I think your problem stems from a poorly worded by law. It’s seems that the bylaw was not drafted by a lawyer ( the language and form give it away).
I think that this forum will not be able to provide you with an answer as the bylaw contains some ambiguities in it. Ie firstly states that OC will pay insurance then owner will reimburse.
It’s a case that probably will end up in a court to have a judge provide their interpretation of what is meant. Now that probably will not suit anybody and the interpretation may be surprising.
It’s also goin to be hard to sort this out since it was so long ago. The players have probably moved on and the records lost.
I’d suggest that both parties start from a clean slate. Decide and agree what how the outbuilding is treated. Get a lawyer to draft a new bylaw ( and cancel the old by law).
As for how to treat your insurance claim today, the owner may have to pay up to get something done as the ambiguity of the bylaw means a long legal battle.