Licence Appeal Tribunal File Number: 15612/ONHWPA

In the matter of an appeal from a decision of Tarion Warranty Corporation under section 14 of the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “Act”).

Between:

Olga Gale

Appellant

and

Tarion Warranty Corporation

Respondent

DECISION

ADJUDICATOR:

Bruce Stanton

APPEARANCES:

For the Appellant:

Olga Gale (self-represented)

For the Respondent:

Pat O’Hara, Warranty Services Representative

Nicholas Reinkeluers, Counsel

Vidish Parikh, Articling Student

Court Reporters:

Taha Aqdas, Josh Grieve

Observers:

Suzanne Chandrakumar (Tarion)

Hande Bilhan, LAT Member

Heard by videoconference:

September 11, 12, 2024

OVERVIEW

1Olga Gale (the “appellant”) appeals from a decision letter issued by Tarion Warranty Corporation (“Tarion”) dated January 2, 2024 (“DL”), pursuant to section 14(13) of the Act, in respect to deficiencies in her condominium.

PRELIMINARY ISSUE

Disclosure of documents, filing of evidence

2Tarion raised an objection to the appellant’s filing of documents for the hearing because the filings were not in accordance with the case conference report and order of March 18, 2024 (“CCRO”). The CCRO outlined the due dates for the exchange of documents and the filing of evidence for the hearing.

3Rule 9.3 of the Licence Appeal Tribunal Rules, 2023 (“Rules”) states that if a party fails to comply with any Rule, direction, or order with respect to the disclosure, exchange, production or inspection of documents, that party may not rely on the document as evidence without the permission of the Tribunal.

4Rule 9.3 stipulates that in these circumstances, parties will have an opportunity to make submissions before the Tribunal determines the evidence it will permit to be entered for the hearing and may consider any relevant factor including:

a) the reasons for non-compliance;

b) whether a party will be prejudiced by the admission or exclusion of the evidence and the extent to which the prejudice can be mitigated by any other order;

c) the extent to which the substance of the information lies within the knowledge of the other party;

d) whether the party opposes the admission of the evidence or testimony; and

e) the relevance of the documents to the issues in dispute.

5Tarion submits that the appellant exchanged only a one-page document with Tarion by June 10, 2024, the date she was to disclose the documents she intended to rely on for the hearing, and served and filed her evidence for the hearing on September 3 and 4, approximately one week after the August 28 deadline for filing of evidence noted in the CCRO. Tarion adds that the appellant’s documents exceeded the 500-page limit and were not organized in accordance with the CCRO (a single PDF copy, indexed, tabbed and page numbered). Tarion notes that the appellant’s two “My Tarion file” documents alone, total more than 700 pages.

6Tarion submits that the appellant did not exchange and file her documents for the hearing in accordance with the CCRO nor did she file a list of the witnesses she intended to call.

7Upon receiving the appellant’s evidence on September 3 and 4, Tarion filed a supplemental book of documents on September 9. After receiving Tarion’s supplemental documents, the appellant filed further additional evidence on September 10, including a book of documents organized in the appropriate format.

8The appellant submits that she will not be calling witnesses and will testify on her own behalf and that she was delayed in filing her documents because she was waiting on estimates from contractors to establish the value of the warranted deficiencies that are the subject of the disputed DL.

9After hearing the respondent’s submissions, the appellant submitted that she wishes to rely only on the following documents for the hearing:

a) Appellant’s Invoice of Burke’s Restoration Inc., May 17, 2022;

b) Appellant’s Homeowner Book of Evidence, excluding pages 2, 3 and 4; and

c) Appellant’s Additional evidence in response to Tarion’s additional evidence, September 10, 2024.

10The appellant submits that she does not wish to rely on the approximately 700 pages of evidence she filed titled “My Tarion File”.

11The respondent does not oppose the appellant’s 3 documents, noted in paragraph [9] above, being entered into evidence. The respondent submits that it wishes to rely on its Supplemental Book of Documents, September 9, 2024, despite it not being filed in accordance with the CCRO.

12After receiving the parties’ submissions on the preliminary issue I have decided to admit the appellant’s 3 documents and the respondent’s supplementary book of documents because the documents are relevant to the issues in dispute and the parties consented to them to be entered into evidence.

ISSUES

13The issues in dispute are:

a) Was there a breach of warranty in items 6 or 8 of the decision letter?

b) Where a breach of warranty occurred and monetary damages resulted, what was the amount of the damages?

RESULT

14The deficiencies represented in items 6 and 8 of the DL are breaches of warranty. The amount of damages is $19,336.62. As the appellant has received compensation of $19,336.62 from Tarion, no further compensation is owed to the appellant. The appellant’s request for additional compensation is denied.

PROCEDURAL ISSUES

Alyson Wiley, Tarion Warranty Services Representative, not appearing as a witness

15On day 2 of the hearing, the appellant objected to the respondent’s failure to call Alyson Wiley (“A.W.”) as a witness. She says that A.W. has information that is relevant to the appeal and should be called as a witness by the respondent.

16The respondent says A.W. is no longer in its employ and that her name was not included on its list of witnesses for the hearing.

17The Tribunal has no authority to require that the respondent call a particular witness. If the appellant needed A.W. to testify, then she could have included her on her own list of witnesses and had the Tribunal issue a summons to secure her attendance. She did not do so.

18The appellant did not suggest a specific remedy and I am not satisfied that the appellant is entitled to an order with respect to this witness' attendance.

Post-hearing written submission by the appellant

19The day after the hearing concluded, the appellant filed a 3-page written submission for the purposes of adding to her reply to Tarion’s closing submission, which she had presented orally the previous day.

20Although 3 days had originally been allotted for this hearing, at 3:00 p.m. on the second day, I proposed, and the parties did not object, to finishing the hearing by 5:00 p.m. that day. A 20-minute break was provided between 3:30 p.m. to 3:50 p.m. for the parties to prepare their closing submissions. Each expected to take approximately 30 minutes for their closing submissions. Closing submissions finished at 4:50 p.m.

21Appreciating that there was only 10 minutes remaining, and that both parties had presented their closing submissions, the appellant was invited to present a brief reply on the respondent’s closing submission, only on the elements of the respondent’s closing statement that she could not have foreseen, or for which she could not have incorporated into her own closing submission. The appellant submits that she ought to have had more time to complete her reply.

22Rule 3.2 gives the Tribunal the power to make such orders or give such directions in proceedings before it to control its process or to prevent abuse of its process. Rule 3.1 states that the Rules will be liberally interpreted to facilitate a fair, open and accessible process and to allow the effective participation by all parties, whether they are self-represented or have a representative, and to ensure an efficient, proportional and timely resolution of the merits of the proceeding.

23I find that the appellant’s post-hearing written submission shall be excluded from consideration in the decision. The hearing had ended on a timetable that was agreed to by the parties. The parties had time to prepare their closing submissions. The hearing was conducted in accordance with the CCRO and on the exceptions or non-compliance with those orders, the parties had the opportunity to make submissions. I find the hearing provided the parties effective participation in a fair, timely and proportional proceeding that had ended. I therefore find the post-hearing written submission of the appellant will be excluded.

ANALYSIS

Tarion warranty protection scheme

24This matter concerns the appellant’s claim of entitlement to compensation from Tarion’s Guarantee Fund (the “Fund”) for breaches of the new home warranty under the Act. It is therefore necessary to understand how the warranty scheme under the Act functions and what rights and responsibilities the homeowner or purchaser, the builder and Tarion have within it. The administrative elements of the scheme are set out in O. Reg. 892 under the Act (“Regulation”).

25Tarion is a private, not-for-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 of a home or condominium on behalf of the owners must be enrolled with Tarion with an enrolment fee paid prior to the commencement of construction.

26Tarion 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 within certain defined time periods.

27If the builder does not repair or resolve a warranty claim within the prescribed time, a homeowner may request a conciliation, a process where Tarion assesses the unresolved items on the homeowner’s warranty form and decides whether they are covered under the warranty set out in the Act. The builder is given a further period after the date the homeowner requests a conciliation inspection to repair or resolve the claim items. A conciliation inspection is scheduled with a Tarion representative, and a representative of the builder typically attends.

28After the inspection, Tarion issues a Conciliation Assessment Report (“CAR”) setting out which of the unresolved claims are warrantable, i.e. constitute a breach of warranty, and which are unwarranted. If a claim item in the CAR is warranted, the builder has 30 days from the date the CAR is issued to resolve or repair the item.

29If the builder fails to resolve the warranted items within the statutory timeline, Tarion will then schedule a follow-up inspection with the homeowner to determine whether the builder has carried out repairs to the warranted items. If a warranted item remains unresolved, Tarion may propose to provide cash compensation to the homeowner from the Fund or may arrange to carry out the repairs.

30If a homeowner disagrees with Tarion’s warranty assessments in the CAR, they can request a decision letter, upon which further negotiation or mediation can continue between the homeowner and Tarion, or the homeowner may file an appeal with the Tribunal.

31As noted above, Tarion issued the DL on January 2, 2024. The appellant filed her appeal of the DL on January 31, 2024.

Are items 6 and 8 in the decision letter breaches of warranty?

32The DL concerns only items 6 and 8 of the appellant’s initial warranty claim form. The parties agree that the deficiencies described in items 6 and 8 constitute a breach of warranty. The DL states that the appellant was provided $9,668.31 from the Fund for each warranted claim, totalling $19,336.62.

33Under section 13(1) of the Act, every vendor of a new home warrants to the owner that it is constructed in a workmanlike manner and is free from defects in materials, is fit for habitation, and constructed in accordance with the Ontario Building Code.

34Section 14 of the Act sets out the basis for compensation that might accrue to a homeowner if there is a breach of warranty under section 13. Section 14(3) stipulates that, subject to the regulations, a homeowner is entitled to receive payment out of the Fund for damages resulting from a breach of warranty.

Events leading to Tarion declaring items 6 and 8 as breaches of warranty and offering compensation for them

35The appellant took occupancy of the condominium on May 31, 2019 and filed an initial claim (“30-day”) statutory warranty form on June 26, 2019 claiming 51 defects or deficiencies in her condo. The administration of the 30-day warranty is set out in section 4.2 of the Regulation.

36Pursuant to section 4.2(5) of the Regulation, the builder was provided the customary 120 days after the 30-day form was submitted to Tarion to address and repair the warranty claims and was granted several extensions of the 120-day period. I have no evidence before me that indicates whether the appellant requested a conciliation inspection or whether Tarion conducted a warranty assessment inspection on its own initiative arising from the appellant’s 30-day warranty claim. Tarion completed a warranty assessment inspection on the 51 items on November 17, 2020, approximately 18 months after the appellant filed her 30-day claim.

37Following the warranty assessment inspection, 5 of the 51 items were determined to be warranted including items 6 and 8. The builder had an additional period to address the warranted items. Tarion conducted a follow-up claims inspection on July 7, 2021 and found that only items 6 and 8 remained unresolved.

38Item 6 involved uneven colour and finish of tile grout in both bathrooms. The grout was repaired in the master bedroom ensuite bathroom, which has a bathtub, but further interior damage occurred in that bathroom when the grout repairs were conducted. The grout repairs in the main bathroom, with a walk-in shower, were not entirely completed. The shower wall grouting was complete but there were no tiles or grout on the shower floor as of the July 7 inspection. The inspection report noted that multiple paint touch-ups and caulking and silicone of the shower surround were required. Tarion notes these further repairs are required as a result of the work done to correct the grouting issue, therefore the claim remains unresolved.

39Item 8 was described as the bathtub in the ensuite bathroom having a rough surface, paint spray on the tub, and poor caulking. At the claims inspection on July 7 the Tarion inspector reported that the tub defects had been addressed but the interior of the ensuite bathroom had been damaged in the process (multiple paint touch-ups needed, shower faucet damaged, toilet seat scratched, towel bars damaged, and sink scratched). Tarion notes these further repairs are required as a result of the work done to correct the bathtub repair, therefore the item remains unresolved.

40The parties agree that items 6 and 8 constitute breaches of warranty.

What amount of monetary damage occurred as a result of the breaches of warranty?

41I find the appellant has not proven that the amount of compensation she received from Tarion is less than, or is not sufficient to meet, the monetary damage arising from the two breaches of warranty,

42On March 4, 2022, Tarion offered compensation in the amount of $19,336.62 to the appellant to affect repairs to the two warranted items. The amount was based on Tarion’s internal estimate of the repairs required, and a second estimate on the same scope of work from a contractor, Burke’s Restoration (“Burke’s”). The total cost of Tarion’s internal estimate was $19,156.75 and Burke’s was $19,336.62. The estimates were nearly identical because Tarion and Burke’s both use an estimating program called Xactimate, software that is commonly used in estimating the cost of repair work in the insurance restoration sector of the construction industry. The appellant agreed to and signed a claim resolution and release on March 4, 2022 for $19,336.62 in full and final satisfaction of her claim under the Act.

Attempted repairs to the two bathrooms

43The appellant submits that, with the help and guidance of Tarion, she contracted Burke’s to conduct the repairs to the bathrooms. Burke’s provided an estimate to the appellant on February 10, 2022 based on the scope of work outlined by Tarion to address and repair the deficiencies, in the amount of $19,336.62 not including HST.

44The appellant testified that she accepted the claims resolution from Tarion on the condition that it would facilitate the repairs to be conducted by Burke’s. She testified that Alyson Wylie, a warranty services representative at Tarion, told her that it would be preferable to have Burke’s complete the work because they had the best price and the work could get underway more quickly.

45The appellant testified that Burke’s did not come until June 2022 to do the work and when they did arrive, she received complaints from the condo building security that Burke’s was not abiding by the condo rules. Burke’s proceeded firstly with installing a new river-rock style floor in the shower during the summer of 2022. The appellant testified that the grout for the river-rock flooring was foaming and washing away, eventually causing cracks in the grout and pieces of the floor and grout were breaking away.

46Due to the unusable condition of the shower, the appellant requested that Burke’s replace the shower floor with a more suitable tile and grout at their expense. Burke’s initially agreed and arranged to begin the replacement of the floor in early December 2022 but the tile installer scheduled to conduct the repair withdrew from the job.

47In an email to the appellant on December 20, 2022, Burke’s informed her that it disagrees that the shower floor work was poorly done. Burke’s’ original intention to replace the shower floor at its expense was because the appellant had specified using a grout that was not suited to the job. Burke’s now argued that the specifications labeled on the pail of grout used in the shower installation did not prevent it from being used in shower floor applications. For example, it specified that 7 days were needed to achieve a final cure of the grout before full water immersion. The label indicated it could be used in showers and swimming pools.

48The appellant filed a specification sheet in evidence for the grout product used in the attempted repair of the shower floor, TEC Design FX, that reads similar to the label on the product container, as noted above. However, the specification sheet includes under the title of Limitations, “Do not use on shower floors”, and “Do not use with irregularly spaced or shaped tile or stone such as pebble stones.” The appellant requested the specification sheet from the manufacturer after she experienced the foaming and washing away of the grout that she observed.

49After the December 20, 2022 email, the contractual relationship between the appellant and Burke’s broke down. Burke’s refused to continue with the contract and refunded the appellant her deposit, less $1,214.75 only for its cost of materials used to that point.

Should new defects revealed during repairs of items 6 be compensated from the Fund?

50In April 2023, the appellant contracted Alexandre Klimov to demolish the shower floor, including the river-rock and grout Burke’s installed and the concrete “dry pack” subfloor, at a cost of $3,000.00 not including HST.

51The appellant testified that after Klimov had demolished the shower floor and removed the remnants of the rock, grout and concrete, the rubber membrane below the dry pack subfloor was exposed and appeared to be damaged. The appellant submits that the defects in the membrane (cuts, and loose membrane at the corners), which were discovered only by virtue of demolishing the previous tile and dry pack, should be covered under the builder’s warranty.

52The appellant submits that since the membrane defects were discovered incidentally in the course of addressing a warranted defect (item 6), compensation from the Fund should be increased to address replacing the membrane and related work.

53The appellant directed me to a paragraph in Tarion’s Compensation Offer letter of March 4, 2022 titled Concern Identified During Repair, which stated that, “If you use compensation to repair an item set out in the Claim Resolution Schedule and during the repair you identify a concern that you believe is directly related to the item, stop the repair and contact Tarion immediately.”

54The appellant submits that the membrane defect was identified during the repair process of item 6 and that, as instructed, she stopped the repair and contacted Tarion about it.

55The appellant referred me to an email and photos of the faulty membrane from Domenic Cistrone of Dom’s Reno & Restoration (“Dom’s Reno”). The appellant invited Cistrone to provide an estimate of the repairs for the membrane related work, and the deficiencies in items 6 and 8. The Dom’s Reno estimate of May 3, 2023 is $33,956.00, about $14,600.00 more than the Burke’s estimate of $19,336.62.

56The estimate from Dom’s Reno notes in the comments that, “Upon inspection of the rubber liner on the shower floor it was noted that there was a cut in the liner in one of the corners. There was also another corner where the liner was pulled out from behind the drywall/cement [wall] board. There is no way to repair these areas and hence the liner needs to be removed and replaced …”.

57The appellant submits that the additional cost of undertaking the membrane repair is $14,600.00, based on estimate by Dom’s Reno and that Tarion should offer additional compensation of $14,600.00 above the $19,336.62 she has already received, so that she can address the defective membrane in addition to the deficiencies in items 6 and 8.

58The appellant submits that the membrane issue arose out of the process to repair the grout and floor issues in the shower, she believes it is directly related to item 6, and submits that she should therefore be compensated for its repair from the Fund.

59Tarion submits that the membrane issue is unrelated to claim items 6 and 8 that are the subject of the DL on which this appeal is based.

60Tarion submits that the concern being referred to in the Compensation Offer must be directly related to the item being addressed, not unrelated repair items. It submits that the membrane is unrelated to deficiencies in the grout in the shower and bathroom.

61In preparation for the hearing, Tarion arranged an inspection of the shower floor (now with the exposed, damaged membrane) by Unlimited Building Solutions (“UBS”) on July 16, 2024. The inspector with UBS who conducted inspection, Derek Bess, testified that the membrane has cuts in it and has folds in the right-side corner that are atypical for a membrane installation.

62Bess testified that he cannot determine how the membrane was damaged or whether it was properly installed. He said approximately 2 inches of concrete would have been removed from above the membrane using tools such as hammers and chisels. Bess testified that it is possible that the removal of the concrete damaged the membrane, but he cannot be sure because he was not there when it was removed.

63Bess testified that he cannot tell how far up the membrane goes behind the wall tile. It would take a destructive investigation to determine that (i.e. remove wall tiles). He testified that the membrane must provide a water-tight seal on the floor and also upward from the floor along the adjacent walls and behind the wall tiles, to a height exceeding the height of the curb/threshold in the shower. The process of installing a new membrane would require replacing at least the lowest row of shower wall tiles and the boarding behind them.

64Tarion referred me to an estimate to repair the shower by UBS totalling $12,463.90. The estimate includes removing the bottom row of wall tiles, replacing the membrane and drain if necessary, installing new dry pack shower pan, and installing new shower floor tile and bottom row of wall tiles.

65Tarion submits there is no evidence of a builder defect with the membrane and even if there was, it is not related to items 6 and 8 that are the subject of the DL.

66Tarion submits that the appellant has the onus of proving that a defect is warrantable and if it is, what monetary damages arose from it. Tarion submits that the appellant has not met her onus in proving she is entitled to more compensation for the warranted defects in items 6 and 8. It submits that for the Tribunal to order more compensation, the appellant would need to prove, on a balance of probabilities, that the amount of compensation paid the appellant was not sufficient to repair the warranted deficiencies. Tarion submits the compensation offered and paid the appellant in respect to the DL is sufficient for the scope of work required to address the damages, and that the Tribunal should order that her claim for additional compensation for the membrane deficiencies be denied.

67I find that Tarion provided sufficient compensation to address the deficiencies in items 6 and 8. The $19,336.62 it offered was based on Burke’s’ estimate and it was corroborated by the portions of Dom’s Reno’s estimate that relate to the deficiencies in items 6 and 8.

68I give little weight to the appellant’s oral evidence that Tarion was complicit in selecting Burke’s to be the contractor or was directing Burke’s’ work in its contract with the appellant. Indeed, the appellant insisted that Burke’s be the contractor because it had provided the estimate upon which the compensation amount was based, and the appellant had been unsuccessful in getting an alternative contractor.

69The appellant signed the Claim Resolution and Release and agreed that the $19,336.62 represented full and final satisfaction of her claim. She had sufficient compensation to address the warranted defects in items 6 and 8 that are the subject of this appeal.

70It is unfortunate that, despite what appears to be honest efforts, the relationship between the appellant and Burke’s came to an end over, among other things, a disagreement on whether the correct grout was used in the first component of the project, the shower floor.

71Regardless, I find the sequence of events from March to December of 2022 from the time the compensation was awarded, to the commencement of work on the shower being undertaken, to the appellant being dissatisfied with Burke’s’ work, and concluding with Burke’s decision to terminate the contract, is irrelevant to the issues in dispute.

72Tarion’s role in this warranty claim was fulfilled in granting sufficient compensation for the warranted defects. The perils and difficulties the appellant experienced in attempting to have the repairs completed are not matters for this Tribunal.

73As a homeowner, the appellant had every right to detach and remove Burke’s’ work on the shower floor but the ensuing damage to the membrane and the revelation that the installation of the membrane may have been deficient, are outside the jurisdiction of this Tribunal.

74Subsection 14(19) of the Act provides that after holding a hearing on a decision Tarion issued under subsection 14(13), the Tribunal may order Tarion to take actions, but those actions must be in accordance with the Act and its regulations. In other words, for the Tribunal to order compensation for the membrane deficiencies, the appellant would have to have claimed it as defect within the warranty period, the builder would have needed to have its statutory period of time to address the repair and Tarion given the opportunity to assess the warrantability of the defect.

75I find the damaged shower membrane is not within the bounds of this appeal because it is not related to item 6 or 8 of the DL. The appellant’s claim for additional compensation relating to the faulty membrane shall be denied.

Conclusion

76Items 6 and 8 in the DL constitute breaches of warranty.

77The compensation paid the appellant in relation to the breaches of warranty is sufficient to affect repairs to the defects and deficiencies related to items 6 and 8.

ORDER

78Items 6 and 8 in the DL constitute breaches of warranty.

79Tarion is directed to deny the appellant’s claim for additional compensation in relation to the decision letter of January 2, 2024.