



COURT OF APPEAL FOR ONTARIO

CITATION: Traders General Insurance Company v. Gibson, 2019
    ONCA 985

DATE: 20191213

DOCKET: C66816

van Rensburg, Paciocco and Thorburn JJ.A.

BETWEEN

Traders General Insurance Company

Applicant (Appellant/

Respondent by way of cross-appeal)

and

Elizabeth Gibson

Respondent
    (Respondent/

Appellant by way of
    cross appeal)

Alan L. Rachlin, for the appellant

Nancy J. Tourgis and Rajiv Joshi, for the respondent

Heard: November 21, 2019

On appeal from the order of Justice Carole J. Brown of
    the Superior Court of Justice, dated March 12, 2019, with reasons reported at
    2019 ONSC 1599.

Thorburn J.A.:

OVERVIEW

[1]

Elizabeth Gibson (Elizabeth) had a Homeowners Insurance Policy (the
    policy) with Traders General Insurance Company (Traders).

[2]

Elizabeths daughter, Elizabeth Thompson Gibson (Betty), commenced an
    action against Elizabeth for damages resulting from injuries after Betty fell
    from the porch of Elizabeths house and the railing came down with her. Betty
    and Elizabeth were tidying the porch while waiting for a taxi to take them to
    medical appointments, which they were both attending.

[3]

Elizabeths policy contains an exclusion of coverage for claims made
    against Elizabeth arising from bodily injury to  any person residing in your
    household other than a residence employee.

[4]

The issue on this appeal and cross-appeal is whether Elizabeth is
    entitled to a defence and indemnity against her daughter Bettys claim, either
    as a residence employee or as a tenant. The essence of the dispute between the
    parties on this appeal is the interpretation of the policy provisions.

[5]

The application judge held that Elizabeth was entitled to coverage for
    Bettys claim because Betty was a tenant. Had she not been a tenant, Bettys
    claim would have been excluded on the basis that Betty was a member of the
    household and there was no exemption from exclusion, as Betty was not a
    residence employee.

[6]

Traders claims the application judge correctly interpreted the words in
    the policy to conclude that Betty was not a residence employee but erred in
    holding that Betty was a tenant and the claim was therefore covered under
    Elizabeths insurance policy.

[7]

Elizabeth claims Betty was either a residence employee and/or a
    tenant within the meaning of the policy and the claim is therefore covered
    under the insurance policy.

[8]

Traders appeals the decision that Elizabeth was entitled to a defence
    and indemnity because she was a tenant. Elizabeth cross-appeals the decision
    that she was not entitled to a defence and indemnity on the basis that Betty
    was not a residence employee within the meaning of the policy.

[9]

For the reasons that follow, I would allow Traders appeal and dismiss
    Elizabeths cross-appeal.

THE ISSUES

[10]

The question on this appeal is whether the application judge erred in
    deciding that Bettys claim was covered under Elizabeths policy.

[11]

The issues to be determined are as follows:

1.

Did the application judge err in her interpretation of the words person
    residing in your household in the policy exclusion?

2.

Did the application judge err in her interpretation of the words
    residence employee contained in the exemption from the policy exclusion?

3.

Did the application judge err in concluding that Betty was covered under
    the policy as a tenant?

THE TERMS OF THE HOMEOWNERS INSURANCE POLICY

[12]

Elizabeths homeowners policy defines Insured as, the person(s)
    named as insured in the Certificate of Property Insurance and, while living in
    the same household: 1) his or her spouse; 2) the relatives of either; and 3)
    any person under the age of 21 in their care. It is agreed that Elizabeth is
    the insured.

[13]

The policy provides coverage for the following:

We will pay all sums which you become legally liable to pay as
    compensatory damages because of unintentional bodily injury or property damage
    arising out of:

1. your personal actions anywhere in the world;

2. your ownership, use or occupancy of the premises
    defined in Section II.

[14]

The policy includes the following exclusion:

We do not insure claims made against you arising from:

5. bodily injury to you or any person residing in your
    household other than a residence employee;

[15]

The policy defines Residence Employee:


Residence Employee
 means 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. This does not include contractors or sub-contractors.
    It also does not cover persons while performing duties in connection with your
    business.

[16]

The policy also limits coverage for residence employees in the following
    way:

We will not pay benefits:

1. unless your employee was actually performing duties for you
    when the accident happened;

[17]

There is no reference in the policy to tenants.

THE NATURE OF THE RELATIONSHIP BETWEEN ELIZABETH AND BETTY

[18]

The facts are not in dispute.

[19]

As of the time of Bettys fall, Betty had been living with Elizabeth for
    over 60 years, save for a ten-month period when she was living in Kingston.

[20]

For many years prior to her fall, Betty received disability benefits.

[21]

Elizabeth and Betty occupied the home together and shared household
    chores such as vacuuming, dusting, laundry, and grocery shopping. They shared a
    washroom and they prepared and ate meals together. They both contributed to the
    cost of home renovations for their mutual benefit.

[22]

Betty paid Elizabeth rent (at first $200 per month and then $400 per
    month) though she had no written rental agreement. Elizabeth assumed
    responsibility for utilities and property taxes.

[23]

Elizabeth never had a specific list of duties for Betty. Elizabeth
    testified that Betty could do what she wished at any given time and when
    Bettys health was poor, she did not do any tasks at all, although her rent was
    not increased during that time.

[24]

There was no written contract between Elizabeth and Betty, nor was there
    a schedule for doing specific work. Betty was not paid for the work she did at
    the house.

[25]

Elizabeth testified in her examination for discovery that all of her
    children were required to help around the house when they lived at home.

THE APPLICATION JUDGES DECISION

[26]

The application judge held that Betty was not a residence employee
    within the meaning of the policy. She held that:

While the background facts indicate that Betty was residing in
    the house, paying a low rent and performing household tasks, I am not of the
    view that those circumstances alone would make Betty a residence employee.



There was no written contract between Elizabeth and Betty
    concerning work that Betty was to do. There was never a schedule propounded for
    doing specific work. Betty was not paid for the work she did at the house. 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, according to Elizabeth. She had discretion
    to perform the household tasks she wanted to. She did not report to Elizabeth
    as regards the work that she did, nor was she supervised by
    Elizabeth. During some periods of her illness, Betty could not work at all
    or perform any household tasks. When this occurred, she did not pay more rent.



[T]here was no family business and no employer and employee
    relationship between Elizabeth and Betty.

For all of the above reasons, I do not find that Betty can be
    considered a residence employee. I am of the view that the policy does not
    provide coverage for Betty as a residence employee.

[27]

However, the application judge concluded that Betty was a tenant and was
    therefore covered by the insurance policy. Although the agreement did not
    define tenancy, the application judge concluded that a tenancy has two
    components: (1) the tenant occupies the property in question; and (2) the
    tenant is permitted to do so by the landlord in exchange for consideration,
    which need not be in writing or for a fixed time. Betty was residing with
    Elizabeth at the time of the accident and they had an agreement about their
    living arrangement, although it was not in writing.

[28]

The application judge held that:

[I]t had to have been in the reasonable contemplation of the
    parties that the owner may have rented a room to a tenant for remuneration, and
    that the owner may call upon that policy if a tenant were injured on the
    property, as the policy was obtained for the express purpose of providing
    liability coverage in respect of the ownership, use and occupancy of the
    property. I find that it would have been in the mind of Elizabeth when she
    first purchased the policy of insurance that she would be covered for
    liability for accidents occurring in the home for tenants. The opposite
    conclusion would be contrary to the reasonable expectations of Elizabeth and to
    the ordinary person as to the coverage purchased. [Citations omitted.]

ANALYSIS AND CONCLUSION

A.

THE STANDARD OF REVIEW

[29]

The interpretation of the terms of an insurance policy are reviewed on a
    standard of correctness:
Ferro v. Weiner
, 2019 ONCA 55, 144 O.R. (3d)
    414, at para. 12;
Lombard Canada Ltd. v. Zurich Insurance Co.
, 2010
    ONCA 292, 101 O.R. (3d) 371, at para. 25.

[30]

In this appeal, there is no dispute as to the facts: The dispute between
    the parties is the interpretation of the words in the policy any person
    residing in your household, residence employee, and whether and in what
    circumstances the policy covers a tenant. The standard of review on these
    questions of the interpretation of the policy is correctness.

B.

PRINCIPLES FOR INTERPRETING INSURANCE POLICIES

[31]

When interpreting an insurance policy, coverage provisions should be
    construed broadly, exclusion clauses should be construed narrowly, and
    ambiguities should be construed against the insurer:
Non-Marine
    Underwriters
,
Lloyds of London v. Scalera
, 2000
    SCC 24, [2000] 1 S.C.R. 551, at paras. 70-71;
Reid Crowther &
    Partners Limited v. Simcoe & Erie General Insurance Co.
,
[1993]
    1 S.C.R. 252, at p. 271.

[32]

The court must attempt to ascertain the purpose of the clause:
Wawanesa
    Mutual Insurance Company v. Bell
, [1957] S.C.R. 581, at p. 583.

C.

ISSUE ONE: DID THE APPLICATION JUDGE ERR IN HER INTERPRETATION OF THE
    WORDS PERSON RESIDING IN YOUR HOUSEHOLD IN THE POLICY EXCLUSION?

[33]

The policy excludes claims arising from [b]odily injury to you or any
    person residing in your household except a residence employee.

[34]

It is agreed that Betty was residing in Elizabeths house at the time of
    the injury.

[35]

A household is defined in
Blacks Law Dictionary
, 9th ed. as
    belonging to the house and family.

[36]

The Supreme Court of Canada defined a household as a collective group
    living in a home, acknowledging the authority of a head, the members of which,
    with few exceptions, are bound by marriage, blood, affinity or other bond,
    between whom there is an intimacy and by whom there is felt a concern with and
    an interest in the life of all that gives it a unity:
Bell
, at p. 584.

[37]

In
Ferro
,
at paras. 17, 25, Miller J.A. for the court
    defines household as a place where:

its members share the intimacy, stability, and common purpose
    characteristic of a functioning family unit.



A persons membership in a household is not established by a
    restricted inquiry limited to interactions surrounding the use and management
    of one particular residence  [M]embership in a household is assessed
    holistically, based on the totality of the parties relations and intentions
    towards each other.

[38]

What is essential in determining whether a person is part of the
    household is not how the household is structured, but the degree to which the
    choices and actions of all members are motivated by the collective interest of
    the household as distinct from their individual interests:
Ferro
, at
    para. 17.

[39]

This involves consideration of whether:

a)

The person contributes to the household in a meaningful way through time
    and/or resources for the benefit of the collective good of the household;

b)

The person shares common space with other members of the household; and

c)

The person is motivated by an interest in the life of all members of the
    household.

[40]

The application judge defined the correct test in interpreting the words
    person residing in your household. She then applied the test to the agreed
    facts.

[41]

She appreciated that when Betty fell from the porch, she had been
    residing in her mother Elizabeths home for many years, sharing responsibility
    for household chores, doing groceries, eating meals together, taking care of
    one another, and sharing an emotional bond. They shared common areas such as
    the kitchen and washroom. While Betty paid some rent to Elizabeth, she also
    spent money on home renovations for the benefit of the household.

[42]

Betty and Elizabeths actions and living arrangements were clearly
    indicative of Betty being a person residing in your household, as the
    application judge correctly defined it. This was a family collective living
    together in a home with a common bond and concern for one another. These
    circumstances were sufficient to conclude that Betty was a member of
    Elizabeths household at the time of her injury.

[43]

Bearing in mind that exclusion clauses should be construed narrowly, it
    is nonetheless clear that the application judge invoked the correct definition
    of person residing in your household and therefore concluded that Betty was a
    member of the household who shared the common purpose of contributing to the
    wellbeing of the members of the household, sharing space, and motivated by an
    interest in her and her mother.

D.

ISSUE TWO: DID THE APPLICATION JUDGE ERR IN HER INTERPRETATION OF THE
    WORDS RESIDENCE EMPLOYEE CONTAINED IN THE EXEMPTION FROM THE POLICY
    EXCLUSION?

[44]

The interpretation of the words residence employee within the meaning
    of the policy is also a question of law to which the correctness test applies.

[45]

Elizabeths policy does not cover claims for bodily injury for members
    of the household (as Betty was) unless they are residence employees. If Betty
    is a residence employee, she is excepted from the policy exclusion.

[46]

Under the policy, a Residence Employee is a person employed by you to
    perform duties in connection with the maintenance or use of the premises  who
    perform household or domestic services or duties of a similar nature for you
    [the homeowner].

[47]

There are few cases that consider whether an individual is covered by a
    policy as a residence employee.

[48]

In
Wawanesa Mutual Insurance Co. v. Hewson
,
the
    son of a farmer who lived on the family farm was injured while lifting a barrel
    of hay and sued his father: 2003 SKQB 116, 28 C.C.L.I. (3d) 196,
    affd 2004 SKCA 112, 13 C.C.L.I. (4th) 189. The court held that the son
    was an employee of his father, although the son worked on the family farm,
    the compensation was inadequate, and it was not fixed or paid systematically.
    He was an employee in the circumstances because his work went beyond chores and
    it was significant to the operation of the farm. Specifically, the court
    reasoned as follows, at paras. 40-42:

The issue of whether a person is an employee is a factual one
    which must be determined upon a consideration of the particular circumstances.



I make particular reference to these circumstances. Dayton
    Hewson did almost all the work involved in the cattle operation.
The amount
    of work was significant, necessary and well beyond what is considered to be
    chores. It was performed on a daily basis
. Yet while he did this work, it
    was done under the direction and control of Larry Hewson who also sometimes
    helped. While Larry Hewson would have acted in the capacity of Daytons father,
    a role which never ceased, this did not preclude him from also acting as an
    employer. He was the owner of the cattle operation and he engaged his son to
    keep it functioning. Yet any profit or loss flowing from the cattle operation
    was that of the father.
In short, the working arrangement was that of any
    business
.

Dayton Hewson obtained compensation which was over and above
    normal care provided to a child by parents. [Emphasis added]

[49]

In
Duquette v. Kent & Essex Mutual Insurance Co.

(1992), 9
    O.R. (3d) 436 (Gen. Div.), two brothers worked on one anothers nearby farms.
    One was returning a combine that his brother had rented when he made an
    improper left turn and caused damage to a tractor-trailer. The issue was
    whether the brother involved in the accident was covered by the other brothers
    Homeowners and Composite Farm policy as a residence employee or farm
    employee.

[50]

The court in
Duquette
held that the ordinary meaning of
    employee was one who works for another for wages or some other valuable
    consideration: at p. 442. The court found that the brother involved in the
    accident was receiving valuable consideration and was working under the
    direction and control of his brother as an employee. In other words, he was
    working in an employer and employee situation.

[51]

In this case, the terms of the policy indicate that the residence
    employee must be performing duties 
for

you (emphasis added),
    referring to the insured person, in this case, Elizabeth. Unlike the cases
    referred to above, Betty regularly performed domestic services in the house she
    shared with Elizabeth, but she did not perform the services
for
Elizabeth. Elizabeth said she did not direct Betty to do work. Betty was not
    remunerated for doing specific tasks, and the tasks she performed were for
    their mutual benefit.

[52]

Moreover, as noted by the court in
Hewson
, doing routine chores
    for the benefit of the household, as Betty did, is not enough to be considered
    an employee. The duties must extend beyond chores to constitute a workplace
    arrangement.

[53]

For these reasons, the application judge correctly interpreted the words
    residence employee in the policy. She applied this interpretation to the
    agreed facts to conclude that the relationship between Betty and Elizabeth was
    not in essence a workplace arrangement, and it did not go beyond performing
    household chores for their mutual benefit. As such, Betty was not a residence
    employee excepted from the policy exclusion.

E.

ISSUE THREE: DID THE APPLICATION JUDGE ERR IN CONCLUDING THAT BETTY WAS
    COVERED UNDER THE POLICY AS A TENANT?

[54]

The clear language of the policy excludes
all
claims for bodily
    injury to
anyone
residing in the household except a residence employee.
    There is no exception to the exclusion for members of the household who are
    also tenants. The absence of a specific exclusion does not create coverage
    where an exclusion applies.

[55]

Thus, once it is established that Betty was a person residing in
    Elizabeths household, coverage cannot be extended for her claim against
    Elizabeth based on her status as a tenant. If the essence of the relationship
    between Elizabeth and Betty had been that of landlord and tenant, rather than
    member of the household sharing the intimacy, stability, and common purpose of
    the household, then Bettys claim would have been entitled to succeed. This was
    the case in
Wright v. Canadian Group Underwriters Insurance Co.
, 2002
    BCCA 254, 1 B.C.L.R. (4th) 30, relied on by the application judge.

[56]

In
Wright
, the claimant was a stranger who had no family
    connection to either owner, and who moved into the insured premises as a
    rent-paying tenant: at para. 25. Unlike Betty, she was a tenant with no family
    ties to the owners and

was not a member of the household in the sense that
    she shared the intimacy, stability, and common purpose characteristic of a
    household, as Betty and her mother Elizabeth did.

[57]

The essence of the relationship in
Wright
was that of landlord
    and tenant. The tenant in
Wright
was not a member of the household who
    contributed to and enjoyed the fruits of being a member of the household, while
    paying some rent. Because the tenant was not a member of the household, the
    exclusion did not apply. By contrast, Betty resided in the residence of the
    insured, Elizabeth, as a member of the household. Although she paid some rent,
    the essence of their relationship was as a member of the household,
    contributing to and enjoying the fruits of membership in the household.

[58]

Once she had determined that the exception applied, that is, that Betty
    was a member of Elizabeths household, the application judge erred by
    considering the reasonable expectations of the parties to the insurance
    policy and concluding that Elizabeth would be entitled to coverage as a
    tenant. The primary interpretative principle in the construction of
    insurance policies is that, where the policy is unambiguous, the court
    should give effect to its clear language, reading the policy as a whole:
Allstate
    Insurance Co. of Canada v. Aftab
, 2015 ONCA 349, 49 C.C.L.I (5th) 173, at
    para. 17;
Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada
, 2010
    SCC 33, [2010] 2 S.C.R. 245, at para. 22; and
Scalera
, at
    para. 71.

CONCLUSION

[59]

The application judge made no error in interpreting the words person
    residing in your household or residence employee in the policy and she
    applied those definitions to the agreed facts. She therefore concluded that
    Betty resided in the household but was not a residence employee.

[60]

However, the application judge erred in her interpretation of the policy
    by holding that Elizabeths claim was covered under the policy on the basis
    that Betty was a tenant. Whether or not Betty paid rent, she was a member of
    Elizabeths household and was not a residence employee. The policy is clear
    that all persons residing in the insureds household are excluded from coverage
    unless they are residence employees. This is so regardless of whether they pay
    rent.

[61]

The application judge therefore erred in concluding that Elizabeth is
    entitled to a defence and indemnity against her daughter Bettys claim on the
    basis that she found Betty was a tenant.

[62]

For these reasons, I would grant the Traders appeal and dismiss
    Elizabeths cross-appeal. I would award costs to Traders in the amount of $11,000
    all inclusive, as agreed by the parties, and, given the result, reverse the
    costs in the court below.

Released: December 13, 2019  (K.M.v.R.)

J.A. Thorburn J.A.

I agree. K. van
    Rensburg J.A.

I agree. David M.
    Paciocco J.A.


