Background:

• The Emonds’ home was damaged by a flood on April 29, 2019.
• Their insurance policy with Trillium included:
  • Guaranteed Rebuilding Cost (GRC) Coverage: Rebuilding with similar materials and techniques.
  • Paragraph 8 Exclusion: Excludes increased costs due to zoning and building laws.
  • Building By-Law and Code Compliance (BBCC) Coverage: Provides up to $10,000 for compliance costs.

Legal Dispute:

1. "Any Law" Interpretation:
   • Trillium: Includes laws, regulations, and by-laws.
   • Emonds: Should exclude regulations/by-laws.
2. Exclusion Clause Application:
   • Application judge: GRC guarantees rebuilding costs without legal limitations.
   • Trillium: This interpretation nullifies Paragraph 8 Exclusion.

Court of Appeal Decision:

• Insurance Contract Interpretation:
  • Clear language must be honored; ambiguities resolved by reasonable expectations and commercial realities.
  • Exclusions construed narrowly.
• "Increased Costs" and "Any Law":
  • Increased costs include compliance with post-construction laws.
  • "Any law" includes statutes, by-laws, regulations, and ordinances.
• GRC and Exclusion:
  • The GRC must be read with the whole policy, including Paragraph 8 Exclusion.
  • The policy covers depreciation and inflation, not all compliance costs.

Conclusion:

• The court ruled for Trillium, applying the Paragraph 8 Exclusion and limiting compliance cost coverage to $10,000.
• Costs awarded to Trillium: $20,000 including HST and disbursements.