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It’s All in the Minutes

Kumra v. Kumra, 2020 ONSC 1425 (CanLII), http://canlii.ca/t/j63dc

Introduction

This case involved a dispute between two brothers, the applicant, Sanjiv, and the respondent Rajiv about their mother’s property. Their mother, Asha was 81 years old at the time, a widow, and incapable of managing her property and personal care.

Asha executed powers of attorney for property and personal care on November 23, 2006, appointing Sanjiv and Rajiv jointly. She subsequently executed a series of powers of attorney, appointing one or both of Sanjiv and Rajiv.

In October 2016, Sanjiv brought this application seeking, among other things, an order terminating all of Asha’s powers of attorney and a declaration that Asha was incapable of managing her property and personal care. Accordingly, Sanjiv also sought an order appointing The Bank of Nova Scotia Trust Company (“Scotiatrust”) as guardian of Asha’s property and the registration of certificates of pending litigation in favour of Asha on title to two properties that Asha allegedly transferred to Rajiv’s spouse, Rashmi, for less than fair market value (the “Transfers”).

On May 28, 2018, Sanjiv and Rajiv entered into Minutes of Settlement (the “Minutes“) to resolve the dispute between them relating to the guardianship Asha’s property and the Transfers. The terms of the Minutes contemplated the appointment of Scotiatrust as Asha’s guardian for property and permitted Scotiatrust to commence claims against Sanjiv, Rajiv, and others in respect of property belonging to her. This provision limited such claims as of the date of the Judgment and/or within the year before the Judgment.

On September 11, 2018, the Honourable Madam Justice Chiappetta issued a judgment appointing Scotiatrust as the guardian of Asha’s property, approving Scotiatrust’s management plan, and ordering Sanjiv and Rajiv to abide by the terms of the Minutes (the “Judgment”).

The Issue                       

The issue, in this case, was whether the Minutes were binding on Scotiatrust, and specifically, whether Scotiatrust could commence litigation against Sanjiv, Rajiv, and others with respect to the Transfers, which took place outside of the one year prior to the Judgment.

Positions of the Parties

Sanjiv asserted that the Minutes did not bind Scotiatrust and further asserted that even if Scotiatrust was bound by the Minutes, it could not be constrained from commencing claims on behalf of Asha on the basis that her rights, as an incapable person, could not be bargained away by her sons.

On the other hand, Rajiv asserted that the Minutes did bind Scotiatrust on the basis that the Minutes were incorporated into the Judgment.

Scotiatrust’s Motion

Scotiatrust brought a motion for directions seeking the advice and direction of the court.  The issues before the court were as follows:

  1. Was it proper for Scotiatrust to bring the motion?
  2. Was Scotiatrust bound by the Minutes?
  3. If Scotiatrust was bound by the Minutes, was it precluded from pursuing a claim respecting the Transfers?

Was it Proper for Scotiatrust to Bring its Motion?

The court determined that Scotiatrust was entitled to bring its motion pursuant to section 39(1) of the Substitute Decisions Act. This was reinforced by the fact that Sanjiv and Rajiv agreed that any dispute relating to the Minutes was to be determined on a motion or application to a judge on the Estates List of the Superior Court of Justice in Toronto as set out in paragraph 35 of the Minutes.

Was Scotiatrust Bound by the Minutes?

The court determined that Scotiatrust was not bound by the Minutes. This decision was reached based upon several findings, an important one being that Sanjiv and Rajiv were the only parties to the Minutes. The court found that Scotiatrust was not a party to the minutes and furthermore, that no one from Scotiatrust attended the mediation.

Asha’s section 3 counsel attended the mediation, bud did not act as Asha’s litigation guardian, or as her substitute decision maker. She also confirmed that she did not sign the Minutes on behalf of Asha. On this basis, the court determined that Asha had no representation at the mediation for the purposes of contributing to, or agreeing to, any terms of the Minutes. Furthermore, if the Minutes were intended to be binding on Asha, court approval would have been required pursuant to rule 7.08 of the Rules of Civil Procedure due to the fact she was a person under disability.

The court noted the significance of the fact that the Judgment did not Order Scotiatrust to abide by the terms of the Minutes. Rather, according to the Judgment, Scotiatrust as Asha’s guardian was ordered to act in accordance with the management plan and was duty-bound to act accordingly for Asha’s benefit:

Scotiatrust, as guardian, must carry out its duties as prescribed by the SDA. Subsection 32(1) of that Act provides that “A guardian of property is a fiduciary whose powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit.” 

Given that the court determined that Scotiatrust was not bound by the Minutes, there was no need to determine whether it could pursue claims with respect to the Transfers. As such, it was left to Scotiatrust to determine whether it would be in Asha’s best interests to pursue those claims on her behalf.

Conclusion

Minutes of settlement are often crafted from compromise. An important takeaway from this case is that parties engaging in settlement negotiations are not free to compromise or otherwise limit the rights of those who are not parties. Some comfort may be taken from this decision as it demonstrates the court’s unwillingness to adhere to terms that frustrate the rights of people who are not parties to minutes of settlement.

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