Ross A. Coburn v. Garda J. Coburn, 2013 BCSC 2462

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Coburn v. Zorkin Insurance Brokers Inc., 2013 BCSC 2462 Date: 20130322 Docket: 11-2810 Registry: Victoria Between: Ross A. Coburn and Garda J. Coburn Plaintiffs And: Zorkin Insurance Brokers Inc. and Family Insurance Solutions Defendants Before: The Honourable Mr. Justice G.R.J. Gaul Oral Reasons for Judgment In Chambers Counsel for the Plaintiffs: M. J. O’Connor, Q.C. (March 12, 2013) L. Weston-Baradoy, Articled Student (as Agent for M.J. O'Connor, Q.C. March 22, 2013) Counsel for the Defendant Family Insurance Solutions appearing via teleconference: R. N.

Beckmann Place and Date of Trial/Hearing: Victoria, B.C. March 12, 2013 Place and Date of Judgment: Victoria, B.C. March 22, 2013 [ 1 ] THE COURT: The plaintiffs, Ross and Garda Coburn ("the Coburns"), are the owners of a single family residence located on Van Isle Road in Qualicum Beach, British Columbia ("the Property"). Through the services of Zorkin Insurance Brokers Incorporated ("Zorkin"), the Coburns obtained residential insurance for the Property (the “Policy”) from the defendant Family Insurance Solutions (“FIS”). [ 2 ] On 23 March 2011, there was a fire at the Property resulting in significant damage.

The Coburns sought recovery from FIS under the terms of the Policy, but FIS rejected the claim on the grounds that the Coburns had allegedly breached the insurance policy. [ 3 ] On 7 July 2011, the Coburns initiated the present action. At the outset, Zorkin was a named defendant; however, the Coburns have discontinued that portion of their lawsuit, leaving only FIS as a defendant. [ 4 ] On 16 November 2012, FIS filed an application seeking to dismiss the Coburns' action.

On 8 January of this year, the Coburns filed an application of their own seeking a declaration that the policy with FIS had not been breached, and that their insurance coverage under the policy continued to exist. [ 5 ] Both parties agree that this matter is suitable for resolution by

summary trial pursuant to Rule 9-7 of the Rules of Court . Issue [ 6 ] There is a single global issue before me: did the Coburns breach the Policy with FIS? [ 7 ] FIS argues that the Coburns breached a material term of the Policy by allowing the Property to remain vacant for more than 30 consecutive days. [ 8 ] The Coburns maintain that the Property was not vacant at the time of the fire and therefore they were not in breach of the Policy.

In the alternative, they argue that the definition of "vacant" contained in the Policy is uncertain and vague, and therefore it should be interpreted in a manner that favours their position. Finally, they argue that to permit FIS to deny coverage would create an injustice. [ 9 ] Determining whether the Property was vacant on the day of the fire will determine the parties' dispute.

Background Facts [ 10 ] The Coburns reside in Nanaimo, British Columbia. In or around 1986, they purchased the Property with the intention of using it as a rental property until such time as they were able to retire. They planned to relocate to Qualicum Beach and live in the Property upon their retirement. [ 11 ] In or around July of 1990, the Coburns began using Zorkin as their insurance broker. In the summer of 2010, Zorkin obtained insurance for the Property through FIS and the Policy was effective for one year commencing 24 July 2010. [ 12 ] The policy contained a number of specific terms, conditions, and exclusions, including the following:

SECTION I - PROPERTY COVERAGE 1. PROPERTY INSURED

A) Dwelling Building This insurance covers: 1) the dwelling building and attached structures described in the Declarations, occupied principally for dwelling purposes; * * * 4. PERILS EXCLUDED This Insurance does not cover loss or damage arising from: . . . (

n) any peril while the Dwelling Building is, to the knowledge of the Insured, Vacant, as defined, for more than thirty (30) consecutive days . . . [ 13 ] The term "vacant" is defined in the Policy as: The occupant(

s) has/have moved out with no intent to return or the dwelling does not contain furnishings or household equipment sufficient to make it habitable. [ 14 ] On or about 1 January 2011, the Coburns’ long-term tenant vacated the Property. Shortly thereafter, Mr. Coburn began major renovations to the Property in anticipation of having it rented again in the near future. [ 15 ] On 13 January 2011, Mr. Coburn contacted Ms. Angie Cole, a licensed insurance broker with Zorkin, to inform her that the Property was no longer tenanted and that it would remain unoccupied while improvements were being made to it.

He also told Ms. Cole that he hoped to have the Property rented again by 1 February 2011. Ms. Cole advised Mr. Coburn that the Policy would need to be amended to add a vacancy permit if the Property were not rented by 1 February 2011. [ 16 ] At some point in January 2011, the Coburns entered into discussions with their neighbours, Bobbi-Jo Sbitney and her common-law partner, Stuart Vaughan, about them renting the Property. [ 17 ] On 1 February 2011, Ms. Cole contacted Ms. Coburn to inquire about the state of the Property and, more specifically, whether it was rented. In her affidavit sworn 24 February 2012, Ms.

Cole described the contents of her conversation with Ms. Coburn as follows: . . . Ms. Coburn confirmed that she and her husband had not found a tenant for the Property and that the Property was vacant . I informed Ms. Coburn that I would amend the Policy to add a vacancy permit. [Emphasis added.] . . . The plaintiffs were charged an additional premium of $45.00 on account of the addition of the vacancy permit to the Policy. [ 18 ] Ms. Cole sent the Coburns a letter dated 8 February 2011, wherein she confirmed the one-month vacancy permit for the Property was in place.

She concluded her letter with the following: Once you have rented out please let us know, and if not rented out by March 1st we will need to add another month vacancy permit. [ 19 ] In her affidavit sworn 3 January 2013, Ms. Coburn makes no reference to this telephone conversation with Ms. Cole, nor does she address Ms. Cole's recollection or description of it. I accept Ms. Cole's evidence on this point and in particular that Ms. Coburn indicated that the Property was vacant on 1 February 2011. For reasons that are not explained, Ms. Coburn did not tell Ms.

Cole during their conversation that she and her husband had, for the past month or so, been in discussions with Ms. Sbitney and Mr. Vaughan about them renting the Property. [ 20 ] According to Ms. Sbitney, around the end of January 2011, she and Mr. Vaughan reached a verbal agreement with the Coburns that as soon as the renovations Mr. Coburn was doing to the Property were finished, they could move in. The Coburns, Ms. Sbitney, and Mr. Vaughan all attest to the fact that an oral tenancy agreement was reached on 18 February 2011, and that shortly thereafter Ms. Sbitney and Mr.

Vaughan began moving some of their personal effects onto the Property. Mr. Coburn was still in the process of renovating the Property and, as such, he could not and did not let them place any of their items inside the residence, because, as he described, he had just started to "rip the place apart for renos". Items belonging to Ms. Sbitney and Mr. Vaughan were left outdoors under

a lean-to that was attached to the residence. [21] On 18 February 2011, Mr. Coburn called Zorkin. Ms. Cole had left for the day, so Mr. Coburn spoke with Nicole Haylett, alicensed insurance broker with Zorkin and a colleague of Ms. Cole's. Mr. Coburn told Ms. Haylett that the Property was occupied by newtenants and that they had taken possession of the Property that day. Mr. Coburn informed Ms. Haylett that the monthly rent was $1,200.Notwithstanding the fact that Mr. Coburn had been in discussions with Ms. Sbitney and Mr.

Vaughan for approximately a month abouttheir desire to rent the Property, for reasons that are not explained, he was unable to provide Ms. Haylett with any further particularsabout the tenancy, including the names of the tenants. Mr. Coburn told Ms. Haylett that he would call her back with the additional tenantinformation. In the meantime, Ms. Haylett partially completed a rental dwelling questionnaire (the “Questionnaire”) indicating that thenew tenants had moved into the Property on 18 February 2011. Mr. Coburn did not call Ms. Haylett back, so she left the Questionnaire,along with a note for Ms.

Cole, in the Coburns' file. [22] On 21 February 2011, Ms. Cole reviewed the Coburns' file, the note Ms. Haylett had left for her, and the Questionnaire thatMs. Haylett had started after her conversation with Mr. Coburn on the 18th. Ms. Cole then contacted Mr. Coburn by telephone. Duringthis conversation, Mr. Coburn confirmed that the new tenants had taken possession of the property on 18 February 2011. AtMr. Coburn's request, Ms. Cole sent him, by facsimile transmission, the Questionnaire, so that he could complete the tenant information.Mr. Coburn returned the completed Questionnaire to Ms.

Cole on 22 February 2011. He had completed the tenant information portion ofthe Questionnaire, inserting the names of Ms. Sbitney and Mr. Vaughan as the new tenants. The notation at the top of the Questionnairethat had been placed there by Ms. Haylett, "February 18, 2011, tenants moved in" had not been altered in any way by Mr. Coburn. In hisaffidavit sworn 4 January 2013, Mr. Coburn takes no issue with Ms. Cole's description of their conversation, including her assertion thathe told her that the new tenants had taken possession of the property on 18 February 2011. I accept Ms.

Cole's version of theconversation. [23] As a result of the information Ms. Cole had received from Mr. Coburn about the new tenant having moved into the Property,Ms. Cole amended the Policy to remove the vacancy permit, which in turn resulted in a refund of premiums for the Coburns. On24 February 2011, Ms. Cole sent the Coburns a letter confirming the removal of the vacancy permit and refund. [24] On 19 March 2011, the Coburns, Ms. Sbitney and Mr. Vaughan signed a one-year tenancy agreement for the property. Shortlythereafter, Ms. Sbitney and Mr.

Vaughan gave the Coburns a $1,000 damage deposit for the Property. [25] On 21 March 2011, Mr. Coburn provided a tradesperson from a local flooring company with a key to the Property so that hecould attend on 23 March and install flooring. [26] On 22 March 2011, Mr. Coburn left Vancouver Island for a trip to Prince George. On 23 March 2011, the tradesperson attendedat the Property and parked his vehicle adjacent to the residence. While he was in the residence working, his vehicle caught fire.

The firespread to the residence and caused significant damage to it. [27] The Coburns sought compensation under the Policy, but FIS has denied their claim. Discussion [28] The Coburns' principal argument is that at no material time did the Property fit within the contractual definition of "vacant". Inother words, they say the Property was never vacant.

Alternatively, they argue that the denial of coverage under the Policy does not meetthe purposes of a vacancy exclusion, and therefore creates an unfair and unreasonable result. [29] There are a number of facets to the Coburns' principal argument and I will deal with each of them in turn. I will then address thequestion of whether denial of coverage gives rise to an unjust operation of the vacancy exclusion clause. [30] The first question to address is the meaning of the term "vacant".

The Coburns say the term "vacant" must be interpreted usingplain meaning of the words used in the policy, so as to give it a common sense effect: Peebles v. Wawanesa Mutual Insurance Company,2012 BCSC 590. They also argue that the word "or" in the definition of “vacant” can and should be interpreted conjunctively as "and", soas to avoid any ambiguity: Clergue v. H. H. Vivian and Company (1909), (SCC), 41 S.C.R. 607, and Jardine v. GeneralHydrogen Corporation, 2007 BCSC 119.

Finally, they maintain that such a conjunctive definition of the term gives effect to thecontracting parties’ intention, and that in any event where there is ambiguity or vagueness, the term should be interpreted in a mannerfavourable to the recipient of the contract (i.e., the insured) as opposed to the drafter of the contract (i.e., the insurer): Peebles, supra. [31] The Coburns maintain that FIS must establish both criteria contained in the Policy's definition of "vacant". That is, for FIS to beable to rely upon the vacancy exclusion clause found at paragraph 4(

n) of the Policy, it must prove: (

a) the occupant of the Property had moved out with no intent to return; and (

b) the dwelling did not contain furnishings sufficient tomake it habitable. [32] I disagree with the Coburns on this point. Many of the cases cited by counsel for the Coburns in support of their argument onthe

interpretation of the term "vacant" are distinguishable from the case at bar, as the policies in these cases did not have a contractualdefinition of the term "vacant". Consequently, it fell to the court in each of those cases to judicially interpret the entire policy and, in thecircumstances of the case, to determine an appropriate definition of the term (see Kayvon Construction Ltd. v. Commercial UnionAssurance Co. of Canada, [1985] B.C.J. No. 636 (S.C.); Hirst v. Commercial Union Assurance Co. of Canada, [1979] B.C.J. No. 824(C.A.); Morton v. Canadian Northern Shield Co., [1998] B.C.J.

No. 1094 (B.C.C.A.); Cody v. Beaver Insurance Co., [1964] A.J. No. 76,(C.A.); Wright v. Capri Insurance Services Inc., 2004 BCSC 265, aff’d 2005 BCCA 559; Harnden v. Farmer’s Mutual Fire InsuranceCo., [1997] O.J. No. 4412 (O.C.J.); Shaeen v. Meridian Insurance Group Inc., 2011 ONSC 1578).

In this respect, the followingobservations of Justice Willcock of this court in Peebles are apposite to the case at bar: [64] Jurisprudence on the meaning of “vacancy” in insurance policies will be of some assistance in determining what meaning hasbeen ascribed to the term by other courts involved in the same exercise as that in which I am engaged . . . Where, as here, however, the

policy contains a definition of the word, care should be taken not to substitute a judicial definition for on e chosen by the contracting parties ... A similar conclusion was reached by Justice Barrow in Wright , at para. 25 . [ 33 ] In my view, the disjunctive definition of "vacant" in the Policy is not vague or ambiguous, nor does it lead to any uncertainty or absurdity. If the occupant of the Property has moved out with no intention of returning, then the Property is, by the definition the parties have agreed to, vacant.

Although the Policy does not explicitly say so, it only makes sense that the Property becomes occupied or non-vacant when a tenant takes possession of it. If it is unclear whether a tenant has actually moved out or if it is unclear whether the tenant might return, then the second branch of the definition applies. That is, if the Property does not have the furnishings or household equipment sufficient to make it habitable, then it will be deemed vacant. Both of these scenarios are reasonably clear and unambiguous, and neither of them results in an absurdity. In my view, if the Coburns' suggested conjunctive

interpretation of "vacant" was adopted in this case, it would create the realistic prospect of the Property never being vacant. Under the Coburns' suggested definition of "vacant", FIS would not only have to show that the tenant had vacated the Property with no intent to return, but also that the residence did not contain furnishings sufficient to make it habitable. Using this definition, all the Coburns would have to do to avoid the Property being vacant under the terms of the Policy would be to maintain sufficient furnishings in it.

If this were a fully furnished rental property then, according to the Coburns, it would never be vacant. In my view, that would not reflect the parties' contractual intent, nor would it make any sense. [ 34 ] In my opinion, the definition of "vacant" contained in the Policy provides both parties with the certainty and knowledge that if the tenant moved out of the Property, that it needed to be re-tenanted within 30 days.

The only alternative, the one the Coburns followed when it became clear to them that they did not have a tenant on 1 February 2011, 30 days after the previous tenant had vacated the Property, is to obtain a vacancy permit for the Property. If neither of those two options are met, then the Policy is not being complied with. Did the Coburns occupy the Property themselves so that it was not vacant? [ 35 ] In his written argument, counsel for the Coburns submits that: . . . there was a clear intent of the insured [the Coburns] to maintain an actual and virtually daily presence at the Property.

There was no intention to abandon the Property or to leave the Property unsupervised for any length of time . . . Furthermore, there was an abundance of chattels present on the property. In fact, there were four truck loads worth of chattels on the Property on account of Sbitney and Vaughan, and there were sufficient belongings of Mr. Coburn to make the Property habitable. [ 36 ] The evidence indicates that immediately after the Coburns' long-term tenant vacated the Property in early January 2011, they began a major renovation to the interior of the residence. Most of the work was completed by Mr.

Coburn, who says he was at the Property on a regular basis between eight to 14 hours a day. He says he kept a mattress in the garage and used it once to sleep on the floor when he was too tired to drive home to Nanaimo. He also claims that he kept a chair and some cutlery in the residence. [ 37 ] I have considered Mr. Coburn's evidence and having done so I find myself doubting its reliability. On the material question of how often he was at the Property, it is, in my view, fair to say that Mr. Coburn is an unreliable historian. In a written statement given to Mr.

Dan Lutz, an insurance adjuster, the day following the fire, Mr. Coburn indicated: ... I have been in the house every day since January 1, 2011 including weekends. I never sleep here. I spend 12 to 14 hours here daily. [ 38 ] At his examination for discovery on 18 June 2012, Mr. Coburn was asked and answered the following questions: 80 Q And this is the statement that you gave to Mr. Lutz and he transcribed. A Yes. . . . Q Mr. Coburn, to the best of your recollection, is this statement true and accurate. A Yes. . . . 263 Q Right. Okay.

And so your evidence, I think, has been -- but just correct me -- just try and clarify it -- is that from January 1, 2011, until February 22, 2011, you were in the house every single day? A Absolutely. Q Saturdays and Sundays? A Yes. Q And holidays? A Yes. . . . 341 Q Okay.

A I was in that house every day from January 1 until I went up to Prince George on the 22 nd [that is, March 22]. [ 39 ] It was only after counsel for FIS sought disclosure of Mr. Coburn's credit card statements for the period of January to March 2011 that it came to light that Mr. Coburn had not been at the Property every day between January 1 and March 22, 2011, as he had asserted in his statement and his examination for discovery. Mr. Coburn had been away on two business trips, one to Cabo San Lucas, Mexico, from 17 January to 25 January, and one to Everett, Washington, from 11 to 13 January 2011.

It was also disclosed that he and his wife were in Victoria on the 14th and 15th of February for a musical concert. [ 40 ] In his affidavit sworn 4 January 2013, all Mr. Coburn had to say about this significant discrepancy was: . . . I was in error when I referred to being at the property every day. [ 41 ] Whether being “in error” means Mr. Coburn forgot is unknown. Mr. Coburn maintains that despite this error, he was certainly at the Property every day from 18 February to 22 March 2011, when he left for Prince George. In my view, Mr.

Coburn's explanation rings hollow, as it is difficult to imagine how he could have been in error when he attested with absolute certainty that he had been at the Property every day from 1 January 2011 to the day prior to the fire, when in actual fact he had taken two trips abroad and had gone to a music concert in Victoria, all during the two-month period prior to the fire. [ 42 ] There is also the undeniable fact that the Coburns understood the need and obligation to contact Zorkin and obtain a 30-day vacancy permit commencing on 2 February 2011. Again, I refer to Mr.

Coburn's evidence on discovery when he was asked and answered the following questions: 129 Q Sorry, you think it's possible you may have told Zorkin before January 1 that your tenant was moving out? A Was moving out, yes. Q Why would you have told them that? A Because there wouldn't be a tenant in the house January 1. It would affect my insurance. Q And so you knew that on January 1, 2011, that -- A That there would not be a tenant? Q -- it would affect your insurance? No, that -- you knew -- A I believe my insurance policy says that I need to notify them if the house does not have a tenant in it.

Q Okay, but you knew that as of January 1, 2011? A Yes. . . . 135 Q Did you know why you needed to notify them? A As I just said to you, I believe it's written in there that I'm to notify the insurance company. . . . Q You appreciated that there was no coverage if the house was vacant for a period of time? A I would suspect so. 138 Q . . . What I want to know is as at January 1, 2011, you had an appreciation that there would be no coverage if the property was vacant for a period of time? A Yes. Q And did you know what that period of time was?

A 30 days. 140 Q So the reason you were calling Zorkin was to let them know that you had a -- you were going to have a property that was vacant for a period of time; correct? A Yes. 141 Q But at that point you didn't know how long? A Yes. [ 43 ] In my view, the evidence supports the conclusion that the Coburns understood their insurance policy, including the fact that if the Property was vacant, they needed to tell their insurer. They did that and obtained a vacancy permit that allowed for the Property to be vacant for a period of 30 days commencing 2 February 2011.

On the Coburns' own evidence, the Property was vacant, as that term is

defined in the Policy, between 1 January 2011 and 1 February 2011, and they believed it would be vacant until they obtained a new tenant. I accept that Mr. Coburn was at the Property performing renovations on a regular basis during the daytime and that on one occasion he slept there on a mattress on the floor. In my view, Mr. Coburn's attendance and activities at the Property did not change its vacant nature. Moreover, I find Mr.

Coburn's activities at the Property and his perception of it did not change after 18 February 2011, the date the vacancy permit was cancelled. [ 44 ] The Coburns assert that irrespective of what transpired prior to 18 February 2011, after that date Mr. Coburn was at the Property on a daily basis, completing the necessary renovations so that Ms. Sbitney and Mr. Vaughan could take possession. In this regard, the Coburns also point to the fact that the Property was habitable at the time, as there were functioning appliances and utilities, and there was some Spartan furniture that allowed Mr.

Coburn to eat his lunch there and possibly sleep on the floor, if need be. All of this, the Coburns claim, is sufficient to constitute occupancy by them during the period up to 22 March 2011. In other words, the property was no longer vacant. The Coburns cite Peebles and Wu as support for their contention that Mr. Coburn's regular attendance at the Property meant it was not vacant after 18 February 2011. [ 45 ] I am not persuaded by the Coburns' argument in this regard.

In Peebles , Justice Willcock considered the question of whether a non-occupant owner attendance at an unoccupied property could create an occupancy, and thereby render the property no longer vacant. At paragraph 95, he observed: Like Wright , however, Wu is a tenant-occupant case, rather than an owner-occupant case. There is no doubt on the facts in Wu , as in Wright , that the occupant had abandoned the property with no intention of returning. The issue in Wu might properly have been defined as whether the non-occupant owner’s intention to return to inspect could create an occupancy.

Where the policy says the property insured is vacant if the occupants have moved out with no intention of returning, the owners’ intentions to visit the property are irrelevant if they were not occupants. [ 46 ] Counsel for FIS cites the unreported case of Ellis v. Gore Mutual Insurance Company (28 September 2007), 04-CV-3437A CM (Ont. S.C.J.), as support for its position that an owner of a rental property who conducts renovations to the property when it is untenanted does not change the fact that the property is vacant.

In Ellis , the insurance policy defined "vacant" as circumstances where, regardless of furnishings, all the occupants had moved out with no intention of returning and no new occupant had taken up residence. [ 47 ] Much like the facts in the case at bar, the property in question in Ellis was a rental property. The tenant of the property vacated the premises by mid-November 2003, and shortly thereafter Mr. Ellis, the owner of the property, began maintenance and renovation work to it. Mr. Ellis attended at the property on a daily basis, but would return home to his own residence at the end of the day.

The work continued until 1 February 2004, when there was a fire at the property. Mr. Ellis's insurance claim was denied because of the fact that the property had been vacant for more than 30 days and there was therefore a breach in the insurance policy. The court dismissed Mr. Ellis's claim against his insurer, and in doing so concluded that as the rental property was being renovated for more than 30 days, and on account that it was tenantless, there was a need for a vacancy permit. There was no such permit, and therefore Mr.

Ellis's property was uninsured. [ 48 ] In my opinion, FIS's argument on this point is the correct one. The fact that Mr. Coburn attended the Property on a daily basis to complete renovations to the property from 18 February 2011 until the day prior to the fire does not change the fact that it was unoccupied and, therefore, vacant. While he would spend a good portion of the day at the Property, he would always, except for one occasion, leave and return home to Nanaimo. In my opinion, the Coburns' presence at the Property did not make them tenants there or alter the vacant nature of the Property.

Did the Property’s vacancy end with the oral tenancy agreement of 18 February 2011? [ 49 ] In the alternative, the Coburns argue that if the Property was vacant in January and early February 2011, then the vacancy ended on 18 February 2011, when they reached an oral tenancy agreement with Ms. Sbitney and Mr. Vaughan and they, Ms. Sbitney and Mr. Vaughan, began moving some of their personal effects onto the Property. [ 50 ] I accept that the Coburns reached an understanding with Ms. Sbitney and Mr. Vaughan on 18 February 2011 regarding their ability to rent the Property.

However, I am not persuaded that their legal tenancy commenced that day, or put another way, that the agreement changed the Property’s vacant status. [ 51 ] Mr. Coburn was still in the process of finishing renovations to the Property on 18 February 2011. Clearly it was not ready on 18 February 2011 for Ms. Sbitney, Mr. Vaughan, and their children to move in. The Coburns agreed that Ms. Sbitney and Mr. Vaughan could store some of their personal effects on the Property, however, those items could not be placed indoors.

In my opinion, the status of the Property was no different on 19 February than it was on 17 February, that is, it continued to be vacant. [ 52 ] The evidence on this

summary trial convinces me that the date when Ms. Sbitney and Mr. Vaughan’s tenancy would commence was a moving target. In his statement dated 24 March 2011 to Mr. Lutz, Mr. Coburn indicated: Bobbi-Jo Sbitney and Stewart Vaughan are scheduled to move into the house April 1, 2011. We have undergone 2 months of major renovations... I have a new tenant who will be moving in. I think my notification was in February but I can't guarantee the date or month. The tenants were supposed to move in on March 1st. I'm not sure what I said to the broker regarding the move in date . . .

The move in date was pushed back to 3/26/11 [26 March 2011] I didn't inform the broker of the change. I didn't see the need as someone was in the house every day. [ 53 ] Mr. Coburn also explained in his affidavit sworn 4 January 2013, at paragraph 36: As stated above, the Tenants had moved some of their belongings onto the Property as they would be moving into the Property once the improvements were complete.

[ 54 ] Ms. Coburn explains in her affidavit of 3 January 2013: On the same day [that being 18 February 2011] my husband and I attended at the property with the new Tenants who indicated that they required cosmetic upgrades to the property prior to taking possession, however, they immediately commenced moving their personal belongings into a storage area attached to the house. [ 55 ] The actual written tenancy agreement between the Coburns and Ms. Sbitney and Mr. Vaughan was not executed until 19 March 2011, a few days before the fire. [ 56 ] Zoe Weir, a friend of Ms.

Sbitney, indicated in her affidavit sworn 3 January 2013: During February 2011 I helped Bobbi-Jo and her common law husband, Stuart Vaughan move their belonging to the Property that they would be renting. [ 57 ] The fact that an oral tenancy agreement is reached regarding the potential rental of a property does not, in my opinion, necessarily mean the vacant status of the property has immediately ended. In my opinion, the evidence indicates the Property remained vacant, even after the Coburns agreed to rent it to Ms. Sbitney and Mr. Vaughan.

This was so because the tenancy would not and could not commence until Mr. Coburn had completed the renovations. Those renovations were never completed and in fact it would appear that, but for the renovations, the fire at the Property would not have occurred. Would denial of insurance coverage under the Policy be unjust? [ 58 ] Finally, the Coburns submit that to deny insurance coverage in the present case because of the vacancy clause in the Policy, when the Property was being supervised on a daily basis, would result in an unjust and unreasonable result.

In particular, they assert that even if the Coburns or someone else, such as a tenant, had been present at the Property on the day of the fire, it would not have changed the events that led to the fire. [ 59 ] The change in the residential status of the Property from renter occupied to untenanted and vacant resulted in a change to the material risk. Mr. Coburn is not an unsophisticated person, and the evidence indicates that he was aware of the insurance consequences of the Property being tenantless. [ 60 ] Mr. Coburn is also someone who is very familiar with residential construction.

As he described in his affidavit sworn 4 January 2013: I completed most of the improvements myself as I have an extensive background in the construction industry having built homes for sale, steel buildings and indeed, a fishing lodge which was built on two barges and towed to the north coast of British Columbia. [ 61 ] The Coburns argue that to permit FIS to rely on the vacancy exclusion provision of the Policy would defeat the intentions of the parties at the time of the contract. I disagree.

FIS agreed to insure the Property on the condition that the Coburns would comply with the terms of the Policy, including advising FIS if the Property was vacant. Mr. Coburn contacted Zorkin in January 2011 because he knew his tenant had moved out and the Property was consequently vacant. In other words, Mr. Coburn properly complied with the terms of the Policy and obtained a vacancy permit, as he should have. In my opinion, nothing changed regarding the vacancy of the Property on 18 February 2011, and in my view Mr. Coburn knew or ought to have known that. For reasons that are not clear, Mr.

Coburn misinformed Zorkin that the new tenants had moved into the Property, when in fact they had not. [ 62 ] Finally, I disagree with the Coburns' submission that the full-time presence of a tenant on the Property or Mr. Coburn being there doing renovations would not have prevented the fire from occurring. The tradesman backed his truck across the front lawn on the Property and parked it on the grass directly in front of the residence. It is not beyond reason to think that, had Mr.

Coburn been present or had a resident tenant of the Property been present, they would have expressed their displeasure at the location of the vehicle on the front lawn and would have insisted that it be moved. This is not an implausible scenario, and had that occurred, the fire from the truck would likely not have damaged the Property. [ 63 ] I accept FIS's argument that an insurer has a contractual right to know if a dwelling is vacant, and that disclosure of that status is mandated under the terms of the Policy.

I also accept that had FIS known the true circumstances surrounding the Property, it would have required an extension to the vacancy permit that had been issued at the start of February 2011. The fact that the Property was not being supervised on the day in question is likely one of the reasons why the Property was damaged, and while the result of FIS's enforcement of the terms of the policy may be harsh for the Coburns, I agree with the defendant that it would be unfair to all of the other policy holders of FIS for it to honour the Coburns' policy given they had breached its terms. [ 64 ] In my opinion, Mr.

Coburn's failure to accurately report the tenancy status of the Property, and, in other words, his failure to report that it was vacant, justified FIS in refusing to cover the damage to the Property that resulted from the fire. [ 65 ] In my opinion, the Property was vacant for at least 30 days prior to the fire. The fact that Mr. Coburn was at the Property regularly and stayed there overnight on one occasion did not alter the fact that the Property was vacant, as that term is defined in the Policy. Moreover, I find Ms. Sbitney and Mr.

Vaughan were not tenants of the Property as of the date of the fire and had not, by reaching an oral agreement 18 February 2011, converted the status of the Property from vacant to non-vacant.

While they had a signed tenancy agreement a few days before the fire and had moved some of their personal belongings onto the Property before that, they had no legal right to occupy and use the Property until 1 April 2011, according to the terms of the tenancy agreement that they signed. [ 66 ] The fact that the Coburns allowed them to store some of their personal items on the Property outside, not in the house, did not convert the status of the Property to tenanted and therefore no longer vacant.

I agree with counsel for the defendant that the vacancy or non-occupation of the Property did not change on 18 February 2011 simply because the Coburns had found new tenants who began moving some of their personal items onto the Property.

[ 67 ] In my view, the defendants are correct when they argue that the Property was no more occupied or non-vacant from 18 February 2011 to 23 March 2011 than it was from 1 January 2011 to 17 February 2011, when the Coburns had a vacancy permit. [ 68 ] In my opinion, the Property was vacant on the day of the fire and that it had been for more than 30 days prior to that date.

I find the Coburns understood the vacancy exclusion provision of their Policy and their need to have such a permit in situations where the Property was vacant for more than 30 days. [ 69 ] In my view, as the fire occurred when the Property was vacant, and as the Coburns did not have a vacancy permit when the fire occurred, I find they did breach a material term of the Policy and, as a result, FIS was justified in denying their claim. [ 70 ] The Coburns' application for

summary judgment against FIS is dismissed. [ 71 ] FIS's application for

summary judgment, and more particularly the dismissal of the Coburns' claim, is granted. [ 72 ] The defendants are entitled to their costs. [ 73 ] Mr. Beckmann, you heard everything? [ 74 ] MR. BECKMANN: Yes, I did, thank you, My Lord. If it's any consolation to the Coburn family, my client has instructed me in the event of success of our motion, that we would not be claiming costs against them. [ 75 ] THE COURT: All right. In such a case then, I will modify my order and say that the parties are to bear their own costs. “G.R.J. Gaul, J.”