



COURT OF APPEAL FOR ONTARIO

CITATION: Monk v. Farmers Mutual Insurance
    Company (Lindsay), 2019 ONCA 616

DATE: 20190719

DOCKET: C64078

Feldman, Brown and Miller JJ.A.

BETWEEN

Diana Lynn Monk

Plaintiff (Appellant)

and

Farmers Mutual Insurance Company (Lindsay)

and
    Muskoka Insurance Brokers Ltd.

Defendants (Respondents)

David A. Morin, for the appellant

Martin P. Forget and Earl J. Murtha,
    for the respondent, Farmers Mutual Insurance Company (Lindsay)

Demetrios Yiokaris and Sydney Hodge,
    for the respondent, Muskoka Insurance Brokers Ltd.

Heard: February 20, 2019

On appeal from the judgment of Justice Edward
    J. Koke of the Superior Court of Justice, dated June 15, 2017, with reasons
    reported at 2017 ONSC 3690, 70 C.C.L.I. (5th) 94.

BROWN J.A.:


I.        OVERVIEW

[1]

The insured, the appellant Diana Monk, owns a
    log house in Bracebridge, Ontario. In 2008, she wanted to refinish the exterior
    of the logs. To do the work, she hired Pleasantview Log Restoration Systems
    Inc. (Pleasantview). The work largely was completed by the end of 2008.
    During and after the restoration work, Ms. Monk noticed some damage to the
    interior and exterior of the house, which she attributed to the cleaning.

[2]

Ms. Monk had a home property insurance policy
    with Farmers Mutual Insurance Company (Farmers). She had obtained the
    insurance through her local broker, Muskoka Insurance Brokers Ltd. (Muskoka
    Insurance).

[3]

There is no dispute that on September 2, 2011
    Ms. Monk informed Muskoka Insurance of damage she claimed had resulted from
    Pleasantviews work. On September 8, 2011 Muskoka Insurance informed Ms. Monk
    that Farmers regarded any claim under the Policy as time-barred. Ms. Monks
    lawyer sent Farmers a formal notice of claim on October 12, 2011 and commenced
    this action for indemnification under the Policy on November 14, 2011.

[4]

Her claim against Muskoka Insurance sounds in
    breach of fiduciary duty and negligence, asserting that the company failed to
    ensure that she was properly advised with respect to her rights of coverage
    under the Policy. Ms. Monk contended that prior to September 2, 2011, she had
    informed Muskoka Insurance on three occasions about the damage, but each time its
    representative told her that the Policy did not provide coverage.

[5]

In addition to the amount of her loss, Ms. Monk
    sought aggravated and punitive damages against both Farmers and Muskoka
    Insurance.

[6]

In 2014, the respondents moved for summary
    judgment dismissing Ms. Monks action on the basis that exclusions in the
    Policy denied coverage. The respondents were successful on their motion: 2014
    ONSC 3940, 37 C.C.L.I. (5th) 92. However, this court set aside the summary
    judgment, holding that the resulting damage to the insured property for which
    Ms. Monk sought indemnification is covered by the policy whether or not that
    damage is the result of faulty workmanship: 2015 ONCA 911, 128 O.R. (3d) 710,
    at para. 42. This court went on to state, at para. 42, that the remaining
    question is whether, or to what extent, [Ms. Monks] action is barred by
    operation of the
Limitations Act
.

[7]

The nine-day trial conducted in 2017 was not
    confined to issues relating to the timeliness of Ms. Monks claim for loss.
    Coverage issues once again were raised by the respondents.

[8]

The trial judge dismissed Ms. Monks claim
    holding, at paras. 226 and 227 of his lengthy reasons:

Although I am satisfied that Ms. Monk has
    coverage under her insurance policy for her losses, her failure to provide
    timely notice of her damages constitutes unreasonable conduct on her part and
    has resulted in substantial prejudice to the insurer. She is therefore not
    entitled to relief from forfeiture and I am therefore dismissing her claim
    against Farmers.

Furthermore, I do not accept Ms. Monks
    evidence that she informed Muskoka on three occasions, prior to September 2,
    2011 that she had sustained damages and that she was informed by Muskoka
    representatives that she did not have coverage for her damages. Her claim
    against Muskoka is also dismissed.

[9]

Although he dismissed her claim, the trial judge
    assessed Ms. Monks damages at
$86,320.70
: [carpets:
    $15,576.32 + exterior lights: $1,501.64 + door hardware: $868.88 + windows and
    doors: $68,373.86]

[10]

The trial judge ordered Ms. Monk to pay partial
    indemnity costs of $175,000 to Farmers and $115,000 to Muskoka.

[11]

Ms. Monk appeals the dismissal of her claim and
    seeks leave to appeal the awards of costs. She asks for the following
: (i) a reversal of the trial judges finding that Ms. Monk
    did not notify her broker forthwith three times upon discovering damage and
    further damage; (ii) relief from forfeiture; (iii) damages for indemnification
    under the policy in the amount of $124,448.47; and (iv) an award of substantial
    indemnity damages of the action in her favour.

[12]

Farmers cross-appeals. Although it obtained
    judgment in its favour dismissing Ms. Monks action, the insurer asks that that
    judgment be set aside and, instead, judgment issue declaring that Ms. Monks
    claim for property damages is excluded by the terms of the Policy. In effect,
    Farmers appeals not from the judgment but from the trial judges reasons.

[13]

I will deal with the issues in the following
    order:

(i)

whether the trial judge erred in holding that
    the Policy covered Ms. Monks claim;

(ii)

whether the trial judge committed reversible error in finding that
    Ms. Monk did not notify her broker forthwith three times upon discovering
    damage;

(iii)

whether the trial judge erred in denying Ms. Monk relief from
    forfeiture;

(iv)

whether the trial judge erred in assessing Ms. Monks damages at
    $86,320.70, instead of the $124,448.47 she requested; and

(v)

whether the trial judge erred in his award of costs.

[14]

For the reasons that follow, I would dismiss Ms.
    Monks appeal, grant her leave to appeal the trial judges cost awards, vary
    those cost awards, and dismiss Farmers cross-appeal.

II.       THE LOSS AND THE CLAIM

[15]

Ms. Monk purchased her log home in 1997. She
    then discovered that the roof leaked. She sued the vendor. Her action settled
    at trial in 2005.

[16]

Ms. Monk had insured her house with Farmers
    through Muskoka Insurance since 1999. Prior to the events in this action, Ms.
    Monk had submitted insurance claims regarding damage to the house to Farmers,
    through Muskoka Insurance: one claim was paid; coverage was denied on the other.

[17]

In June 2008, she hired Pleasantview to restore
    the exterior logs and wooden surface areas of her home using a power wash
    process. Under the contract, Pleasantview was to seal all areas of the building
    where water from the washing process might enter the structure and then coat
    the exterior with a cleaning compound, agitated with bristle brushes, rinse,
    repeat, and then apply a neutralizer solution. As well, the contract called for
    Pleasantview to thoroughly ground or sand all exterior log surfaces to remove
    any loosened surface wood fibres. Finally, Pleasantview was to apply coats of a
    finisher. As part of the clean up after its work, Pleasantview agreed to clean
    thoroughly all windows and glass doors on the interior and exterior. The
    contract price for the restoration services was just under $40,000.

[18]

Pleasantview warranted the integrity of
    materials and workmanship for a period of 36 months after completion. However,
    the warranty would not come into full force until Ms. Monk paid Pleasantview in
    full.

[19]

Pleasantview commenced its work in August 2008.
    With the onset of cold weather and snow in November or December 2008,
    Pleasantview left the site; it never returned.

[20]

By December 2008, Ms. Monk had paid all but $4,851.10
    of the contract price. She refused to pay the balance, taking the position that
    Pleasantview had not completed the work contracted for and had failed to
    properly clean the interior carpets stained by the power wash.

[21]

According to Ms. Monk, sometime in April or May
    of 2009, while cleaning the exterior of her windows, she noticed for the first
    time that a considerable number of the glass panes in the windows and exterior
    doors were scratched and pock-marked. Many of the scratches were circular in shape
    and located close to the edges of the window sashes. She attributed the
    scratching to the work performed by Pleasantview but did not report the damage
    to the contractor.

[22]

Ms. Monk noticed other damages, which included:
    the finishing fluid had been spilled on many of the windows, exterior doors, light
    fixtures, landscape rocks, and decking, and on the screens of her wooden screen
    doors; most of the green wood stain on her wooden window sashes and doors had
    been removed; the grain where the stain had been removed around the windows
    appeared to be raised; and hair-like fibres were visible on the wooden sashes.
    Ms. Monk sanded and applied a fresh coat of brown stain to the window sashes
    and doors during the summer of 2009.

[23]

With the onset of cold weather in the winter of
    2009/2010, Ms. Monk noticed that condensation was forming between the panes in
    many of the thermalseal windows of her home. As well, she observed that some of
    the large thermalseal windows in the exterior doors had come loose and were
    slipping down into the interior of the doors. The frames of the doors were also
    loose, causing the doors to sag and lose their shape, and it was becoming
    difficult to open and close the doors.

[24]

Ms. Monk testified that during this period of
    time she contacted Muskoka Insurance three times to inform the broker about the
    problem. The trial judge did not accept her evidence on this point.

[25]

According to Ms. Monk, on July 28, 2011, knowing
    that the three-year warranty from Pleasantview would soon expire, she delivered
    a warranty claim to Pleasantview. Her claim was a detailed one: it listed the
    deficiencies and included 40 pages of photographs. In August 2011, Pleasantview
    provided Ms. Monk with a written assurance that someone would inspect her
    property and the company would stand behind its work. Ms. Monk testified that no
    one from Pleasantview ever came to her home to do so.

[26]

On September 2, 2011, Ms. Monk went to the
    office of Muskoka Insurance and asked about making a claim. On September 8,
    2011, Muskoka Insurance sent Ms. Monk an email advising that Farmers had
    denied her claim on the basis that the damages to the home had occurred more
    than two years before.

[27]

Ms. Monk thereupon retained a lawyer who, on
    October 12, 2011, submitted a formal letter claim to Farmers for indemnity
    under the Policy. The letter contended that Ms. Monk had discovered the damage
    in January 2010. It stated that Pleasantview had restored the logs in a way
    that caused collateral damage to other property, namely: the windows and doors;
    exterior lights; door knobs; and indoor carpeting. Ms. Monk claimed $82,924.48
    under the Policy.

[28]

On November 14, 2011, Ms. Monk commenced two
    actions. First was this action against both Farmers and Muskoka Insurance
    seeking $150,000 for collateral damage to her home caused by a negligent
    contractor and $150,000 in general and aggravated damages. Her claim for collateral
    damages covers the replacement of: damaged carpeting; exterior lights and
    doorknobs on existing doors; doors; windows; and additional trim repair and
    staining. As particularized in a July 2012 Proof of Loss, the claim totalled
    $105,024.92; as particularized at trial, it totalled $124,448.47, the
    difference turning largely on differing estimates for the replacement of doors
    and windows.

[29]

The second action she commenced was against
    Pleasantview for negligence and breach of contract.

III.      THE POLICY

[30]

Under the Policy, Farmers agreed to indemnify
    Ms. Monk from loss by sudden and unexpected occurrences as described and
    limited in the Insured Perils section of this policy and subject to the terms
    and conditions set out in the policy. Coverage included the dwelling building
    and attached structures. Insured Perils were defined as direct, accidental
    physical loss or damage subject to the EXCLUSIONS and CONDITIONS in this
    policy.

[31]

Farmers denied coverage for Ms. Monks loss
    based on several exclusions in the Policy, only two of which are relevant to
    the insurers cross-appeal:

(i)

Losses Excluded
, s. 2: the cost of
    making good faulty material or workmanship (the Faulty Workmanship
    Exclusion); and

(ii)

Property Excluded
, s. 4: property
     (ii) while being worked on, where the damage results from such process or
    work (but resulting damage to other insured property is covered (the Property
    Being Worked On Exclusion).

IV.     PROCEDURAL HISTORY

Farmers motion for summary judgment: Part I
    - 2014

[32]

In 2014, Farmers moved for summary judgment
    dismissing Ms. Monks claim. Muskoka Insurance brought a companion motion,
    which adopted the positions advanced by Farmers: 2014 ONSC 3940, at para.6.
    The motion judge, who later was the trial judge, identified the issues as: (i)
    whether some or all of the property damage fell within the Faulty Workmanship
    Exclusion or Property Being Worked On Exclusion; or (ii) whether the action was
    statute-barred: at para. 27.

[33]

The motion judge held that the
Faulty Workmanship Exclusion
included both damage from
    the work that forms the subject-matter of the contract with a contractor, such
    as Pleasantview, as well as other damages resulting from faulty workmanship
    related to the work. He found that the damage to Ms. Monks house was excluded
    from coverage: at para. 43. The motion judge went on to state that assuming the
    damage was properly categorized as resulting damage, the exclusion of resulting
    damage from the
Property Being Worked On Exclusion could
    not extend coverage for such resulting damage in circumstances
where the
    damage is caused by faulty workmanship. The motion judge concluded that the
    insurance policy issued by the defendant Farmers Mutual excludes coverage for
    the damages incurred by the plaintiff, Ms. Monk: at para. 53. Given those
    findings, he did not address the limitations defence advanced by Farmers and
    Muskoka Insurance: at para. 51. He dismissed the action against both Farmers
    and Muskoka Insurance.

The 2015 decision of this court

[34]

Ms. Monk appealed the dismissal of her action.
    This court reversed the motion judge: 2015 ONCA 911. It interpreted the Faulty
    Workmanship Exclusion as excluding from coverage only direct damage and not the
    resulting damage flowing from faulty workmanship: at para. 36. As well, this
    court rejected, as an overly narrow interpretation of the resulting damage
    exception in the Property Being Worked On Exclusion, the motion judges view
    that it only preserved resulting damage coverage for a narrow range of events
    unrelated to faulty workmanship, such as damage caused by accident: at para.
    38.

[35]

This court then concluded, at para. 41, that the
    
resulting damage to insured
    property is covered by the policy whether or not that damage is the result of
    faulty workmanship.
At paras. 42 and 43, it
    stated:

In light of this
    conclusion,
the
    remaining question
is whether, or to what extent, the appellants
    action is barred by operation of the
Limitations Act
.
As I have said, for reasons he explained, the motion judge did not
    address this issue.

Accordingly, for the reasons given, I would
    allow the appeal, set aside the order of the motion judge, and
return the question
    whether the appellants action is barred by reason of the
Limitations
    Act
to
    the motion judge for determination
. [emphasis added.]

Summary judgment motion: Part II - 2016

[36]

The motion judge released supplementary reasons for
    the summary judgment motion in May 2016 stating that the limitation period
    issue and the claim of breach of fiduciary duty against Muskoka raised
    significant credibility issues that were not appropriate to decide by way of
    summary judgment: 2016 ONSC 3488, 60 C.C.L.I. (5th) 159, at paras. 14-16. He
    dismissed the summary judgment motion and directed the action to proceed to
    trial. He stated that for the trial he would be requesting submissions with
    respect to the issue of to (sic) what damage is properly classified as
    resulting damage: at para. 19. That then led to the continued litigation of
    the coverage issue at trial.

[37]

Ultimately, the trial judge found that the
    Policys exclusions did not apply to deny coverage to Ms. Monk for the loss
    that she claimed. Farmers cross-appeals from those findings.

V.      THE ISSUE ON THE CROSS-APPEAL: DID
    THE TRIAL JUDGE ERR IN HOLDING THAT THE POLICY COVERED MOST OF MS. MONKS CLAIMED
    LOSS?

[38]

In its cross-appeal, Farmers submits that the
    trial judge erred by failing to apply the Faulty Workmanship and Property Being
    Worked On Exclusions to deny Ms. Monks claim.

Faulty Workmanship Exclusion

[39]

In its 2015 decision, this court held that
    resulting damage to insured property is covered by the policy whether or not
    that damage is the result of faulty workmanship: at para. 41. The following
    year the Supreme Court of Canada, in
Ledcor
    Construction Ltd. v. Northbridge Indemnity Insurance Co.
, 2016 SCC 37, [2016] 2 S.C.R. 23, held that a cost of making good
    faulty workmanship exclusion in a builders risk insurance policy excluded
    from coverage only the cost of redoing the faulty work contracted for: at
    paras. 4 and 5.

[40]

In the present case, the trial judge concluded
    that the cost of making good faulty material or workmanship language in the
    Faulty Workmanship Exclusion should be interpreted to mean the cost of re-doing
    the work which comprised the subject matter of the contract with Pleasantview.
    He held that all other damage properly fell within the scope of resulting
    damage: at para. 132. He went to hold that as Ms. Monks contract with
    Pleasantview did not require the contractor to install carpets, replace
    windows, doors or thermal pane glass units and exterior fixtures, the cost of
    the replacement of those items constitutes resulting damage and, subject to any
    other applicable policy exclusions, is covered by the Policy: at para. 137.

[41]

Farmers submits the trial judge made two
    reversible errors in reaching that conclusion: (i) he failed to apply this
    courts 2015 interpretation of the Faulty Workmanship Exclusion; and (ii) he
    erred in equating the reasonable expectations of a
Ledcor
-type builders risk policy with that of parties to a homeowners
    policy. I am not persuaded by either submission.

[42]

First, Farmers contends that when interpreting
    the Faulty Workmanship Exclusion in its 2015 decision, this court contrasted
    direct damage with resulting damage: at para. 36. This courts use of the
    term direct damage, Farmers argues, means that any damage caused by the
    direct application of a tool, such as an orbital sander, to a window would
    constitute direct damage and therefore be excluded from coverage, even though
    the contract did not call for the contractor to apply the tool to the window.

[43]

I do not accept that submission. It distorts the
    meaning of the 2015 decision. When that decision is read in its entirety,
    especially in light of the arguments advanced by the parties on that appeal, it
    is clear that this court equated direct damage with the cost of redoing the
    faulty work originally contracted for and then distinguished that cost from
    resulting damage.

[44]

Moreover, once Farmers misreading of the 2015
    decision is put to one side, much of the remainder of its written submissions
    on this issue amounts to nothing more than an attempt to interpret the Faulty
    Workmanship Exclusion as treating resulting damage as excluded damage, an
    interpretation specifically rejected by this court. Farmers did not seek leave
    to appeal the 2015 decision. No request was made for a five-person panel to
    hear the cross-appeal. Farmers is bound by the 2015 decision of this court.

[45]

Second, the trial judge followed the approach
    adopted in
Ledcor
to
    reach the conclusion that the cost of making good faulty material or
    workmanship in the Faulty Workmanship Exclusion only excluded from coverage
    the cost of redoing the faulty work Ms. Monk had contracted for with Pleasantview.
    Recognizing that the type of policy at issue in this case  a homeowners
    property insurance policy  differed from that in issue in
Ledcor
 a builders risk policy  the
    trial judge conducted an interpretative process analogous to that used in
Ledcor
. He considered: the reasonable
    expectations of the parties; the need to avoid unrealistic results; and the
    need to ensure an interpretation consistent with the interpretation of other
    insurance policies. In so doing, the trial judge appropriately applied the
    general rules of contract construction to the Policys language.

[46]

Farmers real complaint is that it disagrees
    with the trial judges conclusion about the reasonable expectations of the
    parties. It thinks it is wrong. I disagree. This is what the trial judge wrote
    about the reasonable expectations of the parties, at para. 131:

In my view, when Ms. Monk purchased her
    all-risk homeowners policy from Farmers her expectations aligned in many ways
    with the expectations of an insured who purchases an all-risk builders
    insurance policy. Both parties are purchasing broad coverage for their
    buildings. They are both looking for protection from a loss which is fortuitous
    to the insured. They are both seeking protection from damage caused by a third
    party. They are both looking for coverage which gives them stability, certainty
    and peace of mind. In the case of damages caused by faulty workmanship, a
    homeowner is no more interested in or able to engage in expensive and
    time-consuming litigation pending the completion of work than is a contractor.
    A homeowner expects to be covered for unexpected or resulting damages which are
    not directly related to the scope of his or her contract with a contractor. In
    the circumstances, a homeowner who purchases an all risk policy should be
    entitled to expect that the exclusion for faulty workmanship or for property
    while being worked on will be interpreted narrowly and the exception for
    resulting damage will receive a broad interpretation.

[47]

I see no error in that analysis. I agree with
    it.

Property Being Worked On Exclusion

[48]

In applying this exclusion to the particular
    facts of this case, the trial judge: (i) determined what property was included
    in property while being worked on by ascertaining the scope of work
    contracted for by Ms. Monk; then (ii) assessed what damage resulted from such
    process or work; and (iii) finally, determined what damage fell within the
    exception for resulting damage to other insured property. He found that the
    work Ms. Monk contracted for with Pleasantview comprised the restoration of all
    the wooden surfaces of the house, including the logs, board, batten, and frames
    and sashes of the doors and windows: at para. 149. Damage to that property
    constituted damage resulting from such process or work and was excluded from
    coverage: at para. 153. Consequently, the resulting damage to other insured
    property, which was not subject to the exclusion from coverage, was the damage
    to the thermalseal glass window units, the carpets, and exterior light fixtures:
    at para. 159.

[49]

Farmers challenges those findings on several
    grounds.

[50]

First, Farmers contends that the trial judge
    made a palpable and overriding error by finding that Pleasantview did not work
    directly on the glass panes. It contends that since the evidence showed that
    tools used by Pleasantview touched the window panes, any damage caused thereby
    was from such process or work and, therefore, not covered by the Policy. I do
    not accept this submission. Like Farmers submission in respect of the Faulty
    Workmanship Exclusion, it is based on Farmers misreading of judicial reasons.
    In para. 160 of his reasons, the trial judge stated:

It can be argued that since the court has
    found that restoration of the doors and windows was included within the scope of
    the contract, then it should also find that the damage to the glass thermoseal
    units should be included in the property while being worked on because these
    units comprised part of the doors and windows. I have decided against adopting
    such an interpretation.
Pleasantview was retained to refurbish and restore
    the exterior
wooden
portions of the house, and not any other portions of
    the house such as the light fixtures, door fixtures or glass. The scratching to
    the glass thermoseal units in the windows and doors resulted from
    Pleasantviews attempts to restore the wooden perimeter areas around the glass
    and not from any work carried out directly to the glass.
Exclusion clauses should receive a narrow interpretation and exceptions thereto
    should be interpreted broadly. The glass units should therefore be covered as
    resulting damage to other insured property. [emphasis added]

[51]

The trial judge obviously used the phrase not
    from any work carried out directly to the glass to mean that Pleasantview had
    not been contracted to work directly on the glass. The trial judge was not
    suggesting that Pleasantviews tools did not touch the glass panes. It is
    patent from his reasons that he was aware of such direct contact. The trial
    judge made no palpable and overriding error on this point.

[52]

Next, Farmers submits that the trial judge
    erred in limiting property while being worked on to the property Pleasantview
    was contracted to work on. I am not persuaded by that submission. Farmers
    cites no authority in support of that proposition. Moreover, if the meaning of
    property while being worked on was extended to cover any property beyond that
    subject to the contracted scope of work, little property would be left to fall
    into the exclusion  i.e. within the language, but resulting damage to other
    insured property is covered.

[53]

Third, Farmers argues that the trial judge
    erred in determining what property was being worked on. Specifically, Farmers
    contends that the trial judge made a reversible error meriting appellate intervention
    by differentiating between the wooden sashes of a window and the embedded glass
    pane, treating the former as property worked on and the latter not. I see no
    reversible error. This submission is simply a more fact-focused rehash of
    Farmers argument above that the trial judge improperly interpreted property while
    being worked on as that within the contracted scope of work. I rejected Farmers
    earlier argument; I would also reject this recasting of the same argument.

[54]

I see no palpable and overriding error in the
    trial judges findings about what fell within the category of property while
    being worked on and what property fell outside. I would not give effect to
    this ground of appeal.

Disposition of Farmers Cross-Appeal

[55]

For the reasons set out above, I am not
    persuaded that the trial judge erred in interpreting and applying the Faulty
    Workmanship and Property Being Worked On Exclusions to the circumstances of
    this case. Consequently, I would dismiss Farmers cross-appeal.

[56]

I shall now turn to the issue that this court,
    in its 2015 decision, identified as the only remaining issue for trial: whether
    Ms. Monks action was barred because of her delay in reporting the loss.

VI.     FIRST ISSUE ON THE APPEAL: DID THE
    TRIAL JUDGE ERR IN HIS FINDINGS OF FACT ABOUT WHEN MS. MONK FIRST NOTIFIED
    MUSKOKA INSURANCE OF HER LOSS?

The issue stated

[57]

A key issue in Ms. Monks claims against both
    Farmers and Muskoka Insurance concerned when she first notified them of her
    loss.

[58]

Ms. Monk testified that she noticed the damages
    caused by Pleasantviews work over a period of time: (i) carpet damage in late
    2008 and early 2009; (ii) scratches on glass panes and damages to exterior
    light fixtures in April or May 2009; (iii) the fogging of glass panes with the
    onset of the cold weather in the winter of 2009/2010; and (iv) the
    deterioration of the exterior doors during that winter.

[59]

There is no dispute that Ms. Monk advised a
    Muskoka Insurance representative, Marcia Bissell, on September 2, 2011 about
    the damages she contended Pleasantview had caused. However, Ms. Monk gave
    evidence that she had told Muskoka Insurance about the damages on three prior
    occasions: a January 2009 telephone conversation with Ms. Bissell in which she
    informed her of the carpet damage; a conversation with some other Muskoka
    representative in April or May 2009, when she told the person about the glass
    scratches; and a January 2010 telephone conversation with Ms. Bissell in which
    she advised of the fogging glass and deteriorating exterior doors. It was Ms.
    Monks evidence that in these conversations Muskoka Insurance informed her that
    the Policy would not cover such damage. Ms. Bissell denied that the three
    conversations ever occurred.

[60]

The trial judge preferred the evidence of Ms.
    Bissell to that of Ms. Monk. He held that the first time Ms. Monk spoke to
    Muskoka Insurance about the damage was on September 2, 2011: at para. 94.

[61]

Ms. Monk submits that the trial judge erred in
    reaching that conclusion. She acknowledges that the trial judge accurately
    stated the evidence. However, she contends the trial judge committed a palpable
    and overriding error by concluding, based on those facts, that the three
    conversations did not occur.

Analysis

[62]

Ms. Monk advances three reasons why the trial
    judge should have made a different credibility finding: (i) he did not properly
    assess the evidence; (ii) he erred in ruling inadmissible certain evidence from
    Ms. Monks partner, Mr. Way Lem; and (iii) the trial judges credibility
    finding resulted from a course of conduct by respondents counsel that created
    an animus against Ms. Monk.

Improper assessment of conflicting evidence

[63]

Appellate courts show great deference to
    findings of credibility made at trial, recognizing the special position of the
    trier of fact on matters of credibility, including the advantage enjoyed by the
    trial judge of seeing and hearing the evidence of witnesses:
R. v. W.(R.)
, [1992] 2 S.C.R. 122, at
    p. 131;
Kiskadee Ventures Ltd. v. 2164017 Ontario
    Ltd.
, 2016 ONCA 955, at para. 8. As stated in
R. v. Dinardo
, 2008 SCC 24, [2008] 1
    S.C.R. 788, at para. 26:
Rarely will the deficiencies
    in the trial judges credibility analysis, as expressed in the reasons for
    judgment, merit intervention on appeal.

[64]

This high degree of deference stems, in part,
    from the recognition that a
ssessing credibility is not
    a science: often it is very difficult for a trial judge to articulate with
    precision the complex intermingling of impressions that emerge after watching
    and listening to witnesses and attempting to reconcile the various versions of
    events:
R. v. Gagnon
, 2006
    SCC 17, [2006] 1 S.C.R. 621, at para. 20. It follows that
in respect of a finding of credibility by a trial judge, an appeal
    court must defer to the conclusions of the trial judge unless a palpable or
    overriding error can be shown. It is not enough that there is a difference of
    opinion with the trial judge:
Gagnon
, at para. 10.

[65]

Accordingly, where detailed reasons display a
    strong grasp of the evidence and arguments and offer a full explanation for the
    findings of fact required, an appellant seeking to reverse those findings must
    point to clear and significant errors in the fact-finding process articulated
    in those reasons, as credibility findings are particularly resistant to
    reversal on appeal:
Peart v. Peel Regional Police
    Services Board
, 217 O.A.C. 269(C.A.), leave to
    appeal refused, [2007] S.C.C.A. No. 10, at para. 157.

[66]

In the present case, the trial judge gave
    extensive reasons to explain why he preferred the evidence of Ms. Bissell over
    that of Ms. Monk: at paras. 94 to 109. He considered the evidence of Ms. Monk
    and Ms. Bissell, including inconsistencies therein, written communications
    authored by them both, and the documentary evidence contained in Muskokas
    files. As well, the trial judge considered the evidence given by Ms. Shirley
    Macdonald, a former Muskoka employee, about a conversation she overheard,
    perhaps in mid-2011.

[67]

Amongst the numerous reasons the trial judge
    gave for rejecting Ms. Monks version of events was the lack of any reference
    by her to any earlier reports of loss to Muskoka Insurance in her email
    correspondence with Ms. Bissell following the September 2, 2011 meeting.
    Indeed, Ms. Bissell had emailed Ms. Monk on September 3, 2011, following their
    meeting, questioning the extent to which the Policy might cover any damage. The
    tenor of that email was that Ms. Monks disclosure of a loss the day before was
    news to Ms. Bissell. Ms. Monk sent a detailed responding email on September 7,
    2011. Nowhere in it did Ms. Monk hint that she had reported the loss on three
    prior occasions to Muskoka Insurance. It is understandable that the trial judge
    would treat this as a telling factor in his credibility analysis.

[68]

Ms. Monk asks this court, in effect, to perform
    a fresh assessment and weighing of the evidence in order to reach a different
    credibility finding. In my view, the record does not reveal that the trial judge
    made an error of law or principle or a clear and manifest error in the
    appreciation of the evidence. In those circumstances, I would not give effect
    to this submission.

Exclusion of certain evidence of Mr. Lem

[69]

Ms. Monk called her partner, Mr. Lem, as a
    witness. During his examination-in-chief, he was asked several questions about
    information provided by Lynn concerning insurance coverage issues and what
    information he had that the scratches [on the windows] were reported to the
    insurance broker. Mr. Lem testified that the only information he had was that
    which Ms. Monk had told him. He continued by stating that it sickened me
    because we werent covered by anything. Thats my understanding.

[70]

Farmers counsel objected to this line of
    questioning on the basis that it was inadmissible hearsay as Mr. Lem had no
    direct knowledge about whether Ms. Monk had reported any loss to Muskoka
    Insurance, which was a key disputed issue in the action. The trial judge
    sustained the objection. Ms. Monk submits he erred in so doing.

[71]

I see no error. Whether Ms. Monk had reported
    her loss to Muskoka Insurance prior to September, 2011 was a material fact in
    issue. Mr. Lem had no personal knowledge of the issue  for example, he did not
    overhear Ms. Monk making a telephone call to Muskoka Insurance. His only source
    of information on the matter came from Ms. Monk, who had already testified. It
    is clear Ms. Monk sought to adduce Mr. Lems evidence for the purpose of
    establishing the truth of her evidence that she had reported the loss to
    Muskoka Insurance and that Muskoka Insurance had advised she had no coverage.
    The proposed use of his evidence clearly was hearsay and Ms. Monk did not
    demonstrate any need for Mr. Lem to testify about what she had told him
    out-of-court. The trial judge did not err in excluding the evidence.

Conduct of defence counsel

[72]

Finally, Ms. Monk submits that the trial judges
    finding that she did not report the loss to Muskoka Insurance until September
    2, 2011 was tainted and should be set aside because the trial judge was
    subjected to nine days of constant, negative, belittling comments and
    suggestions from
two
defence counsel who took turns hacking away at
    Ms. Monks character. (emphasis in original).  This created an animus
    against her.

[73]

I would not give any effect to this submission.
    First, Ms. Monk does not submit that the trial judge fell into error by
    permitting respondents counsel to conduct cross-examinations that were unfair
    to her as a witness. Second, a review of the transcripts of the cross-examination
    of Ms. Monk discloses no objection by her counsel that she was being treated
    unfairly by respondents counsel. Finally, no such suggestion was made to the
    trial judge by Ms. Monks counsel in his closing submissions.

Conclusion

[74]

For these reasons, I see no reversible error in
    the trial judges credibility finding preferring the evidence of Ms. Bissell
    over that of Ms. Monk and, as a result, finding that Ms. Monk did not contact
    Muskoka Insurance regarding a loss prior to September 2, 2011. I would not give
    effect to this ground of appeal.

VII.    THIRD ISSUE: CLAIM FOR RELIEF FROM
    FORFEITURE

A.      The issue stated

[75]

In its statement of defence, Farmers asserted
    two time-related defences. First, it pleaded that Ms. Monks claim was
    statute-barred by reason of the two-year limitation period in the
Limitations Act, 2002
, S.O. 2002, c.
    24, Sch. B
. At trial, Farmers abandoned that defence.
    Instead, it relied on the defence that Ms. Monk failed to report the damage
    forthwith and provide a proof of loss as soon as practicable, as required
    by Statutory Condition 6 of the Policy. That condition states, in part:

6. Requirements
    After Loss

(1) Upon the occurrence of any loss of or
    damage to the insured property, the Insured shall, if the loss or damage is
    covered by the contract

(a)
forthwith
give notice thereof in writing to the Insurer

(b) deliver
as
    soon as practicable
to the Insurer a proof of loss
    verified by a statutory declaration. [Emphasis added.]

[76]

Ms. Monk sought relief from forfeiture pursuant
    to s. 129 of the
Insurance Act
, R.S.O. 1990, c. I.8, which states:

Where there has been imperfect compliance with
    a statutory condition as to the proof of loss to be given by the insured or
    other matter or thing required to be done or omitted by the insured with
    respect to the loss and a consequent forfeiture or avoidance of the insurance
    in whole or in part and the court considers it inequitable that the insurance
    should be forfeited or avoided on that ground, the court may relieve against
    the forfeiture or avoidance on such terms as it considers just.

[77]

The purpose of allowing relief from forfeiture
    in insurance cases is to prevent hardship to policy beneficiaries where there
    has been a failure to comply with a condition for receipt of insurance proceeds
    and where leniency in respect of strict compliance with the condition will not
    result in prejudice to the insurer:
Falk Bros.
    Industries Ltd. v. Elance Steel Fabricating Co.
,
    [1989] 2 S.C.R. 778, at p. 783.

[78]

The power to grant relief from forfeiture is a
    discretionary one. An appellate court is not at liberty to substitute its own
    discretion for that already exercised by the judge of first instance. Appellate
    interference requires the appellant to demonstrate that the judge below:
    exercised his or her discretion on a wrong principle of law; failed to take
    into consideration a major element of the case; disregarded, misapprehended or
    failed to appreciate relevant evidence; or made a finding or drew an inference
    not reasonably supported by the evidence:
Cervo v.
    State Farm Mutual Automobile Insurance Co.
(2006),
    83 O.R. (3d) 205 (C.A.), at paras. 56, 79 and 80.

[79]

The principles regarding relief from forfeiture
    in the circumstances of a claim under an insurance policy were canvassed at
    length by this court in
Kozel v. The Personal
    Insurance Company
, 2014 ONCA 130, 119 O.R. (3d) 55.
Kozel
summarized the
    principles as follows:

(i)

Relief from forfeiture under s. 129 of the
Insurance
    Act
is available where there has been imperfect compliance with a
    statutory condition as to the proof of loss to be given by the insured or other
    matter or thing required to be done or omitted by the insured with respect to
    the loss, thereby restricting the availability of the section to instances of
    imperfect compliance with terms of a policy after a loss: at para. 58;

(ii)

Relief from forfeiture pursuant to s. 98 of the
Courts
    of Justice Act
, R.S.O. 1990, c. C.43, is available to contracts regulated
    by the
Insurance Act
: at para. 57;

(iii)

CJA
s. 98
    generally operates where the breach of the policy occurred before the loss took
    place: at para. 58;

(iv)

Although relief under the
Insurance Act
s. 129 and
CJA
s. 98 are not available where the breach consists of non-compliance with a
    condition precedent to coverage, a court should find that an insureds breach
    constitutes noncompliance with a condition precedent only in rare cases where
    the breach is substantial and prejudices the insurer. In all other instances,
    the breach will be deemed imperfect compliance, and relief against forfeiture
    will be available: at paras. 33 and 50;

(v)

Where relief from forfeiture is available, an
    insured must still make three showings  that his or her conduct was
    reasonable, that the breach was not grave, and that there is a disparity
    between the value of the property forfeited and the damage caused by the breach
     in order to prevail: at paras. 51 and 59. This three-element test often is
    referred to as the 
Saskatchewan River
or 
Liscumb
 test, from two of the cases in which it was articulated,
Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co.
, [1994] 2 S.C.R. 490 and
Liscumb v. Provenzano
(1985), 51
    O.R. (2d) 129, at p. 137, affirmed (1986), 55 O.R. (2d) 404n (C.A.).

[80]

The trial judge held that Ms. Monk breached
    Statutory Condition No. 6 by failing to give Farmers notice of her damage
    forthwith: at para. 194. He regarded her failure to give timely notice of the
    loss as a matter of imperfect compliance with the Policy, entitling her to
    claim relief from forfeiture under the
Insurance
    Act
s. 129: at para. 208. However, the trial judge
    found that Ms. Monk was not entitled to relief from forfeiture because her
    conduct was not reasonable, Farmers was prejudiced by her conduct, and while
    Ms. Monk stood to forfeit a significant amount of money, the prejudice to
    Farmers from lack of timely notice was also significant: at paras. 210-222.

[81]

Ms. Monk appeals that conclusion. She
    acknowledges that the trial judge identified the proper test for relief from
    forfeiture. However, she contends the trial judge erred in the findings he made
    for each of the three elements of the test. I shall consider each of the
    grounds of appeal advanced by Ms. Monk.

B.      Analysis

The conduct of the insured

[82]

The reasonableness part of the test requires a
    court to consider the nature of the breach, what caused it and what, if
    anything, the insured attempted to do about it. One circumstance is whether the
    conduct of the defaulting party was willful. All of the circumstances,
    including those that go to explain the act or omission that caused the lapse or
    forfeiture of the policy, should be taken into account. It is only by
    considering the relevant background that the reasonableness of the insured's
    conduct can be realistically considered:
Williams
    Estate v. Paul Revere Life Insurance Co.
(1997),
    34 O.R. (3d) 161 (C.A.), at p. 175;
1497777 Ontario
    Inc. v. Leons Furniture Ltd.
(2003), 67 O.R. (3d)
    206 (C.A.), leave to appeal refused, [2003] S.C.C.A. No. 506, at para. 72.

[83]

Three factual findings underpinned the trial
    judges conclusion that Ms. Monks delay in reporting the loss was not
    reasonable: (i) although damage was first noticed in late 2008, and then
    through 2009 and 2010, Ms. Monk failed to inform the insurer about any damage
    until her September 2, 2011 conversation with Muskoka Insurance; (ii) she did
    not speak to anyone at Pleasantview about the damage until late July, 2011,
    more than 2.5 years after she began to notice the damage; and (iii) after the
    first indication on September 8, 2011 that Farmers would deny coverage, Ms.
    Monk attempted to mislead the insurer by taking the position that she did not
    notice the damage until January 2010.

[84]

Ms. Monk advances two main submissions. First,
    she contends that once the trial judge had concluded that her delay in
    reporting the loss amounted to imperfect compliance, within the meaning of the
Insurance Act
s. 129, she thereby
    became entitled to relief from forfeiture. I see no merit in that argument. The
    case law clearly stands to the contrary. As a matter of law, the
    characterization of the nature of the insureds breach of contract as
    imperfect compliance opens the door for the insured to assert a claim for
    relief from forfeiture under the
Insurance Act
s. 129. Having opened the door to ask for relief, it remains for
    the insured to demonstrate, on the facts of the specific case, entitlement to
    relief from forfeiture.

[85]

Second, Ms. Monk argues, in effect, that this
    court should take a different view of the facts that the motion judge found
    amounted to unreasonable conduct by her. That is not our job. Each of the
    findings made by the trial judge was available on the evidence. Her delay in
    reporting her loss amounted to just about two and three-quarter years from the
    time she observed the first loss  the damage to the carpets  a considerable
    passage of time by any measure.

[86]

At trial, Ms. Monk took the position that she
    had not delayed reporting her loss as she had reported it on three occasions
    prior to September 2011. The trial judge did not accept her evidence on that
    point. As mentioned in paras. 66-68 above, Ms. Monk has not demonstrated any
    palpable or overriding error by the trial judge in rejecting her evidence of
    prior reporting. Nor do I see any reversible error in his holding that Ms. Monk
    had not provided the court with a reasonable explanation for her failure to
    pursue the issue of the damages to her house with the contractor: at para. 212.
    Accordingly, I see no basis for appellate interference with his finding that
    Ms. Monk failed to provide a reasonable explanation for her failure to provide
    notice of her potential claim forthwith, and she has attempted to escape the
    consequences of her late notice by attempting to mislead her insurer with
    respect to the date she discovered her damages: at para. 214.

[87]

Does leaving undisturbed the trial judges
    finding that Ms. Monks conduct was unreasonable and willful conclude the
    consideration of this ground of appeal? Is it necessary to consider the trial
    judges findings on the remaining two elements of the test?

[88]

Some case law suggests that an insured must
    establish each of the three elements of the
Saskatchewan River/Liscumb
test to obtain relief from forfeiture. For example, in
Williams Estate v. Paul Revere Life Insurance Co.
, Osborne J.A. stated, at p. 175:

It is clear from
Saskatchewan River
    Bungalows Ltd.
that to succeed in obtaining relief from forfeiture,
    the insured must pass all three parts of the
Liscumb
test. Major J. did not balance the
Liscumb
factors. At least with respect to the
Liscumb
reasonableness requirement, he proceeded on a "one strike and you're
    out" basis. He held that the applicant, having failed the reasonable
    conduct test, could not get relief from forfeiture.

See also:
Koutcherenko v.
    Queensway Homes Inc.
, 2013 ONSC 3350 (Div. Ct.), at para. 21.

[89]

Other cases have limited their analysis of a
    claim for relief from forfeiture to the reasonableness of the claimants
    conduct without expressly stating whether all three elements of the test must
    be met:
Saskatchewan River
, at p. 505;
Kozel
,
    at para. 68;
Day Estate v. Pandurevic
, 2008 ONCA 266, 61 C.C.L.I.
    (4th) 50, leave to appeal to SCC refused, 256 O.A.C. 391n, at para. 4.

[90]

More recently, this court in
Scicluna v.
    Solstice Two Limited
, 2018 ONCA 176, at para. 29, did not accept that a
    claimant must satisfy each of the three elements of the
Saskatchewan River
test in order to obtain relief from forfeiture. However, the
Scicluna
decision did not refer to the earlier decision of this court in
Paul Revere
,
    which took a different view.

[91]

Although
Saskatchewan River
could be
    read as leaving the point unresolved, I think the better view is that expressed
    in the
Scicluna
case. I reach that conclusion because in
Saskatchewan
    River
the Supreme Court drew upon the decision of the House of Lords in
Shiloh
    Spinners Ltd. v. Harding
, [1973] A.C. 691 (H.L.), in which that court
    reaffirmed the right of courts of equity in appropriate and limited cases to
    relieve against forfeiture for breach of covenant or condition: at p. 723. The
    House of Lords stated, at pp. 723-724:

The word appropriate involves consideration of the conduct of
    the applicant for relief, in particular whether his default was wilful, of the
    gravity of the breaches, and of the disparity between the value of the property
    of which forfeiture is claimed as compared with the damage caused by the
    breach. (emphasis added)

[92]

In
Saskatchewan River
, the Supreme
    Court of Canada closely followed
Shiloh Spinners
formulation of the
    test for relief from forfeiture stating, at para. 32:

T
he power to grant relief against
    forfeiture is an equitable remedy and is purely discretionary. The
factors
to be considered by the Court in the exercise of its discretion are the conduct
    of the applicant, the gravity of the breaches, and the disparity between the
    value of the property forfeited and the damage caused by the breach. (emphasis
    added)

[93]

Reading
Saskatchewan River
together
    with
Shiloh Spinners
, two points emerge. First, the three-element test
    for relief from forfeiture requires a court to consider and balance all three
    elements to determine whether equitable relief should be granted: see also,
Snells
    Principles of Equity
(32
nd
ed., 2010), at p. 419. Second, the
    examination of the reasonableness of the breaching partys conduct lies at the
    heart of the relief from forfeiture analysis. A party whose conduct is not seen
    as reasonable will face great difficulty in obtaining relief from forfeiture:
Ontario
    (Attorney General) v. McDougall
, 2011 ONCA 363, at para. 90.

[94]

Ms. Monks failure to demonstrate an error in
    principle or overriding and palpable error of fact by the trial judge in his
    conclusion that her delay in reporting the loss was unreasonable weighs very
    heavily against her effort to overturn the denial of her claim for relief from
    forfeiture. However, I must consider the trial judges treatment of the other
    two factors.

Gravity of the breach

[95]

In assessing the gravity of the breach, a court
    looks at both the nature of the breach itself and the impact of that breach on
    the contractual rights of the other party:
Kozel
, at para. 67.

[96]

The trial judge held that Ms. Monks delay in
    reporting her loss resulted in Farmers suffering several kinds of prejudice,
    specifically the loss of : (i) the ability to investigate the circumstances and
    value of the loss at the date of occurrence; (ii) the ability to take early
    remedial action to reduce the scope of the loss; and (iii) the right to
    maintain a subrogated claim against the at-fault contractor, Pleasantview, as
    that action likely was statute-barred by the time Ms. Monk reported her loss:
    at paras. 217-219.

[97]

Ms. Monk argues that the trial judge committed
    two errors in reaching those conclusions. First, in respect of the impact of
    her delay on Farmers ability to investigate the circumstances of the loss and
    take early mitigation steps, she contends the trial judge overlooked the
    evidence of Farmers adjuster, Mr. Gary South. In his November 1, 2011 report,
    Mr. South expressed the view that, based on his inspection of Ms. Monks house,
    the damage would qualify as resultant damage to insured property under the
    Policy. Mr. South did not believe that the cost of repair had increased due to
    the delay in reporting the loss.

[98]

I am persuaded that the trial judges failure to
    consider this evidence from Mr. South calls into question the soundness of his
    conclusion that Ms. Monks delay prejudiced Farmers ability to investigate the
    circumstances and value of the loss at the date of occurrence. Mr. Souths
    evidence strongly indicates that it did not. I am also persuaded that the
    evidence undermines the trial judges conclusion that the delay affected
    Farmers ability to take early remedial action to reduce the scope of the loss.
    In his report, Mr. South wrote: The damages we have seen even though rotting
    has occurred would still in our opinion require replacement of the doors and or
    windows as opposed to a repair. This part of his report strongly suggests that
    Ms. Monks delay in reporting did not affect the scope of her loss.

[99]

Ms. Monk further contends that the trial judge
    unreasonably concluded that her delay prejudiced Farmers right to subrogate
    against Pleasantview. I disagree.

[100]

The trial judge relied on the reasons of this court in
Schmitz v. Lombard General Insurance Company of Canada
, 2014 ONCA 88, 118 O.R. (3d) 694, leave to appeal refused, [2014]
    S.C.C.A. No. 143, to observe that one means by which an insurer can protect its
    interests is through a provision requiring the insured to provide timely notice
    to the insurer when she knew or ought to have known she had a loss. In his
    view, Ms. Monks breach of the statutory notice condition prevented Farmers
    from seeking timely subrogation of her loss against Pleasantview: at para. 219.
    That conclusion was supported by the evidence.

[101]

Ms. Monk did not put Pleasantview on notice of a potential claim
    until July 28, 2011. She commenced an action against Pleasantview on November
    14, 2011, the same day she sued Farmers. Pleasantview filed a December 12,
    2011 statement of defence in which it asserted a limitations defence. According
    to Ms. Monk, in late 2008 or very early 2009 she told Pleasantview that she was
    not satisfied with its efforts to clean the stained carpets and she refused to
    pay the final invoice. Pleasantview did not return to the job, nor at that time
    did it promise to repair any of the damage. Those circumstances provided
    Pleasantview with a strong basis to assert that Ms. Monks November 2011 action
    against it was statute-barred.

[102]

An insurers subrogated claim is subject to the same defences that
    the third party could have raised in an action brought by the insured: Barbara
    Billingsley,
General Principles of Canadian Insurance Law,
2nd ed
    (Toronto: LexisNexis, 2014), at p. 351. Ms. Monks lengthy delay in reporting
    her loss, which led to Pleasantview asserting a limitations defence, undermined
    the ability of Farmers to advance a subrogated claim in the event it
    indemnified her for the loss. Accordingly, the trial judges finding on this
    point was reasonable and based on the evidence.

[103]

As a result, notwithstanding the trial judges error in overlooking
    the report of Mr. South, his conclusion that Ms. Monks delay caused prejudice
    to Farmers ability to subrogate was reasonable.

Disparity

[104]

The third factor a court must consider when assessing a claim for
    relief from forfeiture is the disparity between the value of the property
    forfeited and the damage caused by the breach. Examining this factor requires a
    court to conduct a kind of proportionality analysis which, in an insurance
    case, involves comparing the disparity between the loss of coverage and the
    extent of the damage caused by the insureds breach:
Kozel
, at para. 69.

[105]

The trial judge acknowledged that the property forfeited by Ms. Monk
    by reason of her breach of contract was significant  approximately $100,000.
    At the same time, he held that: Farmers may very well have been able to take
    steps or make arrangements with Pleasantview to recover or mitigate its loss if
    it had received timely notice of the claim: at para. 222.

[106]

Ms. Monk submits that pursuing Pleasantview earlier would have
    benefitted no one. I do not find that submission persuasive. Timely reporting
    by Ms. Monk would have enabled Farmers to consider steps against Pleasantview
    unburdened by the ability of the contractor to advance a strong limitations
    defence.

Conclusion

[107]

The trial judge applied the correct principles in considering Ms.
    Monks request for relief from forfeiture. Although I conclude that some of his
    findings on the gravity of the breach were not supported by the evidence, his ultimate
    finding of prejudice was supported, as were his holdings regarding the
    insureds unreasonable conduct and the element of disparity. The trial judge
    made strong adverse findings of credibility against Ms. Monk and found that she
    attempted to escape the consequences of her late notice by attempting to
    mislead her insurer with respect to the date she discovered her damages: at
    para. 214. He evidently found that her default was willful, in the sense that
    term is used in the relief from forfeiture cases. In light of those findings, this
    is one of those cases where a party whose conduct is not seen as reasonable by
    the trial judge cannot hope to obtain relief from forfeiture:
Ontario
    (Attorney General) v. McDougall
, at para. 90. Accordingly, I see no basis
    for appellate intervention in his discretionary conclusion that Ms. Monk was
    not entitled to relief from forfeiture. I would not give effect to this ground
    of appeal.

[108]

As a result, I would dismiss Ms. Monks appeal.

VIII.   FOURTH ISSUE: THE TRIAL JUDGES
    ASSESSMENT OF DAMAGES

[109]

Nevertheless, for the sake of completeness, I will address Ms.
    Monks final ground of appeal, which concerns the trial judges assessment of
    damages.

[110]

At trial, Ms. Monk sought damages under the Policy in the amount of
    $124,448.47. The trial judge assessed her damages at $86,320.70, made up of the
    replacement costs for: carpets: $15,576.32; exterior lights: $1,501.64; door
    hardware: $868.88; and, windows and doors: $68,373.86.

[111]

The difference between Ms. Monks ask and the trial judges
    assessment turns on the replacement costs for windows and doors. Ms. Monk
    relied on the 2016 replacement cost she incurred, adjusted downward to remove
    the price of upgrades. The trial judge based his assessment on two 2011
    estimates submitted by Ms. Monk to Farmers. He chose the midpoint between her
    two 2011 estimates as representing the fair and reasonable cost for replacing
    the windows and doors.

[112]

Ms. Monk submits the trial judge erred in using 2011 replacement
    costs. As she was unable to afford replacing the doors and windows until 2016 
    she was spending money on other projects in and around her house  she contends
    the 2016 replacement costs were the more appropriate ones to use.

[113]

I do not accept this submission. The valuation of a loss is made in
    accordance with the terms of the Policy, not Ms. Monks ability to fund the
    replacement of damaged property at any particular time. The parties did not
    make submissions on the settlement provisions of the Policy, but they are
    clear: the insurer was not liable beyond the actual cash value of the property
at the time any loss or damage occurs
(emphasis added).
    Under the Policy, actual cash value takes into account such things as the
    cost of replacement less any depreciation. Given that Policy language, I see no
    reversible error in the trial judge assessing damages using the 2011 estimates
    submitted by Ms. Monk to Farmers in October 2011.

IX.     FIFTH ISSUE: THE TRIAL JUDGES AWARD
    OF COSTS

[114]

Finally, Ms. Monk seeks leave to appeal the trial judges awards of
    costs.

[115]

Although the trial judge observed that the respondents made a
    compelling case for substantial indemnity costs in light of Ms. Monks
    unsupported allegations of bad faith and breach of fiduciary duty, he concluded
    that given the modest claim for damages he would not fix costs using that
    elevated scale: To do so would have the effect of requiring [Ms. Monk] to pay
    costs totalling more than four times the value of the claim: 2017 ONSC 4511
    (the Costs Award), at para. 29. Instead, he awarded partial indemnity costs
    fixed in the amount of $175,000 to Farmers and $115,000 to Muskoka Insurance.

[116]

Ms. Monk seeks leave to appeal those awards. The crux of her
    submission is that the trial judge ignored her reasonable expectation that if
    her action failed, her costs exposure would not exceed the amount of her loss.

[117]

I see no merit in that submission. Much could be said about the time
    it took to adjudicate this action  5.5 years  and the attendant costs. Suffice
    it to say that from the start it was clear that the upper limit for recovery
    was in the neighbourhood of $125,000. Yet, from the materials filed on this
    appeal, it appears that the parties burned through close to half a million
    dollars in legal costs through the end of trial. The expenditure of such
    amounts on a modest claim does not reflect rational economic decision-making,
    by any party.

[118]

Our costs jurisprudence does not cap a plaintiffs reasonable
    expectation about potential cost exposure at the amount of her claim. The
    amount claimed is only one of several factors that a court takes into account
    when assessing costs: r. 57.01(1)(a) of the
Rules
    of Civil Procedure
.

[119]

In the present case, the most significant factor regarding Ms.
    Monks reasonable expectations about trial costs was the 2015 decision of this
    court. In granting Ms. Monks appeal from the summary judgment dismissing her
    action, this court awarded her costs of $90,000. As the trial judge noted, she
    had actually asked this court to award her partial indemnity costs of $125,000:
    Costs Award, at para. 19. At that point, it should have been clear to Ms. Monk
    that continuing to trial  in this case a 9-day trial  would create potential
    exposure to legal fees far in excess of her claim.

[120]

That said, in assessing the reasonableness of the trial costs, the
    trial judge erred by failing to take into account the impact of the 2015
    decision of this court on the parties reasonable expectations of the costs of
    the further hearing directed by this court. After interpreting the provisions
    of the Policy, this court identified the remaining question as whether Ms.
    Monks action was time-barred and returned that question to the motion judge
    for determination: at paras. 42 and 43. In its costs endorsement, this court
    noted the respondents position that the costs should be left to the motion
    judge as there remains a live issue as to whether the claim is time-barred:
    2016 ONCA 181, at para. 3.

[121]

Given the directions by this court in its 2015 decision, I think Ms.
    Monk could reasonably expect that her cost exposure at trial would be confined
    to the remaining question, as identified by this court. Yet, the trial judge
    expanded the issues for determination beyond those directed by this court to
    include the issue of what damage is properly classified as resulting
    damage, resulting, in practical terms, to the re-litigation of the coverage
    issue both at trial and on Farmers cross-appeal.

[122]

In my view, that resulted in the trial judge awarding costs in
    excess of Ms. Monks reasonable expectations. Based on my review of the trial
    transcripts, I conclude that had the trial judge limited the remaining question
    to that directed by this court in 2015, trial time would have been reduced by
    approximately one-third. Consequently, I would grant Ms. Monk leave to appeal
    the award of trial costs and allow her appeal to the extent of reducing the
    trial judges awards to Farmers and Muskoka Insurance by one-third. That would
    result in cost awards to Farmers and Muskoka Insurance
of
    $116,550 and $76,590 respectively
.

X.      DISPOSITION

[123]

For the reasons set out above, I would dismiss Ms. Monks appeal. I
    would grant her leave to appeal the trial judges cost awards, and I would vary
    the awards of the costs of the action to Farmers and Muskoka Insurance in
    paras. 2 and 3 of the judgment to $116,550 and $76,590 respectively.

[124]

I would dismiss Farmers cross-appeal.

[125]

The parties could not agree on the costs of the appeal. Success
    between the parties on the key issues was divided. On the cross-appeal,
    Farmers, with the active support of Muskoka Insurance, sought to set aside the
    trial judges finding of coverage. Although Muskoka Insurance did not file its
    own cross-appeal, its support of Farmers was not of the me-too variety. Instead,
    it filed a full-length factum that to a great extent duplicated the submissions
    contained in Farmers factum. On her appeal, Ms. Monk sought to revisit the
    trial judges findings regarding her compliance with the statutory conditions
    and relief from forfeiture. Both the appeal and cross-appeal failed. In those
    circumstances, I regard the costs of the appeal and cross-appeal as a wash as
    between Farmers and Muskoka Insurance, on the one hand, and Ms. Monk, on the
    other.

[126]

However, as explained, I would allow Ms. Monks cost appeal in part.
    Given her partial success on the costs appeal, I would award Ms. Monk costs of
    that appeal in the amount of $10,000, payable $5,000 by Farmers and $5,000 by
    Muskoka Insurance.

Released: KF JUL 19 2019

David
    Brown J.A.

I
    agree. K. Feldman J.A.

I
    agree. B.W. Miller J.A.


