INTHESUPREMECOURTOF BRITISHCOLUMBIA Citation:Davidson v. WawanesaInsurance Company, 2015 BCSC 1383 Date: 20150810 Docket: 45491 Registry:Kamloops Between: Steven Michael Davidson Plaintiff And Wawanesa Insurance Company Defendant Before: TheHonourableMadam Justice Fitzpatrick Reasons for Judgment Counselfor Plaintiff:InPerson Counselfor Defendant:J. Meadows Place andDate of Trial:Kamloops, B.C. June29-30, July2-3, 6-8, 2015 Place andDate of Judgment:Kamloops, B.C. August10, 2015 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 2 Introduction [1]Theresidence of the plaintiff,StevenDavidson,in Kamloops, British Columbia,burneddownin April 2010. Thereis no mysteryas to whyit burneddown; it was arson.Thearsonoccurredthe dayafter a police raid of the residence,a raid thatrevealeda marijuanagrow operation andwhatthepolice described as a substantialamountof stolenpropertyand illegal firearms. [2]Mr.Davidson claims he had no knowledgeof theillegal activities at the residence. He seeks recoveryof thevalueof his residence and contentsfromthe defendant,WawanesaInsuranceCompany(Wawanesa),whohad issued a fire-insurancepolicy on theresidence some years before thefire. [3]Wawanesadenied coverage underthepolicy, allegingthatMr.Davidson knewof the illegalactivities. Wawanesanow contendsthattheloss is not covered underthepolicy.Further,it contendsthatMr.Davidsons failureto disclose themor, alternatively,advise Wawanesawhentheyarose, constitutedmaterial misrepresentationwhichwouldhaveotherwisecausedWawanesa notto issue the policy or to cancelit. Wawanesaadvancesa counterclaimagainst Mr. Davidson for amountsit was required to pay to themortgagee whowas entitledto paymentof the mortgage balanceunderthepolicy terms. [4]Wawanesaalso initiallyalleged thatMr.Davidson had set thefire himself, althoughthatallegationwas withdrawnduringargument. [5]Themajorissues to be decided are whethertheloss is covered underthe policy andwhetherMr. Davidsonwas in breachof the insurancepolicyso as to disentitlehim in claiming against Wawanesafor the loss arising from thefire. Background Facts [6]Mr.Davidson is 54 yearsold. He grew up in Ontarioand movedto the Okanaganin 1975. He has a high-schooleducation. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 3 [7]After leavinghighschool,Mr.Davidson had a numberof jobs in Edmonton, Alberta,and in Vernonand Armstrong,British Columbia. [8]He met TammyBoucherin 1989 and theymarried in 1994. InMarch1995, theyhad a daughter,Veronica Boucher.TammyBoucheralso has a daughterfroma previousrelationship,KurstenBoucher. [9]By approximately2000, Mr. Davidson took oversole custodyof Veronica due to Tammybeing unableto care for her.However,at some point, Veronica was taken into thecare of theMinistryof ChildrenandFamily Development(theMinistry), whereshe wouldremain untilher 19thbirthdayin March2014. [10]Mr.Davidson continuedto workin Kamloops, althoughhe later movedto Edmontonandthen,later still,began workingin Fort McMurray.Throughthese efforts,hewas able to save enoughmoneyto purchasea home. [11]InJanuary2006, Mr. Davidson purchasedthe propertyat 4300 Westsyde Road, Kamloops, British Columbia (theResidence),for approximately$320,000. He financedthepurchase,at least in part,by obtaininga mortgage from theRoyal Bank of Canada (theBank),whichwas registered against the Residence (the Mortgage). [12]Immediatelyuponhis purchaseof theResidence, Mr.Davidson arranged for insuranceagainst loss or damage from fire, amongotherthings,fromWawanesa. Policy HPC 1464763 was issued by Wawanesain August2007 (thePolicy).Inthe usualfashion,thePolicy includeda standardmortgage clausein favourof the Bank, whichprotected it in theeventthatthe Policywas voided for anyreason relatingto the insured. [13]Sometime after thepurchaseof the Residence,Tammymoved in.Also, Kurstenand her boyfriend,MichaelWasmund,moved into theResidence for at least some periods of time, possiblyduring2009. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 4 [14]OnDecember 29, 2009, Mr.Davidson was charged withassaultwitha weapon,dangerousoperation of a vehicleand failing to stop at anaccident with anotherperson.Thesecharges arose froman incidentinvolvingTammy,whereby Mr.Davidson drove his vehiclethrougha fence thatthenstruckher.Mr.Davidson says thathe had no intentionof hittingTammy. [15]InearlyJanuary2010, Mr. Davidsonvisited theResidence onlybriefly. Tammy,Kurstenand MichaelWasmundremained in theResidence whilehe went off to work outside of Kamloops. [16]OnJanuary22, 2010, Mr.Davidson turnedhimselfin to theRCMP in connectionwiththe assaultcharges.He was ultimatelyreleased on certainbail conditions,whichincludedthathe wouldnotattendat, or be within100 metersof anyresidence of Tammy,exceptfor one attendance,in thecompanyof a peace officer, forthe purposeof retrievinghis personal belongings. [17]Mr.Davidson renewedthe Policy everyyearup to and includingJanuary 2010. InJanuary2010, he attendedat his broker, HUB InternationalBarton InsuranceBrokers (HUBInternational),in Kamloops to renewthePolicy for the period in question,being January20, 2010 to January20, 2011. Thepolicylimits were as follows:dwellingbuilding:$334,500; privatestructures:$50,200; personal property:$267,600; and additional livingexpenses:$66,900; althoughtheselimits were allsubjectto a singleinclusivelimitof $719,200. [18]Mr.Davidson explainedthat,in early2010 before hewentup northto work, he had given$4,000 to Tammyor Kurstenin order thatthefundscould be deposited into his bank accountwithwhichto pay theMortgage. He contendsthatthedeposit was notmade, unbeknownstto him.As a result,thelast bi-weeklymortgage paymentwas made to theBank on March5, 2010 and, thereafter,commencing March19, 2010, themortgage paymentwas not made and it wentinto default. [19]InApril 2010, Mr. Davidsonwas workingon variousjobs northof Kamloops in thearea of 100 Mile House,British Columbia.Mr. Davidson was advised by various 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 5 people thatafter he hadleft theResidence to go up north,otherpersons mightbe visiting at theResidence withTammy,Kurstenand MichaelWasmund.He knewthe names of some of these people butothers hedid not. [20]OnApril 21, 2010, thepolice raided theResidence,in accordance witha search warrant,withrespect to variousallegedoffences.Theyfound: a)a marijuanagrow operation in thebasement,whichcontained 630 plants in a vegetativestate and variousdried plantmaterial.Otherindicia of a grow operation,suchas scales,were found.Theoutdoorshed also containeditems consistentwitha grow operation.Someone had put drywalloverthedoor to thebasement fromthe lowerlivingroom and a secret access to thebasementwas foundin a closet in anoffice area. The police took samples of theplantsand thedried material foundin the basementof the Residence,but theyneverarranged for anytesting of the plantsor substancesfoundin the Residence.Thepolice did identify marijuanaplantsthrougha physicalinspection; b) a substantialamountof whatcould be described as excesspersonal property,some of whichtheRCMP said was stolen;and c)a numberof illegal firearms. [21]Thepolice removedthemarijuana,thefirearms and muchof thepersonal propertyfromthe Residence.Theyalso arranged to stop all electricaland hydro services to theResidence. TheylefttheResidence around5:30 pm. [22]Inthe veryearlymorninghoursof April 22, 2010, a fire was deliberatelyset in theResidence as a resultof whichmuchof the structureabove groundwas destroyed.Itappears thananaccelerant,gasoline,was used in theliving-roomarea. Theconclusionthatthiswas arson was bolstered,in part, by thefact thatthe utilities had been terminatedafterthe police had left. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 6 [23]Mr.Davidson reported thefire to HUB Internationaland, almostimmediately, Wawanesaretained Fraser Andersonof HustonGrantAdjusters(theAdjusters),to investigatethefire. [24]OnApril 23, 2010, Mr.Davidson cooperated withWawanesa and the Adjusters,providing his consentsandwaivers in order to allowMr. Andersonto attendat the Residencefor the purposesof thatinvestigation. [25]Beginningon or about May3, 2010, Mr.Davidson inquired of Mr.Anderson regarding Wawanesas position regarding his livingexpenses. [26]OnMay 10, 2010, Mr. Davidson provided a detailed statementto Mr.Andersonand gave his writtenauthorizationto Wawanesaor the Adjusters,for therelease of financialor otherpertinentrecords pertainingto himfor the purposeof thefire investigation.Onthatsame date, Mr. Davidsonsigned an authorizationto release informationrelatingto therelease of anyandall financialor otherpertinent records whereversituated,pertainingto me. Thesecond page of this authorization includedtherelease of anyand all informationpertainingto the police case, althoughtherelevantcase numberis leftblank.TheAdjustersused this authorizationto obtain hydrorecords,althoughit was apparentthatthe grow operation involveda bypass of the hydrometer thatallowedfor thetheftof hydro power. [27]OnMay 14, 2010, Mr. Andersonobtained a statementfromKurstenin which she purportedto implicate Mr. Davidson in thegrow operation and thefire. [28]Mr.Davidson continuedto communicatewithMr.Andersonconcerninghis livingexpenses,paymentof theMortgage and compensationfor his losses arising from thefire. He sentMr. Andersonemails on May11 and 19, 2010. Mr. Anderson advised him on May19, 2010 thatWawanesa was unableto consider anyadvance at thattime. Inanyevent,Mr.Davidson advised Mr. Andersonon thatdate thathis livingconditions wereacceptable. He also advised thathehad contactedthe Bank and was dealing withissues arising regardingthe Mortgage. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 7 [29]OnMay 25, 2010, Mr. Davidson gavea statementto theRCMP and was ultimatelyarrested thatdayrelatingto thegrow operation,thestolenpropertyand thefirearms. As he had done to Mr. Anderson,Mr. Davidsondenied anyinvolvement in theillegal activities at the Residence andthe fire. [30]ThroughoutMay2010, Mr. Andersoncontinuedto advise Mr.Davidson that, based on theirpreliminaryinvestigation,no advanceundertheinsurancecould be considered at the time. Furtherpleas for assistance byMr. Davidson intolate May, Juneand Julywere similarlyignored whileWawanesasinvestigationscontinued.On June25, 2010, Mr.Davidson referredto his pain andsufferingandstress resulting from theloss of his home and belongings. [31]Mr.Davidson was investigatedby theRCMP as a possible perpetratorof the grow operation,the theftsof whatwas believed to be stolenpropertyand also the possessor of thefirearms.On May27, 2010, theRCMP recommended to theCrown thatMr.Davidson and Tammybe charged withvariousoffencesrelatingto thegrow operation,the illegalweapons foundin the Residence andthe property,whichwere alleged to havebeen stolenfromlate January2010 andbefore theraid. TheCrown did notapprove these chargesand no chargeswere laid. [32]Mr.Davidson did not havelongto wait to receive word on Wawanesas position in respect of his claim underthePolicy.On June21, 2010, Wawanesa sent a letternotingthattheir investigationhad revealedthatMr. Davidsonhad been charged withpossession of stolenproperty,possession of restricted firearms and productionof a controlledsubstance.Wawanesaindicated thatit wouldnotconsider anyclaim underthePolicy.Wawanesas letterstated: The investigationinto your fire claim of April22, 2010 has revealed that you are being charged with possession of stolen property, possession of restricted firearms and production of a controlled substance. At no time was [Wawanesa] made aware of the fact that you were utilizing your premises in this manner. If [Wawanesa] was made aware of this use of the premises, we would have declined to issue the policy of insurance to you. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 8 Wawanesaindicated thatit was voiding thePolicy effectiveas of theprior renewal date, being January20, 2010. Itrefundedthepremiumpaid, althoughMr. Davidson did notcash the cheque. [33]OnJune28, 2010, Wawanesas counselsenta furtherlettertoMr. Davidson confirmingthatthePolicy had been voided and thatanyclaim was rejectedand denied. He was told thatif he submitteda proof of loss, it wouldbe rejectedand denied. Counselindicated thattheywouldaccept serviceof anylegal proceedings if Mr.Davidson chose to sue. [34]InJuly2010, theinvestigationfirm hiredby theAdjustersconfirmed the tentativeconclusionsthattherehad been forced entryto theResidence and thatan incendiaryfire had been lit giventhepresence of gasoline in theliving room. [35]After thefire, Mr.Davidson boughta camper trailerand a fifth-wheeltrailer and he,Tammyand Veronica travelledacross Canada. By this time,Tammyhad takenVeronica fromher schooland thepolice were attemptingto findher. Eventually,Mr. Davidson came back to British Columbia by wayof SalmonArm. In thefallof 2010, Tammywas apprehended in OntariowithVeronica.Mr.Davidson flewto Ontarioto assist Tammyand theyeventuallymade theirwayback to Alberta in late 2010. [36]After Veronica was returnedinto thecare of theMinistry,Mr. Davidsonmade some unsuccessfuleffortsto get herback. He eventuallygot a job in TumblerRidge and also in variousnorthernlocationsin British Columbia. [37]At the time of the fire,the Mortgage was in defaultand thebalance was approximately$278,000. Once Mr.Davidson foundout whathad happenedwith the mortgage paymentsafter thefire, he did notmake arrangementsto pay theBank to curethe defaultand keep theMortgage in good standing.He said thathe couldnot justifypayingfor a pile of ashes. [38]Thisaction was commenced in March2011. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 9 [39]At some point,the Bank commencedforeclosureproceedings against the Residence.Theforeclosureproceedings continuedand eventuallytheBank completed a sale of theResidence in September 2011, whichnettedproceeds of $98,567.88. [40]InOctober 2011, the Bank filed a proof of loss withWawanesaclaiming recoveryof the remainingbalancedue undertheMortgage. [41]InNovember2011, the assaultchargeslaid against Mr.Davidson relatingto theDecember 2009 incidentwere stayed. [42]Thelast time Mr.Davidson lived withTammywas in December 2011 when she movedto Alberta to be withKursten.He remains in contactwithTammy. Mr.Davidson also attended thewedding of Kurstenand Michael Wasmundin Edmontonin August2014. Tammyhas givenlittleor noinformationto Mr.Davidson regarding whoset up thegrow operation, althoughsheseems to havetakencredit for it. [43]OnFebruary2, 2012, Wawanesa paid $211,576.69 to theBank in satisfaction of its claim undertheMortgage.This paymentarose from theterms of thestandard mortgage clausein the Policy,whichprovides for recoveryto theBank notwithstandinganyact,neglect,omission or misrepresentationattributableto the mortgagor,owneror occupantof the propertyinsured. Issues [44]Theissues to be decided are: a)is Mr.Davidsons claim coveredunderthePolicy?; b)if notexcludedby thePolicy, is thePolicy void by reasonof any misrepresentationor failureto advise of a changeof material risk by Mr.Davidson?; 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 10 c)if thePolicy is effective,has Mr.Davidson provenhis losses arising from thefire? Coverage Issues [45]Wawanesacontendsthatthereis no coverageunderthePolicy in respect of Mr.Davidsons claim,since hewas not residing at the Residence at thetime of the fire or, alternatively,thegrow operation was specificallyexcludedundertheterms of thePolicy. (a)The Residency Issue [46]ThePolicy provides for coverageas follows: COVERAGE A DWELLING BUILDINGS We insure: (1)the dwelling on the premises described in the Declarations and all attached structures; COVERAGE C PERSONAL PROPERTY We insure: (1)personal property you own, wear or use, while on your premises. If you wish, we will include personal property of others while it is on that portion of your premises which you occupy. (2)your personal property while it is temporarily away from your premises anywhere in the world. Personal property at any other location you own, rent or occupy is not insured, except while you are temporarily livingthere. [47]Definitions of Dwellingand Premises underthePolicy are: Dwelling: (1)if you are a building owner, means a building occupied principally as a private residence[.] Premises means: (1)the premises where you reside and which is shown as your principal residence in the Rating information section of the Declarations. If you own that residence, premises also means the grounds appurtenantto it. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 11 [48]Youin thePolicy refersto theInsured.Insuredis defined as: Insured means a Named Insured and, while livingin the same household: (1)his or her spouse; (2)the relatives of either; and (3)any person under the age of 21 years in their care. Spouse includes: (1)either of two persons who are married to each other or who have together entered into a marriage that is voidableor void; or (2)either of two persons who are living together in a conjugal relationship outside marriage and have so livedtogether continuously for a period of 3 years[.] [49]ThePolicy was a principalresidence one withtheResidence being designated as such.Mr. Davidsonis the namedInsured.This typeof policy is distinguishedfrom a basic dwellingpolicythatWawanesas representative,Ricky Grass,described as providing differentcoveragesand being priced differentlyand more expensivelyin terms of risk factors. [50]Wawanesaalleges thatMr.Davidson was not residing at theResidence from January2010 to the time of thefire and that,accordingly,therewas no coverage at thetime of thefire. [51]Thefirst difficultywith thisargumentis thatit is notpleaded as a basis for denyingMr. Davidsons claim. Thisis consistentwithWawanesanotciting thisas a basis for thedenial of the claim in its andits counselslettersto Mr.Davidson in June2010. [52]Inanyevent,theuncontradictedevidenceof Mr. Davidson was thatduring this period of time, he was stayingor livingup in thearea around100 Mile House onlytemporarilywhilehewas employed doing constructionwork on variousjobs. Further,Mr.Davidson maintainedtheResidence as his residence at all times in that, butfor a fewpersonal items,all of his otherpersonal possessions were located at theResidence. For example,muchof his clothing,credit cards and various motorcycleswere stillat theResidence. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 12 [53]Theevidenceof WawanesasMr. Grass,and therepresentativeof HUB International,Anne-MarieHofstede,were of littleassistance on thispoint.Mr.Grass conceded thattemporaryabsences, suchas for work and vacation,wouldnotresult in a personhavingmovedtheir residencefor thepurposes of continuingcoverage undersucha policy andthatit woulddepend onthe circumstances.Ms.Hofstede confirmedher viewthattherewas no need to notifythe broker or theinsurance companyif, for example,theman of thehouseholdwas up northworkingfor extendedperiods of time so longas thefamilymembers continuedto live therein a normalfashion.Inanyevent,Mr.Grass and Ms. Hofstedes interpretationsof the insurancecontractbetweenMr.Davidson and Wawanesaare notadmissible. See Prenn v. Simmonds, [1971] 3 All E.R.237; Eli Lilly & Co. v. Novopharm Ltd.,[1998] 2 S.C.R.129 at 166-167. [54]ThisCourt discussed thecommonly-acceptedprinciples of interpretationof insurancepolicies in The Owners,Strata Plan NW2580 v. Canadian Northern Shield Insurance Company, 2006 BCSC 330. Madam Justice Martinsonstated: [30]The Court must examine the provisions of a policy and the surrounding circumstances to determine if the events in question fall within the terms of coverage of that particular policy. In each case, the Court must interpret the provisions of the policy at issue in light of general principles of interpretationof insurance policies, including, but not limited to: (1)the contra proferentem rule; (2)the principle that coverage provisions should be construed broadly and exclusion clauses narrowly; and (3)the desirability,at least where the policy is ambiguous, of giving effect to the reasonable expectations of the parties; the insureds reasonable expectationis, at a minimum, that the insurance plan will provide coverage for legitimate claims on an ongoingbasis. (Reid Crowther& Partners Ltd. v. Simcoe & Erie General Insurance Co., [1993] 1 S.C.R. 252 at 268-269, 99 D.L.R. (4th) 741, [1993] 2 W.W.R. 433)[.] [55]Iaccept Mr. Davidsons evidence and find,as a fact,thatMr. Davidson was onlytemporarilyawayfromthe Residence forthe purposeof his workand that,at all times, he maintainedtheResidence as his residence.Ialso accept Mr.Davidsons 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 13 evidenceand find, as a fact,thatfrom January2010 to the time of thefire, Tammy and Kurstenwere residing in theResidence as theirprincipal residence. [56]Wawanesaargues thatthePolicy shouldbe interpretedsuchthat,if a person has noknowledge as to whenheor shewill be returningto theproperty,thenthat person cannotbe said to reside at the property.Thereis simplyno basis for applying suchaninterpretationof thePolicy. Does thatmeanthatif someone is away working,and does notknowwhentheywillbe able to get time off workto go home, thatthereis no coverage?Does thatmean thatsomeone backpacking through Europe withan open-endedreturndate to their homehas no coverage?Surely, commonsense woulddictate otherwise. [57]Wawanesaalso pointsto thebail conditionsthatwere imposed on Mr.Davidson in late January2010. However,those bail conditions did notsay that Mr.Davidson could notreside at theResidence; rather,theyrequired thathe stayat least 100 metresawayfrom theresidence of TammyBoucher.Iaccept that Mr.Davidson was unsureaboutwhenthatbail condition mightbe lifted but,in any event,he decided to temporarilywork upnorth.Inspite of thatcondition, Mr.Davidson continuedto havelegal controlof theResidence and,theoretically, couldhaveexercised thatcontrolto removeTammyfrom theResidence and move back in. [58]Itis also worthnotingthatMr.Davidson, as I willdiscuss in more detail below, did visit theResidence once betweenearlyJanuaryand thefireand, in thatsense, was usingit as his principal residence at thattime. [59]InCanadian Northern Shield, MartinsonJ. stated thatin the firstinstance,the insuredmustprovethatthe loss fallswithinthe coverageprovided bythepolicy: para. 15. [60]Iam satisfied thatMr. Davidsonhas met this onusin respect of Wawanesas argumentthathe did notreside at theResidence. Inmyview,the Policy canbe reasonablyinterpretedas allowingfortemporaryabsences from theresidence, such 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 14 as for workor vacation,and thatis exactlywhatMr. Davidsonwas doing between January2010 andthe date of the fire. [61]Thisinterpretationis supported,in part, by thetermsof thePolicy itself,which refer to personalpropertybeing insuredat anylocation otherthanthepremises whileyouare temporarilylivingthere.Thisconceptof being temporarilyresiding elsewhereis also foundin the definitionof premises in terms of theliability coverage wherepremises also means: (4)premises you are using or where you are temporarily residing if you do not own such premises. [62]Thisbroader constructionof thecoverage provision is in keeping withthe interpretationprinciples cited above.Evenif this provisioncouldbe construedas ambiguous,Ifind thatit is in keeping withthereasonableexpectationof the parties. Inour mobile society,manypeople are awaytemporarilyfor variousreasons, includingwork and vacations.Such temporaryabsences do notdetract fromthe fact thata personcan stillmaintaintheir principal residence at anotherlocation. [63]Ifind thatMr.Davidson has met his burdenin proving thathis claim falls withincoverageunderthePolicy. (b)The Grow Operation Exclusion [64]Assumingcoverage for theloss is available underthePolicy, theinsurance companymayclaim thatan exclusionclauseapplies. Theinsurerbears the onusof provingthatan exclusionclause applies. Ifan exclusionclause hasbeen shownto be applicable, theinsuredbears theonusof provingan exceptionto theexclusion clause:Canadian Northern Shield at para. 15. [65]Wawanesaclaims thatthe grow operationwas an excludedrisk thatwas specificallynotinsured underthePolicy. [66]ThePolicy provides: 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 15 SECTION I LOSS OR DAMAGE NOT INSURED We do not insure: (4)loss or damage to structures or buildings used in whole or in part for business or farming purposes; (10)any loss or damage resulting from any illegal activity: (a)of the Insured; (b)of any tenant of the Insured; or (c)the relatives or residence employees of either; arising directly or indirectly from the growing, cultivating,harvesting, processing, manufacture, distribution, or sale of any drug, including but not limited to cannabis, or any non-prescription controlled substance or illegalsubstance or items of any kind, the possession of which constitutes a criminal offence, whether or not you have any knowledge of such activity or are able or unable to control such illegal activity. This includes any alterationof the premises to facilitate such illegal activity. [Emphasis added.] [67]Wawanesarelies oneach of the above exclusionclausesas applyingto the fire loss. Inaddition, as Wawanesapoints out,theseexclusionclausesapply, notwithstandingthattheinsured maynotbe aware of theseactivities onthe premises. Accordingly,theapplication of theseclauses does notdepend on the main issue arising in thiscase in relationto Mr. Davidsons assertions thathe did not knowthatthegrow operation was taking place in the Residence. [68]Thefirst exclusionrelatesto coverage for loss or damage to structuresor buildingsused in wholeor in part for businessor farmingpurposes.Thoseare defined in thePolicy as follows: Business means a trade, profession or occupation. Business does not include farming. Farming means the ownership, maintenance or use of premises for the production of crops or the raising or care of livestock, including all necessary operations. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 16 [69]Ihavedifficultyin seeing thatthegrow operation resultedin a business being conductedfrom theResidence.While Iaccept the evidenceestablishes that marijuanawas being grownin theResidence, therewas noevidence thatthe business,presumablythebuyingand sellingof theproduct,marijuana,was taking place there. [70]As for thefarmingexclusion,Wawanesaargues thatmarijuanais a crop, citing theOxfordEnglishDictionaryas [a] cultivatedplantthatis grownon a large scale commercially,especiallya cereal,fruit,or vegetable. [71]Therecanbe littledoubt thatmarijuanais a cultivatedplantand thatthegrow operation discovered by theRCMP indicated manyplantsconsistentwiththe productionof marijuana.Mr.Davidson noted thattherewas noformaltesting of the plantsor thedried materials foundin theResidence.Nevertheless,Cst. Kale Pauls of the RCMP,who is veryfamiliar withgrow operations,testified thathe was able to visuallyrecognizemarijuanaplants.Iaccept his evidence thattheplantsfoundin the Residence were marijuanaand not,for example,hemp plantsas suggested by Mr.Davidson. Therewas,however,no testingof thedried materials thatwould establishthattheywere,in fact,marijuana. [72]Theobjectiveof interpretinga contractis to discover and give effect to the parties' trueintentionas expressed in thewrittendocumentas a wholeat thetime thecontractwas made: BrentwoodEnterprises Limited Partnership v. Revelstoke Mountain Resort Limited Partnership, 2014 BCSC 773 at paras. 26-27; Eli Lilly at 166-167; KingswayGeneral Insurance Co. v. Lougheed Enterprises Ltd.,2004 BCCA 421 at para. 10. See also BowValley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Ltd., [1997] 3 S.C.R. 1210; Manulife Bank of Canada v. Conlin, [1996] 3 S.C.R.415. [73]Inthe absence of ambiguity,the plain,ordinary,popular,natural,or literal meaningof the words in a contract,read in lightof the entireagreement,and its surroundingcircumstancesshouldbe adopted, exceptwhereto do so wouldresultin commercial absurdityor create some inconsistencywiththerest of thecontract: 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 17 Non-Marine Underwriters,Lloyd's London v. Scalera, 2000 SCC 24 at para. 71; Eli Lilly at 166-167; Manulife Bank at 451. [74]Accordingly,whethera growoperation comes withinthe definitionof farming requires thatthisexclusionclausebe considered withinthecontextof the Policy as a whole. [75]Exclusionclause(10) cited above is clear enough.No doubtthese clauses havebecome more andmore common as the scourgeof residential grow operations havealso become more prevalentin ourcommunities.Mr. Grasstestified as to the importanceof theuse of a propertywhenaninsurerconsiders whetherit willinsure a risk, thecoverages thatit will offerand theamountof premiumit will charge.That accords withcommonsense.Iwouldalso hazarda guess thatit wouldbe a very uniqueinsurerwhowouldpurposefullyinsurean illegal growoperation, whetherin a home or otherwise. [76]Iaccept thata propertybeing used for a businessor farmingpurpose has otherand higherrisk factorsthatwouldbe considered byanyprudentinsurer. However,in this residential-dwellingpolicy,in my view,it cannotbe reasonably interpretedthattheparties intendedto excludea grow operation byuse of the word farming.Put anotherway,I fail to see howtheparties couldhaveintendedthatan illegal growoperation, in a residentialhouse,fit withinthatterm. [77]Rather,consistentwiththeexperienceof the insuranceindustryin relationto grow operations,the Policycontaineda specific provision,exclusionclause(10), dealing withthepotentialfor this situation.Thatprovisionclearlyrefersto the growing,cultivating,harvestingof cannabis.Ifthegrowingof cannabiswas includedwithinthedefinitionof farming,thentherewas no need for thisseparate provision. [78]Thisinterpretationmakes imminentsense whencomparingthe twoseparate provisions.Ifthecultivationof marijuanais an excludedrisk as farming,thenwhy laterlimit theexclusionto onlyloss or damage resultingfromtheillegal activity? 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 18 Wawanesas assertionthatthis is farmingresultsin two separate exclusionswhich operate differentlydepending on thefactualcircumstances.Where theloss does not resultfrom theactivity,thenit wouldbe coveredunderexclusionclause(10), but excludedunderexclusionclause(4) above. Suchaninterpretationresultsin an inconsistencywithinthePolicy. Thisinconsistencyis resolvedbyapplyingonly exclusionclause(10) to situationswherea grow operation is being conductedonthe premises. [79]Further,theseexclusionclausesare to be read narrowly:Canadian Northern Shield at para. 30. [80]Inmyview,the onlyexclusionclausethatapplies to this marijuanagrow operation is clause(10). For the purposesof this argument,Iaccept thatthe marijuanagrow operation eitherbelonged to Mr. Davidson or his wife, Tammy,such thatit arose fromthe activities of either theinsuredor therelativeof theinsured.I also accept whatIbelieve is the uncontroversialconclusionthatthis was an illegal operation,whichwouldconstitutea criminal offenceunderthe Controlled Drugs and Substances Act, S.C. 1996, c. 19. [81]Thatbeing thecase, Wawanesa is required to provethatthe loss or damage result[ed]from theillegal activity. [82]Wawanesaconcedes thatthe fire was notdirectlycaused by thegrowingof marijuana.Thisseems evidentenoughbecause,by thetime of thefire, thegrow operation had been dismantledbythe RCMP. TheonlythingthatWawanesa relies on is theproximityin time betweenthegrow operation and thefire. Itpointsto the coincidencein thatthe Residence was set on fire less than24 hoursafterthe RCMP raided the Residence and disassembled the marijuanagrow operation.It argues thatresultingfromincludesthe foreseeableconsequencesof operatinga grow operation,includingthepossibility of reprisal by rivals,or an intentionalfire by an interestedpartyto destroyevidence followinga police raid. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 19 [83]ThedifficultywithWawanesas position is thatit relies entirelyonspeculation as to howthefire arose. Whilethe timingof eventsis suspicious,it remains thecase thatthereis simplyno evidenceas to whythe fire was set. Itcould havearisen indirectlyfrom theillegal grow operation,butit couldequallyhavehad nothingto do withit. [84]Wawanesahas failed to satisfyme, ona balance of probabilities, thatthe fire resultedfromthegrow operation, whetherdirectlyor indirectly. [85]Insummary,I findthattheloss of damage arising fromthe fire is covered by thePolicy, subjectto theargumentsof Wawanesa belowconcerningmaterial non-disclosureand misrepresentation. MaterialNon-Disclosure and Misrepresentation [86]Therelevantstatuteapplicable to thisApril 2010 fire is theInsurance Act, R.S.B.C.1996, c. 226 (theAct),whichincludesthestatutoryconditionsthatapply: s. 126. [87]Theapplicable statutoryconditionrelatingto changematerial to therisk, as foundin thePolicy,provides: Material change 4. Anychange material to the risk and within the control and knowledge of the insured avoids the contract as to the part affected by the change, unless the change is promptly notifiedin writing to the insurer or its local agent; and the insurer when so notified may return the unearned portion, if any, of the premium paid and cancel the contract, or may notify the insured in writing that, if the insured desires the contract to continue in force, the insured must, within 15 days of the receipt of the notice, pay the insurer an additional premium; and in default of such payment the contract is no longer in force and the insurer must return the unearned portion, if any, of the premium paid. [88]Theapplicable statutoryconditionrelatingto misrepresentation,as foundin thePolicy, provides: Misrepresentation 1. Ifany person applyingfor insurance falsely describes the property to the prejudice of the insurer, or misrepresents or fraudulentlyomits to communicate any circumstance which is material to be made known to the 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 20 insurer in order to enable it to judge of the risk to be undertaken,the contract is void as to any property in relation to which the misrepresentation or omission is material. [89]Therequirements,in order for an insurerto prove a misrepresentation,were set outby McLachlinJ.,as she thenwas, in Sayle v. Jevco Insurance Co., [1985] 58 B.C.L.R.122 at 126 (S.C.),affd (1985),16 C.C.L.I.309 (B.C.C.A.): An insurer relying on misrepresentation in an application for insurance must establish two things:(1) that the representation in question was material; and (2) that there was a misrepresentation or inaccuracy in the information supplied:Stevenson v. Simcoe & Erie Gen. Ins. Co., [1981] I.L.R. 1-1434 at p. 495. The burden of establishing these elements rests on the insurer:Colinvaux,The Law of Insurance, p. 95. [90]Mr.Davidson first applied for thePolicy from Wawanesain January2006 and he was required to,and did, renewit everyyear,withthelast renewaltaking place in January2010. ThatnewPolicy was based onthe informationprovided in Mr.Davidsons original application,plusanychangesthathe disclosed at thetime of renewal.Itis accepted thatMr. Davidsondid notadvise Wawanesa of anychange material to therisk. [91]Ifthecourtis satisfied thattherewas a misrepresentationat thetime Mr.Davidson renewedhis policy in January2010, the Policyis void.Therefore,the questionof the materialityof a marijuanagrow operation to Wawanesais engaged in bothcases, whetherconsidered in thecontextof a misrepresentationor a change material to therisk. [92]Accordingly,underthechangematerial to therisk argument,whichsubsumes theissue of thematerialityof thealleged misrepresentation,Wawanesamustprove: a)therewas a changethatwas materialto therisk; b)thechangewas withinMr.Davidsons control; c)Mr.Davidson had knowledgeof the change;and 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 21 d)neitherWawanesanorits local agentwere promptlynotified in writingof thechange. (a)Changes Materialto the Risk [93]As discussed above, Ihaveaccepted the evidencefrom Cst. Paulsthatthe grow operation foundin the basementof theResidencecontainedmarijuanaplants, as opposed to some otherplantsuchas hemp. [94]Theotherallegationsof Wawanesa are centeredon theallegationthatthe Residence was used to storestolenpropertyand illegalweapons. [95]However,therewas no evidencethatanyof thepropertyitems in the Residence,from January2010 to thedate of thefire, were actuallystolen.Theonly evidencewas fromCpl. Darin Rappel, whosaid he believed manyof theseitems to havebeen stolen,and thattheRCMP recommendedthatchargesbe laid against Mr.Davidson and Tammybased on thatallegation.No direct testimonywas introducedat thetrial to establish thatanyof these items were indeed stolen. Further,therewas noevidence as to howlongthese items had been at the Residence to supportanyallegationthattheywerebeing stored there. [96]Thesame can be said for theallegationthattheResidence was used to storeillegal weapons.Iaccept thatduringthe raid theRCMP did find a numberof weapons,includinga handgun,rifles andshotguns.Theyweredescribed byCpl. Rappel as illegalbecause theywere notregistered to eitherMr.Davidson or Tammy;however,no criminal chargeswere laid andCpl. Rappels testimonydid not establishtheir illegalityat thetrial,evenon a civil standard.Nor,again, was there anyevidenceas to howlong theseitems had been at the Residenceto support Wawanesas allegationthattheywere being stored there. [97]Accordingly,the onlymaterialchange thatwas provenat the trialwas thata marijuanagrow operation was foundin thebasementof the Residence onApril 21, 2010. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 22 [98]Wawanesabears theburdenof provingthematerialityof anychange:Kehoe v. British Columbia Insurance Co., [1993] 79 B.C.L.R.(2d) 241 at 244 (C.A.). The courtin Kehoe agreed withthetrial judge that: It is a question of fact in each case whether, if the matters misrepresented had been truly disclosed, they would, on a fair consideration of the evidence, have influenced a reasonable insurer to decline a risk or to have stipulated for a higher premium. [99]Mr.Grass evidencewas thatthepresence of the marijuanagrow operation wouldhavebeen considered a material changeby Wawanesa.Thereasonableness of Wawanesas practice is supportedby Patricia Stirlings expertreport,dated August21, 2014, to theeffectthatsuchan illegalgrow operation wouldbe considered by an underwriterto be material:Kehoe at 248. Ms. Stirlings report was introducedinto evidencewithoutanychallengebyMr. Davidson.Ms. Stirling professes skill in theassessment of risk to establisheligibility for a personal insurancepolicy or programme. [100]Ifind,as a fact,thatthepresence of themarijuanagrowoperation was a changematerial to therisk underthe Policy.Idid not understandthatMr.Davidson took anycontraryposition, nordid he submitanyevidence to thecontrary. [101]As Ihavenotedabove, thereis no evidencethattheloss or damage arising from thefire was related,in anyway,to thegrow operation. However,thereis no requirementthatthematerial changein risk be causallyconnectedto theloss in order for an insurerto relyon thematerial changeto void the policy:Henwoodv. Prudential Insurance Co. of America, [1967] S.C.R.720 at 723; Marche v. Halifax Insurance Co., 2005 SCC 6 at para. 42. (b)Change Within Mr.Davidsons Control [102]Ialso find thatMr.Davidson had controlof theResidence fromJanuary2010 to the date of thefire. He was the registered ownerof the Residenceand, as Ihave foundabove, was maintainingit as his principal residence evenwhilehe was away workingin the area around100 Mile House.Tammy,Kurstenand MichaelWasmund had movedinto theResidence withhis permission. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 23 [103]AlthoughMr. Davidsons bail conditionsrequired him to stay100 metres away from anyplace heknewto be Tammysresidence, he continuedto havetheability to exercise thatcontrol.For example,he was allowedto visit the Residencein the presence of a police escort. Inaddition, he couldhaveexercised controlover the Residence by commencinglegal proceedings to removeTammy,Kurstenand MichaelWasmundfromthe Residence:Nahayowskiv. Pearl Assurance Company Limited, [1964] A.J. No.27 at para. 20 (S.C.). [104]Mr.Davidson did not dispute thathemaintained controloverthe Residence from January2010 to the date of thefire. (c)Failure to Notify Insurer [105]Mr.Davidson also does not dispute thathe did not notifyWawanesaor its agent,HUB International,of anychangein respect of theResidence, eitherat the time of renewalin January2010 or in theperiod leading up to the fire.He received a letterdated December 21, 2009 from HUB Internationalrelatingto the renewalof the Policy.An attachmentto thatletterspecificallyadvised thatanymaterialchanges arising duringthe policyperiod mustbe reported to their office immediately. Examplesof material changeswere stated to be renovationsor alterationsto the building. [106]Mr.Davidson denies knowledgeof themarijuanagrow operation so hestates thattherewere no changesof whichhe was aware. He also denies anyknowledge of the presenceof anystolenpropertyor illegal firearmsat theResidence. (d)Mr. Davidsons Knowledge [107]Thecentralissue to be decided is whetherMr.Davidson knewof the illegal activities at the Residence.Wawanesa allegesthathe knewof the marijuanagrow operation,both at thetime of therenewalof thePolicy in January2010, and in the period betweentherenewaland thefire. Infact,Wawanesas main allegationis that Mr.Davidson was the drivingforce behindthe grow operation. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 24 [108]AlthoughIhavefoundthatWawanesahas notestablished thepresence of stolenitems or illegalfirearms being storedat theResidence over thisperiod of time, Wawanesasimilarlyalleges thatMr.Davidson knewof these eventsalso. [109]Mr.Davidson says thathewas onthe propertyin earlyDecember 2009 after friends advised him thatstrange thingswere going onat theResidence.Whenhe pulledup in his Jeep Cherokee,he saw variouslawnand outdooritems, suchas wire reindeer. He acknowledgesthatTammywas involvedin pettytheftsand propertycrimes during2009, buthe contendsthatnoneof the stolenitems were in theResidence. He is surethathe discussed his dissatisfaction of heractivities with her.As far as he knew,thesetheftswerenot for resale butratherfor herown pleasure,so the items were being used in his yard.He says thathe ultimatelygot rid of themby loading theitems into his Jeep and dropping themoff somewherewhere he thoughttheycouldbe re-used. [110]Mr.Davidson says thatthesecond to last time he was at theResidence was in thefirst day or two of January2010, and thattherewas nothingstrangegoing on at the Residence.Mr.Davidson provided evidence thathehad listed the Residence for sale from spring 2009 to fall2009. He referred to variouspictures of theinterior, whichindicate a neatand tidy residence.Thebasementdoor, whichwas later hidden,is clearlynoted in thepictures.Thelisting was in place as of September 2, 2010, and he reduced thelisting price to $426,500 onSeptember 29, 2009. However,it appears thatthelisting was cancelledon October20, 2009. [111]Inhis statementto thepolice, Mr. Davidson does refer to his intentionof re-listing theResidence in April or something,whichItake to meanin 2010. That intentionof Mr. Davidsonto list thepropertyin thespring of 2010 is also supported by his earlier statementconcerninga sale of the Residence in thevideo evidence discussed below. [112]Mr.Andersonconfirmed thelisting informationin his May 20, 2010 reportto Wawanesa,whichinformationreferredto a halfunfinishedbasementhavingan area of 784.5 square feet. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 25 [113]Mr.Davidson says thatwhenhe lefttheResidence in earlyJanuary2010, the basementdoor had notbeen coveredwith drywallandre-painted so as to hide its presence.He indicates thatit was neat andtidy, justas depicted in thephotos taken by his realtor. [114]Mr.Davidsons statementto thepolice indicated thathewas thereon January 3, 2010. He emphaticallydenies thatanymarijuanagrowoperation was underwayor therewere stolenpropertyor firearms at theResidence. He did notnotice any blockage of thedoorwayto the basementwhilehe was there.His best assumptionis thatit was done by thetime of theRCMP andMinistrywalk-throughon January6, 2010. This evidenceis somewhatconsistentwiththatof Cst. James Prieur,who visuallyinspected theResidence on January6, 2010 and commentedthatit was neatand tidy.Also consistentwiththe evidenceof Mr. Davidson is thatCst. Prieur did notnotice anylarge amountsof personal propertythatmight havebeen indicia of storage of stolenproperty,suchas was presumablyfoundon April 21, 2010. [115]As Ihavediscussed above, Mr.Davidson was awayfrom theResidence duringthis time workingin the area around100 Mile House.However,most of his personalbelongings,includingcredit cards and keysto his HarleyDavidson motorcycle,remained at or in theResidence. [116]Sometime between Januaryand April 2010, Mr.Davidson says thathedid attendat the Residencein breachof the bail order. He did not mentionthis visitat theResidence whengiving his statementto theRCMP. Tammywas not home,but Kurstenwas there and,perhaps,Michael Wasmundalso. Mr.Davidson admits to seeing variousitems, whichhe assumedwere stolenitems. He was angry.He says thathe smashedall of thestolenitems thathe couldsee, includinga telescope and computermonitors. [117]Mr.Davidson says that,at thispoint, hehad no knowledgeof anygrow operation or drug traffickinggoing on in theResidence. As faras he was concerned, he had takencare of anystolenpropertyissue albeit in an unconventionalmanner bysmashingwhathe saw there.He assumedthatwas theend of it. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 26 [118]Mr.Davidson says thatsometime in April 2010, he began to receive some informationfrom his friendsthatsomethingwas happeningat theResidence. He referred to strangethingshappeningat theResidence, and thattheymeaning Tammyand Kursten were ona crime spree. He referred to his wife as bipolar and havinga personalitydisorder. He said, however,thathewas not aware thatshe was runningamok. [119]At thatpoint, hesays thathe took it uponhimselfto see whatwas going on and clear upthe situationbygetting theindividualsinvolvedat theResidence out. He had in mind thatif he couldget permission to go to theResidence witha police escort, withtheintentionof getting his HarleyDavidson motorcycle,thepolice themselvesmightsee whatwas going on at theResidence and, if necessary,deal withtheindividualsinvolved. [120]LindsayGordon was Mr.Davidsons bail supervisorassigned arising fromthe December 2009 incidentwithTammyBoucher.She met withMr.Davidson earlier in March2010 and also on April 22, 2010. Onthe April date, she stated thatshehad learnedjustthatmorningthata residence on WestsydeRoad had burneddownand she asked Mr.Davidson whetherit was his home.He said hedid not know. [121]Thefire, of course,had happenedjustthatmorning.Mr.Davidson had learnedearlier about theRCMP raid. He wouldlaterlearnof the fire and would,still later,he contends,learnof themarijuanagrowoperation, theallegedlystolen propertyand thefirearms discovered at theResidence. He denies havingany knowledgeof these activities. [122]Mr.Davidson nowspeculatesthatwhoeverset upthe growoperation in his basementwouldprobablyhavebeen in thebeginningstages of doing alterationsto theResidence after heleft in earlyJanuary2010. Mr.Davidson thinksthat,based on his reviewof theoperation,it was beyondthecapabilities of Tammy,Kurstenand MichaelWasmundto set up suchan operation.He has also guess-estimatedthatit wouldhavetakenone to two monthsto set up theoperation and thesame amount of time to grow theplants.He acknowledgesthatit was done for profit. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 27 [123]Wawanesahas notintroducedanydirect evidence thatMr.Davidson knewof theillegal activities in theResidence, butrelies onvariouscircumstantialevidence. [124]Itis readilyapparentthatthe abilityof Wawanesa to provethatMr. Davidson did knowof theactivities at the Residencedepends onit successfullyattacking Mr.Davidsons credibility.Thefactors to be considered whenassessing credibility were summarizedby DillonJ. in Bradshawv. Stenner, 2010 BCSC 1398 at para. 186, affd 2012 BCCA 296: [186]Credibility involvesan assessment of the trustworthiness of a witness testimony based upon the veracity or sincerity of a witness and the accuracy of the evidence that the witness provides (Raymond v. Bosanquet (Township) (1919), 59 S.C.R. 452, 50 D.L.R. 560 (S.C.C.)). The art of assessment involves examination of various factors such as the abilityand opportunityto observe events, the firmness of his memory, the abilityto resist the influence of interest to modify his recollection, whether the witness evidence harmonizes with independentevidence that has been accepted, whether the witness changes his testimony during direct and cross-examination, whether the witness testimony seems unreasonable, impossible, or unlikely,whether a witness has a motive to lie, and the demeanour of a witness generally (Wallace v. Davis, [1926] 31 O.W.N. 202 (Ont. H.C.); Faryna v. Chorny, [1952] 2 D.L.R. 152 (B.C.C.A.) [Faryna]; R. v. S.(R.D.), [1997] 3 S.C.R. 484 at para.128 (S.C.C.)). Ultimately,the validityof the evidence depends on whether the evidence is consistent with the probabilities affecting the case as a whole and shown to be in existence at the time (Faryna at para. 356). [125]Wawanesarefers to variousmattersthatit suggestsindicate Mr.Davidsons evidenceis not to be believed. [126]Therewas confusionaboutdates aroundthe time of the fire.Ms. Gordons evidence,at trial, was thatMr. Davidson missed his April 21, 2010 appointmentin Ashcroftand thatheshowed upin Kamloops on April 22, 2010 withno appointment. Theimport of their discussionthatday was thatMr.Davidson did not knowif his Residence had burneddown thatmorning.Records fromHUBInternationalindicate thathe visited theiroffices on April 22, 2010 at 9:30 a.m.to advise themof thefire, evenbefore his visit to Ms. Gordon.Mr.Davidson says thathethoughthe reported thefire to HUB Internationalthenextday,being April 23, 2010. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 28 [127]Thereis noway to reconcilethese inconsistenciesandnothingreallyturnson theseinconsistenciesin the dates, in anyevent.Insupportof Mr. Davidsons version of events,he asked Ms.Gordon for permission to go to theResidence to pick up his HarleyDavidson motorcycleon April 22 because he had purchasedinsurancefor it theday earlier. Onemightquestionwhyhe woulddo so, if he knewthatthe Residence had gone upin flames. [128]Wawanesapoints to a picture of Mr.Davidsons HarleyDavidson foundin the backyard duringtheRCMP raid, butMr. Davidsonsays thatwhenhe leftthe Residence,it was in thegarage and he had notmovedit since. Itis possible that someone else movedit since Mr. Davidsonleft thekeys in theResidence. [129]Wawanesarefers to Ms. Gordons records,whichprovide a listingof Mr.Davidsons criminalrecord. Itargues thatsome past convictionshavesome relevanceto Mr. Davidsons credibility in general.However,his past convictions, whichincludeforgeryand possession of stolenproperty,are dated in thattheyarose in 1986 and 1995. His lastconvictionbefore thefire was for breachof a probation order in 2006. Intheensuingyearsleading to the fire,no convictionsarose. [130]Wawanesaalso pointsout that,althoughMr. Davidsondenied anyknowledge thatstolengoods wereat theResidence at thetime of renewal,he attendedthe Residence twice to deal with stolengoods. Onthefirst occasion, aroundDecember 2009, he picked upthese goods andremoved themfromthe property.As for his second visit afterrenewal,he failed to advise theRCMP of thatvisit duringthe taking of his statement.Thismight be understandablegivenhis bail conditionsthat did notallow himwithin100 metersof Tammysresidence, althoughMr. Davidson notesthatTammywas notpresentduringthatvisit.I also accept Mr. Davidsons evidencethathe understoodthequestionto be regarding whenhe laststayedin theResidence, notjustanattendancefor a quick visit. As he states,and as Iaccept, it is more thanlikelyhe misunderstoodthe questiongivenhis extremeemotional state and his distress over losinghis house,as heconfirmed in his lateremails to Mr.Anderson. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 29 [131]Mr.Davidsons visit to theResidence, duringwhichtime hesmashed various items he assumed to be stolen,is notin dispute. Inthatrespect, Wawanesarelies, in particular,on a DVD thatincludesfootage and audio of variousstatementsby Mr.Davidson (theVideo). TheVideo was recoveredfrom Mr.Davidsons camcorder,whichwas seized by theRCMP fromthe garage at theResidence. Mr.Andersonreceived theVideo in lateMay 2010 andassumptionsmade byhim arising from Mr.Davidsons statementscontributedto his recommendationsto Wawanesa,whichled to therejectionof the insuranceclaim. [132]Despite the objectionsof Mr. Davidson,theVideo was admitted into evidence,althoughsubjectto argumentsconcerningthe weightthatshouldbe accorded it: R. v. Nikolovski, [1996] 3 S.C.R. 1197 at 1210. Mr. Davidson acknowledgesthathe made variousstatementsas recorded on theVideo. [133]Onthesubjectof theallegedlystolenproperty,the Video does evidence a recording of Mr.Davidsons discussion withanunknownmale onMarch 15, 2010. Thedate of theVideo is actuallyApril 15, 2010, butthe evidenceestablishes thatthe date stamp was one monthahead of thattime. [134]Inthe Video, Mr.Davidson stated: Fuck I think I smashed thousands of dollars of their stolen shit there not too bad, but the whole house is filled with stolen shit. Yeah, theres stolen, theres pictures on the wall, theres you know theres waterfalls flowing and then theres stolen computer monitors and just its cluttered with fucking amps and subs and holy fuck, its uh, fuck its just unbelievablethe shit [135]Mr.Davidsons evidenceis that,as far as hewas concerned,he had solved anyproblem.Mr.Davidsons statementson theVideo are consistentwithhimhaving no prior knowledgeof anystolenpropertybeing at the Residence,and thathe was upsetand angrywhenhe discovered theseitems at theResidence duringthatvisit. Inthe Video, hestated: Uh, I just fucking you know lost it in my house there. You know I had enough of this bullshit. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 30 I dont need that in my life, all this stolen shit. So their little crime sprees over [136]Onthesubjectof thegrow operation,Wawanesasays thatMr.Davidsons knowledgeis provenbytwo circumstances.Firstly,Cst. Prieurs observationsas to thestate of the Residence duringhis visit onJanuary6, 2010; and,secondly, Mr.Davidsons statementson theVideo. [137]Cst. Prieur testified thathe was absolutelycertain thatthedoorwayto the basementwas covered in drywalland painted to matchtheotherwallsduringhis visit on January6, 2010. Wawanesaargues thatthisestablishes that,since thebail order preventingMr.Davidson from attendingTammysresidence was issued on January22, 2010, the basementmusthavebeen concealedwhileMr. Davidsonwas able to attend at theResidence. Thetiming does supportthis, however, Mr.Davidson says thathis second to last visit was in earlyJanuary2010 and, therefore,it couldhavebeen done afterthatattendanceat the Residence and before Cst. Prieurs visit. Inaddition, whenhe nextattended at theResidence on theone occasion after January22, 2010, at whichtime he smashed whathethoughtwas stolenproperty,Mr. Davidsondenies thathenoticed anysuchalterationto the basementdoor. [138]Wawanesas principal argumentis thatMr.Davidsons statementson the Video provethatMr.Davidson was aware therewas a grow operation at the Residence.Itrelies on thefollowingstatementsby eitherMr. Davidson(SD) or an unknownmale (UM),whichwas recorded on March15, 2010: SD:Uh, I just fucking you know lost it in my house there. Youknow I had enough of this bullshit. Fuck youre concentrating more on crime and this petty theft, youre not making no money and downstairs, theres fucking nothing going on there, nothing. UM:Are you telling me she hasnt got the basement fired up again? SD:Not very well. Fucking very pathetic what I seen down there, I finally went in there you know, she showed me a couple plants, brought them up to me, up, you know up to the door you know they look pretty good, but theres not very many there. what the fuck, not very many. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 31 SD:Yeah, ha, I just got tired of the bullshit there, huh. So we agreed that she would be out in two months I told her at the end of Maythat should be enough time to get her program finished you know, get it up and running and finished, and then we, well and Illsell the fucking house, get rid of it, get my headaches over, Iget rid of her. SD:Yeah, cant justify you know and then, and then to neglect your real money maker. SD:And then I found some scales in her car Icant taste what it is but there is some kinda white powder on it, you know. And then I asked her what are you selling and oh, shes only selling marijuana. [139]Mr.Davidson denies thatanyof the above referencesare to the basementin theResidence or, more particularly,a growoperation in thatbasement.Inmyview, as arguedby Mr.Davidson, it is somewhatdifficultto ascribe themeaningfrom thesecommentsas asserted by Wawanesa: a)he states thathis commentabout downstairs fuckingnothinggoing on there,nothingrefers to theitems thatheobserved and assumed were stolengoods duringhis last visit; b)regarding thecommentfuckingpathetic whatIseen downthereandshe showedme a couple plantsand thebasement being fired up again, Mr.Davidson says thatthislikelyreferred to a differentlocation where Tammyreferred to theplants.Othercircumstancesand questionsarising supportsuchan assertion: Firstly,presumablyTammycouldnothave shownthe plantsto himat thedoor,being thedoor to thebasement, since it had likelybeencovered over bythen;secondly,one mightalso questionthatif Mr. Davidson was thekingpin of this marijuanagrow operation,whywouldTammybe showinghim a couple of plantsat the door?; and,finally,whywouldhe describe thegrow operation as pathetic,whenonlya monthlater,it wouldbe shownto be anythingbut?; 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 32 c)regarding thecommentwe agreed thatshe wouldbe out in two months,I told herat the end of May,thatshouldbe enoughtime to get her program finished, Mr. Davidsondenies thattheprogramreferred to thegrow operation in thatTammyhad manyotherprograms underway,suchas psychiatricand rehabilitation; d)regarding thecommentaboutTammyneglectingthereal moneymaker, Mr.Davidson says thatthiscommenthad nothingto do withthe Residence and mayindicate involvementin prostitution;and e)regarding thecommentabouta whitepowder and scales in a car and that shewas sellingmarijuana,Mr. Davidsonsays thatTammydid not have a car, onlya truckand he does notknowwhohe was referringto in terms of the sale of marijuana.Further,evenif Tammywas sellingmarijuana,it does notprove thatshewas selling it from theResidence or that Mr.Davidson knewabout it. [140]IconcludethatMr. Davidsons statementsin the Video, as above,are ambiguousand couldsupport eitherargument. [141]Wawanesaalso arguesthatMr.Davidsons historysupportshis involvement in thegrow operation in thebasement of theResidence. Mr.Davidson indicated duringcross-examinationthatprior to January2010, he had been involvedin one suchoperation in Quesnelin thelate 1990s. He disclosed this to theRCMP whenhe gave his statement. [142]As counselfor Wawanesapoints out,Mr. Davidsonwas undeniably circumspectand vagueconcerninghis employmentin thearea of 100 Mile House from late2009 to the spring of 2010. He was unclearonthis matterin his discussions withMs. Gordon,the RCMP and Mr.Anderson.Thereason forthatwas clearlyrevealedin theVideo whichis date-stamped April 26/27, 2010 and, therefore, was takenon March26/27, 2010. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 33 [143]TheVideo showsMr.Davidson giving somewhatof a tourof a houseand outbuildingsin the 100 Mile Housearea wherethereis clearlya marijuanagrow operation.His stated intentionis to showtheownerof thepropertyhis work on the project andwhatis going on.Inthe Video, Mr.Davidson refers to variouscarpentry work he completedon theproject.Mr. Davidson acknowledged,in his evidence, that he did work as a carpenteron theproject,buthe denied thathe did work as an electrician,or thathe had theoverallknowledge andexperience to organizea grow operation.Itwas clear fromthe Video thathe is somewhatfamiliar withaspects of a grow operation,givenhis commentson certain unhealthyplantsandalso thesize of certain pots being used. Mr.Davidson refersto thisas being the worstshow,with showreferringto grow operations,althoughhe asserts thatit was theowners set upor showand he was onlydoing renovationsfor theowner. [144]Wawanesaargues thatit can reasonablybe concludedthatMr.Davidson is knowledgeableaboutmarijuanagrowoperations, includingtheirconstruction, lightingand whatconstitutesa good grow operation.Suchan inferenceis supported by theactions and commentsof Mr.Davidson in theVideo. However,Ifail to see howthis evidenceis thenimmediatelytranslatedinto Mr.Davidson havingset uphis owngrow operation in thebasementof theResidence. [145]Finally,Wawanesasubmits thatthis Court shoulddraw an adverseinference as a resultof Mr.Davidsons failureto callas a witnessTammy,Kursten,Michael Wasmundor anyoneelse thatmighthaveresided at the Residence fromJanuary 2010 untiltheRCMP raid onApril 21, 2010. Mr.Davidson saw Tammyat Kursten and MichaelWasmundswedding in August2014 in Alberta wheretheyall nowlive. He still speaks to Tammyfromtime to time. He is notcurrentlyaware of Kurstenand MichaelWasmundsaddress since theyhaveseparated. [146]Wawanesaargues thatsuchanadverse inferenceshouldbe drawnhere since noneof themwere called to corroborate Mr.Davidsons evidence thathe was notat theResidence at therelevanttimes and, hence,knewof the marijuanagrow operation. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 34 [147]InTowerWaterproofing v. Mondiale Development Ltd., 2013 BCSC 1772, this Courtdiscussed theprinciples by whichan adverse inferencemay be drawnby reason of a failureto calla witness: [22]It is a longstanding principle of law that an adverse inference may be drawn if, without sufficient explanation,a litigant fails to call a witness who might be expected to give supporting evidence:Buksh v. Miles, 2008 BCCA 318 at para. 31, 296 D.L.R. (4th) 608. However, as the failure to call a witness may reasonably be open to different interpretations, an adverse inference should only be drawn when it is warranted in light of all the circumstances: Davison v Nova Scotia Government Employees Union, 2005 NSCA 51 at para. 73, 231 N.S.R. (2d) 245. [23]Generally,an adverse inference should only be drawn in regard to the non-production of witnesses whose testimony would be superior in respect of the facts to be proved: Bronson v Hewitt,2010 BCSC 169 at para 329, 58 E.T.R. (3d) 14. However, an adverse inference should generally not be drawn where the witness is equallyavailableto both parties: Zawadzkiv Calimoso, 2011 BCSC 45 at para 149. [24]When deciding whether to draw an adverse inference for the failure to call a witness, this court has said that it can reasonably consider the unsworn statements of counsel regarding the reasons for not calling the witness: Fresneda v Ocean Pacific Hotels Ltd., 2008 BCSC 238 at para. 36, 54 C.P.C. (6th) 155; Kokanee MortgageMICLtd. v Concord Appraisals Ltd., 2000 BCSC 1197 at paras. 70-74, 98 A.C.W.S. (3d) 734. [148]As anticipated by Wawanesa,Mr.Davidson mightmeet this argumentby contendingthatit was equallyable to subpoenathese witnessesin supportof its position at trial,particularlysince the burdenof proof onthis point rests on Wawanesa. [149]Indeed,Wawanesa appears to haveobtained an interprovincialsubpoenafor Kurstenand Michael Wasmundwhoreside in Alberta. A process serverwas hired to serveKurstenand MichaelWasmundwiththesubpoenasand conductmoney.He attempted,unsuccessfully,to serve themat variousdates and times at an Edmonton address onJune6-9, 13, 19 and 21, 2015. Therewas noevidence theywere avoiding service.Ican onlypresume thatWawanesa asked for,and obtained from Mr.Davidson, anyaddresses or contactinformationhe hasfor these people. There was no indication thatWawanesamade similar effortsto subpoenaTammy. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 35 [150]Wawanesarelies onthe statementsof this Courtin Caplan Builders Ltd. v. Royal Bank of Canada, [1988] B.C.J. No. 327 (S.C.) thattheword availablehas a restricted meaning,citing Pointer v. Pointer, 251 S.W. (2d) 334 (Mo.App. 1952) at 338: The word available,as it is used here, is not necessarily restricted to mean that either party has a like opportunityto subpoena the witness, for if the relationshipof the witness to a party is such that the witness would reasonably be expected to testify in favour of that party and against the other, such a witness is not equallyavailable [151]InCaplan Builders, the courtconcludedthatthedefendantbankshouldhave called its retired employee to give evidenceas to certain discussions betweenthe bank and theplaintiffon theissue as to whattermsof an agreement,if any,were reached.Inthe absence of thattestimony,the courtinferredthathis testimonywould havebeen unfavourableto thebank and favourableto theevidence of theplaintiff. [152]Inmyview,the circumstancesin Caplan Builders are distinguishablefrom thosehere.Wawanesa bears the burdenof showingthatMr. Davidsondid havethe requisite knowledgeas to thematerial changein risk.Mr. Davidsonhas denied this allegationand his evidencehas been introducedto dispute thatclaim. Inthese circumstances,it is open to the Courtto accept his evidenceas presentedin coming to a conclusionon theissue: Palidworv. Julian Ceramic Tile Inc., 2008 BCCA 395 at para. 9. [153]Further,Ido not see thatthe circumstancesof whateverrelationship Mr.Davidson may havewiththese individualssupportsthattheywere availableto him butnotto Wawanesa.At thetime of trial,theyall livedin Alberta.Clearly, Mr.Davidson is no longerlivingwithTammyand the factthathe stilltalks withher from time to time does not connotea relationshipsuchthathe couldeasily compel herattendanceat thetrial. He also explainsthatshehas variouspsychological issues. [154]Thecircumstancesrelatingto Kurstenand MichaelWasmundare evenless compelling.Kurstengave a statementto theRCMP bywhichshe attemptedto 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 36 implicate Mr. Davidson in theactivities at the Residence andthe fire itself.Itwas this statementthatMr. Anderson,at least in part, relied uponin terms of his recommendationsto Wawanesa.However,the RCMPs investigationsresultedin themconcluding,onSeptember 23, 2010, thatKurstenhadno credibility and would unlikelyreturnfor court.This conclusionis consistentwithMr. Davidsons contention thatshe was lyingand tryingto deflectattentionawayfrom herown criminal activities. Indeed,theRCMP investigationrevealedsome odd behaviourbyKursten aroundthetime of thefire thatevenMr.Andersonviewed as suspicious. [155]Inthe abovecircumstances,Idecline to draw anyadverse inferenceagainst Mr.Davidson. Mr.Davidsons credibilitystill standsto be assessed in lightof allthe evidenceadduced onthe issue.Iaccept his explanationas to whyhedid notcall thesepeople as witnesses.Further,Ifind thattheywere equallyavailableto Wawanesain terms of it provingits allegationabout Mr.Davidsons knowledge.The fact thattheywere unsuccessfulin servingKurstenand MichaelWasmundwiththe subpoenadoes notaffect thatconclusion. [156]Ihaveconsidered, at length,Mr. Davidsons credibility on thecentralissue as to whetherhe was aware of thegrow operation duringtherelevanttime period leading up to theraid and thefire. [157]Mr.Davidson gave his evidence in a respectful,calm and rationalmanneron thestand.He has consistently,to allinvolved,denied anyknowledgeof thegrow operation.After thefire, he also consistentlyand passionatelypled his case to Wawanesain terms of recoveryunderthePolicy. Mr.Davidsons evidence establishesthathe was a responsiblehomeownerwho paid his bills,paid his mortgage and dutifullyrenewedhis insuranceeveryyear.His evidence,whichI accept, is thatbythe spring of 2010, he had a good credit rating,whichhehad worked hardto improveover theyears. [158]He is, however,nowmet withthe web of circumstancesadduced by Wawanesaat thistrial and Iagree thatthose circumstancesare compellingto a degree and do raise some suspicionsabout him andhis activities. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 37 [159]Mr.Davidson presentsanotherpictureof his life duringtherelevanttime,one thatcannotbe described as ordinary.His familylife was difficultin relationto Tammyand Veronica. Also, being a contractorfor a personconductingcriminal activities, suchas a grow operation,is most certainlynotan occupationthatinvitesa conclusionthata person is honest.Thefact thathis lifestyle,includinghis constructionof a grow operation,is clearlyoutof theordinary,was nodoubt a solid factor supportingWawanesas rejectionof his claim. But his involvementin the constructionof thatgrow operation does notnecessarilylead to theconclusionthat he is a liar or thathe was undertakinghis owngrow operationin thebasementof the Residence. [160]Thepicturepainted byMr. Davidsonis equallyconsistentwithhim being awayfrom theResidence duringtherelevanttime and also consistentwithhis wife, step-daughterand boyfriend,and perhapsothers,constructingthe growoperation withouthis input,participation or knowledgewhilehe was away.Thereare equally compelling,albeit unusual,explanationsthatsupport theconclusionthat Mr.Davidson did not know. [161]Iconsider thatMr.Davidson was a credible witness.His evidencedid have certain flaws,butI consider themto havebeen minorwhenconsidered inthe contextof theoverallevidence.By his ownadmission, some facts were unclear,no doubtarising due to thetime lapse betweentheeventsin questionand trial,some five years.Thisis to be expected.His commentson theVideo are ambiguousand couldsupporteither theoryof the case, whetherfrom Wawanesaor Mr.Davidson. [162]Theburdenof proof lies on Wawanesa to proveits case ona balanceof probabilities. Thisis a case close to theline,but Iaccept theevidence of Mr.Davidson and find,as a fact,thathe did notknowof the grow operationor even theotheractivities relatingto potentiallystolenpropertyor potentiallyillegalfirearms overthe relevantperiod of time leading up to thefire.Simplyput,Wawanesa,while presentinga compellingcase and raising a numberof suspicions,did notmeet that 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 38 burdenof proof: A.K. v. The Dominion of Canada General Insurance Co., [1997] B.C.J. No. 576 at para. 17 (S.C.). [163]Idid not understandWawanesas position to be thatMr.Davidsons failureto advise Wawanesa as to the knowledgehe gained duringbrief encounterat the Residence afterJanuary2010, at whichtime hesmashed whathe believedto be stolenproperty,to be a breachof thePolicy.Ihavealreadyconcludedthatthereis no evidencethatsuchitems were indeed stolen.However,if Iam mistakenin that respect and theitems wereindeed stolen,Mr. Davidsonis entitledto seek relief from forfeiture. [164]Theevidenceof Mr.Davidson,whichIaccept, is thatthelocation of these items was onlydiscovered byhim uponhis visit to the Residence,and thathe immediatelydestroyedwhatitems he couldsee. As such,theproblem, if therewas one,was temporary,anddealt withby Mr.Davidson uponhim learningof it. [165]Section 129 of the Act provides: If a contract (b)contains any stipulation,condition or warranty that is or may be material to the risk, including,but not restricted to, a provision in respect to the use, condition, location or maintenance of the insured property, the exclusion, stipulation, condition or warranty is not bindingon the insured if it is held to be unjust or unreasonable by the court before which a question relating thereto is tried. [166]InMarche, theinsuredpurchaseda houseand thenmovedaway to find work. Thehouseremained vacantfor some time before a tenantmovedin. Thehomewas laterdestroyed byfire andthe insurerdenied theclaim on thebasis thatthe temporaryvacancywas a material changein risk thatthe insuredfailed to report to theinsurer.Thetrial judge heldthattheinsuredshouldbe relieved fromthe consequencesof anybreach of thecondition pursuantto s. 171 of the NovaScotia Insurance Act, R.S.N.S.1989, c. 231, whichstated that,similar to s. 129 theAct, a policy conditionis notbinding on theinsuredif a courtfindsit to be unjustor 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 39 unreasonable.Thatconclusionwas upheldbythe SupremeCourt of Canada. McLachlinC.J. stated: [42]On the other hand, the insurer might argue that lack of notificationof a change cost it an opportunityto cancel the contract before the loss. Moreover,it is not essential that a statutory breach be causally connected to the loss:see Henwoodv. Prudential Insurance Co. of America, [1967] S.C.R. 720, in which coverage was denied where the insured had not disclosed the fact that she suffered from clinical depression, and was later killed in an unrelated car accident. It might be argued that this reasoning does not apply to failure to advise of a change in the risk which has subsequently been rectified and hence is not in play at the time of the loss. Manyevents can temporarily change the risk -- for example, a short vacancy, or a sump pump breaking down. Are homeowners obliged, at the risk of losing coverage, to advise insurers of these temporary problems even after they have been remedied and no longer of any consequence? [Emphasis added.] [167]Iwouldrespectfullyadopt thecommentsof theCourt in Marche and, if necessary,applythe provisionsof s. 129 of theAct to relieve Mr.Davidson of any consequencesarising fromhis failureto advise Wawanesaof whathe discovered duringthis one-timevisit. Ifindthatto do otherwisewouldbe unjustor unreasonable in thesecircumstances. Damages [168]Mr.Davidson claims indemnityfor his losses, includingdamages for breach of thePolicy, aggravateddamages and interestand costs.Theonuslies onhim to prove thequantumof his claim. [169]Wawanesas counselconfirmedto himthatbased on thesingle inclusive limit underthe Policy,after paymentto theBank, Mr.Davidson wouldhavehad a maximumcoverage amountof $457,423.31 availableto him. [170]Wawanesasubmits thatMr.Davidson has failed to tendersufficient supportingdocumentationfor his claim. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 40 (a)The Residence [171]ThePolicy provided for guaranteedreplacementcost coverage,which required Mr.Davidson to repair or replace thedamaged or destroyed building(s)on thesame location,withbuilding(s)of thesame size and occupancy,constructedwith materials of similar quality,withina reasonable time afterthe damage. As Mr.Davidson did not do so, thePolicy provides thatheis thenentitledto theactual cash valueof the loss or damage at thedate of loss. [172]ThePolicy defines ActualCash Valueas: Actual Cash Value will take into consideration such things as the cost of replacement less any depreciation. In determining depreciation we will consider such things as: (1)the condition of the property; (2)the resale value of the property; (3)the normal life expectancy of the property; and (4)the use of the property; immediately before the loss or damage. [173]Inhis August2010 report to Wawanesa,Mr.Andersonascribed an overall valueto the Residence of $445,000, whichincludedlandvalueof $153,000 and $292,000 for improvements.This was said byhim to be consistentwiththelisted sale price in 2009 of $426,500 and the2009 assessed valueof $426,000. [174]Mr.Andersons report indicated thattheremaining asset valueof the Residence was limited, buttherewas some valuewithrespect to the site work remaining.So theresidual valueof theResidence wouldhavebeen$292,000 less thesite value(foundation,weatherproofing,andutilityconnections)thatremained, and thevalueof theoutbuildingsthatwere notconsumedbythe fire. He estimated thattheremainingvaluewas about25-45% of thevalueof thehouse,or between $73,000 and $131,400, whichleaves a range of residual valueof $160,600 to $219,000. [175]Mr.Davidson seeks theequityin the Residenceof approximately$160,000, being the differencein theappraised valueand themortgage balanceat thetime of thefire. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 41 [176]Wawanesaargues thatin calculatingtheactualcash valueof theResidence, otherfactors mustbe considered. Hydroand gas services to the homewere disconnected,althoughIdo notsee thatthiswouldhavesubstantiallydetracted from thevalueof theResidence since, presumably,theycould havebeeneasily reconnected. [177]A conditionof theResidence at thetime of thefire did include,of course,the presence of themarijuanagrow operation in the basement.Wawanesa points to a ControlledSubstancesProperty By-lawNo. 24-40 posted bythe City of Kamloops (theBy-law).Section 5 of theBy-lawprovided thatif electrical,water or gas services havebeen disconnectedas a resultof theunlawfuluse of a propertyfor the manufactureof a controlledsubstance,theyshallnotbe reconnectedand the propertyshallnot be occupied untilcertain remediation requirementshad beenmet. [178]Therewas no evidenceintroducedbyeither Mr.Davidson or Wawanesaas to whatcost couldbe ascribed to whateveractions were requiredto meetthe By-law.I accept thatin determiningthe actualcash value,thatwouldbe a consideration. Thelack of evidence onthis one point leavesthecourtin some difficultyin coming to an amountfor damages. However,difficultyin ascertainingtheamountof loss is no reason notto give damages. Thecourtmustdo thebest it can,evenif the decision involveda certain amountof guess work:Penvidic v. International Nickel, [1976] 1 S.C.R.267 at 280. [179]Iwouldaward theamountof $140,000 for thelosses relatingto the Residence. (b)The Personal Property [180]With respect to Mr.Davidsons personal propertyor contentslostin thefire, thePolicy includedreplacementcost coverage,butthis requires theinsuredto repair or replace lost or damaged propertyas soonas reasonablypossible. Otherwise, coverage for suchitems requiresWawanesa to pay onan actualcashvaluebasis. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 42 [181]Insome strangetwistof fate,theRCMPs seizureof manyitems of the personalpropertyownedby Mr.Davidson in the Residence likelysavedthose items from destructionfromthe fire.Mr. Davidson advanceda claim to theRCMP that manyof theitems seized belonged to him or to Veronica and were notstolen property.He indicated thatmanyitems werereturnedto him,includingtheHarley Davidson motorcycleand some TVs. He does notclaim underthePolicy for these items. [182]He claims, however,thatmanyotheritems were notseized andwere destroyedby thefire. Mr. Davidsondid notdelivera proof of loss as he was advised notto byWawanesa,and lateradvised, by its counsel,thatanyclaim wouldbe rejected.He has, however,submittedlengthylists to Wawanesa of items thathe says werelost or destroyed in thefire. Duringargument,he stated thathe was seeking the sumof $260,000 for theseitems. [183]Mr.Andersonconfirms thathe neverdid assess thecontentsclaim that Mr.Davidson advancedsince theclaim had been rejectedprior to thattime. Wawanesamade numerousrequestsfor informationfromMr. Davidsonto allowit to assess thequantumof his claim in theeventhesucceeded at trial.OnMarch2, 2015, Wawanesa obtained an order requiringMr. Davidsonto servefurtherand better particularsof his claim for indemnitypursuantto thePolicy and such particularswere to includethedollaramounts.Wawanesas counseladvises that Mr.Davidson provided no furtherparticularsafter thatorder. [184]Mr.Davidsons lists includedetailed items and, in some cases, he has tried to puta specific dollar valueon theseitems. TheResidence was 2,148 square feet, and includedfourbedrooms, livingand diningareas, kitchen,threebathrooms,a familyroom,laundryand a garage. Mr. Davidsonlists items thatherecalled in allof theserooms. He acknowledgesthatthevalueswere based on his investigation regarding replacementvaluefor theitems and thattheyrepresenthis estimates of thevalues.He says thathedid nothaveextensiveperiods of time to get alldetails of thesevalues,and thathe did his best. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 43 [185]Therewas no evidenceabout whichitems were replaced, ornot.Accordingly, Ipropose to address thisissue on thebasis of determiningtheactualcash valueof theitems lost. [186]Thereare manydifficultieswithMr.Davidsons listings.Manyof the item valuesare clearlyexaggerated,manyincludereplacementcostand manyitems are, in fact,part of theResidence valueand,as such,are alreadyaddressed. [187]Doing thebest Ican, Iaward thesumof $75,000 for theloss of thepersonal propertyand contentsin theResidence destroyedin the fire. Indoing so, Ihave disregarded anyclaim by Mr.Davidson for certainitems thatare excludedunderthe Policy,suchas motorcycles,dirt bikes and four-wheelall-terrainvehicles. (c)AdditionalLiving Expenses [188]ThePolicy provides thatin theeventof aninsured loss wherethedwellingis unfitfor occupancyand theinsuredhas to move outwhilerepairs are being made, Wawanesaprovides coverage for: any necessary increase in livingexpenses, including moving expenses, incurred by you, so that your household can maintain its normal standard of living.Payment shall be for the reasonable time required to repair or rebuild your dwelling, or if you permanently relocate, the reasonable time required for your household to settle elsewhere. [189]InearlyMay2010, Mr.Davidson emailed Mr.Andersonconcerninghis living expensesand he asked for paymentof them.OnMay 19, 2010, Mr.Davidson and Mr.Andersonexchangedemails aboutMr. Davidsons ongoing effortsto get his claim recognizedby Wawanesa.Eventually,on thatdate,Mr.Davidson indicated thatmylivingconditionsare acceptable at this time.Iassume thathewas referring to his havingpurchasedthe trailerand fifthwheelfor$40,000 and $50,000 respectively,wherehe,Tammyand Veronica were staying.He saysit was his decision to purchasetheseitems but,in anyevent,Idid not understandthat Mr.Davidson was claiming these purchaseamounts. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 44 [190]Mr.Davidson advancesa claim for additional livingexpensesof $66,900, whichis thePolicy limit.He saysthathe had to feed Tammyand Veronica andbuy newclothesand toiletries for them.He says thathe paid $10,000 for these items rightafter thefire. [191]However,thereis no indication thattheselivingexpenses,suchas food, were anythingotherthanthe normallivingexpenses thathe wouldhaveincurredfor himselfand his familymembersevenif thefire had not occurred.Therefore,thereis no evidencethattherewas anyincreasein suchexpensesas contemplatedby the Policy. [192]Idecline to award anyamountunderthisclaim. (d)Aggravated Damages [193]Mr.Davidson seeks aggravateddamages. [194]Suchdamages are available as additional compensationif theinsured establishesthata breach of thatcontractcaused her mentaldistress. Theremustbe actualevidenceof aggravationand mentaldistress: Fidler v. Sun Life Assurance Co. of Canada, 2004 BCCA 273 at para. 39, revd in part 2006 SCC 30. [195]Itis commongroundthatthe Policy was a peace of mind contract,the purpose of whichwas to secureMr. Davidsons peace of mind in theeventof a fire suchas occurred here:Fidler (C.A.) at para. 38. [196]Wawanesaargues thatMr.Davidson has adduced no evidenceof aggravationor mentaldistress. To thecontrary,Mr. Davidsons evidencewas that he was in extremedistress and emotionalupsetin thedays,weeks and months followingthe fire.Examples of his emails to Mr. AndersonthroughoutMayand June 2010 were to thefollowingeffect: (i)May12, 2010: My mind is so stressed and I am unsure of so many things, and bewildered, and confused as to why this happenedand actually what happened ! and who would do this, 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 45 I honestly can barely tolerate all this stress and confusion! I have had troubles sleeping, and have headaches and my mind is in a daze ever since. (ii)May19, 2010: Please ask insurer to send money soon! and pay the mortgage!I have been patient and all the investigating must be completed by now? (iii) May19, 2010: This brings me to ask then why I am not receivingassistance? (iv) May26, 2010: I am and was insured, and I had nothing to do with the gro sho, nor the stolen junk! nor the fire! I demand some money for my suffering![197]Evenafter Wawanesasrejectionof his claim on June21, 2010,Mr. Davidson stillsoughtrecoveryin his June25, 2010 email to Mr.Anderson: I am still waiting [impatiently] for a result and some immediate compensation for my pain and suffering and stress ongoing resulting from the loss of my home and all my belongings. I will soon have no other choice but to bring legal action against the insurance company, due to the lack of action and assistance! [198]Mr.Davidsons evidenceis thatWawanesas refusalto acknowledgehis claim and pay himcompensationlefthim in a verystressed condition.He describes his life after thefire as an ordeal. [199]Wawanesaargues thatMr.Davidson was required to provide medical evidencein supportof his claim. Wawanesas counselstates thathewas asked, at his examinationfor discovery,to provide anymedical records in support of thisclaim for mentaldistress or emotionalsufferingand he refused.OnMarch2, 2015, Master McDiarmid ordered Mr. Davidson to provide signed authorizationsfor productionof variousmedical records byApril 7, 2015 failingwhich[Mr.Davidson]be prohibited from seeking damages to his person,emotionalor psychologicalstate. 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 46 [200]Iam advised thatnoproperlyexecutedauthorizationsor records were produced byMr. Davidson.Iwas not advised of the significance of thevarious authorizationsordered to be produced. Manyclearlyrelated to Veronica, or income taxrecords relatingto anyincome loss claim, whichclaims are not being advanced. As best Ican tell,theonlyauthorizationsthatmightpotentiallyrelatetoMr. Davidson were fromDr. Ritenburgand thePrince George GeneralHospital. [201]Ido notread Fidler as requiringthatan insuredmustprovide medical evidencein supportof a claim for aggravateddamages. InFidler, theappellate court upheldthe trial judgesaward of aggravateddamages based onMs. Fidlers testimonyand herlettersto the insurer:para. 48. TheCourt of Appeal notedthatthe trial judgefoundadditionalsupportby statementsbyMs.Fidlers doctor: para. 49. [202]Accordingly,in my view,thecourtcouldhaveassessed Mr. Davidsons evidence,as to his emotionalupset,as to whetheraggravateddamages were proven,evenwithoutanysupportingmaterial from anymedical professionals, assumingthathe evensoughtoutsuchassistance followingthefire. [203]However,in theface of theMasters order, Ido notsee thatit is nowopen to Mr.Davidson to advancesucha claim. [204]Evenwere Ito consider sucha claim,thereare also some difficulties i n ascribing all of Mr. Davidsons emotionaldistress to theactions of Wawanesa. Mr.Davidson was arrested by theRCMP onsuspicion of all of theproposed charges relatingto the growoperation, thestolenpropertyand theillegalfirearms and thefire itself.He was also, by then,in thecompanyof Tammy,whohe suspectedwas involvedin theseactivities. His step-daughterwas giving statementsto theRCMP thatimplicated him in all theseactivities. All of thesematterswould,nodoubt,have been stressful.I accept,however,thatpart of his stress was caused by Wawanesas rejectionof his claim. [205]Further,followingthefire, WawanesainvestigatedMr. Davidsons claim. Itdid so havingin mind theunusualcircumstancesof this case andwith a view to gaining informationthatit thoughtwouldarise throughtheRCMP investigation.Withthe 2015 BCSC 1383 (CanLII)Davidson v. Wawanesa Insurance CompanyPage 47 resultsof thatinvestigationin hand,andparticularlyhavingtheVideo in hand, Wawanesaexercised its rightto void thepolicy for thereasonsdiscussed above. Wawanesasays thatit has theright to defend itselfwithoutcreating anautomatic entitlementto aggravated damages forthe insuredif the insureris foundto be in error in voiding thepolicy. [206]Wawanesarelies onA.K., wheresimilar circumstanceswere discussed. Theretheinsurerhad denied theplaintiffs claim for fire loss on thebasis thatthe insuredhad deliberatelyset thefire or had someoneelse do so. Thecourtfoundthat theinsurerdid notprove thattheinsuredwas involvedin startingthefire. Despite upholdingclaims underthepolicy,the courtdeclined to award aggravateddamages to the plaintiff: [32] In my opinion, on the facts in this case, it is unnecessary in any event to deal with the Plaintiffs entitlement to damages whether they are claimed as exemplary, punitiveor aggravated damages since the claim for damages is based on the Defendants continued denial of coverage. Inthat regard, it is clear from the evidence that while the allegations of arson and that of the improper proof of claim were not established by the Defendant, in the result nevertheless the Defendant was entitledbased on the investigations and inf