There was no dispute that the fire was caused by an insured risk, an accidental kitchen fire, and not the marijuana cultivation, Appeal Court judge wrote
Eight years after his house was destroyed by an accidental kitchen fire, a homeowner may be getting an insurance payout originally denied him because he grew medical marijuana.
The B.C. Appeal Court ruled that a lower court judge was mistaken in 2021 by siding with the Gore Mutual Insurance Co. It had refused to pay Anthony Busato because “during the investigation of the fire, Gore learned (he) was growing approximately 25 marijuana plants,” according to a judgment released Friday.
Busato had a valid Health Canada licence that permitted him to grow and possess up to 73 marijuana plants for medicinal use, but Gore denied coverage for his loss, relying on an exclusion clause in its policy for growing pot.
Busato sued and a Supreme Court judge ruled Busato didn’t have to be paid, it said. The judge called the decision a “harsh result,” but agreed with the insurer that its exclusion clause was clear.
That judge largely relied on a 2010 case in Ontario that involved the same insurer, virtually the same policy and the same exclusion that was successfully used to deny a claim, a decision upheld on appeal, the B.C. judgment said.
“But the circumstances were exceedingly different,” the ruling said of the Ontario case, because a tenant had caused an explosion that destroyed the house while cooking cannabis resin. He didn’t have a growing licence and was criminally charged.
Still, the B.C. judge “concluded it did not matter that (Busato’s) 25 plants were grown pursuant to a licence or that the cultivation had nothing to do with the cause of the fire,” wrote Appeal Court Justice Janet Winteringham, in siding with Busato on behalf of the three-judge panel.
Busato, after several surgeries between 2006 to 2013, was issued a cannabis licence to grow marijuana to treat chronic and debilitating pain, according to the judgment.
On April 23, 2017, his single-family home in Peachland was destroyed by the fire and “there was no dispute that the fire was caused by an insured risk,” an accidental kitchen fire, and not the marijuana cultivation, Winteringham wrote.
Gore in a letter to Busato a couple of weeks after the 2017 fire said the exclusion clause stated the growing of marijuana or the manufacturing any controlled drug, regardless of the cause of the damage or loss, meant the policy did not cover any fire, the judgment said.
Marijuana was legalized in Canada in 2018.
Busato argued that Gore couldn’t rely on the exclusion because the cultivation was legal and didn’t cause the fire loss, and therefore was unjust and unreasonable.
Gore argued the exclusion covered a class of property it didn’t agree to insure, that is, one used for growing marijuana.
Winteringham wrote: “I have concluded that the exclusion clause, properly interpreted, does not apply to remove coverage for the loss. I would therefore allow the appeal.”
Messages left with Gore and Busato were not returned on Friday, and it’s not known if the issue will be retried or appealed.