Court File and Parties
COURT FILE NO.: CV-22-00682774-0000 DATE: 20240827 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Del Tufo et al., Applicants AND: TSCC No. 2655 et al., Respondents
BEFORE: Carole J. Brown J.
COUNSEL: Julian Binavince and Simon Cullen, Counsel for the Applicants Megan MacKey, Inderpreet Sandhu and Sara Mosadeq, Counsel for the Respondents
HEARD: April 18, 2024
Endorsement
[1] The applicants bring this application pursuant to Rule 38.10 of the Rules of Civil Procedure for damages for water infiltration in their condominium unit, municipally known as Unit 34, Level I, 142 William Duncan Rd., Toronto (“the unit”), against the vendor of the condominium unit, Nyla Roopnarinesingh (“the vendor”), and the condominium corporation, TSCC 2655. It is the position of the applicants that the defendant vendor discovered the leakage into the unit prior to closing and is therefore responsible for repair of the leakage and all damages flowing therefrom. It is further the position of the applicants that the condominium corporation is liable for the leakage, as they did not do the necessary repairs for another 18 to 24 months.
[2] The applicants’ unit is part of a stacked townhouse development of 176 units and is the lowest unit of a multilevel stack. The unit sits on and is adjacent to the underground parking garage which extends under the entire condominium complex and gardens.
[3] As regards damages, the applicants’ claim damages in the amount of $200,000, an abatement in purchase price of the condominium, and pecuniary damages. As regards the latter, the only evidence adduced was a spreadsheet of claimed out-of-pocket items in the applicants’ affidavit, with no invoices or other supporting documentation.
[4] It is the position of the defendant, TSCC 2655 (“the condominium corporation”), that they did all within their power, and within the constraints of the Tarion warranty conditions which covered the extensive leakage issue in the condominium complex, with respect to the applicants’ unit. They further maintained that they acted to satisfy their duties to the condominium corporation and all condominium owners to ensure that the Tarion warranty coverage would remain valid.
[5] The respondent, Nyla Roopnarinesingh, brings a counter application for release of the $75,000 holdback given by her on closing, pursuant to the Holdback Agreement, which amount remains in her solicitor’s trust account; and a claim for contribution and indemnity against the condominium corporation. It is her position that she is not liable for any of the damages or repairs to the condominium unit.
[6] For the first time, in their factum, the applicants alleged oppression and negligence. At the hearing of the application, the applicants revised their claim for relief, seeking an allocation of responsibility for the water infiltration and a reference to determine damages. While it was the position of the counsel for the applicant that the water leakage may not be completely repaired, and damages have been ongoing such that he could not finalize the quantification of damages, he should have done as much as he could to quantify damages and prepare his case for hearing. This he did not do.
[7] At the hearing of this case, the applicants had still not provided any supporting documentation for damages sought against the respondents. Accordingly, the applicants sought from this Court an allocation of responsibility for the water leakage and damages; and a reference for an assessment of damages pursuant to Rule 38.10 for water infiltration in the condominium unit against the vendor and the condominium corporation.
The Facts
[8] The condominium unit experienced leakage from approximately 2018 through August of 2021. Two incidents of leakage are reported, one on August 7, 2018 and one on March 4, 2019. After repairs were effected by the condominium builder, Mattamy Builders (“Mattamy”), pursuant to the Tarion New Home Warranty, which covered the condominium complex, the problem was believed to have been rectified.
[9] The vendor sold her home pursuant to the agreement of purchase and sale, with closing on August 30, 2021. The only conditions in the sale were for financing and review of the status certificate. No home inspection was required by the purchasers. The purchasers did visit the condominium on two occasions before closing. The purchasers noticed some water discolouration on the baseboards on August 4, 2021, but said and did nothing about this.
[10] At the time of the closing, the vendor had not resided in the condominium unit since on or before August 8, 2021. She was pregnant and had been admitted to hospital for bedrest on August 8. She delivered on August 14, with the newborn being admitted to the NICU (Neonatal Intensive Care Unit).
[11] On the day of closing, the vendor and her husband had obtained consent to stop by the condominium to check for mail on their way to the hospital, where their newborn was still confined to NICU. They arrived at approximately 11:45 AM and the vendor noticed water discolouration on some baseboards. The vendor immediately contacted the lawyer’s office, who advised her that it was too late and that the property had already been registered, i.e. transferred to the applicants. She further contacted the real estate agent; the property manager of the condominium corporation; Mattamy, who are responsible for doing the condominium repairs under the Ontario New Home Warranty Program (Tarion); and her insurance broker to reinstate her home insurance policy.
[12] In addition, the vendor agreed to a $75,000 holdback pursuant to the Holdback Agreement which she signed. She also gratuitously offered to pay and did pay the purchasers’ first month hydro bill.
[13] The Holdback Agreement stated that the amount of $75,000 would be held back
“until the full amount necessary to pay for the remediation of the water damage has been confirmed in writing by builder and the condominium corporation as well as any contractors that may be necessary, and that confirmation in writing has been obtained that Nyla bears no financial responsibility with respect to any of the foregoing.”
[14] Following the closing, several other instances of water infiltration are noted in the condominium unit in March 2019, February 2022, March through July 2022, October 2022, November 2022, January 2023, July 2023 and November 2023. These all came after Mattamy had completed its repairs in March 2019, and it was believed that all water infiltration had been rectified. It is of note that the water infiltration was much more extensive than simply in the applicants’ unit, but affected the entire underground garage which extended under the condominium complex and gardens, and also affected one other condominium unit, although those unit holders did not commence a lawsuit. The water infiltration in the condominium complex was believed to be caused by failure of the waterproofing and waterproof protective barrier, and rectification of water infiltration necessitated a complete repair of the condominium complex.
[15] The claim had been made by the condominium corporation to the Tarion New Home Warranty Program and, pursuant to the Tarion program, it was the responsibility of the developer/builder of the condominium complex to repair the defects at their own cost.
[16] From February 2022 through 2023, the developer/builder, Mattamy, attempted on numerous occasions to rectify the complex defects which caused the water infiltration but were ultimately unsuccessful. Finally, in December 2022, Mattamy agreed to a settlement with the condominium corporation whereby they would pay the corporation $1,011,350 and the corporation would take over the rectification of the water infiltration issue. That settlement amount was paid to the corporation at the end of March 2023. From that time, the condominium corporation retained an engineer to study and assess the issue and proposed a plan for rectification. The engineer came back with preliminary plans and a cost estimate, which was almost the cost of the settlement arrived at with Tarion. The corporation then entertained bids from three other engineers, selected an experienced engineer whose proposal and estimates fit within the condominium settlement fund budget, requested the necessary “as built” plans from Mattamy, which failed to respond or provide said plans. The corporation finally had to request the plans from the City of Toronto. Once the final engineering plan for rectification was provided, the condominium Board of Directors met with the engineer and approved the plan, which was thereafter implemented. The first repairs were done to the applicants’ unit and the adjacent walls of the garage. From receipt of the settlement monies from Mattamy to completion of the rectification of the problem was 10 months. The cost to repair the applicants’ unit and waterproofing of the garage walls appurtenant to the applicants’ unit amounted to $41,640.50.
[17] On August 3, 2023, the “as built” drawings requested by the condominium engineers, in order to make the necessary changes to the condominium in order to correct the leakage problem, were finally provided to the condominium by Mattamy, after the condominium submitted a disclosure request to the City of Toronto. Thereafter, on September 18, 2023, the engineer retained by the condominium corporation provided its repair proposal, within six weeks after obtaining the “as built” drawings. On October 13, 2023, the condominium board met with the engineers for a sitewide meeting, and thereafter proceeded with the necessary repairs. The repairs were first effected on the applicants’ condominium unit, and thereafter on the rest of the condominium. All repairs were completed by January 2024.
[18] I find that the time from the settlement with Mattamy to final completion of the repairs was timely and expeditious.
Analysis
Was There Any Liability on the Vendor?
[19] I do not accept the applicant’s argument that the vendor is responsible for all repairs and damages to the condominium unit. I do not agree that this is made clear by the agreement of purchase and sale. Nor do I agree that the vendor had a duty of honesty which she breached, or a duty to advise which she breached.
[20] The vendor noticed new leakage in the condominium 27 minutes before closing. The defendant did all that she could reasonably do in the circumstances to notify everyone who needed to be notified about the leakage. She acted reasonably and responsibly throughout. She was advised by her lawyer’s office when she called that the closing had already occurred and that the property had been registered in the name of the applicants. We do know that she entered the condominium unit at 11:45 AM and that she called her lawyer; the builder, Mattamy; Tarion; the condominium property manager; her real estate agent; and her insurance broker to reinstate the insurance to ensure that the plaintiff was protected. We further know that the property was registered at 12:12 PM, at which time the transfer of title occurred.
[21] The vendor further gave an undertaking to provide a $75,000 holdback following the closing. The vendor further paid the first month of the applicants’ hydro bill. It is of note that the applicants never asked the vendor to make an insurance claim through her insurance, although they knew the defendant had reinstated her policy. It is also of note that the applicants never made a claim through their own policy. The condominium corporation is not an insurer for condominium unit owners. It is the responsibility of each condominium unit owner to have their own insurance policy.
[22] I am satisfied that the vendor acted reasonably and fairly throughout, from the time that she first noticed discolouration on the baseboards on the day of closing.
[23] I am satisfied that upon closing, responsibility for any damage became that of the purchasers. If that is not correct, however, in this case, the Tarion Warranty was in place and responded such that responsibility for the leakage became that of the builder of the condominium complex pursuant to the Tarion New Home Warranty Program. The builder, Mattamy, attempted on numerous occasions, unsuccessfully, to correct and repair the leakage into the garage which caused leakage into two adjacent condominium units as well, including that of the applicants.
[24] As regards the holdback, confirmation in writing was provided by the builder and the condominium corporation that the vendor bears no financial responsibility with respect to remediation of the water damage. The holdback was limited to damages required to rectify deficiencies in the property, not with respect to other wrongs.
[25] The holdback undertaking was specifically that $75,000 was to be held back until the full amount necessary to pay for remediation of water damage had been confirmed in writing by the builder and the condominium corporation and that confirmation in writing be obtained that the vendor bears no financial responsibility with respect to the foregoing. Confirmation was obtained from Mattamy, the builder, in December 2021 that Mattamy was rectifying everything and the vendor had no financial responsibility. The condominium corporation had provided confirmation in writing in September-October 2021. Therefore, the undertaking was satisfied and the $75,000 should have been released to the vendor pursuant to the Agreement.
[26] The water leakage was mainly in the condominium complex garage, a common element, although two residential units, including the applicants’ unit, had some moisture going into them. The leakage was a complex sitewide leak, due to a failed water protection membrane, such that individual condominium owners, such as the plaintiff or the vendor, could not rectify the issue, without the entire sitewide issue being rectified.
[27] I accept the affidavit evidence of the licensed Property Manager of the condominium corporation, Laura McCarney, that pursuant to Tarion, the Ontario New Home Warranty Program, it was the responsibility of the builder to repair deficiencies in residential buildings. If a homeowner, or the condominium, were to repair the issues themselves during the Tarion Warranty process, this would void the New Home Warranty Policy. There was no evidence to suggest that the condominium’s understanding of the Tarion Warranty was erroneous. The builder, Mattamy, attempted over the next year to repair the leakage, but without success. Finally, in January 2022, a settlement was reached whereby the builder paid the condominium corporation over $1 million. The money was ultimately paid to the condominium in March of 2023.
[28] I am satisfied that the vendor did not breach a duty of honesty in her contractual performance of the agreement of purchase and sale. She was completely straightforward and honest in her conduct when she first discovered the new leakage in the unit, which was some 27 minutes prior to closing.
[29] I do not agree with the arguments of the plaintiff regarding implied duties in the agreement of purchase and sale. There is no implied “duty to advise” from the part of a vendor under an agreement of purchase and sale: see CM Callow Inc. v Zollinger, 2020 SCC 45. The vendor did not breach an implied “duty to advise”.
Was there any liability on the condominium corporation?
[30] I am satisfied that the condominium corporation acted reasonably throughout in dealing with the issue of water leakage, which was sitewide and affected much more than the subject condominium unit. Effecting repairs only in the subject condominium unit would not have solved the problem. The entire water shield barrier had to be replaced to stop the sitewide leakage, including that of the applicants’ unit.
[31] I do not find that the vendor bore the risk regarding water infiltration and resulting damages. Accordingly, I do not find that the applicants are entitled to damages for loss of enjoyment or for an abatement in the purchase price. The purchasers have not established an evidentiary basis for damages, out-of-pocket expenses or an abatement in purchase price.
[32] The vendor made all reasonable efforts to advise the applicants of the newly discovered leakage and indeed, went well beyond that to notify the builder, the condominium corporation, her agent, her lawyer and her insurance broker.
[33] I further find that the condominium corporation acted reasonably and responsibly in all of the circumstances and fulfilled their duties within the context of the circumstances presented. They were confined by the restrictions of the Tarion Warranty Program and could not undertake repairs of the water infiltration in the applicants’ unit themselves. They did what they could, including provided dehumidifiers and fans to the applicants. They further proceeded with the statutory warranty claim before Tarion New Home Warranty Program and the builder, Mattamy, to repair the water infiltration. The builder was, in this case, under the Ontario New Home Warranty Program, required to complete the repairs to the condominium complex. The repairs were complex and involved much more than repair of water leakage to the applicants’ unit.
[34] I accept that the condominium corporation had to act within the constraints of the Tarion Warranty Program and was not able to take over the repairs to the condominium complex itself without voiding the warranty coverage over the construction deficiencies, which would have been financially detrimental for the condominium and its owners. Doing this would have meant that the condominium would have had to pay for the complex repairs to the condominium on their own, which would have been expensive for the owners, and also was unfair and unnecessary, as the responsibility rested with the builder, Mattamy.
[35] To suggest that the vendor bears the responsibility vis-à-vis the applicants to rectify the water infiltration and to compensate the applicants with respect to all damages that result therefrom, ignores the larger issue that the repairs to only the applicants’ unit would not rectify the leakage issue which involved a much larger failed water membrane issue affecting the entire garage and another unit. Rectifying the one unit would not have prevented further water leakage into that one unit until the larger, complex solution had been implemented. Moreover, it ignores the financial impact on all other condominium owners, as well as the applicants, or the warranty to have been voided, resulting in the condominium owners having to pay large sums of money into a reserve fund to permit the condominium corporation to effect the repairs itself.
[36] Indeed, the repairs required to repair the leakage problem are sufficiently complex that the builder, Mattamy, was unable to affect the repairs. They finally settled with the condominium corporation and paid the settlement amount of $1,011,350 by March 2023. The condominium corporation thereafter tendered the work, selected an experienced engineer whose bid fit within their settlement funds, requested the “as built” plans of Mattamy, which were not forthcoming for several months, until August 2023 and finally requested the plans from the City of Toronto, after which they were able to finalize their plans, obtain the condominium board approval, and proceed with repairs. They completed the applicants’ repairs within 10 months of the settlement. The repairs to the applicants’ unit cost $41,640.50, which included the waterproofing of the garage walls appurtenant to the applicants’ unit.
[37] In all the circumstances, I find the condominium acted reasonably and responsibly and expeditiously, and pursuant to its duties to all condominium owners: Mohamoud v Carleton Condominium Corporation No 25, 2019 ONSC 7127; Weir v Peel Condominium Corporation No 485, 2017 ONSC 6265.
Procedural matters
[38] A number of procedural matters were raised in this application, including the fact that the applicants did not specify in their notice of application the relief sought in this application. Indeed, when the matter came on for hearing, the counsel for the applicants changed the requested relief to simply request an allocation of responsibility among the parties and a reference to determine damages before the Small Claims Court or an Associate Judge.
[39] A lawsuit is to be decided within the boundaries of its pleadings, absent amendments. The underlying principle is fairness: Grandfield Homes (Kenton) Limited v Chen, 2024 ONCA 236.
[40] The applicants failed to claim the relief in their notice of application as specified. They changed the request for relief at trial. They further requested relief for oppression and negligence which were first claimed in their factum. There was no fact situation that would warrant damages for oppression or negligence. They are now precluded from such claims, as they were never specified in their notice of application, nor in any amendment thereto. Again, the underlying principle is fairness to the other parties to know the claim to be met: Rules of Civil Procedure, R 38.04, Renewable Power & Light PLC v HB Global Advisors; and see Doucette v Jones, 2012 NBQB 136.
[41] As regards damages and out-of-pocket expenses, the applicants have failed to provide any invoices of out-of-pocket expenses or other costs incurred. Counsel for the applicants argues that they have provided a spreadsheet in the applicants’ affidavit, of expenses incurred, which spreadsheet was prepared by the applicants. I find that this spreadsheet is not evidence upon which a determination of damages can be founded. They now request a reference to assess their damages without any evidence before this Court that there have been out-of-pocket expenses.
[42] I have found that they are not entitled to any damages. Even had I found them to be entitled to damages, which I have not, I would not have ordered a reference in such circumstances, where they presented no evidence of such damages and did not request such in their notice of application.
[43] This application is dismissed.
[44] The holdback is to be returned to the vendor defendant, Nyla Roopnarinesingh, as already indicated above.
Costs
[45] I strongly urge the parties to agree upon costs payable by the applicants to the defendants. If they are unable to do so, they are to provide their submissions of a maximum of three pages in length, including their bill of costs to meet within 60 days of the release of these reasons.
C.J. Brown J. Date: August 27, 2024