Consultation - Régie du bâtiment du Québec

PROCEEDINGS

[1] The Beneficiary applied for arbitration, pursuant to section 35 of the Regulation respecting the guarantee plan for new residential buildings (hereinafter the “Regulation”), from the decision of the Plan Manager rendered on June 16^th, 2015 dismissing the Beneficiary’s claim in reason of the tardiness of the denunciation.

[2] Although the claim was made by the Syndicate based on the assumption that the problem was one related to the common area of the building, and although it appeared later on that it was not, this irregularity has no impact on the decision rendered by the Plan Manager and as such, no impact on the decision rendered by the present Arbitration Tribunal.

FACTS

[3] Mr. Richard Khambatta, owner of unit #[...], bought his property (hereinafter called the "Unit") from the Builder on or around November 4^th, 2011.

[4] In August 2013, Mr. Khambatta (also referred to as the "Owner") noticed a few drops of water on the wall, near the air conditioning unit. After examining the surrounding area, he did not see any other traces of water.

[5] In July 2014, the Owner noticed water coming from the air conditioning unit, going down to the floor. This situation happened in August and September 2014 as well. Each time, he cleaned up the area, attempted to find the root cause but to no avail.

[6] In September 2014, the Owner reported the situation to the Beneficiary, who in turn filed a complaint with the Plan Manager on September 29^th 2014.

[7] At the time of denunciation to the Plan Manager, the Beneficiary had other complaints ongoing with the Plan Manager for another unit, namely unit #[...]. Therefore, the Plan Manager scheduled a joint inspection of those units on October 14^th 2014.

[8] For an unexplained reason, it appears that although a first inspection of the unit of concern hereto took place in October 2014, the inspection file regarding unit #[...] was subsequently lost. Therefore, no decision was rendered and a second inspection of unit #[...] by the Plan Manager took place on May 14^th 2015.

[9] The decision from which the Beneficiary appeals was rendered on June 16^th, 2015. The debate before the Arbitration Tribunal concerns the delay within which the denunciation was made to the Plan Manager.

III

PROOF AND HEARING

Beneficiary

Richard Khambatta

[10] Mr. Richard Khambatta is the owner of unit #[...]. He testifies that he bought his unit on or around November 4^th, 2011 and lived there ever since. He stated that in August 2013, he noticed a few drops of water on the wall, near the air conditioning unit. After examining the surrounding area, he did not see any other traces of water. Not knowing if it came from the air conditioning unit, a window left open or from watering the plants, he did not report the situation to the Beneficiary.

[11] According to his testimony, it is only in July 2014, almost a year later, that he noticed water leaking from underneath the air conditioning unit, going down to the floor. This happened in August and September 2014 as well. Each time, he cleaned up the area and attempted to find the root cause but to no avail.

[12] In September 2014, he reported the situation to the Beneficiary and remitted at the time a statement of events along with pictures.

[13] To his knowledge, the Beneficiary informed the Plan Manager of the situation on September 29^th, 2014.

[14] On October 14^th, 2014, a first inspection of the premises was done by Mrs. Karine Pépin, inspector-conciliator for the Plan Manager. However, the file was subsequently lost by the Plan Manager.

[15] On May 14^th, 2015, in light of the Beneficiary’s denunciation and the events surrounding the loss of the file, Mr. Jean-Pierre Bigras, inspector-conciliator within the Plan Manager, did an inspection of the unit and rendered a decision on June 16^th, 2015.

[16] The decision rendered dismisses the claim based on the tardiness of the denunciation of the alleged deficiency.

[17] Mr. Khambatta stated that the vast majority of the damages seen by Mr. Bigras during the May 2015 inspection occurred between September 2014 and May 2015. Mr. Khambatta indicated that in May 2015, he could see the water seeping through the drywall and the paint lifting from the wall. The space between the strips of the wooden flooring are now enlarged to a point of reaching almost ¹/₃ to ¹/₂ an inch between each strip which was not the case in September 2014 when the denunciation was made.

[18] Mr. Khambatta claimed that he always did the required maintenance on the air conditioning unit. According to his understanding, the Maintenance manual recommended that the unit be kept clean and that the filter be cleaned regularly, which he does every time the Clean filter light comes on.

[19] Mr. Khambatta also stated that he turns off the air conditioning system during the hot days of summer to prevent the formation of ice that could obstruct the air conditioning system and cause water leaks.

[20] Finally, Mr. Khambatta explained that after the preparatory conference with the Arbitration Tribunal and the parties, he consulted two (2) lawyers which, according to his testimony, both said that despite the Plan Manager decision, it was not a reasonable expectation to be required to denounce the situation in August 2013, under the particular circumstances of this case, as it was not foreseeable at that time that there was a problem.

[21] In cross-examination, the witness reiterated that he noticed the first few drops in August 2013, but did not denounce it then because he was unable to find the cause. Mr. Khambatta added that in August 2013, he personally inspected the air conditioning system and its surroundings to try to find the source, but to no avail.

[22] Although he would not qualify the situation in August 2013 as being normal, he could only monitor the situation to see what would happen and in fact, nothing happened until July 2014.

[23] Mr. Khambatta confirmed that after the episode of water drops in 2013, he continued using the air conditioning unit.

[24] The witness specified that when the problem reappeared in July 2014, he continued to use the air conditioning system, but that he turned it off temporarily as soon as he noticed leaking and turned it back on when the leaking stopped.

[25] He also added that the air conditioning unit was turned off when he was not home for an extended period of time.

[26] Mr. Khambatta never completely restrained himself from using the air conditioning system as it was impossible for him to tolerate the hot temperature during summer time as he works from home. He claims that the indoor temperature easily reaches 40 degrees on the hotter days.

[27] In 2014, the water had caused the paint to ripple a little bit and the drywall was humid, but not soaked, contrary to what Mr. Bigras saw in May 2015 where the drywall was soaked and the paint was clearly lifting from the wall.

Alain Lamoureux

[28] Mr. Alain Lamoureux, a member of the board of directors of the Beneficiary and owner of Unit #[...], was heard as second witness.

[29] Mr. Lamoureux corroborated Mr. Khambatta’s version to the effect that the latter came up to him in September 2014 with regards to a potential issue with the air conditioning system in his unit.

[30] The witness testified that in addition to Mr. Khambatta’s problem, there was a similar issue with Unit #[...].

[31] Mr. Lamoureux then contacted the Plan Manager on September 29^th, 2014 and both files were paired by the Plan Manager.

[32] During the Plan Manager’s first visit, in October 2014, the witness testified that the inspector was able to notice the various damages.

[33] Mr. Lamoureux was told that the Beneficiary should receive the Plan Manager’s report within 45-60 days from the date of the inspection.

[34] In addition, according to Mr. Lamoureux, Mario Milette, an employee of the Builder, was supposed to come back in order to do some water tests. It did not occur.

[35] Mr. Lamoureux received the Plan Manager’s report dated December 19^th, 2014 with regards to Mrs. Karine Pépin’s visit dated October 14^th, 2014. In that report, there was nothing related to Mr. Khambatta’s unit. At that time, he did not know if there was going to be only one (1) report for both units or two (2) separate reports.

[36] According to Mr. Lamoureux, he followed up with the Plan Manager with respect to the decision for unit #[...] in dispute herein and was told that the Plan Manager had lost the file. A second inspection was scheduled for May 14^th 2015.

[37] On May 14^th, 2015, Mr. Jean-Pierre Bigras, inspector-conciliator for the Plan Manager, inspected Mr. Khambatta’s unit, ran a few tests, but was unable to confirm the water infiltration.

[38] The witness is unable to recall if the damages seen in May 2015 were similar or worse than those observed in October 2014.

[39] According to Mr. Lamoureux’s understanding, Mr. Bigras, supported by the representative of the Builder, was of the opinion that the issue came from Mr. Khambatta’s misuse of the air conditioning system as there was no other possibility.

[40] In cross-examination, the witness reiterated that the Beneficiary made a claim in September 2014 regarding unit #[...] and that this claim was joined to the claim of unit #[...] for the purpose of the inspections of October 2014. According to Mr. Lamoureux, Mrs. Karine Pépin scheduled a visit in October 2014 to assess both units.

[41] He then confirmed that Mr. Khambatta did not mention any problem with his air conditioning system prior to September 2014.

Martine Gaudet

[42] The last witness for the Beneficiary is Mrs. Martine Gaudet. She explained that she does not live in unit #[...]. She saw the damages caused by the August 2014 water infiltration a couple of days after it had happen.

[43] She stated that at that time, the paint was a little bit discolored and rippled and that the wall was humid. She took some pictures and sent them to Mr. Lamoureux when asked to later on.

[44] The witness confirmed that she was present during Mrs. Karine Pépin’s inspection in October 2014 and that she acted as translator because Mrs. Pépin did not speak English. Mrs. Gaudet was not present during Mr. Jean-Pierre Bigras’ visit in May 2015.

Builder

[45] The Builder did not testify, nor did he submit any evidence to the Arbitration Tribunal.

Plan Manager

[46] Mr. Jean-Pierre Bigras testified for the Plan Manager. He is the author of the decision rendered in June 2015 following his inspection conducted in May 2015.

[47] The witness explained that further to his visit of unit #[...] in May 2015, he concluded that there were two (2) possible causes for the leak: one being that the air conditioning system was deficient, the other being that the water was coming in from the exterior.

[48] During his inspection, Mr. Bigras ran a few basic tests in an attempt to establish the origin of the water infiltration, but did not open the air conditioning unit or used any destructive method.

[49] The tests revealed no abnormality with the air conditioning system or its installation.

[50] Mr. Bigras stated that based on his tests, his observations and the discussions he had with the different participants, he concluded that the issue was related to the air conditioning system and was not due to a water infiltration.

[51] Mr. Bigras further explained that although there does not seem to be any lack of maintenance from the Owner in this case, the simple occurrence of water near an electrical apparel should ring an alarm and that as far as he is concerned, the Owner should have investigated more thoroughly in 2013 at the first occurrence.

[52] He pointed that the User guide indicates that water drops are not normal. In his opinion, even if the guide does not mention the abnormality of water in the surroundings of the air conditioning unit, the Owner should have known that the water was most likely coming from the air conditioning system.

[53] Therefore, pursuant to the Regulation, the denunciation was to be made within six (6) months of the discovery. Considering that the six-month delay has elapsed at the time of the denunciation, he dismissed the claim.

[54] In cross-examination, Mr. Bigras admitted, with respect to the water test performed, that it is possible that the water does not immediately penetrate inside the premises and that he could have missed something. He then admitted that he could not draw any conclusion solely based on these water tests.

[55] He reiterated that the inspection by the Plan Manager is not intrusive neither thorough and that it is not in their mandate to open or remove units or part of it.

PLEADING

Beneficiary

[56] The Beneficiary submitted to have demonstrated that Mr. Khambatta had a reasonable behaviour in August 2013. Furthermore, Mr. Khambatta did not have any reason to believe that there was an abnormality with the air conditioning system or with any water infiltration. Mr. Khambatta verified the air conditioning system and its surroundings, but never found the source of the drops of water.

[57] The Beneficiary also pointed out that after the first episode in August 2013 and upon Mr. Khambatta’s verifications, nothing happened until July 2014.

[58] Mr. Khambatta did all the required maintenance and was very diligent when he noticed the first few drops in 2013 and thereafter in July 2014.

[59] The Beneficiary submitted to the Arbitration Tribunal that the claim was made to the Plan Manager within the 6-month delay prescribed by the Regulation and therefore, this gives ground to the Tribunal to quash the decision rendered and declare that the claim is an eligible claim under the Regulation.

Builder

[60] The Builder submitted to the Tribunal that the Beneficiary had to denounce the issue to the Plan Manager within six (6) months of the discovery of the first event, namely in 2013 when Mr. Khambatta noticed the first water drops near the air conditioning system.

[61] Instead, Mr. Khambatta chose not to act accordingly and waited until the issue had worsened over time to finally denounce it in September 2014 more than a year after the discovery. For these reasons, the claim is not eligible and the decision rendered shall be maintained.

Plan Manager

[62] Me Godin, attorney for the Plan Manager, submitted to the Tribunal that the Regulation clearly stipulates that any problem discovered must be reported within six (6) months of its discovery to the Plan Manager.

[63] Not only does the Regulation provide for a six-month delay but this delay, according to Me Ewart, is of strict compliance and failing to report the problem as prescribed means the Beneficiary’s right elapsed and can’t be remedied by the Court. In support of its argumentation, the Plan Manager submitted the decision Apollonatos & Karounis vs. Habitations Luxim Inc.[1]

[64] The Plan Manager also added that the Beneficiary did not proceed with due diligence as it should have acted in 2013 when Mr. Khambatta noticed the first sign of what became problematic in July 2014.

[65] Instead, Mr. Khambatta chose not to mention anything to anyone until it became worse in July 2014. It was not reasonable for Mr. Khambatta to continue using the air conditioning system without investigating the root problem. Furthermore, it was not reasonable for Mr. Khambatta to not request that such an investigation be done by a professional.

[66] The Plan Manager does not have to be penalized by Mr. Khambatta’s decision to wait for something to go from bad to worse.

[67] The Beneficiary failed to denounce the issue within the prescribed delay and the Beneficiary cannot argue now that it was reasonable to not report the issue in due time based on the non-reoccurrence of the symptom for a one-year period.

[68] According to the Plan Manager, in August 2013, it was not possible for the Beneficiary to assess the extent of the damages caused by the water infiltration and he should have acted then. Beneficiary’s inaction resulted in much greater damages as the problem was not assessed for at least a year and in September 2014, it was already too late to prevent the now known outcome.

[69] The main purpose of the six-month delay provided for in the Regulation is for the Builder and for the Plan Manager to do whatever has to be done and as quickly as possible to avoid any escalation of damages.

[70] The Plan Manager hereby requests that the decision rendered on June 16^th, 2015 be maintained and subsidiarily, that the file be returned to the Plan Manager for evaluation on the merit.

ANALYSIS AND DECISION

[71] The question submitted to the Arbitration Tribunal is quite simple: the undersigned arbitrator must decide whether or not the Beneficiary has reported the problem in conformity with the Regulation.

[72] The Tribunal must rule in light of the law and in equity, if justified by the circumstances.

[73] The Court agrees with the Plan Manager that the six-month delay provided for in the Regulation is of strict compliance and failing to obey would extinguish Beneficiary’s right to seek the application of the guarantee.

[74] However, the undersigned is of the opinion that the Beneficiary acted diligently. The simple occurrence of what may be called a "splash of water on the wall" is not sufficient, in the absence of any other symptoms, to justify that a claim be made to the Plan Manager.

[75] It would be quite exorbitant to force the Beneficiary to denounce anything that comes up even though there are no other signs of symptoms of deficiency whatsoever.

[76] Accepting the Builder and the Plan Manager’s arguments would result in an abundance of frivolous and unfounded denunciations from beneficiaries in fear of losing their recourses.

[77] In reality, the first manifestation of a problem with Unit #[...] came in July 2014 when Mr. Khambatta noticed signs that revealed a real potential issue rather than the presence of inexplicable drops of water in August 2013.

[78] In light of all the facts, circumstances and testimonies, the Tribunal is hereby satisfied with the evidence administered by all parties to justify that the decision of June 16^th, 2015 be quashed. Moreover, the Tribunal considers that the Plan Manager, by losing the file and waiting until May 2015 to proceed with a second inspection cannot blame anyone but itself for the increased damages.

[79] Therefore, the denunciation made on September 29^th, 2014 was well within the six-month delay provided for in the Regulation and the Beneficiary is well founded to request the present Arbitration Tribunal to declare that its claim is eligible.

[80] The decision of the Plan Manager also mentioned that the problem discussed herein existed for more than three (3) years. The Tribunal did not report the testimonies in that regard but suffice to say that it appears that numerous problems were brought to the attention of the Plan Manager over the last few years and it appears that the said pre-existing condition stated in the June 16^th, 2015 decision has nothing to do with the problem on which the present sentence rules.

[81] With regards to the arbitration costs, pursuant to section 123 of the Regulation, the entire costs shall be paid by the Plan Manager.

FOR THESE REASONS, THE ARBITRATION TRIBUNAL:

GRANTS Beneficiary’s application for arbitration;

DECLARES that the denunciation made on September 29^th, 2014 was within the 6-month delay provided for in the Regulation;

RETURNS the file to the Plan Manager to render a decision on the merit of the claim;

CONDEMNS the Plan Manager to pay all the arbitration costs.

Montreal, this 14^th day of October 2016

Me Karine Poulin, arbitrator

G1115-63

S/A 125

[1] Niki Apollonatos & George Karounis vs. Habitations Luxim Inc., CCAC, June 4^th, 2008, Me Jean-Philippe Ewart, arbitrator.