Can an Adult Child Living At Home Be A “Residence Employee”?
We wrote a blog a couple of weeks ago about the importance of how a word is defined in legislation and insurance policies. This week we bring you another example of what might seem like perfectly normal situation on the surface, but when put under the critical lens of opposing sides in an insurance dispute becomes more difficult to define.
The family history
The daughter, born in 1949, was the adult child of the mother. The daughter lived at the mother’s house. She was the youngest of the mother’s three children. The father passed away in 1967. The daughter’s siblings moved out, but she continued to live with the mother through adulthood.
Once the daughter graduated high school she paid her mother $200 per month in rent. The daughter worked during this period and would pay the mother to take care of her child, who lived with his mother and grandmother.
In 1996 the mother was diagnosed with thyroid cancer. She left her job and was placed on long-term disability. She had two surgeries over the next ten years before having a heart attack. She received a pacemaker in 2007, and her health continued to deteriorate until her death in 2016.
In the years the daughter lived with the mother, they shared daily household tasks, including laundry and grocery shopping. They also shared household expenses, but the mother contributed more and paid the property taxes and utilities.
One of the things the daughter contributed to was the upkeep of the front porch, for which she ordered a railing. A contractor installed the railing. On March 31, 2014, the daughter was on the porch, while her mother was sweeping the steps leading to it. They were waiting for a taxi. When it arrived, the daughter asked the mother to pass her the broom. As the daughter leaned over the railing to take the broom, she fell from the porch, taking the railing down with her. She sued her mother, the contractor, his company, and a neighbour.
The position of the parties
The mother’s house insurance policy contained a clause about bodily injury occurring on the property. It stated ,
“We do not ensure claims made against you arising from:
5. Bodily injury to you or any person residing in your household other than a residence employee.”
The insurer took the position that the daughter was a person residing in the mother’s house, and as such, the daughter was not entitled to collect damages from the insurer.
The mother’s position was that the daughter was a “residence employee” at the time of the accident, and was therefore entitled to pursue damages stemming from the fall. The insurance policy identified a residence employee as “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.”
The mother stated that the daughter performed domestic services in exchange for reduced rent.
The court’s analysis
The court did not side with the mother in determining the daughter was a residence employee. In its decision, the court wrote that the daughter had always paid rent and that all of the children paid rent during any periods they lived at home. The two didn’t have a written contract, nor did they have an official list of chores each was responsible for. The court also noted that the daughter was not obligated to perform any tasks if she didn’t want to, or wasn’t able to (as was in the later years of her life).
But the mother argued that if the court did not find the daughter to be a residence employee, then it should find her to have been a tenant, which would result in her insurance claim being covered by the Traders policy of insurance. Since neither the Traders policy of insurance or the Insurance Act contained a definition of “tenant,” the court turned to the dictionary and concluded, “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.”
The court found the mother and daughter’s relationship to fall under the definition of a tenancy. The daughter occupied the property, and she exchanged her services for reduced rent. The court dismissed the insurer’s application to have the case dismissed.
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