The recent decision of Traders General Insurance Company v. Elizabeth Gibson asked the question, “Am I my [mother]’s keeper?” in the context of coverage for third party bodily injury claims under a homeowner policy. In this case, the answer was “No, you are her tenant.”
The facts of this case were fairly straightforward but highlight the risks of undefined terms within insurance policies. Traders General Insurance (“Traders”), insured Elizabeth Gibson under a homeowner’s policy. Elizabeth’s daughter, Betty, was involved in an accident in the home in March 2014. Betty sued her mother, among others, for her injuries.
The issue was whether the claim brought by Betty, who had lived in the home for 41 years, was excluded from coverage. It appears that during the trial, Traders brought an application for a declaration that the accident was excluded from coverage. Traders argued Betty was residing in the household. Betty’s counsel argued that she fell under the exception to the exclusion because she was really a “residence employee”, or in the alternative, a tenant.
Traders argued that the policy excluded “bodily injury to you or any person residing in your household other than a residence employee.” Residence employee was a defined term that meant: “…a person employed by you to perform duties in connection with the maintenance or use of the premises. This includes persons who perform household or domestic services or duties of a similar nature for you….”.
Betty alleged that she was in fact a residence employee. She alleged she provided domestic services to Elizabeth in exchange for a low monthly rental payment. She argued that she and her mother shared the daily tasks of living in the house such as vacuuming and dusting, preparing meals and eating together. Both Elizabeth and Betty shared household expenses, although Elizabeth contributed more toward those expenses and assumed responsibility for utilities and property taxes.
Ultimately, Brown J., did not accept this argument. This was largely because the relationship between Betty and Elizabeth did not have any of the hallmarks of a traditional employer/employee relationship. There was no written contract concerning work that Betty was to do. There was never a work schedule. Betty was not paid for the work she did. She was not issued a T4. Elizabeth never submitted any documentation relating to Betty with respect to Employment Insurance, Canada Pension Plan benefits, or Workplace Safety and Insurance Board premiums. Betty could do as much or as little as she wished at any time. She had discretion to perform the household tasks she wanted to. She did not report to Elizabeth regarding the work she did. Elizabeth did not supervise her.
However, Brown J. did accept the alternative argument that Betty was a “tenant”. The term “tenant” was not defined in the policy or in the Insurance Act. Brown J., found that there was no exclusion in the policy regarding bodily injured occasioned by a tenant. The judge found that it would be within the reasonable expectation of the policyholder that the policy provided coverage respecting the use and occupancy of the property. Relying on the Oxford Dictionary and Black’s Law Dictionary Brown J., concluded that one satisfies the requirements for a tenant where:
- The tenant occupies the property in question; and
- The tenant is permitted to do so by the landlord in exchange for some form of consideration. It need not be in writing or be for a fixed period of time.
Based on Betty’s payment of rent, and the fact she described the relationship as tenant and landlord in the statement of claim, Brown J., found that the Traders’ policy was required to respond to the claim. The policy holder was entitled to a defence, and indemnity, if required.
This case is a good example of the law of unintended consequences. It should highlight that courts continue to interpret coverage broadly and exclusions narrowly. Where terms remain undefined within a policy, insurers expose themselves to the risk of covering claims they may not have accounted for or received premiums. It reinforces that just because a family member lives in the same home, they may pursue coverage under a policy. Depending on the facts, living situations involving adult children who contribute to the rent or household expenses may not necessarily be excluded from coverage.
See Traders General Insurance Company v. Elizabeth Gibson, 2019 ONSC 1599
