Hanna and Jan Sitnik v. Tarion Warranty Corporation, 2025 CanLII 78087

Hanna and Jan Sitnik v. Tarion Warranty Corporation, 2025 CanLII 78087

Citation: Hanna and Jan Sitnik v. Tarion Warranty Corporation, 2025 ONLAT 16391/ONHWPA & 16723/ONHWPA

Licence Appeal Tribunal File Number: 16391/ONHWPA & 16723/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:

Hanna and Jan Sitnik

Appellants

and

Tarion Warranty Corporation

Respondent

and

Losani Homes (1998) Ltd.

Added Party

DECISION

ADJUDICATORS:

Rebecca Hines, Member

Dagmara Szczudlo, Member

APPEARANCES:

For the Appellants:

Hanna Sitnik, Self-Represented

For the Respondent:

Christopher Gallo, Counsel

For Losani Homes (1998) Ltd.:

William Liske, Counsel

Court Reporter:

Charlotte St. Croix, Veritext Reporting (June 2, 2025)

Taha Aqdas, Veritext Reporting (June 3, 2025)

Heard by:

By videoconference on June 2 and 3, 2025

OVERVIEW

1Hanna and Jan Sitnik (the "appellants") appeal two decision letters dated October 15, 2024 (Tribunal file No. 16391/ONHWPA) and January 14, 2025 (Tribunal file No. 16723/ONHWPA), issued by Tarion Warranty Corporation (the “respondent”) denying the appellants’ claims for their newly constructed home in Paris, Ontario under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “Act”).

2Losani Homes (1998) Ltd. (the “builder”) was added as a party to this proceeding.

3The two files were combined at the case conference and involve the appellants’ claims that there were various defects covered under the two-year warranty and that there is a major structural defect (“MSD”) in the construction of their home. The appellants submit that both claims are closely related and share a common root cause, namely defects in the installation of the foundation weeping tile system and insufficient grading which is resulting in hydrostatic pressure on the foundation, water penetration, excessive moisture and high humidity levels. The appellants have the onus of proving on a balance of probabilities that both claims are a breach of warranty under the Act and/or its regulations, and if so what damages, if any, resulted from the breach.

4The respondent and builder deny that there were any defects in the construction of the appellants’ home and submit that the issue regarding insufficient grading is not covered under the warranty and instead is the responsibility of the municipality.

5This matter proceeded to a two-day videoconference hearing. Hanna Sitnik (“H. Sitnik”) testified on behalf of the appellants. Rick Bagni (“Bagni”), Director of Quality and Warranty and Scott Llewellyn (“Llewellyn”), Engineer testified on behalf of the builder and Stewart McNamara (“McNamara”), Tarion Warranty Service Representative testified on behalf of the respondent.

ISSUES IN DISPUTE

6The issues in dispute are:

i. Was there a breach of warranty in respect of the two alleged defects under the two-year warranty claim which the respondent denied in its decision letter dated October 15, 2024 (16391/ONHWPA)?

ii. Was there a MSD in the construction of the appellants’ home as defined in the Regulations under the Act which the respondent denied in its decision letter dated January 14, 2025 (“16723/ONHWPA”)?

iii. If so, what are the damages or other relief the appellants are entitled to?

RESULT

7After considering the submissions and evidence from all parties we find as follows:

i. The appellants established a breach of warranty in respect of the two alleged defects under the two-year warranty claim (16391/ONHWPA) and that the appellants are entitled to certain repairs, which will be addressed further below.

ii. The appellants have not established that there was a MSD in the construction of the appellants’ home as defined in the Regulations under the Act.

PROCEDURAL ISSUE

Denied appellants’ request to anonymize decision

8At the outset of the hearing, we declined the appellants’ motion to anonymize the Tribunal’s decision.

9The appellants filed a motion on June 1, 2025 requesting that the Tribunal anonymize any written decision resulting from the hearing by using only their initials and redacting their property address from the published decision, pursuant to section 9(1) of the Statutory Powers Procedure Act (SPPA), R.S.O. 1990, c. S.22, and the Tribunal’s discretion. The appellants argued that the decision will be published on a public database and the disclosure of their full names and address may harm their financial interest by reducing the market value of their home making it difficult to sell. In addition, their personal privacy should be protected. They submitted that anonymizing their names and redacting their address would not harm the public interest.

10The respondent submitted that the issues in dispute are not personal or sensitive and do not rise to the level where it will be appropriate to anonymize the Tribunal’s decision. The respondent also submitted that if this decision is anonymized then all Tribunal decisions related to the Act will have to be anonymized. The builder also opposed the appellants’ request and relied on the same reasons as the respondent.

11The Tribunal’s adjudicative records are generally open to the public, in accordance with the open court principle and s. 2(1) of the Tribunal Adjudicative Records Act, 2019, S.O. 2019, c. 7, Sch. 60 (“TARA”). However, s. 2(2) of TARA provides that the Tribunal may order that all or part of an adjudicative record be treated as confidential and not disclosed to the public if it determines that matters contained in the record are of such a nature that the public interest or the interest of a person served by avoiding disclosure outweighs the desirability of adhering to the principle that the record be available to the public. Rule 13 of the Licence Appeal Tribunal Rules echoes these principles.

12Similarly, the Supreme Court of Canada in Sherman Estate v. Donovan, 2021 SCC 25 (“Sherman”), held that the party seeking a confidentiality order of any sort has the burden of proving that one should be made. The Court also set out the following requirements that must be met before placing limits on the open court principle:

a. court openness poses a serious risk to an important public interest;

b. the order sought is necessary to prevent this serious risk to the identified interest because reasonably alternative measures will not prevent this risk; and

c. as a matter of proportionality, the benefits of the order outweigh its negative effect.

13While we acknowledge the appellants’ concern regarding the potential impact of the decision on property value and their personal privacy, we declined the request to anonymize the Tribunal’s decision.

14In Sherman the court recognized that privacy can be an important public interest under the discretionary test where it can be demonstrated that protection of human dignity is at risk. The information sought to be protected must be sufficiently sensitive that it strikes at one’s “biographical core”—it must consist of intimate and personal details about the person, their lifestyle or their experiences. The court highlighted some examples of information that have been recognized by courts in the past as being sufficiently sensitive, including information about stigmatized work, sexual orientation and subjection to sexual assault or harassment. The court also noted that the threshold is high and context-specific and disadvantage, embarrassment, or distress caused by openness will typically be insufficient on their own to interfere with the openness of proceedings.

15We find the interests of the appellants do not outweigh the desirability of adhering to the open court principle because protection of human dignity is not at risk in this case. The information the appellants are seeking to anonymize is also not sufficiently sensitive to require protection. We sympathize with the appellants’ concerns regarding being at a financial disadvantage as a result of these warranty claims, however, this disadvantage is insufficient to grant anonymization as per the binding authority of the court.

16We also find it is unnecessary to include the appellants’ property address in the decision and this will serve as a measure to protect their privacy as we are satisfied that the public will be able to understand the reasons for our decision.

BACKGROUND

17The appellants purchased a new home from the builder and took possession of the home on March 2, 2021. From the onset of possession, the appellants reported deficiencies in the home and engaged the builder to repair them. At the time of the hearing, all parties agree that the builder replaced the garage floor slab to address previous concerns.

18The appellants filed their Second-Year Form with Tarion on February 21, 2023, and their MSD form on May 1, 2024.

19After a period in which the builder had a statutory right to make repairs and resolve the reported defect, the appellants sought conciliation of the claim items that remained unresolved from Tarion. Tarion inspected the claims and reported the results in two conciliation assessment reports (“CAR”) dated May 1, 2024 and November 6, 2024, stating that the claimed items were not warranted. Subsequently, Tarion issued the above-noted decision letters which are the subject of this appeal.

ANALYSIS

A. Two-year warranty claim (16391/ONHWPA)

20We find that there was a breach of the two-year warranty in the claims denied in the respondent’s decision letter dated October 15, 2024.

21Under s. 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.

22Under s. 14 of Reg. 892, every vendor of a new home warrants to the owner that there will be no water penetration through the basement or foundation of the home.

23In its decision letter dated October 15, 2024, the respondent denied the appellants’ two-year warranty coverage for the following:

i. Garage Exterior: Right exterior wall of the building is wet due to a poorly graded lot; and

ii. Garage Interior: Water penetration on garage concrete floor.

24H. Sitnik testified that the value of their home will be impacted by the deficiencies identified on the two-year form and there is residual stigma that occurs even after such properties are repaired. She also testified that severe moisture issues in their home were caused by latent defects in grading, foundation wrap, and the weeping tile system. The appellants rely on a letter from J.H. Cohoon Engineering Limited (“Cohoon Engineering”) dated April 25, 2023, a report from Andrew Smith, Engineer from Landsmith Engineering (“Landsmith”) dated April 3, 2024, and two camera inspections of the weeping tile performed by PlumbDog Inc. on April 4, 2024, and Adams Plumbing and Pumps on November 13, 2024. The appellants also rely on various photos showing moisture on the garage floor and wall, elevated humidity readings, and alleged external damage of weeping tiles. In addition, they submit that all of these records were provided to the respondent and were ignored.

25The respondent submits that the appellants’ claim about property stigma is not properly before the Tribunal. Further, McNamara testified that its inspector found no water penetration nor pooling in the garage and the claims made by the appellants amount to moisture concerns only. The respondent also maintains that lot grading is not covered by the two-year Tarion warranty and is the responsibility of the municipality not the builder. The respondent relied on the report of Susan D’Andrea, home inspector with Carson Dunlop Inspection (“Carson Dunlop”), dated September 26, 2022, and the grading certificate of the municipality.

26Bagni testified that post-construction power-washing is the likely cause of moisture in the garage and that the appellants’ failed to demonstrate that the replacement slab in the garage was done improperly. Bagni also disagreed that the weeper tiles are clogged because if they were, the original moisture concerns in the garage would not have improved since the slab was replaced. Finally, Llewellyn, the builder’s engineer, testified that he signed off on the lot grading which was certified by the County of Brant on November 22, 2021.

27We prefer the reports of the appellants’ assessors for the following reasons.

28First, we prefer the report of Landsmith over Carson Dunlop because the report includes an in-depth analysis, photos of the swales surrounding the subject property, and identifies potential causes of the deficiencies noted by the appellants in their two-year warranty form. Further, the report of Cohoon Engineering corroborated the issues identified by Landsmith regarding the lot grading. McNamara confirmed during cross-examination that the respondent received the above noted reports, however, provided no explanation for why the respondent disagreed with their findings.

29In contrast, we find the report of Carson Dunlop unhelpful because the inspector simply states what the appellants and builder reported to them. Further, the report notes issues with moisture (58 to 66%) and humidity levels (67.8%) in the garage but does not discuss whether this is high, low or normal. Nor does the report discuss the impact or render an opinion of whether it is defective or not. We also prefer the appellants’ reports because they were done by engineers who we find more qualified to render an opinion regarding the structural integrity of a building, lot grading, and improper drainage surrounding the dwelling than a building inspector.

30Second, we do not find convincing the respondent’s and builder’s argument that deficiencies in grading are not warrantable. Llewellyn testified that he reviewed the appellants’ property to ensure compliance with the site grading plan. He issued a letter to Brant County advising that “the final grading on the following lot complies with the general intent of the approved grading plan and the drainage systems are operating satisfactorily” on August 5, 2021, and appended the ‘as-built lot grading plan’. Based on the factual context in this case, we disagree with the respondent and builder that any deficiencies in grading are not warrantable, because deficient grading is a known cause of water penetration in a building envelope and the two are closely tied. The Ontario Building Code (“OBC”) requires that the building site be graded so that water will not accumulate at or near the home. This provision is outlined in article 3.1.18.1 Drainage found in Reg. 332/12, which states “The building shall be located and the building site graded so that water will not accumulate at or near the building and will not adversely affect any adjacent properties”. Nor did the respondent or builder direct us to any authority in the Act or regulation to support their position that lot grading is not covered under warranty.

31For these reasons, we are persuaded by the report of Landsmith which identifies multiple grading and home construction deficiencies including in swales, insufficient waterproofing on the foundation, and a missing retaining wall which was included on the approved grading plan to direct surface water down the swale and away from the dwelling, but which was never constructed. We find that in relation to waterproofing and grading, the home was not constructed in accordance with the OBC and the approved grading plan as determined by Landsmith.

32The Divisional Court affirmed that a builder has primary control of the construction of a home in JRC Developments Ltd. v. Tarion Warranty, 2010 ONSC 6205. In the present case, it is the builder who retained Llewellyn’s services to recommend lot grading certification to the County of Brant, and grading and construction were performed by the builder’s sub-contractors. In our view, it is the builder, not the City of Brant, who retains responsibility for home construction deficiencies which arise from poorly planned or executed grading.

33For the above-noted reasons, we find the water penetration of the interior and exterior of the garage to be a breach of the second-year warranty. We will now discuss whether there was an MSD.

B. MSD (16391/ONHWPA)

34We find that there is no MSD in the construction of the appellants’ home as defined in the Regulations under the Act.

35The 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).

36In its decision letter dated January 14, 2025, the respondent denied the appellants’ MSD claim for the following items:

i. High humidity in the basement 62%, leaking crack in the basement wall;

ii. Moisture on foundation at the back of the house; and

iii. Weeping tile clogged with mud.

37H. Sitnik testified that the weeping tiles were damaged during the construction of the property and that they were not installed properly. This is supported by photographs showing that the sock of the weeping tile was damaged during construction and videos taken during two separate plumbing inspections which support that the weeping tiles were clogged with mud. H. Sitnik stated that the defect in the weeping tile has caused increased moisture and humidity in the basement and a crack in the basement wall. It also likely resulted in moisture on the foundation at the back of the house.

38The respondent argues that the appellants did not meet their onus in proving the failure, function, and use test required for a MSD claim. It submits that the appellants did not establish that the crack in their foundation equates to a structural failure, did not establish that sediment in the weeping tile means that they do not function properly, nor did they establish that the basement of the home cannot be used due to elevated moisture levels.

39The builder adopted the arguments of the respondent in relation to the MSD claim and argues that there is no evidence that the weeping tiles are defective.

40Although we acknowledge that the basement has elevated humidity levels, that there is a crack in the foundation, and there is evidence of sediment in the weeping tile, the appellants have not met their onus in proving that these deficiencies amount to a MSD for the following reasons.

Failure and Function Test

41First, we find the appellants have not satisfied the failure, use and function test. We do not find that the photograph relied upon by the appellants supports their assertion that the weeping tiles were damaged during the construction of the home. The photograph appears to show dusty footprints on the weeping tile but does not establish that it was damaged. Nor do we have an expert opinion supporting that the weeping tile was not installed properly.

42Second, although the plumbing invoices and video demonstrate that the weeping tiles contained mud/sediment, and this is unexpected in a new home as per the testimony of McNamara, the inspection of Adams Plumbing and Pumps on November 13, 2024 noted that there was no need to clear the blockage of the weeping tile at this time. In our view, if the weeping tiles were not functioning, the plumber would have recommended that they be cleared.

43Third, the appellants rely on various photographs of humidity levels within their home which showed consistent readings which exceed the Tarion Guideline for indoor humidity. They also rely on a Tarion Guide from its website titled “How do you keep indoor humidity in check this summer” which recommends keeping indoor humidity levels between 30 and 45%. Although we agree with the appellants that the humidity levels in their basement are above Tarion’s Guide, we were also not provided with an expert opinion about the potential impact of high humidity levels on the load bearing element of the structure.

44Third, we find the one photograph of the hairline crack in the basement foundation insufficient to conclude that there is an MSD. While foundations should be free of cracks, particularly for a new home, we are unable to evaluate the dimensions of the crack from the evidence presented nor its impact on the structural stability of the foundation.

45For the above-noted reasons we find that the appellants have not met their onus in proving that sediment in the weeping tile, hairline crack in the basement wall or high humidity levels would result in a failure of a structural load-bearing element of the home. Nor have they proven how these defects would materially and adversely affect 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 Use Test

46H. Sitnik testified that the appellants cannot use or finish their basement because of elevated moisture levels in the concrete and high humidity levels in the ambient air and submits that her husband has a health condition which prevents him from going into the basement.

47As highlighted above, we find that the humidity levels in the appellants’ home are higher than they should be. However, we find that the appellants have not proven that the high humidity levels would materially and adversely affect the use of the significant portion of the building for the usual and ordinary purposes of a residential dwelling. We have no evidence before us about the square footage of the appellants’ basement compared to the rest of the home. Therefore, we cannot conclude that the humidity levels would materially and adversely affect the appellants’ use of a significant portion of their home. Further, although we can accept that one of the appellants may have a health condition which requires them to avoid high humidity this was not supported by any evidence.

48The appellants rely on the Tribunal’s decision in 8293 v. Tarion Warranty Corporation, 2015 CanLII 38756 (ON LAT). Although this decision also references defects in weeping tiles and moisture concerns in relation to a Tarion warranty claim, Tribunal decisions are made independently and based on the facts and evidence presented in each case. We are not bound by the findings of another Tribunal adjudicator and apply the legal test to the evidence presented in this specific case instead.

49For the above reasons, we find that there is no MSD in the construction of the appellants’ home as defined in the Regulations under the Act.

DAMAGES

50Since we found that the appellants have proven, on a balance of probabilities that there is a breach of the two-year warranty in the claims denied in the respondent’s decision letter dated October 15, 2024, it is necessary to consider if damages resulted, and the amount of the damages.

51Section 14 of the Act sets out the basis for compensation for a homeowner if there is a breach of warranty under s. 13. Section 14(3) stipulates that, subject to the regulations, a homeowner is entitled to receive payment out of the Fund for damages resulting from a breach of warranty.

52The appellants rely on two estimates for waterproofing and replacing the existing weeping tile system from RCC Waterproofing dated May 31, 2024, and City Wide Group Inc. dated July 27, 2024. Neither the respondent nor the builder made submissions on compensation.

53We are persuaded that damages resulted from a breach of the second-year warranty claim, specifically that the garage exterior wall is wet and there is continued water penetration on the garage concrete floor. Although we acknowledge there is a close relationship between weeping tiles, grading, and water penetration in a building structure, we are unable to award damages for the replacement of the entire weeping tile system since ‘weeping tile clogged with mud’ is listed on the MSD warranty claim, not the second-year warranty claim. As stated above, we found that weeping tiles are not a structural element of the home and that there is no MSD in the construction of the appellants’ home as defined in the Regulations under the Act.

54Since the estimates provided by the appellant do not provide a detailed breakdown which would permit separation of the costs of replacement of the existing weeping tile system from foundation waterproofing estimates, we award damages on the basis of some of the recommended repairs outlined in the Landsmith report instead.

ORDER

55Pursuant to s. 14(19) of the Act, we direct the respondent to accept the appellants’ second-year warranty claim.

56The respondent is directed to repair the following defects covered by the two-year warranty claim:

1. Correct the swale at the front right of the dwelling in front of the garage to ensure that there is no standing water within the swale and implement the retaining wall which was included on the approved Grading Plan in order to ensure surface water is directed down the swale to the street and away from the dwelling.

2. Add a 4 inch to 5 inch course of membrane above the line of the existing membrane to ensure that the membrane is above the adjacent grade at the dwelling in all locations.

3. Correct the swale grading on the west side to ensure a minimum swale depth of 0.15m from the foundation wall to the center of the swale.

4. Implement the waterproof membrane on the west side of the garage where the exterior ground elevations are greater than the garage floor elevation.

5. Correct the over-flow caps for the rear-yard soak-away pits such that the pits can overflow as required if they receive too much stormwater.

6. Conduct an additional review of the stormwater management report and geotechnical report for the development to review the likelihood that the moisture issues being experienced are not a result of poor performance of this stormwater management item.

Released: August 6, 2025

__________________________

Rebecca Hines

Adjudicator

__________________________

Dagmara Szczudlo

Adjudicator