BC Homeowner Wins Appeal After Insurance Denied Payout Over Legal Marijuana Cultivation: Led by Sepideh at McQuarrie

March 19, 2025 | Represented By Sepideh Alimirzaee

In a landmark decision, the BC Court of Appeal recently ruled in favor of a BC homeowner, whose claim for an insurance payout was initially denied due to his legal cultivation of medicinal marijuana. This was made possible by the efforts of Sepideh, Partner at McQuarrie, who represented the homeowner throughout the legal battle.

The Background

In 2017, the homeowners’ home in Peachland, BC, was destroyed by an accidental kitchen fire. While the cause of the fire was undisputed—an accidental kitchen mishap—the issue arose when Gore Mutual Insurance Co. discovered that the homeowner had been legally growing medicinal marijuana in his home under a Federally regulated license. Despite the fact that the fire had no causal connection to the marijuana cultivation, the insurer refused to pay out the claim, citing exclusionary language in the policy which Gore Mutual argued permitted them to deny coverage for properties used for the cultivation of marijuana.

The Legal Challenge

In 2021, the BC Supreme Court sided with Gore Mutual. The trial judge agreed with Gore Mutual, upholding the policy’s exclusion clause that denied coverage for the fire because the homeowner was cultivating marijuana, even though the cultivation had no connection to the fire. The judge acknowledged that this outcome might seem harsh but still interpreted to the exclusionary  language to Gore Mutuals advantage, and applied in a similar Ontario Court of Appeal case where similar exclusionary language was considered.

Sepideh argued that the exclusion clause should not apply in this case because the marijuana cultivation did not cause the fire, and it was entirely legal under Canadian law. In particular, Sepideh emphasized that the homeowners’ cultivation was permitted by his federally regulated Health Canada license, allowing him to grow marijuana for medicinal purposes. Lastly, the Court of Appeal accepted that the homeowners’ circumstances permitted the court to exercise its discretion to excuse imperfect compliance with a contractual term where the strict application would create unjust and inequitable results. With this solid legal grounding, she appealed the decision to the BC Court of Appeal.

The Appeal Court’s Ruling

The BC Court of Appeal ruled in the homeowners’ favor, reversing the trial judges’ decision. The Court of Appeal found that the BC Supreme Court judge had erred in applying the exclusion clause, by concluding that it was unambiguous, therefore she was not required to resort to principles of contractual interpretation and that the exclusionary language encompassed legal marijuana activity and not considered unjust or unreasonable.  Justice Janet Winteringham, on behalf of the three-judge panel, agreed with the homeowner that the exclusion clause was ambiguous therefore requiring the court to apply the exclusion as narrowly as possible.

In delivering this judgment, the BC Court of Appeal effectively clarified that where clauses in an insurance contract are ambiguous, the ambiguity must be resolved against the insurer as the party who has the benefit of drafting the policy. After all, if an insurer wishes to narrow coverage, they are free to do so. Further, the court reminded the industry that legislation in British Columbia permits a court the power to protect the public from the loss of an interest or right due to a condition or agreement in contract. The court cited the Supreme Court of Canada where the courts held that they must look at whether the outcome of applying unjust or unreasonable insurance conditions would create an unfair or inequitable result.

Defending Rights in Insurance Disputes

Throughout the case, Sepideh’s expertise in navigating insurance law proved invaluable. With her extensive background in challenging insurance providers on behalf of plaintiffs, she has consistently demonstrated a strong commitment to ensuring that clients receive fair treatment. Whether it involves disputing life insurance denials, long-term disability coverage issues, or fire loss claims, Sepideh is known for her determination to represent individuals against unfair exclusionary clauses.

Her success in this case further solidifies her reputation as a trusted advocate for clients dealing with complex insurance matters. Sepideh is particularly focused on protecting the rights of those whose claims are unjustly denied, and her work in this case was a crucial step toward ensuring that insurers cannot deny coverage simply because of legal marijuana use.

The Broader Implications

This case sets an important precedent for the future of insurance claims involving legal marijuana cultivation. As marijuana continues to become more accepted in Canada, it is essential that the legal system reflects the changing landscape, ensuring that policyholders are not unfairly penalized for engaging in legally protected activities. This decision could have wide-reaching implications, prompting a re-evaluation of exclusion clauses in insurance policies that might inadvertently penalize individuals for legal activities.

Moreover, the ruling emphasizes the importance of having skilled legal counsel to challenge unfair insurance practices. As an advocate for fairness, Sepideh continues to lead the charge in ensuring that clients’ rights are protected, regardless of the complexities of their case.

Looking Ahead

For the homeowner, this victory marks the beginning of a much-needed resolution after years of legal battles. While it is still uncertain whether the insurer will seek further appeals, the BC Court of Appeal’s decision is a powerful statement in favor of policyholders who face unfair exclusions due to legal marijuana cultivation.

As the legal landscape continues to evolve, Sepideh and her team at McQuarrie remain committed to fighting for the rights of individuals who deserve fair treatment from their insurance providers. Whether you are dealing with an insurance claim denial or other complex legal issues, Sepideh and the McQuarrie team are here to provide guidance and advocacy.

Need Help with an Insurance Dispute?

If you’re facing an insurance claim denial or need legal guidance on a complex insurance matter, Sepideh and our team at McQuarrie are here to help. With extensive experience in challenging exclusion clauses and advocating for clients against major insurance providers, we can guide you through every step of the process.

Get in touch with us today to schedule a consultation and learn how we can assist with your case.

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Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. While we strive to provide accurate and up-to-date information, every legal situation is unique. For personalized legal advice tailored to your specific case, please consult with a qualified lawyer. We are happy to assist you with your legal needs, but this post should not be relied upon as a substitute for professional legal counsel.