I am sorry to hear you lost your watch, that has happened to me before too.
In regards to the $400, this is not a cancelation fee. Its the remaining TELUS Easy Payment balance of your device.
When getting a new phone, watch, or another device, you have two options on how to pay.
In your case, it appears you have chosen Option B, and have lost the watch before completing all 24 payments. The remaining total of payments is equal to $400. You can refer to your TELUS Service Agreement which outlines the total cost of the device, and the monthly installments called TELUS Easy Payments.
Login to your My TELUS account. Then go to the Billing page. If your eligible, you will see a link to "Set up a Payment Arrangement". You may be able to split the payments of $400 into 2-3 smaller payments to reduce the immediate financial impact, while ensuring services are not suspended. Alternatively, you can call 1-866-558-2273 or *611 on your TELUS mobile phone.
In addition you can contact TELUS and ask the agent to review the services you currently have, and see if there is any new plans, downgrades, or bundles that help reduce your bill to reduce the monthly financial impact for the time being.