Joseph Adelard Serge Dutremble and Jessica Smith failed to obtain summary judgment against their insurer, Heartland Farm Mutual Inc., in a fire-loss dispute before the Ontario Superior Court of Justice. In a decision rendered on October 9, 2026, the court found genuine triable issues on reconstruction costs, contents replacement, and bad faith damages, while granting the plaintiffs leave to expressly plead punitive damages.

Pandemic inflation complicates fire-loss settlement

On August 5, 2020, fire destroyed the plaintiffs' dwelling, which was under construction at the time. Heartland does not dispute that the loss was total or that the policy was in force. The property was insured under a replacement-cost policy to a limit of $671,000.

Following the loss, Heartland retained an independent adjuster and obtained an appraisal from MBC, an independent property appraisal firm, which initially assessed the cost of rebuilding at approximately $477,000. Heartland paid that amount and later increased the payment to cover items initially omitted.

The plaintiffs maintained they could not find contractors willing to rebuild for the appraised amount, citing rising construction costs during the COVID-19 pandemic.

As early as February 2021, Heartland's independent adjuster had flagged volatility in construction costs linked to the pandemic. However, another adjuster acting for Heartland indicated that the insurer was "not interested in any inflationary increases in costs."

In March 2021, the plaintiffs obtained a rebuilding quote of approximately $698,000 plus HST, exceeding the policy limit. The following month, they received a revised estimate of approximately $501,000, which they considered inadequate.

Three days later, Heartland confirmed it would maintain its position and would not pay beyond the MBC estimate, suggesting the plaintiffs might invoke the appraisal process under Statutory Condition 11.

By April 2023, the plaintiffs relied on a reconstruction estimate from Brayman Construction of $748,997.73 inclusive of HST. Benjamin Brayman, owner of the firm, further swore in an affidavit that costs had risen an additional 15 percent by the time of the hearing.

Evidence in the record also shows that Heartland later agreed to consider COVID-related construction cost increases for other insureds, a position it had explicitly refused to extend to these plaintiffs.

Conflicting valuations prevent summary judgment

In November 2024, Heartland invoked the appraisal process under Statutory Condition 11, but the court declined to compel it, finding that the dispute extended beyond the amount of the loss and that the parties disagreed over the appropriate valuation date.

The parties submitted conflicting expert evidence. John Valeriote of Crawford & Company maintained that Heartland's payments were sufficient, arguing that labour and material costs had declined since the pandemic peak. Brayman disputed those conclusions.

The court found that neither expert had adequately explained the methodology or assumptions underlying their opinions, and neither had been cross-examined. It therefore could not determine whether Heartland's payments were sufficient or whether a reconstruction shortfall remained.

Although the court acknowledged there is "compelling evidence capable of supporting" the conclusion that the MBC appraisal understated rebuilding costs, it stopped short of finding that fact established: the plaintiffs have not shown that the substantial increase in rebuilding costs was caused solely by Heartland's conduct, a gap that bears directly on causation and the scope of any recovery.

The court also identified the plaintiffs' earlier decision not to invoke Statutory Condition 11 as relevant to both causation and mitigation: had the appraisal process been triggered when the dispute arose, the loss amount could have been determined years sooner.

Contents and damages claims also remain unresolved

The court also declined to resolve the contents claim. The plaintiffs argued that the alleged underpayment on their dwelling prevented them from replacing destroyed belongings within the time allowed under the policy, as they lacked a permanent residence in which to store them. The court found that questions of causation and mitigation required a trial.

On the claims for aggravated and punitive damages, the court concluded it was "unable to fairly determine the plaintiffs' claims for aggravated and punitive damages on the present record."

The court also allowed the plaintiffs to amend their claim to expressly seek punitive damages, finding that the allegations underlying the proposed amendment were already known to Heartland and that the insurer would suffer no prejudice warranting refusal.