Kumra v Kumra: Was the Guardian of Property Bound by Previously Executed Minutes of Settlement?
The decision of Kumra v Kumra 2020 ONSC 1425, examined the role of a third-party professional guardian of property appointed after the settlement of a guardianship dispute between two brothers, and whether the guardian was bound by the corresponding Minutes of Settlement.
Background and Litigation
There was an acrimonious dispute between two brothers about their 81-year-old mother’s property. The mother was incapable of managing her property. Starting in 2006, she had executed successive power of attorney documents, either appointing both sons jointly, or one of the sons solely. Litigation ensued with allegations on both sides of wrongdoing, fraud, and improper dealings. In May 2018, the brothers settled their dispute and personally entered into Minutes of Settlement (the “Minutes”).
In September 2018, a judgment was issued by the court appointing a trust company as the mother’s guardian of property. The Minutes included a provision that permitted, but did not require, the trust company to bring claims against the brothers and others in respect of the mother’s property. The provision also limited claims to property transferred as of the date of judgment (September 2018) and/or within the year prior.
At issue was whether the trust company was bound by the Minutes and whether the trust company could commence claims on behalf of the mother regarding two transfers that took place outside of the one-year period in the Minutes.
The trust company sought advice and directions on three questions:
- Was it proper for the trust company to bring the motion for advice and directions?
- Was the trust company bound by the Minutes?
- If bound, was the trust company precluded from pursuing a claim respecting the property transfers?
Decision
On the first question, the court confirmed the distinction, that while a guardian cannot seek direction on how it should exercise its discretion, a guardian can seek the court’s direction on whether it is entitled to exercise its discretion.[1] In this case, the trust company was seeking guidance on whether it could, on behalf of the incapable mother, pursue a claim; not, whether it should pursue a claim. Therefore, the motion was proper.
In answering the second question, the court noted that the Minutes were executed by the brothers only, and that the Minutes specifically stated that the Minutes were “binding on the parties.”[2] The trust company was not a party to the Minutes.
While the representative of the trust company briefly spoke with counsel for the parties over the phone, he was not at the mediation where the dispute settled and had little input, if any into the Minutes.
Notably, the trust company did not approve the settlement, and the settlement was never reviewed by a lawyer on its behalf. Further, subsequent to the settlement, a court order was obtained providing, among other things, that the trust company was appointed guardian of property and that the brothers, “shall abide by the terms of the Minutes of Settlement.”
The court did not make an order that the trust company abide by the Minutes. The trust company was obliged to act in accordance with its Management Plan, not the Minutes.
Pursuant to s. 25 (2) (c) of the Substitute Decisions Act, 1992, SO 1992, c 30 an order appointing a guardian may include court imposed conditions on the appointment. The judgment imposed no such conditions on the appointment of the trust company, including any condition that it abide by the Minutes.[3]
The court found that the trust company was not bound by the Minutes, and therefore, it did not have to answer the third question. However, it remained in the trust company’s discretion to decide whether it would be in the incapable person’s best interests’ to pursue any claim on her behalf.
Takeaway
This case is helpful to provide guidance to fiduciaries’ on the appropriateness of certain questions raised on an application for advice and directions and the scope of the relief reasonably requested.
Notably, all too often parties embroiled in litigation fail to properly include input from those affected by a mediation in situations like this for various reasons including practical obstacles making it not always agreeable or possible.
However, guidance can be gleaned here by all parties’ intent on entering into Minutes of Settlement in litigation, to consider specifically turning focused attention to whether all individuals, or entities that are affected by the Minutes are involved and to ensure that the settlement is drafted so as to reflect such appropriate involvement of all required parties and signatories.
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[1] Kumra v Kumra, 2020 ONSC 1425 at para 32.
[2] Kumra v Kumra, 2020 ONSC 1425 at para 35.
[3] Kumra v Kumra 2020 ONSC 1425 at para 56.
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This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
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Written by: Kimberly A. Whaley
Posted on: October 28, 2020
Categories: Commentary
The decision of Kumra v Kumra 2020 ONSC 1425, examined the role of a third-party professional guardian of property appointed after the settlement of a guardianship dispute between two brothers, and whether the guardian was bound by the corresponding Minutes of Settlement.
Background and Litigation
There was an acrimonious dispute between two brothers about their 81-year-old mother’s property. The mother was incapable of managing her property. Starting in 2006, she had executed successive power of attorney documents, either appointing both sons jointly, or one of the sons solely. Litigation ensued with allegations on both sides of wrongdoing, fraud, and improper dealings. In May 2018, the brothers settled their dispute and personally entered into Minutes of Settlement (the “Minutes”).
In September 2018, a judgment was issued by the court appointing a trust company as the mother’s guardian of property. The Minutes included a provision that permitted, but did not require, the trust company to bring claims against the brothers and others in respect of the mother’s property. The provision also limited claims to property transferred as of the date of judgment (September 2018) and/or within the year prior.
At issue was whether the trust company was bound by the Minutes and whether the trust company could commence claims on behalf of the mother regarding two transfers that took place outside of the one-year period in the Minutes.
The trust company sought advice and directions on three questions:
Decision
On the first question, the court confirmed the distinction, that while a guardian cannot seek direction on how it should exercise its discretion, a guardian can seek the court’s direction on whether it is entitled to exercise its discretion.[1] In this case, the trust company was seeking guidance on whether it could, on behalf of the incapable mother, pursue a claim; not, whether it should pursue a claim. Therefore, the motion was proper.
In answering the second question, the court noted that the Minutes were executed by the brothers only, and that the Minutes specifically stated that the Minutes were “binding on the parties.”[2] The trust company was not a party to the Minutes.
While the representative of the trust company briefly spoke with counsel for the parties over the phone, he was not at the mediation where the dispute settled and had little input, if any into the Minutes.
Notably, the trust company did not approve the settlement, and the settlement was never reviewed by a lawyer on its behalf. Further, subsequent to the settlement, a court order was obtained providing, among other things, that the trust company was appointed guardian of property and that the brothers, “shall abide by the terms of the Minutes of Settlement.”
The court did not make an order that the trust company abide by the Minutes. The trust company was obliged to act in accordance with its Management Plan, not the Minutes.
Pursuant to s. 25 (2) (c) of the Substitute Decisions Act, 1992, SO 1992, c 30 an order appointing a guardian may include court imposed conditions on the appointment. The judgment imposed no such conditions on the appointment of the trust company, including any condition that it abide by the Minutes.[3]
The court found that the trust company was not bound by the Minutes, and therefore, it did not have to answer the third question. However, it remained in the trust company’s discretion to decide whether it would be in the incapable person’s best interests’ to pursue any claim on her behalf.
Takeaway
This case is helpful to provide guidance to fiduciaries’ on the appropriateness of certain questions raised on an application for advice and directions and the scope of the relief reasonably requested.
Notably, all too often parties embroiled in litigation fail to properly include input from those affected by a mediation in situations like this for various reasons including practical obstacles making it not always agreeable or possible.
However, guidance can be gleaned here by all parties’ intent on entering into Minutes of Settlement in litigation, to consider specifically turning focused attention to whether all individuals, or entities that are affected by the Minutes are involved and to ensure that the settlement is drafted so as to reflect such appropriate involvement of all required parties and signatories.
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[1] Kumra v Kumra, 2020 ONSC 1425 at para 32.
[2] Kumra v Kumra, 2020 ONSC 1425 at para 35.
[3] Kumra v Kumra 2020 ONSC 1425 at para 56.
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This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
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