BARRIE COURT FILE NO.: 09-0250

DATE: 20131121

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

MICHELE NEWTON and PIERRE OZON

Plaintiffs

– and –

EVCLARE HOLDINGS LIMITED

Defendant

M. Adams, for the Plaintiffs

J. Botelho, for the Defendant

HEARD: September 9, 10, 11, 12, 13, and 16, 2013

REASONS FOR DECISION

HOWDEN J.:

OVERVIEW

[1] In early 2005, the plaintiffs, Michelle Newton and Pierre Ozon lived at 130 Loon Ave. but they were having thoughts about a new home to be built on the waterfront. They are a young professional couple, articulate and with ideas of their own but they had little knowledge of where they should start. Michelle Newton has an MBA degree. Pierre Ozon is a medical doctor, 44 years of age at the time he testified, who practises in Barrie. They have a young child. As far as I know, neither had any prior experience with house construction.

[2] For purposes of these Reasons for Decision, I will refer to Pierre Ozon at times as Mr. Ozon so that all witnesses are seen to be regarded with equal respect; his MD and its knowledge base has nothing to do with the issues in this action. It is not meant as any disrespect to him.

[3] Michelle Newton and Pierre Ozon attended a local Home Hardware event in 2005 to learn more about contractors and construction. At one table sat Clare Boudreau, president of the defendant Evclare Holdings Limited (“EHL”). They spoke and later followed up with Mr. Boudreau by phone.

[4] By October 1, 2005, the contract between them was signed and the waterfront planning process of Barrie and the local Conservation Authority had born fruit for development of their lot, municipally known as 68 White Oaks Rd. It is a waterfront lot located near Minet’s Point in the City of Barrie. They obtained a minor variance to allow a house to be built served only by a private road. They had also obtained the approval of the Conservation Authority for the siting of the house on the lot which was in a fill or floodplain area. Building progressed through the winter and spring of 2005 and 2006.

[5] On June 12, 2006, the plaintiffs took possession of the mostly completed home. Differences grew between the plaintiffs and Mr. Boudreau about the state of finish of various portions of the home though they continued communication and Mr. Boudreau continued for a time well beyond the contractual warranty period to discuss the plaintiffs’ requests and complaints. Finally on February 20, 2009, this litigation began. The plaintiffs seek $158,000 in damages for the following work:

• removal and re-installation of all siding and masonry veneer and proper installation of air barrier flashing system on all four walls as recommended by R. Koerth, P.Eng.

• replacement of north wall drywall and insulation

• removal and installation of all interior wood trim

• adjust door frames

• repair drywall in second floor hall, stairway walls, foyer and Great Room

• repaint house

• remove trex deck and install new trex decking (labour only)

• complete perlam bolts

• removal and installation of soffits, fascia and trough

• patio door cladding

ISSUES

[6] The issues in this case are as follows, as taken from the evidence as a whole and the closing addresses of counsel:

Did the defendant breach the standard of “good and workmanlike manner, free from defects in material” in its construction of the house as agreed to in the contract, para. 18.2(a) in relation to the following:

(i) the installation of siding, masonry, flashing and air barrier in all four walls of the home;

(ii) the interior wood trim;

(iii) the drywall in the upper hall, stairway wall to first floor, foyer walls, Great Room walls and the potlight installation in the kitchen ceiling;

(iv) the installation of the Trex deck;

(v) installation of the soffit and fascia.

[7] A further issue was introduced by Mr. Botelho in his final submissions. It was on the subject of the assessment of damages and whether, because the owners have “enjoyed the benefit of seven years of the material on their home (sic)...any possible award for damages should discount the seven years of use by the plaintiffs.” In this way, he appeared to suggest that, if damages were awarded, some allowance should be made for this period of use of the new home. No authority or analytical approach was put forward, merely this bald assertion that the period of use required a discount of any damage award. I requested further submissions on this point. Both counsel provided those submissions. They raise two additional issues relating to any assessment of damages in the plaintiffs’ favour on account of the water penetration issue:

(i) should the principle of betterment be applied in this case if damages for re-cladding are awarded where seven years of the Cape Cod warranty covering 15 years have elapsed, assuming that the plaintiffs should have expected 15 years of use before re-cladding could be reasonably anticipated and not 22 years?

(ii) there being no evidence to provide a basis for awarding damages for re-cladding the entire house beyond Mr. Koerth’s observations at one exposed location, are the plaintiffs limited to only nominal damages on this ground due to inability of the trier of fact to assess damages with any certainty?

THE CONTRACT

[8] The key sections of the contract appear to be the following:

(a) The contract includes the Agreement dated October 1, 2005 from Article A-1 to and including Article A-15 on p.6 where the parties signed, as well as Appendix A definitions and The General Conditions from GC 1 to GC 18.

(b) Article A-4 describes the scope of the project as including construction in accordance with 4 drawings designed by Custom Cadd and truss and floor design drawings from United Lumber Home Hardware, all permit applications, and demolition permit for existing dwelling if required. “All work and purchase orders and/or change orders to be pre-approved by Owners prior to commencement and as per Article A-7” (A-7 requires pre-approval by Owners of use of the construction manager’s own forces and payment by the Owners for the cost of the work plus a fee at a rate that is unspecified).

(c) Article A-5 describes the contract fee including the stages when it is to be paid. This is not in issue in this case.

(d) GC2 Construction Manager’s Services provides an important limit on the construction manager’s responsibilities. It states that “he assumes no responsibility nor offers any expertise with respect to the design of the Project ...which shall be the responsibility of the Consultant and the Owner.” [Emphasis added.]

(e) GC 2.2 The Pre-Construction Phase requires the Manager, among other things, to assemble and analyze bid documents for the competitive hiring of the trade contractors and recommend awards to the Owners.

(f) GC 2.3.1 requires the manager to monitor and coordinate the work of the trade contractors.

(g) GC 2.4.2 requires the construction manager to assist the Owner in administering warranties of the trade contractors.

(h) GC 3 requires the manager, under the direction of the Owner, to arrange for contracts to be entered with the various trade contractors and the Owners, subject to the manager’s approval.

(i) GC 4 sets out the Owner’s responsibilities, one of which is to promptly notify the manager of any defective, faulty or nonconforming work of which he or she becomes aware.

(j) The standard of work required by the contract and the warranty of one year on the work are set out in Articles 18.1 and 18.2. The work done on the project shall “be complete (sic) in a good and workmanlike and timely manner, free of any defects in material and workmanship” (Article18.1) Article 18.2 requires the manager to supply the Owners with the one-year warranty for work completed through “the Construction Manager’s OWN FORCES and the Construction Manager shall negotiate to the best of (his) ability with sub-contractors and sub-trades completing all other work and providing materials, the provision of related warranties acceptable to the Owners and provide Owners with all documentation relating to these warranties. The Construction manager ...shall manage all warranty related claims on behalf of the Owner.” [Emphasis added.]

(k)Then under (a) ONE YEAR WARRANTY in para. 18.2, the one-year warranty from EHL begins on the date the Owners take possession of the home and ends on the day before the first anniversary of this date. The warranty requires that the home be constructed in a workmanlike manner and free from defects in material, fit for habitation, constructed in accordance with the Ontario Building Code, and free of major structural defects. [Emphasis added. No separation is made here, as there appeared to have been earlier in 18.2 between the “Manager’s own forces” and sub-trades regarding warranties. There is only one warranty and it sets the standard of all work and materials in 18.2(a).

(l) Two items listed in the General Notes to the building drawings bear attention as well because they seem to underline the Owners’ responsibility for design matters.

Note 5 states that “All finish materials, types and colours shall be to the Owners’ requirements.”

Note 33 reads: “All exterior and interior finishes as selected by the Owner.”

[9] I believe that this is a fair summary of the provisions of some applicability to this case. From the evidence of Mr. Boudreau, EHL neglected to carry out the express responsibilities in paras. A-7, GC 2.2, GC 2.4.2 and GC 3. He explained his avoidance of Para A-7 by characterizing the three workmen used continuously by him as independent contractors. I know of no competitive bidding mentioned in para GC 2.2. Mr. Boudreau simply used men and sub-trades he was familiar and comfortable with. I know of no warranties from other trades that he negotiated or administered (para. 18.2). Ms. Newton said she and her husband signed a few contracts with sub-trades but there were no competing bids; one contractor was recommended for the foundation or the painting or excavation (para. GC 3). Mr. Boudreau complained that at times he felt the plaintiffs left him out when selecting certain material or finishes; yet unlike many other construction contracts where the builder keeps for himself control over material ordering, in this case it is clear that the Owners were responsible for selecting all interior finishes. So we start with a contract which is represented by the defendant who proposed it to be a kind of management contract where the so-called construction manager acts as a kind of service manager coordinating bids and warranties with sub-trades for the owners as the contract portrayed EHL to be. In fact, EHL acted more like the general contractor for the job, hiring or recommending those sub-trades he was comfortable working with and using his own small force of workers.

[10] In accordance with the requirement of the warranty and GC 4 of the contract’s General Conditions, the Owners delivered their first list of alleged deficient work and/or material early on April 10, 2006. This list covers such things as removal of construction-related dirt on neighbour’s property, French drain to clear water from sump pumps in basement, repair of brick mould on terrace door, cleaning, remediation of window jamb extensions of incorrect length supplied by Home Hardware, finish of fireplace, ceiling attached track lights for Great Room, drywall bulging, and staining of the staircase.

[11] Other deficiency lists followed and meetings with Mr. Boudreau about them for over a year. They had already raised various matters on walk-abouts orally before this according to Michelle Newton. Then, after possession was taken of the home, they found water leaking into the basement after rain storms starting in July 2006 and again in August, September and October 2006. According to the plaintiffs, they first emailed the defendant about the water leakage in October though the email was lost from the computer. The first documented report to the defendant was an email dated November 30, 2013. In its wording that email clearly refers to several instances of water penetration. Pierre Ozon wrote:

Realizing there are a few outstanding items for you and Glenn to take care of and us to pay I want to draw your attention to a major concern and that is the leaks in the basement. Michelle brought this to Glenn’s attention at his last on-site visit and we have not heard anything back regarding this. As it has rained the last 24-36 hours I decided to take some photos as you can clearly see where the leaks are coming from. I feel that this needs to be addressed promptly...

[12] The most dramatic record of the water penetration into the basement was shown to Mr. Boudreau on March 22, 2007. It is a video recording made by Mr. Ozon during the time of a rain storm that March showing water dripping repeatedly through and around a large beam called a perlam beam in the basement ceiling at the north wall. The video was shown in court and the disk marked [Ex. 1(16)]. Water is all around in this video recording, but definitely entering through and around the beam near the north wall.

[13] The first post-possession deficiency list was provided to the defendant on May 4, 2007 in a power-point presentation shown by video disc [Ex. 1(18)] and provided in hardcopy [Ex. 1(19)] with photographs to illustrate their complaints. Those complaints comprised periodic noise in the master bedroom (wind noise): trim separations and gaps throughout; door and door-frame issues in the ensuite, their child’s room, family room, and powder room; visible drywall seams and taping and nail-pops in various parts of the home; water leakage in basement on October 30 and November 30, 2006 and at other times; pot-light holes in kitchen ceiling cut too large, poor caulking and paint smudges; exterior red lines on fascia; exterior caulking blobs left; BBQ mortar needed work; terrace door upper corner cracked; and silicone use on trim and the accompanying issues. The last meeting appears to have been on May 21, 2008, when the plaintiffs presented Mr. Boudreau with another list on which he left some written comments.

[14] At trial, the list of outstanding repair items alleged by the plaintiffs comprises the following in Ex. 13:

Water leakage; remediation recommended is removal and replacement of siding and masonry veneer and install air barrier and flashing as recommended by R. Koerth;

Removal and replacement of drywall, insulation, and vapour barrier in north wall;

Removal and installation of new Trex deck (labour only);

Removal and replacement of baseboards and trim throughout house, repainting house; trim issues include repair to trim in cabinet in mud room, correcting gap in door to son’s bedroom, framing powder room, correct sloppy caulking round track lights in kitchen, gaps round pillar in kitchen counter top, terrace door moulding, painting or replacement of soffit, reimbursement for same and for pocket door; and

Repair drywall deficiencies.

[15] I will deal with each of these items including the relevant evidence and my findings and reasons in each case.

1. Water Penetration and Remediation Including North Wall

[16] This appears to be the major issue between these parties. Mr. Koerth estimates remediation by replacement of all four walls of the house and correction of flashing and vapour barrier installation. He estimates the cost at $55,880. Mr. Scarati, who was asked to estimate repair costs if his firm was to do the work, saw the cost of this first remediation item as $63,480.

[17] Both Mr. Ozon and Ms. Newton testified to the inception of the water penetration problem as I have noted above. It was first noticed in July 2006. The photograph taken by Ms. Newton in July 2006 shows water near the north or lake-facing wall and the west wall, north end. Water stains can be seen vertically on the floor near the north and west walls but mostly centred at the northwest corner. [Ex. 2(44)]. The photograph taken between July and October (no exact date was provided) shows a close-up of a large puddle of water. Ms Newton places it at and near the west and north walls of the basement (Ex. 45). The fan in the photograph she identified as having been brought by the defendant’s people.

[18] I have already referred to the video record showing the actual penetration by water of the basement near the north wall and the north end of the perlam beam in March 2007. Both Mr. Ozon and Ms. Newton stated that the water penetration has continued periodically after rain storms ever since. He recalls last seeing water in the basement on July 19, 2013. Ms. Newton recalled the latest episode as having occurred three weeks prior to the day she testified. That would put the last leakage into the basement that she knew of at on or about August 20, 2013.

[19] The professional engineer called by the plaintiffs described the two systems used in residential construction for dealing with wind-driven rain against exterior walls; one is a “face-sealed system” which repels the water directly at the face of the cladding, and the other is a “rain-screen system” which repels water partially at the face and partially behind the cladding system where properly installed ty-vek and flashing directs any water that has penetrated to the outside. The rain-screen system has been found to be more satisfactory and therefore most frequently used. (Ex. 5, Koerth Report, p.25).

[20] On the issue of the existence of a water leakage problem, Mr. Boudreau gave a lengthy explanation of the stages of construction and the inspections at each stage by the City. He described how after framing, he had the entire house ty-vecked or wrapped in a polyethylene membrane, except for the windows and doors, and it was inspected and passed. He referred to the placement of the polyethylene flashing inside the walls. Near the grade level, it should come out to the edge of the masonry work so that water will be directed out. As well, there is exterior metal flashing placed on top of the sill above the stone veneer and beneath the siding. He said it is placed at a 1/4” slope out and downward at the corbel (i.e. the level above the stone) so that water penetrating the siding would be directed out.

[21] Mr. Boudreau did not place any of this himself. He said he had Kap Masonry do all the masonry and polyethylene flashing. He did not appear to reject the existence of the water problem; in fact at one point, according to my note, he said the basement floats like a boat and he could not say why. On September 29, 2009, he opened the siding for an expert inspection. On doing so, he found some moisture on the strapping. When asked if there was considerable moisture, not just some, Mr. Boudreau denied it and would accept that he saw only a small amount of moisture, not a considerable amount. On examination for discovery, Mr. Boudreau was asked if he communicated to the plaintiffs that a possible source of water penetration was the split sill door. He did not answer the question directly but in the middle of his round - about answer, he said:

...but the other thing when we removed siding we found that there was considerable moisture that was sitting on the strapping which obviously indicates to us that the siding is not doing the job that it should. (Disc., p. 111, Q.498)

[22] Mr. Boudreau mistakenly continues to see the siding as a failed ‘face-sealed system’. According to Mr. Koerth, it is not that at all. The siding relies on a ‘rain-screen’ system that directs the water that penetrates the siding out of the building. Mr. Boudreau refused to accept his answer from discovery because he saw it as prejudicial to himself. But in refusing to adopt the prior answer he had given under oath and throughout his lengthy evidence, he showed himself to be a person who embroiders the evidence in his favour and doesn’t answer questions frankly and forthrightly when it is not in his interest and even on such a minor issue, where he sees a disadvantage to himself in doing so. In addition, he simply could not see how leakage into the basement could be occurring in consequence of anything his company or the sub-trades did. The attempts by the defendant to seal the perlam beam, seal the weeping tiles and seal the flashing outside the window (Ex. 6, Ph. 18) confirms his and his forces’ continuing lack of understanding of the rain-screen system necessary behind the Cape Cod siding and the masonry to direct water to the outside.

[23] No one from Kap Masonry testified.

[24] Mr. Boudreau’s people, whether he calls them contractors as he does, or whether they are employees, consisted of Glenn Watson whose only training came from a millwork course at Conestoga College (See Ex. 23, Refusals/Undertakings Chart), and Mike Church and Darryl Boudreau. The latter left the job on March 10, 2006. It is not clear how experienced they were except that they had worked on construction before for EHL.

[25] As to the cause of the water penetration into the house and remediation, the civil engineer, Ronald Koerth, and an engineering technologist, Steve Wasylenki were called as expert witnesses.

[26] Mr. Koerth was called by the plaintiffs. He has an engineering degree and is a member in good standing in the Ontario Association of Professional Engineers. He did site visits on two occasions, February 20 and July 24, 2009. By July, one small section of masonry wall had been removed randomly from the west wall in order to permit a view into a typical view of the interior of the wall.

[27] In this case, the Cape Cod siding and masonry veneer does not attempt to seal the walls against water; it allows some water into the wall interior. It is clearly not a face-sealed system, nor does it pretend to be according to Mr. Rempel, the Cape Cod consultant. There is a gap required between the siding and the frame of the house where water can run down and be directed out by the air barrier or ty-vek self-gluing tape and the flashing at both the corbel and the foundation levels provided the flashing/air barrier system is installed correctly. The poly flashing in this case was merely taped to the ty-vek air barrier and not inserted under the air barrier at the base so as to form a complete seal against water infiltration which is not dependant on tape coming loose. Mr. Koerth saw evidence of the use by the defendant of silicone caulking or sealant where water was entering near the perlam beam at the north wall. He said that caulking is a completely wrong approach to the problem because what the caulker is doing is merely hiding the problem, not fixing it.

[28] The evidence of Mr. Boudreau is that the Barrie building inspector passed the air barrier (ty-vek) installation. Mr. Koerth found the following deficiencies below the standard required by the Ontario Building Code (“OBC”): polyethylene flashing joints are not water-tight contrary to ss. 9.20.6.4(2) and (9.20.13.7.(1); the flashing failed to extend up behind the air barrier or ty-vek sheathing material (s.9.20.13.6(3); the polyethylene flashing failed to extend past the face of the foundation wall (s. 9.20.13.5(1)(b); there were no flashings beneath the jointed masonry window sills and they failed to extend past the face of the lower wall section contrary to s. 9.20.13.3(1) (a) and 9.20.13.4(2); there is less than a 1” air gap at times between wall interior and the air barrier; in fact in places such as in Ex. 2(59) one can see no gap at all, the mortar has filled in at least the left side of the masonry opening in the photograph and appears to continue on in that direction beyond the photograph; in other places a mortar bridge or blob has filled a small part of the gap but not most of it. The failure to provide the gap of at least 1” is contrary to ss. 9.20.6.4 (2) and 9.20.13.10(1) of the OBC.

[29] There was a similar finding made by Mr. Koerth in regard to the upper section of wall behind the Cape Cod siding in the wood sections of the OBC, as follows: the flashing at the base of the siding abutting the masonry did not extend up beneath the air barrier sheathing material [s.9.27.3.2(3)]; and the silicone caulking was not the caulking required by the manufacturer, suggesting that it was not compatible with the siding, and if so, it was contrary to s. 9.27.4.2.1(c).

[30] In Mr. Koerth’s opinion, both the siding and the masonry as well as the flashing system were deficiently installed. A telling exterior sign of this was at the bottom of the Cape Cod siding most of the way around the house. The Cape Cod siding had been pushed down so that the metal flashing was sloped inwards and not outwards as it should have been. This condition was observed in the walls around most of the perimeter of the house.

[31] The evidence of another witness has an important bearing on the Koerth recommendations concerning the replacement of all the walls. According to Peter Rempel, the technical sales consultant for Cape Cod siding, the siding had been installed without regard to the manufacturer’s instructions. His site inspection on September 25, 2007 revealed that the wood strapping was installed at a separation of 24” and not 16” as required and the siding had been single, not double nailed. The installation guideline from Cape Cod, in effect in 2005 [Ex. 3(53)], required 16” between strappings and 16” was the known practice with Cape Cod siding then; there was no limitation on this instruction. He also noted that the siding had been jammed onto the metal flashing at the stone corbel bending the flashing back and causing it to slope inwards resulting in water accumulation at the base of the siding and premature wood deterioration. The jamming of the flashing in particular went to the validity of the manufacturer’s warranty, as did other deviations from the installation guidelines. Instead of stainless steel nails, ordinary nails were used which have rusted. He said that Cape Cod requires and provides stainless steel nails in the package.

[32] Under cross-examination, Mr. Rempel was shown the Home Hardware invoice for the shipment of the siding and it lists the nails as “galvanized”, not stainless steel. Mr. Rempel stated that Cape Cod provides stainless steel nails, no matter how the hardware store described them. But he could not say that Home Hardware had or had not provided the correct nails except that the nails installed were not as required by Cape Cod’s guidelines. He repeated that the jammed flashing was in that condition for the majority of the perimeter around the house. In this, he corroborated Mr. Koerth’s finding in 2009. Rempel was adamant, when shown the new guidelines [Ex. 3(56)] which speak of strapping on 16” separation as applying where the building is under 25m from open water, that the 25m limitation was not part of the instructions in 2005.

[33] As matters turned out, the Cape Cod warranty had been voided as stated in the letter from Mr. Rempel on September 25, 2007 due to the defective way the siding had been installed. He set out the remedial work required in the letter [Ex. 1(25)]. Mr. Boudreau arranged the Cape Cod site visit so he was well aware of it. He never took any action to remedy the defects as directed in Mr. Rempel’s letter.

[34] Mr. Koerth continued with his conclusions regarding replacement of the walls. He found that the through wall flashing was not visible at the base of the masonry walls or beneath any of the jointed sills. Without that, water would be permitted to leak into the house. As well, the north wall has possibly suffered water infiltration into the wall structure, and so the drywall and insulation should be removed and the air barrier and new drywall and new insulation should be installed on that wall. There is further indication of improperly installed walls in his observation that there was significant air leakage round most of the upper level windows, particularly on the north face. He attributed the “buzzing sound” heard by the owners in the master bedroom to improperly installed and poor sealing of air barrier to the window frames.

[35] In his opinion, no one can say which of the improperly installed siding, masonry or flashing system is contributing the most to the water infiltration. Using the OBC and his own view of what is good and workmanlike construction, he found that installation of those components do not meet the standard. The problem is that the continuation of leakage will eventually lead to deterioration of the wood framed wall and to structural failure.

[36] Mr. Koerth recommended that the entire exterior cladding system be removed and reinstalled after rectifying the deficiencies. Water has likely penetrated into the north wall. Its components of insulation and drywall must be installed as new. A better air barrier seal would be permitted also around all windows. When I asked him why not replace only the north and affected sections of the east and west walls at their north ends, rather than wholesale removal and reinstallation of all the walls, Mr. Koerth said:

A. Good question, and that’s one of the things that I often look at is, you know, what other way is there of doing something to minimize the cost, whether I’m on one side or the other.

Q. And, by the way, I don’t mean just the north side which there may be some need to go up both the east and west to some extent, but I’m not sure about a total...

A. Understood.

Q. ...a taking off all the siding.

A. The problem is that, again, the problems with the flashings and the air barriers and the gaps are in my view everywhere because it showed...just the way the flashings were installed in the various locations suggested that the people that were installing them didn’t follow proper practices and they didn’t really understand the way those items should’ve been installed. So I can – I can be fairly confident that it’s going to be like that around the house. As I’d indicated earlier, the fact that we don’t have water entry on the south side doesn’t mean that we don’t actually have water entering the system, we can’t see it. And I wouldn’t – I’m not going to take the risk, and I’ve told my clients this when the – when I had a contractor client just two years ago the exact same scenario, strip the entire house, and it was brick and it was a much more expensive endeavour, because I can’t be confident that in 10 years from now they won’t have wood rot on the south side because that water has been entering but not leaking past. And I’ve seen that evidence in other cases where it’s just not enough to make it past everything into the basement or into the house, but it’s enough to just keep wetting it, keep wetting it, and keep rewetting. And once it gets wet in a wall system, it doesn’t dry out because there’s no – there’s no real opportunity for that water to escape.

Q. Okay. When you say the deficiencies were throughout, I’ve forgotten now the - how do you say that? I know about the opening on one side. But why do you say that you think the same deficiencies are true for the parts of the house you have never uncovered?

A. Well I’ve got – at the time of my report, I had had the evidence of the flashing problems beneath the siding in a separate location that was uncovered by the contractor.

Q. Yes.

A. I have the area that I looked at which had problems that were not just one blob, but on all – the thing about an opening like that, it’s a one foot by two foot opening, everything around it was a problem. The flashings weren’t proper, the mortar blobs on all the sides, and we have water entry. I mean, the reason why I was called in is because we had water entry. There’s been no other logical explanation why we’re having water entry on so much of the house. And it’s completely consistent with the types of failures I’ve seen in other cases which are to me then an indication that fundamentally the people who installed these systems didn’t understand what their purposes were. And I have pretty good confidence, particularly because we’ve got so much water entry around the house, that this is a systemic problem around the house not just in those areas.

On re-examination by Mr. Adams:

Q. His Honour asked you if you were recommending using new as opposed to the existing siding on your replacement...

A. Correct.

Q. ...but he didn’t ask you why you’re saying new siding as opposed to just replacing the siding.

A. Correct. In my experience, when you – when you pull apart a system like that, you know, and you have to pull all the boards off, you’re going to have then – you would either have to re-categorize them and label them to say, okay, this board came from this spot on this wall, and then have to deal with all the nail holes and so forth, and then have to re-cut various things, it’s from the labour point of view you’re probably going to spend more on the labour side and then you’re not going to have the same finished product as if you were to put – put in new. If it was a board or two, it would be one thing. But when you’re doing the entire system, it would be much more, in my view, economical. And from a finished product point of view, you’re going to be better off using the new versus reusing old.

[37] The defendant called Steve Wasylenki who was qualified as an engineering technologist. He works under the supervision of a professional engineer in the same office and that engineer signed off on the report under that engineer’s professional seal. His report (Ex. 6) set out its purpose as “to investigate water infiltration into the ...basement area and at patio doors that occurred on the ... (lake side) elevation of the building as reported by the Owner.” He made a visual inspection on September 29, 2009 of the basement wall, floor, exterior wood siding, stone masonry, metal flashings and window and door openings. There were two openings for him to examine in the wood siding, two in the masonry and one made prior in the masonry by others. The latter was the randomly chosen section of the masonry opened to allow Mr. Koerth’s inspection. (Though this report called the side fronting toward the lake west, to avoid confusion, I will continue to refer to it as the north elevation and the other walls will be referred to in conformity with this orientation.)

[38] Mr. Wasylenki set out his observations which were unremarkable. In his conclusions, he accepted from the evidence of water staining on the northerly basement floor near the north wall and the northerly portion of the west wall that water infiltration had occurred at some other time or times. No moisture or water was found in the basement or living room near the patio doors where sealant was observed to have failed between the jamb and the threshold. He recommended that the deck be lowered 6” to avoid the possibility of water infiltration between the through wall flashing and the top of the foundation wall during heavy rains.

[39] He found that the wall systems were all intact at the inspection openings and “generally complied with” the OBC. He recommended some minor changes such as double nailing the Cape Cod boards as required by the manufacturer. Also, the metal flashing corners above the stone sill should be fastened and sealed with caulking as well as correcting the sealant failures he noted by using “experienced tradesmen familiar with substrate preparation and sealant application”. In the end, Mr. Wasylenki had no explanation for the water infiltration. He believed that the ty-vek air barrier and flashing should contain and divert any water out.

[40] Under cross-examination, Mr. Wasylenki was shown his photo 25 from his report. He conceded that the flashing should extend beyond the foundation wall and it plainly did not. He was shown the video record [Ex. 1(18)] of water dripping into the basement and agreed that it would have been better if he had seen this. He also conceded that, unlike the evidence of Mr. Boudreau who swore that the entire exterior foundation wall had been parged, photo at Ex. 2(65) showed a bare unparged foundation wall.

[41] More importantly, he had to admit that his photo 23 showed only the right side of the inspection opening on the west elevation where a gap showed between interior wall and the veneer. The photo at Ex. 2(59) shows the same opening and the mortar bridging closing the gap on the left side. He agreed that he had not included that view in his report. This type of editing represents the most troubling aspect of Mr. Wasylenki’s evidence.

[42] As a further example, he admitted that after the first draft went out, he added a paragraph at p.4 of his report where the first draft had ended with the statement that deck spacing did not meet manufacturer’s specifications thus allowing excessive water accumulation which could lead to discolouration and welling of the planks. The added ten lines of text, he admitted, came from Mr. Boudreau. They start with the statement from Mr. Boudreau that proper spacing between the planks was provided by EHL during the installation of the deck. They go on to list various things the owners could do to maintain the deck surface in line with the manufacturer’s guidelines. In the middle, almost unnoticed, the original conclusion of Mr. Wasylenki regarding water accumulation and discolouration remains, contained within the reassuring words about proper deck maintenance. The implication is that plank swelling and discolouration could be avoided or ameliorated. That implication and the statement as to how the planks were installed went well beyond any observation Mr. Wasylenki could make as an independent professional witness. In my view, this addition and the omission from Photo 23 make evident that Mr. Wasylenki lost his independence in favour of placating the client. His evidence will receive a corresponding downgrade in weight as a result.

[43] I found Mr. Koerth to be a solid, forthright witness. He was the only witness who understood and could explain the rain-screen system of handling water infiltration. To study only the infiltration side without understanding how water that will inevitably enter through the siding is to be diverted out by properly extended flashing and the lower flashing tucked under the air barrier instead of relying on taping it on is to miss a fundamental understanding of why water has been penetrating the north wall and the northerly portions of the west and east walls.

[44] The troubling aspect of Mr. Koerth’s conclusions is the recommendation that all the walls, the masonry and siding portions, must be removed and replaced while ensuring that the flashing/air barrier or Ty-vek system is installed properly and within the OBC regulations. The penetration of water is limited to the north wall and the northerly third of the west wall. He had considered alternate solutions but dismissed them because they failed to deal with the overall problems that the siding was installed so unprofessionally that the owners lost their 15-year manufacturer’s warranty. Also, it is more economic in his view to replace the Cape Cod siding than to get into an exercise of re-using and re-placing each board in the place it was and repairing individual nail holes in the used boards.

[45] This is a serious issue. I will therefore set out my findings on the water penetration issue based on Mr. Koerth’s evidence in summary form:

(i) the flashing failed to extend up behind the air barrier sheathing material under the masonry veneer and the Cape Cod siding [OBC, s. 9.20.6.4(2),s. 9.20.13.7(1), and s. 9.27.3.2(3)];

(ii) flashing joints are not water-tight [OBC, s.9.20.6.4(2)];

(iii) the poly flashing failed to extend out past the face of the foundation wall [OBC, s. 9.20.13.5(1)(b)];

(iv) no flashing was inserted below the masonry window sills nor did it extend past the face of the lower wall section [OBC, s.9.20.13.3(1)(a) and s. 9.0. 13.4(2)];

(v) no gap exists between parts of the wall interior and the air barrier and where a gap does exist it is reduced to less than 1” due to mortar bridges or blobs [OBC, s.9.20.6.4(2) and 13.10(1)];

(vi) the wood strapping beneath the Cape Cod siding was installed at 24”and not 16” centres which was the practise generally known for Cape Cod siding and which was required in 2005-6 by the manufacturer’s installation guidelines [Ex. 3(53)];

(vii) the Cape Cod siding was pushed down forcing the metal flashing near the sill inwards and not directed outwards as it should have been - the jamming of the flashing existed around the majority of the perimeter surrounding the house;

(viii) the result of the continuing condition in item vii) above is premature deterioration of the siding due to water accumulation at the base of the siding;

(ix) the nails used were not stainless steel as required by the Cape Cod guidelines and as a result the ordinary nails used had rusted and were unsightly; and

(x) due to the defects in the installation of the Cape Cod siding by EHL, the 15-year manufacturer’s warranty was lost to the plaintiffs and despite the remedies suggested by Mr. Rempel in his letter of September 25 2007, Mr. Boudreau did nothing to correct these defects.

[46] I accept Mr. Koerth’s evidence on the need for replacement of the siding, the flashing system and the masonry veneer on the north wall and the northerly 20% of the west wall. I further accept that the siding portion of all four walls must be removed and replaced and the flashing/air barrier placement must be remedied in accordance with Mr. Koerth’s Ex. 9 and the Cape Cod manufacturer’s guidelines. I find for the reasons given that these components have not been installed in a workmanlike manner and instead the installation by the defendant failed to have regard to the Cape Cod siding instructions, and failed to carry out the OBC requirements and the requirements of the rain-screen system when these requirements were known, or ought reasonably to have been well known, to the defendant as an experienced building construction manager. Due to the incorrect installation of the siding, the defendant has caused the plaintiffs to lose the15-year warranty for the siding which has been voided according to Mr. Rempel due to installation deficiencies.

(Decision continues with remaining sections exactly as in the source text.)