2019 QCCA 1022, 2019 QCCA 1022

Unofficial English Translation of the Judgment of the Court Cousineau c. Intact, compagnie d'assurances 2019 QCCA 1022 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-026558-171 (460-17-001963-149) DATE: June 10, 2019 CORAM: THE HONOURABLE MARIE-FRANCE BICH, J.A. MANON SAVARD, J.A. MARK SCHRAGER, J.A. ÉRIC COUSINEAU APPELLANT – Plaintiff v.

INTACT INSURANCE COMPANY RESPONDENT – Defendant JUDGMENT [ 1 ] The appellant appeals from a judgment rendered on December 6, 2016, by the Superior Court, District of Bedford (the Honourable Suzanne Mireault), dismissing the action he brought against the respondent, claiming insurance benefits and damages totalling $1,066,313.35.

The appeal also calls into question the October 17, 2016 ruling rendered during the proceedings to admit into evidence the statements of a person who did not appear as a witness. [ 2 ] For the reasons of Schrager J.A., with which Bich and Savard JJ.A. agree, THE COURT : [ 3 ] ALLOWS the appeal in part; [ 4 ] REVERSES the judgment rendered in the course of a proceeding on October 17, 2016 that allowed a recording of telephone conversations held by the defendant in warranty, Patrick Séguin, and their transcript to be filed into evidence and ALLOWS the appellant’s objection in this respect; [ 5 ] REVERSES the trial judgment and, ruling anew: [ 6 ] GRANTS in part the Re-re-re-amended originating application and CONDEMNS the respondent (the defendant) to pay the appellant (the plaintiff) $40,611.60 with interest at the legal rate and the additional indemnity set out under

article 1619 C.C.Q. as of August 14, 2013; [ 7 ] THE WHOLE , with legal costs on appeal and in first instance. MARIE-FRANCE BICH, J.A. MANON SAVARD, J.A. MARK SCHRAGER, J.A. Mtre Yacine Agnaou DUPUIS PAQUIN AVOCATS & CONSEILLERS D’AFFAIRES INC. For the appellant

Mtre Denis Cloutier Mtre Sophie Gauvin-Sasseville CAIN LAMARRE For the respondent Hearing date: May 1, 2019 REASONS OF SCHRAGER J.A. [ 8 ] The appellant appeals from a judgment rendered on December 6, 2016, by the Superior Court, District of Bedford (the Honourable Suzanne Mireault), dismissing the action he brought against the respondent, claiming insurance benefits and damages totalling $1,066,313.35.

The damages claimed arise inter alia from the use of a building erected on his property by a tenant who was growing cannabis there. [1] [ 9 ] To impugn the trial judgment, the appellant argues mainly questions of fact. [ 10 ] The appeal also calls into question the ruling rendered during the proceedings by the trial judge to admit into evidence, as testimony, the statements of a person who did not appear as a witness.

I am of the view that, in this respect, the judge committed errors that are palpable and overriding, justifying the Court’s intervention. [ 11 ] Last, the appellant contests the judge’s refusal to allow the investigation file of the respondent’s claims adjuster to be disclosed. It is not necessary to rule on this issue, given the lateness of the appeal from that interlocutory decision. I. THE FACTS [ 12 ] The appellant owns a commercial building located at 19 Milton Road, in Granby. In September 2012, after moving his business to new premises, he decided to rent the building.

According to the appellant’s testimony, he entered into a verbal [ translation ] “monthly” lease beginning on December 1, 2012, with a man called Patrick Cyr, who intended to operate an [ translation ] “automotive detailing business”, selling related products and maintaining, storing, and selling motorcycles. [ 13 ] He claimed that he did not know Patrick Cyr. He did not seek to confirm his identity or business activities before entering into the lease.

It turns out that the tenant was in fact Patrick Séguin (“ Séguin ”), an individual with a criminal past. [ 14 ] Through his insurance broker, the appellant amended the insurance policy he had with the respondent for the building. The nature of the activities declared for the building was [ translation ] “automotive detailing business”. The appellant wanted an all-risk insurance policy and asked to insure the building for its [ translation ] “replacement cost”. The all-risk insurance policy issued by the respondent and filed into evidence covers the period between November 30, 2012, and November 30, 2014.

It does not contain the [ translation ] “replacement cost” protection. [ 15 ] Towards late May 2013, the appellant noticed that contrary to their agreement, Séguin had failed to transfer the electricity bill into his name at the start of the lease.

For the first time since he had moved into the premises, Séguin did not pay the rent on June 1, 2013. [ 16 ] On June 13, 2013, the appellant and his spouse entered the building [ translation ] “after taking apart some locks, they claimed, so that they could enter”. [2] They discovered that the building had been significantly damaged and that Séguin had lied to them about his activities.

They called the Sûreté municipale de Granby, who sealed off the building. [ 17 ] On June 14, 2013, investigator Alexandre Labrecque performed a search after obtaining a warrant and realized that the building had housed a hydroponic cannabis plantation. The smell of cannabis was very noticeable. The equipment had disappeared, as had Séguin, who had left the premises. Fingerprints taken and sent to the Sûreté du Québec on June 17, 2013 revealed the true identity of the tenant. [ 18 ] Hydro-Québec was informed about the plantation on the premises.

The state-owned enterprise’s investigation revealed the presence of an electric switch that prevented the counter from measuring all the electricity being used.

Its representative noted the following situation: [ translation ] “This alteration was performed with near-professional skill and was not visible unless the Hydro- Québec seal affixed to the panel was broken.” [ 19 ] The appellant filed a claim with the respondent, who began an investigation in which the appellant was questioned (the respondent’s request was communicated three months after the claim was filed). [ 20 ] Police investigator Labrecque confirmed that there was nothing to indicate that the appellant might have been involved in the production of cannabis.

Nonetheless, the respondent refused to pay the claim and proceedings ensued. [ 21 ] On June 17, 2014, the respondent filed a motion to examine Séguin before the filing of the defence to verify, in particular, whether the appellant had directly or indirectly taken

part in the production of cannabis. The motion was dismissed from the bench by the Honourable Line Samoisette on October 8, 2014. On November 3, 2014, the respondent filed a motion to institute proceedings in warranty against Séguin. On November 6 and 10, 2014, Mtre Jessie Courteau, who worked in the same firm as counsel for the respondent, received telephone calls from Séguin, [3] who confirmed his involvement and that of the appellant in the production of

cannabis. Mtre Courteau told Ms. Archambault, the respondent’s employee who had been assigned to the file, about her conversations. [ 22 ] On December 12, 2014, the respondent filed its defence, in which it alleged that the appellant knew of the cannabis production activities and was directly or indirectly involved. It asked the Court to declare the insurance policy void ab initio . [ 23 ] Between February 12 and 19, 2015, Séguin and Mtre Courteau spoke on the telephone on five occasions. These conversations were largely recorded. It was agreed that Séguin would make his sworn statement on March 3, 2015.

In exchange, he asked that the action in warranty against him be discontinued and for an undertaking that the appellant would not be criminally prosecuted for insurance fraud. Mtre Courteau indicated that the respondent was disposed to agree to these demands. Ms. Archambault testified that there was no agreement: she did not offer to discontinue the action in warranty and the respondent’s common practice is to not file a criminal complaint. At the appointed time, Séguin refused to take

part in the examination, but casually spoke with Ms. Archambault in Mtre Courteau’s presence. On March 16, the respondent amended its defence in accordance with the information it had thus obtained to allege the details of the appellant’s involvement in the operation and his manoeuvres to obtain compensation from the respondent. [ 24 ] On September 27, 2016, the trial began. A joint hearing was held for the principal action and the action in warranty.

The hearing lasted 15 days in September and October 2016. [ 25 ] On October 4, 2016, at the respondent’s request, the trial judge authorized an arrest warrant for the apprehension of Séguin, who did not report to the courthouse despite having received a subpoena. Following unsuccessful steps to carry out the arrest warrant, on October 11, 2016, counsel for the respondent brought an application for leave to file as testimony the recording of the telephone conversations between Séguin and Mtre Courteau as well as their official transcript. The trial judge granted the application on October 17, 2016.

The statements were admitted as extrajudicial admissions in the action in warranty and as extrajudicial statements by a witness in the principal action. [4] II.

JUDGMENT UNDER APPEAL [ 26 ] The judgment recites the facts in chronological order, concludes that the appellant knew about the criminal activities taking place in his building, and accepts the respondent’s argument that the insurance policy should be void ab initio . [ 27 ] The judge dwelt at length over the elements she accepted in her analysis of the appellant’s credibility, raising inconsistencies that she characterized as significant between his various statements on crucial points and other less important elements.

She saw therein [ translation ] “an undeniable display of bad faith” [5] and found that he completely lacked credibility. [6] She also explained that some of his spouse’s remarks discredited, although to a lesser degree, her corroborating testimony. [7] [ 28 ] The judge then explained the elements she took into account in her analysis of the probative value to be assigned to Séguin’s statements, including the fact that this individual was a criminal who used red herrings. [8] She also noted the manner in which his statements were obtained, adding that Mtre Courteau [ translation ] “was treading a fine line” and had made remarks that were [ translation ] “tendentious and clumsy at times”. [9] She claimed to be convinced, however, on a balance of probabilities, that Séguin had told the truth, particularly with respect to the following points: [10] – É.

Cousineau and himself were introduced for the purpose of setting up a cannabis plantation in É. Cousineau’s building; – Cousineau paid for the equipment needed to carry out this project; – Cousineau allowed P. Séguin to install the equipment in his building and it was with his knowledge and approval that the amenities were set up there; – the site of the loss was used for the production of cannabis; and – É. Cousineau had promised to financially reward P.

Séguin , with money from the insurance indemnity from Intact, if he remained [ translation ] “out of sight” for now. [ 29 ] It is noteworthy that the extrajudicial statements made by Séguin during his telephone conversations with Mtre Courteau are the only direct evidence of the appellant’s involvement or knowledge of cannabis being cultivated in the building. [ 30 ] The judge also noted the weakness of the testimony of Ms.

Archambault, the respondent’s representative assigned to the appellant’s claim file, but determined that her statements were credible overall and that she could not find that her conduct had been [ translation ] “abusive” or [ translation ] “clearly in bad faith”. [11] [ 31 ] Finally, the trial judge considered that the respondent had shown that the appellant knowingly failed to declare that his tenant was cultivating cannabis and, considering that he was one of the instigators of this project, she declared the insurance policy void ab initio . [12] [ 32 ] In light of this conclusion, the judge did not rule on the remaining issue, that is, the damages claimed.

She also dismissed the action in warranty. III. ISSUES ON APPEAL [ 33 ] The principal issue is the admissibility of Séguin’s extrajudicial statements as testimony, because once this pivotal point of the

judgment is excluded, the judgment cannot stand and must therefore be set aside. [ 34 ] As stated above, the appeal from the refusal to disclose the insurer’s investigation file is late (arts. 31, 363 C.C.P.). [ 35 ] The allegations relating to the insufficient reasons of the judgment need not be addressed given my conclusion on the first ground. [ 36 ] Finally, the damages should be quantified in accordance with the evidence in the appeal record. IV. DISCUSSION

a) Admissibility of Séguin’s extrajudicial statements [ 37 ] As a general rule, to be used as evidence, testimony must be found in a deposition made at the hearing or during an examination whose transcript is filed into evidence. A recorded or written extrajudicial statement of a witness is inadmissible into evidence if the author has not been called to testify and cannot therefore be cross-examined by the opposing party, unless that party consents to its admission. [13] Hearsay is therefore a priori inadmissible into evidence.

This exclusionary rule is justified by the difficulty in testing the reliability of the statements and satisfies society’s interest in uncovering the truth and maintaining the integrity of the judicial system. [14] [ 38 ] This rule does have a number of exceptions, however, in particular the one codified under

article 2870 C.C.Q., similar to the principled approach in criminal law and based on the necessity and reliability of the statement: [15] 2870. A statement made by a person who does not appear as a witness, concerning facts to which he could have legally testified, is admissible as testimony on application and after notice is given to the adverse party , provided the court authorizes it. 2870. La déclaration faite par une personne qui ne comparaît pas comme témoin, sur des faits au sujet desquels elle aurait pu légalement déposer, peut être admise à

titre de témoignage, pourvu que, sur demande et après qu’avis en ait été donné à la

partie adverse , le tribunal l’autorise. The court shall, however, ascertain that it is impossible for the declarant to appear as a witness, or that it is unreasonable to require him to do so, and that the reliability of the statement is sufficiently guaranteed by the circumstances in which it is made . Celui-ci doit cependant s’assurer qu’il est impossible d’obtenir la comparution du déclarant comme témoin, ou déraisonnable de l’exiger, et que les circonstances entourant la déclaration donnent à celle-ci des garanties suffisamment sérieuses pour pouvoir s’y fier .

Reliability is presumed to be sufficiently guaranteed with respect in particular to documents drawn up in the ordinary course of business of an enterprise, to documents entered in a register required by law to be kept, and spontaneous statements that are contemporaneous to the occurrence of the facts.

Sont présumés présenter ces garanties, notamment, les documents établis dans le cours des activités d’une entreprise et les documents insérés dans un registre dont la tenue est exigée par la loi, de même que les déclarations spontanées et contemporaines de la survenance des faits. [Emphasis added.] [ 39 ] There may therefore be an exception to the hearsay rule if it is shown that the statement concerns facts about which the deponent may legally testify, that his or her appearance is impossible or unreasonable, and that the reliability of the statement is sufficiently guaranteed by the circumstances in which it is made. [16] The exercise must take into consideration the fact that the credibility of the author cannot be directly assessed and cannot be challenged through cross-examination.

Although, in the end, the court will decide its probative force. [17] [ 40 ] Because the trial judge is well placed to consider the facts that determine the necessity and reliability of remarks made by a person who does not appear as a witness, the Court of Appeal must show deference if the trial judge’s decision is based on the relevant legal principles.

The Court’s intervention must be limited to correcting an error of principle or a conclusion that is unreasonable or unsupported by the evidence. [18] [ 41 ] The trial judge admitted into evidence extrajudicial statements made by Séguin via recordings of the telephone conversations between Séguin and Mtre Courteau as well as the transcript of these conversations. [ 42 ] At the appeal hearing, the appellant insisted on the fact that the judge should not have allowed this evidence because the identity of Séguin as the person speaking with Mtre Courteau on the telephone had not been established.

In my opinion, the appellant raises two other, more convincing grounds, which lead me to find that these statements do not meet the reliability and procedural requirements of

article 2870 C.C.Q.; the request to admit the recordings as testimony was, in this case, late. (

i) Lateness [ 43 ] The trial judge concluded that the prior notice given by the respondent, once the appellant’s case had been closed, complied

with the criteria of

article 2870 C.C.Q. and that the recordings could be filed under the rules of the Superior Court. [19] Applying factors from the case law, [20] she indicated, about the lateness of the application, [21] that Séguin’s remarks had already been alleged in the pleadings (defence and action in warranty) and that the appellant therefore could not claim to be taken by surprise, despite being unaware that the statements had been recorded. She therefore considered that the appellant would suffer no prejudice, contrary to the respondent if its application were refused.

The judge noted that the respondent believed that Séguin would testify, and that she had [ translation ] “nothing to say about counsel’s conduct of the file”. [22] She added that filing the statements did not bring the administration of justice into disrepute [ translation ] “although, I will say that it was a very close call”. [23] [ 44 ] Save in exceptional circumstances, the notice in

article 2870 C.C.Q. must be given prior to the trial, that is, before the certificate of readiness for trial is issued. Simply reading

article 2870 C.C.Q. confirms this. As a general rule, the notice must be prior to the filing of the declaration stating that the case is ready for trial accompanying the request for setting down for trial.

The aim of the C.C.P. is for the disclosure of evidence to be fair and open. [24] The time for trial by ambush ended with the enactment of the Code of Civil Procedure in 1981. [25] The adoption of the new C.C.P. in 2014 certainly did nothing to reverse that. [ 45 ] I share the appellant’s view that the telephone transcripts appear to show that, by February 2015, the respondent knew that it was unlikely that Séguin would testify at the hearing. He reiterated that he would prefer to be unavailable and not [ translation ] “to get involved” and ultimately refused to take

part in the out-of-court examination set for March 3, 2015. During the conversations, he often repeated that he did not want to go to the courthouse under any circumstances.

Without making any assumptions about the respondent’s intentions, it is important to point out that the transcripts of the recordings were made on September 21, 2016, before the trial began. [ 46 ] Here, the respondent, or at least its counsel, knew or should have known well before the trial that Séguin would not appear before the court; they must assume responsibility for deciding not to file the transcripts earlier. [26] Furthermore, a reading of these transcripts reveals that it was risky to count on Séguin to say the same thing in the witness box as he had said on the telephone.

The need for transcripts to be able to treat Séguin as a hostile witness was certainly a foreseeable possibility for a reasonable counsel.

In this case, this was another reason to file the transcripts into the record prior to the trial. [ 47 ] Because of the highly prejudicial nature of Séguin’s statements to the appellant, I find that the very late application by the respondent, although it does not take the appellant entirely by surprise, “robs [him] of the invaluable weapon of cross-examination which has always been one of the mainstays of fairness in our courts”. [27] [ 48 ] It should be noted that the recording was part of the respondent’s investigation file and, accordingly, the respondent refused to disclose it invoking litigation privilege.

It seems rather ironic to want to adduce this element into evidence, without a compliant prior notice, after invoking privilege and preventing the disclosure. It does resemble a stratagem. Indeed, during courtroom conversations, the trial judge noted this strategic approach.

In light of the considerations relating to fair process codified in art. 20 C.C.P., such a strategy should not escape judicial sanction. [ 49 ] In my view, the judge committed a reviewable error in concluding that the notice given after the appellant had closed his case in the principal action was sufficient. [ 50 ] Consequently, the transcripts of the conversations between Séguin and Mtre Courteau should not have been admitted into evidence.

That being the case, there is no other direct evidence of the appellant’s knowledge of or involvement in the cultivation of cannabis on the premises. (ii) Reliability [ 51 ] Even if the notice of filing is considered adequate, I believe the judge is mistaken with respect to the reliability of the statements. [ 52 ] Apart from the three situations where, according to the third paragraph of art. 2078 C.C.Q., the condition of reliability is presumed to have been met, any statement made in circumstances that sufficiently guarantee reliability will meet this criterion. [28] [ 53 ] The circumstances in this case do not allay the real concerns about the truth of the statements admitted by the judge. [29] Séguin often insisted on the fact that [ translation ] “maybe I’m not telling the truth”, and refused to provide a sworn extrajudicial statement.

What’s more, he did not obey the summons to appear at trial and, at the time, had vanished. [ 54 ] As defendant in warranty, Séguin was certainly a party interested in the outcome of the dispute. His remarks implicating the appellant constitute self-serving evidence. [30] They show that he understood that if he implicated the appellant in the cultivation of cannabis, the appellant’s claim against the respondent would fail and, consequently, the respondent’s action in warranty against him would also fail.

On several occasions during the conversations, he expressed his fear of being indebted to an insurance company for a considerable amount. In fact, he finally agreed to speak with the insurer in exchange for the insurer’s undertaking to discontinue the action against him. [ 55 ] While it is true that Séguin’s statements are prejudicial to him if admitted as extrajudicial statements in the action in warranty, once admitted as testimony in the principal action, they save the day for him by causing the proceeding to fail.

It appears from the conversations with Mtre Courteau that Séguin was aware of this direct consequence. The fact remains that he claimed to be afraid of payback by the appellant if he exposed him. [31] Even if we believe this assertion, Séguin also suggested that a guarantee that neither he nor the appellant would be prosecuted would reassure him, which guarantee Mtre Courteau gave him on behalf of the respondent.

That is not enough, in my view, to find that the circumstances surrounding the statement reach a sufficiently high threshold of reliability. [ 56 ] The judge discussed none of this when she decided to admit the recording and the transcript. Her consideration was limited to the fact that it was obvious that the statement was from Séguin given his knowledge of certain details and that some of his remarks were not in his interest. She therefore considered that the recorded statements were reliable. [32] I find that she erred on this point.

In her judgment on the merits of the action, the judge found that Séguin’s statement was credible: [ translation ] “even though he [Séguin] is a

criminal who used red herrings and was hesitant in his remarks to D. Archambault and Mtre Courteau, I am convinced on a balance of probabilities that he told the truth...”. Given all these elements, the statements do not meet the reliability test of

article 2870 C.C.Q. and should not have been admitted into evidence. [ 57 ] Finally, it appears upon reading the judgment under appeal that the judge based her decision on an exercise in which she weighed the appellant’s credibility against Séguin’s. However, even though she did not believe the appellant when he denied his involvement or knowledge of the cannabis cultivation, [33] the respondent failed to discharge its burden to prove this fact. The only evidence of this fact is the transcript of the telephone conversations.

Given the exclusion of the transcript from the file and its lack of probative value, the judge committed an error of law by finding that the insurance policy was void. [ 58 ] At the hearing, the respondent argued, however, that even if Séguin’s statements are excluded from the evidence, the judge would still have decided that the appellant was involved and that the insurance policy was void.

In this respect, counsel relies on some of the reasons listed by the judge to contest the appellant’s credibility; to wit, that the building could be seen from the appellant’s home, that some of the alterations to the ventilation system were visible, or that the smell of cannabis should have been obvious. [34] With respect, that is not the reasoning of the judge, who set aside the appellant’s testimony and accepted Séguin’s extrajudicial statement as true (I reiterate) [ translation ] “even though he is a criminal who used red herrings and was hesitant in his remarks...”. [35] [ 59 ] An appellate court is not in the best position to draw findings of fact from the findings of a judge who was herself unable to reach them through her own observations.

Here, in particular, the indicators of the appellant’s knowledge appear vague when placed in a temporal context. For example, when should the appellant have noticed the smell of cannabis coming from the building? The respondent has not convinced me that the appellant’s involvement in or knowledge of the cultivation of cannabis was proved without taking into consideration Séguin’s extrajudicial statements. [ 60 ] Accordingly, faced with the exclusion of these statements and their lack of probative value, the judge committed an error of law in finding that the insurance policy was void.

The appellant should have won at trial. [ 61 ] In these circumstances and given the above, it is not necessary, as stated earlier, to address the ground concerning the insufficient reasons raised by the appellant. Nor is it necessary to address in detail the ground concerning the judge’s decision to refuse access to the respondent’s investigation file.

As discussed above, the appeal in this respect should have been brought during the proceedings and is therefore late. (iii) Excluded risks in the insurance policy [ 62 ] The policy held by the appellant insures all the risks that could affect the insured building, subject to the exceptions identified therein. [ 63 ] The respondent submits the following exclusion clauses from the insurance policy without, however, expounding on its arguments in this respect: 2.9 – rain infiltration; 2.11 – humidity, temperature variation; 2.17 – dishonest act or criminal offence; act by a person to whom the property has been entrusted; 2.20 – damage due to rust or corrosion. [ 64 ] The exclusions under 2.11 and 2.20 are without effect if the risk is specifically covered, which is the case here because the cultivation of cannabis is, in this case,

an act of vandalism or a malicious act [36] that is a named risk under clause 6 of the insurance policy. The exclusion under clause 2.9 clearly does not apply, on its face. [ 65 ] The exclusion under 2.17, if interpreted as the respondent would have us do, nullifies the policy’s coverage.

Above all, the insured has not committed a dishonest act and a tenant (Séguin) cannot be considered a person to whom the property was entrusted considering that the coverage application states that the building is occupied [ translation ] “by a third party”. (iv) Quantum of damages [ 66 ] All that remains is to determine the amount of compensation to be awarded to the appellant in accordance with the evidence in the record. [ 67 ] Even though the judge did not address this question, there is no reason to refer the file back to the Superior Court for quantification, as the appellant suggests. [ 68 ] To grant the appellant’s request would be contrary to the interest of justice, the rules of proportionality, and the proper use of judicial resources.

As long as appellate judges are in possession of the evidence to quantify the damage, it is not desirable to refer a file back to the court of first instance. [37] [ 69 ] The record in first instance was not reproduced in its entirety on appeal, but I find that the Court has enough evidence to rule on the questions that were left unanswered by the judge. [38] In particular, the file includes the evidence adduced by each of the parties on the amount of damage caused to the building, and the evidence submitted by the appellant for the compensatory damages claimed.

Some elements of the trial judge’s analysis, both in the judgment under appeal and the rulings on the disclosure of evidence protected under litigation privilege, also touch upon the question of punitive damages. [39] Finally, both parties took positions on the merits, referring only to the evidence in the appeal record. [ 70 ] The appellant submitted the report from his building inspector to argue that the building was a total loss. The inspector did not quantify this loss and the appellant submitted the municipal assessment to claim $157,500.

This value is a market value established for the purpose of taxation, not a replacement cost dictated by the cost of repairs or construction. Accordingly, the only useful evidence in the record is that of the claims adjuster adduced by the respondent; the claims adjuster itemized his evaluation of the damage. [ 71 ] The claims adjuster came to an amount of $43,111.60 to repair like new as a direct result of the loss. This amount will have to

be awarded, not the amortized costs.

Although the policy does not include the replacement cost protection, it appears in the insurance proposal, which prevails in the event of a discrepancy. [40] Furthermore, the appellant has always expressed his intention to make the necessary repairs, which he cannot do without receiving the insurance indemnity. [ 72 ] I propose that the respondent be condemned to pay this amount, less the $2,500 deductible, with interest and the additional indemnity since August 14, 2013, that is, 60 days after the notice of loss. [41] The respondent did not make requests for information to the appellant during this period.

Clearly, the respondent did not pay while waiting for the outcome of its investigation, but that does not prevent interest from accruing. [ 73 ] As extra-contractual damages, the appellant claims from the respondent: [42] - punitive damages ($300,000); - moral damages ($135,000); - damages for the delay caused to the development of his business, for the loss of rental income, and for the loss of employment income ($91,500); - the amount of the extrajudicial fees, and an amount of $50,000 for the harm caused by the alleged abuse of procedure. [ 74 ] Essentially, the appellant alleges that the exceptionally reprehensible conduct of the respondent, marked by abuse, arbitrariness, malice, and its [ translation ] “unspeakable bad faith” in processing his claim and in the course of the legal proceedings caused him harm other than the non-payment of the insurance indemnity. [ 75 ] In this case, however, the evidence does not ground a conclusion that the respondent intentionally deprived the appellant of the free disposition of the damaged building by denying the claim or that it intentionally violated his dignity or reputation by alleging his knowledge of and involvement in the cultivation of cannabis that occurred there.

These allegations are not in themselves evidence of the respondent’s [43] malice required to maintain an application in damages based on the Charter of Human Rights and Freedoms . [44] Moreover, in the circumstances of this case, the evidence does not give rise to a finding that there was a civil fault causing compensatory damages or an abuse of procedure. [ 76 ] The insurer did not act abusively by conducting an investigation.

This investigation led it to Séguin, whose testimony, had it been validly adduced, might have justified the refusal to pay the insurance indemnity. [ 77 ] As for the loss of income claimed by the appellant, it is not insured according to the policy and, given the absence of abuse, the respondent is not liable in this respect.

The delay in paying the insurance indemnity is offset by the payment of interest and the additional indemnity. [45] [ 78 ] For all these reasons, I would allow the appeal, in part, to set aside the trial judgment and grant the motion to institute proceedings so as to condemn the respondent to pay the appellant $40,611.60, with interest at the legal rate and the additional indemnity since August 14, 2013, as well as the legal costs on appeal and in first instance. MARK SCHRAGER J.A. [24] Arts. 20, 174, and 248 C.C.P.; Modes Striva , supra note 20 at para. 8 .