Vancouver, B.C. – The Supreme Court of British Columbia has ordered Aviva Insurance Company of Canada to pay an additional $2.278 million to a numbered company for business losses after a planned South Surrey restaurant was derailed by a series of disasters. In his August 11, 2025 judgment, cited as 1048977 B.C. LTD. v Aviva Insurance Company of Canada, 2025 BCSC 1532 (CanLII), Justice Giltrow also issued a formal declaration that the insurer breached its duty of good faith in its handling of the claim, though he declined to award further damages for that breach.
The case was brought by 1048977 B.C. Ltd., a company helmed by principal Trina Allam, who in 2015 purchased a property formerly known as Chateau Cargill with a vision to create a unique fine dining restaurant and special events venue. Ms. Allam and her team, which included an internationally award-winning chef, Victor Bongo, were in the final stages of extensive renovations when their plans were abruptly halted in August 2016. Construction on a neighbouring property caused a significant land subsidence, or sinking of the ground, making the building unsafe and stopping all work.
The property’s troubles compounded over the following months. A hydrogen sulphide gas escape and, most significantly, a major flood from burst pipes in December 2016 caused extensive further damage. The business, which was on the cusp of opening, never served a single customer. The property was ultimately sold in December 2017 amid foreclosure proceedings.
Following the initial land subsidence, Aviva Insurance paid the plaintiff approximately $1.06 million for business income loss. This payment was based on a 12-month indemnity period starting from the August 2016 subsidence. However, Ms. Allam’s company argued this amount was insufficient on two major grounds. First, it claimed Aviva had significantly undervalued the restaurant’s projected income. Second, it argued the indemnity period should have extended for 12 months past the second major insured event, the December 2016 flood, which would have provided several more months of coverage.
At trial, Aviva’s position shifted. While it had paid the initial claim, its lawyers argued that the plaintiff’s business was a “foolhardy business plan” burdened by debt and would likely have failed to open even without the subsidence and flood. The insurer contended that even if the business had opened, the amount already paid was more than adequate to cover any realistic losses.
Justice Giltrow rejected Aviva’s characterization of the plaintiff’s business plan. He found that, on a balance of probabilities, the restaurant would have opened by October 1, 2016. He noted that despite the plaintiff’s debt obligations, the evidence showed there was always at least $1 million in equity in the property, which made Ms. Allam’s plan to refinance after renovations were complete a likely success. The judge also found the team Ms. Allam had assembled, which included experienced individuals from the construction and hospitality industries, was sophisticated and capable of launching the business.
A central issue was the length of time for which Aviva should pay compensation. Aviva had treated the subsidence and the later flood as a single event. Justice Giltrow, however, agreed with the plaintiff, finding that the subsidence and the flood were two separate insured occurrences under the policy. This finding was critical, as it extended the period of business interruption coverage. The judge determined the full indemnity period ran until December 21, 2017, which was 12 months after the flood and approximately four months after the plaintiff was notified that a permit for repairs was finally ready.
The court then undertook a detailed analysis to determine what the business would have earned during this extended period. This involved a “battle of the experts,” with both sides presenting testimony from forensic accountants and restaurant industry veterans. The judge found the plaintiff’s expert evidence more persuasive. He favoured a methodology based on projected table turnover rates and average customer spending, which was supported by data from comparable local restaurants, over the defendant’s expert’s approach, which relied on an average revenue-per-square-foot figure from a U.S. industry survey.
Justice Giltrow found that the defendant’s expert had inappropriately used a general average that did not account for the specific, upscale characteristics of the planned restaurant. However, the judge did not accept the plaintiff’s calculations entirely. Acknowledging the business was new and untested, he applied a 15 percent contingency reduction to the projected restaurant revenues. He also found the plaintiff’s projections for event revenue were too optimistic given the lack of confirmed bookings, and he reduced that figure accordingly. After calculating the total projected revenue and subtracting non-continuing expenses, he concluded Aviva owed the plaintiff an additional $2,277,810 on top of what had already been paid.
Beyond the financial dispute, the plaintiff leveled a serious accusation that Aviva had breached its duty of utmost good faith in handling the claim. The court heard evidence that Aviva repeatedly sent cancellation notices, took conflicting positions on whether the property was vacant, and was responsible for significant delays in the repair process.
Justice Giltrow found that Aviva’s conduct did indeed cross the line into bad faith on two key points. The first involved the final cancellation of the insurance policy in November 2017. The judge found that Aviva knew its internal policy made it very likely that the plaintiff’s insurance would be cancelled if she chose to accept a cash settlement for the value of the repairs instead of having Aviva indemnify the repairs as they were completed. Aviva’s key contact on the file, adjuster Lynda Sanders, admitted she was aware of this risk but did not inform Ms. Allam, stating it was “not my role.” The judge found this failure to disclose a critical consequence of the plaintiff’s choice was a breach of Aviva’s duty to act in good faith and give as much consideration to its client’s interests as its own.
Second, the court found Aviva acted in bad faith by failing to conduct a fair and balanced assessment of the business loss. The judge determined that Aviva had exclusively relied on the loss calculations from its own retained accounting firm, Jarvie & Co., despite knowing the firm lacked specific restaurant expertise and that some of its assumptions were speculative. Simultaneously, Aviva dismissed the detailed report from the plaintiff’s accountant and refused an offer from the plaintiff to view confidential, unredacted data from comparable local businesses. Justice Giltrow concluded this unilateral reliance on its own, more favourable report did not meet the standard of a balanced investigation.
Despite these findings, the judge dismissed the plaintiff’s claim for further damages arising from the bad faith conduct. The plaintiff had sought compensatory damages for being forced to sell the property at a price below its market value. Justice Giltrow was not persuaded that Aviva’s bad faith was the direct cause of the sale. He concluded that ongoing uncertainty about the stability of the ground, which persisted into late 2017, was a significant factor in the delay of repairs and the plaintiff’s ultimate decision, independent of Aviva’s actions. A claim for punitive damages was also dismissed, with the judge finding that while Aviva’s conduct was serious, it did not rise to the “exceptionally reprehensible” level required by law for such an award.
The final judgment awards the plaintiff $2,278,000 for unpaid business income loss under the policy, along with the declaration that Aviva breached its duty of good faith. The parties will have the opportunity to make submissions on who will bear the legal costs of the lengthy trial.
