. Even putting aside the absence of any evidence of water intrusion to support M.R.’s theory, the Tribunal cannot issue orders with respect to items that were not covered in the Decision Letter. As Tarion was not put on notice of an issue with the other half of the roof, no inspection of this area ever occurred and it was therefore not referenced in the Decision Letter. I also find no merit to the Appellants’ suggestion that both sides of the roof must be replaced in the interests of uniformity since cosmetic considerations and “curb appeal” fall outside the strict threshold of a defect in workmanship or materials.

236The Appellants have attempted to expand their grounds of appeal with respect to Item 6-2 in other ways. With respect to ice damming, the Appellants were required under paragraph (a) of subsection 15(2) of Reg. 892 to demonstrate that there was a defect in workmanship or materials that caused this issue. Noting the Appellants’ unexplained delay in obtaining an expert report with respect to the roof issues, Tarion relied upon the Ontario Divisional Court’s decision in Ducas v. Tarion Warranty Corporation, 2021 ONSC 5885, in which the Court rejected the Tribunal’s incorrect adoption of a reverse onus on the builder to investigate issues arising after the submission of the Second Year form:

Ducas suggests, as an alternative argument, that the onus to prove the cause of the water penetration should shift to the builder after a breach of the Two-Year Warranty has been established. On this basis, Ducas argues that the Tribunal erred by failing to place the onus on Forest Grove to conduct an investigation of the cause of the water penetration after she had established the three Violations.

There is no authority for such a reverse onus in the language of the Act or the Regulation, which Ducas acknowledges. I do not accept that the Tribunal had this authority merely because it is to be viewed as consumer protection legislation, as Ducas suggests.¹²

237As with the other facts involved, the Appellants bore the evidentiary burden to prove every allegation of a breach of warranty. As the Tribunal explained in Re Ontario 8149/ONHWPA, 2015 CanLII 59625 (ON LAT):

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.¹³

238In Ducas, the mere existence of ice damming was insufficient to establish a defect in either workmanship or materials used in the construction of the roof. In the present case, even the possibility of ice damming was largely speculative.

239As in the present case, the appellants in Ducas also referenced questionable roof design choices that may or may not have complied with undefined “industry standards.” While this may be the case, this is not equivalent to the necessary causal relationship to a defect in the workmanship or materials that would place the issue under warranty coverage. At best, the evidence as presented in J.B.’s testimony, was that the design was less than ideal, but may lead to issues in the future if not reassembled. The relevant evidence was the water test conducted by G.S. pursuant to the defined Construction Performance Guidelines which failed to reveal the source of the historic leak. For all of his baseless and subjective criticisms of Tarion’s water test methodology, by the date of the hearing, almost two years after his first inspection, R.P. had never conducted his own water tests, at eight hours in duration or otherwise. During that same period, he also observed no water intrusion through the roof.

240The Appellants’ alleged inability to use the basement office is also outside the coverage under the Act, since like M.R.’s labour costs, these issues fall under the excluded secondary expenses pursuant to paragraph (b) of subsection 13(2) of the Act. In any event, they called no evidence on this loss of use, referencing it only by implication in their closing submissions.

241The Appellants also alleged multiple violations of the Ontario Building Code and noted that paragraph (d) of subsection 15(2) of Reg. 892 requires adherence to these criteria. As noted above, the RJeneration report contained a passing reference to the Building Code. However, the apparent argument that the roof did not comply with the provisions of that statute was not pursued in the evidence and largely only arose within a list of relevant legislation during the Appellants’ closing submissions.

242With respect to the reliability of R.P.’s report as evidence, I find that the concerns of the other counsel at the start of the hearing were ultimately justified. Expert witnesses have a duty to a court or tribunal to give fair, objective and non-partisan opinion evidence. They must be aware of this duty and able and willing to carry it out. The expert’s opinion must be impartial in the sense that it reflects an objective assessment of the questions at hand. It must be independent in that it is the product of the expert’s independent judgment, uninfluenced by who has retained him or her or the outcome of the litigation. It must be unbiased in that it does not unfairly favour one party’s position over another. In other words, even in the context of a contested hearing, the expert’s opinion should not change regardless of which party retained him or her.

243Keeping these standards in mind, I find that R.P.’s report should be accorded very little weight as expert evidence. It was not authored by an expert, but instead driven by M.R. himself. It was impossible to distinguish which parts of it were contributed by the purported expert from that dictated by M.R., particularly as R.P.’s original notes were not produced, or available for even his own reference at the hearing. As well, since he had positioned himself to conduct any required remediation work ordered, R.P. was improperly incentivised to inflate the severity of the alleged damage, and in turn, the total cost of repairs. As well, unlike the other properly qualified experts, he offered no cogent authorities for his perspectives on proper construction standards, such as his insistence that the duration of a water test should be first eight then four hours at minimum.

244That having been said, much of R.P.’s criticisms with respect to the roof’s inherent design issues, regardless of their actual source, were substantially supported by J.B.’s expert evidence. However, while their disparagement of the roof design and assembly may have appeared intuitively reasonable, neither of them held qualifications under the Building Code nor alluded to any cogent authority that would raise their distaste for the roof’s construction to that of a warrantable defect. As the Tribunal noted in 9147 v. Tarion Warranty Corporation, 2015 CanLII 38755 (ON LAT), a party asserting non-compliance must ground their assessment in some authority beyond their own preferences and experience or even more nebulous “industry standards”:

Industry standards are not self-evident. It is not sufficient for appellants to bring evidence of areas of construction with which they are dissatisfied and expect the Tribunal, in the absence of any other evidence, to conclude that workmanship does not meet industry standards simply because the appellant alleges it is so. There must be some objective evidence before the Tribunal defining the industry standard and identifying the manner in which the complaint falls below that standard.¹⁴

245The mere speculative capacity for future problems and subjectively dubious design choices do not necessarily equate to evidence of a defect in workmanship or materials that would give rise to a breach of warranty. While J.B.’s report detailed a host of less than ideal design choices, none of these rose to the severity of a warrantable item under section 15 of Reg. 892.

246As a result, I find that the Appellants failed to meet their evidentiary burden to demonstrate that the roof was “free from violations of the Ontario Building Code regulations under which the Building Permit was issued, affecting health and safety, including but not limited to fire safety, insulation, air and vapour barriers, ventilation, heating and structural adequacy.”

247Even if this were not the case, I find that the Appellants ultimately failed to establish the continued existence of a leak or the cause of the historical leak. Despite the water test conducted by G.S., no water intrusion was found and the precise cause of the staining to the masonry at the entrance of the house was never determined. J.B. found evidence of historical water penetration, but nothing to demonstrate that this leak remained an ongoing or even repeated historical occurrence. As his own report concluded, no action was required as he did not believe that the leak is a threat to the structure and there is not enough moisture in the structure from the past leak to cause rot to develop before the next set of shingles are required.

248It is worth noting that both J.B. and R.P. consistently framed their negative assessments of the roof assembly in the conditional tense – in other words, various problems could theoretically result from this design at some unspecified point in the future. However, neither offered evidence that the present configuration had directly resulted in a leak into the building envelope. At best, R.P. and J.B. may have established a correlation between less than ideal design and assembly and a historic water leak, but never proved a causal relationship between the two issues.

249As a result, I find that the Appellants failed to demonstrate a breach of the warranty with respect to item 6-2 in the Decision Letter dated November 7, 2019.

Costs Submissions

250In his closing submissions and reply, counsel for the Appellants requested costs with respect to the length of the proceeding and his clients’ frustration at the delays leading to the hearing, largely based upon the presumption that their appeal would succeed in spite of the other parties’ opposition.

251On April 26, 2022, counsel for the Appellants filed further costs submissions based upon evidence and submissions not presented at the hearing, despite the opportunity to do so.

252At the hearing, the Appellants bore the evidentiary burden to state the basis of their appeal. This allowed Tarion and O.F.H. to know the case to meet, such that they are able to provide a full answer and defence to the Appellants’ case, including costs submissions. The Appellants already had an opportunity to outline their costs submissions at the Hearing and did so both in closing submissions and reply. The other parties relied upon the Appellants’ submissions at the Hearing in tendering their own submissions in this matter, both ultimately opting not to request costs. There was no request for leave for any of the parties to file written submissions for costs or otherwise following the conclusion of the hearing.

253Costs in proceedings before the Tribunal do not automatically follow the event. They have a punitive dimension to address unacceptable behaviour. Rule 19.1 provides as follows:

19.1 Where a party believes that another party in a proceeding has acted unreasonably, frivolously, vexatiously, or in bad faith, that party may make a request to the Tribunal for costs. [Emphasis added]

254The Appellants have not pointed to any conduct on the part of either Tarion or O.F.H. in the proceeding that could be described as frivolous, vexatious or in bad faith. As well, they are not entitled to advance part of their claim, only to later provide further submissions that could have and should have been presented during the hearing itself.

G. ORDER:

255For the reasons set out above, pursuant to subsection 14(19) of the Act, I confirm Tarion’s decision in the Decision letter of November 7, 2019 and direct Tarion to deny the Appellants’ appeal.

256The Appellants’ request for costs is denied.

LICENCE APPEAL TRIBUNAL

_______________________

Kevin Lundy, Member

Footnotes

1. 1(2009) 2009 CanLII 65801 (ON SCDC), 99 O.R. (3d) 656 (Ont. Div. Ct.) (‘Liddiard’).
2. 2Ibid. at paras. 49-50.
3. 3Ibid. at paras. 51-52.
4. 42020 CanLII 12761 at paras. 15-18 (ON LAT).
5. 52000 SCC 51, [2000] 2 S.C.R. 600 at para. 28.
6. 6Ibid. at para. 29.
7. 72015 SCC 23 at para 49.
8. 82015 CanLII 72280 at para. 40 (ON LAT).
9. 92013 CanLII 83569 at para. 23 (ON LAT).
10. 10[2008] O.L.A.T.D. No. 3 at para. 47.
11. 112012 CanLII 71132 at para. 86 (ON LAT).
12. 122021 ONSC 5885 at paras. 68-69 (‘Ducas’).
13. 132015 CanLII 59625 at para. 9 (ON LAT)
14. 142015 CanLII 38755 at para. 25 (ON LAT).