Coquitlam landlord’s lawsuit against insurance broker dismissed after fire destroys building

A Coquitlam landlord who sued her insurance broker after a fire destroyed a building on Clarke Road has lost her case, with a BC Supreme Court judge finding she failed to prove the broker was negligent or that she suffered the financial losses claimed.

In a Sept. 25 decision, Justice Simon Coval dismissed Kulwinder Kaur Sanghera’s lawsuit against Gold Key Insurance Services Ltd., which she accused of failing to obtain appropriate insurance for her commercial rental property at 513 Clarke Rd.

The dispute stemmed from a March 2014 fire that destroyed most of a two-storey house that had been converted from a residential rental property into part of an automotive repair business.

The building had been insured under a residential dwelling policy issued by Wawanesa Mutual Insurance Company, which subsequently denied coverage because the property was being used commercially.

Sanghera and her husband, Jagjit Sanghera, alleged they had informed their longtime insurance representative, Sukhdarshan Sandhu, about the property’s rezoning and change in tenancy years before the fire.

They claimed the lack of appropriate insurance cost them approximately $70,000 in lost rental income and another $100,000 through a reduced sale price for the property.

However, Coval found the evidence did not establish that Sandhu had been informed of the changes or failed in his professional responsibilities.

“I agree with Gold Key that the Sangheras have proven neither a breach of Mr. Sandhu’s duty of care nor any losses from their lack of insurance coverage,” Coval said.

According to the judgment, the Sangheras purchased the property around 2003 and initially rented the two-storey house to a family. They also owned the adjacent property, along with several other residential and commercial properties in Coquitlam, including a pizza restaurant all on the same stretch on Clarke Road.

In April 2006, Sandhu arranged insurance for 513 Clarke Road property, adding it to an existing residential rental policy covering another property on Farrow Street. Later that year, it was rezoned for commercial use.

The residential tenants remained for approximately six months before the property was leased to an automotive business already operating next door.

By March 2007, Trinity Auto Center was using the building as an office, storage facility and automotive repair shop.

The Sangheras maintained that Jagjit had called Sandhu twice to inform him of the changes, once after learning about the rezoning and again when the automotive business moved into the building.

Jagjit testified that Sandhu had agreed to update the insurance coverage and take photographs for a new application.

Sandhu denied receiving either call.

The Sangheras also argued the commercial use should have been apparent to Sandhu because he regularly visited their nearby pizza restaurant and drove past the property.

But Coval rejected that argument, finding the building’s exterior still resembled a residential home and that a passerby could reasonably have assumed the automotive activity belonged exclusively to the neighbouring property.

Following the March 2014 fire, Sandhu submitted an insurance claim to Wawanesa.

The insurer denied coverage on March 21, explaining that it had not been notified the building was being rented to a commercial enterprise.

Wawanesa stated that it would not have insured the property had it known it was being used as an automotive dealership and repair facility.

The company subsequently voided the combined insurance policy for the Clarke Road and Farrow Street properties, retroactive to March 2007.

It returned $11,445 in premiums paid since the change in use.

Sanghera originally sued both Wawanesa and Gold Key, but agreed to dismiss her claim against the insurance company in February 2024.

The case against Gold Key proceeded to trial in New Westminster in September 2026.

In dismissing the lawsuit, Coval pointed to several inconsistencies in the Sangheras’ testimony about whether they had informed Sandhu of the property’s commercial use.

Jagjit testified at trial that he called Sandhu twice, but had previously stated during an examination for discovery that he had only made one call.

Kulwinder also gave conflicting accounts about when the conversation occurred and whether her husband used a cellphone or landline.

Coval found it unlikely Sandhu would have knowingly failed to update the policy after learning about the commercial tenancy, particularly because the more expensive commercial insurance would have generated higher premiums and commissions.

The judge also concluded that Jagjit, as an experienced commercial and residential property owner, likely understood the policy had never been changed.

“I therefore find that he knew that the policy change was never made,” Coval said.

The judge accepted Sandhu’s evidence that, following the fire, Jagjit questioned why commercial coverage was necessary when the building itself remained a residential house.

Coval concluded that the remark explained why the Sangheras had not switched to more expensive commercial coverage.

The court also rejected an argument that Sandhu should have regularly inspected the property or asked about changes during annual policy renewals, noting the allegation had not been properly raised in the lawsuit and would have required expert evidence about the standards expected of insurance representatives.

The court separately found that the Sangheras failed to establish they had suffered financial losses because of the insurance dispute.

At the time of the fire, the family was in the process of selling both Clarke Road properties for approximately $7 million. Jagjit testified that the buyer subsequently negotiated a reduction of between $90,000 and $100,000 because of the destroyed building.

The couple also claimed lost rental income of $5,775 per month for six to nine months.

However, the court heard that the automotive business had already stopped paying rent for several months before the fire because of financial difficulties.

The Sangheras also failed to produce documents supporting their alleged losses, including the commercial lease, rental payment records, purchase and sale agreements, communications with the buyer and repair invoices.

Coval said those records were necessary to determine whether the fire actually resulted in a lower sale price or lost rental income.

The judge noted that the buyer might not have reduced the purchase price at all if the property was intended for redevelopment and the existing building was not needed.

“It would be unfair to Gold Key to find the plaintiff has proven its alleged losses having failed to fulfill its procedural obligation to disclose all these key documents,” Coval said.

The lawsuit was dismissed, with Gold Key awarded legal costs, subject to any further submissions from the parties.