SUPREME COURT OF BRITISH COLUMBIA Citation: Davidson v. Wawanesa Insurance Company

Citation:
Davidson v. Wawanesa Insurance

Company,
2015 BCSC 1383
Date: 20150810
Docket: 45491
Registry: Kamloops
Between:
Steven Michael Davidson

Plaintiff
And
Wawanesa Insurance Company
Defendant
Before: The Honourable Madam Justice Fitzpatrick
Reasons for Judgment

Counsel for Plaintiff:
In Person
Counsel for Defendant:
J. Meadows
Place and Date of Trial:
Kamloops, B.C.
June 29-30, July 2-3, 6-8, 2015
Place and Date of Judgment:
Kamloops, B.C.
August 10, 2015
2015 BCSC 1383 (CanLII)
IN THE SUPREME COURT OF BRITISH COLUMBIA
Davidson v. Wawanesa Insurance Company
Page 2
Introduction
[1]
The residence of the plaintiff, Steven Davidson, in Kamloops, British
it was arson. The arson occurred the day after a police raid of the residence, a raid
that revealed a marijuana grow operation and what the police described as a
substantial amount of stolen property and illegal firearms.
[2]
Mr. Davidson claims he had no knowledge of the illegal activities at the
residence. He seeks recovery of the value of his residence and contents from the
defendant, Wawanesa Insurance Company (Wawanesa), who had issued a fireinsurance policy on the residence some years before the fire.
[3]
Wawanesa denied coverage under the policy, alleging that Mr. Davidson
knew of the illegal activities. Wawanesa now contends that the loss is not covered
under the policy. Further, it contends that Mr. Davidsons failure to disclose them or,
alternatively, advise Wawanesa when they arose, constituted material
misrepresentation which would have otherwise caused Wawanesa not to issue the
policy or to cancel it. Wawanesa advances a counterclaim against Mr. Davidson for
amounts it was required to pay to the mortgagee who was entitled to payment of the
mortgage balance under the policy terms.
[4]
Wawanesa also initially alleged that Mr. Davidson had set the fire himself,
although that allegation was withdrawn during argument.

[5]
The major issues to be decided are whether the loss is covered under the
policy and whether Mr. Davidson was in breach of the insurance policy so as to
disentitle him in claiming against Wawanesa for the loss arising from the fire.
Background Facts
[6]
Mr. Davidson is 54 years old. He grew up in Ontario and moved to the
Okanagan in 1975. He has a high-school education.
Columbia, burned down in April 2010. There is no mystery as to why it burned down;

[7]
Page 3
After leaving high school, Mr. Davidson had a number of jobs in Edmonton,
Alberta, and in Vernon and Armstrong, British Columbia.

He met Tammy Boucher in 1989 and they married in 1994. In March 1995,
they had a daughter, Veronica Boucher. Tammy Boucher also has a daughter from a
previous relationship, Kursten Boucher.
[9]
By approximately 2000, Mr. Davidson took over sole custody of Veronica due
to Tammy being unable to care for her. However, at some point, Veronica was taken
into the care of the Ministry of Children and Family Development (the Ministry),
where she would remain until her 19th birthday in March 2014.
[10]
Mr. Davidson continued to work in Kamloops, although he later moved to
Edmonton and then, later still, began working in Fort McMurray. Through these
efforts, he was able to save enough money to purchase a home.
[11]
In January 2006, Mr. Davidson purchased the property at 4300 Westsyde
Road, Kamloops, British Columbia (the Residence), for approximately $320,000.

He financed the purchase, at least in part, by obtaining a mortgage from the Royal
Bank of Canada (the Bank), which was registered against the Residence (the
Mortgage).
[12]
Immediately upon his purchase of the Residence, Mr. Davidson arranged for
insurance against loss or damage from fire, among other things, from Wawanesa.
Policy HPC 1464763 was issued by Wawanesa in August 2007 (the Policy). In the
usual fashion, the Policy included a standard mortgage clause in favour of the
Bank, which protected it in the event that the Policy was voided for any reason
relating to the insured.
[13]
Sometime after the purchase of the Residence, Tammy moved in. Also,
Kursten and her boyfriend, Michael Wasmund, moved into the Residence for at least
some periods of time, possibly during 2009.
[8]

[14]
Page 4
On December 29, 2009, Mr. Davidson was charged with assault with a
weapon, dangerous operation of a vehicle and failing to stop at an accident with
Mr. Davidson drove his vehicle through a fence that then struck her. Mr. Davidson
says that he had no intention of hitting Tammy.
[15]
In early January 2010, Mr. Davidson visited the Residence only briefly.
Tammy, Kursten and Michael Wasmund remained in the Residence while he went
off to work outside of Kamloops.
[16]
On January 22, 2010, Mr. Davidson turned himself in to the RCMP in
connection with the assault charges. He was ultimately released on certain bail
conditions, which included that he would not attend at, or be within 100 meters of
any residence of Tammy, except for one attendance, in the company of a peace
officer, for the purpose of retrieving his personal belongings.
[17]
Mr. Davidson renewed the Policy every year up to and including January
2010. In January 2010, he attended at his broker, HUB International Barton

Insurance Brokers (HUB International), in Kamloops to renew the Policy for the
period in question, being January 20, 2010 to January 20, 2011. The policy limits
were as follows: dwelling building: $334,500; private structures: $50,200; personal
property: $267,600; and additional living expenses: $66,900; although these limits
were all subject to a single inclusive limit of $719,200.
[18]
Mr. Davidson explained that, in early 2010 before he went up north to work,
he had given $4,000 to Tammy or Kursten in order that the funds could be deposited
into his bank account with which to pay the Mortgage. He contends that the deposit
was not made, unbeknownst to him. As a result, the last bi-weekly mortgage
payment was made to the Bank on March 5, 2010 and, thereafter, commencing
March 19, 2010, the mortgage payment was not made and it went into default.
[19]
In April 2010, Mr. Davidson was working on various jobs north of Kamloops in
the area of 100 Mile House, British Columbia. Mr. Davidson was advised by various
another person. These charges arose from an incident involving Tammy, whereby
Page 5
people that after he had left the Residence to go up north, other persons might be
visiting at the Residence with Tammy, Kursten and Michael Wasmund. He knew the
[20]
On April 21, 2010, the police raided the Residence, in accordance with a
search warrant, with respect to various alleged offences. They found:

a) a marijuana grow operation in the basement, which contained 630 plants
in a vegetative state and various dried plant material. Other indicia of a
grow operation, such as scales, were found. The outdoor shed also
contained items consistent with a grow operation. Someone had put
drywall over the door to the basement from the lower living room and a
secret access to the basement was found in a closet in an office area. The
police took samples of the plants and the dried material found in the
basement of the Residence, but they never arranged for any testing of the
plants or substances found in the Residence. The police did identify
marijuana plants through a physical inspection;
b) a substantial amount of what could be described as excess personal
property, some of which the RCMP said was stolen; and
c) a number of illegal firearms.
[21]
The police removed the marijuana, the firearms and much of the personal
property from the Residence. They also arranged to stop all electrical and hydro
services to the Residence. They left the Residence around 5:30 pm.
[22]
In the very early morning hours of April 22, 2010, a fire was deliberately set in
the Residence as a result of which much of the structure above ground was
destroyed. It appears than an accelerant, gasoline, was used in the living-room area.
The conclusion that this was arson was bolstered, in part, by the fact that the utilities
had been terminated after the police had left.
names of some of these people but others he did not.

[23]
Page 6
Mr. Davidson reported the fire to HUB International and, almost immediately,
Wawanesa retained Fraser Anderson of Huston Grant Adjusters (the Adjusters), to
[24]
On April 23, 2010, Mr. Davidson cooperated with Wawanesa and the
Adjusters, providing his consents and waivers in order to allow Mr. Anderson to
attend at the Residence for the purposes of that investigation.
[25]
Beginning on or about May 3, 2010, Mr. Davidson inquired of Mr. Anderson
regarding Wawanesas position regarding his living expenses.

[26]
On May 10, 2010, Mr. Davidson provided a detailed statement to
Mr. Anderson and gave his written authorization to Wawanesa or the Adjusters, for
the release of financial or other pertinent records pertaining to him for the purpose of
the fire investigation. On that same date, Mr. Davidson signed an authorization to
release information relating to the release of any and all financial or other pertinent
records wherever situated, pertaining to me. The second page of this authorization
included the release of any and all information pertaining to the police case,
although the relevant case number is left blank. The Adjusters used this
authorization to obtain hydro records, although it was apparent that the grow
operation involved a bypass of the hydro meter that allowed for the theft of hydro
power.
[27]
On May 14, 2010, Mr. Anderson obtained a statement from Kursten in which
she purported to implicate Mr. Davidson in the grow operation and the fire.
[28]
Mr. Davidson continued to communicate with Mr. Anderson concerning his
living expenses, payment of the Mortgage and compensation for his losses arising
from the fire. He sent Mr. Anderson emails on May 11 and 19, 2010. Mr. Anderson
advised him on May 19, 2010 that Wawanesa was unable to consider any advance
at that time. In any event, Mr. Davidson advised Mr. Anderson on that date that his
living conditions were acceptable. He also advised that he had contacted the Bank
and was dealing with issues arising regarding the Mortgage.
investigate the fire.

[29]
Page 7
On May 25, 2010, Mr. Davidson gave a statement to the RCMP and was
ultimately arrested that day relating to the grow operation, the stolen property and
in the illegal activities at the Residence and the fire.

[30]
Throughout May 2010, Mr. Anderson continued to advise Mr. Davidson that,
based on their preliminary investigation, no advance under the insurance could be

considered at the time. Further pleas for assistance by Mr. Davidson into late May,
June and July were similarly ignored while Wawanesas investigations continued. On
June 25, 2010, Mr. Davidson referred to his pain and suffering and stress resulting
from the loss of his home and belongings.
[31]
Mr. Davidson was investigated by the RCMP as a possible perpetrator of the
grow operation, the thefts of what was believed to be stolen property and also the
possessor of the firearms. On May 27, 2010, the RCMP recommended to the Crown
that Mr. Davidson and Tammy be charged with various offences relating to the grow
operation, the illegal weapons found in the Residence and the property, which were
alleged to have been stolen from late January 2010 and before the raid. The Crown
did not approve these charges and no charges were laid.
[32]
Mr. Davidson did not have long to wait to receive word on Wawanesas
position in respect of his claim under the Policy. On June 21, 2010, Wawanesa sent
a letter noting that their investigation had revealed that Mr. Davidson had been
charged with possession of stolen property, possession of restricted firearms and
production of a controlled substance. Wawanesa indicated that it would not consider
any claim under the Policy. Wawanesas letter stated:
The investigation into your fire claim of April 22, 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.
the firearms. As he had done to Mr. Anderson, Mr. Davidson denied any involvement
Page 8
Wawanesa indicated that it was voiding the Policy effective as of the prior renewal
date, being January 20, 2010. It refunded the premium paid, although Mr. Davidson
[33]
On June 28, 2010, Wawanesas counsel sent a further letter to Mr. Davidson
confirming that the Policy had been voided and that any claim was rejected and
denied. He was told that if he submitted a proof of loss, it would be rejected and
denied. Counsel indicated that they would accept service of any legal proceedings if
Mr. Davidson chose to sue.
[34]
In July 2010, the investigation firm hired by the Adjusters confirmed the
tentative conclusions that there had been forced entry to the Residence and that an
incendiary fire had been lit given the presence of gasoline in the living room.
[35]
After the fire, Mr. Davidson bought a camper trailer and a fifth-wheel trailer
and he, Tammy and Veronica travelled across Canada. By this time, Tammy had
taken Veronica from her school and the police were attempting to find her.
Eventually, Mr. Davidson came back to British Columbia by way of Salmon Arm. In
the fall of 2010, Tammy was apprehended in Ontario with Veronica. Mr. Davidson
flew to Ontario to assist Tammy and they eventually made their way back to Alberta
in late 2010.
[36]
After Veronica was returned into the care of the Ministry, Mr. Davidson made
some unsuccessful efforts to get her back. He eventually got a job in Tumbler Ridge
and also in various northern locations in British Columbia.
[37]
At the time of the fire, the Mortgage was in default and the balance was
approximately $278,000. Once Mr. Davidson found out what had happened with the
mortgage payments after the fire, he did not make arrangements to pay the Bank to
cure the default and keep the Mortgage in good standing. He said that he could not
justify paying for a pile of ashes.
[38]
This action was commenced in March 2011.
did not cash the cheque.

[39]
Page 9
At some point, the Bank commenced foreclosure proceedings against the
Residence. The foreclosure proceedings continued and eventually the Bank
$98,567.88.
[40]
In October 2011, the Bank filed a proof of loss with Wawanesa claiming
recovery of the remaining balance due under the Mortgage.

[41]
In November 2011, the assault charges laid against Mr. Davidson relating to
the December 2009 incident were stayed.

[42]
The last time Mr. Davidson lived with Tammy was in December 2011 when
she moved to Alberta to be with Kursten. He remains in contact with Tammy.

Mr. Davidson also attended the wedding of Kursten and Michael Wasmund in
Edmonton in August 2014. Tammy has given little or no information to Mr. Davidson
regarding who set up the grow operation, although she seems to have taken credit
for it.
[43]
On February 2, 2012, Wawanesa paid $211,576.69 to the Bank in satisfaction
of its claim under the Mortgage. This payment arose from the terms of the standard
mortgage clause in the Policy, which provides for recovery to the Bank
notwithstanding any act, neglect, omission or misrepresentation attributable to the
mortgagor, owner or occupant of the property insured.
Issues
[44]
The issues to be decided are:

a) is Mr. Davidsons claim covered under the Policy?;
b) if not excluded by the Policy, is the Policy void by reason of any
misrepresentation or failure to advise of a change of material risk by
Mr. Davidson?;
completed a sale of the Residence in September 2011, which netted proceeds of
Page 10
c) if the Policy is effective, has Mr. Davidson proven his losses arising from
the fire?
[45]
Wawanesa contends that there is no coverage under the Policy in respect of
Mr. Davidsons claim, since he was not residing at the Residence at the time of the
fire or, alternatively, the grow operation was specifically excluded under the terms of
the Policy.
(a)
[46]
The Residency Issue
The Policy provides for coverage as 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 living there.
[47]
Definitions of Dwelling and Premises under the Policy 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 appurtenant to it.
Coverage Issues

[48]
Page 11
You in the Policy refers to the Insured. Insured is defined as:
(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:
[49]
(1)
either of two persons who are married to each other or who have
together entered into a marriage that is voidable or void; or
(2)
either of two persons who are living together in a conjugal relationship

outside marriage and have so lived together continuously for a period
of 3 years[.]
The Policy was a principal residence one with the Residence being
designated as such. Mr. Davidson is the named Insured. This type of policy is
distinguished from a basic dwelling policy that Wawanesas representative, Ricky
Grass, described as providing different coverages and being priced differently and
more expensively in terms of risk factors.
[50]
Wawanesa alleges that Mr. Davidson was not residing at the Residence
from January 2010 to the time of the fire and that, accordingly, there was no
coverage at the time of the fire.
[51]
The first difficulty with this argument is that it is not pleaded as a basis for
denying Mr. Davidsons claim. This is consistent with Wawanesa not citing this as a
basis for the denial of the claim in its and its counsels letters to Mr. Davidson in
June 2010.
[52]
In any event, the uncontradicted evidence of Mr. Davidson was that during
this period of time, he was staying or living up in the area around 100 Mile House
only temporarily while he was employed doing construction work on various jobs.
Further, Mr. Davidson maintained the Residence as his residence at all times in that,
but for a few personal items, all of his other personal possessions were located at
the Residence. For example, much of his clothing, credit cards and various
motorcycles were still at the Residence.
Insured means a Named Insured and, while living in the same household:

[53]
Page 12
The evidence of Wawanesas Mr. Grass, and the representative of HUB
International, Anne-Marie Hofstede, were of little assistance on this point. Mr. Grass
in a person having moved their residence for the purposes of continuing coverage
under such a policy and that it would depend on the circumstances. Ms. Hofstede
confirmed her view that there was no need to notify the broker or the insurance
company if, for example, the man of the household was up north working for
extended periods of time so long as the family members continued to live there in a
normal fashion. In any event, Mr. Grass and Ms. Hofstedes interpretations of the
insurance contract between Mr. Davidson and Wawanesa are not admissible. 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]
This Court discussed the commonly-accepted principles of interpretation of
insurance policies in The Owners, Strata Plan NW2580 v. Canadian Northern Shield
Insurance Company, 2006 BCSC 330. Madam Justice Martinson stated:
[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
interpretation of 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 expectation is, at a minimum, that the
insurance plan will provide coverage for legitimate claims on
an ongoing basis.
(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]
I accept Mr. Davidsons evidence and find, as a fact, that Mr. Davidson was
only temporarily away from the Residence for the purpose of his work and that, at all
times, he maintained the Residence as his residence. I also accept Mr. Davidsons
conceded that temporary absences, such as for work and vacation, would not result
Page 13
evidence and find, as a fact, that from January 2010 to the time of the fire, Tammy
and Kursten were residing in the Residence as their principal residence.
Wawanesa argues that the Policy should be interpreted such that, if a person
has no knowledge as to when he or she will be returning to the property, then that
person cannot be said to reside at the property. There is simply no basis for applying
such an interpretation of the Policy. Does that mean that if someone is away
working, and does not know when they will be able to get time off work to go home,
that there is no coverage? Does that mean that someone backpacking through
Europe with an open-ended return date to their home has no coverage? Surely,
common sense would dictate otherwise.
[57]
Wawanesa also points to the bail conditions that were imposed on
Mr. Davidson in late January 2010. However, those bail conditions did not say that
Mr. Davidson could not reside at the Residence; rather, they required that he stay at
least 100 metres away from the residence of Tammy Boucher. I accept that
Mr. Davidson was unsure about when that bail condition might be lifted but, in any
event, he decided to temporarily work up north. In spite of that condition,
Mr. Davidson continued to have legal control of the Residence and, theoretically,
could have exercised that control to remove Tammy from the Residence and move
back in.
[58]
It is also worth noting that Mr. Davidson, as I will discuss in more detail below,
did visit the Residence once between early January and the fire and, in that sense,
was using it as his principal residence at that time.
[59]
In Canadian Northern Shield, Martinson J. stated that in the first instance, the
insured must prove that the loss falls within the coverage provided by the policy:
para. 15.
[60]
I am satisfied that Mr. Davidson has met this onus in respect of Wawanesas
argument that he did not reside at the Residence. In my view, the Policy can be
reasonably interpreted as allowing for temporary absences from the residence, such
[56]
Page 14
as for work or vacation, and that is exactly what Mr. Davidson was doing between
January 2010 and the date of the fire.
This interpretation is supported, in part, by the terms of the Policy itself, which
refer to personal property being insured at any location other than the premises
while you are temporarily living there. This concept of being temporarily residing
elsewhere is also found in the definition of premises in terms of the liability
coverage where premises also means:
(4)
[62]
premises you are using or where you are temporarily residing if

you do not own such premises.
This broader construction of the coverage provision is in keeping with the
interpretation principles cited above. Even if this provision could be construed as

ambiguous, I find that it is in keeping with the reasonable expectation of the parties.
In our mobile society, many people are away temporarily for various reasons,
including work and vacations. Such temporary absences do not detract from the fact
that a person can still maintain their principal residence at another location.
[63]
I find that Mr. Davidson has met his burden in proving that his claim falls
within coverage under the Policy.

(b)
[64]
The Grow Operation Exclusion
Assuming coverage for the loss is available under the Policy, the insurance
company may claim that an exclusion clause applies. The insurer bears the onus of
proving that an exclusion clause applies. If an exclusion clause has been shown to
be applicable, the insured bears the onus of proving an exception to the exclusion
clause: Canadian Northern Shield at para. 15.
[65]
Wawanesa claims that the grow operation was an excluded risk that was
specifically not insured under the Policy.

[66]
The Policy provides:
[61]
Page 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 illegal substance 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 alteration of the premises to facilitate such illegal
activity.
[Emphasis added.]
[67]
Wawanesa relies on each of the above exclusion clauses as applying to the
fire loss. In addition, as Wawanesa points out, these exclusion clauses apply,
notwithstanding that the insured may not be aware of these activities on the
premises. Accordingly, the application of these clauses does not depend on the
main issue arising in this case in relation to Mr. Davidsons assertions that he did not
know that the grow operation was taking place in the Residence.
[68]
The first exclusion relates to coverage for loss or damage to structures or
buildings used in whole or in part for business or farming purposes. Those are
defined in the Policy 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.

[69]
Page 16
I have difficulty in seeing that the grow operation resulted in a business
being conducted from the Residence. While I accept the evidence establishes that
business, presumably the buying and selling of the product, marijuana, was taking
place there.
[70]
As for the farming exclusion, Wawanesa argues that marijuana is a crop,
citing the Oxford English Dictionary as [a] cultivated plant that is grown on a large
scale commercially, especially a cereal, fruit, or vegetable.
[71]
There can be little doubt that marijuana is a cultivated plant and that the grow
operation discovered by the RCMP indicated many plants consistent with the
production of marijuana. Mr. Davidson noted that there was no formal testing of the
plants or the dried materials found in the Residence. Nevertheless, Cst. Kale Pauls
of the RCMP, who is very familiar with grow operations, testified that he was able to
visually recognize marijuana plants. I accept his evidence that the plants found in the
Residence were marijuana and not, for example, hemp plants as suggested by
Mr. Davidson. There was, however, no testing of the dried materials that would
establish that they were, in fact, marijuana.
[72]
The objective of interpreting a contract is to discover and give effect to the
parties' true intention as expressed in the written document as a whole at the time
the contract was made: Brentwood Enterprises Limited Partnership v. Revelstoke
Mountain Resort Limited Partnership, 2014 BCSC 773 at paras. 26-27; Eli Lilly at
166-167; Kingsway General Insurance Co. v. Lougheed Enterprises Ltd., 2004
BCCA 421 at para. 10. See also Bow Valley 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]
In the absence of ambiguity, the plain, ordinary, popular, natural, or literal
meaning of the words in a contract, read in light of the entire agreement, and its
surrounding circumstances should be adopted, except where to do so would result in
commercial absurdity or create some inconsistency with the rest of the contract:
marijuana was being grown in the Residence, there was no evidence that the
Page 17
Non-Marine Underwriters, Lloyd's London v. Scalera, 2000 SCC 24 at para. 71; Eli
Lilly at 166-167; Manulife Bank at 451.
Accordingly, whether a grow operation comes within the definition of farming
requires that this exclusion clause be considered within the context of the Policy as a
whole.
[75]
Exclusion clause (10) cited above is clear enough. No doubt these clauses
have become more and more common as the scourge of residential grow operations
have also become more prevalent in our communities. Mr. Grass testified as to the
importance of the use of a property when an insurer considers whether it will insure
a risk, the coverages that it will offer and the amount of premium it will charge. That
accords with common sense. I would also hazard a guess that it would be a very
unique insurer who would purposefully insure an illegal grow operation, whether in a
home or otherwise.
[76]
I accept that a property being used for a business or farming purpose has
other and higher risk factors that would be considered by any prudent insurer.
However, in this residential-dwelling policy, in my view, it cannot be reasonably
interpreted that the parties intended to exclude a grow operation by use of the word
farming. Put another way, I fail to see how the parties could have intended that an
illegal grow operation, in a residential house, fit within that term.
[77]
Rather, consistent with the experience of the insurance industry in relation to
grow operations, the Policy contained a specific provision, exclusion clause (10),
dealing with the potential for this situation. That provision clearly refers to the
growing, cultivating, harvesting of cannabis. If the growing of cannabis was
included within the definition of farming, then there was no need for this separate
provision.
[78]
This interpretation makes imminent sense when comparing the two separate
provisions. If the cultivation of marijuana is an excluded risk as farming, then why

later limit the exclusion to only loss or damage resulting from the illegal activity?
[74]
Page 18
Wawanesas assertion that this is farming results in two separate exclusions which
operate differently depending on the factual circumstances. Where the loss does not
excluded under exclusion clause (4) above. Such an interpretation results in an

inconsistency within the Policy. This inconsistency is resolved by applying only
exclusion clause (10) to situations where a grow operation is being conducted on the
premises.
[79]
Further, these exclusion clauses are to be read narrowly: Canadian Northern
Shield at para. 30.

[80]
In my view, the only exclusion clause that applies to this marijuana grow
operation is clause (10). For the purposes of this argument, I accept that the
marijuana grow operation either belonged to Mr. Davidson or his wife, Tammy, such
that it arose from the activities of either the insured or the relative of the insured. I
also accept what I believe is the uncontroversial conclusion that this was an illegal
operation, which would constitute a criminal offence under the Controlled Drugs and
Substances Act, S.C. 1996, c. 19.
[81]
That being the case, Wawanesa is required to prove that the loss or damage
result[ed] from the illegal activity.

[82]
Wawanesa concedes that the fire was not directly caused by the growing of
marijuana. This seems evident enough because, by the time of the fire, the grow
operation had been dismantled by the RCMP. The only thing that Wawanesa relies
on is the proximity in time between the grow operation and the fire. It points to the
coincidence in that the Residence was set on fire less than 24 hours after the
RCMP raided the Residence and disassembled the marijuana grow operation. It
argues that resulting from includes the foreseeable consequences of operating a
grow operation, including the possibility of reprisal by rivals, or an intentional fire by
an interested party to destroy evidence following a police raid.
result from the activity, then it would be covered under exclusion clause (10), but

[83]
Page 19
The difficulty with Wawanesas position is that it relies entirely on speculation
as to how the fire arose. While the timing of events is suspicious, it remains the case
indirectly from the illegal grow operation, but it could equally have had nothing to do
with it.
[84]
Wawanesa has failed to satisfy me, on a balance of probabilities, that the fire
resulted from the grow operation, whether directly or indirectly.

[85]
In summary, I find that the loss of damage arising from the fire is covered by
the Policy, subject to the arguments of Wawanesa below concerning material nondisclosure and misrepresentation.
Material Non-Disclosure and Misrepresentation
[86]
The relevant statute applicable to this April 2010 fire is the Insurance Act,
R.S.B.C. 1996, c. 226 (the Act), which includes the statutory conditions that apply:
s. 126.
[87]
The applicable statutory condition relating to change material to the risk, as
found in the Policy, provides:

Material change
4. Any change 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 notified in 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]
The applicable statutory condition relating to misrepresentation, as found in
the Policy, provides:

Misrepresentation
1. If any person applying for insurance falsely describes the property to the
prejudice of the insurer, or misrepresents or fraudulently omits to
communicate any circumstance which is material to be made known to the
that there is simply no evidence as to why the fire was set. It could have arisen
Page 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.
The requirements, in order for an insurer to prove a misrepresentation, were
set out by McLachlin J., as she then was, 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 the Policy from Wawanesa in January 2006 and
he was required to, and did, renew it every year, with the last renewal taking place in
January 2010. That new Policy was based on the information provided in
Mr. Davidsons original application, plus any changes that he disclosed at the time of
renewal. It is accepted that Mr. Davidson did not advise Wawanesa of any change
material to the risk.
[91]
If the court is satisfied that there was a misrepresentation at the time
Mr. Davidson renewed his policy in January 2010, the Policy is void. Therefore, the
question of the materiality of a marijuana grow operation to Wawanesa is engaged in
both cases, whether considered in the context of a misrepresentation or a change
material to the risk.
[92]
Accordingly, under the change material to the risk argument, which subsumes
the issue of the materiality of the alleged misrepresentation, Wawanesa must prove:
a) there was a change that was material to the risk;
b) the change was within Mr. Davidsons control;
c) Mr. Davidson had knowledge of the change; and
[89]
Page 21
d) neither Wawanesa nor its local agent were promptly notified in writing of
the change.
[93]
Changes Material to the Risk
As discussed above, I have accepted the evidence from Cst. Pauls that the
grow operation found in the basement of the Residence contained marijuana plants,
as opposed to some other plant such as hemp.
[94]
The other allegations of Wawanesa are centered on the allegation that the
Residence was used to store stolen property and illegal weapons.

[95]
However, there was no evidence that any of the property items in the
Residence, from January 2010 to the date of the fire, were actually stolen. The only
evidence was from Cpl. Darin Rappel, who said he believed many of these items to
have been stolen, and that the RCMP recommended that charges be laid against
Mr. Davidson and Tammy based on that allegation. No direct testimony was
introduced at the trial to establish that any of these items were indeed stolen.
Further, there was no evidence as to how long these items had been at the
Residence to support any allegation that they were being stored there.
[96]
The same can be said for the allegation that the Residence was used to
store illegal weapons. I accept that during the raid the RCMP did find a number of
weapons, including a handgun, rifles and shotguns. They were described by Cpl.
Rappel as illegal because they were not registered to either Mr. Davidson or
Tammy; however, no criminal charges were laid and Cpl. Rappels testimony did not
establish their illegality at the trial, even on a civil standard. Nor, again, was there
any evidence as to how long these items had been at the Residence to support
Wawanesas allegation that they were being stored there.
[97]
Accordingly, the only material change that was proven at the trial was that a
marijuana grow operation was found in the basement of the Residence on April 21,
2010.
(a)

[98]
Page 22
Wawanesa bears the burden of proving the materiality of any change: Kehoe
v. British Columbia Insurance Co., [1993] 79 B.C.L.R. (2d) 241 at 244 (C.A.). The
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 evidence was that the presence of the marijuana grow operation
would have been considered a material change by Wawanesa. The reasonableness

of Wawanesas practice is supported by Patricia Stirlings expert report, dated
August 21, 2014, to the effect that such an illegal grow operation would be
considered by an underwriter to be material: Kehoe at 248. Ms. Stirlings report was
introduced into evidence without any challenge by Mr. Davidson. Ms. Stirling
professes skill in the assessment of risk to establish eligibility for a personal
insurance policy or programme.
[100] I find, as a fact, that the presence of the marijuana grow operation was a
change material to the risk under the Policy. I did not understand that Mr. Davidson
took any contrary position, nor did he submit any evidence to the contrary.
[101] As I have noted above, there is no evidence that the loss or damage arising
from the fire was related, in any way, to the grow operation. However, there is no
requirement that the material change in risk be causally connected to the loss in
order for an insurer to rely on the material change to void the policy: Henwood v.
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] I also find that Mr. Davidson had control of the Residence from January 2010
to the date of the fire. He was the registered owner of the Residence and, as I have
found above, was maintaining it as his principal residence even while he was away
working in the area around 100 Mile House. Tammy, Kursten and Michael Wasmund
had moved into the Residence with his permission.
court in Kehoe agreed with the trial judge that:
Page 23
[103] Although Mr. Davidsons bail conditions required him to stay 100 metres away
from any place he knew to be Tammys residence, he continued to have the ability to
presence of a police escort. In addition, he could have exercised control over the
Residence by commencing legal proceedings to remove Tammy, Kursten and
Michael Wasmund from the Residence: Nahayowski v. Pearl Assurance Company
Limited, [1964] A.J. No. 27 at para. 20 (S.C.).
[104] Mr. Davidson did not dispute that he maintained control over the Residence
from January 2010 to the date of the fire.
(c)
Failure to Notify Insurer
[105] Mr. Davidson also does not dispute that he did not notify Wawanesa or its
agent, HUB International, of any change in respect of the Residence, either at the
time of renewal in January 2010 or in the period leading up to the fire. He received a
letter dated December 21, 2009 from HUB International relating to the renewal of the
Policy. An attachment to that letter specifically advised that any material changes
arising during the policy period must be reported to their office immediately.
Examples of material changes were stated to be renovations or alterations to the
building.
[106] Mr. Davidson denies knowledge of the marijuana grow operation so he states
that there were no changes of which he was aware. He also denies any knowledge
of the presence of any stolen property or illegal firearms at the Residence.
(d)
Mr. Davidsons Knowledge
[107] The central issue to be decided is whether Mr. Davidson knew of the illegal
activities at the Residence. Wawanesa alleges that he knew of the marijuana grow
operation, both at the time of the renewal of the Policy in January 2010, and in the
period between the renewal and the fire. In fact, Wawanesas main allegation is that
Mr. Davidson was the driving force behind the grow operation.
exercise that control. For example, he was allowed to visit the Residence in the
Page 24
[108] Although I have found that Wawanesa has not established the presence of
stolen items or illegal firearms being stored at the Residence over this period of
[109] Mr. Davidson says that he was on the property in early December 2009 after
friends advised him that strange things were going on at the Residence. When he
pulled up in his Jeep Cherokee, he saw various lawn and outdoor items, such as
wire reindeer. He acknowledges that Tammy was involved in petty thefts and
property crimes during 2009, but he contends that none of the stolen items were in
the Residence. He is sure that he discussed his dissatisfaction of her activities with
her. As far as he knew, these thefts were not for resale but rather for her own
pleasure, so the items were being used in his yard. He says that he ultimately got rid
of them by loading the items into his Jeep and dropping them off somewhere where
he thought they could be re-used.
[110] Mr. Davidson says that the second to last time he was at the Residence was
in the first day or two of January 2010, and that there was nothing strange going on
at the Residence. Mr. Davidson provided evidence that he had listed the Residence
for sale from spring 2009 to fall 2009. He referred to various pictures of the interior,
which indicate a neat and tidy residence. The basement door, which was later
hidden, is clearly noted in the pictures. The listing was in place as of September 2,
2010, and he reduced the listing price to $426,500 on September 29, 2009.
However, it appears that the listing was cancelled on October 20, 2009.
[111] In his statement to the police, Mr. Davidson does refer to his intention of relisting the Residence in April or something, which I take to mean in 2010. That
intention of Mr. Davidson to list the property in the spring of 2010 is also supported
by his earlier statement concerning a sale of the Residence in the video evidence
discussed below.
[112] Mr. Anderson confirmed the listing information in his May 20, 2010 report to
Wawanesa, which information referred to a half unfinished basement having an
area of 784.5 square feet.
time, Wawanesa similarly alleges that Mr. Davidson knew of these events also.
Page 25
[113] Mr. Davidson says that when he left the Residence in early January 2010, the
basement door had not been covered with drywall and re-painted so as to hide its
by his realtor.
[114] Mr. Davidsons statement to the police indicated that he was there on January
3, 2010. He emphatically denies that any marijuana grow operation was underway or
there were stolen property or firearms at the Residence. He did not notice any
blockage of the doorway to the basement while he was there. His best assumption is
that it was done by the time of the RCMP and Ministry walk-through on January 6,
2010. This evidence is somewhat consistent with that of Cst. James Prieur, who
visually inspected the Residence on January 6, 2010 and commented that it was
neat and tidy. Also consistent with the evidence of Mr. Davidson is that Cst. Prieur
did not notice any large amounts of personal property that might have been indicia of
storage of stolen property, such as was presumably found on April 21, 2010.
[115] As I have discussed above, Mr. Davidson was away from the Residence
during this time working in the area around 100 Mile House. However, most of his
personal belongings, including credit cards and keys to his Harley Davidson
motorcycle, remained at or in the Residence.
[116] Sometime between January and April 2010, Mr. Davidson says that he did
attend at the Residence in breach of the bail order. He did not mention this visit at
the Residence when giving his statement to the RCMP. Tammy was not home, but
Kursten was there and, perhaps, Michael Wasmund also. Mr. Davidson admits to
seeing various items, which he assumed were stolen items. He was angry. He says
that he smashed all of the stolen items that he could see, including a telescope and
computer monitors.
[117] Mr. Davidson says that, at this point, he had no knowledge of any grow
operation or drug trafficking going on in the Residence. As far as he was concerned,
he had taken care of any stolen property issue albeit in an unconventional manner
by smashing what he saw there. He assumed that was the end of it.
presence. He indicates that it was neat and tidy, just as depicted in the photos taken
Page 26
[118] Mr. Davidson says that sometime in April 2010, he began to receive some
information from his friends that something was happening at the Residence. He
Tammy and Kursten were on a crime spree. He referred to his wife as bipolar
and having a personality disorder. He said, however, that he was not aware that she
was running amok.
[119] At that point, he says that he took it upon himself to see what was going on
and clear up the situation by getting the individuals involved at the Residence out.
He had in mind that if he could get permission to go to the Residence with a police
escort, with the intention of getting his Harley Davidson motorcycle, the police
themselves might see what was going on at the Residence and, if necessary, deal
with the individuals involved.
[120] Lindsay Gordon was Mr. Davidsons bail supervisor assigned arising from the
December 2009 incident with Tammy Boucher. She met with Mr. Davidson earlier in
March 2010 and also on April 22, 2010. On the April date, she stated that she had
learned just that morning that a residence on Westsyde Road had burned down and
she asked Mr. Davidson whether it was his home. He said he did not know.
[121] The fire, of course, had happened just that morning. Mr. Davidson had
learned earlier about the RCMP raid. He would later learn of the fire and would, still
later, he contends, learn of the marijuana grow operation, the allegedly stolen
property and the firearms discovered at the Residence. He denies having any
knowledge of these activities.
[122] Mr. Davidson now speculates that whoever set up the grow operation in his
basement would probably have been in the beginning stages of doing alterations to
the Residence after he left in early January 2010. Mr. Davidson thinks that, based on
his review of the operation, it was beyond the capabilities of Tammy, Kursten and
Michael Wasmund to set up such an operation. He has also guess-estimated that it
would have taken one to two months to set up the operation and the same amount
of time to grow the plants. He acknowledges that it was done for profit.
referred to strange things happening at the Residence, and that they meaning
Page 27
[123] Wawanesa has not introduced any direct evidence that Mr. Davidson knew of
the illegal activities in the Residence, but relies on various circumstantial evidence.
did know of the activities at the Residence depends on it successfully attacking

Mr. Davidsons credibility. The factors to be considered when assessing credibility
were summarized by Dillon J. in Bradshaw v. Stenner, 2010 BCSC 1398 at
para. 186, affd 2012 BCCA 296:
[186] Credibility involves an 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 ability and opportunity to
observe events, the firmness of his memory, the ability to resist the influence
of interest to modify his recollection, whether the witness evidence
harmonizes with independent evidence 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 validity of 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] Wawanesa refers to various matters that it suggests indicate Mr. Davidsons
evidence is not to be believed.
[126] There was confusion about dates around the time of the fire. Ms. Gordons
evidence, at trial, was that Mr. Davidson missed his April 21, 2010 appointment in
Ashcroft and that he showed up in Kamloops on April 22, 2010 with no appointment.
The import of their discussion that day was that Mr. Davidson did not know if his
Residence had burned down that morning. Records from HUB International indicate
that he visited their offices on April 22, 2010 at 9:30 a.m. to advise them of the fire,
even before his visit to Ms. Gordon. Mr. Davidson says that he thought he reported
the fire to HUB International the next day, being April 23, 2010.
[124] It is readily apparent that the ability of Wawanesa to prove that Mr. Davidson
Page 28
[127] There is no way to reconcile these inconsistencies and nothing really turns on
these inconsistencies in the dates, in any event. In support of Mr. Davidsons version
Harley Davidson motorcycle on April 22 because he had purchased insurance for it

the day earlier. One might question why he would do so, if he knew that the
Residence had gone up in flames.
[128] Wawanesa points to a picture of Mr. Davidsons Harley Davidson found in the
backyard during the RCMP raid, but Mr. Davidson says that when he left the
Residence, it was in the garage and he had not moved it since. It is possible that
someone else moved it since Mr. Davidson left the keys in the Residence.
[129] Wawanesa refers to Ms. Gordons records, which provide a listing of
Mr. Davidsons criminal record. It argues that some past convictions have some
relevance to Mr. Davidsons credibility in general. However, his past convictions,
which include forgery and possession of stolen property, are dated in that they arose
in 1986 and 1995. His last conviction before the fire was for breach of a probation
order in 2006. In the ensuing years leading to the fire, no convictions arose.
[130] Wawanesa also points out that, although Mr. Davidson denied any knowledge
that stolen goods were at the Residence at the time of renewal, he attended the
Residence twice to deal with stolen goods. On the first occasion, around December
2009, he picked up these goods and removed them from the property. As for his
second visit after renewal, he failed to advise the RCMP of that visit during the
taking of his statement. This might be understandable given his bail conditions that
did not allow him within 100 meters of Tammys residence, although Mr. Davidson
notes that Tammy was not present during that visit. I also accept Mr. Davidsons
evidence that he understood the question to be regarding when he last stayed in
the Residence, not just an attendance for a quick visit. As he states, and as I accept,
it is more than likely he misunderstood the question given his extreme emotional
state and his distress over losing his house, as he confirmed in his later emails to
Mr. Anderson.
of events, he asked Ms. Gordon for permission to go to the Residence to pick up his
Page 29
[131] Mr. Davidsons visit to the Residence, during which time he smashed various
items he assumed to be stolen, is not in dispute. In that respect, Wawanesa relies, in
Mr. Davidson (the Video). The Video was recovered from Mr. Davidsons
camcorder, which was seized by the RCMP from the garage at the Residence.
Mr. Anderson received the Video in late May 2010 and assumptions made by him
arising from Mr. Davidsons statements contributed to his recommendations to
Wawanesa, which led to the rejection of the insurance claim.
[132] Despite the objections of Mr. Davidson, the Video was admitted into
evidence, although subject to arguments concerning the weight that should be
accorded it: R. v. Nikolovski, [1996] 3 S.C.R. 1197 at 1210. Mr. Davidson
acknowledges that he made various statements as recorded on the Video.
[133] On the subject of the allegedly stolen property, the Video does evidence a
recording of Mr. Davidsons discussion with an unknown male on March 15, 2010.
The date of the Video is actually April 15, 2010, but the evidence establishes that the
date stamp was one month ahead of that time.
[134] In the 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
unbelievable the shit
[135] Mr. Davidsons evidence is that, as far as he was concerned, he had solved
any problem. Mr. Davidsons statements on the Video are consistent with him having
no prior knowledge of any stolen property being at the Residence, and that he was
upset and angry when he discovered these items at the Residence during that visit.
In the Video, he stated:
Uh, I just fucking you know lost it in my house there. You know I had enough
of this bullshit.
particular, on a DVD that includes footage and audio of various statements by
Page 30
I dont need that in my life, all this stolen shit. So their little crime sprees
over
knowledge is proven by two circumstances. Firstly, Cst. Prieurs observations as to

the state of the Residence during his visit on January 6, 2010; and, secondly,
Mr. Davidsons statements on the Video.
[137] Cst. Prieur testified that he was absolutely certain that the doorway to the
basement was covered in drywall and painted to match the other walls during his
visit on January 6, 2010. Wawanesa argues that this establishes that, since the bail
order preventing Mr. Davidson from attending Tammys residence was issued on
January 22, 2010, the basement must have been concealed while Mr. Davidson was
able to attend at the Residence. The timing does support this, however,
Mr. Davidson says that his second to last visit was in early January 2010 and,
therefore, it could have been done after that attendance at the Residence and before
Cst. Prieurs visit. In addition, when he next attended at the Residence on the one
occasion after January 22, 2010, at which time he smashed what he thought was
stolen property, Mr. Davidson denies that he noticed any such alteration to the
basement door.
[138] Wawanesas principal argument is that Mr. Davidsons statements on the
Video prove that Mr. Davidson was aware there was a grow operation at the
Residence. It relies on the following statements by either Mr. Davidson (SD) or an
unknown male (UM), which was recorded on March 15, 2010:
SD:
Uh, I just fucking you know lost it in my house there. You know 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.
[136] On the subject of the grow operation, Wawanesa says that Mr. Davidsons
Page 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 May that
should be enough time to get her program finished you know, get it up
and running and finished, and then we, well and Ill sell the fucking
house, get rid of it, get my headaches over, I get 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 I cant 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 that any of the above references are to the basement in
the Residence or, more particularly, a grow operation in that basement. In my view,
as argued by Mr. Davidson, it is somewhat difficult to ascribe the meaning from
these comments as asserted by Wawanesa:
a) he states that his comment about downstairs fucking nothing going on
there, nothing refers to the items that he observed and assumed were
stolen goods during his last visit;
b) regarding the comment fucking pathetic what I seen down there and she
showed me a couple plants and the basement being fired up again,
Mr. Davidson says that this likely referred to a different location where
Tammy referred to the plants. Other circumstances and questions arising
support such an assertion: Firstly, presumably Tammy could not have
shown the plants to him at the door, being the door to the basement,
since it had likely been covered over by then; secondly, one might also
question that if Mr. Davidson was the kingpin of this marijuana grow
operation, why would Tammy be showing him a couple of plants at the
door?; and, finally, why would he describe the grow operation as
pathetic, when only a month later, it would be shown to be anything but?;
Page 32
c) regarding the comment we agreed that she would be out in two months, I
told her at the end of May, that should be enough time to get her program
operation in that Tammy had many other programs underway, such as

psychiatric and rehabilitation;
d) regarding the comment about Tammy neglecting the real money maker,
Mr. Davidson says that this comment had nothing to do with the
Residence and may indicate involvement in prostitution; and
e) regarding the comment about a white powder and scales in a car and that
she was selling marijuana, Mr. Davidson says that Tammy did not have
a car, only a truck and he does not know who he was referring to in terms
of the sale of marijuana. Further, even if Tammy was selling marijuana, it
does not prove that she was selling it from the Residence or that
Mr. Davidson knew about it.
[140] I conclude that Mr. Davidsons statements in the Video, as above, are
ambiguous and could support either argument.
[141] Wawanesa also argues that Mr. Davidsons history supports his involvement
in the grow operation in the basement of the Residence. Mr. Davidson indicated
during cross-examination that prior to January 2010, he had been involved in one
such operation in Quesnel in the late 1990s. He disclosed this to the RCMP when he
gave his statement.
[142] As counsel for Wawanesa points out, Mr. Davidson was undeniably
circumspect and vague concerning his employment in the area of 100 Mile House
from late 2009 to the spring of 2010. He was unclear on this matter in his
discussions with Ms. Gordon, the RCMP and Mr. Anderson. The reason for that was
clearly revealed in the Video which is date-stamped April 26/27, 2010 and, therefore,
was taken on March 26/27, 2010.
finished , Mr. Davidson denies that the program referred to the grow
Page 33
[143] The Video shows Mr. Davidson giving somewhat of a tour of a house and
outbuildings in the 100 Mile House area where there is clearly a marijuana grow
project and what is going on. In the Video, Mr. Davidson refers to various carpentry
work he completed on the project. Mr. Davidson acknowledged, in his evidence, that
he did work as a carpenter on the project, but he denied that he did work as an
electrician, or that he had the overall knowledge and experience to organize a grow
operation. It was clear from the Video that he is somewhat familiar with aspects of a
grow operation, given his comments on certain unhealthy plants and also the size of
certain pots being used. Mr. Davidson refers to this as being the worst show, with
show referring to grow operations, although he asserts that it was the owners set
up or show and he was only doing renovations for the owner.
[144] Wawanesa argues that it can reasonably be concluded that Mr. Davidson is
knowledgeable about marijuana grow operations, including their construction,
lighting and what constitutes a good grow operation. Such an inference is supported
by the actions and comments of Mr. Davidson in the Video. However, I fail to see
how this evidence is then immediately translated into Mr. Davidson having set up his
own grow operation in the basement of the Residence.
[145] Finally, Wawanesa submits that this Court should draw an adverse inference
as a result of Mr. Davidsons failure to call as a witness Tammy, Kursten, Michael
Wasmund or anyone else that might have resided at the Residence from January
2010 until the RCMP raid on April 21, 2010. Mr. Davidson saw Tammy at Kursten
and Michael Wasmunds wedding in August 2014 in Alberta where they all now live.
He still speaks to Tammy from time to time. He is not currently aware of Kursten and
Michael Wasmunds address since they have separated.
[146] Wawanesa argues that such an adverse inference should be drawn here
since none of them were called to corroborate Mr. Davidsons evidence that he was
not at the Residence at the relevant times and, hence, knew of the marijuana grow
operation.
operation. His stated intention is to show the owner of the property his work on the
Page 34
[147] In Tower Waterproofing v. Mondiale Development Ltd., 2013 BCSC 1772, this
Court discussed the principles by which an adverse inference may be drawn by
[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 equally available to both parties: Zawadzki v 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 Mortgage MIC Ltd. 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 might meet this argument by

contending that it was equally able to subpoena these witnesses in support of its
position at trial, particularly since the burden of proof on this point rests on
Wawanesa.
[149] Indeed, Wawanesa appears to have obtained an interprovincial subpoena for
Kursten and Michael Wasmund who reside in Alberta. A process server was hired to
serve Kursten and Michael Wasmund with the subpoenas and conduct money. He
attempted, unsuccessfully, to serve them at various dates and times at an Edmonton
address on June 6-9, 13, 19 and 21, 2015. There was no evidence they were
avoiding service. I can only presume that Wawanesa asked for, and obtained from
Mr. Davidson, any addresses or contact information he has for these people. There
was no indication that Wawanesa made similar efforts to subpoena Tammy.
reason of a failure to call a witness:
Page 35
[150] Wawanesa relies on the statements of this Court in Caplan Builders Ltd. v.
Royal Bank of Canada, [1988] B.C.J. No. 327 (S.C.) that the word available has a
338:
The word available, as it is used here, is not necessarily restricted to
mean that either party has a like opportunity to subpoena the witness, for if
the relationship of 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 equally available
[151] In Caplan Builders, the court concluded that the defendant bank should have
called its retired employee to give evidence as to certain discussions between the
bank and the plaintiff on the issue as to what terms of an agreement, if any, were
reached. In the absence of that testimony, the court inferred that his testimony would
have been unfavourable to the bank and favourable to the evidence of the plaintiff.
[152] In my view, the circumstances in Caplan Builders are distinguishable from
those here. Wawanesa bears the burden of showing that Mr. Davidson did have the
requisite knowledge as to the material change in risk. Mr. Davidson has denied this
allegation and his evidence has been introduced to dispute that claim. In these
circumstances, it is open to the Court to accept his evidence as presented in coming
to a conclusion on the issue: Palidwor v. Julian Ceramic Tile Inc., 2008 BCCA 395 at
para. 9.
[153] Further, I do not see that the circumstances of whatever relationship
Mr. Davidson may have with these individuals supports that they were available to
him but not to Wawanesa. At the time of trial, they all lived in Alberta. Clearly,
Mr. Davidson is no longer living with Tammy and the fact that he still talks with her
from time to time does not connote a relationship such that he could easily compel
her attendance at the trial. He also explains that she has various psychological
issues.
[154] The circumstances relating to Kursten and Michael Wasmund are even less
compelling. Kursten gave a statement to the RCMP by which she attempted to
restricted meaning, citing Pointer v. Pointer, 251 S.W. (2d) 334 (Mo. App. 1952) at
Page 36
implicate Mr. Davidson in the activities at the Residence and the fire itself. It was this
statement that Mr. Anderson, at least in part, relied upon in terms of his
them concluding, on September 23, 2010, that Kursten had no credibility and would
unlikely return for court. This conclusion is consistent with Mr. Davidsons contention
that she was lying and trying to deflect attention away from her own criminal
activities. Indeed, the RCMP investigation revealed some odd behaviour by Kursten
around the time of the fire that even Mr. Anderson viewed as suspicious.
[155] In the above circumstances, I decline to draw any adverse inference against
Mr. Davidson. Mr. Davidsons credibility still stands to be assessed in light of all the
evidence adduced on the issue. I accept his explanation as to why he did not call
these people as witnesses. Further, I find that they were equally available to
Wawanesa in terms of it proving its allegation about Mr. Davidsons knowledge. The
fact that they were unsuccessful in serving Kursten and Michael Wasmund with the
subpoena does not affect that conclusion.
[156] I have considered, at length, Mr. Davidsons credibility on the central issue as
to whether he was aware of the grow operation during the relevant time period
leading up to the raid and the fire.
[157] Mr. Davidson gave his evidence in a respectful, calm and rational manner on
the stand. He has consistently, to all involved, denied any knowledge of the grow
operation. After the fire, he also consistently and passionately pled his case to
Wawanesa in terms of recovery under the Policy. Mr. Davidsons evidence
establishes that he was a responsible homeowner who paid his bills, paid his
mortgage and dutifully renewed his insurance every year. His evidence, which I
accept, is that by the spring of 2010, he had a good credit rating, which he had
worked hard to improve over the years.
[158] He is, however, now met with the web of circumstances adduced by
Wawanesa at this trial and I agree that those circumstances are compelling to a
degree and do raise some suspicions about him and his activities.
recommendations to Wawanesa. However, the RCMPs investigations resulted in
Page 37
[159] Mr. Davidson presents another picture of his life during the relevant time, one
that cannot be described as ordinary. His family life was difficult in relation to
activities, such as a grow operation, is most certainly not an occupation that invites a
conclusion that a person is honest. The fact that his lifestyle, including his
construction of a grow operation, is clearly out of the ordinary, was no doubt a solid
factor supporting Wawanesas rejection of his claim. But his involvement in the
construction of that grow operation does not necessarily lead to the conclusion that
he is a liar or that he was undertaking his own grow operation in the basement of the
Residence.
[160] The picture painted by Mr. Davidson is equally consistent with him being
away from the Residence during the relevant time and also consistent with his wife,
step-daughter and boyfriend, and perhaps others, constructing the grow operation
without his input, participation or knowledge while he was away. There are equally
compelling, albeit unusual, explanations that support the conclusion that
Mr. Davidson did not know.
[161] I consider that Mr. Davidson was a credible witness. His evidence did have
certain flaws, but I consider them to have been minor when considered in the
context of the overall evidence. By his own admission, some facts were unclear, no
doubt arising due to the time lapse between the events in question and trial, some
five years. This is to be expected. His comments on the Video are ambiguous and
could support either theory of the case, whether from Wawanesa or Mr. Davidson.
[162] The burden of proof lies on Wawanesa to prove its case on a balance of
probabilities. This is a case close to the line, but I accept the evidence of
Mr. Davidson and find, as a fact, that he did not know of the grow operation or even
the other activities relating to potentially stolen property or potentially illegal firearms
over the relevant period of time leading up to the fire. Simply put, Wawanesa, while
presenting a compelling case and raising a number of suspicions, did not meet that
Tammy and Veronica. Also, being a contractor for a person conducting criminal
Page 38
burden of proof: A.K. v. The Dominion of Canada General Insurance Co., [1997]
B.C.J. No. 576 at para. 17 (S.C.).
advise Wawanesa as to the knowledge he gained during brief encounter at the

Residence after January 2010, at which time he smashed what he believed to be
stolen property, to be a breach of the Policy. I have already concluded that there is
no evidence that such items were indeed stolen. However, if I am mistaken in that
respect and the items were indeed stolen, Mr. Davidson is entitled to seek relief from
forfeiture.
[164] The evidence of Mr. Davidson, which I accept, is that the location of these
items was only discovered by him upon his visit to the Residence, and that he
immediately destroyed what items he could see. As such, the problem, if there was
one, was temporary, and dealt with by Mr. Davidson upon him learning of 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 binding on the insured if
it is held to be unjust or unreasonable by the court before which a question
relating thereto is tried.
[166] In Marche, the insured purchased a house and then moved away to find work.
The house remained vacant for some time before a tenant moved in. The home was
later destroyed by fire and the insurer denied the claim on the basis that the
temporary vacancy was a material change in risk that the insured failed to report to
the insurer. The trial judge held that the insured should be relieved from the
consequences of any breach of the condition pursuant to s. 171 of the Nova Scotia
Insurance Act, R.S.N.S. 1989, c. 231, which stated that, similar to s. 129 the Act, a
policy condition is not binding on the insured if a court finds it to be unjust or
[163] I did not understand Wawanesas position to be that Mr. Davidsons failure to
Page 39
unreasonable. That conclusion was upheld by the Supreme Court of Canada.
[42]
On the other hand, the insurer might argue that lack of notification of a
change cost it an opportunity to cancel the contract before the loss.
Moreover, it is not essential that a statutory breach be causally connected to
the loss: see Henwood v. 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. Many events 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] I would respectfully adopt the comments of the Court in Marche and, if
necessary, apply the provisions of s. 129 of the Act to relieve Mr. Davidson of any
consequences arising from his failure to advise Wawanesa of what he discovered
during this one-time visit. I find that to do otherwise would be unjust or unreasonable
in these circumstances.
Damages
[168] Mr. Davidson claims indemnity for his losses, including damages for breach of
the Policy, aggravated damages and interest and costs. The onus lies on him to
prove the quantum of his claim.
[169] Wawanesas counsel confirmed to him that based on the single inclusive
limit under the Policy, after payment to the Bank, Mr. Davidson would have had a
maximum coverage amount of $457,423.31 available to him.
[170] Wawanesa submits that Mr. Davidson has failed to tender sufficient
supporting documentation for his claim.
McLachlin C.J. stated:

(a)
Page 40
The Residence
[171] The Policy provided for guaranteed replacement cost coverage, which
the same location, with building(s) of the same size and occupancy, constructed with
materials of similar quality, within a reasonable time after the damage. As
Mr. Davidson did not do so, the Policy provides that he is then entitled to the actual
cash value of the loss or damage at the date of loss.
[172] The Policy defines Actual Cash Value as:
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] In his August 2010 report to Wawanesa, Mr. Anderson ascribed an overall
value to the Residence of $445,000, which included land value of $153,000 and
$292,000 for improvements. This was said by him to be consistent with the listed
sale price in 2009 of $426,500 and the 2009 assessed value of $426,000.
[174] Mr. Andersons report indicated that the remaining asset value of the
Residence was limited, but there was some value with respect to the site work
remaining. So the residual value of the Residence would have been $292,000 less
the site value (foundation, weatherproofing, and utility connections) that remained,
and the value of the outbuildings that were not consumed by the fire. He estimated
that the remaining value was about 25-45% of the value of the house, or between
$73,000 and $131,400, which leaves a range of residual value of $160,600 to
$219,000.
[175] Mr. Davidson seeks the equity in the Residence of approximately $160,000,
being the difference in the appraised value and the mortgage balance at the time of
the fire.
required Mr. Davidson to repair or replace the damaged or destroyed building(s) on
Page 41
[176] Wawanesa argues that in calculating the actual cash value of the Residence,
other factors must be considered. Hydro and gas services to the home were
the value of the Residence since, presumably, they could have been easily
reconnected.
[177] A condition of the Residence at the time of the fire did include, of course, the
presence of the marijuana grow operation in the basement. Wawanesa points to a
Controlled Substances Property By-law No. 24-40 posted by the City of Kamloops
(the By-law). Section 5 of the By-law provided that if electrical, water or gas
services have been disconnected as a result of the unlawful use of a property for the
manufacture of a controlled substance, they shall not be reconnected and the
property shall not be occupied until certain remediation requirements had been met.
[178] There was no evidence introduced by either Mr. Davidson or Wawanesa as to
what cost could be ascribed to whatever actions were required to meet the By-law. I
accept that in determining the actual cash value, that would be a consideration.
The lack of evidence on this one point leaves the court in some difficulty in coming to
an amount for damages. However, difficulty in ascertaining the amount of loss is no
reason not to give damages. The court must do the best it can, even if the decision
involved a certain amount of guess work: Penvidic v. International Nickel, [1976] 1
S.C.R. 267 at 280.
[179] I would award the amount of $140,000 for the losses relating to the
Residence.
(b)
The Personal Property
[180] With respect to Mr. Davidsons personal property or contents lost in the fire,
the Policy included replacement cost coverage, but this requires the insured to repair
or replace lost or damaged property as soon as reasonably possible. Otherwise,
coverage for such items requires Wawanesa to pay on an actual cash value basis.
disconnected, although I do not see that this would have substantially detracted from
Page 42
[181] In some strange twist of fate, the RCMPs seizure of many items of the
personal property owned by Mr. Davidson in the Residence likely saved those items
many of the items seized belonged to him or to Veronica and were not stolen
property. He indicated that many items were returned to him, including the Harley
Davidson motorcycle and some TVs. He does not claim under the Policy for these
items.
[182] He claims, however, that many other items were not seized and were
destroyed by the fire. Mr. Davidson did not deliver a proof of loss as he was advised
not to by Wawanesa, and later advised, by its counsel, that any claim would be
rejected. He has, however, submitted lengthy lists to Wawanesa of items that he
says were lost or destroyed in the fire. During argument, he stated that he was
seeking the sum of $260,000 for these items.
[183] Mr. Anderson confirms that he never did assess the contents claim that
Mr. Davidson advanced since the claim had been rejected prior to that time.
Wawanesa made numerous requests for information from Mr. Davidson to allow it to
assess the quantum of his claim in the event he succeeded at trial. On March 2,
2015, Wawanesa obtained an order requiring Mr. Davidson to serve further and
better particulars of his claim for indemnity pursuant to the Policy and such
particulars were to include the dollar amounts. Wawanesas counsel advises that
Mr. Davidson provided no further particulars after that order.
[184] Mr. Davidsons lists include detailed items and, in some cases, he has tried to
put a specific dollar value on these items. The Residence was 2,148 square feet,
and included four bedrooms, living and dining areas, kitchen, three bathrooms, a
family room, laundry and a garage. Mr. Davidson lists items that he recalled in all of
these rooms. He acknowledges that the values were based on his investigation
regarding replacement value for the items and that they represent his estimates of
the values. He says that he did not have extensive periods of time to get all details of
these values, and that he did his best.
from destruction from the fire. Mr. Davidson advanced a claim to the RCMP that
Page 43
[185] There was no evidence about which items were replaced, or not. Accordingly,
I propose to address this issue on the basis of determining the actual cash value of
[186] There are many difficulties with Mr. Davidsons listings. Many of the item
values are clearly exaggerated, many include replacement cost and many items are,
in fact, part of the Residence value and, as such, are already addressed.
[187] Doing the best I can, I award the sum of $75,000 for the loss of the personal
property and contents in the Residence destroyed in the fire. In doing so, I have
disregarded any claim by Mr. Davidson for certain items that are excluded under the
Policy, such as motorcycles, dirt bikes and four-wheel all-terrain vehicles.
(c)
Additional Living Expenses
[188] The Policy provides that in the event of an insured loss where the dwelling is
unfit for occupancy and the insured has to move out while repairs are being made,
Wawanesa provides coverage for:
any necessary increase in living expenses, 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] In early May 2010, Mr. Davidson emailed Mr. Anderson concerning his living
expenses and he asked for payment of them. On May 19, 2010, Mr. Davidson and
Mr. Anderson exchanged emails about Mr. Davidsons ongoing efforts to get his
claim recognized by Wawanesa. Eventually, on that date, Mr. Davidson indicated
that my living conditions are acceptable at this time. I assume that he was referring
to his having purchased the trailer and fifth wheel for $40,000 and $50,000
respectively, where he, Tammy and Veronica were staying. He says it was his
decision to purchase these items but, in any event, I did not understand that
Mr. Davidson was claiming these purchase amounts.
the items lost.
Page 44
[190] Mr. Davidson advances a claim for additional living expenses of $66,900,
which is the Policy limit. He says that he had to feed Tammy and Veronica and buy
right after the fire.

[191] However, there is no indication that these living expenses, such as food, were
anything other than the normal living expenses that he would have incurred for
himself and his family members even if the fire had not occurred. Therefore, there is
no evidence that there was any increase in such expenses as contemplated by the
Policy.
[192] I decline to award any amount under this claim.
(d)
Aggravated Damages
[193] Mr. Davidson seeks aggravated damages.

[194] Such damages are available as additional compensation if the insured
establishes that a breach of that contract caused her mental distress. There must be
actual evidence of aggravation and mental distress: Fidler v. Sun Life Assurance Co.
of Canada, 2004 BCCA 273 at para. 39, revd in part 2006 SCC 30.
[195] It is common ground that the Policy was a peace of mind contract, the
purpose of which was to secure Mr. Davidsons peace of mind in the event of a fire
such as occurred here: Fidler (C.A.) at para. 38.
[196] Wawanesa argues that Mr. Davidson has adduced no evidence of
aggravation or mental distress. To the contrary, Mr. Davidsons evidence was that
he was in extreme distress and emotional upset in the days, weeks and months
following the fire. Examples of his emails to Mr. Anderson throughout May and June
2010 were to the following effect:
(i) May 12, 2010:
My mind is so stressed and I am unsure of so many things, and
bewildered, and confused as to why this happened and actually what
happened ! and who would do this,
new clothes and toiletries for them. He says that he paid $10,000 for these items
Page 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.
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) May 19, 2010:

This brings me to ask then why I am not receiving assistance?
(iv) May 26, 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] Even after Wawanesas rejection of his claim on June 21, 2010, Mr. Davidson
still sought recovery in his June 25, 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 evidence is that Wawanesas refusal to acknowledge his claim
and pay him compensation left him in a very stressed condition. He describes his life
after the fire as an ordeal.
[199] Wawanesa argues that Mr. Davidson was required to provide medical
evidence in support of his claim. Wawanesas counsel states that he was asked, at
his examination for discovery, to provide any medical records in support of this claim
for mental distress or emotional suffering and he refused. On March 2, 2015, Master
McDiarmid ordered Mr. Davidson to provide signed authorizations for production of
various medical records by April 7, 2015 failing which [Mr. Davidson] be prohibited
from seeking damages to his person, emotional or psychological state.
(ii) May 19, 2010:
Page 46
[200] I am advised that no properly executed authorizations or records were

produced by Mr. Davidson. I was not advised of the significance of the various
tax records relating to any income loss claim, which claims are not being advanced.
As best I can tell, the only authorizations that might potentially relate to Mr. Davidson
were from Dr. Ritenburg and the Prince George General Hospital.
[201] I do not read Fidler as requiring that an insured must provide medical
evidence in support of a claim for aggravated damages. In Fidler, the appellate court
upheld the trial judges award of aggravated damages based on Ms. Fidlers
testimony and her letters to the insurer: para. 48. The Court of Appeal noted that the
trial judge found additional support by statements by Ms. Fidlers doctor: para. 49.
[202] Accordingly, in my view, the court could have assessed Mr. Davidsons
evidence, as to his emotional upset, as to whether aggravated damages were
proven, even without any supporting material from any medical professionals,
assuming that he even sought out such assistance following the fire.
[203] However, in the face of the Masters order, I do not see that it is now open to
Mr. Davidson to advance such a claim.
[204] Even were I to consider such a claim, there are also some difficulties in
ascribing all of Mr. Davidsons emotional distress to the actions of Wawanesa.
Mr. Davidson was arrested by the RCMP on suspicion of all of the proposed charges
relating to the grow operation, the stolen property and the illegal firearms and the fire
itself. He was also, by then, in the company of Tammy, who he suspected was
involved in these activities. His step-daughter was giving statements to the RCMP
that implicated him in all these activities. All of these matters would, no doubt, have
been stressful. I accept, however, that part of his stress was caused by Wawanesas
rejection of his claim.
[205] Further, following the fire, Wawanesa investigated Mr. Davidsons claim. It did
so having in mind the unusual circumstances of this case and with a view to gaining
information that it thought would arise through the RCMP investigation. With the
authorizations ordered to be produced. Many clearly related to Veronica, or income
Page 47
results of that investigation in hand, and particularly having the Video in hand,
Wawanesa exercised its right to void the policy for the reasons discussed above.
entitlement to aggravated damages for the insured if the insurer is found to be in

error in voiding the policy.
[206] Wawanesa relies on A.K., where similar circumstances were discussed.
There the insurer had denied the plaintiffs claim for fire loss on the basis that the
insured had deliberately set the fire or had someone else do so. The court found that
the insurer did not prove that the insured was involved in starting the fire. Despite
upholding claims under the policy, the court declined to award aggravated damages
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, punitive or aggravated damages since the claim for
damages is based on the Defendants continued denial of coverage. In that
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 entitled based on the
investigations and information it had received that it was entitled to exercise
its right to defend the action based on what it considered as reasonably
substantive grounds. Accordingly, I make no award for damages.
[207] If required, I would have adopted the comments of the court in A.K. in this
case and denied any recovery of aggravated damages. The position taken by
Wawanesa, while not upheld at the end of the day, had some support in the unusual
circumstances here. Those circumstances were not of Mr. Davidsons making, but
they were not the making of Wawanesa either. Finally, Mr. Davidsons distress, no
doubt, came from a variety of sources, and not exclusively from Wawanesas denial
of the claim.
Conclusions
[208] In conclusion, Mr. Davidson is awarded a total of $215,000, as follows:
Wawanesa says that it has the right to defend itself without creating an automatic
Page 48
Dwelling: $140,000
Personal property: $75,000
Wawanesa to the Bank under the standard mortgage clause.

[209] Mr. Davidson is also entitled to court order interest on the above amounts
commencing 60 days after June 21, 2010, which allows some period of time for the
normal statutory period for payment after filing of a proof of claim, had that been
done: the Act, s. 126, Statutory Condition #12.
[210] Finally, Mr. Davidson is awarded his costs of the action on Scale B, subject to
assessment.
Fitzpatrick J.
The above amount, in respect of the Residence/Dwelling, is net of amounts paid by

SUPREME COURT OF BRITISH COLUMBIA Citation: Davidson v. Wawanesa Insurance Company

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SUPREME COURT OF BRITISH COLUMBIA Citation: Davidson v. Wawanesa Insurance Company

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Davidson v. Wawanesa Insurance

Steven Michael Davidson

Before: The Honourable Madam Justice Fitzpatrick

Reasons for Judgment

Counsel for Defendant:

Place and Date of Trial:

Place and Date of Judgment:

2015 BCSC 1383 (CanLII)

IN THE SUPREME COURT OF BRITISH COLUMBIA

Davidson v. Wawanesa Insurance Company

The residence of the plaintiff, Steven Davidson, in Kamloops, British

Mr. Davidson claims he had no knowledge of the illegal activities at the

although that allegation was withdrawn during argument.

Mr. Davidson is 54 years old. He grew up in Ontario and moved to the

Okanagan in 1975. He has a high-school education.

2015 BCSC 1383 (CanLII)

Davidson v. Wawanesa Insurance Company

Alberta, and in Vernon and Armstrong, British Columbia.

Mr. Davidson continued to work in Kamloops, although he later moved to

In January 2006, Mr. Davidson purchased the property at 4300 Westsyde

Road, Kamloops, British Columbia (the Residence), for approximately $320,000.

2015 BCSC 1383 (CanLII)

Davidson v. Wawanesa Insurance Company

weapon, dangerous operation of a vehicle and failing to stop at an accident with

On January 22, 2010, Mr. Davidson turned himself in to the RCMP in

2010. In January 2010, he attended at his broker, HUB International Barton

2015 BCSC 1383 (CanLII)

Davidson v. Wawanesa Insurance Company

search warrant, with respect to various alleged offences. They found:

2015 BCSC 1383 (CanLII)

names of some of these people but others he did not.

Davidson v. Wawanesa Insurance Company

Wawanesa retained Fraser Anderson of Huston Grant Adjusters (the Adjusters), to

Beginning on or about May 3, 2010, Mr. Davidson inquired of Mr. Anderson

regarding Wawanesas position regarding his living expenses.

On May 10, 2010, Mr. Davidson provided a detailed statement to

Mr. Davidson continued to communicate with Mr. Anderson concerning his

2015 BCSC 1383 (CanLII)

investigate the fire.

Davidson v. Wawanesa Insurance Company

in the illegal activities at the Residence and the fire.

based on their preliminary investigation, no advance under the insurance could be

Mr. Davidson was investigated by the RCMP as a possible perpetrator of the

2015 BCSC 1383 (CanLII)

Davidson v. Wawanesa Insurance Company

This action was commenced in March 2011.

2015 BCSC 1383 (CanLII)

did not cash the cheque.

Davidson v. Wawanesa Insurance Company

At some point, the Bank commenced foreclosure proceedings against the

Residence. The foreclosure proceedings continued and eventually the Bank

recovery of the remaining balance due under the Mortgage.

the December 2009 incident were stayed.

she moved to Alberta to be with Kursten. He remains in contact with Tammy.

On February 2, 2012, Wawanesa paid $211,576.69 to the Bank in satisfaction

The issues to be decided are:

2015 BCSC 1383 (CanLII)

completed a sale of the Residence in September 2011, which netted proceeds of

Davidson v. Wawanesa Insurance Company

Wawanesa contends that there is no coverage under the Policy in respect of

The Residency Issue

The Policy provides for coverage as follows:

the dwelling on the premises described in the Declarations and all