Wynward Insurance Group Appellant (Defendant) v. Smith Building and Development Ltd., 2023 SKCA 57

Court of Appeal for Saskatchewan Docket: CACV3801 Citation: Wynward Insurance Group v Smith Building and Development Ltd. , 2023 SKCA 57 Date: 2023-05-12 Between: Wynward Insurance Group Appellant (Defendant) And Smith Building and Development Ltd. Respondent (Plaintiff) Before: Schwann, Tholl and Kalmakoff JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Madam Justice Schwann In concurrence: The Honourable Mr. Justice Tholl The Honourable Mr.

Justice Kalmakoff On appeal from: 2021 SKQB 54 , Regina Appeal heard: April 21, 2022 Counsel: Scott Hopley and John Williams for the Appellant Paul Harasen for the Respondent Schwann J.A. I. INTRODUCTION [ 1 ] Smith Building and Development Ltd. [Smith Ltd.] is the owner and lessor of several commercial buildings in Estevan, Saskatchewan. One such building had been leased by Smith Ltd. to various tenants over the years. It was destroyed by fire on April 13, 2016. The fire was caused by an arson perpetrated by an unknown third party. [ 2 ] Smith Ltd. had insured the building with Wynward Insurance Group [Wynward].

Pursuant to the terms of the insurance policy, Wynward agreed to indemnify Smith Ltd. against losses or damages for the value of the insured property in the event the building was lost or damaged by an insured peril. Smith Ltd. made a claim on its policy for the losses it sustained due to the fire.

However, Wynward refused to indemnify Smith Ltd., having formed the opinion that the insured failed to inform it of a material change in risk and because Smith Ltd. had failed to provide certain information necessary to support its claim. [ 3 ] Smith Ltd. commenced an action against Wynward in contract and negligence for the value of the insured property, business interruption losses and assorted costs and expenses.

Following a trial, a Court of Queen’s Bench judge found in favour of Smith Ltd. and granted judgment in the amount of $693,690, being the limits of coverage under the policy: Smith Building and Development Ltd. v Wynward Insurance Group , 2021 SKQB 54 , 11 CCLI (6th) 246 [ Trial Decision ]. [ 4 ] Wynward appeals from that decision. For the reasons that follow, I have concluded that the appeal must be dismissed. II. BACKGROUND [ 5 ] Smith Ltd. owns an assortment of commercial buildings in and around Estevan.

One such building, located at 218 Souris Avenue North [insured premises or property], had been leased to a variety of tenants between 2008 and 2016, beginning with HTK Oilfield Services Ltd., followed by Regens Disposal Ltd. and, finally, True Torq Power Tongs. Before vacating the premises in 2012, Regens Disposal had subleased a portion of the building to 1818 Ink, a tattoo business, and another part to a motorcycle club called the Reapers Riders. The tattoo business was operated by the motorcycle club.

At some point in time, the Reapers Riders changed its name to the Heretics Motorcycle Club [Heretics]. [ 6 ] The sublease arrangement between Regens Disposal and 1818 Ink and the Heretics continued after True Torq took over the head lease. [ 7 ] True Torq vacated the insured premises in February of 2016, but 1818 Ink and the Heretics carried on at the site. Smith Ltd. permitted the sublessees to remain in the insured premises until it could find a new tenant for the entire building.

Smith Ltd. did not enter into a formal lease agreement with either 1818 Ink or the Heretics but had been provided with post-dated rent cheques for the ensuing three months. At the time this arrangement was put in place with the sublessees, Ryan Smith, the principal and business manager of Smith Ltd., completed a walkthrough of the premises. He found nothing out of the ordinary; the property was clean and in good order. [ 8 ] On April 13, 2016, the insured premises was destroyed by fire.

The chief of the Estevan Fire Rescue Service, who investigated the origin of the fire, discovered the front window in the portion of the insured premises that had been occupied by the Heretics had been smashed inward and a plastic jerrycan containing an accelerant was found under the collapsed roof. Based on his investigation, the fire chief was of the opinion that the fire had been caused by arson, but the identity of the perpetrator was unknown. Nothing in the investigation or in the evidence led at trial suggested that Smith Ltd., 1818 Ink or the Heretics were involved in setting the

fire. [ 9 ] Smith Ltd. advanced a claim with Wynward under its policy of insurance. Ronald Henderson, Wynward’s senior claims examiner, concluded the Heretics were affiliated with the Hells Angels Motorcycle Club, which he described as a notorious motorcycle club with suspected links to criminality. Mr. Henderson’s knowledge in this regard came from an internet search he had conducted that led him to a weblog and two newspaper articles. As a result of this investigation, he determined that Wynward should decline to cover Smith Ltd.’s losses on the bases that (

a) the tenancy of “a motorcycle club related to the outlaw biker club ‘Hells Angels’” was a material change in risk (30 May 2016 letter of denial of coverage of loss), and (

b) Smith Ltd. had failed to provide Wynward with the details of the subleases it had entered into with 1818 Ink and the Heretics. [ 10 ] As noted, Smith Ltd. commenced an action against Wynward for the value of the insured property, business interruption losses and assorted costs and expenses.

The principal issue at trial was whether there was a material change in risk and, if not, whether Smith Ltd. was entitled to replacement cost coverage. [ 11 ] For trial purposes, the parties had agreed that the actual cash value of the insured premises was $406,000, the replacement cost was $812,000, and the cost of clean up and removal of debris was $18,290. The maximum coverage under the policy was $640,000. [ 12 ] As of the date of trial, the building had not been rebuilt. III.

VOIR DIRE DECISION [ 13 ] At trial, and without providing a notice of expert witness, Wynward sought a ruling from the trial judge as to whether Mischa Shewchuk, a member of the Drug Intelligence Unit of the Estevan Police Service, could give opinion evidence as a participant expert witness. Because Cst.

Shewchuk was tasked with monitoring the Heretics as part of his policing duties, Wynward took the position that he was a participant expert, and, as such, he should be allowed to testify about the nature of the Heretics, its affiliation with the Hells Angels and the significance of what is called a “patch over” ceremony. Constable Shewchuk’s opinions were purportedly based on (

a) observations he had made over the years of the Heretics’s activities, (

b) his surveillance and investigation of the Heretics, and (

c) his involvement and unique knowledge of biker gangs that had been gained through his work with the Drug Enforcement Unit. [ 14 ] The trial judge concluded Cst. Shewchuk was not a participant to the proceedings and, therefore, did not “properly fall within the participant expert exception recognized in Racette ” ( Smith Building and Development Ltd. v Wynward Insurance Group (10 December 2020) Regina, QBG 1447 of 2016 (Sask QB) [ Participant Witness Voir Dire ]).

His conclusion is captured in the following passages: THE COURT: … To be clear, I am not saying this individual could not have testified and given his opinion, had proper notice be provided. Rather, it is to say, because proper notice was not provided, he is not entitled to proffer an opinion on the topic sought. … But as a result of this ruling, this witness can certainly take the stand and say what he observed. … He can certainly take the stand and say he observed the Heretics Motorcycle Club.

He observed the Heretics Motorcycle Club interacting with certain individuals whom he knows to be Hells Angels -- members of the Hells Angels, or were wearing Hells Angels apparel, or whatever it is. He can testify to whatever facts he observed. … This ruling simply prohibits this witness, in these proceedings at this time, from providing an expert opinion on whatever he was going to opine. He is a witness who can testify whatever you direct him to, and if [Smith Ltd.] has objections to relevance, [it] will raise them. IV.

THE TRIAL DECISION [ 15 ] The trial judge was asked to resolve numerous issues, including whether (

a) there was a material change in risk, (

b) the policy provided for replacement value, and (

c) Smith Ltd.’s failure to rebuild the insured premises precluded recovery. [ 16 ] On the first issue, the trial judge found “nothing sufficient to establish, on a balance of probabilities, there had been a material change in risk” ( Trial Decision at para 91). The presence of some Hells Angels members at various Heretics events, he said, did not prove that a connection existed between those motorcycle clubs.

Moreover, he found that even if there was a connection between the Heretics and the Hells Angels, that, in and of itself, was insufficient “to constitute a material change in risk” (at para 95). [ 17 ] The trial judge went on to say that, even if there were a material change in risk, Wynward bore the onus of proving that Smith Ltd. knew about it.

While Smith Ltd. was aware that a motorcycle club was a subtenant in the insured premises, and that it had changed its name from Reapers Riders to the Heretics, the trial judge found an absence of evidence to support the suggestion that Smith Ltd. was aware of the club’s operations with respect to alleged criminal activities.

As to Wynward’s submission that Smith Ltd. should have made further inquires upon learning that the Heretics were occupying its building, the trial judge accepted Smith Ltd.’s evidence: i.e., there was nothing untoward about the Heretic’s name and nothing that would have led it to connect the Heretics with the Hells Angels or to criminal activity. As he put it, “the lack of connection does not permit the Heretics Motorcycle Club to be tarred with that same brush” (at para 95). [ 18 ] Smith Ltd. was awarded damages of $693,690, being the limit of coverage under its policy, plus costs.

The trial judge declined to award punitive damages or costs on a solicitor–client basis. V. ISSUES ON APPEAL

[19] While Wynward sets out a number of multifaceted grounds of appeal in its factum, I would reframe the issues on appeal in thisway: (

a) Did the trial judge err in refusing to allow Cst. Shewchuk to proffer opinion evidence as a participant expert without givingnotice under The Queen’s Bench Rules? (

b) Did the trial judge err in concluding Wynward had failed to establish a material change in risk? (

c) Did the trial judge err in awarding replacement cost coverage? VI. ANALYSIS A. Did the trial judge err in refusing to allow Cst. Shewchuk to provideopinion evidence as a participant expert? 1. The law with respect to participant expert witnesses [20] The law of evidence recognizes the role expert opinion plays in litigation: “An expert’s function is precisely this: to provide thejudge and jury with a ready-made inference which the judge and jury, due to the technical nature of the facts, are unable to formulate” (R vAbbey, (SCC), [1982] 2 SCR 24 at 42). The threshold requirements for the admissibility of opinion evidence, as set out inR v Mohan, (SCC), [1994] 2 SCR 9, are these: (

a) the evidence must be relevant to some issue in the case, (

b) theevidence must be necessary to assist the trier of fact, (

c) the evidence must not contravene an exclusionary rule, and (

d) the witness mustbe a properly qualified expert. Even when the Mohan criteria are satisfied, if the prejudicial effect of the evidence outweighs its probativevalue, it will not be admitted. The Mohan criteria were refined in White Burgess Langille Inman v Abbott and Haliburton Co., 2015 SCC23, [2015] 2 SCR 182 [White Burgess], by adding a requirement that an expert’s opinion be independent, impartial and objective. [21] There is a procedural element that accompanies the overarching question of the admissibility of expert evidence.

In thisprovince, The Queen’s Bench Rules stipulates that, where a party intends to call an expert witness to testify at trial, that party must servean expert report [notice] either “not less than 60 days before the date scheduled for a pre-trial conference” or “not less than 90 days beforethe date scheduled for trial” (at Rule 5-40(2)(

a) and Rule 5-40(3)(a)), depending on the circumstances : see also Rule 5-39. The noticemust, among other things, provide “a

summary of the expert’s opinion”, “the information and assumptions on which the expert’s opinionis based”, and the expert’s qualifications (at Rule 5-39(1)(a)). The word expert is broadly defined by Rule 17-1 to mean “a person who isproposed to give expert opinion evidence”. [22] Rule 5-40(4) underscores the importance of notice by providing that, barring a court order that states otherwise, expert opinionevidence “must not be presented at trial” unless the service requirements have been met.

Together, these measures are designed to achievefairness, efficiency in litigation and, no doubt, avoid surprises at trial. [23] The issue raised by this appeal is whether the trial judge erred in concluding that Cst. Shewchuk was not a participant expertand, as such, notice under The Queen’s Bench Rules was required. The issue of the notice requirement, in circumstances where a partyseeks to have a participant expert testify at trial, was addressed by the Ontario Court of Appeal in Westerhof v Gee Estate, 2015 ONCA206, 384 DLR (4th) 343 [Westerhof], leave to appeal to SCC refused, and .

The question inWesterhof was narrow: whether a participant witness was required to comply with Rule 53.03 of Ontario’s Rules of Civil Procedure, RRO1990, Reg 194. That rule, read in conjunction with Rule 4.1.01(1) of the Rules of Civil Procedure, states that “every expert engaged by oron behalf of a party to provide evidence in relation to a proceeding under these rules” must “serve on every other party to the action areport, signed by the expert” in advance of trial (emphasis added, at Rule 53.03(1)). [24] The trial judge in Westerhof had ruled that certain medical witnesses, who had treated or assessed Mr.

Westerhof, would not beentitled to proffer opinion evidence about their diagnosis or prognosis because the plaintiff had not complied with Rule 53.03(1). As aresult, those witnesses were precluded from giving their evidence in its entirety. The Ontario Superior Court of Justice upheld the trialjudge’s ruling – Westerhof v Gee (Estate), 2013 ONSC 2093, 24 CCLI (5th) 226 [ONSC Westerhof] – but, on further appeal, the OntarioCourt of Appeal took a different view, holding that not all opinion evidence fell within the ambit of Rule 53.03.

In reaching thatconclusion, the Court of Appeal categorized experts into three broad types – litigation experts, participant experts and non-party experts –providing the following broad

definitions for each of them: (

a) a litigation expert is said to be a person who is “engaged by or on behalf of a party to provide evidence in relation to aproceeding” (Rule 4.1.01(1) of the Rules of Civil Procedure); (

b) a participant expert refers to a person who forms “opinions based on their participation in the underlying events … rather thanbecause they were engaged by a party to the litigation to form an opinion” (Westerhof at para 6); and (

c) a non-party expert, is someone who is “retained by a non-party to the litigation … who form opinions based on personalobservations or examinations relating to the subject matter of the litigation for a purpose other than the litigation” (at para 6). [25] As it pertains to the category of participant experts, the Ontario Court of Appeal went on to carve out the scope of, andboundaries for, what constitutes this sort of expert: [60] Instead, I conclude that a witness with special skill, knowledge, training, or experience who has not been engaged by or on behalf of aparty to the litigation may give opinion evidence for the truth of its contents without complying with rule 53.03 where -- the opinion to be given is based on the witness’s observation of or participation in the events at issue; and

-- the witness formed the opinion to be given as part of the ordinary exercise of his or her skill, knowledge, training and experience whileobserving or participating in such events. [61] Such witnesses have sometimes been referred to as “fact witnesses” because their evidence is derived from their observations of orinvolvement in the underlying facts.

Yet, describing such witnesses as “fact witness” risks confusion because the term “fact witness” doesnot make clear whether the witness’s evidence must relate solely to their observations of the underlying facts or whether they may giveopinion evidence admissible for its truth. I have therefore referred to such witnesses as “participant experts”. (Emphasis added) [26] I pause here to make the observation that Westerhof was not a case about the admissibility of opinion evidence from a treatingphysician, nor was it about whether Mr. Westerhof’s medical witnesses were qualified to provide opinion evidence.

Although the Court ofAppeal did not grapple with those matters, there did not appear to be an issue as to the actual qualifications of the proposed experts or ifthey were indeed participant experts. The qualifications, at least, seemed to have been conceded or not pursued at trial or on appeal. Asmentioned, the question posed on appeal was narrow: whether participant experts could testify absent compliance with Rule 53.03 of theRules of Civil Procedure.

While that decision turned on the notice requirement, the Court of Appeal cautioned that, as noted above, “[i]fparticipant experts or non-party experts also proffer opinion evidence extending beyond the limits … described, they must comply withrule 53.03 with respect to the portion of their opinions extending beyond those limits” (Westerhof at para 63).

To similar effect, see Imesonv Maryvale (Maryvale Adolescent and Family Services), 2018 ONCA 888 at para 74, 429 DLR (4th) 108, leave to appeal to SCC refused, [Imeson]. [27] Unlike the applicable Ontario rule, the obligation falling on a party to give notice of proposed expert evidence underSaskatchewan’s Rule 5-40 is not limited to experts “engaged by or on behalf of a party”.

Nonetheless, in Saskatchewan v Racette, 2020SKCA 2, [2020] 8 WWR 84, leave to appeal to SCC refused, [Racette], this Court concluded that the samequalification applied under The Queen’s Bench Rules in Saskatchewan and adopted the Westerhof approach to the notice requirements forparticipant experts. However, and quite significantly, Tholl J.A., speaking for the Court, underscored the narrow scope of this exceptionand the need to be vigilant in its application (Racette): [61] … the exception must be tightly applied in order to avoid unfairness to the opposing party.

It is not a licence for the witness toprovide unlimited opinion evidence once he or she has been permitted to provide some expert opinion evidence.

When the testimony ofsuch a witness goes beyond his or her observations and involvement in the underlying facts, and beyond the opinions formed as part of theordinary exercise of his or her skill, knowledge, training and experience while observing or participating in such events, the participantwitness exception no longer applies and the evidence should not be accepted absent proper notice and the formal qualification of thewitness as an expert: [references omitted]. (Emphasis in original) [28] As I read Racette, this Court emphasized the limits of opinion evidence that can be elicited from a participant expert in holdingthat testimony that goes beyond an opinion formed as part of the ordinary exercise of a person’s skill, knowledge, training and experience,while observing or participating in such events, strays outside the boundaries of the exception.

On the facts in that case, this Courtconcluded the trial judge had erred in permitting the physician witnesses to provide expert opinion evidence that went beyond the so-called participant witness exception, “without first qualifying them as expert witnesses” (at para 62). Similar points were made in bothWesterhof at paras 63–64 and Imeson at paras 73–75. [29] A case that is somewhat comparable to the matter at hand is Attorney General (Ontario) v 855 Darby Road, Welland and AllContents (Property), 2017 ONSC 4953 [ONSC Welland], aff’d 2019 ONCA 31, 431 DLR (4th) 243 [Welland].

There, a police officer hadbeen put forth as a participant expert witness. At issue was whether a building used as a Hells Angels clubhouse should be forfeited to theprovince under the Civil Remedies Act, SO 2001, c 28.

In determining whether one of the police officers was a participant expert (noticehad been given for the other), the trial court focused on whether the officer’s opinions were formed for the purpose of the forfeiturelitigation. [30] Although the Ontario Court of Appeal in Welland ultimately dismissed the appeal from the result in ONSC Welland, itdetermined that the trial judge had erred by admitting the officer’s evidence without notice, because the officer’s opinion was not based onhis observation of or participation in the events at issue.

The Court of Appeal went on to say that, even if the officer had directinvolvement in the investigation that led to the forfeiture litigation, “his affidavit goes well beyond his participation in those events.Where a participant expert goes beyond his observation and involvement in the underlying facts, the Westerhof exception for participantexperts no longer applies” (Welland at para 29). The decision in Welland is, in my view, important for the following three points. First, theofficer would have been a participant expert if he had had direct involvement in the subject matter of the litigation.

In that case, he did not.Second, the Westerhof exception ends where the evidence sought to be elicited goes beyond the witness’s observations and involvement inthe underlying facts. Third, the trial judge retains discretion to waive non-compliance with the rules respecting expert witnesses where theparty opposite suffers no prejudice.

In that case, the officer’s proposed evidence was contained in an affidavit that substantially compliedwith the informational requirements of the Ontario rules. [31] A participant expert is also said to exceed the limited nature of their allowable evidence where they testify in generalities, suchas was the case in Imeson, where the proposed testimony related to “problems typical of survivors of childhood sexual abuse” (at paras 40,64 and 74).

Similarly, issues arose in Poff v Hamilton (City), 2021 ONSC 7224, 498 CRR (2d) 83, where the witness spoke to “‘problemstypical’ of people experiencing homelessness” (at para 69).

Where the opinion strays beyond one that is based on observed fact tostatements of broad generalities, the expert is no longer giving evidence grounded in objective observations of the events in issue. [32] Admittedly, it may be difficult, in some circumstances, to determine the point at which a participant expert’s evidencesurpasses the permitted scope for that category of witness: see, for instance, Kon Construction Ltd. v Terranova Developments Ltd., 2015ABCA 249 at para 37, 387 DLR (4th) 623 [Kon Construction]; Davies v Clarington (Municipality), 2016 ONSC 1079 at para 36, 95 MVR(6th) 231; Ogwadeni:deo Six Nations Child Welfare v K.L.H., 2021 ONCJ 339 at para 47; and M.A.B. v M.G.C., 2021 ONSC 8572, 66RFL (8th) 427.

[ 33 ] Finally, some latitude exists in situations where the opposing party already has possession of the necessary information about the prospective opinion evidence, such as through the disclosure process in civil litigation.

In North Pacific Roadbuilders Ltd. v Aecom Canada Ltd. , 2012 SKQB 522 at para 7 , 42 CPC (7th) 411 [ North Pacific ], a case that pre-dates Westerhof and Racette , Laing J. observed that “[o]nce reports, memos, notes or correspondence from professional persons who have previously rendered service to a party are relevant to a matter in trial, these reports, etc., will be disclosed as part of document disclosure”, and, provided the witness’s evidence is restricted to such documents, “there is no reason to require a separate expert witness notice, and there is no basis to claim prejudice due to lack of notice” ( North Pacific at para 7 ): see also Westerhof at para 85 and Welland at para 31 . 2.

Application of the law on participant experts [ 34 ] Wynward sought to have Cst. Shewchuk testify to observations he made about the Heretics as part of his work as a member of the Drug Intelligence Unit as well as to express an opinion about the things he saw, notably the significance of what is known as the patch over ceremony. [ 35 ] In the Participant Witness Voir Dire , the trial judge summarized Wynward’s position on Cst. Shewchuk in this way: “He is said, based on his position, experience, training, and perhaps special exposure through the Drug Enforcement Unit, to be able to form these opinions.

He is said to have an expertise which allows him to form these opinions. His observations to the casual observer might mean nothing, to him they mean something more”. [ 36 ] Wynward’s application was based solely on oral submissions from the parties’ respective legal counsel. The trial judge was not provided with (

a) a precis or

summary of Cst. Shewchuk’s proposed evidence, (

b) a statement of Cst. Shewchuk’s qualifications to express an opinion, or (

c) viva voce testimony from Cst. Shewchuk himself. Simply put, the trial judge was asked to permit Cst. Shewchuk to testify as a participant expert based on what could only be described as a limited foundation for how he fit within that category of expert. [ 37 ] The trial judge was not persuaded by Wynward’s arguments, which led him to find that Cst. Shewchuk was more like a “third- party witness [who was] not involved in the matter” and not a participant expert ( Participant Witness Voir Dire ).

His conclusion is reflected in the following passage: In the case before me, I am unable to determine how this witness’s opinion evidence does not fit squarely within the expert opinion rules provided in The Queen’s Bench Rules . This witness is not a participant in the proceedings in any way. He cannot be compared to the role of a treating physician as set forth in the Westerhof decision. This witness is an independent third party, who has formed certain opinion[s] based on his observation and stated particular expertise.

All of these things would be the subject of the expert witness notice to ensure the plaintiff is not taken by surprise, and is prepared to confront the evidence at trial. The plaintiff is entitled to know the exact qualifications of the expert in order to test their level of expertise. The plaintiff is entitled to know the nature of the opinion to be provided, and the basis for that opinion, so it can test it through cross-examination, and so it can test it through rebuttal evidence, if that is what it chose to do. [ 38 ] Wynward takes issue with that ruling.

Its allegations of the trial judge’s errors are captured in the following excerpts from its factum: 40. … [Paragraph 61 of] Racette signify one of the critical determinations of this Court as regards “participant experts”, namely, that when the exception applies, [ The Queen’s Bench ] Rules requiring “proper notice and the formal qualification of the witness” do not apply.

Thus, unlike the first category of experts from Kon Construction (variously described as “litigation”, “independent” or “notice” experts), participant experts may provide certain opinion evidence without proper notice or being formally qualified before the court as an expert ( Racette at para 61 ).

Under this exception the participant expert may speak to their observations and their involvement in the underlying facts and can also speak to their opinions formed “as part of the ordinary exercise of his or her skill, knowledge, training and experience while observing or participating in such events” (emphasis omitted, Racette at para 61 ). It is only where a participant expert is to give opinion evidence beyond these restrictions, that notice must be given and the formal qualification process be followed. … 49. … The trial judge erred in failing to recognize that Cst.

Shewchuk had the independence required of the participant expert definition. The trial judge then further erred by conflating Cst. Shewchuk’s lack of relationship with any of the parties to the litigation with the independence and impartiality of hired witnesses who fall under the White Burgess/Mohan criteria. Cst.

Shewchuk’s “independence” is directly akin to that of the emergency room physician: both made observations as part of their involvement in underlying events, and neither are parties to the litigation – they are independent in the sense that they did not make their observations as part of the litigation, or at the request of one of the parties (as an insurance investigator might). (Underline emphasis omitted) [ 39 ] To properly assess Wynward’s arguments, I return to the straightforward proposition it advanced on the voir dire . Wynward sought to have Cst.

Shewchuk declared to be a participant expert, able to express an opinion about the nature of the Heretics, its affiliation with the Hells Angels, the significance of a patch over ceremony, and whether the activities of these motorcycle clubs were criminal in nature. If Cst. Shewchuk were a participant expert, it meant, says Wynward, that (

a) notice under The Queen’s Bench Rules was not required, (

b) it did not have to satisfy the Mohan– White Burgess test, and, more specifically, (

c) Cst. Shewchuk did not need to be qualified to provide an expert opinion because his opinion was formed from his observations of the Heretics and its clubhouse. In Wynward’s view, Cst. Shewchuk would only cease to be a participant expert if he proffered an opinion that the Heretics connection with the Hells Angels amounted to a material change in risk: in other words, if the opinion he gave answered the ultimate issue at trial. [ 40 ] As a starting point, I see no error in the trial judge’s identification of the applicable law.

The trial judge referred to Westerhof , Racette , Imeson and North Pacific and understood there is a limited exception to the notice requirements under The Queen’s Bench Rules for participant experts . He described a participant or fact witness as someone whose testimony comes about because of their participation in the proceedings, such as a treating physician, party engineer or an expert who speaks to a previous expert report on a litigant’s file.

However, as the trial judge went on to note, that exception does not open “the doors wide to any expert opinion, if they are connected to the matter at hand, or if they are not specifically retained” ( Participant Witness Voir Dire ). He also said this:

I was not provided with any authorities and have not discovered any, which would extend this limited exception to any individual who mayhave an expert opinion, to then be able to testify. Indeed, it is difficult to imagine where the line would be drawn with the application ofthis exception, if it applied here. [Wynward] sought to distinguish this proposed expert from one who was retained directly by a party.With respect, I do not see a difference.

The rule was developed not to have a difference between retained experts and others, it wasdeveloped to provide notice of expert opinions generally, that are to be proffered at the trial of an action. (Emphasis added) [41] At root, Wynward can be understood to argue on appeal that the trial judge erred in his application of the law to the facts.Respectfully, I struggle to understand how the trial judge made an error that warrants appellate intervention in concluding thatCst. Shewchuk was not a participant witness.

My assessment of the matter is informed by the following reasons. [42] First, absent an error in principle or a material misapprehension of the evidence, appellate courts owe deference to a trialjudge’s decision to admit or reject expert evidence: R v D.D., 2000 SCC 43, [2000] 2 SCR 275; R v Chung, 2018 SKCA 70 at para 16;Frondall v Frondall, 2020 SKCA 135 at para 20, 49 RFL (8th) 293; Racette at para 18; and Imeson at para 53. [43] Second, while Cst. Shewchuk could testify to observed facts (which he ultimately did), it was unclear from Wynward’ssubmissions on the voir dire if (

a) Cst. Shewchuk was involved in the underlying events that gave rise to the litigation, (

b) his opinionwas based on observations of or participation in the underlying events, and (

c) his opinion was formed as part of the exercise of his skill,knowledge, training and experience. It was incumbent on Wynward to make its case for the admission of Cst. Shewchuk’s opinionevidence. It is hard to see how the trial judge erred when he was given so little information in that regard. [44] Third, in large measure, this head of appeal challenges the trial judge’s

interpretation of the Westerhof definition of a participantexpert witness and his application of that decision to the facts. However, as I discuss, I see no such error. [45] Wynward principally argues the trial judge improperly limited the phrase, events in issue, to mean the events that gave rise tothe litigation. This alleged error is said to be embedded in the following excerpt from the trial judge’s reasons in the Participant WitnessVoir Dire: He has not had participation in the events in issue in this litigation, the building, the fire, the insurance.

Rather, he has had exposure to andinvolvement in the examination of motorcycle clubs, and this one in particular, and the determination of their “outlaw status” or perhapsalso said, their criminal nature.

It is also apparent, this witness is going to give his opinion not based on the ordinary exercise of his skill, knowledge, training andexperience, while observing or participating in the events connected to this litigation, rather he is going to give evidence based on hisexperience, skill, knowledge, training as a police officer involved in the Drug Unit of the Police Service, conducting investigations on thesurveillance of motorcycle clubs, and this one in particular. (Emphasis added) [46] The decision in Welland offers some insight as to the meaning intended by the phrase, events at issue.

As mentioned, theOntario Attorney General in that case sought to tender a police officer as a participant expert in its application for the forfeiture of a HellsAngels clubhouse under the Civil Remedies Act, 2001, SO 2001, c 28. The officer in question had tendered an expert witness affidavit in acriminal trial that had preceded the forfeiture application, but he had little or no involvement in the underlying facts concerning theforfeiture matter.

More to the point, the officer did not reach his conclusion about the criminality of the Hells Angels for purposes of theforfeiture application by viewing the events at the clubhouse. [47] The Ontario Court of Appeal concluded the police officer “had little or no involvement in the underlying facts” and that his“affidavit is concerned with the broader question of whether the HAMC [Hells Angels Motorcycle Club] is a criminal organization and ofhow the HAMC operates and carries out its activities” (Welland at para 28).

Even if the police officer had some limited involvement in theinvestigation of the Hells Angels’ activities, the Court of Appeal concluded that because the officer was offering an opinion, which “goeswell beyond his participation in those events” (at para 29), the Westerhof exception no longer applied. This conclusion, in my view,underscores the restrictive approach to the events at issue qualifier.

Similarly, Kaul v Canada, 2017 TCC 55, 2017 DTC 1059 [Kaul], canbe read as standing for the proposition that the events at issue are those in which the witness is directly involved and which are related toan issue at trial. [48] Another way of coming at this question is by examining it from the perspective of the quintessential participant expert – e.g., atreating physician. A treating physician is essentially a witness of fact who is called to testify about their involvement with a patient.

Thatsaid, to explain their diagnosis or treatment, they apply their professional expertise: “the family doctor cannot explain why he or sheendorsed any particular treatment without expressing a medical opinion about it. It is difficult to set the boundary between what they didand their expert opinions about what should have been done” (Kon Construction at para 37). In other words, the testimony of a participantexpert is narrow: it is testimony about the facts of their involvement or the opinion that went into their judgment.

Contrary to the positionadvanced by Wynward on this appeal, being classified as a participant expert is not a vehicle to open the door for broad-based opinionevidence. It must be rooted in observations about the litigation matter in issue. [49] Further support for my

interpretation can be drawn from David M. Paciocco, Palma Paciocco and Lee Struesser, The Law ofEvidence, 8th ed (Toronto: Irwin Law, 2020), where, in their discussion on participant experts, the authors make this observation (at 282): At times, the expert may be a witness to the facts forming the foundation for their opinion, such as the burn expert in R v Marquard [ (SCC), [1993] 4 SCR 223], who examined the burn before diagnosing it. These “participant witnesses” will testify aseyewitnesses to the underlying facts and then offer an expert opinion as to what those facts signify.

As explained earlier, the expertevidence admissibility rules apply solely to the opinions offered. They do not apply to the testimony about the facts the expert haspersonally observed – unless the observations in question could not have been made without expertise, in which case the expert evidenceadmissibility rules may apply, though the authority on this point is not fully settled.

(Italic emphasis in original, footnotes omitted) [ 50 ] Wynward sought to elicit testimony from Cst. Shewchuk not only about what he saw and observed but to also elicit other opinions from him that he had formed from his broad-based exposure to motorcycle club culture in general – and the Heretics in particular – through his policing duties. While the trial judge may have unduly narrowed the events in issue to the fire, the nature and extent of the opinion Wynward hoped to garner from Cst. Shewchuk went far beyond his participation in the underlying events.

I see no error in the way in which the trial judge approached the events in issue limitation. [ 51 ] Furthermore, in making its argument, Wynward ignores the segment of the Westerhof formulation that speaks to the need for the witness to have the requisite “skill, knowledge, training, or experience” to “give opinion evidence for the truth of its contents” (at para 60).

In that decision, the Ontario Court of Appeal underscored the necessity of a participant expert to possess the requisite qualifications and for the witness’s opinion to be formed “as part of the ordinary exercise of his or her skill, knowledge, training and experience while observing or participating in such events” (Rule 53.03 of the Rules of Civil Procedure ). [ 52 ] I interpret those passages to mean that a participant expert, who is called to give evidence of both observed fact and opinion formed through their participation in the underlying events, must possess the necessary qualifications and special knowledge to express that opinion.

This

interpretation accords with the following passage from Westerhof : [64] As with all evidence, and especially all opinion evidence, the court retains its gatekeeper function in relation to opinion evidence from participant experts and non-party experts. In exercising that [gatekeeper] function, a court could, if the evidence did not meet the test for admissibility, exclude all or part of the opinion evidence of a participant expert or non-party expert or rule that all or part of such evidence is not admissible for the truth of its contents.

Although the Ontario Court of Appeal did not expand upon that point, I take it to refer to the Mohan– White Burgess test. Similar observations can be found in Imeson at para 63, Kon Construction at para 37, Kaul at paras 109–113, and Children’s Aid Society of the Niagara Region v S.S. , 2021 ONSC 8582 at para 26 (n), 68 RFL (8th) 433. [ 53 ] It is fair to observe that decisions about the admissibility of evidence from a participant expert do not generally mention the need for a witness of this sort to be properly qualified to express an expert opinion.

This may be so because either the qualifications of the proposed witness have been implicitly accepted or, for whatever reason, that issue has not frequently arisen. One suspects the special knowledge and qualification of a treating physician is typically unchallenged because they are principally witnesses of fact and the opinion portion of their evidence, be it treatment or diagnosis, is based on an understood level of skill, training, experience, etc. I should not be taken to say that it is always, or necessarily, the case that police officers can never be a participant expert.

I simply make the point that sufficient evidence of their qualification is required for them to offer expert opinion evidence. [ 54 ] Wynward also argues the trial judge erred by characterizing Cst. Shewchuk as an independent, third-party witness. It says the phrase, retained by , takes Cst. Shewchuk out of the independent, third-party witness category and, by process of elimination, makes him a participant witness. [ 55 ] I see no such error in the trial judge’s categorization.

First, the phrase, engaged by or on behalf (or retained by), comes from Rule 53.03 of the Rules of Civil Procedure , which appears to be the demarcation between when notice of an expert witness is required in that province and when it is not. Division 3: Experts and Expert Reports of The Queen’s Bench Rules does not distinguish between the types of experts to whom the rules apply. [ 56 ] Second, the trial judge was no doubt referring to the third Westerhof category – a non-party to the litigation.

Westerhof described this type of expert as someone who satisfies the following: [6] … It would also include experts retained by a non-party to the litigation (for example, statutory accident benefits (“SABs”) insurers), who form opinions based on personal observations or examinations relating to the subject matter of the litigation for a purpose other than the litigation (referred to in these reasons as “non-party experts”). (Emphasis added) As I see it, Cst. Shewchuk fit that description.

Moreover, albeit in addressing what constitutes a participant expert, the Tax Court in Kaul emphasized that “the Ontario Court of Appeal [in Westerhof ] did not intend to use the phrase [engaged by or on behalf of a party] as an integral part of the test” (at para 88); rather, the focus should be on whether the expert was engaged for the purpose of litigation . I agree with that view. [ 57 ] Third, even if Cst. Shewchuk was not an independent, third-party witness, his status did not default automatically to the participant expert category.

The proper characterization of Wynward’s proposed expert, and more to the point, whether notice under The Queen’s Bench Rules was required, was a matter for determination by the trial judge, based on the law and the facts before him. It did not boil down to a process of elimination. [ 58 ] Wynward goes on to say that, logically speaking, Cst. Shewchuk had to be a participant and not a third-party expert because he could not satisfy the impartiality requirements laid down in White Burgess . I am not entirely persuaded that this argument was put to the trial judge.

However, for the sake of completeness, I will point to the two obvious flaws with Wynward’s submission. First, Wynward once again falls into the default trap described above, i.e., if Cst. Shewchuk was not an independent, third-party expert then, as a matter of deductive logic, he had to be a participant expert. That is not a principled approach to the law of evidence. Second, had this proposition been put to the trial judge, I am confident it would have given him further reason to pause. For the reasons set out above, to suggest that Cst.

Shewchuk’s opinion (as opposed to his factual evidence) should have been admitted even though it was not impartial would have been an obvious reason for the trial judge to have concluded otherwise. [ 59 ] In its final argument, Wynward asserts that Smith Ltd. was not ambushed by the lack of formal notice because it was undoubtably cognizant of the defence Wynward intended to lead at trial. With respect, this argument is inconsistent with the express wording of The Queen’s Bench Rules . Without the benefit of prior notice of Cst. Shewchuk’s qualifications, documents, notes, reports, or a

summary of his proposed testimony, Smith Ltd. was hampered in its ability to challenge the admissibility of the evidence Wynward sought to elicit from this witness. Had notice been given, Smith Ltd. would have been alerted to Wynward’s intention to adduce an expert opinion from Cst. Shewchuk and would have been able to critically assess his qualifications to express an opinion. The essence of his proposed opinion would have been laid bare in advance of trial. From a trial fairness perspective, Smith Ltd. would then have been equipped to challenge the qualifications and expertise of Cst.

Shewchuk, test his opinion evidence through cross-examination or call rebuttal evidence. The absence of notice placed Smith Ltd. at a distinct disadvantage. The trial judge properly recognized that to be the case. [ 60 ] To the extent Cst. Shewchuk’s qualifications were in issue, Wynward suggests it was open to Smith Ltd. to challenge them at trial. With respect, the proper forum for determining whether he was properly qualified to express an opinion on the subject matter of the criminal element of motorcycle clubs was at the voir dire .

However, as noted, Wynward did not detail the special skill, knowledge, training or experience that Cst. Shewchuk possessed that enabled him to express his opinion. [ 61 ] Finally, Wynward sought to have Cst. Shewchuk express an opinion about biker gangs or criminal organizations and the material risk inherent in leasing property to such groups. That sort of evidence called for Cst.

Shewchuk to express an opinion about the criminal nature of motorcycle clubs generally, their unspecified involvement in criminal conduct, and the elevated risk those sorts of groups pose as being possible victims or targets of crime such as arson, vandalism, gun violence, etc. Constable Shewchuk could not, without satisfying the notice requirements where a party proposes to call an expert witness, testify about the nature and structure of the Hells Angels, or any other motorcycle gang, the types of criminal activity they are typically involved in, or the risks that such groups pose.

That would be opinion evidence that went beyond the factual observations he made from monitoring the Heretics and its clubhouse. It is uncontroverted that where a participant expert’s testimony goes beyond their observations and involvement in the underlying facts (of what they saw and how they participated in the events), that witness exceeds what is permitted as per Westerhof and Racette. [ 62 ] One final thought. Although the trial judge ruled that Cst.

Shewchuk was not a participant witness, and that his evidence was subject to the notice requirement, I do not take him to have precluded Wynward from calling the officer to provide an expert opinion, provided the appropriate notice was given. He simply ruled that because notice was not given, Cst. Shewchuk could not provide an opinion in the manner proposed by Wynward. After the ruling was made, it was open to Wynward to pursue other options such as (

a) seeking an adjournment for purposes of providing appropriate notice, (

b) suggesting that Smith Ltd. be given time to prepare its cross- examination of Cst. Shewchuk, or (

c) suggesting that Smith Ltd. could call an expert of its own to refute Cst. Shewchuk’s opinion. None of those propositions were put to the trial judge. [ 63 ] In

summary, I see no error in relation to how the trial judge dealt with the participant expert issue. B. Did the trial judge err in determining there was no material change in risk? [ 64 ] The central issue at trial was whether Wynward had established a material change in risk with respect to the insured premises by reason of the existence of an “outlaw biker club” as a subtenant in the building.

At trial, Wynward took the position that a material change in risk had occurred when the Heretics transitioned from being a recreational motorcycle club (i.e., the Reapers Riders) to what it described as an outlaw motorcycle gang because of its reputed connections to the Hells Angels and the latter’s alleged criminality and general unsavoury character. [ 65 ] The trial judge framed the alleged material change as being “the existence of an ‘outlaw motorcycle gang’ as a subtenant in the insured premises” arising from the Heretics affiliation with the Hells Angels ( Trial Decision at para 63).

It was not the mere presence of a motorcycle club that was said to amount to a material change, “but this particular club with its unsavoury connection is a material change in the risk” (at para 65).

In addressing this issue, the trial judge understood that the question of whether something amounted to a material change in risk is a question of fact, with the onus of proof residing with the insurer. [ 66 ] The trial judge began his assessment of that issue with the observation that calling the Heretics an “outlaw motorcycle club”, as a stand-alone phrase, was unhelpful and that evidence was required to explain what Wynward meant by it and to show if or how the Heretics members were involved in illegal activity. However, as he went on to note, no such evidence was called.

Although Wynward made much about the signage affixed to the insured premises, the trial judge found that unpersuasive, concluding “[t]he presence of this signage, in and of itself, does not establish anything regarding the risk or materiality” (at para 68). Neither did the trial judge find the testimonial evidence of Mr. Henderson and Cst. Shewchuk shone much, if any, light on the issue of risk or materiality.

Based on the evidence – or lack of it – put forth by Wynward, the trial judge concluded that it had “failed to establish, on a balance of probabilities, the presence of the Heretics Motorcycle Club was a material change in the risk of this insurance policy” (at para 99). [ 67 ] Wynward submits the trial judge erred in his analysis by relying too heavily on the limitation of the duty to disclose that is imposed by law on an insured. It says a correct

interpretation of the policy and the statutory conditions required the trial judge to carefully examine whether the information about the Heretics, its suspected involvement in crime and unsavory activity, and its relationship with the Hells Angels would have influenced a reasonable insurer to demand a higher premium or decline coverage. 1. The law on material change and disclosure [ 68 ] As a matter of law, insurance contracts are characterized as uberrima fides , or the utmost good faith.

This is because of the mutual vulnerability of both the insured and the insurer: see, generally, Carter v Boehm (1766), 97 ER 1162 (KB) . Barbara Billingsley, General Principles of Canadian Insurance Law , 3rd ed (Markham, Ont: LexisNexis Canada, 2014) [ Canadian Insurance Law ], describes the mutuality of their vulnerability in this way (at 47): The insurer is vulnerable because its assessment of the insured risk, and therefore its decision to provide insurance coverage is largely dependent upon information provided by the insured.

Likewise, the insurer’s investigation and payment of a loss relies on information supplied by the insured. Further, the insurer frequently depends upon the insured to minimize the risk of a loss materializing. The insured is in turn vulnerable to the insurer because, upon a loss occurring, the insurer determines whether and in what amount the loss will be paid. From the insured’s perspective, an insurance policy provides peace of mind in the event of an unintended loss. This peace of mind relies

upon “fair, objective, and even-handed” treatment by the insurer in the event of a claim. (Footnotes omitted) [69] Among other things, the doctrine of uberrima fides requires insureds to be forthcoming in providing information to the insurerwith respect to particulars considered to be relevant to risk: “The law imposes a duty on the insurer and the insured to act in good faithduring negotiations and during performance” (Denis Boivin, Insurance Law, 2d ed (Toronto: Irwin Law, 2015) at 129 [Boivin]).

The dutyof disclosure reflects a long-standing principle of insurance law derived from the oft-quoted decision of Carter v Boehm, where LordMansfield discussed this duty in the context of negotiating an insurance contract. Boivin speaks to this concept in this way: “Before aninsurance provider can accept a risk, it must make predictions about what the future will hold. In making these predictions, underwritersrely on facts disclosed by the insurance applicant and on information reasonably accessible to the insurance industry” (at 151).

That said,the terms of the insurance policy or legislation can extend the duty to disclose by requiring insureds to disclose a material change to risk asand when discovered. [70] The duty to disclose is not unbounded, however.

The four limitations identified in Carter v Boehm, as summarized by Boivin,are these: “the duty to disclose applies to (1) facts, (2) within the knowledge of the applicant, (3) unknown and inaccessible to the insurer,and (4) material to the risk being insured” (at 134). [71] The statutory conditions set out under s. 128(2)(4) of The Saskatchewan Insurance Act, RSS 1978, c S-26, as it existed at thefiling of the statement of claim, codified the common law duty to disclose a material risk after a policy is in place.

In that respect, thestatutory conditions provided as follows: STATUTORY CONDITIONS … Material change 4 Any change material to the risk and within the control and knowledge of the insured shall avoid the contract as to the part affectedthereby, unless the change is promptly notified in writing to the insurer or its local agent; and the insurer when so notified may return theunearned portion, if any, of the premium paid and cancel the contract, or may notify the insured in writing that, if he desires the contract tocontinue in force, he must, within 15 days of the receipt of the notice, pay to the insurer an additional premium; and in default of suchpayment the contract shall no longer be in force and the insurer shall return the unearned portion, if any, of the premium paid. [72] This obligation has been carried forward in statutory condition 4 of The Insurance Act, SS 2015, c I-9.11, which replaced TheSaskatchewan Insurance Act in January of 2020: Material change in risk 4(1) The insured must promptly give notice in writing to the insurer or its agent of a change that is: (

a) material to the risk; and (

b) within the control and knowledge of the insured. [73] What constitutes a fact material to the risk is one that “if the facts had been truly represented they would have caused areasonable insurer to decline the risk or required a higher premium” (Henwood v Prudential Insurance Company of America, (SCC), [1967] SCR 720 at 737): also see Canadian Insurance Law or Boivin (at 165).

This general principle is discussed by JenniferPereira in “Material Disclosure” (2 October 2016) 83.10 Canadian Underwriter at 30: The test of materiality is not what is material to the particular insurer, but what a reasonable insurer would have done or how areasonable or prudent insurer would have reacted to the true facts. … Thus, the fact that a particular insurer regards a fact as beingmaterial does not necessarily determine its materiality in objective terms. (Emphasis added) [74] An insured’s duty to disclose extends only to facts which the insured has actual or constructive knowledge of, which arematerial to the risk being insured.

To be clear, the knowledge requirement extends only to an insured’s knowledge of the facts and not theinsured’s appreciation for or significance attached to those facts, vis-à-vis the insurance contract: see, for example, Badenhorst v Great-West Life Assurance Co., 2013 MBCA 5 at para 36, 358 DLR (4th) 522, leave to appeal to SCC refused, . [75] As mentioned, the question of whether something is material is a question of fact: The Saskatchewan Insurance Act ats. 103(6).

The onus of proof rests with the insurer, on a balance of probabilities: see Kehoe v British Columbia Insurance Company, (BC CA), [1993] 6 WWR 196 (BCCA) at para 24. 2. Was there a material change in risk? [76] The trial judge was alert to the law that applied to the issues before him. He understood that “[t]he duty to disclose a materialrisk is as a result of the nature of the insurance contract: being one of utmost good faith” (Trial Decision at para 57).

With reference totextual authorities, which rely on the principles enunciated in Carter v Boehm, he observed that it is not “every piece of information whichmust be shared by the insured with the insurer” (at para 58). Turning to the fourth such factor – materiality – the trial judge adopted thefollowing statement of law set out by Boivin: [59] The issue of materiality of the information is stated in [Boivin] as follows at page 138:

d) Materiality

Materiality is the fourth limit to mandatory disclosure expressed by Lord Mansfield. The duty to disclose does not apply to all facts known by the applicant and inaccessible to the insurer; it applies only to material facts. The concept of materiality has become the leading factor in determining the scope of mandatory disclosure. In short, material facts are facts that would have influenced the decision of a reasonable insurer, had they been known at the relevant time.

These facts can relate to the gravity of the risk (for example, the applicant stores works of art in her basement) or to the probability that the risk will materialize (for example, the applicant stores explosives in her basement). The determination is an objective one, although a subjective analysis does come into play at another stage. In Carter v Boehm , the Court dismissed the underwriter’s defence on other grounds. The insured had no duty to disclose the three statements because the first was accessible to the insurer and the other two were matters of speculation.

Thus, Lord Mansfield did not elaborate on the concept of materiality other than to recognize its importance to the scope of mandatory disclosure. Materiality has received much attention since Carter v Boehm . In practice, it is usually categorized as an issue of breach, rather than an issue of duty. … Yet it is worth noting the connection between materiality and the rationale for the duty to disclose.

Since the applicant’s duty exists to promote reliance on the part of insurers, it only makes sense to limit its scope to facts that would probably have had an impact on the decision-making process, had they been known at the time. (Footnotes omitted) [ 77 ] Much like its first argument, I do not take Wynward to suggest that the trial judge erred in his appreciation of the law governing an insured’s duty to disclose a material change in risk or what constitutes materiality. Instead, Wynward asserts that the trial judge erred in his application of the legal standard to a set of facts.

This engages a question of mixed law and fact, which is entitled to deference on appeal, absent a palpable and overriding error: Housen v Nikolaisen , 2002 SCC 33 at para 1 , [2002] 2 SCR 235 [ Housen ] .

Given this, the appropriate starting place is with the facts as found by the trial judge that underpinned that question. [ 78 ] The trial judge framed Wynward’s supposition on the material change issue as being the “existence of an ‘outlaw motorcycle gang’ as a subtenant in the insured premises” and that the “Heretics Motorcycle Club is such an outlaw gang and, furthermore, is a subsidiary of, or an affiliated gang with the notorious Hells Angels Motorcycle Club” ( Trial Decision at para 63).

However, the trial judge also took pains to articulate what he understood Wynward did not assert: [64] It is critically important to note the defendant is not asserting the presence of a motorcycle gang as a subtenant in the building is the material change in risk here.

The presence of “a motorcycle gang”, or a motorcycle club known as the Reapers Riders, or presumable even a non-Hells Angels affiliated Heretics Motorcycle Club, would not necessarily be a material change in risk in the eyes of this insurer. [ 79 ] The evidence led at trial disclosed that, as early as 2012, the Reapers Riders motorcycle club had become a subtenant of the head lessee in the insured premises. The evidence also disclosed that, as a result of a 2012 inspection by Wynward of the insured premises, the existence of this motorcycle club was known to the insured and the insurer.

In an inspection report prepared by insurance underwriters, the following observations were recorded: “They have sublet about 1740 of office and shop space to a Tattoo shop that is also a bike club of some sort. … This shop is used for storage of vehicles and tools. … It appears that they do mechanical work in the bay, likely just tinkering on bikes” (26 October 2012 comments appended to the underwriting record). Also of significance in the report was this statement: “Broker advised tenants have changed, occupancies remain the same, just different company”.

The 2012 underwriter expressed no concern with the presence of a motorcycle club on the premises. In fact, of the five concerns they had flagged, none related to the presence of the motorcycle club. That report concluded, “Renew normally”. [ 80 ] Based on that body of evidence, the trial judge inferred that Wynward did not consider the mere presence of a motorcycle club to be a material risk. [ 81 ] The trial judge also heard testimony from Michelle Anderson, a commercial underwriter with Wynward who was responsible for the Smith Ltd. account in 2012.

The underwriting process involved reviewing and assessing information to decide if the policy should be renewed. Ms. Anderson testified that Wynward had no policies in place, nor had it queried Smith Ltd. about motorcycle clubs generally, sought out criminal records or explored the character of its tenants. [ 82 ] The trial judge next turned to the testimony of Wynward’s former senior claims examiner, Mr. Henderson, who testified about the investigation he had conducted following the fire. Mr.

Henderson said Wynward only discovered after the fire that there was a motorcycle club in the premises, which was contrary to Ms. Anderson’s evidence and the inspection record. He said the following in testimony: “All we knew about were oilfield businesses and related oilfield businesses”. [ 83 ] Mr. Henderson’s post-fire investigation consisted of an internet search, the review of newspaper articles and visiting specific weblogs. As he put it, “There was much information available on newspapers and on blogs about the motorcycle gang situation in Saskatchewan”. From this research, Mr.

Henderson formed the opinion that (

a) the Heretics was a subsidiary of the Hells Angels, (b) “they would have been involved in criminal activities”, and (

c) the “Heretics had been involved in selling drugs and that they had been very much involved in large fights”. [ 84 ] Under cross-examination, Mr. Henderson conceded that he had only read a handful of newspaper articles (of which, none were produced at trial) and had relied upon that information as being truthful and accurate. One of the weblogs he found most useful was entitled “Gangsters Out”. Mr.

Henderson acknowledged that he was unaware of the journalist who posted it, stating, “I understood this to be something about gangs that I had no knowledge of, and therefore, I read it and it seemed that this blog gives a lot of information from people who are in gangs. And this had led -- led to its credibility for me”. Mr. Henderson acknowledged that the weblog contained the byline, “Your alternate news source. Connecting the dots between politics and organized crime”, but he was, nonetheless, confident about the reliability of its content because of the number of people who had commented on it.

On this point, he said as follows: “it doesn’t look to me like it’s made up because it would be too much work to do”. [ 85 ] Mr. Henderson was also cross-examined about the newspaper articles he had read. He acknowledged that an

article in the Estevan Mercury on the fire said nothing about there being a connection between the Heretics and the Hells Angels nor was another

article illuminating in that regard. When pressed about how these articles helped him draw a connection between the Heretics and the Hells Angels, he replied, “Mainly, it didn’t help me to draw direct connections between the two, but it did indicate to me that there was

significant gang -- motorcycle gang activities in Saskatchewan. That they were very active and that they were trying to build up theirpresence”. [86] While the trial judge did not discount the possibility that “a report received could, certainly, form the basis for a decision todeny coverage” (Trial Decision at para 74), he was dubious about the correctness and reliability of the information Mr. Henderson hadused to form an opinion on the material risk issue. He expressed concern with Mr.

Henderson’s inability to produce any notes or copies ofthe articles (other than the weblog) that he had read, and, as to the Gangsters Out weblog, he wrote, “fairness requires this information beavailable to be reviewed by the insured, and if possible, to be challenged as to its accuracy or veracity. This was not available here” (atpara 80). In the result, the trial judge found Mr. Henderson’s investigation flawed and insufficient. [87] Next, the trial judge considered the testimony of Cst. Shewchuk.

He testified about three events that were held by the Hereticseach year: the show and shine, a poker run and a fish derby – each of which attracted the public at large and members from othermotorcycle clubs. Based on Cst. Shewchuk’s testimony, the trial judge described them as no more than “social events as might be carriedon by any other social club” (at para 85). Constable Shewchuk also testified about having witnessed Hells Angels promotionalmerchandise being marketed at one of the Heretics events.

The trial judge said he had difficulty seeing the connection between thatactivity and Wynward’s argument about enhanced risk: “It is not known how this table [came] to be there or if the Heretics MotorcycleClub provided authorization” (at para 86). Nor did the trial judge find that merchandise damming: “That there were apparent members ofthe Hells Angels present at the various events of the Heretics Motorcycle Club does not connect the two organizations” (at para 92). [88] The trial judge found it noteworthy that Cst.

Shewchuk had not testified about observations he had made of any criminalactivity or even any suspected criminal activity at the insured premises. He provided no testimony as to the outcomes of his surveillanceefforts nor did he testify about any past criminal activity of the Heretics. [89] What I have just recounted was the sum of Wynward’s evidence adduced at trial to establish the existence of a material risk.This led the trial judge to conclude as follows: [91] … there is nothing sufficient to establish, on a balance of probabilities, there had been a material change in risk in this case.

Again, itis worth emphasizing Mr. Henderson readily recognized there was no suggestion by the insurer the presence of a motorcycle club was, inand of itself, a material change in risk. Rather, it was his suggestion, this particular motorcycle club with its alleged connections to theHells Angels and its alleged history of crime or unsavoury character, evidenced a material change in risk. I determine the defendant hasfailed to establish this on a balance of probabilities. [90] Neither did the trial judge find Cst.

Shewchuk’s evidence to be of much assistance in connecting the two organizations:“Indeed, the evidence of Cst. Shewchuk was there were other members of bike clubs there, as well as members of the general public.Presence at a public event does not establish the presence of the Heretics Motorcycle Club is a material change in the risk of the insuredproperty” (at para 92).

As noted, he did not find the sale of Hells Angels promotional material at one event to be persuasive. [91] Respectfully, based on the limited and unsatisfactory evidence Wynward had adduced at trial, it was open to the trial judge toconclude that the insurer had not discharged the onus of establishing that the presence of the Heretics in the insured premises and itsalleged connection with the Hells Angels created an elevated level of risk that was material to the insurance contract. That was a finding offact or, at best, a question of mixed fact and law.

In either event, it is a conclusion that attracts deference on appeal. Absent a palpable andoverriding error, appellate intervention is unwarranted.

I see no such error. [92] Wynward also argues that the trial judge failed to consider whether the Heretics’s suspected involvement in crime andunsavory activity, coupled with its relationship with the Hells Angels, would have influenced a reasonable insurer to demand a higherpremium or decline coverage. [93] I cannot give effect to this argument for the simple reason that the trial judge concluded that Wynward had failed to adducesufficient evidence to establish a connection or affiliation between the Heretics and the Hells Angels.

The mere presence of Hells Angelsmembers at a Heretics-sponsored social event did not, on its own, connect the two organizations. His determination in this regard is foundin the following paragraph: [95] The court is certainly aware of the name Hells Angels. However, is that enough to then conclude their presence, in any context, issufficient to constitute a material change in risk? There is no evidence, aside from the presence of perhaps five or six individuals, to allowfor a conclusion the two clubs were affiliated or acting in association.

Thus, even if the court could conclude the Hells Angels are sonotorious as to need no further proof, the lack of connection does not permit the Heretics Motorcycle Club to be tarred with that samebrush. Again, it is noteworthy Cst. Shewchuk specifically did not testify as to this connection or association. [94] Wynward next argues that Smith Ltd. had knowledge of the material change in risk, i.e., the presence of a “motorcycle clubrelated to the outlaw biker club Hells Angels” (at para 16), but failed to disclose that elevated risk to the insurer.

It points to how theHeretics signage was a clear signal of something more sinister. Wynward relies on Schellenberg v Wawanesa Mutual Insurance Company,2020 BCCA 22, 96 CCLI (5th) 14, leave to appeal to SCC refused, , for the proposition that, where the risk is self-evident to an insured (in that case, a large medical marijuana grow operation, coupled with a significant electrical upgrade), the insured issaid to objectively know that a change in risk was material to the insurer. [95] The trial judge addressed Wynward’s argument in three ways.

First, he concluded that the presence of five or six members ofthe Hells Angels at a Heretics social event was insufficient to support the idea that the two clubs were affiliated. Neither did he find anyother evidence capable of supporting the inference that the two clubs were affiliated or acting in concert. Second, as the trial judgeobserved, even if the Hells Angels name was “so notorious as to need no further proof”, the lack of any connection between the two clubsdid not permit him to infer that it should, as he put it, be “tarred with that same brush” (Trial Decision at para 95).

Finally, the trial judgefound the suggested moniker “outlaw motorcycle club” on its own and undefined at trial did not inform the question of whether there wasa material change in risk: [97] The suggested phrase was not defined by any witness at the trial. It has not been identified as a defined term in any of the trial

documents or, for that matter, in any of the authorities cited in support of the defendant’s position. This term appears to be offered as a descriptor only, and not as a defined type of entity. [98] It follows from all of this the suggested phrase is of no assistance in resolving the issues in this trial.

While it may describe what the insurer wants, or perceives, the club to be, it does not assist in determining whether the presence of this club was a material change in risk. [ 96 ] Based on the trial judge’s findings of fact, I see no merit to Wynward’s argument that the elevated level of risk was self- evident. Without putting it in these terms, the substance of its submission is that the trial judge should have taken judicial notice of the facts that would amount to a material change.

Judicial notice may be taken only of those facts that are “(1) so notorious or generally accepted as not to be the subject of debate among reasonable persons; or (2) capable of immediate and accurate dem onstration by resort to readily accessible sources of indisputable accuracy” ( R v Find , 2001 SCC 32 at para 48 , [2001] 1 SCR 863). In R v Kirton , 2007 MBCA 38 , [2007] 7 WWR 676, Scott C.J.M. concluded that “a court cannot take judicial notice of the fact that the Hells Angel is a criminal organization, tempting as that might be” (at para 18).

If this is so, it certainly must also be the case that a court cannot take judicial notice of a sublease to a motorcycle club, which may or may not be affiliated with the Hells Angels, is material to the risk in an insurance policy. [ 97 ] Next, Wynward renews its refrain that, had Cst. Shewchuk been allowed to express an opinion about the significance of the signs and symbols used by the Heretics, the evidence would have knitted together in a way that focussed attention on the risk posed by the presence of that club in the insured premises. Wynward also says Cst.

Shewchuk’s evidence would have been useful in undermining Mr. Smith’s credibility in a way that would have revealed him to be wilfully blind to the true nature of the Heretics. It asserts Mr. Smith’s testimony about his lack of awareness of the unsavory conduct of the Heretics, or its connection to the Hells Angels, could not be properly assessed without Cst. Shewchuk’s opinion evidence. [ 98 ] Needless to say, this argument is little more than a back door attempt to revisit the participant expert ground of appeal.

Having concluded that the trial judge did not err in that regard, Wynward’s observations about what evidence could or should have changed the result at trial is little more than speculation. It says nothing about any errors in the fact-finding process or if the trial judge erred in resolving the question of whether there was a material change in risk. 3. Smith Ltd.’s knowledge of the facts said to constitute a material change in risk [ 99 ] Based on the evidence adduced at trial, the trial judge concluded that Mr.

Smith lacked the requisite knowledge of the existence of either a Hells Angels connection to the Heretics or “anything untoward with the motorcycle club” (at para 110). Although Mr. Smith knew that a motorcycle club was a subtenant in the building, and that it had morphed from the Reapers Riders into the Heretics, the trial judge was not satisfied that Mr. Smith had the requisite knowledge of its connection to the Hells Angels or anything criminally nefarious. [ 100 ] On appeal, Wynward challenges the trial judge’s findings that (

a) Mr. Smith did not know that an affiliate of the Hells Angels occupied the insured premises, (

b) the presence of a motorcycle club did not create an elevated risk, and (

c) Mr. Smith was not wilfully blind to what all of that meant. The proposition Wynward put forth to the trial judge, and revived again on appeal, was that Smith Ltd., through its principal Mr. Smith, “should have made additional inquiries after learning that the Heretics were involved in renting part of the building he owned. … When assessing whether the insured had effective knowledge of the motorcycle club and [its] connection to the Hells Angels, the trial judge failed to ask what was knowable to Mr.

Smith at the time”. [ 101 ] Smith Ltd. asserts, and I agree, that having found there was no material change in risk, the question of whether it had knowledge of certain facts that allegedly should have pointed to an elevated level of risk is irrelevant. Put another way, because the trial judge concluded there was no material change in risk, it was unnecessary for him to go on to address if the insured knew of the change. This is a complete answer to Wynward’s arguments.

However, for the sake of completeness, I will address the specific points raised under this ground of appeal. [ 102 ] Once again, Wynward asserts that, had Cst. Shewchuk been permitted to provide opinion evidence, it would have shown either that Mr. Smith was not credible or that he was wilfully blind to the need for him to make further inquiries. As discussed, that argument hinges on whether the trial judge erred in how he resolved the participant expert issue, a topic that has been addressed at some length above. [ 103 ] Turning to the specifics, Wynward points to the fact that Mr.

Smith had a personal interest in motorcycles, had attended an annual motorcycle rally in Sturgis, South Dakota, and possessed general knowledge about the Heretics fundraising events. Further, it says Mr. Smith knew there was a large beer fridge in the clubhouse and that the Heretics had placed distinct signage on the building. [ 104 ] The trial judge found Mr. Smith to be a credible witness and accepted his testimony: he had no knowledge of the Heretics operations beyond it being a motorcycle club that held social gatherings and did mechanical work on its bikes at the clubhouse. Mr. Smith also testified that he (

a) was rarely at the insured premises, (

b) did not see merchandise being sold, and (

c) was not curious about the possible presence of Hells Angels merchandise, the operations of the Heretics or its penchant for going on motorcycle rides. Although Mr. Smith was aggressively cross-examined on his testimony-in-chief, the trial judge saw no reason to reject his evidence. Mr. Smith was also cross-examined about his interest in motorcycles and the fact that he had attended a renowned motorcycle rally in the United States. However, the trial judge saw none of that as being sufficient to establish a connection between the Heretics and the Hells Angels or to attribute any knowledge of such connection to Mr. Smith. [ 105 ] Apart from rearguing the points referred to a

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