York Regional Standard Condominium Corporation No. 1284 v. Tarion Warranty Corporation, 2024 CanLII 77408

Citation: York Regional Standard Condominium Corporation No. 1284 v. Tarion Warranty Corporation, 2024 ONLAT 14889 OHNWPA

Licence Appeal Tribunal File Number: 14889/ONHWPA

Appeal from a Decision of Tarion Warranty Corporation under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 to Denying the Appellants Claim for Warranty Coverage

Between:

York Regional Standard Condominium Corporation No. 1284

Appellant

and

Tarion Warranty Corporation

Respondent

and

Allegra On Woodstream Inc.

Added Party

DECISION

ADJUDICATOR:

Rebecca Hines, Member

APPEARANCES:

For the Appellant:

Erik Savas, Counsel

For the Respondent:

Danielle Peck, Counsel

For Allegra on Woodstream Inc.:

Sarah Jamshidimoghadam, Counsel Michael Doyle, Counsel

Heard:

By videoconference on March 18, 19, 20, 21, 25, 26 and 27, 2024 with closing submissions in writing

OVERVIEW

1York Regional Standard Condominium Corporation No. 1284 (the "appellant") appeals the Decision Letter dated April 11, 2023, issued by Tarion Warranty Corporation (the “respondent”) denying the appellant’s claim for major structural defect (“MSD”) warranty coverage for its building at 24 Woodstream Boulevard, Woodbridge, under section 14(4) of the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “Act”). Allegra on Woodstream Inc. (the “builder”) was added as a party to this proceeding.

2The appellant alleges that the design and construction of the underground parking garage (“garage”) constitutes a MSD which is warranted under the Act and is entitled to compensation. The respondent and builder deny that there is a MSD in the construction and design of the garage. Further, the builder maintains that the claims that are the subject of this appeal have been settled and that the appellant is barred from bringing this appeal.

3The garage is comprised of two underground parking levels that were constructed in two separate phases. Phase 1 involved the construction of the appellant’s portion of the garage and condominium building. Phase 2 involved the completion of the construction of the garage and building of York Regional Standard Condominium Corporation No. 1307 (“1307”). The finished garage is common to both condominiums. Parking level P1 is the lowest parking level with a concrete floor slab placed on ground. Parking level P2 is a 200 mm (8 inch) thick reinforced concrete slab supported on concrete columns that are placed on footings below parking level P1. The columns and walls extending upward from the parking levels at the southerly half of the site support two ten-storey residential towers, a block of two-storey terraced residential lofts, and along the west side of the site the shared building lobby. At the northern half of the building is a ten-storey residential tower, a two-storey terraced residential loft apartment building, and two commercial buildings. A 2-lane 6-metre-wide ramp providing vehicle access to the garage extends downward from the ground level floor slab to the P2 level. From there a second ramp extends from the P1 level down to the lowest P2 level.

4The appellant, 1307 and a commercial corporation share the common elements which include the garage and there is a cost sharing agreement in place which address the corporations’ responsibilities for the maintenance and repairs to the common elements.

5This matter proceeded to a seven-day videoconference hearing with closing submissions in writing. On behalf of the appellant, I heard the testimony of three lay witnesses: Joseph Prottoto and Joseph Cirianni, former Directors of the appellant, and Daniel Battison, Vice President of Downing Property Management. The appellant also called three structural engineers: Sofya Frey and Oleg Podimov from Wynspec Engineering (“Wynspec”) and Stephen Blaney (“Blaney”), consultant engineer. On behalf of the respondent, I heard from Shah Sagharian (“Sagharian”), structural engineer from LEA Consulting Ltd (“LEA”). On behalf of the builder, I heard from Shawky Ibrahim (“Ibrahim”), structural engineer, and Alan Tregabov (“Tregabov”), architect. Russ Gionotta (“Gionotta”), Chief Financial Officer of the builder, and Lenny Simonelli (“Simonelli”), former project manager also testified on behalf of the builder.

ISSUES IN DISPUTE

6I have been asked to decide the following issues:

i) Has the warranty claim being made by the appellant been previously settled?

ii) If the warranty claim has not been settled, has the appellant proven on a balance of probabilities that there was a MSD as defined in the Regulations under the Act?

iii) Has the appellant proven that it incurred damages as a result and is entitled to compensation?

iv) Is the builder entitled to costs pursuant to Rule 19.1 of the Licence Appeal Tribunal’s Rules?

v) Is the appellant entitled to costs pursuant to Rule 19.1 of the Licence Appeal Tribunal Rules?

RESULT

7I find that the appellant has proven on a balance of probabilities that there is a MSD in the design and construction of the appellant’s garage. I order the respondent to pay the appellant $250,253.43 for the cost of repairs to the garage ramp and $1,315,060 plus HST for the remaining repairs to the garage to correct the MSD. I find that neither party is entitled to costs.

PROCEDURAL ISSUES

Issues in Dispute – Roof Slab

8A dispute arose regarding whether the construction of the roof slab of the garage was an issue in dispute in this appeal. The respondent and builder argue that this issue was withdrawn by the appellant during the conciliation inspection and was noted as withdrawn in the decision letter. Both the respondent and builder submit that because the issue was withdrawn it was not assessed by either the respondent or builder’s experts. As a result, it would be procedurally unfair to allow the appellant to pursue this issue at the hearing. Further, at no point between the date of the decision letter and the commencement of the hearing had the appellant advised the respondent or builder that the issue is being disputed. The respondent and builder submit that since the issue was withdrawn and was not addressed in the decision letter the issue is not properly before me.

9The appellant argues that the issue is still in dispute. Counsel for the appellant submits that he had not received instructions from his client to withdraw this issue as an issue in dispute.

10I agree with the respondent and builder that the issue involving the construction of the garage’s roof of slab is not an issue that is properly before me. It was noted as being withdrawn by the appellant in the decision letter. Beyond making the general statement that the issue is still in dispute, the appellant did not direct me to any evidence following the respondent’s decision letter to support that the roof slab was added to the dispute prior to the date of the hearing. Further, I agree that it would be procedurally unfair to the respondent and builder to address this issue in this hearing because their experts have not assessed it in their reports. As a result, I will not be addressing this issue as part of this decision.

Report of Ibrahim dated March 13, 2024

11The appellant requested that the report of Ibrahim dated March 13, 2024 be excluded on the basis that the report was served on the Friday prior to the commencement of the hearing. The Tribunal’s case conference report and order (“Order”) provided the parties with a deadline of January 12, 2024, for the service and exchange of all reports. Further, the order did not provide the builder with the opportunity to submit a rebuttal report and there was no explanation for why this report was now being served on the eve of the hearing when deadlines were agreed to at the case conference.

12The builder submits that the report should not be excluded because it was prepared in response to Blaney’s report dated November 23, 2023. Further, the report does not contain a lot of new information and the appellant will have had one week to review it by the time Ibrahim is called as a witness. As a result, the appellant is not prejudiced by the late service of the report and any prejudice could be dealt with by adjourning the hearing. The builder also argues that it was added as a party in August 2023 and did not have a lot of time to prepare for this hearing. During cross-examination, Ibrahim acknowledged that he was asked to complete the report in February 2024. The appellant opposed the builder’s request for an adjournment as it has been pursuing its rights since last year and an adjournment would result in unnecessary delays in a determination being made in this matter.

13I agree with the appellant that there was nothing in the Tribunal’s Order that provided the builder with the right to file a rebuttal report. Further, Blaney’s report, to which the report in issue was a response, was authored in November 2023. As a result, I find the builder provided no reasonable explanation for the delay in waiting until February 2024 to ask Ibrahim to prepare a rebuttal report and serve it on the appellant on the eve of the hearing. I also agree with the appellant that granting an adjournment will result in a delay in a determination being made in this matter. Having said that, I decline to exclude the report. However, I have taken the report’s late service into account in determining what weight to give to it. Ultimately, I find the report was of limited value because Ibrahim simply agreed with the conclusions rendered in LEA’s 2024 report rather than providing independent conclusions of his own.

ANALYSIS

The MSD warranty claim made by the appellant has not been settled.

14The builder argues that the appellant’s warranty claims regarding the construction of the garage have been settled because the appellant entered into a repair agreement regarding the common elements of the building on April 27, 2018. The agreement stated that the builder would repair various items which were the subject of first and second-year warranty claims, extended the deadline for repairs to December 1, 2018, and provided that if repairs were not completed by this date, the appellant had until December 31, 2018, to request conciliation. Further, if conciliation was not requested by this date the appellant was deemed to have withdrawn all warranty claims for any outstanding items. The agreement also indicated that upon completion of the repairs, the builder would pay the appellant $25,000.00, which was paid by the builder. The builder argues that the deadline to request conciliation passed without the appellant having done so. The builder submits that the appellant’s MSD claim is based on the same deficiencies in the garage noted in the appellant’s first and second-year warranty claims which have been settled. Therefore, the appellant is barred from disputing this MSD claim because these issues were previously settled and the appellant missed the deadline to apply for conciliation.

15The builder also relies on a full and final release dated January 31, 2019, between it and 1307 which resolved all first and second-year warranty claims for $35,000.00. As part of this agreement, the builder agreed to waive nine mortgage payments for the guest suite at 1307 as part of the settlement. The builder submits that this full and final settlement resolved all warranty claims in their entirety and is binding on the appellant because it and 1307 entered an easement and cost sharing agreement dated May 1, 2015, where it was agreed that both corporations were responsible for splitting the cost of repairs and maintenance for all common elements which included the garage.

16The respondent submits that it was not a party to either settlement agreement and has not made a determination about them. However, the respondent submits that if I do determine that the defects alleged in this appeal have been settled, then the appellant is not entitled to compensation under the builder’s warranty.

17The appellant raised three arguments in response to the builder’s submissions that this claim has been settled which can summarized as follows:

i) The builder waived any right to rely on or is estopped from relying on the repair agreement as a defence because it did not raise the issue until January 8, 2024, which was three and a half years after the appellant filed its MSD claim and two months prior to the hearing. This issue was never brought up in October 2020, when it first filed its MSD claim, nor did the respondent rely on it as the basis for denying the claim, and it was not raised at the case conference. The appellant submits that there is no evidence that the agreement was not within the builder’s knowledge or discoverable from October 2020 and there was no explanation for the delay. The appellant relied on the Court of Appeal’s decision in Bradfield v. Royal Sun Alliance Insurance, 2019, ONCA 800. This decision dealt with an accident benefit claim where the court determined that the insurer waived its right to make a certain defence because it was not raised in a timely manner.

ii) The repair agreement is not enforceable because it was signed by only one board member, Dennis Boutzis, and it was not voted on by the Board and therefore is not binding on the corporation. Both Cirianni and Prototto testified that they were not aware of the agreement at the time it was signed. Nor, did the builder call Boutzis as a witness to confirm that it was his signature on the document or the circumstances of the agreement.

iii) The repair agreement only applies to first and second-year warranties, and was not a full and final settlement of all future warranty claims such as a MSD. Moreover, the Schedule attached to the repair agreement was not legible, so it unclear what first and second year items the agreement applied to. The appellant submits that s.13(6) of the Act precludes the waiver of future warranties. Finally, the appellant submits that it did not sign the full and final release involving 1307 with the builder because it is a separate corporation and none of its board members were informed of this agreement nor signed it. I agree with the appellant for the following reasons.

18I did not find the testimony of either parties’ witnesses helpful in determining whether a full and final settlement was reached on the appellant’s future warranty claims. Cirianni and Prototto had limited knowledge and information about either settlement agreement. Further, while Gianotta and Simonelli confirmed that these agreements were signed by the parties they provided limited insight into whether either of the agreements constituted a full and final settlement of all the appellant’s future warranty claims.

19Ultimately, I find that neither the repair agreement signed by the appellant, nor the full and final release signed by 1307 constitute a full and final release of the appellant’s MSD claim. In fact, both agreements specifically state that the agreements apply to all first and second-year warranty claims. The repair agreement attached a chart, marked as Schedule A, which listed the various claims and repairs to be made to the garage. Although I accept that the appellant made various first and second-year warranty claims regarding the garage, Schedule A was not legible, so it is unclear exactly what this agreement applied to. Further, the repair agreement does not indicate that the appellant was abandoning all future warranty claims such as the seven-year MSD claim. I find that if that was the intention of the repair agreement it should have been set out in clear language.

20The builder relies on the Divisional Court’s decision in Metropolitan Toronto Condo Corp. No. 1101 v. Ontario New Home Warranty, [2003] OJ No. 5145, (“MTCC”) where the court recognized that it would be contrary to the purpose of the Act to bar releases of warranty claims, an essential part of settlement agreements, and that such releases should be enforceable. I do not find this decision helpful to the builder’s position because while parties can settle claims that already existed, they cannot settle future claims in their agreement. The builder also relies on the court’s decision in Lumsden et al. v. The Toronto Police Services Board et al 2019 ONSC 5052. I do not find this decision applicable as it does not address settlements involving home warranty claims which have different periods of warranty and did not involve two corporations which share common elements.

21The appellant relies on the Divisional Court’s decision in 375 Lakeshore Developments Inc. v. Tong, 2021 ONSC 1820 (“Tong”). In this decision, the court noted that because the Act is consumer protection legislation it should be given a broad and liberal interpretation. The court ruled that a settlement involving a first-year warranty claim did not constitute a full and final release for future warranty claims. The court determined that to do so would functionally negate the protection of s. 13(6). I find this decision helpful as far as assessing the facts of the case before me in that it was not open to the parties to agree to a release from future warranty claims, but only the first and second year warranty claims referred to in the agreements.

22In Tong, the court highlighted that the Act is remedial legislation and should be given a fair and liberal interpretation. The court noted that releases purporting to contract out of statutory warranties have been viewed strictly as a result, and cited the Court of Appeal in interpreting s.13(6) of the Act to mean that “the warranties contained in s.13(1) continue in force, irrespective of any agreement by the parties to the contrary. This interpretation gives a fair and just result…When a mutual release is executed between an owner and builder it is” possible that there may be defects that could not be discovered by reasonable inspection. The court noted that an incorrect defect assessment leading to a modest resolution and release is exactly the type of circumstance that s. 13(6) is designed to prevent. To rule otherwise would gut the protection. In this case, the repair agreement between the appellant and builder for the garage was for $25,000.00. I find this case similar to Tong, because the appellant was not aware of the extent of the deficiencies in the garage at the time the 2018 agreement was signed. In this case I have determined that there is a MSD in which expensive repairs are required that significantly exceed $25,000.00. Therefore, I find it unconscionable for the repair agreement regarding the first and second-year warranty claims to preclude the appellant from pursuing its MSD claim.

23Finally, I find that the full and final release signed by 1307 does not apply to the appellant as the appellant is not named as a party in this agreement. In fact, the document explicitly states that it is between the builder and 1307. Nor was the document signed by any of the appellant’s board members who have legal authority to bind the corporation. While both the appellant and 1307 may share the cost of maintenance and repairs for common elements such as the garage there is no agreement before me to support that both corporations entered a full and final agreement in this matter. I conclude that the seven-year MSD claim which is the subject of this appeal has not been settled.

Is there a MSD in the design and construction of the appellant’s garage?

24The appellant bears the onus of establishing that there is a breach of warranty under s. 13(1)(b) of the Act which requires that the home be free of a MSD as defined by Reg. 892, R.R.O. 1990 under the Act (the “Regulation”). Section 1 of the Regulation defines “major structural defect” to mean:

(a) …any defect in work or materials in respect of a building, including a crack, distortion or displacement of a structural load-bearing element of the building, if it,

i. results in the failure of a structural load-bearing element of the building (the “failure” test),

ii. materially and adversely affects the ability of a structural load-bearing element of the building to carry, bear and resist applicable structural loads for the usual and ordinary service life of the element (the “function” test), or

iii. materially and adversely affects the use of the significant portion of the building for usual and ordinary purposes of a residential dwelling and having regard to any specific use provisions set out in the purchase agreement for the home (the “use” test).

25The appellant argues that the builder was negligent in the design and construction of the garage because they did not use expansion joints continuously throughout the P2 slab, ramp structure, columns, and perimeter walls throughout the garage. The appellant submits that the builder’s failure to install continuous expansion joints in a structure this size has resulted in numerous cracks in the concrete, excess water penetration, which in turn has led to premature corrosion of the reinforcements and delamination of the concrete. The appellant also asserts that either the concrete used in pouring the P2 slab was defective or the construction process resulted in defective concrete. The appellant submits that the defective concrete and the builder’s failure to install continuous expansion joints in the various elements of the garage meet the definition of an MSD under the failure, function, and use tests.

26The respondent and builder argue that there is nothing in the Ontario Building Code (“Code”) that makes it a legal requirement to use expansion joints in the construction of garages. They submit that it is within the professional judgement of the structural engineer as the designer of the building to determine whether expansion joints are needed. They also allege that the appellant is to blame for the deterioration of the garage because it failed to carry out annual maintenance and repairs because the appellant was financially unstable. They also criticize the methodology used by the appellant’s experts in extracting core samples and the ETABs 3D modelling of the garage and submit the results of these tests were inconclusive. Finally, they argue that the appellant has not proven that the construction of the garage meets the failure, function or use test which define an MSD under the Act.

27During the hearing, I heard evidence from five structural engineers, each of whom had the requisite education and certification to be licenced in their industry. Each was qualified as an expert for the purpose of this hearing however, they had different experience as far as the design, assessment and repair of structures and garages. I will first discuss whose expert opinion I prefer and why, and then I will address my findings regarding the failure, use and function test.

28Although I do not accept all Wynspec and Blaney’s opinions, overall, I prefer their reports and testimony over those of Sagharian and Ibrahim for the following reasons:

29First, I find the appellant’s experts have more expertise in assessing the structures of garages and recommending repairs. Both Frey and Blaney testified that they have assessed over 100 underground garages in their careers. Frey’s specific role at Wynspec focusses on assessing the structural integrity of garages for the purpose of recommending and overseeing repairs. Blaney’s curriculum vitae outlined his extensive experience in conducting structural assessments, and restoration and repairs to various structures such as hockey arenas, bridges and condominiums. I note that Sagharian’s expertise is primarily in the structural design of new buildings which includes garages and other elements such as balconies. Although he testified that he has experience in assessing garages, I find his curriculum vitae did not contain this experience. In my view, this supports that conducting structural assessments for the purpose of recommending repairs has not played a significant role in his career. Further, I have given Ibrahim’s opinion little weight because as the structural engineer who designed the building, he has a vested interest in the outcome of the proceedings. I also find both Ibrahim and Tregabov’s opinions unreliable considering the other evidence before me which I will discuss further below.

30Second, I find the reports of Wynspec and Blaney more thorough in their inspection and assessment of the various elements of the garage. Wynspec’s initial report describes in detail the length of cracks and defects found throughout the garage and the various signs of structural compromise and provided photographs of the defects. Wynspec also conducted chain drag surveys and hammer tests which confirmed hollow sounds throughout the structure which supported the position that delamination of concrete had occurred. Wynspec then confirmed that there was delaminated concrete by extracting core samples from the suspended slab. In addition, Wynspec completed ETABs 3D modelling of the garage which supported their opinion that the lack of continuous expansion joints throughout the structure has resulted in stress on the structure that the building was not designed for.

31Although I note that Wynspec’s reports do not specifically address the legal test to meet a MSD, Blaney’s report does and he agreed with the tests and methodology employed by Wynspec in carrying out their assessment, as well as their findings and conclusions. Although Blaney did not conduct any testing I find his analysis and opinion outlined in his report regarding the impact of the lack of installation of a continuous expansion joint throughout the structure of the garage persuasive.

32Third, I find both reports completed by LEA lacking in detail and analysis and their opinions were based solely on a visual inspection. LEA’s first report authored by Zack Ho, senior project engineer and Igli Bregasi, structural designer, was brief, and the opinions were rendered without further investigation. LEA’s second report authored by Sagharian was more detailed, but it was done in February 2024, approximately four years after Wynspec’s initial assessment and after the garage had undergone repairs. I find many of the visual signs of the defects noted in Wynspec’s 2019, 2020 and 2021 reports had been covered up. Sagharian testified that his visual inspection of the various elements of the garage revealed nothing out of the ordinary in a garage of that age, which I find inconsistent with the other evidence before me, whereas Wynspec provided detailed descriptions of the various defects along with pictures to support same.

33I will now discuss my findings regarding whether the builder’s construction and design of the garage constitute an MSD under the failure, use and function test.

Failure Test

34I find the appellant has not proven on a balance of probabilities that the builder’s construction or design of the various components of the garage meet the failure test. There is no evidence before me that any defect has resulted in the failure of a structural load bearing element of the garage.

35The appellant’s engineers, Wynspec and Blaney, opined that the lack of expansion joints installed throughout the structure and poor concrete quality of the suspended slab has either failed to a significant degree or will result in future failure. I find the opinions of the appellant’s experts speculative on the failure test and find the evidence before me does not support that the various elements of the garage have to date failed. Further, the appellant did not direct me to any case law which discussed the failure test or how future failure meets the test.

36The builder relied on the decision in WCC No. 336 (Re) (2007) (“WCC”) in support of its position that speculation about future failure is insufficient. Further, this decision supports that the failure must occur within the seven-year warranty period. The builder also relies on Ban (Re), [2002] OLATD No. 238 (“Ban”) which supports that a fear of future potential problems cannot constitute an MSD as per the failure test. Moreover, Tarion’s MSD Warranty Interpretation Guideline (“Tarion’s Guideline”) defines the failure test and states that “actual failure is required” to satisfy the test. While the complete collapse of a structure might not be needed to meet this test, I find that there needs to be more than evidence of cracks or delaminated concrete to support the failure test. Overall, I find the evidence before me supports that to date, while the load bearing function of the various elements of the garage have serious defects which has led to premature deterioration they have not yet failed. As a result, I find the appellant has not convinced me on a balance of probabilities that the failure test has been met to support a MSD claim.

Use Test

37The appellant argues that the residents were temporarily restricted from using the garage entrance ramp while it was being repaired. Further, the various defects in the garage will affect the resident’s future use of the garage. The appellant relies on this Tribunal’s decisions in Grudzinski v. Ontario New Home Warranty Program, 1997, CanLII 16252 (ON SC) (“Grudzinski”) and 9272 v Tarion Warranty Corporation, 2015 CanLII 72280 (ON LAT) (“9272”) in support of its position that to prove a loss of use or intended purpose, the structure does not need to be vacated entirely by its occupants. In Grudzinski, the court determined that the Tribunal’s decision was reasonable in finding that the use test had been met because the homeowners were completely prevented from using their basement because of persistent water accumulation caused by structural failure. I find this case distinguishable from the facts in Grudzinski because the garage has continued to be used and the occupants have not been restricted from using a significant portion of any areas except for the temporary use of the garage ramp while it was being repaired.

38The respondent and builder submit that a temporary restriction of use is not sufficient to meet the MSD test. I agree. I find that a plain reading of the Regulation makes it clear that to meet the use test the defect must materially and adversely affect the use of a significant portion of the building [emphasis mine]. In my view, the temporary restriction of the garage ramp while it was being repaired does not constitute restricted use of a significant portion of the garage. Further, the appellant did not submit any case law to support its position that the potential impact on future use meets the use test. As highlighted above, I find that speculation about the future insufficient to meet the test and agree with the builder that the restriction in use must manifest within the seven-year MSD period. As a result, I find the appellant has not persuaded me on a balance of probabilities that the use test has been met in support of a MSD claim.

Function Test

39Tarion’s Guideline provides that to meet the function test the defect must materially and adversely affect the load bearing function of a structural load bearing element. Actual or imminent failure of the structural load bearing element is not required to satisfy the function test. The test will be met if the element’s load bearing function has been materially compromised. The load-bearing function of a building element is the ability of that element to carry, resist, transfer or distribute applicable loads for the usual and ordinary service life of the element. An adverse effect must be material, meaning there is either: (i) a present compromise in load bearing strength; or (ii) a defect that the affects the ordinary service life of the structural element.

40I will now discuss the various elements of the structure outlined in the respondent’s decision letter and my findings regarding whether there is a MSD as per the function test.

Expansion Joint Assembly & Columns

41I find that the builder’s failure to install a continuous expansion joint throughout the structure to be a defect in work which has materially and adversely affected the ability of a structural load-bearing element of the building to carry, bear and resist applicable structural loads for its usual and ordinary service life.

42In its decision letter the respondent noted that the expansion joints and columns were addressed together because the construction details and as-built condition in question relate to the transition from expansion joint to construction joint at the structural column in the building. The letter notes that the respondent was directed to a structural column and section of the slab where an expansion joint extending from one side of the parking garage terminates above the column and continues as a construction joint from the column to the opposite side of the garage. The letter notes that a vertical crack was observed on the column near the expansion joint and there was evidence of previous cracking and water penetration on the slab. Saw cuts were also observed to be present in several of the columns. The respondent concluded that there was no displacement or distortion of the columns or the slab above and it did not observe any locations where it was evident that the load-bearing function of a load bearing portion of the building had been materially and adversely affected.

43In support of its decision letter the respondent relied on the LEA’s report from October 2021. In that report LEA states that the ETABs 3D modelling carried out by Wynspec was based on a partial model of the building and was missing information. As a result, the results could not be relied upon in support of a MSD claim.

44The appellant relied on the May 2020 Wynspec report. In the report, Wynspec provided a structural analysis of the elements of the building using a program called ETABs 3D Modeling. The modeling is used to study the factors that can alter the strength, stiffness, stability, and vibration of any given element of a structure. Wynspec acknowledged in its report that the ETABs 3D modeling was missing important information from the builder and was based on reviewing building drawings, site observations and measurements. However, the report notes that the performance results of the elements will be approximately similar as the details they do have were accurate. I note the following points from Wynspec’s report:

a) There was a failure on columns L-13 and L-14 which can be directly attributed to the lack of an expansion joint. The construction joint installed instead has restricted movement which has resulted in cracks on the columns and wall at the end of the construction joint.

b) The wall has multiple injection points with staining and delamination surrounding the construction joint. There are patches of concrete topping meant to correct spalling previously present on the wall. All the present issues point toward stress applied in this area due to internal movement and the lack of an expansion joint to absorb these movements which has resulted in these indications of stress on the structure.

c) The extent of cracking forming the expansion joint and splitting in the membrane has reached a level that is compromising the structural integrity and watertight condition of the structure and its occupants. The cracking can be attributed to the failed design criteria forming the expansion joints/construction joint. Based on their interpretation of the provided structural drawings for the building, and our analysis carried out on ETABs has confirmed that the design of the expansion joint is flawed…The effects of thermal movement of the construction joints through several columns and the frequent presence of moisture in the slabs likely caused the material to break down rapidly. In its present state, the concrete and membrane material are no longer capable of providing effective rigidity to the slab beneath the overburden materials. The properly designed expansion joint, as specified in the structural drawings would have resisted the degradation caused by thermal movement.

d) The choice of a makeshift joint in substitution of a properly designed expansion joint at the slab and column connections indicated a significant deviation from the drawings. Furthermore, the questionable lack of an expansion joint from gridline L-11 to L-15. Instead of an expansion joint this section has been replaced with a construction joint has contributed to the observed cracking. The structural drawings make no clear indication or reference regarding the installation of an expansion joint from gridline L-11 to L-15 and it is our opinion that this is a deficiency in design. Further degradation and poor design criteria of the slabs in these identified areas will compromise the safety of the structure.

45In Blaney’s November 2023 report, the engineer agrees with Wynspec that the failure to install a continuous expansion joint throughout the structure has resulted in a MSD. Of note, Blaney highlights that the Phase 1 drawing of Tregebov originally planned for a continuous, uninterrupted expansion joint to continue from grid line L-11 to L-15 along column L and extending from column line K1 to L. It was Blaney’s opinion that this would have properly created an expansion joint fully separating the Phase 1 and Phase 2 garage roof slab and P2 slab, with each having a maximum length of 252 feet rather than being double this length. However, the expansion joint shown on the architectural drawings extending along grid line 11 between column K1 and L was eliminated by the builder during Phase 2 of the construction process and replaced with a construction joint.

46Blaney explains that the elimination of the expansion joint effectively doubled the length of the western part of the P2 slab and the garage roof slab to 434 feet when it should not have been more than 200 feet. The resulting drying shrinkage and temperature stresses within this excessively long slab caused an excessive amount of crack damage and evidence of structural failure through the P2 slab, around tops of columns, walls and in the garage roof of the slab. Further, the ongoing temperature related slab movements have increased the number and width of the cracks and has allowed water to pass through the garage slab and roof where it can be observed on the underside of the slabs. Water containing chloride from road salts is already causing the steel reinforcement within the suspended garage slabs to rust which will, if it has not already, materially and adversely affect the use of the garage slabs.

47Blaney clarified during his testimony that the lack of a continuous expansion joint along the slab, walls and columns is a major structural defect. He indicated that you could see cracks coming out of the columns that indicate that there is inadequate reinforcement in the columns. When the slab tries to move the columns prevent it. The columns support the building above down to the foundation and are not intended to resist sideway movement from the slab shrinking. It was Blaney’s opinion that this is a defect in work which has materially and adversely affected the ability of a structural load-bearing element of the building to carry, bear and resist applicable structural loads for its usual service life. During cross-examination, Blaney acknowledged that the ETABs 3D modelling should have incorporated all the elements of the garage for a more accurate result. However, the fact that Wynspec’s analysis did not do this did not change the engineer’s opinion. I find Blaney’s report and testimony about the impact of the builder’s failure to install a continuous expansion joint throughout the structure and its impact persuasive.

48In LEA’s 2024 report, Sagharian agrees with both Blaney and Wynspec that the absence of the expansion joint will create undesired effects. The report states “Since the slab is partially restrained and where there is a joint, the layout is unusual (such as terminating at columns without provision in the columns) the structure will experience stresses that it is probably not designed for or can be designed for.” However, Sagharian criticized Wynspec and Blaney for not producing any quantitative validation that the structure has been compromised. In Sagharian’s opinion to conclude that the structure is not capable of carrying the loads, an in-depth analysis is needed which includes:

1. Modelling the timelines of the concrete placement;

2. Actual temperature fluctuation in the garage

3. Influence of the soil confining the basement;

4. Accurate modeling of the structural elements including the foundation walls, elevators, and stairwells.

49Sagharian testified that from his experience, the impact of improper expansion, construction and control joints can range from large cracks forming in the corner of the garage slab to multiple hairline cracks throughout the slab. Cracks release stress in the elements. The location and magnitude of the cracks can impact the integrity of the structure. However, he did not observe any cracks that led him to believe that the structural integrity of the columns or slabs has been compromised.

50I prefer the opinion of Wynspec and Blaney on this issue because Sagharian’s opinion was based solely on a visual inspection of the garage and was not backed up by any testing or structural analysis. Further, Wynspec’s initial assessment of the garage provided a detailed breakdown of defects and described cracks developing through the columns and suspended slab, cracks where the expansion joint stops and the construction joint begins and saw cuts that had been made in the columns by the builder, which Wynspec suspected was to mimic an expansion joint and release stress in the columns. Further, vertical expansion joints were installed as an afterthought. These had been sealed with polyurethane materials, which is supported by pictures, although the the builder denied doing so. There was also evidence of water penetration through the roof slab expansion joints. Further, I find Sagharian’s opinion that there is no defect in function inconsistent with the statement made in his report that without a continuous expansion joint “the structure will experience stresses that it is probably not designed for or can be designed for.”

51I find Ibrahim’s initial report unhelpful because it was overly brief and did not provide an in-depth review or analysis of the structure. I find his second report lacked impartiality based on the language and tone used throughout it. I also find Ibrahim’s testimony unreliable because out of the five engineers that testified, he was the only one who did not fully agree that it is a best practice within the industry to install continuous expansion joints every 100 meters throughout all the elements of a structure including the perimeter walls. Ibrahim testified that the construction joint was deliberately designed to be underneath residential units in the building, to prevent unwanted and unnecessary movement in the residential units overhead.

52In light of the opinion of the four other structural engineers that the failure to install a continuous expansion joint in a building this size was highly abnormal, I do not find Ibrahim’s explanation convincing. I also find the decision to change the expansion joint to a construction joint was not initially part of the design plan. The appellant relied on a revised drawing with Ibrahim’s engineer stamp which post-dated the construction of the building which reflected the switch from expansion joint to construction joint. I find the fact that the date stamp on the revised drawing post-dated the construction of the structure suspect. In my view, this supports that the construction and design was flawed because the initial design plan was not followed and was revised after construction was complete as an after-the-fact justification.

53Finally, Ibrahim was also highly critical of Wynspec’s ETABs 3D modelling and analysis because it did not include complete information. Ibrahim testified that he had results from his own ETABs 3D Modelling from the initial design of the structure, however, this was not relied upon by the builder at the hearing. The builder argues that it does not have to submit this evidence because it is the appellant’s onus to prove the MSD not theirs to disprove it. While I agree that it is the appellant’s onus to prove the MSD, I am concerned by the builder’s decision not to present evidence that it alleges refutes the appellant’s claim. I do draw an adverse inference from the builder’s failure to submit Ibrahim’s ETABs 3D modelling results for my consideration. In my view, I find it likely that they did not rely upon it because it does not support the builder’s position.

54The appellant agrees with the respondent and builder that there is nothing in the Code that makes the use of expansion joints mandatory. The appellant relied on this Tribunal’s decision in N.J. and F.N. v. Tarion Warranty Corporation et al., 2017 CanLII 144640 (ON LAT) where the adjudicator determined that an appellant does not need to show a violation of the Code to prove a warranty claim, but rather a departure from industry customs and standards. In this case, I find that the builder’s departure from installing a continuous expansion joint throughout the structure has departed from industry customs and standards and resulted in a MSD.

Perimeter Walls

55I find that the builder’s failure to install a continuous expansion joint throughout the perimeter walls to be a defect in work which has materially and adversely affected the ability of a structural load-bearing element of the building to carry, bear, and resist applicable structural loads for the usual and ordinary service life.

56In its decision letter the respondent notes that cracks were observed in the foundation of the walls resulting in water penetration and that the wall finishes were stained and flaking in many locations. Further, it was apparent that previous repairs were made at many of these locations because injection plugs were visible. However, despite these noted defects the respondent determined that there was no displacement, distortion or collapse of the foundation walls. As a result, it determined that the load bearing function of the foundation walls had not been materially or adversely affected.

57The Wynspec initial report notes that there have been multiple injection points to the walls with staining and some delamination surrounding the construction joints. There are patches of concrete topping meant to correct spalling previously present on the wall. Further, there were approximately sixty-five (65) linear metres of cracks that have been repaired in the past but continue to leak. It was Wynspec’s opinion that these issues are because of stress applied to the walls because of internal movement of the walls due to temperature change and the lack of expansion joint to absorb these movements.

58Blaney agreed with Wynspec and in his report states that the cracks within the walls and slabs were caused by restricted movement due to temperature changes as result of the builder’s failure to install continuous expansion joints. The cracks have allowed excess water penetration through the walls which has resulted in deterioration of the steel reinforcement. Blaney testified that the perimeter walls were poured as one continuous piece and when the slab above moves it has resulted in cracks and deterioration. Further, if it is not repaired the wall will be unable to hold up the soil on the other side. It is Blaney’s opinion that the ongoing deterioration and cracks in the walls caused by the missing expansion joint has materially and adversely affected the wall’s load bearing function.

59The Blaney report included a picture of a perimeter wall which supports cracks and rust from water damage which he submits is from the deterioration of the rebar. Blaney also testified that there was evidence of past attempts to fix the wall, however, they have been unsuccessful, and the wall is falling apart because concrete is coming off the wall. Blaney’s report highlights that Sagharian’s report acknowledged water penetration within the perimeter walls, but failed to acknowledge that water penetration is an undesireable condition in a structure which will cause the steel reinforcement within the slab to corrode.

60As noted above, Sagharian agreed that it is a best practice within the industry to match expansion joints throughout the slab, walls, and columns to predict movement due to temperature variation to avoid restraints. However, despite this acknowledgment Sagharian did not observe any horizontal or shear cracks that impact the structural integrity of the walls. Sagharian testified that he only observed a handful of cracks which were nothing out of the ordinary. I find Sagharian’s opinion at odds with the other evidence before me.

61The appellant relied on a video of the perimeter wall taken in January 2020 (less than five years after construction) by one of the board members. I find the video persuasive evidence that the structural load-bearing element of the perimeter walls are unable to carry, bear and resist applicable structural loads for the usual and ordinary service life of the element. The video depicts water rushing out of the perimeter wall along with cracks and large rust stains which supports the appellant’s position that the reinforcements within the walls have corroded. In my view, the fact that the video was taken less than five years after occupancy of the building supports that the structure’s service life has been negatively impacted as per the function test. Further, I was also shown numerous pictures of the perimeter walls which depict water stains, cracks, and corrosion at various locations throughout the garage. I find the photographs support that the example of the wall in the video is likely not an isolated incident within the structure.

62In addition, even though the walls have been repaired with injections and plugs water continues to penetrate. In my view, this evidence contradicts the respondent and builder’s argument that the appellant is to blame for the defects in the structure for not carrying out routine repairs and maintenance.

63For the above reasons, I accept Blaney’s opinion that the load bearing function of the perimeter walls has been materially or adversely affected by the lack of the installation of a continuous expansion joint throughout the structure. I find the builder’s design and construction of the perimeter exterior walls constitute a MSD as per the function test.

64Finally, as noted above, I find Ibrahim’s testimony regarding this issue unhelpful because he did not agree that expansion joints should be installed in the perimeter walls. Throughout his testimony, Ibrahim also placed blame on the waterproofing of the structure, not the construction and design. For example, Ibrahim expressed concern about the fact that the rebar within the walls had rusted and blamed the water penetration in the walls on the weeping tile underground. However, there was no evidence to support this theory. Further, he testified that the only way to inspect the waterproofing of the perimeter walls would be to remove the earth around the entire structure which I find would be an expensive and onerous task. In my view, the fact Ibrahim acknowledged that the rebar in the walls had rusted supports the appellant’s position that the load bearing function of the perimeter walls has been materially or adversely affected.

65For the above-noted reasons, I find the builder’s departure from industry best practices in failing to install a continuous expansion joint throughout the perimeter walls has materially compromised the structure’s load bearing function and has resulted in a MSD.

Suspended Level Slab

66I find the appellant has proven on a balance of probabilities that there is a defect in function of the design and construction of the suspended slab which constitutes a MSD under the function test.

67In its decision letter, the respondent concluded that there was no MSD in the suspended level slab. The letter acknowledged observing the appellant’s representative drag a heavy chain across the floor which demonstrated a hollow sound. The letter disregarded the core samples taken by Wynspec because no strength testing or chemical analysis was done. The respondent concluded that the floor surface appeared intact and there were no visible signs of displacement, distortion or collapse of the slab and it did not meet the function test. Further, the core samples were inconclusive to support any defect in the concrete that would interfere with the structure’s load bearing function.

68The May 2020 Wynspec report describes the methodology of how the core samples were taken and concluded that a visual inspection of the cores support that all the samples had delaminated by one inch and the top portion of the concrete has debonded from the rest of the material. Wynspec concluded that because the damage and cracks were uniform across the eight core samples it establishes that there was an error during the concrete casting and curing process. It was Wynspec’s opinion that the suspended level floor slab is experiencing severe surface deterioration. In Wynspec’s December 2020 report it was recommended that additional tests be done on the core samples to assess strength and composition. However, this testing was never carried out. In November 2021, in response to the respondent’s decision letter Wynspec explained that it would be difficult to obtain intact core samples of the slab to carry out compressive strength testing because the core samples previously obtained came out in crumbles with little force applied.

69Blaney supported the conclusions rendered by Wynspec in extracting the core samples and testified that this evidence supported concrete surface delamination and poor concrete quality. It was Blaney’s opinion that this was likely the result of the ground being frozen when the concrete was poured. Blaney’s report noted that the reduction of the slab thickness by one inch will reduce the concrete cover to protect steel reinforcement from rusting along with the stiffness of the slab required to resist deflection under vehicle loads. Further, any reduction of slab thickness caused by delamination for any reason, will reduce the intended flexural resistance and therefore the intended performance of the suspended slab. Based upon the depth of the damage to the concrete slab observed in the concrete cores, the slab’s effective depth would be reduced and therefore the slab’s load bearing function would be materially and adversely affected.

70Sagharian agreed with Blaney in his January 2024 report that the delamination of concrete can impact the structure’s load bearing function. However, Sagharian stated that to determine the cause of and extent of delamination it is critical to determine if the concrete can carry loads the structure was intended for. Sagharian took issue with the sample size extracted by Wynspec and the fact that no compressive strength testing or chemical analysis was done. During cross-examination, Sagharian acknowledged that he has never extracted core samples and did not do so in the present case.

71Ibrahim was also highly critical of the methodology employed by Wynspec in extracting and analyzing the core samples, yet he also acknowledged that he has never extracted core samples. During cross-examination, Ibrahim acknowledged that the cement of the suspended slab was supposed to be eight inches. Ibrahim was asked if the concrete in the suspended slab had delaminated by one inch whether it would structurally impair the building’s design and he acknowledged that “if it was the entire slab yes”. I find Ibrahim’s concession perplexing as it is unclear what further type of testing or destructive testing would be required to determine if the whole slab was structurally compromised.

72The builder relies on this Tribunal’s decisions in Ban (noted above) and Ye v. Tarion, 2022 CanLII 8682 (ON LAT) (“Ye”) where the adjudicators gave less weight to a homeowner’s expert because of a lack of complete testing and structural analysis. In Ban, the adjudicator was not satisfied that the core testing completed by the homeowner’s expert was sufficient and that the absence of horizontal cracks did not support a MSD. In Ye, the adjudicator determined that the appellant had not met their onus because no testing was completed by the appellant’s expert at all.

73I find both above decisions distinguishable from the case before me. In Ban, the adjudicator placed more weight on the evidence of Tarion’s expert because they determined that the expert had more expertise with concrete, testing and repair. I have not rendered this conclusion in the present matter. Further, Tarion’s expert in Ban did not just rely on a visual inspection of the structure but utilized other testing methods such as using a Schmidt hammer in which the results contradicted the other expert’s opinion. In the present case, neither the respondent or builder have conducted any testing or provided the results at this hearing. In fact, Tregobov testified that they tested every cement truck prior to the concrete being poured, yet these results were not relied on at the hearing. I also find Ye is distinguishable from the case before me because the homeowner’s expert in that case did not do any testing at all, however, Tarion’s experts did. Finally, I agree with the appellant that I have been provided with no authority to support that horizontal cracks must be present to constitute a MSD.

74Wynspec’s initial report was done at the five-year mark which showed evidence of structural defects. I agree with the appellant that the defects in the suspended slab is not because of a lack of maintenance or repairs. Wynspec’s initial report notes that repairs had been carried out prior to the five-year mark. I find the delamination of the concrete of one inch in a five-year old garage supports that its ordinary service life has been impacted which meets the function test. Finally, despite Traganov’s testimony that the cement was tested the results were not submitted for my consideration. I draw an adverse inference from the builder’s failure to rely on evidence where it would refute the appellant’s position.

75I find the testing carried out by Wynspec and the results to be sufficient evidence that the suspended slab has delaminated by one inch. Further, I agree with Blaney’s opinion that the delamination of the concrete will materially and adversely affect the ability of the structural load- bearing element of the suspended slab to carry, bear and resist applicable structural loads for the usual and its ordinary service life of the structure.

Entrance Ramp

76I find the appellant has proven on a balance of probabilities that there is a defect in function of the design and construction of the ramp which would constitute a MSD under the function test.

77In its decision letter, the respondent concluded that there was no MSD in the design or construction of the garage’s entrance ramp. The respondent acknowledged observing evidence of previous water penetration at locations along the ramp wall, near where the trench drain was installed along with rust stains and water marks. Further, active water penetration was observed immediately around the area where the drainpipe from the trench drain comes through the ramp through the level below. The letter noted that it was evident that previous crack injection repairs had been made to these locations and injection plugs were visible. Surface finishes were peeling and flaking off the walls and the underside of the ramp where water penetration had occurred. Despite these observations, the respondent concluded that there were no visible signs of displacement, distortion or collapse of the ramp. Further, there was no defect that materially or adversely affects the load bearing portion of the ramp or building.

78In its initial report, Wynspec noted that there was active water penetration through the landscaping materials undermining the membrane materials concealing the ramp entrance. Further, the top surface of the exterior ramp comprises of asphaltic traffic topping with waterproofing membrane materials and heating cables that is generally in poor to fair condition. There was water penetration along the construction joints and cracks in the underside of the ramp entrance, as well as the trench drain at the base of the ramp.

79Blaney’s report notes that there are cracks in the garage ramp structure that were caused by uncontrolled movement of the structure due to the lack of proper installation of expansion joints. He noted that the electrical heating cables that were installed on the garage ramp are over areas of the slab were cracking within the supporting concrete. Blaney attributed the breakage of the heating cables to uncontrolled movements in the supporting concrete slab and structure wall because of the lack of installation of continuous expansion joints. He submits that the cracks within the supporting walls and slab materially and adversely affected the use of the ramp by the occupants of the building.

80Blaney testified that the Wynspec reports noted substantial damage to the drain at the bottom of the garage ramp and concrete was cracking, spalling, and falling off the wall, which was supported by pictures which predated his inspection. The concrete on the sheer wall on the right side was completely deteriorated and was rusted which was caused by the slab above it trying to move in a different direction which has pulled the face of the concrete off. This was caused by the lack of expansion joint. Blaney stated that the ramp had recently undergone repairs which cost $250,000.00 where the concrete was chipped down to expose the bars and patched with material. It was Blaney’s opinion that this is highly unusual in a garage of this age and the repairs would need to be redone in a few years. In his experience, he has repaired many garages and the heating cables in the ramp have failed because of defects in the concrete slab and stresses from movement where the heating cables were attached. It was Blaney’s opinion that there is a MSD in the ramp structure in relation to its load bearing or use.

81In the 2024 LEA report, Sagharian criticizes Blaney for not providing factual information backed up by calculations to determine stresses and movement of the ramp structure. Further, the engineer only observed hairline cracks in the walls. LEA also criticized Blaney for relying on the Wynspec report from November 2019, where they note that the ramp was in fair condition. LEA concluded that the number of leakages were due to improper slopes or waterproofing not structural issues such as stress cracks.

82I prefer Wynspec and Blaney’s opinion over Sagharian’s, establishing that there is a MSD in the ramp in that the failure to install continuous expansion joints throughout the structure has materially and adversely affected the ability of the structural load- bearing element of the ramp to carry, bear and resist applicable structural loads for the usual and ordinary service life of the structure. I find the ramp was already showing signs of structural compromise which was reflected in the 2019 reports of both Wynspec and LEA. These reports note that even though the ramp had been repaired with plugs and injections it continued to deteriorate to the point where it required more extensive repairs in 2023. I agree with Blaney’s opinion that these types of repairs should not have been necessary in a building which was less than five years old at the time of Wynspec’s initial report. I agree with Blaney that the extent of repairs required to fix the ramp in a structure of such a young age supports that the ordinary service life of the structure has been materially and adversely affected.

Has the appellant proven that they incurred damages as a result and are entitled to compensation?

83I find the appellant has proven that they incurred damages and are entitled to compensation in the amount of $250,253.43 for the cost of repairs to the garage ramp and $1,315,060 plus HST for the remaining repairs to the garage to correct the MSD.

84Section 14(4) supports that 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.

85Section 15 (a) of the Act supports that for the purposes of sections 13 and 14, a condominium corporation shall be deemed to be the owner of the common elements in the corporation.

86Section 6 (5) of Regulation 892 supports that a condominium corporation that has a claim under subsection 14 (3) or (4) of the Act with respect to a condominium project is entitled, subject to subsection (8), to be paid out of the guarantee fund the cost of rectification of defective work in respect of the common elements of the condominium project. Further, s. 6 (6) of the Regulation supports that liability is limited to damage to the common elements only and there is no liability for any other damage, direct or indirect. Section 8(b)(i) of Regulation 892, provides that the maximum amount payable out of the guarantee fund in respect of a claim relating to the common elements of a condominium project is $2.5 million.

87The appellant argues that neither the respondent or the builder submitted any evidence on the scope or cost of repairs. Nor did they cross-examine the appellant’s experts about the repairs recommended or their opinions regarding the cost of same. The appellant relies on Wynspec’s bid analysis report dated October 8, 2020, which compared bids from seven contractors which priced the cost of repairs to the suspended slab, roof slab and garage roof between 1.7 and 2.7 million. The report attached a breakdown which included the repair work and the cost charged by each contractor. The appellant submits that both Blaney and the Wynspec engineers testified that the repairs outlined in the bid analysis are reasonable given the extent of the damage to the structure. Blaney testified that he expects that the cost of repairs to have doubled since 2020, which means it may cost as much as 4 million now to make the necessary repairs. The appellant argues since Blaney’s opinion remains unchallenged they should be awarded the maximum amount of compensation provided by the Regulation in the amount of $2.5 million.

88The appellant also submits that since the garage is a shared common element and is an integrated structure, it would be too narrow a reading of the Act to limit the MSD claim to those defective structures in need of repair only within the portion of the garage belonging to the appellant. Moreover, while there is a cost sharing agreement in place, there was clearly an unreasonable refusal of 1307 to make an MSD claim for the garage. Finally, the appellant was pressured to discontinue its investigation and MSD claim because the Board for 1307 was conflicted. The appellant submits that this should not prejudice or limit the warranty rights of the appellant.

89The respondent argues that the bid report prepared by Wynspec includes several items that are not structural in nature. However, the only evidence I have before me on the recommended repairs to correct the MSD are from Blaney and Wynspec. I accept their opinion that in carrying out the MSD repairs that certain aesthetic repairs would likely also likely be necessary. As a result, I accept most of Blaney and Wynspec’s recommendations on the necessary repair work to correct the MSD.

90In addition, the respondent submits that the bid analysis report addressed the repairs to the entire garage which is owned by the appellant, 1307 and the commercial building. The respondent asserts that although the garage is shared between the three corporations, each owns a portion of the garage. For example, the former board member testified that the appellant owns 46% of the garage. Moreover, nine of the parking spaces depicted in the photographs attached to the appellant’s submissions belong to 1307 and the walls, columns and slabs shown in the photographs are not owned by the appellant. The respondent submits that ss. 5 and 6 of Regulation 892 support that the appellant is only entitled to compensation out of the guarantee fund for the cost of repairing the defective work in the common elements it owns. Since the appellant is not the owner of 12 Woodstream Blvd it is not entitled to compensation for these common elements. Finally, it argues that the appellant has not met its onus in proving the amount of compensation because there is no breakdown in the scope of work to show what repairs are being made to the common elements owned by the appellant. The builder argues that no repairs are necessary because there is no MSD to fix.

91I agree with the appellant that the Act should be broadly and liberally interpreted because it is consumer protection legislation. In my view, since I have determined that there is a MSD, it would create an absurd result if I ordered the respondent to repair the MSD only in the portion of the garage that is owned by the appellant. In effect, this would fail to repair the MSD, because it is an integrated structure, and all the components work together for the stability of the building. In my view, if I ordered the respondent to repair or pay for the cost of repairs to 46% of the building it would endanger the stability of the other half of the structure. I am satisfied that since the garage is a fully integrated structure remedial work is necessary to correct the MSD on the whole structure.

92Whether 1307 did not pursue a warranty claim because its board members were conflicted is not ultimately material to my decision. Certainly, two of the appellant’s former board members testified that the builder’s son was a Director of 1307 and other board members included contractors who have had prior business dealings with the builder. These facts were not challenged by the respondent or builder during cross-examination, so I accept them as being truthful, and as having created a conflict of interest that may have affected the decision not to pursue a MSD claim against the builder. However, what is more material is that while perhaps 1307 may have otherwise also had a basis to pursue a warranty claim, the appellant has established damages required for repair of the integrated structure. Whether 1307 might have, but did not, pursue a similar claim that could have affected the calculation of damages is immaterial.

93The respondent submits that the bid analysis includes several items that are not structural in nature. However, the only evidence I have before me on the recommended repairs to correct the MSD are from Blaney and Wynspec. I accept their opinion that in carrying out the MSD repairs that certain aesthetic repairs would likely also likely be necessary. As a result, I accept most of Blaney and Wynspec’s recommendations on the necessary repair work to correct the MSD.

94Having said that, with the exception of the garage ramp, the appellant has not presented any evidence about the cost of inflation for the cost of repairs between the date of the bid analysis report and the hearing. I find Blaney’s general testimony about the cost of construction doubling in the absence of any evidence is insufficient to order the maximum amount of compensation allowed under the Act. Further, I agree with the respondent that since the roof slab was removed as an issue in dispute the appellant is not entitled to the cost of repairs for that. The appellant relied on a contract between it and Strut Engineering which supports that it paid $250,253.43 in 2023 for the cost of repairing the garage ramp. In the absence of any evidence to the contrary, I accept that this is what it cost to repair the garage ramp. In Wynspec’s bid analysis report they indicated that Conterra Restoration Ltd. (who provided one of the lowest bids) would be qualified to make the repairs. In their bid they estimated the cost of repairing the suspended slab including fixing the expansion joints at a cost of $1,315,060. Therefore, I find the appellant is entitled $250,253.43 for the cost of repair of the garage ramp and $1,315,060 plus HST for the remaining repairs to correct the MSD in the garage.

Costs

95I find that neither the appellant nor the builder are entitled to costs.

96Rule Rule 19.1 of the Licence Appeal Tribunal Rules, 2023 (“Rules”) provides that a party may request costs of the proceeding, if they believe that the other party has acted unreasonably, frivolously, vexatiously, or in bad faith during the proceedings. Rule 19.2 provides that a request for costs may be made to the Tribunal in writing or orally at a case conference or hearing, at any time before the decision or order is released. Rule 19.4 further sets out the requirements for that request, which must include the reasons for the request and the particulars of the alleged conduct.

97The purpose of Rule 19.1 is to deter conduct by parties that is unreasonable, frivolous, vexatious, or in bad faith. This is a high bar for conduct to attract a cost award and is an exceptional remedy.

98In its closing submissions the builder requested an order for costs on the basis that the appellant brought this appeal without evidence of a MSD. The builder submits that it has had to expend legal fees for a seven-day hearing and three case conferences, for a speculative MSD claim. In light of my decision in this matter, the builder is not entitled to costs as I have found that there is a MSD based on the evidence relied upon by the appellant. Further, it well established law that costs are not awarded because a party is unsuccessful at the hearing. This matter was complicated in that it involved a novel issue with limited jurisprudence.

99The appellant also indicated an intention to seek costs at the appropriate time in their closing submissions but did not provide any submissions in support of an order for costs. I find Rule 19.2 clear that a request for costs must be made in writing or orally at a case conference or hearing, at any time before the decision or order is released. Since the appellant has not provided any submissions in support of costs prior to the release of this decision, I find the appellant is not entitled to claim costs.

ORDER

100I find that the appellant has proven on a balance of probabilities that there is a MSD in the design and construction of the appellant’s garage

101I order the respondent to pay the appellant $250,253.43 for the cost of repairs to the garage ramp and $1,315,060 plus HST for the remaining repairs to the garage to correct the MSD.

102I find that neither party is entitled to costs.

LICENCE APPEAL TRIBUNAL

Rebecca Hines, Member