Martinez v. Tarion Warranty Corporation, 2025 CanLII 125916

Tribunals Ontario

Licence Appeal Tribunal

Licence Appeal Tribunal File Number: 16898/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"), Section 14.

Between:

Nicole and Mario Martinez

Appellants

and

Tarion Warranty Corporation

Respondent

DECISION

ADJUDICATORS:

Colin Osterberg, Vice-Chair Kevin Kovalchuk, Vice Chair

APPEARANCES:

For the Appellants:

Michael Burokas, Counsel

For the Respondent:

Noah Eklove, Counsel

Heard:

October 7, 8, & 9, 2025

OVERVIEW

1Nicole and Mario Martinez (the "appellants") appeal from the decision letter dated January 6, 2025 ("Decision") issued by Tarion Warranty Corporation ("Tarion") which, pursuant to s. 14 of the Ontario New Home Warranties Plan Act, R.S.O. 1990, c.O.31 ("Act") denied the appellants' claim for warranty compensation for alleged flooring defects in their home and specifically the following items listed on the Year-End warranty form received by Tarion on December 1, 2021:

(12) Interior – Basement – Floor – Most of the sections of the floor planks have water damage due to the flood. Planks are shrinking, causing large gaps between the planks. Planks are causing halo [sic] sound because lifting from floors.

(13) Interior – Basement – Floor – Planks have warped/ causing uneven edges along the walls, now the shoe mould and baseboards DO NOT look even. huge gaps along the walls in every room.

(14) Interior – Basement – Bedroom – Floor – Planks that were attempted to be fixed during the flood were not glued correctly and now lifting and hollow. ALL have hallow [sic] sounds. Water damage is still noticeable WATER DAMAGE.

ISSUES

2The issues to be determined are:

i. Whether claim items 12, 13 or 14 of the Year-End warranty form constitute a breach of warranty under s. 14(3) of the Act,

ii. If so, whether the appellants suffered monetary damages resulting from the breach(es) of warranty; and

iii. If so, the amount of these damages.

RESULT

3Having considered all of the evidence and for the reasons that follow we find that the appellants have not demonstrated a breach of warranty and we direct Tarion to deny the appellants' claim.

ANALYSIS

4Tarion takes the position that the damage to the hardwood flooring that is the subject of this appeal is "secondary damage" and is excluded from warranty coverage pursuant to s. 13(2) of the Act.

5The appellants submit that the damage to the flooring was caused by flooding which was the result of the failure of the sump pumps installed by the builder of the home, is not secondary damage under the Act, and is therefore warranted.

The Statutory Warranty

6Section 13(1)(a) of the Act provides that the vendor of a home warrants to the owner that the home is constructed in a workmanlike manner and is free from defects in material, is fit for habitation and is constructed in accordance with the Ontario Building Code.

7Section 13(2)(b) of the Act provides that a warranty under subsection (1) does not apply in respect of secondary damage caused by defects, such as, property damage and personal injury.

8The onus is on the appellants to prove, on a balance of probabilities, that the defects in the home fall within the warranty coverage, that monetary damages have resulted from the defects and the amount of those damages. The Tribunal owes no deference to Tarion's decision.

9Following a hearing, the Tribunal may, pursuant to s. 14(19) of the Act, direct Tarion to take such action as the Tribunal considers Tarion ought to take in accordance with the Act and the regulations, and for such purposes the Tribunal may substitute its opinion for that of Tarion.

Facts and discussion

The parties agree that:

i. The appellants purchased 60 Heritage Lake Drive, Puslinch, Ontario, ("home") from Timberworks Homes ("vendor") and moved into the home on December 1, 2020.

ii. On June 20, 2021, the basement of the home was flooded due to a rainstorm. The flooring in the basement was 5/8" x 7" White Oak Engineered Hardwood. The same flooring was installed on the main floor of the home.

iii. It is agreed that the flood resulted in damage to the hardwood floor in the basement. There was no damage to the basement floor prior to the flood.

iv. The hardwood floor on the main floor of the home was found to be undamaged.

v. The damage to the hardwood flooring that is the subject of this appeal resulted from the flood that occurred on June 20, 2021.

10The parties do not agree as to the cause of the flooding. The appellants argue that the flooding was caused by a failure of the sump pumps to operate properly due to a defect in at least one of the sump pumps.

11Tarion argues that the sump pumps did not operate on the night of the flood because of a failure of the electrical system that supplied power to the sump pumps.

12In our view, it is not relevant to our determination whether the flooding was caused by a defect in the sump pumps or a failure of the electrical system. In either case, the damage to the appellants' flooring is "secondary" damage and therefore excluded from warranty coverage pursuant to s. 13(2) of the Act.

13The Divisional Court in Liddiard v. Tarion Warranty Corp., 2009 CanLII 65801 (ON SCDC) ("Liddiard") describes at paragraph 52, what is covered under s. 13(1) of the Act and what is considered secondary damage as follows:

What is conferred by the warranty is the right to have done that which should have been done correctly in the first instance or a sum of money to purchase the labour and materials to do so. Any loss or damage that is derivative of the failure to construct in accordance with s. 13(1) is secondary and therefore excluded.

14In the present case, the warranty conferred on the appellants the right to have sump pumps without defect installed, and an electrical system which is capable of supplying power to the sump pumps so that they operate properly. If the sump pump was defective, then the appellants would have the right to have a sump pump that was not defective installed under the warranty. If the electrical system was defective, then the warranty would require the repair or replacement of that system with one that is not defective.

15Loss or damage that is derivative of the installation of a defective sump pump or a defective electrical system is, according to the Divisional Court in Liddiard secondary and therefore excluded.

16The appellants submit that Liddiard does not apply because it deals with loss of property value that stems from a breach of warranty. They argue that this is quite removed and not analogous to the case at hand. We disagree with this submission. The issue as to the applicability of the exclusion for secondary damage arose in Liddiard because that case dealt with loss of property value that results from a breach of warranty and not property damage or personal injury which are specifically mentioned in s. 13(2) of the Act as the kinds of derivative damage that are excluded from the warranty.

17In the present case, the appellants are making a claim for property damage which resulted from the breach of warranty which is specifically mentioned in s.13(2) of the Act as the kind of damage that is excluded from warranty coverage as secondary damage. In other words, the damage to the appellants' floor is of a kind that is even more clearly subject to the exclusion in s. 13(2) than the damage being claimed in Liddiard.

18We are bound by the meaning of the word "secondary" articulated by the Court in Liddiard and find that it applies to the appellants' claim in this case.

19We find, whether the failure of the sump pumps to operate was due to a defect in the sump pumps themselves or a defect in the electrical system, the damage to the appellants' floors caused by the resulting flood is derivative of the failure to construct in accordance with s. 13(1), and therefore "secondary damage" excluded from warranty coverage pursuant to s. 13(2) of the Act.

Damages:

20Having found that there is no breach of warranty it is not necessary for us to consider whether the appellants suffered any monetary damage resulting from the breach of warranty; and if so, the amount of damages.

ORDER

21For the reasons set out above and pursuant to s. 14(19) of the Act, we direct Tarion to deny the appellants claim.