Court File and Parties

COURT FILE NO.: 1769/18

DATE: 2020/01/24

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 375 Lakeshore Developments Inc., Plaintiff

AND:

1695895 Ontario Inc. c.o.b. Wilson Project Management, Richard Wilson, WPML Inc., Prana Masonry Inc., Architectural Accents c.o.b. Stonerox, Turner Fleischer Architects Inc., and Great Northern Insulation Contracting Ltd., Defendants

BEFORE: Justice J.C. George

COUNSEL: Kyle MacLean, for the Plaintiff

Michael Owsiany, for the Non-Party Respondent

HEARD: January 24, 2020

Endorsement

[1] The Plaintiff seeks an order permitting it and its engineering representatives to attend at 37, 39, 41 and 43 Godfrey’s Lane, Mississauga (“premises”), in order to measure, survey, make observations, and conduct tests and or experiments.

[2] While served, none of the homeowners responded to or attended at the hearing.

[3] Non-Party Respondent Tarion Warranty Corporation (“Tarion”) – who is administering ongoing statutory warranty claims at these homes - did attend. It opposes the request.

[4] The Plaintiff was the previous owner/developer of the premises, an 18-unit townhome complex. The Plaintiff hired 1695895 Ontario Inc. (“Wilson”) to construct the premises. The Plaintiff alleges various deficiencies with Wilson’s work as well as other subcontractors.

[5] In June 2019 the Plaintiff learned that Tarion and the unit owners were alleging that insufficient or inadequate insulation was installed by Wilson’s subcontractor Great North Insulation (“Great Norther”) to the ground floor concrete slabs which, they allege, has contributed to persistent heating issues in those units.

[6] Tarion advises that it intends to proceed with repair work to these ground floor units which would involve removal of the existing slabs, installation of new insulation, and the replacement of the current flooring with hydronic heating coils. This work has commenced but is not yet completed.

[7] Upon learning of the repairs the Plaintiff asked Tarion and the owners for permission to attend while the work was being done so that they might assess the state of the existing insulation and ground floor concrete slabs, take samples, and preserve the necessary evidence in order to substantiate its claim against Great Northern and the other Defendants. Tarion and the owners initially refused but later changed their mind ultimately allowing a Plaintiff representative to attend and observe the work.

[8] After commencing this motion the Plaintiff was allowed to observe the repairs and collect samples at units 3 and 33 of Godfreys Lane. I am told that the Plaintiff has retained Pretium Engineering Inc. to undertake the observation, sample collection, and analysis. The expert has analyzed the data collected to date and has concluded that:

-the vertical wall insulation complies with the Ontario Building Code;

-the insulation below the ground floor concrete slabs complies with the Ontario Building Code;

-improper balancing of the mechanical heating systems might be contributing to the heating concerns raised by the ground floor owners (including units 37, 39, 41 and 43); and

-temperature monitoring within those units should be undertaken for 30 days after the heating systems have been properly balanced, but before further slab removal work is done by Tarion.

[9] Plaintiff counsel submits that Tarion’s current work will result in the destruction of evidence relevant to its current action and to any later administrative proceedings that might be brought against Tarion. He further submits that to grant his client’s request will in no way prejudice Tarion, or the owners, as it would not interfere or delay any of the work now scheduled.

[10] The Plaintiff relies upon r. 32 of the Rules of Civil Procedure which provides that:

32.01(1) The court may make an order for the inspection of real or personal property where it appears to be necessary for the proper determination of an issue in a proceeding.

(2) For the purpose of the inspection, the court may,

(a) Authorize entry on or into and the taking of temporary possession of any property in the possession of a party or of a person not a party;

(b) Permit the measuring, surveying or photographing of the property in question, or of any particular object or operation on the property; and

(c) Permit the taking of samples, the making of observations or the conducting of tests or experiments.

(3) The order shall specify the time, place and manner of the inspection and may impose such other terms, including the payment of compensation, as are just.

(4) No order for inspection shall be made without notice to the person in possession of the property unless,

(a) Service of notice, or the delay necessary to serve notice, might entail serious consequences to the moving party; or

(b) The court dispenses with service of notice for any other sufficient reason.

[11] Among the materials filed by the Plaintiff is an affidavit from Gerald Genge, Pretium’s President who, as indicated, has been retained to undertake observations, collect data, and analyze the data of those relevant units at the premises. He details the work done to date and attaches to his affidavit an interim summary of his findings in relation to units 3 and 33. His report includes these findings:

-the reported lack of a “thermal break” at the edge of the slab is a permissible exception that complies with the requirements of the Ontario Building Code;

-the as-built conditions of the insulation under the ground floor concrete slabs, as recorded and analyzed by Pretium, comply with the requirements of the Ontario Building Code; and

-an air balancing report for one of the units suggests that a more thorough and non-destructive assessment of the HVAC system and internal temperatures is warranted.

[12] He deposes that, given these findings, Pretium should be permitted to continue their investigation by installing non-destructive temporary air temperature monitoring sensors in the relevant units, which he says would need to be done after the mechanical heating systems at each unit have been balanced but before the current ground floor slabs are removed by Tarion, which is currently scheduled to occur in March.

[13] This, he argues, would allow the Plaintiff to ascertain and better understand the likely causes of the apparent heating deficiencies. To not allow this would frustrate the Plaintiff’s efforts to collect representative data of the internal air temperatures at the premises in their as-built condition.

[14] Tarion relies upon the affidavit of one of its warranty service representatives, Samantha Rieder. She describes Tarion’s mandate, what is obliged to do, and why it is involved with these homeowners. Its main function is to conciliate warranty disputes between vendors (in this case the Plaintiff) and homeowners by deciding which defects fall within the statutory warranties. It also “backstops the statutory warranties by resolving claims directly with homeowners in cases where the vendors fail to meet their warranty obligations”. I am not going to reproduce the process in its entirety, but her affidavit sets out in great detail how this warranty program works.

[15] What is important to know is that before Tarion intervenes in a warranty claim, the vendor is afforded the first opportunity to assess and resolve the claim. This is referred to as the building repair period. In this case, that repair period has expired for the units in question.

[16] Ms. Rieder’s affidavit goes on to detail Tarion’s investigation, what it learned, and why it is undertaking the work it is now doing and is about to do. For instance, Tarion determined that there is no 3” rigid insulation below the floor slab-on-grade - which was intended in the home’s original plan – meaning there is insufficient insulation to create a “thermal break” to prevent heat loss. It also determined that there is no perimeter insulation between the concrete slab and foundation wall, which is necessary in order to prevent heat loss. Tarion has therefore assessed that these homes fail to meet minimum heating requirements and consider this to be a warranted defect that must be repaired.

[17] At para. 34 of her affidavit she characterizes the Plaintiff’s request as follows:

34. 375 Lakeshore’s most recent proposal to monitor temperature and re-balance the HVAC systems, in many cases, comes after the Builder Repair Period for the homes has expired, and after 375 Lakeshore failed to resolve the claims pursuant to the Builder Bulletins. The Builder Bulletins and Tarion’s claims process do not afford 375 Lakeshore with a further opportunity to assess and resolve the claims at this point – Tarion must step in and resolve the claims as Tarion determines is appropriate.

[18] Tarion’s counsel reinforced this argument at the hearing also confirming that, with respect to those units where the builder repair period has not expired, the Plaintiff is free to offer what they propose here to those homeowners who can then either accept or refuse. In any case, where the homeowners are unsatisfied with the remedial steps proposed by a vendor the process would have the homeowners request that Tarion intervene and conciliate, with Tarion ultimately being tasked with determining if, first, it is a warranted defect, and second, if there is, the appropriate repair.

[19] Tarion’s bottom line position is captured at paras. 36 and 37 of Ms. Rieder’s affidavit wherein she deposes that:

36. Tarion could likely be prejudiced in terms of delays to the warranty claims or compensation processes (and expenses to Tarion via its contractor, UBS) if slab work is suspended at the Homes to await completion of 375 Lakeshore’s proposed temperature monitoring.

37. There are insufficient details to evaluate the potential delay and prejudice to Tarion because:

(a) 375 Lakeshore has not provided any proposed timelines as to when the HVAC balancing that must precede temperature monitoring will be completed;

(b) 375 Lakeshore has not provided evidence that the homeowners in question have consented to the re-balancing of their HVAC; and

(c) 375 Lakeshore has indicated that temperature monitoring must take place during cold weather, but has not explained what contingencies are in place if there are unseasonably warm winter days – will the monitoring period be extended in such cases?

[20] I have carefully considered each party’s position and having done so I am content that an order issue on the terms and in the form suggested by Plaintiff counsel.

[21] In my view, the concerns raised by Ms. Rieder in her affidavit, and by Tarion’s counsel in argument are adequately addressed by Plaintiff counsel in the draft order he has proposed. For example, he proposes that the Plaintiff and its duly authorized agents must attend at unit 15 on or before January 31, 2020 in order to assess, sample and balance the mechanical heating system in that unit. In addition, the Plaintiff would be required to remove all testing equipment and sensors on or before March 2, 2020, which is the date the slab removal is to occur at that unit. As a further example, in respect of unit 16, the deadline he proposes is February 7, 2020 for the assessment and balancing and that all testing equipment and censors be removed on or before March 9th which would allow Tarion to proceed with the remedial work in that unit as scheduled.

[22] The proposed order also specifies that, while not anticipated, if any repairs are required as a result of the inspection and or testing the Plaintiff will be responsible for that cost.

[23] Furthermore, I specifically find, as required by r. 32, that the inspection appears to be necessary for the proper determination of an issue in a proceeding, and that the inspection and testing proposed by the Plaintiff falls within the purview of sub rule (2).

[24] I appreciate the rule is permissive, which means even if I deem the inspection necessary, I can still decline to make an order if it is otherwise not appropriate in the circumstances. However, in this case I am prepared to exercise my discretion in favour of the Plaintiff.

[25] I also appreciate Tarion counsel’s submission that the homeowners have not consented and that I should not place too much weight in the fact they have all declined to participate on this motion. He suggests that, in the normal course, a party in the Plaintiff’s position would make a greater effort to reach out to the homeowners to resolve this issue or otherwise seek their express consent to do what it proposes here, which it has not. I appreciate as well that the homeowners are unrepresented. However, I do place limited weight in the fact that they, while provided notice, have chosen to not file materials, attend court, or in some other way indicate their objection.

[26] In the result, an order will issue on the terms set out in the draft provided by Plaintiff counsel. I have signed that order and it accompanies this endorsement. With respect to the balance of the issues identified in the Plaintiff’s motion, which I have not addressed, they are returnable on at least 7 days notice.

[27] At this point I would typically address costs or invite counsel to make submissions in respect of costs. In this case, however, I find that a costs award is both unnecessary and unwarranted. No order as to costs.

“Justice Jonathon C. George”

Justice Jonathon C. George

Date: January 24, 2020