Case Name:

Dinsmore v. Southwood Lakes Holdings Ltd.

Between

James Dinsmore and Barbara Dinsmore (Plaintiffs), and

Southwood Lakes Holdings Ltd., Masterpiece Homes (1997)

Ltd., The Corporation of the City of Windsor and the

Ontario New Home Warranty Program (Defendants)

[2006] O.J. No. 5589

61 C.L.R. (3d) 113

2006 CarswellOnt 8628

Docket: 02-GD-53338

 Ontario Superior Court of Justice

J.H. Brockenshire J.

Heard: May 12, 13, 15-19, 23-26 and 29-31, 2006.

 Judgment: July 12, 2006.

(163 paras.)

Counsel:

Mr. Raymond G. Colautti and Mr. Owen Thomas for Plaintiffs.

Mr. Gino Morga, Q.C., for Defendant, Southwood Lakes Holdings Ltd., Masterpiece Homes (1997) Ltd.

No one for Defendant, The Corporation of the City of Windsor.

Mr. Montgomery Shillington for Defendant, Ontario New Home Warranty Program.

1 J.H. BROCKENSHIRE J.:-- This case was characterized by Mr. Morga, in his opening statement, as "a sad situation". I find that to be an accurate statement.

2     The case is about dampness in the basement of a new townhouse, purchased by the plaintiffs in 1997 for some $177,000.00. Eight and a half years later, after the expenditure of small fortunes on all sides for expert opinions, and presumably for legal fees, the issues of what exactly causes the problem, what to do about it, and what if anything the defendants should pay for it remained unresolved. Fourteen days were spent in court, at further great expense for experts and legal counsel. The distance the parties remained apart is indicated by the closing suggestions of plaintiff's counsel that damages of over $200,000.00 should be awarded and the suggestion of Mr. Morga, counsel for the builder that less than 1/10th of that amount would be appropriate.

3     This case calls for the application of well known principles of law, and perhaps less well known sections of the Ontario New Home Warranty Program Statute and Regulations, and the Ontario Building Code, to the particular facts of this case.

4     The plaintiffs had named the City of Windsor as a defendant in the action, which was commenced February 27th, 2002. The action was discontinued as against the City of Windsor on January 31st, 2005.

5     The defendant the Ontario New Home Warranty Program (hereinafter ONHWP) stated that it had carried out all of its duties under its statute and regulations, and sought a dismissal of the claim against it, with costs. Alternatively, it cross-claimed against the lead defendants Southwood Lakes Holding Ltd. (hereinafter Southwood), and Masterpiece Homes (1997) Ltd. (hereinafter Masterpiece), sometimes collectively referred to herein as "the builders", claiming indemnification. ONHWP further commenced a third party claim against Mady Family Holdings Ltd. under a guarantee by it. That third party claim was not defended.

Background

6     James Dinsmore was the president for many years of Dinsmore Construction, a general construction company in the Windsor area started by his father, that did all kinds of heavy construction, but also did a subdivision in the area of the City of Chatham. Mr. Dinsmore closed down that company in 1972 but thereafter, for some time worked for a steel corporation involved in renovating old factory space and installing heavy machinery, where he served as the adviser on heavy concrete pads etc., needed for the installation of such machinery. His wife advised he is now 80 years old, in fragile health, very weak, forgetful and confused. He has been hospitalized three times in the past year and was unable to attend court. His wife of some 57 years, Barbara, a bright and charming woman, testified extensively and attended throughout the trial. While she was involved, unfortunately the dealings with the builders re the problems on this house had been handled by her husband.

7     Southwood Lakes was and is a substantial residential development in the Windsor area including on my recall, a hundred or so single family homes and some two hundred townhouses, developed in phases along winding streets and featuring small lakes and significant park like landscaping. The little lakes had a very utilitarian purpose - they served as storm water retention ponds to catch and hold rainwater runoff until the adjoining municipal trunk storm water drains could handle the inflow.

8     Southwood Lakes was designed, developed, and eventually "built out" by the Mady Group - a number of separate companies created and controlled by Charles Mady and his immediate family, including his daughter Carrie.

9     Carrie Mady explained that Southwood was the builder of the townhouses in the sub-division while Masterpiece was the builder of the single-family homes.

10     The land on which the Dinsmore townhouse was built had been registered in the name of Southwood and Southwood was shown as the builder. It was described in Mady Group documents as "a bare trustee" Masterpiece, which was described by Carrie Mady as her company, was building the single-family homes not only in this sub-division, but in another across the street, and still others elsewhere in the City of Windsor area. She indicated that through her company she had built over 500 single-family homes. For all practical purposes, it appeared that Masterpiece was also doing the townhouse construction, on behalf of, or in the name of, Southwood. She through Masterpiece and Southwood was responsible for construction of all of the residences, single family or townhouse in the Southwood Lakes Development.

11     The homes and townhouses were "production" construction - that is, they were not custom built homes. A number of different "models" were offered, through a sales force, with buyers having a limited number of options and alterations or improvements available. The residences went up on a production basis, with crews of excavators, cement finishers, framers, etc., moving from site to site in the phase of the sub-division under construction.

12     The Dinsmores, who were living in an apartment in Amherstburg after many years in South Windsor, were attracted to the Southwood Lakes Development and chose a site and a building model for their townhouse. This was to be one-half of a duplex type structure, with a townhouse at each end consisting of a basement, first floor and second floor. The purchase was of a lot and of a building to be constructed thereon. The purchase documents made it clear that their building, a Cheshire Model, would have an unfinished basement, except for insulation on the basement walls and roughed in plumbing for a three-piece bathroom. On closing the Dinsmores received among other things a formal warranty from Southwood. Carrie Mady made it clear in her testimony, that any and all additions to the townhouse including partitions etc., to finish the basement would not be covered by the builder's warranty unless her company did the construction.

Credibility and Liability

13     Before getting into the issues in this litigation, I wish to make it clear that Barbara Dinsmore and Carrie Mady were the principle witnesses on each side in this dispute. Both testified at length and were cross-examined at length. I have no reason to doubt or question the honesty, sincerity, and credibility of either. I detected no indication of any attempt to mislead the court or to withhold information and I accept the evidence of both as being truthful to the best of their knowledge and ability.

14     Mrs. Dinsmore, as above mentioned, was attempting to advise the court on behalf of both herself and her husband, who could not testify, which required her to give second-hand evidence as to the concerns that drove his decisions during this long outstanding dispute.

15     Ms. Mady was at the time actively engaged in trying to resolve this problem, but she was also engaged in overseeing the construction of hundreds of residences in this and other developments.

16     Further, as she advised, she could not simply try to satisfy Mr. Dinsmore, although that was her hope, she also had to satisfy the City, in view of the clear breach by the builder of the Building Code, and also satisfy ONHWP, which would be essential for the future of the Mady Group as a new home developer. She was hampered in her efforts by what she charitably describes as a personality conflict between herself and Mr. Dinsmore. She wisely withdrew from the possibility of actual conflict, but this left her often with only second-hand information of developments re the Dinsmore problem.

17     Both of these witnesses spoke of some difficulties in recall due to the lengthy passage of time and the many intervening matters in their lives, which raises some question of the complete reliability of their testimony; however, as above stated, I have no doubt whatever as to the honesty of both of these witnesses, or that they were exercising anything less than their best efforts to put the truth, as they perceived it, before the court.

18     I heard from a number of other witnesses during this trial. I have no reason to question the honesty and credibility of any of them. A number of the witnesses were professionals, who were expressing their professional opinions, and as is to be expected, they disagreed one with the other as to the correctness of other opinions presented. This leaves the court with the problem of trying to determine who is right and who is wrong or whether in fact different views could co-exist, but I have no doubt that the opinions put forth were those of persons of integrity, expressing honestly to the court the opinions which they had reached and the basis for such opinions.

The Problem

19     The problem is defined in the Statement of Claim as the basement floor being substandard, meaning poor workmanship, and failure to meet the requirements of the Ontario Building Code or the building permit specifications, with the result that the exposed floor has discoloured, water seeps through the floor, moisture collects under objects left on the floor and cracking is evident. As a result the plaintiffs have not been able to use the basement as a living and bedroom area as they planned.

20     Mr. Dinsmore, on his examination for discovery of May 5, 2003, most of which was read in by the defence, advised he and his wife took possession of the townhouse on October 16th, 1997 and moved in on October 23rd. On October 16th he did a walk through with the builder's representative and as I understand his discovery evidence, there was a lot of mud from workmen's boots all over the basement floor, but between the clumps of mud he could see the concrete and noticed right away that the floor, instead of being light in color as properly finished concrete in his opinion would be, was a very dark shade of grey. From his 45 to 50 years in the construction business, he saw that as indicating water.

21     The Dinsmores had the mud cleaned off the basement floor within the first two weeks of their having possession and he then observed the entire floor was dark grey, indicating water. After the heat was on in the house the floor appeared to dry out somewhat, in that instead of being uniformly dark grey, it became blotchy, showing to him, that there was still some water in it, and it stayed that way. He said he was told by Steve Labelle, the builder's representative who did the inspection with him, that this would be temporary and related to the backfilling around the premises not being completed. In fact, according to Mrs. Dinsmore, the backfilling around their house was not completed until June of 1998. That, plus the use of two dehumidifiers in the basement, plus the furnace heating the basement area all winter, did not make the moisture in the floor slab go away. Neither did a French drain installed under the lawn between their townhouse and an enjoining townhouse, where water had been pooling.

22     On July 28, 1998 the Dinsmores sent a letter to ONHWP notifying it of their continuing complaints of moisture in their basement, with a copy to Masterpiece Homes. Two days later Mr. Labelle was over and drilled a hole in the basement slab. He found the slab was only 2 1/2 inches thick at that point. A few days later Masterpiece drilled three more holes, which confirmed that the slab was less than 3 inches thick.

23     The defence position of Southwood and Masterpiece is that from the moment they found the slab did not meet the building code requirement of a minimum 3-inch thickness, their approach has been to correct the situation in a reasonable way.

24     This position is set forth in the Statement of Defence of Southwood and Masterpiece, which admits that the slab is thinner than it should have been, and they have an obligation to resolve the problem. It adds that they would have long ago, but for the plaintiffs' unwillingness to agree to any remedy put forth and being unwilling or indecisive in achieving a solution to the problem. Further, they say the plaintiffs have taken no steps whatsoever to mitigate their damages and have compounded the damages by finishing sections of the basement, knowing floor problems existed.

Contributing factors to the obvious difficulties with attempts at resolution.

25     Over and above the problem being litigated, the Dinsmores had other problems which perhaps "set the tone" for this protracted litigation.

26     First, when Mr. Dinsmore was in the basement for the first time, he noticed a dark liquid seeping under the party wall between his townhouse and the neighbours'. It smelt like sewage. He complained, and the builders promptly remedied the situation in full, but it stuck in his mind.

27     Second, when the Dinsmores moved in they found the basement covered with mud from the builder's workmen. The builder offered to clean it up but they could not wait and hired someone themselves to do it.

28     Third, in February of 1998 there were heavy rains and the sump pump was running constantly. A flexible connector on the pump exhaust line let go, resulting in the pump exhausting water all over the basement floor. Mr. Labelle responded immediately, had the pipe fixed, the floor mopped up, and to aid drainage (in his view) punched holes in the bottom of the plastic liner for the sump.

29     The above are the only two incidents of there being water on the floor from the time of the Dinsmores' purchase, except for condensed water vapour induced by placing something impermeable such as a plastic container or a sheet of plastic over the concrete.

30     Fourth, in addition to the moisture complaint, a small portion of the floor slab had been either very poorly finished or not installed at all around a sewer clean out. The builder fixed this by cutting out the offending area and more around it and installing properly finished new cement, which incidentally proved to be thicker than required. However, whoever cut the cement failed to control the dust, by running water on the cut or otherwise, so that fine cement dust filled the home into which the Dinsmores had just moved. The builder apologized and Carrie Mady arranged for a restoration company to come in and clean the entire house and further arranged for the cleaning of all of the Dinsmores' clothes but the memories of the mess lingered on until today.

31     Further, Southwood and Masterpiece had a systemized approach to dealing with deficiency complaints. Other than real emergencies, they encouraged new homebuyers to provide, in addition to notes of their walk-through before purchase, deficiency lists at 90 days, 6 months and one year. The companies had a person, Danielle Breault, whose job it was to schedule all of the follow-up work needed in a development of this kind and make sure the buyers were satisfied and happy.

32     It seems that Mr. Dinsmore did not take to this organized approach. This is indicated by his letter of July 28, 1998 to ONHWP where he notes that by then he had filed 8 deficiency reports with the builder about his damp basement, and the evidence of Ms. Breault at trial of Mr. Dinsmore being quite aggressive in his demands, once specifically saying that if his specific choice of tile was not to be installed he would sue. Carrie Mady recalled Danielle Breault asking her to get involved in dealing with Mr. Dinsmore because she was having problems with him and as above noted. Ms. Madly decided later to avoid direct contact with Mr. Dinsmore, because of personality conflicts.

Attempts to resolve the problem

33     As soon as Carrie Mady found that floor slab did not meet the minimum 3" thickness requirement of the Ontario Building Code, she offered to have the slab removed and another of proper thickness installed.

34     The Dinsmores promptly rejected that, based in part, on Mrs. Dinsmore's evidence, on the previous experience of the mess caused by removing a small part of the basement slab. I do not know whether the oral discussions concerning that offer got into the rather nasty issue of responsibilities for the partitions and the complete bathroom the Dinsmores had installed in the basement after they moved in. Obviously, from the point of view of the contract, the responsibility for all of that would fall to the Dinsmores.

35     At Mr. Dinsmore's suggestion, Carrie Mady got C.T. Soils to investigate the problem and suggest a remedy. C.T. Soils suggested sealing the basement floor and perhaps applying a topping over this. Mr. Dinsmore rejected this and several variations on this theme, based on information he obtained that the various sealants referred to would not work or were not available in Canada. He then put forth a proposal that the entire basement slab be covered with some type of ceramic tile of his choosing, at a price he had obtained from a contractor he would use, with Masterpiece to, on my understanding, pick up the tab if this held up during a test period. Carrie Mady countered with an improved offer based on the seal and coat approach, which the City of Windsor was prepared to accept as satisfying the Building Code breach, and this even reached the point of a memorandum of understanding being prepared and sent out to the parties by Mr. Link, the then Building Commissioner, after a meeting he initiated. The Dinsmores did not respond. This was in May of 2001, five years before the trial.

36     At trial, the Dinsmore position was the floor slab had to be removed, water under the slab had to be dealt with, and a new slab had to be installed, with all of the improvements the Dinsmores made having to be removed and then replaced, all using the services of a custom contractor. The evidence of Masterpiece at trial was that using Tilbury Concrete, a company that had supplied a great deal of cement for basements to the Mady Group, and a work force that it would assemble, the slab itself could be removed and replaced at a cost much less than what the Dinsmores were putting forth.

37     However, during the five years leading up to the trial, in addition to all of the steps in the litigation process being duly carried out, a number of further experts looked at the problem.

The Experts

38     Before the litigation started, the Dinsmores consulted Mr. Boscariol, an engineer, and Southwood, at Mr. Dinsmore's suggestion, brought in C.T. Soils. Once the litigation got under way, the lawyers for all three parties retained a series of other experts. None of them were retained to solve the problem. They were retained to review other reports, attend at the property, do some tests, and provide opinions.

39     As the process of examinations and resulting deductions and conclusions were explained by one expert after another it struck me that the experts, because of the limitations in their retainers, were operating much like brain surgeons, who have to diagnose a serious problem within a limited time by examinations through a tiny hole in the skull, and from second-hand information.

40     What the experts were all finding was that the thickness of the floor slab did not meet the minimum 3 inches under the Ontario Building Code, that there was water under the slab and that there was moisture coming through the slab which could be demonstrated by putting a sheet of plastic over the concrete, resulting in a wet patch. They apparently all had information from Mr. Dinsmore, directly or indirectly from the reports of others, that the sump pump was operating too frequently.

41     By way of background, the position of the City of Windsor Building Department, as given before me by Ian Day and Barry Suszek was that the sole violation under the Building Code was that the floor slab was not of the minimum 3 inches thickness required. By the time they were involved, the building plans and specifications for this townhouse had been destroyed under the City By-law for disposing of redundant paper, and they had no information to support the allegation that there were special specifications for the basement floor in this townhouse, calling for a 4 inch thick slab with a 6 millimetre thick poly water vapour barrier underneath it.

42     The City had checked the foundation drains with a camera and concluded they were clear and functioning properly and conducted dye tests which established that effluent from the sump pump did go out to a rear yard catch basin in the storm sewage system. Mr. Day recognized that there was water underneath the basement slab, the depth of which could be measured through a series of standpipes installed by various experts through the basement floor. This did not concern him. His observations, briefly, were that homeowners may not realize it, but it is not uncommon to have freestanding water under a basement floor slab, and in this townhouse there is no indication that such water had ever reached up to the slab itself, which simply indicated that the drainage system around the footings was working, as it should.

43     From the point of view of the Building Code, he explained, the cement slab is not a structural feature of the home. The home rests on the footings, and so does the basement slab, the purpose of which is simply to make the basement area usable.

44     Mr. Suszek, who had carried out the original inspections when the homes and townhouses were built in the subdivision, told us that when the excavations were dug, the point was to provide a level surface for the footings. When the footings were poured the height of the footings would be checked by a surveyor to make sure they were level so that the house would be level. The bottom of the excavation inside of the footings would generally be level. He could not say that it would ever be crowned and did say that if instead it was dished, so that it was lower in the middle than at the sides, all of this would be below the footings, so that if such a dished excavation caught and held water, the water would be below the footing level and in his view, not a problem. Mr. Suszek also said that a basement slab is not a structural component of the home. It simply provides a surface in the basement area and if finished, the basement area is treated as habitable.

45     He provided the information that to his knowledge, no one else in the subdivision had a complaint like the Dinsmores, and also the information that the Building Department looks to the wording of the various sections in the Ontario Building Code unless something different has been specified by an engineer or architect.

Mr. Boscariol

46     Mr. Aldo Boscariol of A.A. Boscariol & Associates Consulting Engineers was the first expert on the scene. His is a well-known and long-standing Windsor civil and structural engineering firm. The only question raised as to his qualifications was that he has been involved throughout his career, principally with very substantial apartments, industrial, commercial and institutional buildings, and municipal services. His response was that while he had only been involved directly with half a dozen single-family homes, the engineering principles were the same.

47     He had known Mr. Dinsmore both from Dinsmore Construction and Mr. Dinsmore's later work for a steel company. He was first brought on the scene by Mr. Dinsmore in May of 1998 and continued to be involved both in reviewing reports of other experts and doing further investigations of his own, and in the dealings with Southwood and Masterpiece, the City of Windsor, and the warranty program. He prepared a substantial report with many appendices and exhibits, dated November 2001.

48     The essence of Mr. Boscariol's conclusions was that the drainage system around the house footings functions normally to get rid of rain water but in addition to this there is other water under the basement slab that is being replenished when it is pumped out. He bases this on Mr. Dinsmore's information to him that the sump pump cycles every 1 to 2 hours during relatively dry periods of weather, and his own observation that when he manually operated the sump pump the water then in the sump immediately dropped to 21 inches below the top of the slab. The foundation drainage pipes into the sump were dry and the sump was receiving water through the holes punched in its bottom by Mr. Labelle. The water level rose a total of 8 inches to 13 inches below the top of the slab in approximately 50 minutes. He concluded that dampness on the surface of the slab was coming from water vapour arising from the excess water under the slab and passing through it, and that the source of the excess water would be exfiltration (a four syllable word for leaks) in the storm sewage system.

49     Mr. Boscariol explained on the stand, much better than in his report, that storm sewers, unlike sanitary sewers and water mains do not have joints that are scaled lightly and some leakage is permissible. All of the municipal services are laid in trenches, on beds of crushed stone, and where they run parallel within the road allowance, or when individual collection lines cross the trunk lines, and each other when going to the lot lines, these trenches can intersect so that water building up in the trunk storm water sewer line can run down into the other service trenches and find its way back under the house. He prepared an elaborate diagram (Figure 5) illustrating that in this subdivision, Wolfe Lake, in the vicinity of the Dinsmore house, was the recipient of the storm water from the area and that the trunk storm sewer line, by design, was continuously flooded with water to the lake level, in the manholes along the road. [Editor's note: Figure 5 was not included in the copy received from the Court and therefore is not included in the judgment.] The individual storm sewer lines going to the road would be above that level, but below that level were the sanitary sewer line and water line, the trenches of which could be receiving leakage from the storm system.

50     Mr. Boscariol's recommendation, based on his knowledge to the date of his report that any coating system to seal the basement would not be successful, was to tear out the existing basement slab, replace it with one of the proper thickness with a vapour barrier underneath it, and put clay plugs in all of the service lines to prevent exfiltration water from flowing into the granular fill below the basement slab.

C.T. Soil

51     Mr. Tom O'Dwyer of C.T. Soil & Materials Engineering Inc. was the person asked to examine the property by Masterpiece at the request of Mr. Dinsmore. Mr. O'Dwyer is a professional engineer. He and the company he heads does geotechnical investigations, testing of concrete, soil compactions and structural testing and environmental assessments. He and his firm have long experience in these areas in and around Windsor.

52     He explained that a good deal of the City of Windsor and indeed the County of Essex, had clay soil which has a low permeability for water. He explained that concrete over water trapped by impermeable clay could transmit moisture through it in two ways. The first is by the water being in actual contact with one side of the concrete, directly or through capillary action. The other way would be water vapour on the underside of the concrete passing through the somewhat porous concrete to the upper surface. In the Dinsmore basement, the bore holes he made showed the water below was not getting up to the bottom of the slab and that the slab was resting on clear stone, which is an aggregate of uniformly sized stones, which inhibits capillary action so that the water would not be wicked up to the underside of the slab.

53     He explained that clear stone is used under basement slabs specifically because it inhibits capillary action and promotes the flow of water under the slab to the weeping tiles around the footings. Another granular type was mentioned - Granular A - and Mr. O'Dwyer explained that was mix of various sizes of aggregates down to very fine material, that had the virtue of compacting together to provide a firm solid base for something like roadwork, but had the disadvantage, because of the fine material in it, of acting like a wick to carry water by capillary action up to the bottom of any slab resting on it.

54     Mr. O'Dwyer concluded there is no evidence of direct or indirect contact of the bottom of the slab with liquid water, and concluded the problem in this basement was related solely to the transference of water vapour. The concrete slab would act like a semi-permeable membrane, and water vapour could pass through it, moving from the area below where the humidity would be 100% to the space above where it would be below that. The general rule would be that the thicker the cement, the more impermeable it would become.

55     If at less than 3 inches, this floor was too permeable (he having found no problem with the strength of the concrete or its expected durability in this basement in future), the solution would be to coat it with one of the newer patented water vapour treatments. He explained that there had been obvious problems with old coatings which put a thin film, like paint, on the surface where it would tend to bubble or wear off, but the newer compounds, when correctly applied, would grow crystals in the microscopic pores in the cement, effectively scaling the pores below the surface of the slab.

56     In his view it would not be necessary to take down all of the partitions installed in the basement, if sealant was applied. There should have been polyvinyl put down between the basement floor and any wood touching it, or treated wood should have been used, but even if that had not been done, as a practical matter, he could not see the increased water vapour under the sills causing any substantial damage in the immediate foreseeable future.

N.K. Becker

57     Dr. Becker is the President of the Becker Engineering Group Companies, that carry out the professional practice of consulting engineering, investigative engineering and applied research in Canada and the United States. He is a civil engineer and consulting engineer and holds a doctorate in civil engineering. He has been involved in major projects around the world and has been frequently retained re construction problems, failures and accidents. He has testified many times.

58     Dr. Becker prepared a series of reports, commenting on the findings of other experts. Basically, Dr. Becker agreed with the report and the conclusions of Mr. Boscariol and disagreed with the findings of other experts who suggested remedies different from removing and replacing the existing slab.

59     In his testimony before the court he amplified on the problems of having persistent water under the basement slab. He pointed out that cement contains salts, which are soluble, and which can be carried to the surface by migrating moisture or water vapour, creating efflorescent on the basement floor surface which not only would be unsightly but would react with any proposed coating treatment on the cement. He further spoke of possible problems with mold and fungi. In his view the granular layer under the basement slab is there to permit occasional rainwater to run off to the drainage tiles around the footings. If water were to infiltrate into that area on a regular basis it would carry soil and clay into the spaces between the aggregate, resulting eventually in a wicking action to the underside of the slab. Further, if extraneous water, other than the anticipated rain water which by design, would be carried away by the tiles around the footings, is getting under the slab, there is a risk that at some point the inflow could exceed, through pump failure, hydro failure etc., the ability of the system to remove it, which could in turn result in the water level rising to contact the bottom of the slab and exert hydrostatic pressure on it.

60     In his view, even if the extraneous source of water was identified and plugged off, you would still have a problem from the ponded, or "perched" water under the slab, creating water vapour. He was concerned with any suggestion that did not deal with the plates under the basement partitions because he felt even if plastic was under those plates, there would be joins in the plastic which would allow water vapour into the wood of the plates creating a risk of rot or mold.

61     Dr. Becker confirmed that a vapour barrier, such as a six-millimeter poly, is not required under a basement slab, but added that if the basement is intended to be habitable, such a vapour barrier is commonly installed.

62     Dr. Becker noted the reports of existing cracks in the basement slab and advised that concrete continues to shrink throughout its lifetime, so that cracks could tend to enlarge, so that even if an impervious durable coating could be found for the floor, that coating would fail along an expanding crack.

AMEC

63     AMEC Earth & Environmental Limited is a geotechnical-consulting firm in Windsor headed by Dr. Dimitriu. Dr. Dimitriu studied and taught at the Technical University for Civil Engineering in Bucharest, Romania from 1970 to 1991, receiving a doctorate in geotechnical engineering in 1984, and also worked part-time with various design and research firms in Romania on many huge and diverse projects. He came to Canada in 1991 to join AMEC where he has done geotechnical work in Southwestern Ontario. He was retained by counsel for the Dinsmores and reviewed the previous reports, inspected the property, spoke to the owner, and later returned and opened a test pit in the basement. He provided a report dated July 11, 2005. In his testimony he reviewed that report and provided further comments.

64     Dr. Dimitriu explained, in more detail than others before him, that the soil in the area of the Dinsmore home is a brown and silty clay down 3 or 4 metres, which is partially saturated, and below it is a grey silty clay, which is completely saturated. Water moves through this clay very slowly if at all. He confirmed the soil composition by actual observation in the test pit created in the basement at the Dinsmore residence.

65     Dr. Dimitriu's observation was that the drainage system under this residence, designed to take away rain water and snow melt, should guide that water to the foundation drains, and the sump pump should quickly exhaust it, leaving no bulk water under the slab. Here, observations at the standpipes always showed some bulk water under the basement slab. He therefore concluded that there was something more than simple rainwater getting under the slab. He suspected the source was the network of utility trenches that could pick up additional rainwater from an extensive area as well as leakage from the storm sewer system.

66     He found support for this conclusion in his test pit of 12 by 18 inches cut in the floor slab near the outside wall, over the point where the sanitary sewer line running under the basement went under the footings and out to the municipal sewer line under the street. He found the concrete at that point was 5 inches thick (this was the area the Dinsmores found to be rough or unfinished when they took possession, and in which Southwood cut out old cement and put in new). Below this was 9 inches of crushed clear gravel and then wet brown clay. Free ground water was present at 9 3/4 inches below the top of the slab. A shop vac was used to suck out the water in this pit and the observation was that the pit filled up again in less than a minute, with the water flow being observed to be from the direction of the street.

67     The conclusion by Dr. Dimitriu was that the new water had come down the utility trench around the sanitary sewage pipe. In cross-examination, Dr. Dimitriu did not deny that the sewage pipe not only went under the footings, it also of necessity went under the Big O that constituted the drainage system inside and outside of the footings, and was perforated, so there could be flows from those drains into the pit, and also that because the pit was a low spot in the excavated area within the footings, free water within that area would run into the pit. However, Dr. Dimitriu maintained that he could see the sheen of the moving water and the movement was coming from the direction of the street. Dr. Dimitriu installed a further standpipe in the area and then re-cemented the opening for the pit.

68     Dr. Dimitriu agreed with Mr. Boscariol that the ground water supplied to this residence is greater than would be normally anticipated, and agreed the most logical explanation for the excess is water from the municipal utility trenches. He agreed that cut-off collars or plugs should be installed in the utility trenches serving the building and expressed concern that the perforations in the bottom of the sump, while apparently working well for the last several years, could clog up, and if there is actual erosion being caused by the flow of water to the sump that could undermine the stab. Other than those recommendations, he had no suggestions on what if any repairs to carry out in the Dinsmore residence.

Construction Control Inc.

69     Construction Control Inc. is a firm of consulting engineers, technologists and technicians, some 50 in all, from Woodbridge, Ontario and apparently serving primarily the greater Toronto area. This firm was retained by ONHWP, prepared a report of August 2004 of its own investigations, and subsequent reports of their comments on the reports of others. Two of their professionals testified - Tony Alexander, who founded the company and who has particular expertise in construction and materials, and Vic Nersesian who has special expertise in earth sciences.

70     Mr. Alexander obtained his Bachelor and Masters Degrees in Birmingham, England, worked with contractors and engineering firms involved in substantial construction work, served for years as an engineer with the Portland Cement Association in Toronto, and founded his present firm in 1972. He deferred to Mr. Nersesian, who studied hydro technical engineering in Armenia and received his Civil Engineering Degree from the University of Toronto in 1983, on geotechnical matters.

71     The firm was retained to review other reports, inspect the floor slab and the exterior grounds surrounding the house, prepare a report as to their opinion of the causes of the problem and the type and extent of the remedial work "required to bring the floor slab into a condition such that it performs in its service environment in a manner equivalent to that intended by the Ontario Building Code".

72     Mr. Alexander, in his firm's report and on the stand reviewed the Building Code requirements as they stood when this building was constructed. He pointed out that under the Ontario Building Code no waterproofing or damp proofing was required under the basement slab, as it does not provide structural support to the building. The code required not less than 4 inches of a granular material and it appeared that 8 inches more or less of clear stone was under this slab. However, the code was clear that the slab should be no less than 3 inches thick. This one clearly was not. However, the slab was much stronger than required, so much so that in Mr. Alexander's opinion, the slab had the practical equivalent of a 3-inch thick slab of the compressive strength required under the code. This opinion was bolstered, in his view, by the facts that the slab had now been there for 7 years and displays only minimal cracking, which would be due to shrinkage.

73     He noted that the Dinsmores' principal complaint was of moisture in the basement, demonstrated by moisture collecting under sheets of plastic or articles placed on the floor, and a dark discolouration in the slab itself. Mr. Alexander counters those observations by pointing out that both vinyl tile and ceramic tile have been on portions of the cement slab for years, with no evidence of deterioration. In his view, if there was really excessive moisture, the vinyl tile would delaminate and probably the ceramic would also lift or come loose. Close examination showed the ceramic tile to appear perfect. There was one area of imperfection in the vinyl tile, but marks on it suggest this was due to impact rather than separation from the cement due to moisture.

74     Mr. Alexander examined the dark spots on the floor and concluded that the most likely cause of this was not staining from moisture, but over trowelling with steel trowels when the floor was finished. He explained that when cement is trowelled too much with a steel trowel, the result is what cement finishers call "burning" the cement. However, he added that the darkness could also come from moisture in the concrete.

75     Mr. Alexander observed two dehumidifiers in the basement, and had heard or read of Mr. Dinsmore's regular use of the dehumidifiers. He observed that dehumidifiers would actually increase the volume of water vapour passing through the cement slab, because reducing the humidity above the slab would increase the differential between that humidity level and the 100% level below it, thus expediting the passage of water vapour through the slab.

76     Mr. Alexander supported the concept of applying a silicate type coating to the exposed cement in the basement that would seal the pores in the concrete, and following it with a topping to increase the thickness of the slab. In his opinion this would handle the concern of excess water vapour in the basement. He had heard of the previous concerns, including those of Mr. Boscariol about American products and the lack of service or backup for them in Canada, but provided the names and specifications of two similar sealing products generally available in Canada.

77     Mr. Alexander was prepared to provide a written opinion letter, under his seal, that the existing slab, especially if sealed and then thickened by a topping in the places where it was exposed, would be the equivalent of the 3 inch slab required under the Ontario Building Code. That kind of certification, in his view, would be sufficient to clear up any issue on non-compliance with the code.

78     Mr. Alexander noted that none of the observations made by any of the experts or by the Dinsmores had shown the water level under the stab to have risen to where it actually touched the slab. That included April 20th to April 21st, of 2000, when 95.8 millimeters of rain fell in 48 hours. The definition of the "Once in a hundred years" storm was 100 millimeters, or 4 inches of rain in 48 hours. The sump pump and the drainage system under the house had handled that downpour, and he felt it unreasonable to anticipate that anything worse would occur in the foreseeable future, or that there was any real danger of the water level under the slab rising to the point of actually applying pressure to it. He recognized the point raised by Dr. Becker that hydro can fail during such a storm, and observed that the Dinsmores had provided for a battery-powered backup in case of that eventuality.

79     In cross-examination, he confirmed that either BAGRAT or Tegraproof, the two silicate type water proofing coatings for cement for which he had supplied the technical details, they being available in Canada, could pose health hazards during application, and require sand blasting or shot blasting to prepare the surface, and have to be applied professionally. However he added that once the liquids have been applied and have dried, they no longer are hazardous and that there are now machines available to do sandblasting or shot blasting in which all of the resulting dust, dirt and used materials are sucked up immediately from the area being worked on.

80     Mr. Nersesian made a relatively brief visit to the Dinsmore home together with Mr. Alexander. However, in his time there, he observed that there was no indication of dampness or mold in the drywall on the partitions in the basement, he checked the water levels in the standpipes put through the basement floor by others and confirmed it was well below the bottom of the slab, and checked the operation of the sump pump. He found one cycle of the sump pump would lower the water in the sump by about 4 inches, which he worked out to something like 19 litres. As he put it, that would not do much towards removing the standing water under the basement slab.

81     He examined the exterior of the house, and visually checked the levels shown for the ground around the foundation on a diagram prepared by Mr. Boscariol. He found that the levels shown were not taken next to the foundation (and further found that this was because the surveyor's rod being used was too long to fit under the eaves of the building). His visual examination, backed up by photographs, indicated that under the building eaves, the surrounding soil sloped down towards the foundation walls. Additionally, there was some fairly extensive landscaping which would make the soil next to the foundation more permeable. His conclusion, based on the examination of basement water problems in the many homes in the Toronto area, was that the excess water under the basement slab was coming from rainwater running down the basement walls into the weeping tile outside of the footings, and then getting inside the footings from the cross-over connections to the inside weeping tile. He told us that is by far the most likely source of excess water.

82     Further, he told us that he had carefully considered Mr. Boscariol's theories on exfiltration and Mr. Demitriu's observation of water flowing into his test pit, apparently, from the trench for the sanitary sewer extending out to the road, but concluded that if the water under the slab was coming from that source, because the trunk storm sewers and the manholes were flooded to the level of Wolfe Lake, a foot and a half or so above the level of the floor slab, the sump pump would be running all the time, while in fact during his time there, it had to be triggered manually to run at all, and the reports of sump pump activity, such as they are, indicate the pump operates a lot more frequently after it rains.

83     His conclusion was that some simple re-sloping of the land around the house, that would direct water away from the foundations, and extensions on the down-spouts that are not connected to the storm sewage system, would likely be all that would be required to reduce the excess water under the slab.

84     My discussion, and conclusions, re the expert evidence, will be set out later.

Mr. Alfred Rocheleau

85     One of the oddities of this trial was that Mr. Dinsmore, the principal protagonist in the early investigation of this problem, was unable to testify. Another oddity was that the Dinsmore home is one-half of a duplex building, divided in two by a party wall, the design and construction of which was an object of some dispute. Mr. Rocheleau owns the townhouse in the other half of the building. The engineering evidence all indicated that there would be a single weeping tile running around the exterior foundation walls of the building, with connections under the footings to more weeping tile running around the inside of the footings (including the footings for the party wall) with the interior weeping tile running to sumps and sump pumps in the basements of each side of the building. Further, while each of the two townhouses would have separate sanitary sewers going out from under the two halves of the building, in fact those two sewers connected together in a "Y" connection before a single sanitary service line went out to the trunk sewer. Thus the drainage for rainwater would be interconnected for the two halves of the building, and the sanitary sewer trenches, described in the AMEC report as the source of the excess water under the Dinsmore floor slab, would come from the same common source as that of the owner of the other townhouse. Yet none of the experts had been in Mr. Rocheleau's basement, or knew what if any problems he might be having.

86     Mr. Rocheleau was called late in the trial. He explained that he had bought 1053 Hacienda, next door to the Dinsmore at 1045, in October of 1997. He said that he too had some water seepage through the basement floor, and put it on his list of repairs required to his new townhouse. He too was told that this was due to the lack of landscaping and backfilling around the foundations. However in the next summer he was still noticing moisture under plastic put on the floor and he included this in further reports of deficiencies and also sent a letter to the Warranty Program to put it on notice, and particularly on notice that if the Dinsmores got something out of their negotiations with the builder, he would want the same sort of repair. In response to that he got a letter from Carrie Mady advising that if repairs were needed Southwood would carry them out. His intention was to simply piggyback on the Dinsmore claim.

87     However, as he explained, he had 17 grandchildren who wanted to visit and his basement floor was damp. Steve Labelle of Southwood said they were willing to put a coating of a two-part epoxy scaler on the basement floor, and in fact delivered the materials. The contractor didn't show up to paint it on so Mr. Rocheleau set out to do it himself. It apparently was not a very good fix, as he said the coating started to peel off. He simply put latex paint over it all and lived with it. He still has the original sump pump, which seems to be functioning without any problems and he does not want his basement floor torn up.

The Party Wall

88     Part of the Dinsmore claim was that their basement slab was not 4 inches thick and did not have a 6 mm polyvinyl vapour barrier underneath it. This was based on a "detail sheet", apparently out of building plans of some kind, identified only as "alternate one" and found as Appendix "A" to the Boscariol report. This is obviously a detail of a party wall extending from a basement slab up through a building contained two or more units. Mr. Boscariol states in his report, and testified verbally that he was given this by Mr. Dinsmore, who told him he got it from the Building Department. This diagram shows a 4 inch concrete slab over a 6 mm polyvapour barrier over 6 inches of compacted granular "A". It further shows a footing under the party wall 8 inches deep, sitting on undisturbed soil, being apparently in a 2 inch deep trench dug in the bottom of the building excavation.

89     A physical examination by Dr. Becker, during the course of the trial showed that above the slab, there was in fact a double wall on 2 x 4 studs with an air space in between extending a large part of the way between the two townhouses in the basement. However, that party wall was continued at each end by cement walls.

90     All the evidence as to the excavation of the townhouses indicated that a single flat excavation was dug, all of the footing was put on it without any trenches being created anywhere and 8 inches, not 6 inches, of clear stone, rather than Granular "A", was put inside the footings. The evidence was that Granular "A" would never be used on top of the heavy clay in the Windsor area as water could not flow freely through it to the drains around the footings and water would wick up in to the bottom of the slab.

91     The evidence of the City representatives called to testify was that this document would not have come from the building plans of Southwood, because such plans were kept by the City as a whole, and not as individual sheets, and that each page of such plan would be carefully marked as to what project it related to and they would be stamped as a City document.

92     This diagram was in Mr. Boscariol's possession, and he is entitled as an expert to explain how he came to have it, as he in part relied upon it in forming his opinion. However, that does not make the hearsay evidence of Mr. Dinsmore as reported by Mr. Boscariol, admissible in evidence as to its truth.

93     This diagram is the only evidence that would support a claim for a 4-inch thick slab or a 6 mm polyvapour barrier. I find this diagram is not admissible as evidence for that purpose.

The Floor Sealing Process

94     Mr. Morga called Mr. Fabrice Forte for the Defence. Mr. Forte founded and has operated for some 10 years a business known as Floor Solutions. The company seals and levels floors, and deals with floors that cannot take finishes. He has a staff of 12 people and his company is a certified installer for the manufacturers of sealants and toppings. The work his company does is mainly for concrete floors in industrial, commercial or institutional buildings. However in the 10 years of business he recalls doing about 3 houses.

95     As he described the process, firstly the premises are inspected. If the problem is moisture, they check for the amount of moisture passing through the slab by placing a weighed container of desiccated calcium chloride on the cement floor under a cover, like a bell jar. After a day they weigh the calcium chloride. Calcium chloride absorbs water at a known rate and a comparison of the two weights can produce a figure for the actual amount of moisture transmission through the cement slab. With that transmission rate in hand, he would then make a recommendation as to the appropriate sealant to apply.

96     Incidentally, none of the experts that came and examined the Dinsmore floor conducted this rather simple test, although one of them said that if retained to remedy the situation, the first step would be to conduct such a test.

97     No matter which sealant was to be used, the cement floor had to be prepared for it. This is done by shot-blasting the floor, using a special machine in which the entire process is contained. The machine is passed back and forth over the floor while steel shot is fired at the slab, retrieved, (I believe magnetically) and shot again, while the dust and dirt is being vacuumed up. The machine can be run along right next to a wall. In a residential basement, if a hot water heater or a furnace is on legs, and high enough off the floor, the machine might be run underneath. If not, then the approach is to simply not to do that area, on the theory that the whole purpose is to create usable space, and the space under furnaces, etc., is not usable in any event.

98     Once the slab has been properly prepared, the sealants are mixed outside, and then applied by the trained installers, wearing protective clothing. The process does no damage to interior walls etc., there is minimal dust, and any fumes can escape through open windows. The whole process takes about 3 days, and afterwards any finish desired can be put down. The cost would be $4.00 to $7.00 a sq. foot depending largely on the amount of moisture found.

99     Mr. Forte had sent two letters to Mr. Dinsmore, March 12th and April 10th, 2000. He confirmed he had spoken to Mr. Dinsmore and had been out to see his basement. The first letter, at Tab 165 of the documents book said that after inspection he had concluded that their topping "would not bond to the current moisture conditions present". Therefore they were unable to quote the job. The second letter again said they were unable to prepare a quote because they didn't carry the warranted materials needed "for the conditions you have stated occurring to your floor". He said that both letters were written to avoid getting involved with Mr. Dinsmore, as he was not comfortable with dealing with him. In July of 2000 he sent a fax to Carrie Mady at Mady Development saying "upon further discussion with Creteseal, we do have a warranted spec., for correcting the problem at the Dinsmore residence. We also have other solutions other than Creteseal". He said that was sent because he was comfortable dealing with the Madys.

Discussion re "The Problem"

100     All of the evidence from all of the experts, as well as the evidence of the Dinsmores, the City Inspectors and others confirm that there has been water under the basement slab in the Dinsmore home since they moved in many years ago. There is also no question that some water vapour is coming through the basement slab, and that it can be evidenced by placing a sheet of plastic or some impermeable object such as a cooler on the slab, where moisture will collect under the object.

101     Clearly the primary source of water under a basement floor is rain or snowmelt percolating down through the soil. The drainage design for buildings is to pick up this water through drainage tile or big O down to the depth of the footings and carry it to the sump where the sump pump would expel it. In this basement holes were poked through the bottom of the sump, so that the sump, which extends below the level of the footings, could pick up water below the footing level, if such water could reach it through the impermeable clay which was below the footings. It could be that the bottom of the excavation for this building, instead of being flat, had minor hills and valleys in it, providing low spots where water would be retained and spots above the level of the bottom of the footings, which would block the intended free flow of water to the sump or the drains around the footings. In any event the water below the stand-pipes appears to be persisting, despite the years that have passed by and despite the inevitable evaporation and also transmission downward, which the experts tell us would be slight in the clay soil.

102     The most obvious source of this water would be rainwater and snowmelt, and all the experts including Mr. Boscariol, admit this. Mr. Boscariol however adds the further source - exfiltration from trunk storm lines, being carried below the basement in service trenches such as the sanitary sewer trench. Dr. Becker accepts this as a possible source. Mr. Nersesian absolutely rejects it, because, as he points out, the usual water level in Wolfe Lake is a foot and a half above the basement level. The Wolfe Lake level is carried to the manholes in the storm sewer system, which would mean a constant flow of water under the Dinsmore basement. Mr. Dimitriu gives us the evidence of his own eyes - when his test pit was emptied, it filled up again with water he saw as flowing from the direction of the street in the sanitary sewer trench.

103     I accept Mr. Nersesian's position that if this was a direct flow from the trunk storm sewers, which are always flooded to a level above the basement, the flow would be constant, yet at no time when an expert was in the basement did the sump pump turn on by itself. However, I accept the evidence of Mr. Dimitriu that he did see water flowing in to fill the emptied test pit, and that it appeared to be coming down the sanitary sewage trench.

104     Unfortunately, while the Dinsmores did faithfully record the water levels in the test pipes, including dates, times and comments, they apparently only did it for the months of July, August and September of 2005, as shown in Exhibit 7, 9 and 10. While those few observations show a correlation between levels and rainfall, there are also observations showing a change in levels despite a complete lack of rain. The most obvious are those for July 27th, 28th and 30th, three days in which not only was no rain reported but also the note shows it was very dry and the lawns and the gardens very dry and brown. Yet on July 27th the measure was 8 1/4 inches, on July 28th it was 8 3/4 inches and July 30th it was 9 1/4 inches, a full inch above the measure for July 27th. This limited evidence leads me to the conclusion that there is an infiltration of water, on a sporadic basis, separate and apart from rainwater. It could well be that there is an occasional spill over, for some unknown reason, from the trunk storm sewage system into the trench for the sanitary sewer leading to this basement. This in turn leads to the conclusion, since a protracted inflow from the storm system could obviously cause a build-up of water to the point of exerting hydrostatic pressure on the floor slab, that the installation of clay plugs in the service trenches passing under the footings leading to this building would be a very wise precaution. In fact, such plugs are now mandated by by-law in Windsor.

105     I accept Mr. Nersesian's observations about reverse slopes near the foundations of this building, and accept his views, which in fact are I believe included in the Building Code itself, that the property should be graded so that water flows away from rather than towards the foundation walls. I accept that there could have been changes in the slopes in the intervening years since the builder completed the grading around the building, and that part of the problem could be, as shown in the photographs, the planting of bushes and flowers. I also accept his recommendation that splash pads or downspout extensions be installed extending out further than those now in existence. I accept his observations, based on his considerable experience with residential drainage problems, that these relatively inexpensive and quite minor changes can have a dramatic effect on the inflow of water to the basement area.

106     In my view, based on the evidence before me, these changes should greatly reduce the quantity of water flowing under the slab, and reaching the sump and sump pump.

107     If, as I suspect, water is ponding under the slab, I would also suspect that any remaining inflows would go to firstly supplement the ponded water, and only then overflow to reach the sump. However, as I observed early on, the opportunity for direct observation is limited to the few standpipes put through the slab. I would think however, since it seems relatively simple to pump water out from under the slab (Mr. Dimitriu emptied his test pit with a shop vac) it might be worthwhile and certainly it would be easy, to put a hose connected to a simple pump down the various standpipes, run the pump until no more water came out, and then see whether that emptied an isolated pond that would stay dry, or whether it would simply fill up again.

What would remedy the damp basement?

108     Despite my suggestion of pumping, I conclude that on the balance of probabilities there would continue to be water under the basement slab. While I accept Mr. Boscariol's and Dr. Becker's concerns that it is possible that the slab could deteriorate in the future, it has also, in my view, been clearly established, especially by the evidence of Mr. Alexander, that the slab is continuing as solid and if anything is getting harder as years go by. I accept that shrinkage of the slab has for all practical purposes ceased and that the hairline cracks in the slab, attributed to such shrinkage, will not further enlarge and do not affect the strength and integrity of the slab.

109     I accept the evidence of Mr. Boscariol and Dr. Becker that at the time of their reports, they were not aware of any surface treatment to prevent water vapour coming through a cement slab that was successful and available for residential purposes in Canada. However, years have gone by and there have been improvements in technology. I accept the evidence contained in the later reports of Construction Controls Inc. that the new materials which will grow crystals in the pores of cement are successful and permanent. The City of Windsor and ONHWP appear to be prepared to accept these treatment programs, and importantly, ONHWP is prepared to see the warranty on the floor slab extended, pursuant to the Act and Regulations, if such a treatment was applied and the City was prepared to accept the slab as so treated. The City of Windsor concern with the slab related solely to its thickness. Mr. Alexander testified that his tests showed that the strength of the existing slab was greater than what is called for in a slab 3 inches thick, and that he was prepared to so certify. I have no indication that with such certification, the City of Windsor would not acknowledge acceptance of the existing slab as the equivalent to what is required under the code, thus putting ONHWP in a position to extend the warranty. Proper water vapour transmission tests will be made before treatment of the surface of the slab, and repeat tests afterwards should quickly indicate whether or not the treatment was successful. The application of a sheet of plastic to the surface should also show in a very simple way whether the moisture transmission problem had been controlled. If not, a claim under the Warranty Program would be available.

110     Much was made during the trial of concerns over the plates on the bottoms of the partitions installed by the Dinsmores. I accept the evidence of Mr. Nersesian, that he observed no deterioration, mold or dampness in the drywall on these partitions. The specifications of the carpenter who did the job clearly showed that he was installing polyvinyl as a barrier between the plates and the floor and it appears to have worked just fine for many years. I see no practical reason to think of extending floor-sealing applications under the partitions. For that matter, the ceramic tile is obviously standing up perfectly well. The vinyl flooring shows one area of delaminating, which Mr. Alexander attributed to a blow of some kind, rather than a moisture effect, but in view of the very small amount involved, in my view it would be better to lift the vinyl, treat the floor under it, and then put new floor covering over the treated area. If the City of Windsor in fact accepts the engineering report that the slab as-is, because of its strength, is the equivalent of a 3 inch thick slab, then the purpose of treating the surface would be for moisture control only, and the question of whether to put a topping over the initial treatment would be left to the advice of the floor finishing specialists, without concern over adding thickness to the slab.

The Repair Estimates

111     The defence position was that the most that would be needed would be sealing and topping the basement slab, which would cost $4.00 to $7.00 per sq. foot from Mr. Forte's evidence.

112     However, both to give evidence as to the actual construction process as well as an alternate figure if the court found that replacing the slab was required, Mr. Morga called Mr. Don Jarrold of Tilbury Concrete. That company maintains a yard in Windsor, and supplies ready mix concrete and also will supply all of the labour for finishing the concrete.

113     The company installs approximately 350 basement floors a year and finishes roughly 40% of them depending on the market. According to the testimony of Carrie Mady, the company had a long and satisfactory history with the Mady Group, providing cement for its subdivisions.

114     Mr. Jarrold's evidence was that he would very seldom see polyvinyl vapour barriers being installed under slabs. This would happen only when specified by an architect and usually was seen in a custom home. It was never seen in an entry level home.

115     He explained the foundation process in subdivisions of production homes consisted of an excavator digging a square or rectangular hole, with a flat bottom. The forms for the footings would be set on this flat bottom and the footings poured. The next day or so the big O for drainage would be put around the inside and outside of the footings and the space within the footings, which were 8 inches high, would be filled with 3/4 inch clear stone. Granular "A" was never used. The basement walls would then be formed and poured on the footings. The slab itself might not be poured until the roof was on the framed-in structure. The basement slab was 3 inches or perhaps a bit more thick. The "More" would depend more than anything on whether there was a bit of extra cement in the truck. The slab itself poured and finished would cost around $2,500.00 to $2,600.00.

116     Tilbury Concrete had provided an estimate, Exhibit 45, for removing the old slab, re-grading and pouring a new 4 inch thick slab of $17,390.00 plus G.S.T., to the Mady Group January 25, 2005. He explained that this did not cover taking out partitions, utility lines, the furnace etc., but did cover all of the work of breaking up or cutting the existing slab and hauling the pieces out by hand, leveling out the granular base, and then pouring a 4 inch slab. All other parts of the job, including dust control and the assumption of liability for damages would be handled by the Mady Group. The extra inch on the slab would be worth about $250.00.

117     Woodall Construction Co. gave an estimate dated February 11, 2002 to the Plaintiff's counsel for doing all the work specified by Mr. Boscariol in his report. That estimate is Exhibit 30. Mr. David Woodall, President of the Company, was called by Plaintiff's counsel. He advised that he had simply priced the work described by Mr. Boscariol, and had no opinion as to whether all of the work was needed. The price quoted for all of the work Mr. Boscariol envisioned, including removing and storing the furniture, cleaning the duct work, restoring landscaping and putting plugs in the service trenches comes to $69,864.00 plus G.S.T.

Liability

118     The Plaintiffs sued Southwood for breaches of contract and negligence. There were two parts to this claim - a claim that the building had a substandard floor, which did not meet the Ontario Building Code, and a further claim that the floor did not meet "the specifications of the Building Permit Drawings". As indicated in the foregoing review of the evidence, Southwood and Masterpiece through their officers and employees, have admitted liability under the first head from the time they first discovered that the basement slab, at least in places where holes had been cut in it, was less than the Building Code minimum of 3 inches thick. From that point on, in my view the evidence overwhelmingly supports the defence position that Southwood and Masterpiece were attempting to "right the wrong", in one way or another, but without success. They first offered to replace the defective basement slab. The Dinsmores refused to have this done. Then, when the geotechnical engineer recommended by Mr. Dinsmore and hired by Carrie Mady recommended applying sealants and a topping to the floor, the builders offered to do this and the Dinsmores refused. Carrie Marty suggested to Mr. Dinsmore that he ask the Warranty Plan to set up a conciliation meeting, and attended and took part in that meeting, seeking a solution as to the method of repair. That was unsuccessful. The City of Windsor attempted through a similar meeting to see if a settlement could be worked out. Southwood and Masterpiece participated there. Apparently, it seemed to the Building Commissioner that a resolution had been agreed, but Mr. Dinsmore refused to sign the Memorandum of Agreement. The matter then proceeded into litigation. As the trial judge I have no knowledge of the efforts being made during litigation to settle the matter, but I do have Carrie Mady's uncontradicted testimony that to avoid the expense and time losses of a trial, she would have been prepared to authorize whatever repairs Mr. Dinsmore wanted.

119     In summary, Carrie Mady admitted that there was a breach of contract in providing a basement slab that did not meet the Building Code specifications. She did not know how that happened. She only knew that the cement supplier and the cement finisher were both companies well known to her for their good materials and workmanship, and long experience in the business. She explained in her evidence, in production construction in a sub-division, mistakes can happen, and the policy of the companies has always been to correct the mistakes as expeditiously as possible to keep the customer happy. There is no question as to liability under the first part of the claim, on the basis, without more, of the admissions above detailed.

120     The second part of the claim is based on the untitled and unidentified detail of a party wall shown as Appendix A to the original Boscariol report. This showed a 4-inch thick basement slab, with a 6 mm polyvapour barrier underneath it. For all of the reasons set out above, this Appendix A properly forms part of the Boscariol report as background material which he relied upon in forming his opinion, but was not accepted as evidence against Southwood and Masterpiece. The evidence before me was that the actual construction plans and specifications for this building (called the "permit plans") had long since been destroyed by the City, could not be found by the Mady Group, if they still existed, and most importantly, were never shown to a prospective buyer, who bought on the basis of floor plans, elevations and artist's sketches. I therefore have nothing before me showing any required specifications beyond those of the Ontario Building Code.

121     I conclude that Southwood and Masterpiece are liable, as admitted, under the first part of the claim, of supplying a basement slab less than 3 inches thick, but not liable under the second part of the claim, of not meeting agreed plans and specifications.

122     ONHWP is sued on the basis of an alleged contractual relationship arising when the Plaintiffs signed a Certificate of Completion and Possession, and on the basis of negligence, for basically failing to try to settle the matter, or failing to force the builder to repair the problem and basically "failing to fulfill their duties and exercise their statutory authority as a public agency". The defence of ONHWP was that it has only a contingent liability under the limited warranty, and as the builder has continuously offered to make good the problem, this "benefit" offsets any claim that could be made directly against the program. Further, the program alleges that it carried out all of its statutory and regulatory duties.

123     Mr. Shillington, acting for the Warranty Plan, pointed out in his closing argument that firstly, even if there was a liability on the plan, that liability is limited by statute to $100,000.00, and is further limited by the exclusion of secondary damage. Secondary damage, in this case, would mean all of the improvements the Dinsmores added to the basement of their townhouse, which they purchased with an unfinished basement. That would include a complete bathroom, all of the partitions, flooring and ceilings that the Dinsmores added on their own.

124     However, primarily he relied upon s. 14 of the Act, which provides for entitlement to payment out of the guarantee fund but after taking into consideration any "benefit, compensation, or indemnity payable to the person or owner from any source".

125     Mr. Shillington points to two cases to support the position that the Dinsmores had disentitled themselves to their claim against the Plan. First, in Liddy v. Ontario New Home Warranty Program (1999), [2000] O.J. No. 585 (Ont. Div. Ct.), a Divisional Court decision of February 28, 2000, the court found, in paragraph 8, that the Plan has to be given the opportunity to effect repairs. The owner in that case refused offers to carry out repairs and instead brought in an outside contractor. That was found to be a failure or refusal by the Applicant to mitigate damages and disentitled him to relief.

126     In Wilkinson, Re, [1998] O.C.R.A.T.D. No. 78 (Ont. Comm. Reg. App. Trib.), a decision of the Vice Chair of the Ontario Commercial Registration Appeal Tribunal released May 1, 1998, the Vice-Chair found, after quoting s. 14(2) of the Act, in para. 32 of the decision that, "in this matter, the builder has always been prepared to rectify the difficulties, in accordance with the recommendations of experts who suggest that the proper way to rectify the situation is by way of an application of a sealant to the driveway ... no evidence was presented to the tribunal by Mr. Wilkinson that this approach was not an effective resolution". The tribunal therefore found, in para. 35 that because of the failure of the owner to allow the builder to remedy the situation, the owner had suffered no damages compensable under the Act.

127     I accept the position taken by ONHWP here, that throughout the builder was prepared to implement a remedy, recommended by experts, which appeared to be reasonable in all of the circumstances, and the owner refused to accept those proposals and allow entry so that the work could be done, even though the owner was assured that the repair work would enjoy an extended warranty under the Plan. Under the Statute and the cases decided thereunder, which I accept, I find no liability whatsoever on ONHWP in relation to the principal claim relating to the wet basement.

128     There are additional allegations of failure to act for the benefit of the owner under the general public duties imposed by the Act. I find on the evidence as a whole, in particular the evidence of Mr. Douglas Irvine, the ONHWP field man, who explained the efforts made by the plan within its statutory and regulatory limits, that the Plan had done all that it could be expected to do under these circumstances, and that it could do no more when faced with a builder who proposed, with considerable support, a course of repairs, which the owner simply refused to accept.

129     I therefore find this claim should be dismissed in its entirety as against the ONHWP.

Damages

130     In this case, all counsel appear to agree that the statement in the head note of Nu-West Homes Ltd. v. Thunderbird Petroleums Ltd. (1975), 59 D.L.R. (3d) 292 (Alta. C.A.), an Alberta Appeal Court decision of May 20, 1975, which is really a summation of the wording in a number of other English Canadian and American decisions, represents the law in relation to claims against a builder. The head note is as follows:

Where a builder is in breach of his obligations under a building contract, the owner is entitled to damages measured by the cost of making good the defects and omissions, unless the cost is unreasonably high in relation to the value to be gained by its expenditure. In judging the reasonableness of the owner's decision to rectify defects in such a case, the court should not be overly critical, since the necessity of making the decision is occasioned by the builder's own breach of contract.

131     Here, the owners' position at trial was that nothing would do except the complete reconstruction of the entire basement to the highest of standards, including the removal of all of the partitions, the bathroom built by the owners, the ceiling, which would be connected to the partitions, the furnace and hot water tank, and then the complete basement slab, to be removed through a hole in the basement wall created to accommodate it, followed by installing a vapour barrier, then a 4 inch thick new concrete floor slab, re-installing the furnace, hot water heater etc., rebuilding the bathroom, and putting in new partitions, new flooring, rebuilding the outside wall and also moving and storing all of the furniture, and bringing it back afterwards, restoring the landscaping, and putting the owners up in a hotel for the period of construction. Additionally, clay plugs were to be put in all of the service trenches. The estimated cost for this was $69,864.00 plus G.S.T. To Woodall Construction, plus 12% additional since the estimate, and $15,365.00 plus G.S.T. To Boscariol & Associates plus an additional $2,000.00 for inspection cost during construction totaling $87,229.00 plus G.S.T.

132     Mr. Morga in his submissions pointed out that the purchase price of the townhouse was $177,900.00, and the total paid by the Dinsmores to an independent contractor for all of the additions they made to the basement was $11,300.00 (Exhibit 46). He suggested that monetary reasonableness must involve some comparison of the cost of the damaged item with the cost of the proposed repairs. In my view the decided cases support this as at least one of the comparators to keep in mind.

133     The above quote from Nu-West Homes, in my view, speaks not only of the reasonableness of the costs but also the reasonableness of the owner's decision on rectifying defects.

134     In this case the owner has not as yet carried out any repairs. As Mr. Morga noted, despite the comments along the way by many experts, commencing with his own, Mr. Dinsmore has not even replaced the plastic liner for the sump, which Mr. Labelle for the builder had punctured in hopes of improving the situation. The cost of doing that would be only a few hundred dollars, but the step was not undertaken.

135     If the Plaintiffs had acted on the basis of the original information they had from Mr. Boscariol, the court would be in a much different position than it is now, because the initial information was that there was no sealing material available in Canada that could be used to correct this situation.

136     Mr. O'Dwyer, in his report suggested Masterseal 550, or equal be applied on the surfaces. The City of Windsor suggested Creteseal. Creteseal answered inquiries by saying it does not go out of the U.S.A. for projects nor do they get involved in residential homes. Inquiries by Mr. Dinsmore of Floor Solutions in Windsor were met with that company declining to get involved. Dr. Becker in his opinion, discouraged the use of sealants. Therefore, at that point, it seemed as if removal of the slab was the only viable approach.

137     Mr. Dinsmore appeared to have some interest in sealing, rather than replacing the slab, because he himself proposed installing ceramic tile throughout the basement, perhaps based on the successful installation of such tile in the bathroom. However, he did not follow up on a possible settlement based on that proposal. It was not until the report of Construction Control Inc. in August 2004 that it was clear that there are sealants available in Canada which would work on this floor. From that point the Plaintiffs' entitlement to damages drastically changed.

138     For one thing, the issue of whether or not the Plaintiffs would be entitled to recover for all of the improvements they made in the basement ceased to be a problem. I have above indicated that the Plaintiffs could not advance that claim as against the Warranty Program. Southwood and Masterpiece did not raise that issue in their Statement of Defence, but it was certainly very much on the table when Mr. Morga read in from the examination-for-discovery of Mr. Dinsmore, in which he admitted that he was aware of a water problem in the basement from the time he moved in, but nevertheless went ahead with the installation of all of the partitions, bathroom, etc. Fortunately, the decision that the appropriate remedy is the application of the sealant, and perhaps topping, with all of the partitions etc., remaining in place, avoids that problem.

139     In an interesting case of Pinehurst Woodworking Co. v. Sakhrani Holdings Inc., [1990] O.J. No. 1493 (Ont. Dist. Ct.), a decision of Hoilett D.C.J. he notes that "... generally speaking the time for measuring the damages is the time at which the defects were discovered, as opposed to the date of trial." However, he went on to recognize that there can be special circumstances warranting a departure from that general rule, and cites London Congregational Union Inc. v. Harriss & Harriss, [1985] 1 All E.R. 335 (Eng. Q.B.), at 344. He quotes the head note at p. 336 as adequately summarizing the court's position, which is as follows:

... (4) Although as a general rule damages fall to the assessed as at the date of the Defendant's wrongful act, since there was a material difference between the cost of repairs at the date of the Defendant's negligent act and the date when repairs could first reasonably have been undertaken, the Plaintiff's damages fall to be assessed at the rates prevailing at the latter date. Having regard to all the circumstances, the Plaintiffs had acted reasonably in deciding not have repairs carried out during the years 1977 to 1982 because of internal financial difficulties and the fact the Defendants were denying liability. However the Plaintiffs have been guilty of 18 months delay in bringing the case to trial, and damages would therefore be assessed on the basis that the case should have been tried in 1982 and at the rates for repair current at that time.

140     In my view the circumstances above detailed provide more than ample reason for looking to the year 2004, after the reasonableness of the use of sealants had been confirmed, as a proper time for assessing what the reasonable damages herein would be. This is especially so here, where the plaintiffs have taken no steps to mitigate, and neither side has at yet expended any funds on the repair of the problem.

141     The information I have on what the actual cost of repair could be is quite sparse. Mr. Forte of Floor Solutions had indicated $4.00 to $7.00 a square foot, depending on conditions, to satisfactorily treat the floor. Mr. Boscariol, in Figure 1 to his first report has a basement floor plan showing 1,390 square feet. Part of it would be the washroom and hallway, shown together on Mr. Boscariol's Figure 2 at 234 square feet, finished with ceramic tile, which needs no treatment, and a part would be an area under the furnace and hot water tank. In my view 1,150 square feet requiring treatment would be reasonable. Also, in my view, it would be reasonable not to treat this as the worse case scenario from the point of view of the treatment, and to allocate $6.00 per square foot to the job. That gives me $6,900.00.

142     Presumably, before treatment, the various standpipes etc. should be removed from the floor and filled in. In my view a $1,000.00 would be generous to cover that.

143     The problem of establishing the suitability of the slab as is, although less than 3 inches thick, would have to be addressed. Mr. Alexander had indicated he would be prepared to certify as to its suitability. That would involve preparation of a formal engineering opinion, however brief, and subsequent presentation of it to the Building Department for approval and withdrawal of the correction order. I would allocate $1,000.00 to this.

144     Mr. Woodall had estimated the cost of clay plugs for the utility trenches at $4,859.00. Unfortunately, Mr. Boscariol has spoken of clay plugs "on the exterior side of the basement wall". Mr. Woodall obviously took that as literally accurate and so included considerable landscaping costs. Properly, these plugs would be placed near the lot line, where only grass would have to be disturbed. In my view, $4,000.00 would adequately cover this. Because of the inter-connected drainage system, the other townhouse in the building will also benefit from this, but there is no way, in this action, to get Mr. Rocheleau to share the cost.

145     I have no estimate whatever of the cost of changing the grade of the soil around the foundation walls, so that it slopes away from the building. Mr. Morga in his summation mentioned a small amount of extra soil. In addition to this, there would be the cost of removing the sod and plants next to the building, adding the soil, sloping it appropriately and tamping it down, and then replacing the sod and plants. I cannot imagine that all of that would cost more than $2,500.00 and I allow that amount. This, like the clay plugs mentioned above, will also benefit Mr. Rocheleau, but there is no way I can require him to pay part of the cost.

146     Pumping out water under the slab. This should involve no more than a handyman spending a couple of hours with a garden hose and a small pump sucking up water under the slab, available through the existing stand pipes, and pumping it out a basement window. I allow $300.00 for this.

147     The Dinsmores encountered considerable engineering fees. The case law, most recently Alie v. Bertrand & FrËre Construction Co., [2000] O.J. No. 1360 (Ont. S.C.J.) (the Ottawa Cement case) and numerous cases before it have supported, as part of a damage claim, the costs of experts in investigating the problem, identifying it, and suggesting ways of dealing with it. However, the case law also indicates that experts' reports obtained for the purposes of trial should be handled as costs rather than damages.

148     In this case, Mr. Boscariol was involved from May of 1998 through to February of 2002, not only in investigating the problem and eventually reporting on it but also in attending meetings and being in effect part of Mr. Dinsmore's negotiating team with the builders, the City and the Warranty Plan. Mr. Boscariol lists all of this in s. 2.0 of his report as being necessary for its preparation. The bill for the report as indicated in s. 6.0 of the report is $15,365.00 plus G.S.T. I would allow $14,000.00 lump sum as being, in my view adequate to cover the purely investigative engineering part of the services rendered.

149     The Dinsmores have also claimed for damages for upset, a loss of enjoyment of life etc., because of the problems with their basement and its effect on their lives.

150     I have no doubt that Mrs. Dinsmore was speaking the complete truth when she told the court that she and her husband had been looking forward to being in their wonderful new home in South Windsor and instead found themselves embroiled in a whole series of problems and disappointments. Obviously she and her husband had planned and carried out improvements to the unfinished basement to make it an integral part of their lifestyle, and they have found instead that they rarely go down to it. I assume that their lives have to at least some degree been subsumed into this problem and the subsequent litigation. However, on the other side, knowing when they moved in that there was a problem with moisture in the basement, they nevertheless proceeded with all of the improvements made in the basement area. It then became clear that the problem was not due simply to the delay in backfilling of the foundations. Unfortunately, along the way other problems such as pipe coming off the sump pump occurred, which had nothing to do with the problem before the court.

151     Another thing that had nothing to do with basement dampness, was that the Dinsmores had originally planned to have a bedroom in the basement. They found they could not do that because of municipal regulations, I believe relating to a requirement for two exits from sleeping areas, that had nothing whatever to do with dampness. However this obviously called for a change in their plans, with the intended bedroom now being designated as a "t.v. room", still complete with a closet, and with the full bathroom, complete with shower, now perhaps in part redundant.

152     The photographs show that the Dinsmores furnished the basement, use it at least in part as an extension of their living space, and additionally use it for storage, laundry, etc. They had wanted to carpet part of it, and had been unable to do so, and have the stand pipes installed by various experts protruding through the basement slab in various places.

153     Mrs. Dinsmore was not able to point to any damage caused to their furniture or other belongings by dampness from the floor slab. Neither did she indicate that the noise of the sump pump interfered with their use of the basement. Indeed, in cross-examination she simply indicated that the sump pump ran more frequently when it rained, which I gather is standard throughout South Windsor.

154     I find that the loss of enjoyment of life, and interference with lifestyle suffered by the Dinsmores and related to the basement dampness, rather than other causes, when viewed objectively, has been relatively minor. Further, I sadly come to the conclusion that they were the authors of their own misfortune for two reasons. First, they proceeded with the finishing of their basement despite knowing, from first taking possession of the townhouse, that there was a problem with dampness, and despite knowing that despite the operation of the furnace and dehumidifiers, the problem did not go away. They, and the builder's representative, felt that backfilling the foundation walls would cure the problem, but prudence would have indicated it would have been better to wait and see if that would in fact happen. Second, they failed to take any steps to mitigate their loss.

155     As it turned out, despite it appearing to be premature to have put in all of the interior walls and finishes, the only thing that would have been affected would have been the carpeting they planned to lay. The parts of the floor slab they covered with ceramic tile has stood up just fine. According to Mr. Alexander, the same applies to the vinyl flooring they put down in the storage room. Although Mr. Dinsmore at one point proposed ceramic tiling for the rest of the basement floor, he apparently resiled from that suggestion, and did nothing to mitigate the alleged problems.

156     I conclude there should be no award of damages for interference with lifestyle or loss of enjoyment of life.

157     The Statement of Claim alleges that there has been a significant decrease in the value of the plaintiffs' home as a direct result of the basement problem. No evidence whatever was led as to this alleged decrease. The foregoing damages awarded should completely cover the cost of correcting the dampness and removing the stigma of a less than standard basement slab. I award no damages under that heading.

158     The Statement of Claim, in paragraphs 26, 27 and 28, makes allegations, apparently in support of aggravated and punitive damages, including a complete disregard for the plaintiffs' concerns and for the building code violations, high handed and insulting conduct, deliberately causing mental distress, and specifically in relation to aggravated damages, the building code violations which were alleged to be "publicly and socially reprehensible".

159     As the above review of the evidence indicates, I have found that the builders had been actively attempting to find a way, satisfactory to the plaintiffs, to remedy the building code violation since they first found that it existed. They were prosecuted over that breach, unsuccessfully, but despite the dismissal of the charge continued to try to resolve the matter. I find no basis for aggravated damages.

160     The Supreme Court of Canada, in Fidler v. Sun Life Assurance Co. of Canada [[2006] 2 S.C.R. 3, 2006 CarswellBC 1596 (S.C.C.)], a decision released June 29, 2006, revisited the concept of punitive damages, saying in part, in relation to contract cases (which primarily, this case is) that to attract punitive damages:

the impugned conduct must depart markedly from ordinary standards of decency - the exceptional case that can be described as malicious, oppressive or high-handed and that offends the court's sense of decency ...

Further, the court said:

The misconduct must be of a nature as to take it beyond the usual opprobrium that surrounds breaking a contract. ... It is important that punitive damages be resorted to only in exceptional cases, and with restraint.

I find nothing here that meets those tests. A claim for punitive damages is dismissed.

Conclusion

161     I find that the plaintiffs are entitled to damages of $29,700.00 for breach of the express and implied terms of the building contract and builders' warranty. I dismiss the claims for aggravated and punitive damages.

162     The issues of costs and pre-judgment interest were not addressed at the trial. If counsel cannot resolve those issues, if any counsel wishes to address them orally before the court, a date can be arranged with the trial coordinator. Otherwise, counsel may make written submissions. I would ask that all such submissions be in within 60 days from the release of these reasons.

163     If any of counsel find any factual errors or omissions in these reasons, I would ask that they advise the other counsel and this court, so that such errors and omissions could be addressed, before the formal judgment is taken out.

qp/s/qlgxc/qlmxt/qltxp