Licence Appeal Tribunal File Number: 15297/ONHWPA

In the matter of an appeal from a Decision of Tarion Warranty Corporation under section 16 of the Ontario New Home Warranties Plan Act, RSO 1990, c 0.31 to Disallow a Claim,

Between:

Grezegorz Kawa

Appellant

-and-

Tarion Warranty Corporation

Respondent

-and-

Mastercraft Homes Windsor (2011) Inc.

Added Party

DECISION

ADJUDICATOR: Matthew M. Létourneau

APPEARANCES:

For the Appellant: Grezegorz Kawa

For the Respondent: Catherine Longo, Counsel Shantam Goran, Representative

For the Added Party: Laura Fanelli, Representative

HEARD: April 23, 2024

OVERVIEW

1Grezegorz Kawa (the “appellant”) appeals a decision letter issued by the Tarion Warranty Corporation (the “respondent” or “Tarion”) on September 1, 2023 (“the Decision Letter”).

2The appellant seeks more compensation under the Ontario New Home Warranties Act (the “Act”) because a change to the front door of his house differed from what was agreed to in the purchase agreement. He did not authorize Mastercraft Homes Windsor (2011) Inc. (the “Added Party” or the “Builder”) to make this substitution.

3Specifically, the appellant contests the installation of an incorrect, smaller front entrance doorframe (45’’ instead of 55’’) with a transom window above the door, instead of a broader, entrance-style of a door involving a vertical side light window sitting to the side of the door in the same frame. The side light door style was initially agreed upon in the purchase agreement but was substituted for a transom beam and a transom light window sitting above the door instead.

4Tarion determined in its Decision Letter that there was an unauthorized substitution to the front door entrance of the home constituting a breach of the substitution warranty. A payment was made to the appellant from the fund. Tarion found, however, that the appellant was entitled to the difference in quality of a side light door and a transom window as compensation. The appellant appeals the amount paid in compensation, arguing that the damages should include the cost of repair and replacement of the door entrance as initially agreed upon with the Builder.

ISSUES

5The issue in this hearing is what amount, if any, the appellant is entitled to as compensation for the breach of the substitution warranty.

RESULT

6The appellant is entitled to additional compensation due to the changes made to the front door of the home. Pursuant to s. 14(19) of the Act, I substitute my opinion for Tarion’s and direct Tarion to pay the appellant $8,907.45, plus HST, less the $195.09 already paid to the appellant for this warranty breach.

ANALYSIS

Is more compensation due for the unauthorized substitution of the front door?

7The Tribunal finds that the breach of warranty recognized by the parties in relation to the front door entitles the appellant to further compensation of damages than what was initially paid by Tarion in the amount of $195.09.

8Tarion agreed that under the substitution warranty, the Builder was required to provide a door that is equal or better quality to the door set out in the contract. Tarion determined that the appellant was entitled to compensation for the difference in cost.

9The Tribunal finds that the damages flowing from this breach of warranty were greater than what Tarion initially paid when it stated that the transom window above the door was equivalent or better value than a wider door frame with a side light door installation, as agreed upon in the contract.

10The Tribunal makes this determination after carefully analyzing the parties’ evidence, testimony and cross-examination at the hearing, and submissions.

11The parties agreed that subsection 14(3) of the Act applies to the breach of warranty analysis, as stated:

Same, breach of warranty

(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.

12Also, the parties agreed that section 19 of O/Reg 892 applies, which states:

SUBSTITUTIONS

19. Every vendor of a new home warrants to the purchaser that, where the vendor makes a substitution with respect to an item that is referred to in the purchase agreement that is not an item that is to be selected by the purchaser, the item will be of equal or better quality than the item referred to in the purchase agreement.

13The Tribunal finds, as submitted by the parties, that in analyzing these provisions, the appellant bears onus of proving, on a balance of probabilities:

i. The breach of warranty by the Builder;

ii. That damages flowed from that breach; and

iii. The quantum of damages.¹

14The Tribunal notes that the Act is consumer protection legislation and is to be interpreted liberally to provide that protection.

15The appellant appealed on the grounds that Tarion confirmed that there was an unauthorized substitution of front doors, but only offered compensation for the difference in cost between the transom window and a side light glass. Tarion did not dispute in its Decision Letter that the warranty under section 19 of O/Reg 892 was breached given that the appellant was not given the opportunity to choose the substitution for the missing side light window and door.

16The Builder explained at the hearing that the 18’’ side light window to be added to the door installation was unavailable due to supply shortages during the COVID-19 pandemic. The Builder decided on its own to make a substitution and add a transom window above the door to add light to the entryway. The builder installed a 45’’ inch door frame instead of a 55’’ door frame with a transom window above the beam of the door.

17I would note that there was not clear supporting evidence that a side light door was not available. I am unable to conclude if it was delayed, backordered, unavailable, or otherwise. The Builder admitted under cross-examination that they did not look at other suppliers, because they dealt more commonly with a single door and window supplier who did not have that item at the time of request. I find that this supports the finding that there was a breach of warranty and that there are damages that result from the substitution.

18Tarion argues that substitutions are permitted, and that the transom window installation was of equal value, except for a difference in price between the door installed and the side light door in the contract, amounting to no more than $195.09. Tarion arrived at this amount in providing the price for the material only of a glass side light replacement fee of $162.57 for 1 component plus $32.52 for contractor expenses. I disagree with this valuation of the only additional compensation owing.

19The appellant notes very clearly, with pictures provided, that the door framing was 10’’ narrower that the door frame he agreed to. He argues that his claim for more compensation is based on the original door choice requires a larger doorframe than the smaller doorframe what was ultimately installed. A larger doorframe would involve cutting into the stone and wall at the entrance, repositioning the supporting studs, installing a wider header and frame, and installing a door with a side light glass component adjacent.

20The appellant testified that the function of a smaller doorframe is fundamentally different than a larger doorframe. I agree. I find that the types of doors that can be installed in a smaller doorframe significantly alters the structural and physical condition of the front entrance. If the applicant wanted to install the originally desired door in the future, the doorframe chosen by the Builder could not accommodate it. I find that the smaller doorframe cannot accept an 18’’ side light.

21The challenge here is that Tarion’s Decision Letter does not seem to recognize or allow for substitutions of the same size of door to be considered here. It only considers the window substitution. Other types of door substitutions of the kind agreed upon in the contract are simply not possible, despite the transom’s presence. A better or equal door would have to at least have the same or similar dimensions. As it stands, the dimensions of the entrance would have to be significantly altered in order to allow for the agreed upon side light to be installed and this was not accounted for in Tarion’s decision, nor in its submissions at the hearing.

22I agree with the appellant that work would be needed to alter the entrance to install a wider frame, alter studs, remove or cut the stones next to the door frame and even make space for a longer transom window above a larger frame. The substitution of a window completely outside of the door frame is not equivalent in this case given the current dimensions that were chosen by the Builder in electing to substitute the transom window for the space required for a side light window component in the door frame.

23I find that Tarion made an error in stating that a transom window installed above the beam of the door frame is at all equal to a larger door frame that can fit a door and a side light component. These are not comparable, and I do not agree that the transom should be considered as equivalent here. I find that there must be consideration for the physical and structural changes needed to install a side light in the door frame, which is simply not possible given the substitution that was made by the Builder in this instance.

24The side light door was in the purchase agreement contract initially signed. It ought to have been provided.

25The appellant stated that the transom window substitution was made without his authority and the contract stipulates that changes cannot be made without his authority. I find that this was the case, in fact, and given the requirements of the Act and regulation noted above.

26Tarion made submissions to the effect that the side light and the transom windows would play a similar role in allowing light through near the door and that is similar to other cases decided by the Tribunal. I was pointed to examples of siding being substituted for a different type of siding. Another case spoke to wood finishing for stairs being substituted for wood veneer finishing instead. In these examples, the substituted materials were different, and may have different properties, but are placed in the same structural and physical placement as the agreed upon materials.

27In this case, I find that the appropriate analysis is to look at the area horizontally adjacent to the door and to the frame of the door. Here, in viewing the pictures of the home and in hearing from the parties, this area is clearly covered by a wall, with stonework siding covering it, and a narrower doorframe. The transom over the door does not constitute an equivalent substitution in this regard as it does not provide the same function as increasing the door area and allowing for other choices of doors to be installed, or the entrance to have the same appearance and functions. I find that the discussion of the transom is a red herring.

28I find that the appellant has met, on a balance of probabilities, his burden of showing that the contract said side light, that the door shows no side light or possibility of a side light, but instead, a solid wall with a smaller doorframe where the side light should be.

What is the proper amount of compensation due to the appellant?

29Given the above findings that damages flow from the breach of warranty by the Builder, the final question to determine is what quantum of damages is appropriate.

30The appellant argued that the cost of full removal and replacement of the door frame is the appropriate quantum of compensation required. The appellant provided testimony and evidence of a quote from Brookstone Windows and Door included work required for removing studs, widening the door frame, cutting stone and stucco and to install the door and side light window. The quote is noted as providing for the installation of a “single door + sidelite left”. The door slab would be 36” wide. To add an 18’’ side light window would require a frame of 55”. Under cross-examination, the appellant explained he did not have a cost difference between the door installed in his home and the new door suggested by Brookstone. The total in the quote was $13,206.45 for all the replacement work to install a new door with a side light based on his understanding of the estimate provided to him without further breakdowns or itemized lists regarding work to be completed.

31Tarion submits that the appellant’s quote is disproportionate and that I must assess the “difference in cost” between the transom window installation and the side light door, as the Tribunal has done in previous cases such as 7496 v. Tarion, 2013 CanLII 24103 (ON LAT). In that case, the Tribunal found that a difference between the use of solid oak for a staircase and oak veneer was not properly specified by the builder in that case and that ambiguity was interpreted against them. The difference in cost as shown in evidence by the appellant in that case was ordered to be paid as compensation.

32Tarion argued that the appellant has not shown his losses. Tarion submitted that should any amounts be payable, that the maximum to be paid is $8,907.45 as noted in an estimate that its estimator, Steve Haagsma, created with the system called Xactimate. This estimate was provided concerning the removal and replacement of the door frame and side light. I heard that Mr. Haagsma was a warranty services representative for 6 years, is trained and has extensive experience in evaluating and resolving warranty claims. He assessed the door for functionality, durability, security, locks, use as a door, windows for light to hallway, fiberglass door, values and correct functioning.

33With respect to the comparison of transom window and sidelight, Mr. Haagsma stated that the Builder’s quote that was offered to the appellant for approximately $400.00 in satisfaction of his claims was not preferable because it did not consider the transom window value. Mr. Haagsma came to the amount of $195.09 as being the difference in cost in the initial Decision Letter.

34At the hearing, Mr. Haagsma was asked about and spoke to a quote of $8,907.45 for the replacement of the door, including labour minimums applied. The line totals were $7,422.85 plus $742.30 for overhead and profit, and provided a detailed breakdown of replacing the door, adding a side light, repainting, changing the stone veneer, cleaning, protection, reframing, adding a steel lintel, adding vapour barrier, recasing, sealing and changing the locks.

35Tarion argues that if any amounts were owing for the door replacement, Mr. Haagsma’s estimate is an amount based on an experienced estimator’s review, provides an itemized quote and assigns a specific dollar value for components and labour, rather than a global estimate as provided by the appellant through Brookstone. Tarion argues that the appellant’s quote of $13,206.45 was not clear, nor was the estimator available to provide evidence.

36I find that the Xactimate estimate by Mr. Haagsma of June 24, 2022, is preferable to the Brookstone estimate, but in making this finding, it does not mean that the appellant’s has not already met his onus of proving his damages.

37I find that the appellant had an estimator provide him with a quote and this is evidence of a quantum of loss not exceeding $13,206.45. As Tarion’s estimator provided a clearer estimate, I prefer that evidence to be a clearer statement of the quantum of damages and accept the amount of $8,907.45 as the clearer statement of damages.

38The appellant showed that there is a cost associated to changing the transom window substitution for a side light door replacement in his estimate. I accept his testimony as well that to replace this, work would need to be done to open the wall further to the side to be able to replace the door with a side light, or some other door that fits a similar frame. Mr. Haagsma did not provide evidence that contradicted this, and in fact, the estimate corroborates the appellant’s claims.

39The Tribunal finds that the damages that flow from the breach are not the difference in cost between a transom window above the beam of the door and a door with a side light door frame replacement. The damages are that this substitution was made without authorization and constitutes an altogether different component which requires labours and replacement materials. The cost of replacement of a new door frame with the proper dimensions and with a side light is the proper difference in cost in assessing the compensation owed for the unauthorized breach of warranty.

40The appellant has proven a breach of warranty and that damages flowed. The appellant suffered damage from this claim. I prefer the evidence from the Xactimate estimate of June 24, 2022 in showing the amount of damages.

Conclusion

41I find the amount payable in compensation for this breach of warranty to the appellant to amount to $8,907.45 plus HST, less amounts paid by Tarion with respect to this item.

ORDER

42Pursuant to subsection 14(19) of the Act, I substitute my opinion for that of Tarion’s and direct Tarion to pay the appellant the sum of $8,907.45 plus HST, less the $195.09 already paid to the appellant, for the breach of warranty.

Released: October 24, 2024

Matthew M. Létourneau

Adjudicator

Footnotes

1. 1See 7496 v. Tarion Warranty Corporation, 2013 CanLII 24103 (ONLAT) at page 10.