The Delta sawmill fire may be the latest setback in a string of challenges facing San Group. | Shane MacKichan
A massive Delta sawmill fire fuels a $31M legal fight as insurers allege arson and companies push back in court.
Flames, Fallout, and a Fight for Millions
It started in the dark hours of April 8, 2024. Fire crews rushed to a sawmill in Delta, B.C., as flames tore through the site. Within hours, a large section of the mill was destroyed.
Now, that fire has ignited a legal battle worth nearly $31 million. And the stakes couldn’t be higher.
Insurer Alleges Arson
At the centre of the dispute is Lloyd’s Underwriters. The insurer refused to pay the claim, arguing the fire was no accident. Instead, it claims the blaze was deliberately set.
According to court filings, Lloyd’s alleges the owners of the mill were involved in the fire. The company says the act was carried out either directly or with help from others.
However, the mill’s owners strongly reject that claim. They argue there is no proof of arson. They also say the insurer is avoiding a costly payout.
Companies Push Back in Court
In response, the San Group and its subsidiary, Acorn Forest Products, have launched legal action. At the same time, the Business Development Bank of Canada (BDC) has joined the fight.
Together, they have filed multiple lawsuits in B.C. Supreme Court. Their goal is clear: recover losses and challenge the insurer’s decision.
Meanwhile, Lloyd’s has stood firm. It voided the insurance policies, citing alleged wrongdoing.
Broker Under Fire
The dispute does not stop with the insurer. The companies and the BDC are also suing their insurance broker, BFL Canada Risk and Insurance Services.
They claim the broker failed to properly list the BDC on the insurance policy. Because of that, the bank may not be able to recover its share of the losses.
As a result, the plaintiffs argue the broker did not meet professional standards. They are now seeking damages for that failure.
A Bank’s Separate Claim
The BDC has also filed its own lawsuit against Lloyd’s. It argues that even if arson occurred, its rights as a lender remain protected.
In other words, the bank says it should still be paid. It points to a mortgage clause designed to shield lenders from borrower misconduct.
Additionally, a report from Deloitte states there is no evidence the company intentionally caused the fire.
Mounting Financial Pressure
This legal fight comes at a tough time for the San Group. The company has faced major financial strain in recent years.
By late 2024, it sought creditor protection. Debts climbed above $150 million. Operations slowed, and some facilities shut down.
At the same time, assets have been sold to repay lenders. Still, large sums remain unpaid.
A History of Fire and Disputes
Notably, this is not the first fire linked to the company. In 2020, another mill blaze caused tens of millions in losses.
That claim was also disputed by Lloyd’s. Years later, only a small portion of the money has been paid.
Because of this history, tensions between the company and insurer were already high.
What Happens Next?
For now, the courts will decide. None of the claims have been proven.
However, the outcome could shape how insurance disputes are handled in Canada’s forestry sector.
Until then, one thing is certain: what began as a fire has turned into a complex and costly legal showdown.
