Well I'm opening myself up to criticism, but here goes... There doesn't have to be anything inherently evil about installing tile on plywood instead of cement board. I know this by experience. I routinely install flooring tile over plywood and have NEVER had a problem. If CORRECTLY done it can be fine. By "correctly done" I mean properly sized floor joists, T&G 3/4" underlayment glued and ring nailed to joist, and 1/2" - 3/4" ply glued and screwed or ring nailed with staggered seams. I use thinset mortar and good quality grout and it works great. I have done this at least 50 times and have never had a callback or a problem that was caused by this. There are no magical properties of backer board/cement board. You can have grout failure with it also if the joists are undersized, or the subfloor isn't installed correctly, or if the backer board isn't glued or thinset in place with or is lacking adequate fasteners etc. All other things being equal the cement board is better, but rarely are all other things equal and that could very well be the cause in this case. Here we are with people telling this poor person to rip out the whole job and start over. I don't think you have enough info to say that. All you are going on is that the tile is on wood. How do you know the joists aren't undersized or that the wrong mastic was used or that the grout is a bad batch? If any of these things are the cause then the person will re-do the whole job and it will fail again. I am not impressed, next time try to break a sweat and get to the bottom of the problem instead of just parroting "put it on cement board".