Traders General Insurance Company v. Gibson

[Indexed as: Traders General Insurance Co. v. Gibson]

Ontario Reports Ontario Superior Court of Justice C.J. Brown J. March 12, 2019 145 O.R. (3d) 51 | 2019 ONSC 1599

Case Summary

Insurance — Interpretation and construction — Homeowners policy excluding coverage for claims arising from bodily injury to insured or any person residing in insured's household other than "residence employee" — Policy not excluding coverage for bodily injury to tenants — Adult daughter living with insured while paying modest rent and performing share of household chores — Daughter not "residence employee" — Daughter covered under policy as "tenant".

B had lived with her mother, E, for many years, paying a modest rent and performing some household chores. She sued E after being injured in an accident at home. E's homeowner's policy excluded coverage for claims arising from bodily injury to the insured or any person residing in the insured's household other than a "residence employee". The insurer brought an application for a declaration that it was not required to indemnify E under the policy.

Held, the application should be dismissed.

There was no written contract between E and B concerning work that B was to do. B was not paid for the work she did. She was never issued a T4, and E never submitted any documentation relating to employment insurance, Canada Pension Plan benefits, or Workplace Safety and Insurance Board premiums. B could do as much or as little as she wished, was not supervised by E and did not report to E. B was not a "residence employee".

There was no exclusion in the policy for tenants. It would have been in E's mind, when she first purchased the policy, that she would be covered for liability for injuries to tenants arising from accidents in the home. Despite the absence of a written lease, B was a "tenant".

Cases Considered:

Other cases referred to:

Statutes referred to:

Insurance Act, R.S.O. 1990, c. I.8

Rules and regulations referred to:

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 30.1.01(1)

APPLICATION by the insurer for a declaration that it was not required to indemnify the insured.

Andrew E. Steinman, for applicant. Rajiv Joshi, for respondent.

[1] C.J. BROWN J.: — The applicant, Traders General Insurance Company ("Traders"), brings this application for a declaration that it is not required to indemnify the respondent, Elizabeth Gibson ("Elizabeth"), under homeowner's policy of insurance P29012515HAB (the "policy of insurance") issued by Traders. This is pertinent to a legal action commenced against Elizabeth and others by her daughter, Elizabeth Thompson Gibson ("Betty"), referenced as Court File Number CV-14-507726 (the "underlying action").

[2] It is the position of Traders that the underlying action arises from an accident which occurred at the home of Elizabeth, which was occupied by Elizabeth and Betty, and that the said policy excludes coverage for claims arising from "bodily injury to you or any person residing in your household". It is the position of Traders that Betty was a person residing in Elizabeth's household at the time of the loss and that Betty is, therefore, excluded from coverage.

[3] It is the position of the respondent that Betty was either a "residence employee" or a "tenant", and as such was not excluded from policy coverage.

Deemed Undertaking Rule

[4] Prior to analyzing the main application, a preliminary issue must be determined, namely, whether the deemed undertaking rule applies in the circumstances of this case.

[5] Rule 30.1.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 reads in relevant part as follows:

30.1.01(1) This Rule applies to,

(a) evidence obtained under

(ii) Rule 31 (examination for discovery)

(3) All parties and their lawyers are deemed to undertake not to use evidence or information to which this Rule applies for any purposes other than those of the proceeding in which the evidence was obtained.

(4) Subrule (3) does not prohibit a use to which the person who disclosed the evidence consents.

(6) Subrule (3) does not prohibit the use of evidence obtained in one proceeding, or information obtained from such evidence, to impeach the testimony of a witness in another proceeding.

(8) If satisfied that the interest of justice outweighs any prejudice that would result to a party who disclosed evidence, the court may order that subrule (3) does not apply to the evidence or to information obtained from it, and may impose such terms and give such directions as are just.

[6] Traders seeks to use examination for discovery transcripts of the parties as the basis for the affidavit in this application. The transcripts were provided by counsel for Betty, prior to her untimely death in 2016, after her evidence was given on examination for discovery. Neither party has objected to use of the transcripts.

[7] In Juman v. Doucette, [2008] 1 S.C.R. 157, [2008] S.C.J. No. 8, 2008 SCC 8, at para. 34, the Supreme Court of Canada formulated a test applicable to relief from the deemed undertaking rule, as follows:

If satisfied that the interest of justice outweighs any prejudice that would result to the party who disclosed evidence, the court may order that [the implied or "deemed" undertaking"] does not apply to the evidence or to information obtained from it, and may impose such terms and give such directions as are just.

[8] The Supreme Court of Canada has further found that where discovery material in one action is sought to be used in another action with the same or similar parties and the same or similar issues, the prejudice to the examinee is virtually non-existent and leave will generally be given: see Juman v. Doucette, supra, at para. 35.

[9] One of the policy reasons behind the conclusion that relief from the deemed undertaking rule ought to be granted with respect to discovery evidence in related actions is to prevent inconsistent evidence, or allowing a person to tailor his or her evidence to suit his or her needs in each particular proceeding.

[10] In not dissimilar circumstances, the court held as follows in Antongiovanni v. Phung, [2001] O.J. No. 4659, 20 C.P.C. (5th) 77 (S.C.J.), at para. 73:

In my opinion prior testimony under oath in another proceeding by the same person who is a party to the current action, and which involves the same factual underpinning, namely the same accident and the same injuries is precisely the kind of evidence to which rule 30.1.01(6) is directed. The plaintiff cannot be heard to complain of prejudice if she is impeached by her own testimony under oath. If I do not order production of the transcripts, the evidence will not be available for impeachment.

[11] In this case, the application involves the same parties as the underlying action and involves the same factual matrix as involved in the underlying action, notably the living arrangements between Elizabeth and Betty. While the respondent now submits that Elizabeth will be prejudiced by use of the affidavit, I do not find this to be the case. Further, without this evidence, the court will be unable to properly assess the matters in issue in this application, particularly in light of Betty's death.

The Policy of Insurance

[12] Elizabeth's home at [number omitted] West Ave., Toronto, Ontario was insured pursuant to the policy of insurance issued by Traders, which provided personal liability protection.

Relevant Provisions of the Subject Policy of Insurance

[13] The relevant portions of the policy were as follows:

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:

your personal actions anywhere in the world;

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

[14] Said coverage was subject to a number of exclusions including the following:

We do not ensure claims made against you arising from:

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

[15] As defined in the policy of insurance, "Insured" means 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.

[16] "Residence Employee" is defined in Section I as follows:

"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.

[17] Under Coverage H ("Voluntary Compensation for Residence Employees"), the provision states:

We offer to pay the benefits described below if your residence employee is injured or dies accidentally while working for you, even though you are not legally liable.

We will not pay benefits:

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

General Principles of Insurance Policy Interpretation

[18] The parties essentially agree on the general principles of interpretation to be considered when determining whether an event falls within coverage of a particular policy. These include the contra proferentum rule; the principle that coverage provisions should be construed broadly and exclusion clauses narrowly, and the standard practice that ambiguities be construed against the insurer since insurance contracts are essentially adhesionary. Furthermore, the Supreme Court has noted the desirability, at least where the policy is ambiguous, of giving effect to the reasonable expectations of the parties: Non-Marine Underwriters, Lloyd's of London v. Scalera, [2000] 1 S.C.R. 551, [2000] S.C.J. No. 26, 2000 SCC 24, at paras. 70-71; and Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., [1993] 1 S.C.R. 252, [1993] S.C.J. No. 10, at paras. 33, 38.

[19] The court must also attempt to ascertain the purpose of the clause in issue, to the extent that it can be obtained from the wording of the policy: Wawanesa Mutual Insurance Co. v. Bell, [1957] S.C.R. 581, [1957] S.C.J. No. 35, at p. 583 S.C.R. The purpose of the exclusion in question has been previously considered and found to be to prevent claims between the named insured and family members "residing in the household"; the reason behind the exclusion being to prevent the potential for collusive claims being advanced by such individuals: Aviva Canada Inc. v. Yaehne, [2005] S.J. No. 822, 2005 SKQB 553, at para. 17; and Appel (Public Trustee of) v. Dominion of Canada General Insurance Co., [1997] B.C.J. No. 1794, 39 B.C.L.R. (3d) 113 (C.A.), at para. 46.

The Background Facts

[20] Elizabeth and her husband, Alexander Gibson, were married in 1945. They had three children: Catrina, born August 31, 1945; Robert, born November 21, 1946; and Betty, born July 22, 1949. They emigrated from Scotland to Toronto in 1951 and purchased [number omitted] West Ave., Toronto, in 1961. Alexander died in 1967. Thereafter, Catrina married and moved from the residence and, in 1970, Robert moved from the residence.

[21] Betty continued to live in the residence, with the exception of a ten-month period in the 1970s when she was living in Kingston, Ontario. She never married, although she had a son, Alexander, who lived with her. She paid rent of $100 twice per month after graduating from high school. She worked and paid her mother to take care of Alexander. In 1996, she was diagnosed with thyroid cancer and ceased her employment with Ontario Development Corporation. She was placed on long-term disability. She underwent surgery to remove the tumor, which returned in 2000 when she had a second surgery. In 2006, she had a heart attack and, as a result, received a pacemaker in 2007 and subsequently a larger one in 2013. Her medical and physical health deteriorated significantly from 1996 to 2016, when she died.

[22] She remained on long-term disability from 1996 to 2014, when she commenced receiving CPP. Her medical conditions precluded her from returning to full-time employment or being employed in a conventional employment setting.

[23] While living at [number omitted] West Ave., Betty and her mother shared the daily tasks of living in the house. These included sharing the tasks of vacuuming and dusting, preparing meals and eating together, sharing responsibilities for doing their collective laundry and hanging their clothes to dry, and grocery shopping together. Both Elizabeth and Betty shared household expenses, although Elizabeth contributed more toward those expenses and assumed responsibility for utilities and property taxes.

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

[25] Elizabeth and Betty shared a washroom and had made modifications to the washroom after the accident to benefit both of them, including safety bars on walls and a lowering mechanism. Betty had wallpapered and painted the kitchen and had paid for other renovations. She had participated in some of the upkeep and maintenance of the home, including ordering a side railing for the premises. After the accident, she hired a contractor to replace the front porch railing.

[26] The accident occurred on March 31, 2014. Betty was on the porch of the property owned by Elizabeth. They were waiting for a taxi to take them to medical appointments, which they were both attending. Elizabeth was sweeping below the porch. When the taxi came, Betty said, "Mom, here's the taxi, give me the broom". Elizabeth handed the broom up to Betty who was on the porch. As Betty leaned over to get the broom, she fell from the porch and the railing came down with her. As a result, Betty sued her mother, Elizabeth, the contractor and his company and a neighbour. Elizabeth testified in her examination for discovery that, at the time of the accident, she was simply reaching up to hand Betty the broom as the taxi had arrived.

Is Betty to be Considered a "Residence Employee"?

[27] It is the position of the respondent that the coverage exclusions in the policy which preclude residents of the household from third party liability coverage do not exclude "residence employees". The respondent submits that Betty is a residence employee employed by Elizabeth to perform household services or duties in connection with the maintenance or use of the premises.

[28] It is the position of the respondent that Betty was providing domestic services to Elizabeth in exchange for a low monthly rental payment given Betty's financial and medical circumstances.

[29] Based on all of the background facts and the documentation before me, as well as the case law relied upon by the parties, and taking into account the principles of interpretation of insurance policies, I am unable to interpret the "residence employee" definition so broadly as to find that Betty was a residence employee employed by Elizabeth.

[30] 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. Betty had lived there for 61 years and had always paid rent from the time she graduated from high school. She initially paid $200 per month, which subsequently increased to $400 per month. Elizabeth testified that all of her children, when they lived in the household, did tasks and chores. Elizabeth never had a specific list of duties for Betty; she testified that Betty could do what she wished at any given time and that when Betty's health was poor, she did not do any tasks at all, although her rent was not increased during that time. Elizabeth never supervised her in any tasks, and Betty never reported to Elizabeth when she had done certain tasks.

[31] 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.

[32] I find this to be very different from the cases relied on by the respondent, which are discussed below.

Cases Relied Upon by the Respondent

[33] As recognized by the parties, there have been very few determinations of the term "residence employee". The respondent refers to and relies on insurance cases which involve the term "employee". These cases involve determination of whether a family member is an "employee" or a "residence employee" in the context of the family farm business. In both of those cases, it was determined that the son was an employee of the father in the family farm business. In Wawanesa Mutual Insurance Co. v. Hewson, [2003] S.J. No. 187, 2003 SKQB 116, affd [2004] S.J. No. 534, 2004 SKCA 112, the court considered whether the son, who lived on the family farm, was a residence employee. The son had been hurt while lifting a barrel of hay and sued his father. If the son was an employee, then the exclusion for "injuries to persons living in the household" would not apply and his father would have coverage under his homeowner's policy. Although the son was working on the family farm and the compensation was inadequate and not fixed or paid systematically, the court held that the son was indeed his father's employee. In this regard, the court held, in part, 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 Dayton's 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 obtain compensation which was over and above normal care provided to a child by parents.

[34] In the case of Duquette v. Kent & Essex Mutual Insurance Co. (1992), 9 O.R. (3d) 326, [1992] O.J. No. 1366 (Gen. Div.), two brothers worked on one another's nearby farm. 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 homeowner's policy would respond if the driver had been a "residence employee" or "farm employee". The insurers took the position that the brother was a volunteer who had only performed services gratuitously. In deciding that the brother was the other's employee, the court looked to the plain and ordinary meaning of the word "employee". This was found to be "one who works for another for wages or some other valuable consideration". The court noted that the brother had indeed been working for the other and found that the consideration for the work was the exchange of labour. The common-law test was only assessed to reaffirm the conclusion already made. The court found, inter alia, that the brother was working as an "employee", was receiving "some other valuable consideration" and was working under the direction and control of his brother. In other words, he was working in a normal master-servant relationship or, as the court found, an "employer and employee" situation.

[35] In both of these cases, one family member was indeed acting as the employer and the other as employee. This is much different from the case at bar where there was no "family business" and no "employer and employee" relationship between Elizabeth and Betty.

[36] 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".

Was Betty a Tenant?

[37] In the alternative, the respondent argues that Betty was a tenant and therefore her claim against Elizabeth would be covered by the Traders policy of insurance.

[38] There is no exclusion in the Traders policy of insurance with regard to bodily injury occasioned by a tenant at the residence. I am of the view that it 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: see, for example, Wright v. Canadian Group Underwriters Insurance Co., [2002] B.C.J. No. 810, 2002 BCCA 254, 1 B.C.L.R. (4th) 30. 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. Therefore, in my view, if Betty were a tenant, then her injury would be covered by the Traders policy of insurance.

[39] There is no definition of "tenant" in the Traders policy of insurance or in the Insurance Act, R.S.O. 1990, c. I.8. The Oxford Dictionary defines "tenant" as "a person occupying rented land or property", and it defines "tenancy" as "an agreement by which the owner of a building, apartment, vehicle, piece of land, etc. allows another to use it for a specified time in return for payment". Similarly, Black's Law Dictionary defines "tenant" as "someone who holds or possesses lands or tenements by any kind of right or title", and "lease" (also termed "tenancy agreement") as "a contract by which a rightful possessor of real property conveys the right to use and occupy the property in exchange for consideration, usually rent; the lease term can be for life, for a fixed period, or for a period terminable at will". From these definitions, I conclude that a tenancy is characterized by 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 some form of consideration. A tenancy need not be in writing or be for a fixed period of time.

[40] First, as noted above, Betty resided at her mother's home for most of her life, with the exception of ten months when she lived in Kingston. She was residing there at the time of the incident that gave rise to this claim; it was her primary residence. Therefore, the first criteria of a tenancy is satisfied.

[41] Second, Elizabeth and Betty had an agreement about their living arrangement. The definitions above demonstrate that a lease agreement does not have to be in written form. Elizabeth testified that after Betty graduated from high school, Betty began to pay rent to live at her mother's home. Initially, Betty paid $200 a month, which subsequently increased to $400 per month. After Betty's long-term disability in 1996, she could not pay any more and her rent remained at $400 per month thereafter.

[42] Betty characterized the living arrangement as one of landlord and tenant. She described herself in her statement of claim as a tenant residing at [number omitted] West Ave., Toronto, and described her mother as a landlord of the same residence.

[43] Therefore, the second criteria of a tenancy is satisfied: Betty and Elizabeth formed a mutually beneficial agreement whereby Betty was permitted to reside, and did reside, in her mother's home in exchange for rent.

[44] As a result, I am of the view that Betty was, for the years that she lived at Elizabeth's home, a "tenant". Betty, as a tenant, would be covered by the Traders policy of insurance.

[45] Accordingly, based on all of the above, I dismiss this application. The trial will continue. Traders continues to have a duty to defend and indemnify, if required, Elizabeth Gibson pursuant to the policy of insurance.

Costs

[46] I would urge the parties to agree upon costs, failing which I would invite the parties to provide any costs submissions in writing, to be limited to three pages, including the costs outline. The submissions may be forwarded to my attention, through Judges' Administration at 361 University Avenue, within 30 days of the release of this endorsement.

Application dismissed.

End of Document

Traders General Insurance Company v. Gibson, 2019 ONSC 1599

Case Summary

Traders General Insurance Company v. Gibson

Case Summary

Deemed Undertaking Rule

The Policy of Insurance

Relevant Provisions of the Subject Policy of Insurance

General Principles of Insurance Policy Interpretation

The Background Facts

Is Betty to be Considered a "Residence Employee"?

Cases Relied Upon by the Respondent

Was Betty a Tenant?

Costs

Judge

Counsel

Parties

Areas of Law