arbitration DECISION

After having read the proceedings, heard the proof and argument of all parties, the ARBITRATION tribunal renders its decision As follows:

1. FACTS AND PROCEeDings

On February 28, 2001, the Beneficiary took possession of his new house located at […], City of Vaudreuil-Dorion, Quebec, […]. In Spring 2001, as soon as the snow melted, the Beneficiary complained to the Builder about the finishing appearance of the cement balcony and steps. The Builder was notified in writing by the Beneficiary on November 22, 2001 of this problem and other problems in a list of deficiencies sent to the Builder on that date.

The Builder repeatedly assured the Beneficiary that the problem would be taken care of shortly. In Fall 2002, the Builder applied a fresh coat of cement to the balcony and steps. Before long, the same problem occurred with the same manifestations: spalling, scaling, and pitting of the cement. Bubbles soon formed under the new coat of cement and the surface began to crack and peel off after only a few days from the new application. At the hearing, the Beneficiary filed into the record Photos 1 to 8 to demonstrate the unsatisfactory state and the problems experienced with the balcony and the steps. After the unsuccessful application of the cement top coat, the Beneficiary again complained to the Builder. However, the Builder did nothing more, except to promise to look into it and repair it.

Finally, on October 7, 2004, the Beneficiary sent a written notice to the Builder with a copy to the Plan Manager / Mise en cause pursuant to the claim procedure to obtain relief under the Guarantee Contract with Qualité Habitation (“Guarantee”) (Article 6.9.1). At all relevant times, the Beneficiary had in his possession of copy of the Guarantee which outlines its terms, conditions and procedures.

In his letter of October 7, 2004, the Beneficiary asks that the problem of the scaling, spalling and pitting of his cement balcony and steps be “fixed once and for all”. The Builder did not react. The Plan Manager under the Guarantee sent an expert-conciliator, Mr. Normand Pitre, to assess and report on the complaint.

Given the date of the complaint, the only protection still afforded by the Guarantee, and in virtue of which the expert-conciliator had jurisdiction to decide, was Article 6.4.2.5 of the Guarantee which reads as follows:

“6.4.2.5 Repairs to faulty design, construction or production of work, or unfavourable nature of the ground, within the meaning of article 2118 of the Civil Code, which appear within five (5) years following the end of work on the building, notice of which is given in writing to the Contractor and the Plan Manager within a reasonable time, which may not exceed 6 months from discovery of the occurrence of the fault or, in the case of gradual faults or losses, of their first manifestation.”

In his report, dated December 17, 2004, the expert-conciliator decided that the problem in issue did not fall within the scope of Article 6.4.2.5 since the alleged defect was not of a type that would “entraîner la perte partielle ou totale de l’unité résidentielle”.

The Beneficiary requested arbitration of the expert-conciliator’s decision, and this is the subject matter of the present arbitration.

2. Questions in issue

The questions in issue are:

1) Whether the complaint of the Beneficiary falls within the coverage provided by Article 6.4.2.5 of the Guarantee?

2) Whether any other coverage of the problem is available to the Beneficiary under the Guarantee?

3. Analysis and Decision

The Beneficiary’s claim is that he wants permanent repair of the above-described problem with the balcony and the steps and that whatever required work be done. In his letter of October 7, 2004, he states his view that the cause of the problem is the poor quality of the cement and that it was mixed too long. At the hearing, the Beneficiary stated that there was too much air in the cement but no expertise was filed to support that theory. The conclusion of the Beneficiary’s submission is that if the only solution is the replacement and a new installation of the entire balcony and steps, then such work should be carried out. In the opinion of the Arbitration Tribunal, the cost of such work would be considerably in excess of $3,000.00.

In its proof, the Builder suggests that the cause of the spalling, scaling, pitting and bubbling of the cement is the use of salt. The Beneficiary states categorically that the only product he and his family have used on the balcony was “Déglaçant Alaskan”. The instructions for this product expressly state that it can be used for and will not harm good quality cement designed for cold climates (“Le Déglacant Alaskan n’abîme pas le béton de qualité conçu pour les climats froids”).

The expert-conciliator states that no salt-based product at all should be used on cement. He does, however, acknowledge that the use of salt on cement is wide-spread in Quebec and in particular-ly, the Greater Montreal area, in residential, commercial, institutional and governmental sectors.

In the opinion of the Arbitration Tribunal, the extent of the proven damages to the cement on the balcony and steps is not consistent with the mere use of “Déglaçant Alaskan” or even the use of a more abrasive salt-based product. The cement does appear to be deficient in quality for a proper finishing and its appearance is seriously unsatisfactory.

However, the only proof shown is that the appearance of the balcony is not satisfactory, that is, it is scaling, spalling and pitting. These are superficial manifestations which affect only the outside finishing of the cement.

No sufficient proof was made to establish that the cement is of such poor quality that the balcony will, either now or at a later date, collapse, perish or fail as a structure.

Without such proof, the Arbitration Tribunal is unable to conclude that the complaint of the Beneficiary falls within the gravity and conditions stipulated at Article 6.4.2.5 of the Guarantee. For that reason, the Arbitration Tribunal agrees with the conclusion of the expert-conciliator rejecting coverage under that article.

However, the Beneficiary also requests that the Arbitration Tribunal grant coverage under the other headings of the Guarantee (one (1) year protection against poor workmanship (Article 6.4.2.3) and the three (3) year protection against latent defects (Article 6.4.2.4)) since the only reason he did not complain earlier under the formal claim procedure of the Guarantee was that the Builder kept promising and reassuring him that the problem raised would be repaired shortly. The behavior and representations of the Builder may be good grounds against the Builder for an extension of all legal guarantees owed by the Builder to the Beneficiary. However, the acts of the Builder cannot extend or modify the liability of the Plan Manager under the Guarantee in the absence of some other proof or special circumstance.

For these reasons, the Arbitration Application must be dismissed.

4. AMOUNT IN ISSUE AND APPORTIONMENT OF COSTS

The replacement and installation of a new cement balcony and steps would cost in excess of $3,000.00, probably between $4,000.00 and $5,000.00. The Plan Manager submitted that a partial solution could be considered at a lesser cost but that was not the request of the Beneficiary considering his allegation that the actual cement is defective. The Arbitration Tribunal decides that the amount in issue is $4,000.00.

Given that the Beneficiary, who the Arbitration Tribunal considers to be entirely in good faith, did not make an earlier claim under the Guarantee because of the unfulfilled promises and representations of the Builder, and since the Arbitration Tribunal is of the view that an earlier claim would have been well founded under the headings and coverages for one (1) year and three (3) years, the Builder should also participate and contribute to the costs of the present arbitration. The financial participation of the Builder ordered by the present decision is also based upon Article 116 of the Règlement sur le plan de garantie des bâtiments résidentiels neufs which authorizes the Arbitration Tribunal to introduce equity into the decision when justified in the circumstances. The apportionment of costs will be as follows:

- Beneficiary: $150.00; and

- The Builder and the Plan Manager shall pay 50% each of the remaining costs of the

Arbitration.

For these reasons, the Arbitration Tribunal:

DISMISSES the Arbitration Application;

CONDEMNS the Beneficiary to pay the amount of $150.00, as costs of the present arbitration, to the Canadian Commercial Arbitration Center (CCAC);

CONDEMNS the Builder and the Plan Manager to pay 50 % each of the remaining costs of the present arbitration.

____________________________________
Mtre. Jeffrey Edwards, Arbitrator

For the Beneficiary :

Mr. Naji El-Mousfi

[…] Vaudreuil-Dorion, Quebec […]

For the Builder :

Mr. Normand Hébert

Construction Nordi Inc.

2911 Du Meunier Street

Vaudreuil-Dorion, Quebec J7V 8P2

For the Plan Manager :

Mtre. Avelino de Andrade

La Garantie Qualité-Habitation

7400 des Galeries-d’Anjou Blvd.

Suite 200

Anjou, Quebec H1M 3M2

Hearing: May 17, 2005

Arbitration Decision: May 26, 2005