Licence Appeal Tribunal File Number: 15317 ONHWPA
In the matter of an Appeal from a Decision of Tarion Warranty Corporation under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “Act”) to deny a claim
Between:
Toronto Standard Condominium Corporation No. 2848
Appellant
and
Tarion Warranty Corporation
Respondent
and
Concord Lakeshore Limited
Added Party
DECISION
VICE-CHAIR: Avril A. Farlam
APPEARANCES:
For the Appellant: Carol A. Dirks, Counsel
For the Respondent: Danielle Peck, Counsel
For the Added Party: Ryan Hauk, Counsel
HEARD: July 16 and 17, 2024
OVERVIEW
1The appellant, Toronto Standard Condominium Corporation No. 2848 (“Condominium”), appealed the denial of its claim for warranty under s. 14(3) of the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (“Act”) for Item 1 on Emergency Form dated December 7, 2021 and for Item 2 on Emergency Form dated February 24, 2022 as set out in the Decision letter dated September 22, 2023 (“Decision”) issued by Tarion Warranty Corporation (“Tarion”).
2The appellant’s claims relate to separate water leak incidents in two separate buildings which the appellant alleges caused extensive damage to common areas of the buildings.
3Tarion’s Decision denied the Condominium’s claims for reasons set out in its Conciliation Assessment Report dated May 2, 2023, including that the Condominium did not follow the emergency procedure set out in Tarion’s Registrar Bulletin No. 02 - Claims Process – Condominium Common Elements (the “Bulletin”).
4Concord Lakeshore Limited (the “Builder”) agrees with Tarion’s Decision and takes the position that 1081716 Ontario Limited c.o.b. as Lisi Services (“LS”) was not authorized by the Builder to be the mechanical service in an emergency involving plumbing and/or flooding at the Condominium.
5At the case conference held May 7, 2024, all parties agreed to bifurcate the appeal and have the Tribunal determine at a hearing whether or not LS was authorized by the declarant, the Builder, to be the mechanical service in an emergency involving plumbing and/or flooding. The outcome of this preliminary issue will determine whether additional issues need to be adjudicated by the Tribunal.
6At this preliminary issue hearing, all parties agreed to submit their evidence in chief by way of affidavits and to proceed by way of cross-examination on the affidavits at the hearing.
ISSUE AT THIS PRELIMINARY ISSUE HEARING
7Counsel for all three parties agreed at the outset of the hearing to a correction to the issue set out in the Tribunal’s May 7, 2024 Case Conference Report and Order (the “CCRO”) and confirmed that the issue before me is more accurately stated as follows:
a. Whether or not LS was authorized by the Builder to be the mechanical service in an emergency involving plumbing and/or flooding at the property. This will determine whether Tarion’s finding in the Conciliation Assessment report that the Condominium failed to follow the emergency procedure set out in Registrar Bulletin No. 02 is reasonable.
8The CCRO provides that the outcome of this preliminary issue hearing will determine whether additional issues need to be adjudicated by the Tribunal.
RESULT
9I find that LS was not authorized by the Builder to be the mechanical service in an emergency involving plumbing and/or flooding at the Condominium’s property. As a result, the appellant’s appeal is dismissed. There are no additional issues which need to be adjudicated by the Tribunal.
THE LAW
10Section 15(a) of the Act states that the condominium corporation is deemed to be the owner of the common elements in the corporation, and under s. 15(d), the warranties on the common elements take effect on the date of the condominium’s registration of the declaration and description in accordance with the Condominium Act, 1998, S.O. 1998, c. 19 (the Condominium Act).
11The Act defines “common elements” as all the condominium property except the condominium units.
12The Act provides that the condominium corporation’s board of directors shall retain a professional engineer or an architect to conduct a performance audit of the common elements on behalf of the condominium corporation and, under s. 44(9), file the audit with Tarion and the corporation’s board of directors by the end of the 11th month following registration of the declaration. Section 44(10) deems the filing of this report to constitute notice of a claim to Tarion for deficiencies found during the audit.
13With respect to defects found during the first year following the date of registration, the condominium corporation is entitled to submit one or more first-year forms to Tarion to make claims regarding defects found during the first year following the date of registration of the declaration under s. 5.5 of the Act.
14If warranty claims are made but not resolved between the vendor and the condominium corporation, Tarion is required to conduct a conciliation to determine whether the items in question are covered by a warranty under the Act.
15Tarion’s Decision may be appealed to the Licence Appeal Tribunal.
16After a hearing under s. 14(19) of the Act, the Tribunal may order Tarion to take the action that the Tribunal considers Tarion ought to take in accordance with the Act and the Regulation, and may substitute its opinion for that of Tarion. The Tribunal owes no deference to Tarion’s Decision.
Positions of the Parties on this Preliminary Issue
17In summary, as set out in the Decision, Tarion takes the position that the Condominium did not follow the emergency procedure set out in the Bulletin. Instead, the Condominium had its own plumber repair the leak without giving the Builder an opportunity to do so disentitling itself to warranty coverage. Also, the Condominium’s plumber appears to have made the situation worse.
18In summary, as set out in its Notice of Appeal dated October 18, 2023, the Condominium takes the position that Tarion erred in denying the Condominium’s claims including the conclusion that the Condominium did not follow the emergency procedure set out in the Bulletin, did not follow the Builder’s emergency procedure, and did not provide the Builder with an opportunity to investigate and repair the leak(s), thereby disentitling itself to warranty coverage. The Condominium’s position is that it followed the emergency procedure of the Builder by contacting the plumbing contractor on the Builder’s trade list, and the plumbing trade who attended to investigate the leak was the Builder’s trade, not the Condominium’s.
19In summary, the Builder agrees with Tarion’s position. The Builder also takes the position that LS was not authorized by it to be the mechanical service in an emergency involving plumbing and/or flooding at the Condominium’s property, that LS was not the Builder’s trade, and that the Builder did not retain their services. The Condominium retained LS to investigate and repair the leak(s) at the Condominium.
Facts Not in Dispute
20The following facts are common ground between the parties.
21The Builder is the declarant of the high-rise residential buildings located at 17 and 19 Bathurst Street, Toronto (the “property”).
22Crossbridge Property Management (“Crossbridge”) was the property manager retained by the Builder to manage the property.
23Lisi Mechanical Contractors Ltd. (“LM”) installed the plumbing equipment at the Condominium property.
24The Condominium’s declaration and description were registered on May 10, 2021, creating the Condominium as a non-profit corporation.
25The Condominium is responsible for the management and administration of the property.
26As required by s. 43 of the Condominium Act, the turnover of the building from the Builder to the Condominium took place at a meeting on July 20, 2021 (“turnover meeting”). At the turnover meeting, the Condominium elected a new board of directors and the Builder turned over certain records to the Condominium.
27After the turnover meeting, the Condominium continued to have Crossbridge manage the Condominium’s property until the Condominium hired FirstService Residential Ontario as manager in late 2022.
28The Condominium experienced a water leak on October 10, 2021 at the property following which the Condominium contacted LS to fix the leak on October 10, 2021 on the advice of Crossbridge.
29On December 7, 2021 Tarion received an emergency warranty claim from the Condominium about the October 10, 2021 leak. On February 24, 2022 Tarion received a second emergency form from the Condominium.
30The real dispute between the parties is whether LS was authorized by the declarant, the Builder, to be the mechanical service in an emergency involving plumbing and/or flooding at the Condominium’s property.
ANALYSIS
LS Was Not Authorized by the Builder to be the mechanical service in an emergency involving plumbing and/or flooding at the Condominium’s property
31I find that LS was not authorized by the Builder to be the mechanical service in an emergency involving plumbing and/or flooding at the Condominium’s property. To the contrary, I find that the decision to seek service from LS in respect of the leaks was made solely by the Condominium, without any consultation or notice to the Builder, or to Tarion, until after repairs had been made and significant remediation work undertaken by the Condominium.
32Although the Condominium submits that the Builder retained LS, the evidence does not support this. To the contrary, the evidence before me establishes that the Condominium hired LS to do service and repair work, including emergency leak repairs which are the subject matter of the emergency claims to Tarion. Considered in totality, the evidence before me establishes that it is more likely than not that LS was not authorized by the Builder to be the mechanical service in an emergency involving plumbing and/or flooding at the property for the following reasons.
LS is not on the Trades List the Builder Provided
33Carlos Manuel David Jesus has been the Builder’s performance audit manager for the property since 2020, prior to the building being completed in the spring of 2021, registered on May 10, 2021 and turned over to the Condominium board of directors on July 20, 2021. Mr. Jesus has over 35 years experience in the construction industry in various capacities and most recently in managing performance audit processes for residential condominium projects, including this Condominium. Mr. Jesus is responsible for dealing with audit and deficiency claims and coordinating these with the Condominium and its property managers.
34Based on the evidence of Mr. Jesus, the Builder has significant construction experience, having completed over 150 residential and mixed-use buildings with more than 50 in various stages of planning and development.
35Mr. Jesus testified that the Builder retained Lisi Mechanical Contractors Ltd. (“LM”) to complete the plumbing and mechanical scope of work for this building.
36Mr. Jesus testified that the Builder provided the list of trade contacts for the building to Crossbridge on August 5, 2020 by email (the “trades list”). The trades list is entitled “Block 8-Trades List” and lists 18 different trades. Under the heading “Trades” and subheading “Mechanical”, the trades list names LM, specifically “Lisi Mechanical”, Frank as the “Foreman”, gives Frank’s email at “lisimechanical.com” and Frank’s phone number.
37There is no other trade shown on the trades list for mechanical or plumbing.
38Mr. Jesus testified that this is the only trades list given to the Condominium as part of the turnover process. The appellant did not put forward any other trades list provided by the Builder.
39Mr. Jesus testified that the purpose of providing the trades list is so the Condominium and its property manager would have a list of contacts in case there are issues with warranty items, including emergency items. Mr. Jesus testified that the Builder has a contract with its trades that include warranties in favour of the Builder that cover issues with the applicable trade’s work and that this was the case for this building with LM in relation to plumbing.
40Mr. Jesus is the only witness put forward by any party who was involved with the property in 2021 both before and after October 10, 2021. As a result he is the only witness who has first-hand knowledge of the property both pre and post-leak on October 10, 2021. Where his evidence conflicts with that of Diana Anyim, the Condominium’s current manager, I prefer the evidence of Mr. Jesus.
41Based on the evidence before me, I find that LS is not on the trades list which the Builder provided for the property.
The Condominium Retained LS for Maintenance Work Prior to the Leaks
42The Condominium retained the on-going services of LS in a contract dated May 13, 2021 effective May 1, 2021 to April 30, 2024. LS’s Robert Lisi Jr. signed this contract June 10, 2021. The Schedule B scope of work is for preventative maintenance on certain mechanical equipment on the common elements. Payment is annual, payable monthly. There is provision in the contract for the Condominium to hire LS for work outside the scope of work set out in the contract.
43The Builder is not named as a party to this contract. The Builder did not sign this contract. According to the evidence of Mr. Jesus, the Builder did not negotiate or see this contract, and only discovered the existence of the contract recently.
44The Condominium pleads in its Statement of Claim in a Superior Court of Justice action against LS that “On or about October 10, 2021, a leak was reported ….Property management for TSCC 2848 contracted with Lisi Services on an emergency basis to investigate the source of the leak and to attend to any repairs.” While this pleading contains allegations not yet proven in court, it sets out the Condominium’s view of its legal relationship with LS and appears to indicate that the Condominium regarded LS as the contractor it hired to address the leaks on October 10, 2021.
LS Acknowledges It Was Not Doing Builder Warranty Work for the Condominium
45According to its documentation, LS appears to have been alive to the distinction between service and maintenance work, and construction deficiencies.
46LS’s job summary dated October 1, 2021 confirms that Condominium staff requested and received service from LS regarding a leak prior to October 10, 2021.
47LS’s documents confirm it was doing service work for the Condominium in respect of the leaks on October 10, 2021 including the following:
A. LS’s job summary dated October 10, 2021 refers to “Emergency Service Call” from Gagandeep Singh, the Condominium’s security service.
B. The job summary notes “NO” beside the reference to “warranty”.
C. LS’s job summary includes pictures and confirms the time was service completed.
D. LS’s job summary is signed as accepted by “Tersa Arena” at email “tarena@crossbridgecs.com” on behalf of the Condominium’s property manager Crossbridge.
E. LS’s invoice dated October 19, 2021 confirms service work performed by LS for the Condominium on October 10, 2021 and October 13, 2021.
F. LS’s Rob Lisi emailed Mr. Jesus and others on November 25, 2021 and confirmed that “Lisi Services was retained to perform maintenance tasks as per a maintenance contract agreement. We do not have any time or costs allowed to troubleshoot, diagnose, repair etc. construction deficiencies…”
48Mr. Jesus testified that the Builder had not retained LS for this property and did not have a contract with them to undertake repairs or maintenance.
49I prefer the evidence of Mr. Jesus over that of Ms. Anyim because he has first-hand information about the Builder’s relationship to the trades.
LS is a Different Corporation than LM
50Corporate searches filed clearly establish that LM, incorporated as Lisi Mechanical Contractors Ltd., and LS, incorporated as 1081716 Ontario Limited, carrying on business with the registered business name Lisi Services, are two different corporations incorporated some 40 years apart from each other, and having different head office addresses.
51Although Ms. Anyim testified that LM and LS both use “Lisi” as part of their names, use the same logo, and appear to be connected because one can access LS by clicking on the website of LM, this testimony does not establish that LS and LM are the same legal entity.
52Ms. Anyim was not working for the Condominium’s property manager until 2023. There is no evidence before me establishing that the logo and website similarities existed in 2021, that the Condominium or its property manager Crossbridge knew of this or relied on it in any way, or that it influenced the decision of the Condominium to call LS to fix the leaks on October 10, 2021.
By Hiring LS to Fix the Leaks on October 10, 2021, the Condominium did not Follow Tarion’s Emergency Protocol and Disentitled Itself to Warranty
53The evidence of Mr. Jesus, not seriously shaken on cross-examination, was that when a leak is reported to the Builder, it will ask for immediate access to the property to inspect and/or will require the trade contractor responsible for the work, in this case LM, to address the repair because the Builder has a contract with its trade that include warranties in favour of the Builder that cover issues with the applicable trade’s work. This was so on this property with LM in relation to plumbing.
54Mr. Jesus swore that the Builder was not notified by either the Condominium or its property manager of the leaks before the Condominium’s property manager engaged its maintenance contractor LS to undertake repairs. The Builder was not advised of the emergency repairs or consulted on repairs prior to them being undertaken. Mr. Jesus said he was notified of the leak on October 12, 2024. Frank Palermo, Tarion’s Senior Warranty Service Representative, Common Elements, confirmed that Mr. Jesus advised him to the same effect.
55Ms. Anyim admitted in cross-examination that, to her knowledge, the Condominium’s security called LS under the direction of the Condominium’s property manager and confirmed that her affidavit contains no reference to the Builder or Tarion being contacted about the leak at the time it happened.
56The Builder had not retained LS for the property and did not have a contract with LS to undertake the repairs or maintenance for the property.
57Based on the evidence of Mr. Palermo, Tarion was not notified by the Condominium until December 7, 2021 when it submitted to Tarion a Common Element Emergency Form regarding the October 10, 2021 water leak.
58As explained in Mr. Palermo’s evidence, Tarion is a not-for-profit corporation which administers the warranty plan established under the Act and its regulations. The Act requires a vendor, including the Builder, to provide warranties which cover the common elements of a condominium, including the common elements of the Condominium. The process is that the Condominium makes a warranty claim under the Act to the Builder and Tarion backstops the Builder’s warranties if not honoured. However, Tarion requires the Condominium to follow the warranty claims process set out in the Act and regulations.
59Tarion considers a plumbing leak that requires the entire water supply to be shut off as an emergency situation. The relevant claims process for emergency warranty claims is set out for ease of reference and understanding, in the Bulletin which is available condominium corporations and vendors on Tarion’s website. If the Condominium believes that there is an emergency situation, the relevant process can be summarized as follows:
A. The Condominium should contact the Builder first and follow the Builder’s instructions to handle the situation.
B. The Builder is permitted up to 24 hours to resolve the emergency to ensure that the situation has been made safe and to prevent further damage.
C. After the initial emergency has been resolved, the Builder is required to complete the full repair, if necessary, in accordance with the Builder’s warranty obligations as soon as possible and not later than 30 days from the date the Condominium reported the emergency.
D. If the Condominium cannot reach the Builder within 24 hours, or if the Builder has been contacted but has not resolved the emergency situation within 24 hours, the Condominium may contact Tarion for further direction. Tarion will determine whether there is an emergency situation or if the item should be added to the Condominium’s next warranty form. If Tarion concludes there is a warranted emergency situation, Tarion will first try to contact the Builder, and if unsuccessful or the Builder is unwilling or unable to resolve the emergency situation, Tarion will instruct the Condominium to do repairs as necessary to resolve the emergency situation and make the situation safe and to prevent further damage.
E. If the Condominium is unable to contact the Builder and Tarion and it believes there is a warranted emergency situation, the Condominium may perform repairs necessary to resolve the warranted emergency only, and is required to submit a Common Elements Emergency Form to Tarion and the Builder if it wishes to be reimbursed for emergency repairs done.
60It is clear from the evidence put forward by all parties that the Condominium did not follow this emergency warranty claim process.
61The Condominium did not contact the Builder or Tarion on October 10, 2021 according to the evidence of all parties. The Condominium contacted LS and undertook or authorized repairs itself. This fact cannot be seriously disputed.
62It is apparent from the incident report attached to Ms. Anyim’s affidavit, the immediate response of LS at the time, LS’s job documentation, the affidavits and testimony of Messrs. Palermo and Jesus, and the allegations made by the Condominium in its ongoing litigation with LS that the Condominium decided to engage LS before contacting the Builder or Tarion. Further, the Condominium in its court action is seeking damages from LS based on, among other causes of action, breach of contract.
63Although the Condominium made submissions at the hearing, and Ms. Anyim suggested in her evidence, that LS was contacted because the Condominium had led it to believe LS was the trade to contact in an the event of a plumbing emergency by paying for a previous warranty work account of LS, the Condominium had been given contact information by LS to use in the event of an emergency, and LS is somehow related to LM on its current website, I do not accept these submissions.
64Ms. Anyim’s evidence is that LS was contacted on the advice of Crossbridge, its property manager.
65Although Ms. Anyim’s evidence was that another leak occurred on October 1, 2021 and the Builder took no issue with LS being called as the plumber in that instance and paid the invoice, this incident is insufficient to establish that LS was authorized by the Builder to be the mechanical service in an emergency involving plumbing and/or flooding at the property for all situations or operate to add LS to the Builder’s trade list. It is up to the Condominium to engage the services of LS in an emergency if it wishes to do, but the Builder is only responsible for warranty work if the warranty procedure was followed. Here, I find that it was not followed.
66It is unsurprising that LS had given to the Condominium information about contacting LS in the event of an emergency given the multi-year service and maintenance contract between LS and the Condominium.
67Taken in totality, the evidence establishes that the Condominium did not follow Tarion’s emergency warranty claim process or even attempt to advise the Builder or Tarion within 24 hours as required.
68The result of the Condominium not following the Tarion emergency warranty claim process is that the Builder was denied the opportunity to be the first advised of the emergency situation, was denied the opportunity to give instructions to the Condominium to handle the situation, and was denied the 24 hour period to resolve the emergency and ensure that the situation had been made safe and to prevent any further damage. Further, the Condominium disentitled itself to warranty coverage and its appeal cannot succeed.
Conclusion
69I find that LS was not authorized by the declarant, the Builder, to be the mechanical service in an emergency involving plumbing and/or flooding at the Condominium’s property. As a result, there are no additional issues which need to be adjudicated by the Tribunal.
ORDER
70For the reasons set out above, I find that LS was not authorized by the declarant, the Builder, to be the mechanical service in an emergency involving plumbing and/or flooding at the Condominium’s property. There are no additional issues which need to be adjudicated by the Tribunal. The appeal is dismissed.
Released: August 29, 2024
Avril A. Farlam
Vice-Chair