Licence Appeal Tribunal File Number: 16482/ONHWPA

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

Between:

Nadine Aliya Murray

Appellant

and

Tarion Warranty Corporation

Respondent

and

Marshall Homes Corporation

Added Party

DECISION

ADJUDICATOR:

Bruce Stanton

APPEARANCES:

For the Appellant:

Nadine Aliya Murray

Michael Murray

For the Respondent:

Pat O’Hara, Warranty Services Representative

Suzanne Chandrakumar, Counsel

For the Added Party:

Lynne Funston, Warranty Manager

Lindsay Marshall, Décor Manager

Craig Marshall, President

Court Reporters:

Kelli Ryan, April 28, 2025

Taha Aqdas, April 29, 2025

Heard: by videoconference

April 28, 29, 2025

OVERVIEW

1Nadine Aliya Murray (the “Appellant”) appeals from a decision letter issued by Tarion Warranty Corporation (“Tarion”) dated November 1, 2024 in relation to items 14, 27, 128 and 176 on the Appellant’s 30-Day statutory warranty form.

2Marshall Homes Corporation (the “Builder”) was added as a party to this proceeding at the case conference held on January 10, 2025.

ISSUES

3The issues to be determined are:

i. Whether the Appellant’s property is eligible for warranty coverage for items 14, 27, 128 and 176 of the 30-Day statutory claim form; and

ii. If so, the amount of damages the Appellant has proven, arising from the breach(es) of warranty.

RESULT

4The warranty claims in dispute are not eligible for warranty coverage; they do not constitute breaches of warranty. The claims are denied.

ANALYSIS

The new home warranty claims

5This appeal concerns the Appellant’s new home in Pickering, where the Appellant lives with her family, including her spouse, Michael Murray, and son, Jameel Norman. The three family members are co-owners of the property. They took possession of the property on April 6, 2023. They filed their 30-Day Statutory Warranty Form with Tarion on May 17, 2023 which included 176 claims for defects and deficiencies they observed in their new home.

6After a period of time in which the Builder had a statutory right to make repairs and resolve the reported defects, the Appellant sought conciliation of the claim items that remained unresolved. Tarion inspected the claims on June 19 and 20, 2023, and reported the results in a Conciliation Assessment Report (“CAR”) dated June 30, 2023. Of the 176 items:

i. 77 were listed as warranted defects;

ii. 35 were withdrawn by the Appellant;

iii. 58 were not warranted;

iv. 4 were listed as under investigation; and

v. 2 were listed as seasonal.

7Tarion conducted a conciliation re-inspection of the 4 claims (items 14, 27, 128 and 176) which were noted as being under investigation in the CAR of June 30, 2024, and reported in a CAR dated October 12, 2023 (“CAR Oct 2023”) that the 4 items were not warranted.

8The Appellant disagreed with Tarion’s warranty assessment in CAR Oct 2023, and requested that Tarion issue a decision letter. Tarion issued the decision letter on November 1, 2024 (the “DL”), pursuant to section 14 of the Act.

9The Appellant filed an appeal of the DL with the Licence Appeal Tribunal (“Tribunal”) on November 20, 2024. The Appellant has the onus of proving on a balance of probabilities (that it is more likely than not) that the defect or deficiency reported in a claim is a breach of the builder warranty, and if so, the amount of damages that arise from the breach, i.e., the cost or repairing or replacing the warranted defect to the intended standard.

Claim item 14 – flooring below kitchen cabinets not finished

10I find claim item 14 is not a breach of warranty. This claim relates to the Appellant’s report of the hardwood flooring in the kitchen not extending to the floor areas beneath the kitchen cabinets and island. The finished hardwood flooring exists only on the useable, exposed areas.

11Under section 13(1) of the Act, every vendor or builder of a new home warrants to the owner that it is constructed in a workmanlike manner and is free from defects in material, is fit for habitation, and constructed in accordance with the Ontario Building Code (“OBC”). The builder also warrants to the owner such other warranties as are prescribed by the regulations.

12One such regulation is in relation to substitutions of construction, materials, or finishes a builder has committed to under the terms of an Agreement of Purchase and Sale (“APS”) with a homeowner.

13Section 18 of O. Reg 892 (the “Regulation”) stipulates that a vendor or builder cannot make substitutions in those items of construction or finishing for which the purchaser is entitled to make a selection pursuant to an APS without the written consent of the purchaser.

14Section 19 of the Regulation stipulates that when the vendor makes a substitution for an item that is referred to in the APS and is not to be selected by the purchaser, the substituted item must be of equal or better quality than the item referred to in the APS.

15For these purposes, the APS includes its schedules, addendums, amendments and any written, signed orders between the parties in relation to changes or upgrades of finishes, materials, or components covered in the APS.

16For clarity, a substitution that is contrary to the requirements of sections 18 or 19 of the Regulation would be a breach of warranty under the Act.

17Section 14 of the Act sets out the basis for compensation for a homeowner if there is a breach of warranty under section 13. Section 14(3) stipulates that, subject to the regulations, a homeowner is entitled to receive payment out of Tarion’s Guarantee Fund (the “Fund”) for damages resulting from a breach of warranty.

18The Appellant submitted that there was no hardwood flooring installed below the kitchen cabinets or island. Michael Murray, co-owner, testified that he observed the unfinished flooring during the pre-delivery inspection (“PDI”) on April 5, 2023. He stated that the kick plates had not yet been installed below the cabinets, thus, he was able to observe the unfinished floor area below.

19The Appellant testified that she paid $4,775.39 for an upgrade (to hardwood) from the original APS that had specified the kitchen floors to be finished in ceramic tile. She stated that Shannon, at the Builder’s sales office, calculated the cost of the hardwood upgrade based on the area of the ceramic tile it would be replacing.

20The Appellant testified that she and Mr. Murray attended the meeting with Shannon and both expected that the entire kitchen floor would be finished, not just the useable areas. She stated that if they decided to reorganize the layout of the kitchen in later years, for example moving the cabinets, the flooring would also need to be modified and by that time the same hardwood may not be available.

21The Appellant submitted that the lack of finished flooring below the cabinets is a breach of warranty. She did not submit an amount for the damages arising from the alleged breach of warranty.

22Pat O’Hara, a warranty services representative at Tarion who conducted the conciliation inspection and the re-inspection reported in CAR October 2023, testified that it is not common to have finished flooring under kitchen cabinets. He could only recall one occasion where he had seen that done. He stated that the industry standard is to install finished flooring to just slightly beyond the lower inside edge of the cabinets and no more.

23Mr. O’Hara testified that there was no agreement between the Builder and the Appellant that the ceramic flooring originally specified in the APS should cover the entire square footage of kitchen (not just the useable areas). Tarion referred to line 1 of the Builder’s change order form, signed by the Appellant, titled Request For Extras #3 and/or Changes, that relates to the $4,775.39 hardwood upgrade. The description does not include any dimensions for the area to be upgraded. The area is described as “Kitchen/Breakfast [flooring] (incl. servery and pantry)”, and “Hardwood in Carpet/Tile Standard Areas”, and includes the specification of the hardwood size, model, and supplier.

24Considering there was no agreement specifying the area to be finished, beyond the standard described in the change order, Mr. O’Hara concluded there was no unauthorized substitution, therefore, no breach of the substitution warranty under the Regulation.

25Tarion submitted that the failure of a builder to meet a homeowner’s/purchaser’s expectations does not make the reported deficiency a breach of warranty. Tarion submitted that the scope of the appeal is limited to alleged breaches of the Builder’s warranty as set out in the DL and as defined in s. 13 of the Act (i.e. constructed in a workmanlike manner, free from defects in material, fit for habitation, constructed in accordance with the OBC, and compliant with the regulations).

26Tarion directed me to a decision of the Tribunal’s predecessor in the matter of Baranowski v. Ontario New Home Warranty Program, [2003] O.L.A.T.D. No. 262 (“Baranowski”) where the Tribunal stated, “There is often a misconception by new home purchasers that every problem is covered in some fashion under the Act. It is unfortunate that purchasers do not understand the limited nature of the protection under the Act.” Baranowski goes on to suggest that, “The most effective way for a purchaser of a new home to be protected is by signing an APS that is exact in its specificity”, and goes on to suggest agreements should be in writing, floor plans and dimensions need to be precise, and agreements should be signed by the vendor and purchaser.

27I am not bound by previous decisions of the Tribunal or its predecessor. However, I find the decision in Baranowski helps shed light on how the gap between a homeowner’s expectations and what a builder is obligated to provide under an APS and under s. 13 of the Act, can become a source of difficulty between the parties. Baranowski reinforces the ability of written agreements between the parties, with specifics, that are signed and dated, to help prevent these disputes.

28Tarion submits that disputes such as this disagreement over what constitutes the “finished kitchen floor area” are not within the purview of the Tribunal. It submits this is a contractual dispute that falls outside the Tribunal’s authority.

29Lindsay Marshall, décor manager at Marshall Homes, testified on behalf of the Builder that the kitchen flooring specified in the APS was to be ceramic tile, as specified in Schedule A, titled “Next – Two Storey Series – Standard Features and Finishes”, to the APS. She testified that the Builder calculated the cost of the upgrade to hardwood flooring based on the square footage of ceramic tile that the Builder was committed to in Schedule A, and the pre-calculated price book based on the hardwood supplier’s pricing.

30Ms. Marshall testified that the price for the upgrade was based on the area intended to be covered by ceramic tile, per the APS, that would be replaced by hardwood flooring, and that area did not include the unusable floor below the cabinets or island. She described the area to be finished in hardwood as being “standard” finishes.

31I find there is no breach of warranty in claim item 14. There is no evidence or documentation before me of an agreement between the Builder and the Appellant that the kitchen floor area must include the areas beneath the cabinets. Neither the Schedule to the APS nor the change order defined the area of the kitchen floor to be finished, beyond it being “standard” finishes.

32I am persuaded by Mr. O’Hara’s testimony that during his decade of work in the building industry he can recall only one instance of a kitchen floor in a new home being finished below the cabinets. It suggests that kitchen floor finishes covering only the useable area is the industry standard.

33I am persuaded by the Builder’s explanation that the hardwood floor upgrade was based on the same square footage as it was committed to supplying and installing with ceramic tile, and that area did not include below the cabinets.

34I accept that Mr. and Ms. Murray believed the kitchen floor would be finished below the cabinets but unfortunately there appears to have been a gap between their expectations and Builder’s plan. Since there is no evidence of an agreement between the parties specifying the kitchen area be any different than “standard”, I find there was no unauthorized substitution pursuant to section 18 or 19 of the Regulation.

35Accordingly, I find on a balance of probabilities that claim item 14 is not a breach of warranty.

Claim item 27 – inside door from garage not wide enough

36I find the defect reported in claim item 27 is not a breach of warranty.

37The Appellant described this deficiency as the Builder’s failure to make the inside garage door, leading from the garage into the mudroom (“mudroom door”), sufficiently wide to accommodate a family member weighing 600 lbs. The Appellant testified that she paid $3,000.00 to upgrade the mudroom door from the standard 32” to one that would better accommodate her family member. She asked the Builder if a double door could be installed at that location. The Builder advised that a double door could not be done architecturally, but that it would increase the width of the door.

38The Appellant referred me to an email exchange she had with the Builder on this subject which reveals that the Appellant believed the wider mudroom door would be wider than the 36” main entrance door. The emails did not include the Appellant’s objective width for the mudroom door.

39The Appellant testified that the $3,000.00 upgrade included raising the mudroom floor so that it would be flush with the main floor.

40In putting a question to Mr. O’Hara under cross-examination, the Appellant opined that a door for a 600 lb. person would obviously need to be wider than the 36” wide front entrance door.

41The Appellant submits that the mudroom door ought to have been constructed to be wider than the front entrance door, and therefore, it constitutes a breach of warranty. The Appellant did not submit an amount of damages she believes is a consequence of the alleged breach.

42Mr. O’Hara testified that claim item 27 was not warranted because there was no agreement between the parties as to what width the “wider” mudroom door should be. The signed change order for $3,000.00 described raising the mudroom floor but does not specify the door width.

43Ms. Marshall testified that the mudroom door was enlarged from 32” to 36” wide, and that a 36” door is the standard they provide to meet accessibility requirements. Article 3.8.3.3 of the OBC specifies that a barrier-free door must be a minimum of 860 mm or 34”. She testified that the $3,000.00 was mainly for raising the mudroom floor and that the cost of widening the mudroom door to 36” was relatively minor, so the Builder did not charge the Appellant extra for the wider door.

44I find that claim item 27 is not a breach of warranty. Like claim 14, this dispute relates to a gap between what the Appellant expected out of the $3,000.00 change order, and what was constructed. Unfortunately, there is no documentation or agreement between the parties that specifies or sets out the dimensions for the wider mudroom door, therefore, there is no evidence of an unauthorized substitution. I find the Appellant has not met her burden.

45I am persuaded by the Builder’s evidence revealing that it installed a door that met accessibility standards at 36” wide, which, without any instruction or agreement to the contrary, seems reasonable and exceeds the OBC standard for a barrier-free door.

46There is also no evidence before me to suggest the door installation has any defects in materials or workmanship, or violations of the OBC. There is no evidence of a breach of the statutory warranties.

47Accordingly, I find on a balance of probabilities that claim item 27 is not a breach of warranty.

Claim item 128 – substituted brick cladding

48I find that claim item 128 is not a breach of warranty.

49The Appellant submits that the Builder changed the brick cladding on her home without notice and that such a change required the owners’ consent. The Appellant signed an Exterior Colour Package Preference Form (“Preference Form”) which indicated her first choice of exterior colours (cladding, roof shingles, window trim, soffit, front door, garage door and wood trim) was Package #3, which included Canada Brick’s “Old Queenston” brick.

50The Appellant testified that the installed brick is completely different than the one she chose and adds that a number of homes in the neighborhood were finished with the brick she had chosen (Old Queenston).

51The Appellant directed me to a Toronto Star article by Bob Aaron, August 28, 2004, in relation to a builder who supplied the wrong colour of cladding to new homeowners. The article references a 2002 Divisional Court decision in the case of Ashcroft Homes v. Timothy Fuller, Patricia Swick and the Ontario New Home Warranty Program. Mr. Aaron opined in his article that the court’s upholding of a Tribunal ruling granting compensation for the unauthorized substitution of the exterior cladding signals to future home purchasers, and builders, that when a contract entitles buyers to make a selection of siding, brick, or anything else, their selection becomes a contractual obligation of the builder.

52The Appellant submits the brick was a finish she was entitled to and did make, and that its substitution, without notice or consent, constitutes an unauthorized substitution, and therefore, a breach warranty. She did not submit an amount of damages arising from the alleged breach of warranty.

53Mr. O’Hara testified that an exterior colour preference form is not considered to be part of the APS. The homeowner is not guaranteed to receive one or any of the options in an exterior preference form and the Builder is not under any obligation to provide notice of the final brick to be installed, or get the owner’s consent for the final product.

54Mr. O’Hara directed me to the disclaimer at the bottom of the Preference Form which reads, in part that, “No warranty is offered by Marshall Homes that any preferences or specific dislikes will or will not be accommodated …”, “The purchaser acknowledges that architectural control of the subdivision, availability of materials and other factors take precedence over any preferences expressed here …”, and, “The purchaser further acknowledges that as constructed exterior materials may vary in colour and may not be an exact match to samples shown at the sales centre … and that Marshall Homes has the right to substitute product manufacturers without notice even if such substitution results in variation of material colour from sample shown, …”.

55Mr. O’Hara testified that the subdivision is architecturally controlled, meaning the municipality has the final say as to what exterior cladding is used. He testified that the Builder will be obliged to follow the direction of municipal architectural control over the exterior finishes.

56Ms. Marshall testified that the roof shingles had already been installed on the home when they learned of the Old Queenston brick being discontinued, and the roof shingles were those specified in Package 3, the first choice of the Appellant. Because the roof shingles were already installed, the Builder was obliged to substitute a brick that was as close as possible in colour, quality and texture as Old Queenston (that specified in Package #3). The closest match they could find was Canada Brick’s “Hudson” brick, which was installed on the home.

57The Builder directed me to a document that pictures the Old Queenston and Hudson bricks. Ms. Marshall testified that Hudson was same size and quality as Old Queenston and that there was only a very slight difference in colour and texture.

58Ms. Marshall testified that the brick choice in this case was spelled out in the Preference Form and does not form part of the APS. The Preference Form is not a contractual obligation and therefore any changes to the materials in the final application do not require the Builder to issue a notice of a change and/or get consent of the purchaser to make a substitution.

59I find on a balance of probabilities that claim item 128 is not a breach of warranty.

60I am persuaded by the Builder’s documentation which reveals the Old Queenston and Hudson brick are similar in colour and texture, and that Hudson is of at least equal quality to the Old Queenston.

61I am persuaded by Ms. Marshall’s testimony and the Builder’s submissions that the quality of the Hudson brick is consistent with the Old Queenston. There is no evidence before me to suggest it is of an inferior quality, only that the colour is not identical to that which the Appellant chose as part of Package 3. Nor has the Appellant suggested there is any deficiency in quality.

62I acknowledge the factual basis of Mr. Aaron’s article from 2004. It is consistent with the current Regulation in sections 18 and 19, that when a homeowner is entitled to make a choice of finish in the APS, a Builder cannot make a substitution without notice and written consent. However, in this case, the Preference Form is not part of the APS.

63I am persuaded by the Builder’s and Mr. O’Hara’s testimony that the Preference Form is not part of the APS and the fact that the Appellant signed the Preference Form which included the disclaimer language noted above.

64There is no evidence before me to refute Tarion’s and the Builder’s position that the Preference Form is not part of the APS, nor has the Appellant directed me to a part of the APS that indicates the exterior cladding is a finish that she was entitled to make a decision upon.

65I give weight to Mr. O’Hara’s and Ms. Marshall’s testimony that the architectural control imposed on the Builder in this subdivision is a significant factor in the determination of the final cladding to be used on a particular home in the subdivision.

66I find that, because there is no evidence that the cladding was an item in the APS for which the Appellant was entitled to make a selection, the substitution warranty in s. 18 of the Regulation does not apply. Nor does the APS, its addendums, or the Schedule of Standard Features and Finishes refer to exterior cladding as an item in the agreement. Therefore, s. 19 of the Regulation does not apply. I find there was no unauthorized substitution, i.e., no contravention of the section 18 or 19 substitution warranties.

67I find on a balance of probabilities that claim item 128 was not a breach of warranty.

Item 176 – basement ceiling height

68I find claim item 176, basement ceiling height, is not a breach of warranty.

69The Appellant testified that she paid $30,000.000 to upgrade the basement from a “finished basement” model, that included a family room, bedroom, washroom, and walk-out entrance, to a flex-suite which included all the components of the finished basement plan, and more.

70The Appellant stated that the upgrade she agreed to was based on the flyer the Builder offered for a flex-suite, basement option, titled “Flexhouz”™ Suites, which included a fully finished bedroom and bathroom, smooth ceilings, upgraded baseboard trim, laminate flooring in kitchen and living/dining area, bank of drawers in the kitchen, granite counter tops, stainless steel, undermount sink, in-suite laundry hookups, and a dual-zoned heating and air conditioning system.

71The Appellant referred me to an artists’ drawing of the kitchen unit intended for the flex-suite. The drawing is noted to be for illustration purposes only and that the drawing is produced for millwork production and installation only and may change without notice. The dimensions on the drawing show the kitchen arrangement (cabinets, stove, drawers, and fridge) fitting in a vertical space 83” to the finished bulkhead.

72The Appellant submitted that the finished basement ceiling was shorter than they expected and consequently, the upper cabinets were not as tall as they were hoping for. Jameel Norman, the Appellant’s son and co-owner of the home, testified that he is 6’ 1” in height and finds the basement ceiling uncomfortably low, noting that during the framing of the basement his head hit the lights.

73The Appellant submitted that the shorter ceiling in the basement constitutes a breach of warranty. The Appellant did not present an estimate for the damages that resulted from the breach, but she submitted that correcting the ceiling heights in homes like hers in the subdivision is estimated to cost over $100,000.

74Mr. O’Hara testified that when he inspected the ceiling height in various locations including below the bulkheads (for HVAC and beams) he determined that the ceiling height met requirements, i.e., there were no contraventions of the OBC in relation to the basement ceiling height. In referring to the artist’s rendering of the kitchen area of the flex-suite, Mr. O’Hara noted that it was for illustration purposes and specifications could change.

75Mr. O’Hara referred to CAR Oct 2023 in noting that a substitution warranty does not apply because ceiling height is not an item of construction that is subject to the homeowner’s choice in the APS, as would be the case, for example, for a specific brand of flooring or kitchen cabinets. Mr. O’Hara notes that the Appellant was provided with substantially the same kitchen as outlined in the artist’s rendering.

76Ms. Marshall testified that the finishes and features of the flex-suite were set out in Schedule A+ to the APS, and that those features were supplied. She noted that the height of the cabinet doors was not specified in Schedule A+ and the drawings that depicted the kitchen layout were for illustration purposes.

77I find that claim item 178 is not a breach of warranty.

78I give weight to Mr. O’Hara’s testimony that the basement ceiling meets OBC requirements and there is no evidence before me to suggest otherwise. I am persuaded by Mr. O’Hara’s observations in CAR Oct 2023 that the kitchen area of the flex-suite is substantially the same as the artist’s rendering.

79I am persuaded by the artist’s rendering of the kitchen area of the flex-suite, signed off by the Appellant, that the kitchen area was planned to fit into an approximately 83” (to finished bulkhead) vertical space. There is no evidence before me to suggest the final built dimensions of the basement differ from that which she signed off for the flex-suite drawings.

80I find on a balance of probabilities that claim 178 is not a breach of warranty because there no evidence of an OBC contravention or that the “as constructed” basement flex-suite contravened the substitution warranties under the Regulation.

Conclusion

81The Appellant did not meet her burden in demonstrating that claim items 14, 27, 128 and 176 were breaches of warranty under s. 13 the Act. Since there were no breaches of warranty, it is not necessary to consider the amount of damages arising from the reported defects or deficiencies in claim items 14, 27, 128 and 176.

ORDER

82Pursuant to s. 14(19) of the Act, I order Tarion to deny claim items 14, 27, 128 and 129.

Released: May 21, 2025

_____________________

Bruce Stanton

Adjudicator```