Parties under a Disability: Court Approval and Guardianship

INTRODUCTION

Very often the people who require the largest amounts of money to compensate them for their economic losses are people who are incapable of managing money.   This is true for seriously injured children.   It is also true for people with catastrophic brain injuries.

Under the Rules of Civil Procedure people who are “under disability” require a litigation guardian to advance or defend claims.1   Rule 7.08 provides that “no settlement of a claim made by or against a person under disability…is binding on the person without the approval of a judge.”

All minors are classified as people “under disability”.2   As such, any settlement of a claim by or against a person under 18 requires Court approval.

People who are “mentally incapable” of making decisions about their property or personal care are also classified as people under disability.3   The definition of mental incapacity is found in the Substitutes Decisions Act,1992. (“SDA”)4  A person is incapable of managing his or her property or personal care where:

1. He or she is not able to understand information relevant to making a decision about the management of his or her property or personal care;  or
2. He or she is not able to appreciate reasonably foreseeable consequences of a decision or lack of decision about the management of his or her property or personal care.

A person who meets this definition of mental incapacity requires a litigation guardian and cannot have his or her claim settled without Court approval.

The requirement that settlements reached on behalf of parties under disability be scrutinized by the Court is derived from the Court’s paren patraie (“father of the people”) jurisdiction.   As the Ontario Court of Appeal explained in Wu Estate v. Zurich Insurance Co.5, the overriding rationale behind paren patraie is to ensure that decisions made on behalf of incapable people be in their “best interests”:

The parens patriae jurisdiction is of ancient origin and is “founded on necessity, namely the need to act for the protection of those who cannot care for themselves…to be exercised in the “best interest” of the protected person…for his or her “benefit or welfare”.  

The overriding concern of a Judge hearing a motion to approve a settlement is whether the settlement is in the best interests of the incapable person.

COURT APPROVAL OF SETTLEMENTS

The Material Required

Rule 7.08(4) tersely defines what material that is required to be submitted on a motion to approve a settlement.   An affidavit from the litigation guardian “setting out the material facts and the reasons supporting the proposed settlement” is required.   An affidavit from plaintiffs’ counsel “setting out the solicitor’s position in respect of the proposed settlement” is required.   Where the person under disability is a minor who is over the age of 16, the minor’s consent in writing is required.   Finally, a copy of the minutes of settlement is required.   The Rules of Civil Procedure provide no further guidance on what is to be included in the materials.

Recent case law has expanded upon the information that should be included in a motion for approval of a settlement.   In the case of Marcoccia v. Gill6 Justice Wilkins described the issues that the Court requires evidence on:

 In essence, a settlement for a person under a disability requires an approval of the amount for which the claims are being settled.   It further requires an approval of the disposition of those funds for the best interests of the plaintiff under a disability, a guardian as to property must, of necessity, be appointed by the Court, and the Court must further approve a scheme of management and accounting for the ultimate disposition of monies.

The affidavits provided by the litigation guardian and plaintiffs’ counsel must contain information which will allow the Court to assess the following issues:

a)            Whether the quantum of the settlement is appropriate given the liability and damages issues in the case;

b)            Whether the settlement funds are being allocated appropriately (as between capable and incapable persons);

c)            Whether the settlement funds being allocated to an incapable person are being invested and managed appropriately; and

d)            Whether the legal fees being charged to the incapable person are reasonable.

The affidavit material should address these issues in a fulsome manner.   As Justice Thorburn pointed out in the case of Rivera v. LeBlond 7 the Court will not accept affidavits that simply offer up conclusions without factual detail:

This is a serious and substantial requirement which cannot be satisfied by the provision of conclusory statements.   It requires full disclosure of evidence regarding the material issues.   Where there is a conflict in the evidence the conflicting evidence must be disclosed to the court.  

The Quantum of the Settlement

 

It is necessary to provide the Judge hearing the settlement approval motion with details on the liability and damages issues and the evidence on those issues.

Key liability evidence should be summarized.   Expert reports bearing upon liability should be provided for review.   Where a settlement represents a compromise based upon a liability risk, it is important that the affidavits filed in support of the motion fully describe the liability risk.

The key evidence relating to damages should also be summarized.   Medical reports, long-term care reports and economic loss reports from both sides should be provided to the Judge for review.

Allocation of Settlement Funds

Very often there are multiple plaintiffs who divide up settlement proceeds.   Where settlement funds are being allocated as between capable plaintiffs and incapable plaintiffs it is necessary to advise the Court of who is getting what.   In the case of Giusti v. Scarborough Hospital8 Justice Spies was critical of motion materials that did not spell out the amounts being allocated to the capable plaintiffs:

Before approving a settlement for a party under disability, it is imperative that the motion record include full disclosure of the entire settlement including the total amount to be received from all of the defendants and how it is proposed that the global amount be allocated among all of the plaintiffs…The court cannot determine if the settlement for the minor is reasonable without considering what is being allocated to the claims of the adults, usually the parents.  

In addition to setting out how much of the total settlement is being allocated to each plaintiff it is good practice to explain the rationale for the allocation.

Investment and Management of Settlement Funds

The settlement approval material must also include details with respect to the proposed investment and management of the settlement funds.   The rationale behind the choice of investment should be set out in the affidavits. The Judge reviewing the motion will want to be assured that the proposed scheme of investment and management is in the best interests of the incapable person.

Structured settlements are attractive to Judges for a number of reasons.   A structure payable for life eliminates the risk that the incapable person will outlive his or her settlement proceeds.   Structured settlements also protect incapable people from losing their settlement money through bad investment decisions.   Another important advantage of a structured settlement is that the periodic payments made from the structure are tax-free.

Structured settlements can be designed in a multitude of ways.   Increases in monthly payments over time to account for inflation can be built into a structure.   Periodic large lump sum payments for the purchase of large items can be built into a structure.   It is possible to purchase “guarantees” which provide that if the incapable person dies within the guarantee period the payments for the remainder of the guarantee period will continue to flow to his or her dependants.

It is important to describe the design of the structure to the Judge hearing the approvals motion, and to set out the rationale for the choice of structure.   In Giusti v. Scarborough Hospital9 Justice Spies dealt with an approvals motion in respect of a child who was severely brain damaged at birth.    It was proposed by plaintiffs’ counsel that a large portion of the settlement be placed into a structured settlement.   It was proposed that there be a 50 year guarantee over the structure to the benefit of the child’s family.   Justice Spies required information on the cost of the guarantee and, after receiving the information, decided that there should be no guarantee because it was not in the child’s best interest.   The guarantee reduced the monthly income available to the child, who had no dependants.   The guarantee was for the family’s benefit, not for the injured child’s benefit.

In some cases it will be reasonable to choose an investment other than a structured settlement.   The key to getting the proposed investment approved is to provide the Judge with details of the plan and the rationale behind it so that the Judge can be assured that the investment is in the incapable person’s best interest.

Whatever the choice of investment, it is crucial that the Judge receive information to establish that the payments made from the investment of the settlement will be sufficient to meet the incapable person’s needs.   As Justice R.J. Smith pointed out in Cogan (Re)10, this information is crucial to the decision of whether the settlement is in the incapable person’s best interests:

 In order to determine if [the incapable person’s] best interests have been adequately met by the settlement, a review of how [his or her] future needs will be met must be made.

The Judge should be provided with information on the incapable person’s future needs and an explanation as to how the investment of the settlement proceeds will meet those needs.

It is also necessary to describe how the proceeds of the settlement will be managed.  In the case of Dhaliwal v. Miller, the materials indicated that the money would be invested into a structured settlement payable to the benefit of the incapable person, without further detail.   Justice Daley found this to be unacceptable:11

The materials submitted for court approval do not contain any proposal with respect to the management or handling of the proceeds of the settlement on behalf of Paramjit Singh Dhaliwal.

 I am not content to simply have the plaintiff’s parents as litigation guardians take over the management of the settlement monies without appointment of guardian as to property and an approved management plan. 

In cases involving mentally incapable adults it is a good idea to bring on an application for the appointment of a guardian under the Substitute Decisions Act at an early stage of the proceedings, well before a settlement.   That way, the guardian is in place before the settlement is reached.   If no guardian is in place at the time of settlement, a guardianship application should be brought on concurrently with, or immediately after, the settlement approval motion.

In cases involving children, an application for guardianship under the Children’s Law Reform Act, can be brought either with or immediately after the settlement approvals motion.

Legal Fees        

The Judge hearing the settlement approval motion will also decide whether or not to approve the legal fees charged to the incapable person.

The terms of the retainer agreement entered into on the incapable person’s behalf should be set out in the motion materials. The terms of the retainer agreement should be clear and unambiguous.     In Marcoccia v. Gill Justice Wilkins was critical of what he described as an “ambiguous” agreement:12

 In the case at bar, the agreement provides “I/we acknowledge that I/we have been advised that after an analysis of the fees compared to the final result of other cases of this type handled by Nancy Ralph & Associates, they have found that fees do not normally exceed 15%, plus the part of the fees paid by the insurer (party and party costs).”  That provision in the agreement does not establish the mechanism by which fees up to or approximating 15% might be calculated.   Whether this was to be by adding up the hourly rates of persons working on the file or simply taking a contingency fee of 15% over and above the partial indemnity costs is unknown.   In any event, that portion of the retainer agreement, in my view, is ambiguous to the point of being meaningless which it comes to attempting to establish a basis on which to charge a client.

The settlement approval materials provided to Justin Wilkins did not set out any details of the extent of the services rendered or the nature of the time spent on the file.   Justice Wilkins ultimately reduced the proposed fee from $400,000 to $250,000.

Some commentators have opined that the Marcoccia v. Gill decision means that contingency fee agreements should be given little weight in determining fees charged to an incapable person.   The case does not say that.  Indeed, the retainer agreement that Justice Wilkins was dealing with was not a contingency fee agreement at all.    Justice Wilkins found the terms of the retainer agreement to be so ambiguous that it was meaningless in terms of establishing the fee to be charged to the incapable person.

In the case of Re Cogan13 there was a clear and unambiguous contingency fee agreement signed by the minor’s guardian.   The case involved allegations of medical malpractice in relation to birth trauma.   The retainer agreement provided for fees equal to 33.5% of the total amount recovered for damages and costs.   The case was settled on the eve of trial for over $12.5 million.   Plaintiffs’ counsel sought fees of slightly less than $4.175 million pursuant to the contingency fee agreement.   The Office of the Children’s Lawyer took issue with the proposed fee and relied on Marcoccia v. Gill to argue that the contingency fee agreement should be given little weight.  Justice Smith rejected this argument:14

The statement that a contingency agreement requires court approval before it becomes binding on a party under disability is quite different from the approach taken by the Children’s Layer, which in effect completely disregards the contingency agreement as a factor to be considered.  I find that the fact that a contingency agreement entered into by a litigation guardian with a lawyer, on behalf of the child, is not binding unless approved by a judge, does not mean that the contingency agreement entered into by the litigation guardian should not be accorded any weight or should be completely disregarded by the court when deciding on the fairness and reasonableness of the contingency fee agreement.

…

I find the approach suggested by the Children’s Lawyer would effectively deny the benefit of contingency fee agreements to injured children and limit the fee arrangements to a solicitor’s hourly rate plus a premium, which was the situation before the amendments to allow contingency fees were made.  

Justice Smith was satisfied based on the information provided to him that the litigation guardian understood and accepted the terms of the contingency fee agreement.   He found that substantial weight should be given to a contingency fee agreement entered into on behalf of an incapable person:15

I find that an injured child should have the right to enter into contingency fee arrangements through their litigation guardians in order to obtain access to justice to recover damages for injuries suffered, provided the contingency fee agreement is fair and reasonable in the circumstances.   I also find that substantial weight should be given to a contingency agreement entered into by a sophisticated party who considered and weighed the risks involved and acted in the best interests of the child.

Justice Smith identified the following factors to be considered in determining the fairness and reasonableness of a contingency fee agreement (para. 42):

When a contingency fee agreement is being presented for approval by the court, the following factors must be considered: a) the financial risk assumed by the lawyer, which is included under likelihood of success, the nature and complexity of the claim, and the expense and risk of pursuing it; b) the results achieved and the amount recovered; c) the expectations of the party; d) who is to receive an award of costs; and e) achievement of the social objectives of providing access to justice for injured parties, including injured children and parties under disability.   I find that these factors must be accorded much greater weight than the time spent by the lawyer.

 It is important to include evidence on these issues in the settlement approvals material.    In Re Cogan there was evidence to indicate that the case was complex and risky from a liability perspective.   The amount recovered was adequate to meet the injured child’s needs.   There was evidence of substantial disbursements.   After reviewing this evidence, Justice Smith found the contingency fee agreement to be fair and reasonable:16

I find that the percentage of 33.5% set out in the contingency fee agreement to be a reasonable percentage given the financial risk assumed by the solicitor, the length of time the lawyer may have had to provide legal services and fund substantial disbursements for expert witnesses without being paid, the complexity of a birth injury case, the risk of not being successful on the issues of standard of care and in particular on causation, the length of time reasonable expected to complete the litigation, the outstanding result achieved and the costs paid by the defendant were not paid in addition to the contingency percentage.

Justice Smith took comfort in the fact that there was evidence to indicate that the settlement would meet the injured child’s needs, after the deduction of legal fees:17

The parents and the litigation guardian have arranged an excellent financial plan to meet [the child’s] future care needs…The proposed settlement adequately meets [the child’s] care future needs after payment of the legal fees claimed.

A number of lessons can be learned from the Marcoccia v. Gill and Re Cogan cases.   Some of the key lessons are as follows:

a)            It is important to have retainer agreements that are clear and unambiguous;

b)            The affidavit of the litigation guardian should make it clear that the litigation guardian understood the terms of the retainer agreement;

c)            The nature and extent of the work and effort spent by plaintiffs’ counsel should be set out;

d)            The materials should address the financial cost and risk to plaintiffs’ counsel in taking on and advancing the claim;

e)            The materials should address whether the incapable person’s needs will be met from their net recovery after the deduction of legal fees.

In cases like Cogan where the contingency fee agreement is easy to understand the agreement should be given substantial weight.   Fees based on clear and unambiguous contingency fee agreements have been approved in cases subsequent to Cogan.18

Where the retainer agreement is ambiguous, fees are more likely to be reduced.   The decision of Justice Wilkins in Marcoccia v. Gill involved a partial settlement with one set of defendants.   The case proceeded on to trial as against Ford Credit.   At trial, total damages were assessed at over $16 million.   Due to a liability split, the plaintiffs recovered damages of slightly more than $10 million.

Justice Moore dealt with the issue of plaintiffs’ counsel’s fees following trial in an endorsement reported as Marcoccia v. Ford Credit.19  The retainer agreement at issue in Marcoccia v. Ford Credit provided for fees “in the amount of 15% of the total damages awarded before reduction for any split in liability”.    Justice Moore questioned whether the litigation guardian understood the terms of this retainer:20

One wonders whether [the guardian] understood that the contingency percentage number was to be applied to the gross assessment or the damages actually awarded by the judgment.

..

By shielding [counsel] from accountability for failure to persuade the jury to apportion liability entirely against the defendants, this agreement requires Robert to pay fees, not at 15% of “damages” but at a net effective rate of 25% of the damages awarded through the judgment in this case

Justice Moore reduced the fee account to 15% of the plaintiff’s actual recovery for claim, less costs.    This case stands as a further reminder of the importance of unambiguous retainer agreements and the need for evidence that the terms of the retainer were understood by the litigation guardian.

Judges are more reluctant to approve large contingent fees where there is a lack of evidence that the plaintiffs’ net recovery will meet his or her needs.   In Giusti v. Scarborough Hospital the minor plaintiff’s parents had signed a contingency fee agreement which provided for fees in the amount of 20% of the amount recovered for claim plus the partial indemnity costs recovered.    The minor plaintiff’s claim was settled for $4.5 million plus costs of $600,000 inclusive of GST.   Justice Spies heard the motion for settlement approval.  She reduced the fee payable by the injured child from $900,000 plus costs of $600,000, to $780,000 plus costs of $600,000.  The main factor influencing Justice Spies to reduce the fee account was that the minor plaintiff’s future needs would not be met by the settlement:21

The difficulty in the case before me is that although it was prudent to enter into the settlement, I am not satisfied that all of Jack’s future care needs will be met for life if the fee requested is approved.   There is no doubt that the settlement reflects a substantial compromise, as one would expect.

…

It is obviously much easier to approve of a substantial premium when there is no doubt that the needs of the party under disability will be more than satisfied, as was the case in Cogan and Sandhu.   That is not this case.  

Setting out the details of how the settlement proceeds will meet the injured person’s needs will provide the Judge hearing the motion with comfort as to the quantum of the settlement.   As the Giusti case demonstrates, it will also provide the Judge hearing the motion with comfort as to the fees charged.

There has also been some reluctance on the part of judges to approve fees pursuant to contingency fee agreements in relation to accident benefits settlements.   In Adler v. State Farm Justice Wilkins distinguished between complex tort actions and straight forward accident benefits claims:22

In my view there is a significant difference between a contingency fee requiring Court approval in a tort action in which many complex issues are at stake.   Tort actions frequently involve issues of liability and they have the requirement of proof on the balance of probabilities.   An accident benefits claim, on the other hand, is very different in nature, particularly when the demonstrable injuries are catastrophic, the needs of the claimant are patent and the wording of the Act, the regulations and the policy are applicable.  

Similar reasoning was employed by Justice C.L. Campbell in Durmus v. Durmus.23  That case involved the settlement of a tort claim and an accident benefits claim.   There was a contingency fee agreement that provided for fees in the amount of 25% of the total recovery.  Justice Campbell approved the 25% contingent fee in respect of the tort action but reduced the fee to 15% in respect of the accident benefits settlement.

Sometimes accident benefits claims can be just as challenging and time consuming as tort claims.   It is important to explain the challenges faced in connection with the accident benefits claim and describe the time spent assisting the client with his or her accident benefits claim in the settlement approval material.

In summary, the key to the approval of contingent fees is providing the Judge with fulsome information on the guardian’s understanding of the retainer agreement,  the complexities of the case, the risk involved, the extent of the work done on the file and the appropriateness of the net settlement in terms of meeting the injured person’s needs.

GUARDIANSHIP FOR ADULTS

Determining Capacity

Adults who lack capacity to make property or personal care decisions need a substitute decision maker.   In the rare case, the incapable person will have appointed a power of attorney prior to losing capacity.   Where there is no power of attorney, the Substitute Decisions Act, 1992 (”SDA”) sets out a procedure for the appointment of a guardian of property and/or guardian of the person.

The test for capacity to make property decisions is set out in section 6 of the SDA.  A person is incapable if he or she does not understand the information necessary to make decisions about his or her property or cannot appreciate the reasonably foreseeable consequences of a decision about property.

Personal care decisions are those which relate to health care, nutrition, shelter, clothing, hygiene or safety issues.  A person may be incapable of making decisions about one, some or all of these issues.    The test for capacity to make personal care decisions is the same as for property.   If a person is incapable of understanding the information necessary to make personal care decisions or cannot appreciate the reasonably foreseeable consequences of a decision about personal care, then that person is incapable of making personal care decisions for himself or herself.

Where there is uncertainty about an adult’s capacity to make property or personal care decisions it is possible to arrange a capacity assessment by a certified capacity assessment.   The Ontario Attorney General’s office maintains a list of certified capacity assessors.

Powers and Duties of the Guardian

A guardian of property has the power “to do on the incapable person’s behalf anything in respect of property that the person could do if capable, except make a will”.24

In order for a guardian of the person to be appointed, the Judge must be satisfied that the injured person is incapable of making decisions concerning his or her own health care, nutrition, shelter, clothing, hygiene or safety.   If an injured person is incapable of making decisions in all of these areas a full guardianship of the person can be ordered.   If an injured person is incapable of making decisions in some, but not all, of these areas, a partial guardianship of the person can be ordered.   The guardian of the person has authority to make decisions in relation to those areas in which the injured person is found to be incapable.

The overriding duty of a guardian of property or guardian of the person is to act in the incapable person’s best interests.   The guardian must exercise his or her powers “diligently, with honesty and integrity and in good faith, for the incapable person’s benefit.”25  A guardian of property is required to keep accounts of all transactions relating to the incapable person’s property.

The Procedure for the Appointment of a Guardian

Anyone can bring an application for the appointment of a guardian of property or a guardian of the person in respect of an incapable person.   Usually, the application is brought on by a family member of the incapable person.   Non family members who provide paid health care or residential, social, training or support services to the incapable person are prohibited from being guardians.26  In considering whether to appoint a particular person as guardian, the Court is to consider the qualifications of the applicant, the closeness of the applicant’s relationship with the incapable person and the incapable person’s wishes if they can be ascertained.27

The application must include evidence to satisfy the Judge that the person is incapable.   This may be in the form of a capacity assessment.   It may be based on affidavits from the person’s treating health care providers.   The guardianship order must include a finding of incapacity.28

An application for guardianship must be served on the incapable person, the incapable person’s family members and the Public Guardian and Trustee.

Management Plan and Guardianship Plan

An application for the appointment of a guardian of property must be accompanied by a Management Plan.29   The form of the Management Plan is prescribed by regulation.  The Management Plan must list out all of the incapable person’s assets, income and expenses. Where the incapable person has substantial care needs, detailed information should be provided about the cost of those needs and how they will be paid for.

An application for the appointment of a guardian of the person must be accompanied by a Guardianship Plan.30   The form of the Guardianship Plan is prescribed by regulation. It must describe the applicant’s plans for the incapable person’s health care, nutrition, shelter, clothing, hygiene and safety.

The Timing of Guardianship Applications for Adults

In the case of a severe brain injury it may become obvious quickly that the injured person will lack capacity for a lengthy period of time or indefinitely. In such a case, it makes sense to bring on a guardianship application early on, well before the case settles.   That way, there is a properly authorized substitute decision maker to manage the incapable person’s property pending the settlement. Once a settlement is reached and is approved, it may be necessary to file a revised management plan with the Public Guardian and Trustee.

Guardianship Costs

There is at least one judicial decision that says the cost of an initial guardianship application is a rehabilitation benefit under the Statutory Accident Benefits Schedule and, therefore, payable, by the accident benefits insurer.31

The cost of complex guardianship applications can be substantial.   Where a person has become incapable due to another person’s negligence, it is possible to claim the cost of legal fees associated with guardianship proceedings in the tort claim.  In the case of Sandhu v. Wellington Place Apartments32 Justice Horkins awarded $400,000 for future legal fees in connection with guardianship proceedings for a brain injured minor.

Guardians are entitled to fees under the SDA.  The cost to pay personal and institutional guardians is also recoverable in tort proceedings where injured person has been rendered incapable because of the defendant’s negligence. In the Sandhu v. Wellington Place Apartments Justice Horkins awarded $268,000 for future guardianship fees of a family member appointed as guardian and $1,127,000 for future fees of an institutional co-guardian.   

GUARDIANSHIP FOR CHILDREN

During the course of a lawsuit, a minor’s litigation guardian is entitled to make decisions about the lawsuit.   However, once the lawsuit is finally determined by Judgment, the person’s status as litigation guardian ends.   Where money is payable to a minor’s benefit it is essential that the money either be paid into Court or paid to a properly authorized substitute decision maker.

Rule 7.09 of the Rules of Civil Procedure requires the payment of funds owing to a minor to be paid into Court unless the Court orders otherwise.    Where a minor plaintiff does not have ongoing care needs to be covered by the settlement, payment into Court is an acceptable option.  If money is paid into Court and it needs to be withdrawn to pay for a reasonable expense, a motion can be brought under Rule 72.

Payment of settlement funds into Court is not a satisfactory option where the minor has significant ongoing care needs that must be met by the settlement proceeds.   In these situations, money paid to the benefit of the child must be paid either to a court appointed guardian of property or to a trustee.

Section 47 of the Children’s Law Reform Act33 (“CLRA”) provides that the child’s parents, or any other person, may apply to be appointed as guardian of a child’s property. Both parents may be appointed as joint guardians.   Where there is a choice between a parent and a non-parent the CLRA says that the parent shall be given preferential entitlement. 34 The CLRA directs the Court to consider whether the proposed guardian has the ability to manage the child’s property, the merits of the plan proposed for care and management of property and the views of the child if they are ascertainable.

Unlike the SDA, the CLRA does not set out of the form that the management plan must be in.   The Court will expect a comprehensive plan setting out the anticipated expenses for care and maintenance of the child and setting out the proposed investment of the settlement proceeds to meet those needs    It is important to remember that a parent has an obligation to provide a child’s ordinary day to day needs.   As such, a Judge may object to a management plan that calls for the settlement funds to be used to provide the basic necessities of life.   Similarly, a Judge is likely to be concerned about any management plan that calls for the child’s settlement proceeds to support his or her family.

In circumstances where it appears that the child, due to disability, will not be capable of managing his or her settlement upon reaching the age of majority, a Judgment approving a settlement or guardianship order may provide for a capacity assessment of the child shortly before his or her eighteenth birthday so that an application to appoint a guardian under the SDA can be brought.

SUMMARY

As lawyers representing seriously injured children and adults we must do our best to ensure that a fair settlement is reached and that the proceeds of the settlement meet our clients’ needs in the future.   Where the injured person is incapable of making decisions for himself or herself it is essential to ensure that a properly authorized substitute decision maker is put in place.

It is important to keep the following things in mind when advancing the claim of a party under disability towards settlement:

•  Ensure that a clear and unambiguous retainer agreement is signed by a substitute decision maker (ie.  the litigation guardian or court appointed guardian).
• Where an adult person has been rendered incapable of making property and personal care decisions, consideration should be given to the need for a guardianship application under the SDA at an early stage.
• If no guardian is appointed before the case settles, a guardianship application should be brought concurrently with, or immediately after, the approvals motion.
• When a case is settled, the settlement approval materials should include fulsome information to explain the following      issues to the Judge:
  •  The nature of the liability risks in the case.
  • The nature and complexity of the damages issues in the case.
  • The issues relating to any claim for accident benefits and an explanation of any difficulties associated with the       accident benefits claim.
  • Justification of the result having regard to the risks.
  • How the total settlement funds are being allocated as between plaintiffs and the rationale behind the explanation.
  • How the settlement proceeds for an incapable person are to be invested.
  • How the investment of the settlement proceeds will meet the needs of the injured person.
  • A proposal with respect to who will manage the settlement proceeds (ie. either an existing guardian or through the appointment of a guardian).
  • Information about the proposed guardian’s background and capacity to manage the money.
  • Information about the time and effort spent on the file by counsel.
  • Information about the risks taken on by counsel in connection with the claim, including the funding of disbursements.

---

1. Rule 7.01 of the Rules of Civil Procedure.
2. Rule 1.03 of the Rules of Civil Procedure.
3. Rule 1.03 of the Rules of Civil Procedure.
4. S.O. 1992, c. 30, sections 6 and 45.
5. (2006) 268 D.L.R. (4^th) 670 (C.A.), at para. 10.
6. [2007] O.J. No. 12 (S.C.J.), at para. 20.
7. [2007] O.J. No. 889 (S.C.J.), at para. 24.
8. [2008] O.J. No. 1899 (S.C.J.), at para. 6.
9. Ibid.
10. [2007] O.J. No. 4539 (S.C.J.), at para. 21.
11. [2008] O.J. No. 3875 (S.C.J.), at para. 15.
12. Supra, note 6, at para. 27.
13. Supra, note 10.
14. Ibid, at paras. 34,60.
15. Ibid, at para. 53.
16. Ibid, at para. 56.
17. Ibid, at para. 25, 27.
18.  See, for example, Symington v. Adam [2008] O.J. No. 1923 (S.C.J.).   See also Zigomanis v. Ing, unreported decision of Justice Frank, Toronto Court File No. 07-CV-342083.
19. [2008] O.J. No. 2272 (S.C.J.).
20. Ibid, at para. 39, 44.
21. Supra, note 8, at paras 88-90.
22. [2008] O.J. No. 2666 (S.C.J.), at para. 35; revised by [2009] O.J. No. 2095 (S.C.J.)
23. [2009[ O.J. No. 4870 (S.C.J.).
24. Substitute Decisions Act, 1992, s. 31.
25. SDA, s. 32
26. SDA, s. 24.
27. SDA, s. 24.
28. SDA, s. 25 and 58.
29. SDA, s. 70.
30. SDA, s. 70.
31. Stukic v. Personal Insurance of Canada, [2005] O.J. No. 3325 (Small Claims Court).
32. [2006] O.J. No. 2448 (S.C.J.).
33. R.S.O. 1990, c. C.12.
34. CLRA, s. 48(2).