Cheng et al. v. Tarrion Warranty Corporation, 2015 ONSC 1347
COURT FILE NO.: CV-14-514780
DATE: 20150310
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Stephen Cheng and Sannie Lee, Applicants
AND:
Tarion Warranty Corporation, Respondents
BEFORE: Carole J. Brown, J.
COUNSEL: Applicants representing themselves
Neil S. Abbott, for the Respondents
HEARD: March 2, 2015
ENDORSEMENT
[1] The applicants, Stephen Cheng and Sannie Lee ("the applicants") seek an order finding that the respondent, Tarion Warranty Corporation ("Tarion ") is in contempt of the Order of the Licence Appeal Tribunal ("the Tribunal") dated November 19, 2012.
[2] The Tribunal, after a 5 1/2 day hearing, ordered as follows:
The Tribunal finds as a fact that there has been water penetration of Unit 21 and Unit 23, in the areas around the living room balcony doors in both units and in the master bedroom of Unit 21. Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs Tarion to carry out the necessary steps to determine the cause of this water penetration, which the Tribunal has found to be a fact, with the understanding that this may require the involvement of persons with expertise in the investigation of water penetration issues such as the Added Party's expert. Tarion is further directed to ensure that the necessary repairs, to correct the water penetration problems, are completed.
[3] The Tribunal further found that "The expert testimony in this proceeding made it clear to the Tribunal that the determination of the cause of water penetration can be very difficult and may require testing beyond that set out in the CPG".
The Facts
[4] The applicants purchased two new adjoining townhouses, Units 21 and 23 Wharfside Lane in the City of Toronto, on Lake Ontario in 2008. Commencing in approximately December of 2009, the applicants observed extensive water penetration in the units and made a claim to Tarion.
[5] Tarion was established in 1978 to protect the rights of new homebuyers and regulate new home builders. It administers the Ontario New Home Warranty Plan Act, R.S.O. 1990,c. O. 31, which outlines the warranty protection to which new home purchasers are entitled. Tarion undertakes investigations and funds repairs in accordance with the Act and its Regulations. In accordance with the Act and Regulations, Tarion investigated the applicants' claim and, following investigation, denied the applicants' claim for water penetration. The applicants thereafter appealed to the Licence Appeal Tribunal which issued the Order as set forth at paragraph 2, above.
[6] Following this, Tarion retained Halsall Engineering to investigate the complaints. It assigned a Warranty Services Officer to the case on March 21, 2013, who attended properties with a representative of the engineer to inspect for water penetration. No leaks were found on that day. On May 27, 2013, the Warranty Services Officer, the engineer and a representative of the builder attended again to carry out water testing pursuant to the Construction Performance Guidelines ("CPG").
[7] Pursuant to recommendations made by the engineer, Tarion conducted further investigations beyond the CPG guidelines, depressurizing the home in order to attempt to identify the cause of the leak ("a Blower Door Test"). This test revealed leaks in the living room balcony doors in both homes. The engineer further, on July 17, 2013, recommended testing on the roof above the master bedroom, which was conducted by the engineer on September 23, 2013. No leaks were detected. Testing of the roof is contested by the applicant. Spray tests were conducted, with spraying of the masonry above the roof gable for approximately one hour and spraying immediately below the roof gable for approximately 30 minutes, as recorded in the engineer's report of December 18, 2013, with no leakage detected. On October 3, 2013, the builder carried out repairs suggested by the engineer, including new caulking around the balcony door of Unit 23 and fresh weather stripping added to the door of Unit 21.
[8] On December 18, 2013, the engineer made a formal report indicating that the tests completed at the homes were in accordance with industry standards for determining leakage. As part of its assessment, the engineer stated as follows in that report under the subheading "Assessment":
The testing we have completed is typical of the industry standards for an evaluation to identify leaks that occur under rainy, windy conditions. Further testing, over and above this, may identified the source of the suspected leak. This might include prolonged wetting or some form of depressurization of the attic, which is not commonly done.
[9] Other than these observations which simply noted other testing that may identify the source, no recommendations for testing were made in the report.
[10] The applicants continued to report occasional water penetration at the properties. There was no evidence that damage resulted from said leakage. As a result of the reports of occasional leakage, Tarion offered to retain a waterproofing contractor, which suggestion was not accepted by the applicants. The applicants wished to be appointed as case manager of any future repairs they deemed necessary.
[11] The applicants thereafter commenced this application and have brought this motion for contempt pursuant to Rule 60.11 of the Rules of Civil Procedure.
The Law and Analysis
[12] The Superior Court of Justice has inherent jurisdiction to punish for contempt of court where such contempt consists of a violation of a court order. Fundamental to a contempt order is maintenance of respect for the court and the rule of law. While criminal contempt is more concerned about punishment, in civil contempt, the court’s emphasis is on attempting to obtain compliance with the court order.
[13] A finding of contempt of court is a serious matter that is quasi-criminal in nature. The bar for civil contempt is high. A finding of civil contempt must be made on a criminal standard "beyond a reasonable doubt": Chiang (Re), 2009 ONCA 3.
[14] Pursuant to established jurisprudence, the tripartite test for a finding of contempt of court is as follows:
The Order that was breached must state clearly and unequivocally what should and should not be done;
The party who disobeyed the Order must do so deliberately and wilfully;
The evidence must show contempt beyond a reasonable doubt.
[15] Any doubt must be resolved in favour of the person alleged to have breached the Order.
[16] Based on the evidence before me, and on the settled jurisprudence regarding contempt and the tripartite test set forth at paragraph 3, supra, I find that the applicants/moving parties have not satisfied the three-pronged test for contempt.
[17] As regards the first part of the tripartite test, and the Order alleged to have been breached, Tarion was ordered to carry out the necessary steps to determine the cause of water penetration in the subject units, which may require the involvement of persons with expertise in the investigation of water penetration issues and was further directed to ensure that the necessary repairs to correct the water penetration were completed. I find that Order to be clear on its face.
[18] As regards the second part of the tripartite test, the deliberate and wilful disobedience and failure to comply with the Order, I have carefully reviewed all of the evidence provided to me by both parties, and based thereon, do not find any evidence that the defendants wilfully and deliberately breached the Court Order or conducted themselves in a manner designed to breach the Court Order.
[19] Indeed, following the Order of the Tribunal dated November 19, 2012, Tarion retained the engineering company to investigate the complaints, attended at the subject properties with the engineer on March 21, 2013, May 27, 2013, conducted a Blower Door Test to attempt to identify the cause of the leak and re-attended at the subject properties on September 23, 2013 to conduct further water testing. No leaks were detected on these attendances. On October 3, 2013, repairs were undertaken at the engineer's suggestion. Based on the evidence, Tarion took numerous steps to identify and repair the leakage. Tarion's engineer was not able to further clarify or identify the sources of the suspected leak, although testing was done pursuant to industry standards and the CPG, as well as testing that went beyond the guidelines in the CPG. When the applicants reported additional incidences of occasional leakage, Tarion offered to retain a waterproofing contractor, which suggestion was rebuffed by the applicants.
[20] I am satisfied that Tarion took numerous steps to determine the cause of water penetration, conducted numerous investigations, followed the suggestions of the expert as regards repairs, including the engineer's suggestions for new caulking around the balcony door of Unit 23 and fresh weather stripping added to the door of Unit 21, and further conducted water testing. As noted above, regarding the Blower Door Test, they went beyond the CPG guidelines, as the Tribunal noted Tarion may have to. Following the applicants' motion for review to the Tribunal, which was dismissed, Tarion recommended that a waterproofing contractor be retained, which was not accepted by the applicants. Tarion made repeated offers to retain a waterproofing contractor, which suggestion was not accepted by the applicants. There has been no reason given for their objection, other than the applicants' submission that it is not clear what said contractor could or would do. Based on all of the foregoing, I do not find that Tarion has deliberately and wilfully disobeyed the Order of the Tribunal.
[21] As regards the third part of the tripartite test, there is no evidence which shows contempt beyond a reasonable doubt. In this regard, I reiterate my observations at paragraphs 19 and 20, above.
[22] I find that the applicants have not satisfied the tripartite test for contempt. The respondent has demonstrated an intention throughout to carry out and satisfy the Order, as set forth above. It has undertaken investigations and testing conducted by experts, and at the expert’s suggestion, has undertaken repairs. When additional occasional leakage was reported, it made further suggestions, namely the waterproofing contractor, but received no response from the applicants, nor authorization to access the properties to undertake the proposed suggestion.
[23] Based on the foregoing, I dismiss the applicant's motion for contempt.
[24] However, despite the fact that this Court has not found any contempt, this Court exercises its discretion to make the following Orders as regards the follow-up work as recommended by Tarion, in order to give effect to the Licence Appeal Tribunal decision.
[25] As had been suggested by Tarion following the Tribunal's decision, I Order that the proposed waterproofing contractor attend at the subject premises by April 30, 2015 to conduct further investigation and testing of the subject premises. I further Order that the recommendations of the contractor as regards investigations, testing and repairs required be followed and that the repairs be effected. The homeowners are to allow access to Tarion and the contractor for these purposes.
[26] While I am of the view that the additional testing ordered at paragraph 25, above, as suggested by Tarion, gives full effect to the Tribunal Order, in the event that nothing is able to be determined as a result of the above ordered procedure, and the leaks continue, I make the following additional Order. The engineer's observations made in his Report of December 18, 2013, suggested some further testing which may identify the source of the leak, although it does not appear that this was certain to do so. It suggested prolonged wetting or some form of depressurization of the attic. I do note that prolonged wetting in the gables was done, as well as some depressurization of the home, in the form of the Blower Door Test. In the event that these above-noted tests are different from the tests mentioned in the December 18 Report, I order that the additional testing as recommended by the engineer in the above referenced Report, namely prolonged wetting and depressurization of the attic should be undertaken with the supervision of the engineer.
[27] Beyond these Orders, I make no further Order to give effect to the Tribunal Order. Tarion has made full and reasonable attempts to satisfy the Tribunal's Order.
[28] I make no order as regards costs of this motion. Each party is to bear their own costs.
Carole J. Brown, J.
Date: March 10, 2015