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					                                          TI BUILDERS ARI1RTION FORUM

                                              IN THE MATTER OF
                                              the Ontario New Home Warnnties
                                              Plan     Act, R.S.O. 1990,c. 0.31

                                    S1EPHEN J. KELLY

                                    Counsel for the Buider
                                    Counsel for Tarion Warrnty Coiporation

DA1E OF HEARNG: January                              29, 30, 31, Februry 1, March 4 and 17, 2008

                                         REASONS FOR DECISION and ORDER


1. Ths is an arbitration award puruant to the Notice of Aritration issued by the Buider on
            October 16, 2007, in relation to a Warrty Assessment Report dated September 24,2007,
            issued by Tarion Warrnty Coiporation ("Tarion").

2. The Buider is a registered builder and vendor under the Onri New HOJ "W1ra1' Plan

           Aa I (the "Act'). On Februry 22, 2005, the Buider entered into a construction contract
            with the Homeowners to buid a home on propert known muncipally                         as , Ontario
            (the "premises"). The Homeowners took possession of the premises onJune 15,2005.

3. Puruat to the Notice of Aritration, the Buider seeks a declaration that the diputed item
            in the Warrnty Assessment Report of September 24,2007, is not warrntable or chargeable,
            that the Buider is not requied to indemny Tarion for repair or compensation paid by it to
            the Homeowners, and that Tarion is requied to reimbure the Buider for repair carred out
            by the Buider puruant to the subject Warrnty Assessment Report. It should be noted that
            in the letter from Tarion to the Buider dated September 24, 2007, which enclosed the
            Warrty Assessment Report, Tarion indicated to the Buider that it would not be treating
            the subject Warrnty Assessment Report as a chargeable item

4. On the consent of both parties and puruant to Rule 6.11 of the Buider Aritration Foru
       lawyrs were allowed to conduct the case on behalf of each part.

5. On the consent of the parties and puruat to Rule 6.10 permssion was grated for the
       proceedigs to be recorded, subject to the condition that any additional charge associated
       with the recordig would be borne by                        the Buider.

6. On consent of the parties, it was agreed that should Tarion choose to call the Homeowners
       as witnesses, Tarion could split its case by callg the Homeowners after the Buider had
       closed his case. Ths step wa taken to allow the Buider to obtain a transcript of a previous
       examiation of the Homeowner prior to cross-examig of this Homeowner in thi


7. At the outset of the hearig the Homeowners attended with their own counsel who

       indicated an intention to remain for the examiation of the Homeowners in order to protect
       their interests. Rule 6.7 of the Buider Aritration Foru states: "The hearig is open only                        to
       the Aritrator and the parties and their lawyrs and witnesses, uness the parties agree

       otherwe." The Buider indicated that he did not agree to counsel for the Homeowners
       attendig. Furher Rule 6.11 of the Buider Aritration Foru only                              allows for participation

       by lawyrs for the parties and does not allow for participation by lawyrs for witnesses. An
       Order was made excludig counel for the Homeowners as well as excludig witnesses prior
       to their giving of evidence.

8. In dealig with the Warrnty Assessment Report of September 24, 2007, the Buider

       presented the argent that the Homeowners' behaviour, not only with regard to the
       subject Warrnty Assessment Report but thoughout, was relevant to whether the subject
       Warrnty Assessment Report would be not only chargeable but also warrntable. Counsel
       for Tarion agreed that if a homeowner had acted uneasonably throughout (includig by                              a
       denial of reasonable access to the premises) then not only should the item not be chargeable
       but the homeowner would forfeit their rights under the warrties. It does not stri me as
       reasonable that a homeowner who is acting reasonably with regard to a curent Warrnty
       Assessment Report could lose their warrnty rihts on the basis of past actions; therefore, I
       wi consider the Homeowners' actions with regard to the subject Warrnty Assessment
      Report, and only in the event that I find their behaviour wanting wi I consider their
      previous behaviour.

9. Finally, there is a jurdiction issue that needs to be addressed before I deal with the

      evidence. As previously stated, the Buider has filed a Notice of Aritration with regard to

      the Warrnty Assessment Report dated September 24, 2007. The Report was prepared

      followig a desk reassessment of September 23, 2007, which assessment was essentially
      based on the findigs set out in a report filed by an Engineerig fir hied by the
      Homeowners, dated September 11, 2007, which was prepared followig an attendance on
      September 4, 2007. After referrg to the Homeowners' Engineets report, the Warrnty
      Assessment Report states:

              The water testing concluded that the basement widows and the crack in the
              southwest corner of the basement allow water penetration. It wa noted that
              water was observed through a foundation crack imediately. . ..

              Under section 14 of Reguation 892 of the Act, every vendor of a new home
              warrts that there wi be no water penetration though the basement or

              foundation of the home for two years after the date upon which the home is
              completed for possession.

10. dearly, the Warrty Assessment Report of September 24, 2007, deals with water

      penetration as a result of leaks through a crack in the foundation and around widows.
       Subsequently, durg the process of removal of construction materials in the basement, wide
       spread mould was found. The Homeowners' Engineer retued for a furher inspection and
       submitted a supplementary report, dated November 5, 2007. In this report, the
       Homeowners' Engineer concludes that the widespread development of mould is due to the
       fact that the concrete had been poured durg cold weather conditions and the interior wall
       suroundig the perieter of the basement were constructed after the concrete had cured

       but before the excessive moistue in the concrete was allowed to escape, thereby trapping

       the moistue and leadig to the development of mould.

11. Durg the coure of the hearig, counsel for the defendant raised the matter of what he
       perceived as the unairess of Tarion firt relyig on leaks and a breach of the water

       penetration warrnty in the Warrnty Assessment Report of September 24,2007, and then
       tag the position at the arbitration that the problem wa due to excessive moistue content

       in the foundation which was viewed as a breach of the workmnship warrty. Tarion
       countered by pointing out the inormtion was contained in their engineets report and their
       Statement of Reasons both of which were provided to the Buider before the hearig;

       therefore, the Buider should not have been taken by suirise. The issue of jursdiction was
       not raised. The dificulty I am faced with is that this new theory was not the basis for and is
       not set out in the subject Warrnty Assessment Report. Furher, based on the discovery of
       the additional mould and upon the Homeowners' Engineets findigs and recommendations,
       more remedial work was carred out than was referred to in the subject Warrnty
       Assessment Report.

12. As the issue of jurdiction was not addressed durg the hearig, counsel were afforded the

       opportty to make submissions on the issue by conference call, which submisions were

       quite helpful.

13. As pointed out by Tarion, prejudice to the Buider over the introduction of the
       workmship warrty wa reduced, if not completely         avoided, by the fact that the Engineer
       report were provided to the Buider who had the report reviewed by its own expert who

       provided report in reply, and by production of its Statement of Reasons, which briefly

       refers to the water retention and workmnship warrty whie makig extensive reference to
       the leaks and water penetration warrty. Whe that may in whole or in part address the
       issue of prejudice to the Buider, it does not address the issue of my jurdiction. The Buider
       Aritration Foru is a process establihed by Tarion, no doubt followig consultation with

       representatives of the residential construction industry. It is a creatue of statute. My

       jursdiction is lited to that provided under the Builder Aritration Foru Rules. Rule 7.1


             7.1 Jursdiction

                   The Aritrator has the jursdiction to:

                   (a) Decide whether diputed items in the Warrnty Assessment Report are or are
                         not a breach of warrnty.

Counsel for Tarion submitted that the reference to "disputed item. refers not to the defect but to
the complaint described by the Homeowners and that any reference in a Warrty Assessment
Report to a specific defect and warrty is simply an attempt by Tarion to be helpful but is
unecessary and ultimtely not relevant to the determation of the issue of whether an item is
warrntable. In other words, the specific defect and warrnty identified in a Warrnty Assessment
Report can be wrong, but an arbitrator can stil find the disputed item as warrntable based on
evidence led by Tarion dealig with a totally diferent defect and warrnty provision. Ths does not
seem right. Tarion investigates dipute items and then prepares a Warrnty Assessment Report
outlig its findigs. Where items are found to be warrtable, the buider considers Tarion's

findig regarding exitence of a defect and that it breaches a specific warrnty. The buider has the
option of remedyig the sitution withi 30 days or can decide to dipute Tarion's findigs. When a

buider comes to a decision on how to proceed based on a specific set of findigs set out in a
Warrnty Assessment Report, it doesn't seem reasonable that the buider be found responsible for
the disputed item based on a defect and! or warrnty breach not mentioned in the Warrnty
Assessment Report. If Tarion is to maintain that a disputed item is warrnted on the basis of a
defect and! or warrnty not identified in its Report, then a fresh or amended Warrty Assessment
Report should be filed to allow the buider to consider the findigs and decide whether to remedy
the defect and resulting damage or dipute the findigs by way of arbitration in this foru.

For the above-noted reasons, I find that under sub-rue 7.1(a) when determg if a diputed item
in warrtable I only have jursdiction to consider the specific defect and warrnty referred to in the

Warrty Assessment Report of September 24, 2007, and not with regard to factors and grounds
determed and presented subsequently.


14. Whether the alleged deficiency        of a crack in the foundation as set out in the Warrnty
           Assessment Report of September 24,2007, is warrtable as a breach of the two year water
           penetration warrnty set out in section 14 of Reguation 892 under the NewHOJ Warrant
           PlanA      a?

15. If the alleged deficiency is warrtable, is the amount sought to be recovered from the

           Buider by Tarion reasonable?

16. Tarion was represented by          a Field daim Representative who testified at the hearig. He is
           an experienced field claim representative of T arion and was pririy responsible for dealig

           with the warrnty issues with regard to the propert. He confired the date of possession of
           June 15, 2005. Tarion received a 30-Day Form from the Homeowners dated July 5, 2005,
           which included the followig items: "Water leakig or poolig in basement on all side wall
           (drall framig insulation) all wet since June 15,2005, and previous to us takig over new

           home." This wi be referred to as the "water issue". Subsequently, the Field daim
           Representative's office received a request for concilation concerng the 30- Day Form. A
           concilation was carred out on January 4, 2006, and was addressed in a Warrnty
           Assessment Report dated January 5, 2006. In thi report the Field daim Representative

           confired that a musty smell could be noted when enterig the basement. He also noted

           that the door at the top of the stairell was kept closed. He goes on to set out the

           inormtion provided to hi by the Homeowner. The Field daim Representative noted that

           water testing could not be performed in the witer time and scheduled the testing for July
           2006. The issue was left as "under investigation".

17. The water issue was restated in the Year End Form dated June 5, 2006, filed by the

18. The Field daim Representative testified that he attended at the propert again on July 4,
            2006, to carr out water testing. Ths lead to his Warrnty Assessment Report of July 5,

            2006. The Field daim Representative indicated that the Homeowners and Buider were both
            present for the testing. The Field daim Representative explained that he tested one crack on
            the south wall near the garage, and a second on the west wall near the basement widow.
            Both were tested for below grade water penetration in accordace with a procedure

            establihed under the Construction Pertormnce Guidelies. A garden hose was used at half
            flow with the hose laid parallel to the wall at the crack, which he ran for 20 miutes. The
            Field daim Representative noted water penetration at both sites but did not record how
            long it took for the water to appear. He found that the water leaks were warrnted under
            section 14 of Reguation 892 made under the Act. He called upon the Buider to repair the
            leaks .
19. The Field daim Representative gave evidence that he attended at the premises with the
      Homeowners and Buider on September 26, 2006. The cracks were again water tested for
      leakge in the same manner as previously described. The Field daim Representative
      indicated that no water penetration resulted. The Field daim Representative concluded that
      the water issue as well as all other outstadig issues set out in the Warrnty Assessment
      Report of July 5, 2006, along with items set out in the 30- Day Form had been resolved. His
      findigs were confired in correspondence to the Homeowners and Buider September 26,


20. On October 2, 2006, the Homeowners submitted to Tarion a Second- Year Form. In the box
      titled "Water penetration of basement or foundation" the Homeowners stated the water
      issue as follows: "In hot sumer months wall seem to have moistue all along flooi'. The
      Homeowners also go on to describe water penetration at the basement widows.

21. The Homeowners requested a concilation under the One- Year Form, which concilation
      was carred out on December 11, 2006, by the Field daim Representative. In dealig with
      the water issue, the Warrty Assessment Report of December 11, 2006, indicates that it is
      not a warrnted item, but indicates that the Field daim Representative wi follow up with
      the Homeowners on the issue and deal with it puruat to the 30- Day Form. The Field
      daim Representative, in fact, did re-attend at the premies on Janua 23, 2007, and met
      with one of the Homeowners and a representative of the Buider. In his evidence the Field
      daim Representative explained that signs of water near the furace on the nort side were

      on the opposite side of the home from the locations of where the cracks appeared. As a

      result, he did not feel this water was due to water penetration and the item was not found to
      be warrtable. In that Warrnty Assessment Report the Field daim Representative refers to
      the workmnship warrnty under section 13.1(a)(~ and (ii) of the Act as opposed to the
      water penetration warrty under section 14 of Reguation 892. The Warrnty Assessment
      Report was forwarded to the Homeowners and Buider by letter dated Februry 2,2007, in
      which letter Tarion indicates that it considers the water leak issue resolved, the matter closed
       and did not requie any furher action by the Builder.

22. The Field daim Representative explained that hi office was contacted by the Homeowners

       in the sumer of 2007 with continued concerns regardig the water issue. The Homeowners
       expressed the opinion that the problem was in part due to condensation and also explained
       that there was water leakage when they cleaned the sidig with a hose. Due to the persistent
       concerns, the Field daim Representative chose to conduct a desk reassessment, which led to
       his Warrty Assessment Report of Augut 23, 2007, wherein he authoried the
       Homeowners to retain an Engineerig Company to conduct an investigation of the
       condensation issue. The water issue was again placed under investigation. The Field daim
       Representative received the Homeowners' Engineets report of September 11, 2007, and
       carred out a furher desk reassessment on September 23,2007, which led to the Warrnty
      Assessment Report of September 24,2007. Th report was based on the original complaint
       as set out in the 30- Day Form As indicated previously, the Field daim Representative
       concluded, on the basis of the Homeowners' Engineets report, that there were leaks at the
      basement widows and at the crack in the southwest corner of the basement allowig water
      penetration. The Field daim Representative found that there had been a breach of the water
      penetration warrnty set out in section 14 of Reguation 892, which provides there shall be

      no water penetration through the basement or foundation of the home for two years after
      the date upon which the home is completed for possession. The Report indicates that Tarion
      would deal diectly with the Homeowners with respect to the widows. The Report called
      upon the Buider to repair the crack and remove all interior finishig along the south wall
      and part of the west wall. The Warrty Assessment Report was served upon the Buider
      who was advised that he had to resolve the issue by October 24, 2007. Again, Tarion
      indicated that the inspection was not a chargeable item. The Field daim Representative
      concluded that the items had not been resolved by the Buider by October 24, 2007, and
      thereafter dealt diectly with the Homeowners to resolve the item

23. In hi evidence, the Field daim Representative dealt with concerns raised by the

      Homeowners about alleged leaks and! or condensation problems around the steel I-beam in
      the basement and leaks around the basement widows. Essentially, Tarion determed that
      both issues were as a result of a fractued pipe, which was not warrntable. Tarion settled
      diectly with the Homeowners regarding the widows as a gestue of good wi.

24. The Field daim Representative acknowledged that prior to the Warrnty Assessment Report

      of September 24, 2007, he had received a number of a complaints diectly       and indiectly
      from the Buider regardig lack of cooperation of the Homeowners concerning giving the

      Buider access to the premises to carr out repair. The Field daim Representative referred

      the Buider to Buider Bulletin 42 (revised) which provides that the homeowner must
       provide reasonable access and that the Buider must document attempts to obtain reasonable
       access, which reasonable access was refused.

25. The Field daim Representative testified that he understood the Buider started removing the
       contamiated material from the basement on October 11, 2007, which was withi the 30 day
       period. The Homeowners questioned the qualiications of those removing the contamiated
       materials and then asked that the Buider retain individuals who specialied in removing such
       materiaL. The Field daim Representative was aware that the Buider retained a Mould
       Remediation Company, which began removing the contamiated materials on October 29,
       2007, (outside the 30 period allowed to the Buider to resolve the item) and completed in
       November 2007. The Field daim Representative acknowledged learng from the Buider
       that the Homeowners would not allow access after October 24, 2007, to complete the
       reinstallation of the interior walls of the basement. The Field daim Representative explained
       that, whie Tarion always encourges buiders or homeowners to continue workig together
       even past the date provided for completion of work, the homeowner is under no obligation
       to do so.

26. Under cross-examiation, the Field daim Representative confired that the Homeowners'
       Engineets water testing in September 2007 was carred out beyond the two year water
       penetration warrnty, which would have expired as of June 15, 2007. The Field daim
       Representative explained that the Buider provides a furher one year warrnty for repair.

27. The Homeowners' Engineer also gave evidence on behalf of Tarion. I thi it is sufficient to
       say that the Homeownets Engineer is an extremely well qualiied engineer. On consent, he
       was qualiied to give opinon evidence concerng engineerig of buidig envelopes and
       maonr. The Homeowners' Engineer gave evidence that he attended at the propert on
       September 4, 2007. Among other thigs, he identified and water tested two cracks which
       extended below grade: one near the southwest corner close to a basement widow and a
       second on the south wall near the garage. He understood that the cracks had been previously
       repaired but did not see any above grade repair. The water testing at the crack at the
       southwest corner resulted in leakge almost imediately. There was no leakage of the crack
       by the garage. On an inspection of the basement, the Homeowners' Engineer noted midew
       on the back of tar paper, which was against the foundation wall. He also found wetness on
       the vapour barrer where it backed onto the insulation, and he was able to squeeze moistue
       from the insulation at the bottom of the wall. There were three openigs in the south and
       west wall all of which showed signs of moistue content and midew. In his report of
       September 11, 2007, the Homeowners' Engineer confired that he saw leakage as well as
       moistue saturation of the wall finhigs, which he believed would be lited to the south
       and west walls. He concluded:

              Ou investigation clearly showed that the moistue iniltration is caused by
              the poor installation of the basement widows and the leakig crack near the
              southwest corner of the buidig.

              Although the weather had been dr for several days prior to our inspection,
              the moistue from previous leakage incidents remain trapped behid the
              vapour barrer for extended periods at time which resulted in the formtion
              of midew   and mould on the wood studs and the buidig paper.

       In his report, the Homeowners' Engineer recommended sealig the cracks, replacement of
       widows, and removal and replacement of the finshigs on the south and part of the west
       wall. While testifyig, the Homeowners' Engineer reviewed photographs which confired
       hi findigs.

28. The Homeowners' Engineer confired that he was asked to re-attend on November 2,
       2007, which led to his report of November 5, 2007. By that time the cracks had been
       repaired and most of the materials removed from the basement. He tested not only the crack
       that leakd upon his firt attendance, but also other cracks that had been repaired. No

       leakge resulted. He also observed that the water issue had affected all four wall.

29. Although the Homeowners' Engineer provided considerable detail, I thi it is sufficient to
       say that he noted that concrete requies heat to both cure and dr out. In cold conditions,
       both the curg and drg process wi be slow. He produced an Environment Caada

       report of temperatues for Petawawa, the nearest weather reporting station to Renfrew,
       which showed extremely cold day time and night time conditions from March 10, 2005, (the
       date that the parties agreed the foundation wa poured) for a number of days and well below
       freezing temperatues at night for most of the remainder of the month. He explained that

       whie steps could be taken to ensure that the concrete cured within the norml 28 day
       period, due to the cold temperatues, moistue would be retained in the concrete longer than
       if poured under warmer conditions. He also explained that whie the exterior of the concrete
      wall had been wateiproofed, the moistue could only    escape through the interior side of the
       concrete walls. The Homeowners' Engineer understood that the walls had been enclosed
      withi weeks and that even if enclosed after 45 days, thi would be too fast. He felt it would
      be better to have waited at least into the sumer. He also produced publications from
       Canada Mortgage and Housing Coiporation (CMq which suggest that a buider should
      wait one year before enclosing a basement wall.

30. The Homeowners' Engineer was asked to comment upon the report of TSC Engineerig
      Inc., dated January 21, 2008, filed by the Buider. The Homeowners' Engineer agreed with
      the opinon expressed in the report that the concrete may have cured withi 28 days, but
      indicated that this is not a measure of the moistue content. The concrete contains more
      moisture than is needed to cure and that moistue must be allowed to escape. When asked to
      address the suggestion in the TSC report that an openig in the wall made at the

      Homeowners' request would allow moistue into the wall structue, the Homeowners'
      Engineer expressed the opinon that the openig was too small to explain the moisture
      content which affected almost the entirety of the basement. In fact, he felt that the openig
      might allow some moistue to escape from the wall.

31. Upon cross-examiation, the Homeowners' Engineer acknowledged that the CMC
      publications refer to the problem of heated moist basement air enterig the wall structue
      through openigs in the air barrer. He went on to explain that he did not feel thi was the
      cause in this sitution as it was not a unorm cause. The Homeowners' Engineer stressed
      that a unorm problem must have a unorm cause. He also stressed that the publications
      called for delayig and closing of the foundation walls for up to a year. Overall he felt the
      vapour barrer was fine and that the condensation problem related to the period of
      construction as opposed to the liecycle of a home.

32. With regard to the testing of the cracks, the Homeowners' Engineer confired that a hose
      was pointed diectly at the cracks. A sprayer attchment was not used for the above grade
      water test.

33. An Environmental Engineer was called on behalf of Tarion. The Environmental Engineer
      co-authored a report dated November 23,2007. The Environmental Engineer was qualiied
      to give opinion evidence concerng sample collection for the puioses of mould collection
      and identification. The Buider also acknowledged that it would not dipute the laboratory
      findigs set out in the Environmental Engineer report. Essentially, the Environmental

      Engineets evidence and the report with its enclosed test results indicate that there was
      widespread contamiation, includig mould contamiation in the interior basement walls.
      The Environmental Engineer indicated that the relative humdity levels in the basement
      were somewhat greater than that on the main floor but attributed this to the fact that the
      Homeowners were not using the ventiation system in the latter part of the sumer in order
      to prevent the mould from migrating to the main floor. The Environmental Engineer

      recommended a remediation plan as establihed by the Canadian Construction Association.
      Th was a level three plan designed for situtions of extensive contamiation. The
      Environmental Engineer did not confir in hi evidence nor does the report outlie when

      representatives of the Environmental Engineerig Company were on site, but it appears
      from the test results that it was on or before October 26, 2007. The Buider never took
      serious issue that the basement wall contained signiicant contamiation. There is no need
      to spend furher time on the Environmental Engineets evidence.

34. Finally, one of the Homeowners was called by Tarion. The Homeowner indicated that as

      early   as May 12, 2005, she and her husband had noted condensation on the basement walls.
      They also noted poolig around the interior walls in the basement when they took
      possession on June 15, 2005. The dampness extended approxitely 6 to 8 inches out from

      the walls, but the poolig of water was closer to the walls. The poolig of water was worse
      along the south and west wall, especially followig rain or durg warm weather. Dealig
      with the 30- Day Form the Homeowner stated that when you ra your hand along the
      drall it was soakig wet.

35. Accordig to the Homeowner, there were no openigs in the wall as of July 5,2005, when
      the 30- Day Form was filed. She advised that the Buider provided them with a heater. The
      Homeowners also purhased a dehumdiier which they used 90 percent of the time. The
      water in that area would diappear, but when the dehumdiier was moved it would reappear.
      They    also used central air conditionig durg hot weather. Typically they had the door
      open, but when the musty smell had got so bad you could smell it as soon as you came in
      the front door, they would close the door to the basement. Although the Homeowners had
      extensive photographs, they did not seem to have a pictue showig the fans and

      dehumdiier that they used. When the basement wall was cut in the sumer of 2005, the
            Homeowner stated that she could see and feel moistue on the side of the vapour barrer
            facing the insulation, on the insulation itself and back to the tar paper. The Homeowner
            indicated that there was at least one good flood as a result of the crack at the southwest
            corner. She could not say whether the crack by the garage led to leakig. Essentially, the
           Homeowner explained that the water and dampness in the basement was an ongoing
           problem, which they raised in their various filgs with Tarion.

36. With regard to removal of the materials, the Homeowner acknowledged that this was

           initially started by the Buider. When her husband saw the extent of the mould and noted
           that the Buidets workers were not takig any particulr cautions with regard to the removal,

           they were told to stop by her husband. The Homeowner confired their satisfaction with
           the methods used by the Mould Remediation Company as far as handlg the contamiated

           materiaL. She spent some time reviewig photographs of materials where she felt she had
           observed contamiation. Again, the presence of extensive contamiation was not really

37. Upon cross-examiation, the Homeowner acknowledged that the other Homeowner had
           removed the insulation from around the I-beam, and that their complaints regardig
           moistue damage at that location were never deemed warrnted.

F. EVIDENCE CALED                    BY   THE BUILDER

38. The Buider gave evidence on his own behalf. To the extent his evidence simply confir
           various contract, closing and meeting dates, it wi not be repeated.

39. The Buider testified that the preparation of the basement wa subcontracted out to a
           Concrete Contractor. The footings were poured on March 4, 2005, and the walls on March
            10,2005. Heated concrete was used. The form were left on for a few extra days to add to
           the insulating effect. They also used taips along the top of the wall as well as straw. When
           the ground floor was put on, heaters were installed in the basement.

40. It is clear from the Buidets evidence that the relationship between he and the Homeowners

           deteriorated rather rapidly to the point that by May 16,2005, a lawyr he had retained had
           wrtten to a lawyr representing the Homeowners offerig simply for both parties to walk
       away from the contract. A considerable amount of the Buidets testimony was diected to
       what he considered to be a uneasonable behaviour by the Homeowners with regard to
       denyig access to the home, agreeing to the access home and then cancellg shortly before
       the attendance, failg to be present when representatives of the Buider did attend and to

       allegedly rudely throwig the Buidets representatives off the site. To some extent the
       Buider documented hi concerns to Tarion.

41. The Buider gave hearsay evidence that an Independent Contractor had attended at the
       premises on or about July 8, 2005, and cut a hole in the interior wall. The Independent
       Contractor apparently noticed condensation on the floor and water about five inches out
       from the floor. Apparently, the Independent Contractor advised the Homeowners that thi
       was due to condensation, and that they should ru their dehumdiier, fan and air exchanger.

42. The Buider testified that he was troubled by the treatment afforded by Tarion to the
       Homeowners. He expressed sentiments that Tarion was simply bowig to the Homeowners
       because they were so demanding and dificult. He was also concerned that the Homeowners
       had been provided with money on a number of occasions to address problems and then
       didn't use the money to rectify the problems. Finally, he was particularly concerned by a
       letter from the Homeowners essentially askig for a cash settlement otherwse the
       Homeowners would purue their rights under their warrnties with Tarion.

43. With regard to the cracks and water leaks, the Buider confired that he retained a thid
       part to repair the below grade cracks using a membrane. He also confired that the cracks
       did not leak durg the water testing on September 19, 2006. He relied on Tarion's

       representation in its letter of September 26, 2006, that the water issue was resolved, the
       matter closed, and that the Buider would not be asked to ta any furher action.

44. The Buider explained that he felt that water was allowed into the wall structus as a result
       of the cracked pipe which was found not to be a warrted item. He also felt that the
       Homeowners were applyig a considerable amount of water to their propert, the suggestion
       being that the Homeowners were tryg to provide for water penetration in the basements.

45. The Buider is obviously concerned that a desk reassessment had been made by the Field
       daim Representative in Augut of 2007 without his knowledge. He was also concerned that
       the Homeowners' Engineer was on site and conducting testing without the Buider or hi
       representative being given the opportty to attend.

46. With regard to the Warrnty Assessment Report of September 24, 2007, the Buider

       indicated he did not receive it until on or about October 1, 2007. He arrged for the crack
       to be repaired. He confired the evidence previously referred to regardig his

       representatives attendig but not being allowed to complete the work and that he
       subsequently retained a Mould Remediation Company. He pointed out that the Mould
       Remediation Company began and completed their work after the 30 days, which had been
       allowed to resolve the problems, without complaint by the Homeowners. The Buider paid
       the Mould Remediation Company invoice. He was obviously troubled by the fact that,
       despite repeated effort through November 2007, the Homeowners refused to allow the
       Buidets workers on site to reinstall the interior basement walls. Within the 30 days allowed
       to the Buider to rectify the problems, he arrnged for a thid part to fil the above grade

       cracks at a cost to the Buider of $254.40.

47. With regard to the charges rendered by Tarion, the Buider felt that the $2,360 to remove
       and reinstall an electrical panel and to rewie the receptacle on the exterior basement wall
       submitted by an Electrical Company was excessive in that a charge of half the price would
       be reasonable. He also felt the charge of $4,120 for installg new basement widows was
       excessive and that perhaps $1,300 would be more reasonable. He was also concerned that
       other invoices received from Tarion did not indicate what work the charges related to.

48. On cross-examiation, the Buider acknowledged that it was up to the Buider to determe
       when it would be best to enclose the basement walls. He also acknowledged that he saw
       moistue at the base of the interior wall of the basement when he attended in July of 2007,

       but he stated it did not extend out five inches as claimed by the Homeowners. He
       acknowledged being aware that there was condensation on the interior of the vapour barrer
       but felt th was due to the fact that the Homeowners were not using their air exchanger. He
       stated that he advised the Homeowners to use their fans, widows, air exchanger and
       dehumdiier. The Buider acknowledged that he saw the Homeowners in fact had a
       dehumdiier but never saw it in use. The Buider conceded that the Homeowners had
       complained about water in the basement durg the coure of construction but indicated it
       was on the opposite side of the home from where the leaks were located. He acknowledged
      thi was only the second home he had constructed in witer conditions. He went onto
      explain that he and his contractor had tan considerable steps to ensure that the concrete

      cured in the cold weather. He acknowledged that the work requied under the Warrnty
      Assessment Report of September 24, 2007, was not completed by October 24, 2007, as
      requied. Whe he couldn't find any legislation dealig with mould removal, he was aware of
      industry gudelies. He also acknowledged there were obviously condensation problems

      occurg within the interior basement walls.

49. The Buider called one of his employees. Th employee had been in construction hi entire
      lie and acquired a number of various trade skis. Much of his evidence repeated that which
      has already been reviewed. He did say that in the sprig of 2007 he observed the

      Homeowners extensively waterig new gras seed. It was this Buidets employee who
      dicovered that the pipe exiting the foundation near the I-beam had fractued and water had
      ru inside the walls. He also noted that the air exchanger had been tued off on occasions
      when he was present. On cross-examiation the Buidets employee confired that the
      fractued pipe was located on the north wall and that this would not explain water on the
       south wall or in the southwest corner. He also acknowledges that he was not aware of
       gudelies for the removal of mould.

50. The Buider also called an employee of the Concrete Contractor fir. Essentially, this
       employee went through the steps taken to pour the footings and basement, none of which
      was contested. He did attend the premises in early July 2005 before the interior wall was
       open. He found high humdity levels and sweating on the wall. The employee felt there was
       a problem with condensation and told the Homeowners to keep their air exchanger on. On
       cross-examiation he acknowledged that the poolig he saw on the floor was no more than
       one foot away from the wall and that it affected three walls.

51. A general contractor employee was called to confir that he carred out repair of the cracks
       in July 2006. He attended the premises at the request of the Homeowners prior to carrg
       out the repairs. He acknowledged a musty midew smell in the basement. He noticed
       dampness but not poolig of water. He did see wickig of moistue on the floor in three or
       four areas resulting in staining but no actul water. Th was mostly on the south wall. In
       this employee's opinon the crack by the garage would only ru under the garage and not
       into the basement.
52. The chief buidig official for the Muncipalities of Renfrew County, was called by the

      Buider. He confired the wall in the basement had not been closed prior to his review of
      the framig on Apri    13, 2005. He recall attendig at the home with the Homeowners in
      June 2005 and seeing condensation on the floor inside the foundation but not water. On
      cross-examiation he acknowledged that the Ontario Buidig Code is a mium quality
      requiement and that construction can meet code and stil have workmnship problems. He
      acknowledged that condensation went four to six inches into the room.

53. An employee of a widow and door company was called by the Buider essentially to
      confir an occurence on Februry 6, 2006, when a number of trades attended at the
      premies and were told to leave by the Homeowner. Accordig to this employee, the actions
      of the Homeowner were less than hospitable.

54. Finally, the Buider called an Engineer. Th Engineer is a civil engineer with a PhD in

      structul engineerig. He was qualiied to give opinon evidence on the structue and

      buidig envelope of residential properties includig generally the curg of foundations. He
      was not qualiied to give opinon evidence with regard to the specifics of the water content
      of concrete and the process of evaporation of the water. The Buidets Engineer spoke
      regardig the importance of properly installed vapour and air barrers. He noted that while
      small h()les would not allow an insigniicant amount of water, they can allow in large
      quantities of moist air. The Buidets Engineer referred specifically to the openig in the
      interior wall made by the Homeowners which was approximtely 3 feet by 3 feet and the
      breach of the vapour barrer at the end of the I-beam, again made by the Homeowners. He
      referred to article 8- of the Ontario Buidig Code which essentially points to the
      rik of warm humd air moving into a wall space, being trapped in that location and
      condensing, which could result in signiicant moistue accumulation and mould growt. It
      was hi opinon, as also expressed in hi report of November 19, 2007, that the wide spread
      accumulation of moistue and the development of mould in the basement was due to water
      vapour from inside the house enterig through the holes made in the vapour barrer by the
      Homeowners as opposed to leak through the foundation wall. He criticized the above grade
      water test conducted by the previous engineer in that a sprayer was not used. He reviewed
      the conditions, as he understood them, under which the basement wa poured. Essentially,
      the Buidets Engineer expressed the opinon that sufficient precautions were taken to ensure
      that the concrete curd. He also went onto essentially restate the findigs in his
       supplementary report of January 21,2008, where he indicated that the holes in the vapour
       barrer not only allowed moist air into the wall structue, but also allowed the temperatue
       withi the wall structue to increase to a point where mould could grow. In th report he
       does indicate that it was hi understandig the temperatue at the time of pourg the floor
       was mius five degrees Celsius. Upon cross-examiation the Buidets Engineer confired
       that if there was evidence of moistue on the floor and in the wall before openigs were
       made in the vapour barrer, thi would change his opinon back to either assumg the
       moistue came through a leak in the wall or from humdity in the foundation. There would
       have to be some other explanation than interior air moving into this cavity.


55. Section 14 of Reguation 892 made under the Act provides as follows:

                     Every vendor of a new home warrnts to the owner that there wi be no
                     water penetration through the basement or foundation of a home for two
                     years after the date upon which the home is completed for possession.

56. It was acknowledged by the parties that repair under any warrnty are warrnted for a year

       from the date of the repair.


57. The Warrnty Assessment Report of September 24,2007, refers to the above noted warrnty
      which can be referred to as the two year water penetration warrnty. As possession of the
       premies was taken on
                                       June 15,2005, thi warrty     expired no laterthanJune 14,2007. The
       Warrnty Assessment Report of July 5, 2006, had identified cracks resulting in leaks into the
       basement and found that these items are warrnted under the two year water penetration
      warrty. The invoice from the general contractor providig the crack repair indicates that
      the repair had been completed by July 28, 2006; therefore, the warrnty of these items was
       extended by            one year by the repair and would have expired no later than July 28, 2007. The
       leak found by Tarion's Engineer upon his attendance on September 4,2007, was therefore
       outside the warrnty period.

58. In addition, I have significant concerns regardig the method of testing used by this

       Engineer to identify the leak The Construction Pertormnce Guidelies issued by the
       Ontario New Home Warrnty Program indicate that for above grade testing (which is to
       simulate an average, wid-drven rainall) a sprayer should be used from a ditance of at least
       two metres. The Engineer did not use a sprayer and directed the end of the hose right at the
       crack from a very close ditance. The method used by thi Engineer did not comply with the
       gudelies for below grade tests either in that the hose was diected at the crack whereas it
       should have been laid rug parallel with the wall. As a result, even if the testing had
       occured withi the warrnty period, I would not have held that the results were valid.

59. An argent could be made that the midew was simply a previously undicovered

       consequence of leakg that occured withi the warrty period. I note that this Engineer,
       who I found to be a very credible witness, stated in hi evidence that a unorm mould
       problem means a unorm cause. His opinon was that thi unorm mould problem was not
       the result of isolated leaks in the foundation, but rather as a result of unorm excessive
       moistue content in the foundation wall when they     were enclosed by   the interior   wall.

60. For the most part, I accept this Engineets ultimte conclusion that the moistue problem in

       the wall was caused by enclosing the basement wall before sufficient water evaporated
       from the concrete. The basement was certiny poured durg extremely cold conditions.
       While the Engineer initially understood that the walls had been closed withi a few weeks,
       he indicated that even enclosing the wall withi 45 days would be too soon. He quite rightly
       pointed to the CMC publications which suggest that foundation walls not be enclosed for
       the firt year. This is good practice under norml conditions. It would make even more sense
       when the foundation is poured under the conditions in which the subject foundation was
       poured. To the extent the contract call for a finhed basement on closing, I thin it is up to
       the buider to explain to the homeowner that this is not a good practice and, at the very least,
       should the homeowner insist on a finshed basement upon closing, a buider would be wie
       to confir in wrting his advise to the homeowner and the homeownets instructions back.

       Enclosing of the foundation wall of the subject propert 45 days after the concrete had

       been poured in such cold conditions, may well have amounted a breach of the workmnship
       warrnty under section 13 of the Act, but thi is not addressed in the Warrty Assessment
       Report of September 24,2007, to which thi arbitration relates.

61. That said, I am not convinced that the two openigs made by the Homeowners in the

       vapour barrer, and water leakig into the wall from the split pipe did not contribute to the
       development of the mould problem. If I had found that the item was warrntable, my
       incliation would have been to hold the Buider responsible for the majority of the cost of
       repair but not all to reflect the contribution of these other factors. Th would have raised
       the question of whether I had the jurdiction to do so or if this is a question of the Buider
       being responsible for all or nothig. In light of my rug on the intial jursdiction issue,
       there is no need for me to determe this jursdictional question.

62. As I have found that this is not a warrntable item, there is no need for me to deal with
       whether or not the amounts sought to be recovered by T arion from the Buider are
       reasonable. I wi say that I found that Tarion tried to deal in as reasonable a fashion as
       possible with both the Homeowners and the Buider and should be commended for those

63. Again, as I have found that thi is not a warrtable item, there is no need for me to spend a

       great deal of time with the question of whether or not the Homeowners provided reasonable
       access to the Buider. I wi say that the Homeowners were pertectly withi their rights to
       allow the Mould Remediation Company to complete the removal of the contamiated
       materials, as they had confidence in that fir, whie at the same time denyig access to the
       Buider after the 30 day period for resolution of the problems had expired in that the
       Homeowners had clearly lost confidence in the Buider. I wi not comment as to whether
       that loss of confidence was justifiable, but it is clear the relationshi had reached that point.

64. In sumry and puruant to Rule 7.1 of the Buider Aritration Foru I find that the
       diputed items in the Warrnty Assessment Report of September 24,2007 are not a breach
       of warrnty. Tarion shall reimbure the Buider for the costs he incured in repairg the
       above-grade cracks and in carrg out some of the additional remedial work as diected
       under the Warrnty Assessment Report, being the amount of $7,421.60. I order that Tarion
       pay the arbitratots costs as reflected in the account accompanyig this decision which has
       been prepared in accordance with Rule 8 and the Tarif. The Buidets deposit is to be
       refunded. Finally, as requied by Rule 9.2 of the Buider Aritration Foru I declare that I

       have no conflict of interest with any part or witness and this award is final and bindig
       upon the parties.
Dated: .Apri   18, 2008
                          .~k-. il
                          Stephen J. Kell, Arbitrator

                          KELLY SANTINI LL
                          Barsters and Solicitors
                          23rd Floor, 66 S1'lter St.
                          Ottawa, ON ~K1P SH1
                          Tel.: (613) 238'-6321
                          Fax: (613) 233-4553