Following a fire in October 2017, the owners were required to rebuild their property differently because of the municipality’s architectural and heritage requirements. The insurer paid the full indemnity but disputed the increased costs associated with bringing the property up to code. The court ruled in favour of the insureds and awarded part of the amount claimed, but the insurer appealed the decision.
In a judgment from August 6, 2026, which was only published in French, the Quebec Court of Appeal granted Promutuel Insurance Alta, five business days to file its brief. The insurer had filed a motion for relief from the consequences of its failure to act and for the additional time.
The motion was not contested by the insureds. The lapse of the appeal had been set aside on June 16, 2026, and the appellant was relieved from the consequences of its default. The insurer is challenging the trial judgment rendered by the Quebec Superior Court.
On February 5, 2026, Justice Sylvana Conte, of the Terrebonne district, ordered Promutuel Insurance Alta to pay the plaintiffs $132,527.63, plus 43% of the applicable taxes. Interest and the additional indemnity are calculated from February 15, the date the amended originating application was served. Legal costs, including expert fees, are also payable by the defendant.
The loss
The 3,063-square-foot property at the centre of the dispute was damaged by fire on October 13, 2017, in Saint-Sauveur. The building was used for commercial and residential purposes, with three commercial units on the ground floor and three apartments upstairs.
The property is owned by Fiducie Verronneau (the Verronneau Trust), an investment company represented in this litigation by Christian Verronneau and Robert Jutras. At the time of the loss, the property was insured by Promutuel Boréale (whose merger with another mutual created the new Promutuel Insurance Alta entity in July 2025).
On March 20, 2020, the plaintiff received full indemnity for its building, including a provision for inflation and Extension 19 for its demolition and loss of income, for a total of $754,194.46. The indemnity paid took replacement cost into account (subject to contractual limitations), but not the costs of bringing the property up to code.
The Trust’s insurance claim amounts to $286,732.23. It is based on the coverage provided under clauses 1, 13, 15 and 19 of the policy, the latter relating to coverage extensions.
The insurer disputes the claim, alleging, among other things, a lack of cooperation by the insured, the late submission of supporting documents and the submission of a construction contract that did not reflect the actual terms of the agreement between the parties, which it considers to be a misrepresentation.
In addition, Promutuel maintains that the Trust failed to prove that the upgrades required to meet code were necessary and considers the amount claimed to be overstated and that it should not exceed $91,437.81.
Restoration
The day after the fire, the insurer’s representative informed Mr. Verronneau that he could proceed with boarding up the property and choose his general contractor for the reconstruction. The co-owner retained his own construction company, of which the Trust is the majority shareholder, to board up the property.
On January 31, 2018, the City of Saint-Sauveur informed the owners of the municipal regulations applicable to the reconstruction of a building located in this heritage area. The parking lot in front of the building would therefore have to be relocated behind the new building. The planning advisory committee would have to approve the plans.
The insurer’s representatives were informed of Mr. Verronneau’s difficulties in his dealings with the municipality. The Trust had to provide a site plan, specifications, demolition and reconstruction plans, as well as a soil rehabilitation program. The proposed site layout required the installation of semi-underground containers for garbage and recycling, as well as a landscaping plan. The rear foundation of the building could not be reused.
An architect was retained, and the building permit was issued in October 2018, one year after the loss. A contractor was selected. The estimated reconstruction value was $500,000. A first cheque for more than $511,000 was sent to the Trust on December 11, 2018.
In July 2019, Mr. Verronneau sent the insurer’s claims adjuster the contract he had signed with contractor Interra, but the message went unanswered. With reconstruction nearly complete, claims adjuster Miriam Marchand wrote to the Trust on November 5, 2019, and her comments suggested that the work had not yet begun. She also noted that the insurer wanted to settle the file because it intended to bring an action against the tenant responsible for the fire.
The loss of rental income was compensated for on December 5, 2019. On February 19, 2020, Mr. Verronneau advised Ms. Marchand that the work would soon be completed. The full indemnity was paid on March 20, 2020.
Over the following months, the insurer requested supporting documents concerning the costs of bringing the property up to code. On April 20, 2021, the Trust instituted proceedings. The court examined at length the insurer’s allegations in disputing the claim and its assessment of the amounts it would still have to pay the insured.
Arguments rejected
The insured’s duty to cooperate is set out in article 2471 of the Civil Code of Québec. According to the court, the evidence shows that Mr. Verronneau cooperated with the insurer by providing all required documents at each stage of the reconstruction, which Ms. Marchand acknowledged. Promutuel’s main argument concerned the late submission of supporting documents for the amounts claimed in January 2021. Most of the documents were not provided until February 2022.
Mr. Verronneau pointed out that the Excel file had been sent in January 2021 at Ms. Marchand’s request following discussions with his accountant. A bundle of documents was sent on March 23, 2021, and the claims adjuster advised the Trust that she would not be able to analyze them before the limitation period expired.
The evidence shows that the Trust concealed nothing from the insurer regarding the costs associated with bringing the property up to code. Ms. Marchand could also have retained an expert to visit the construction site, which she chose not to do. The court rejected this argument by the insurer.
Forfeiture of insurance coverage due to misrepresentation is provided for under article 2472 of the Civil Code. Although the terms of the contract between Interra and the Trust were subsequently amended, the insured’s claim is based on the actual terms of the amended agreement, as described in the invoices submitted by the Trust in support of its claim.
There was no misrepresentation because it was not made for the purpose of obtaining an indemnity to which the insured was not entitled, the court concluded.
Analysis of the amounts claimed
The court then analyzed the main categories of claims arising from the coverage extensions. According to the court, relocating the building was a requirement imposed by the city with which the insured had no choice but to comply.
The additional claims are based on the following clauses:
- clause 1 for trees, shrubs and natural plants (limit of $10,000). The court rejected this claim;
- clause 13 for environmental upgrades (limit of $50,000). The court awarded $31,184.35 for the installation of retention basins in the rear parking lot, plus 43% of the applicable taxes;
- clause 15 for roadways, sidewalks and parking areas (limit of $25,000). The court awarded $5,319.20 after deducting the amount already paid by Promutuel for demolition;
- clause 19 for coverage extensions on the total amount, with a limit of $250,000. The court allowed part of the claim and awarded $96,024.08.
As noted above, Promutuel estimated the value of the claims at 31.9% of the amount sought by the Trust. The court ultimately awarded 46.2% of the amount claimed.
The Court of Appeal’s August 6, 2026 judgment does not disclose the insurer’s arguments for challenging the trial judgment.
