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INTRODUCTION[1]
Most people have property. While we are decisionally capable of doing so, we manage our own property as we see fit, or as we direct. When a person loses or does not have the requisite decisional capacity to manage their property, another person or entity may need to fill this void and manage the incapable person’s property on the person’s behalf.
If the person executed a continuing power of attorney for property (“CPOAP”), while capable of doing so as prescribed by governing legislation, the named attorney under the CPOAP will have the legal authority to manage the incapable person’s property. If the person has not executed a CPOAP (or in other circumstances described below), then a guardian of the property may be appointed, where necessary to manage the person’s property, if the person is declared incapable of doing so pursuant to the Substitute Decisions Act, 1992[2] (“SDA”).
If the incapable person is a minor, a Guardian of the Property may be appointed pursuant to the Children’s Law Reform Act[3] (“CLRA”) to manage the incapable minor’s property.
This chapter is divided into three sections:
Guardianship of property generally;
Guardianship of property applicable to minors; and
Guardianship of property applicable to adults.
GUARDIANSHIP OF PROPERTY GENERALLY
Why Guardianship?
The first question to consider is, “why guardianship”?
Primarily, there are three instances in which a guardian of the property might be appointed when a person is found to be decisionally incapable of property management:
the incapable person has not executed a CPOAP, and a guardianship appointment is in order such that the incapable person’s property can be managed on their behalf;
the incapable person has executed a power of attorney for property, but it does not survive incapacity like a CPOAP contemplates, or there is no appropriate less restrictive means to have substitute decisions made for the person, or for one reason or another, it becomes necessary or advisable for a person to apply for appointment as the incapable person’s guardian of property, thus overriding the CPOAP appointment. For example, where a third party is concerned that an incapable person’s chosen attorney under CPOAP is not managing the incapable person’s property appropriately, or if the chosen attorney herself becomes incapable, it may be necessary for a third party to apply for appointment as the incapable person’s guardian of the property;[4] or
the incapable person is a minor who has, for one reason or another, property which must be managed on the incapable minor’s behalf as indicated in the CLRA.
What is a Guardianship Application?
It is beyond the scope of this chapter to fully address the procedure on a guardianship application, but it will be of assistance to the reader to understand, at a high level, what the process entails and what criteria the court will consider when hearing a guardianship application. Careful attention must be paid to the statutory provisions of the SDA and/or CLRA as well as the Ontario Rules of Civil Procedure[5] (“Rules”).
A guardianship application is a court application like any other application under the Rules, and consists of a notice of application, supporting affidavit, management plan, consent to act and draft order, all of which are contained in an application record. In most procedural respects, the application is governed by the Rules, including timelines for service, formatting of documents, the requirement of facta (in some instances) and bills of costs, to name a few.
Guardianship applications are, however, different from other types of applications under the Rules because the SDA and CLRA require certain documents to be filed and/or steps to be taken (including service of certain parties) which are not otherwise required under the Rules. These distinguishing characteristics of guardianship applications will be considered below in relation to proceedings under both the SDA and the CLRA.
In the next section of this chapter, guardianship as it applies to incapable minors will be considered. Though the legislative scheme which governs guardianship applicable to children is substantially different from the SDA, in all cases of guardianship, guardians are fiduciaries for the incapable person.
Guardianship applicable to incapable minors
Minors are incapable by virtue of their designation as a minor under the age of 18.[6] Guardianship applications in relation to minors are governed by the CLRA.
Money may be payable to a child:
under a court order for damages, or other;
in an estate (with or without a will) or trust;
under a life insurance policy where the child has been named as the designated beneficiary;
under an RRSP or other pension plan; or
under some other death or accident benefit.
A parent is not automatically the “guardian” of his/her own child’s property. A parent (or other person with custody) cannot receive property belonging to a minor if it has a value in excess of $10,000, absent authority.[7]
Unless money is payable to a minor under a judgment or order of the court, if any amount owed to a minor is less than $10,000, the person under a duty to deliver it to the minor may deliver it to:
a parent with whom a child resides;
a person who has custody of a child; or
the child, if the child has a legal obligation to support another person.[8]
A person who receives the minor’s property has the same responsibility as a guardian for the care and management of the property.[9]
A court order is required for a person to be appointed as the guardian of a minor’s property. Sections 47 and 58 of the CLRA establish the framework for appointing a guardian of a minor’s property. Since it is the Office of the Children’s Lawyer of Ontario (“OCL”) who responds to guardianship applications brought concerning a minor’s property in accordance with s 47 of the CLRA, the person making the application should be named as the applicant and the application must be brought on notice to the OCL.
Parties Who May be Appointed
A parent or any other person may be appointed as guardian of a minor’s property upon application to the court and on notice to the OCL.[10] Subject to a court order, judgment, or agreement, the parents of a child are equally entitled to be appointed as guardians. Parents are preferred over non-parents. More than one guardian may be appointed and multiple guardians are jointly responsible.[11] Where the amount of money is large, the court may require an insured/bonded professional, for instance a trust company or other independent professional, to act as guardian.
The Ontario Superior Court of Justice and the Ontario Court of Justice have jurisdiction to make guardianship orders for a minors’ property.[12] However, only the Ontario Superior Court of Justice has jurisdiction to grant a guardianship judgment that permits encroachment.[13]
Responsibilities of a Guardian of Property under the CLRA
A guardian of property is responsible for the care and management of the minor’s property.[14] The guardian is required to:
keep careful accounts of all dealings with the child’s money;
make proper trustee investments and invest the child’s money as required by the management plan approved by the court (guardians must comply with the Trustee Act[15] requirements for the investment of trust funds); and
transfer all the property to the child at age 18.[16]
If the child has a legal obligation to support another person, the court will terminate the guardianship on the child’s application.[17]
In a guardianship application, the court considers all circumstances, including the ability of the applicant to manage the property, the merits of the proposed management plan for the investment of the child’s funds and the views and preferences of the child where they can be reasonably ascertained.[18]
Section 55 of the CLRA stipulates that the court “shall require” the guardian to post a bond, but the court may dispense with a bond where the applicant is a parent of the child.[19] Usually, the court will not dispense with a bond where the applicant does not have assets in excess of the amount of the child’s funds.[20]
Guardianship Applications for Minors
In reviewing a guardianship application, the OCL evaluates the requirements listed in the CLRA and considered by the courts, such as:
The applicant’s ability to manage the property;[21]
Merits of the Plan for the Care and Management (“management plan”) put forward by the applicant;[22]
Whether the anticipated rate of return is likely to be more favourable than if the funds are paid to the Accountant of the Superior Court of Justice (“ASCJ”)[23];
Information about the applicant’s ability to keep accounts, to account and, if required, pass accounts;[24]
That the guardianship must terminate when the minor attains the age of majority and the funds must be transferred to the former minor;[25]
Whether the applicant will charge compensation for acting as guardian;[26] and
The applicant’s ability to post a bond[27] which is mandatory for any applicant who is not a parent, though as noted above, a parent may seek a court order dispensing with the requirement to post a bond.[28]
The Management Plan
The management plan should be prepared and signed by the applicant, and not the financial advisor or lawyer, because it is the applicant’s plan and it is the applicant whom the court will hold accountable.
The proposed investments should reflect consideration of the duty to act as a prudent investor under s 27 of the Trustee Act (though the CLRA does not reference the Trustee Act). The management plan should allow for flexibility by providing a percentage range of investments as among cash, fixed income and equities, and should include particulars of any fees, loads or commissions associated with the investments.
The management plan must set out details of any authorized encroachments, for example for the minor’s income tax and preparation of income tax returns. The management plan must be sufficiently specific to permit meaningful review on a passing of accounts or when the child attains 18 years.[29] There will be less room for dispute on review if the judgment is specific as to the powers of the guardian, and specifically if it states what, if any, expenditures from the minor’s funds will be permitted by the guardian. If the guardian seeks authority to use the minor’s funds for the minor’s support, details supporting this request will be required, particularly if the applicant is a parent. Under s 31 of the Family Law Act[30] (“FLA”), a parent has a legal obligation to support his or her child. Any change in circumstance may require a new management plan and further court order reflecting the change. A sample, blank management plan was provided as an appendix to Chapter 3: Guardianship of the Person. See Chapter 3, Appendix A.
The Guardianship Order
The guardianship order/judgment should incorporate the management plan for the child’s money or property such that the guardian has clear directions for managing the money. The guardian is required to account. The guardian is required to keep careful records of all transactions including investments, receipts and disbursements of the child’s funds so as to be able to account to the court as required and to the child when he/she reaches the age of 18 years.[31] Where a large amount of money is involved, the guardianship order may require the guardian to regularly pass the guardianship accounts before the court at fixed intervals. The interval may range depending on age, stage and circumstances, but is usually from one to five years.[32]
Where the guardianship order/management plan does not expressly authorize the guardian to spend the child’s money, the guardian only has the authority to hold and invest the money until the child reaches the age of 18 years.
Generally speaking, the child’s money cannot be used for the financial support of the child. Parents have a legal obligation to support their children. Guardians are not entitled to use the child’s funds to provide for support for the child unless the guardianship order/management plan so authorizes it. Notably, however, a guardian of the property of a child is entitled to payment of a reasonable amount for fees for and expenses of management of the property of the child.[33]
A guardianship order is specific to the property, rather than to the minor/person. Accordingly, a guardianship application should only be commenced AFTER the minor’s entitlement to property (and the quantum) has been finally determined. Practically speaking, however, the application is made as close to the same time as circumstances will permit. As well, in order for the OCL and the court to assess the application against the requirements of the CLRA, particularly the reasonableness of the management plan and the applicant’s accounting plan, the nature and quantum of the minor’s property must be ascertained with certainty.
Personal Injury Proceeds
The role of guardian of a minor’s property and litigation guardian in the context of a legal proceeding are two distinct roles. Litigation guardians are addressed later in this chapter.
If the guardianship order applies to funds received by the minor from a personal injury settlement, specific, current information about the minor’s ongoing needs will be required (for example, a current Future Care Costs Report and a Home Accessibility Report). Factors considered will include the timing and size of payments from a structure, the costs of housing, transportation, therapies, assessment, attendant care, professional fees, equipment and renovations to existing structures. Depending on the quantum involved, and the structure of the award, a corporate guardian may be more appropriate, particularly since structured settlements can be complicated for the lay guardian to manage.
If there is a possibility that a minor may be incapable upon attaining the age of majority, the guardianship judgment should include a term requiring the guardian to arrange and pay for the minor’s assessment of capacity to manage property, in other words to be assessed by a qualified capacity assessor under the SDA prior to the minor’s 18th birthday. The judgment should set out who will arrange for the assessment and how it will be funded. It should also provide that, if the minor is found incapable, arrangements will be made for a guardian to be appointed in accordance with the SDA.
Investment of Trust or Guardianship Funds in an RESP
Courts and the OCL recognize the advantages of a parent or other relative contributing to an RESP to benefit a minor child, but investment in an RESP may not necessarily be prudent when the proposal is to fund the RESP with assets belonging to the minor, and the parent is the subscriber. The prospect comes with some risk and the views on whether it is appropriate vary.
If an RESP has been established for a minor who does not attend post-secondary education, the savings grant is returned to the government, and any interest may be lost, resulting in minimal return on the investment.
Because the subscriber is the owner of the funds, the subscriber may withdraw RESP contributions at any time, roll the RESP over into the subscriber’s RRSP or designate another child as beneficiary. RESP contributions may be considered property of the subscriber upon marriage breakdown, and therefore subject to equalization. RESP funds are not creditor proof in the event of the subscriber’s bankruptcy. Upon the death of the subscriber, RESP funds may be considered an asset of the subscriber’s estate and subject to creditor claims. Some of these concerns were expressed by Quinn J in Hoad v Giordano, in which the court stated:
In this application only one reason is advanced as to why the settlement funds should not be paid into court – Mr. Hoad feels he will garner a higher rate of return. I regret to say that I find his plan overly vague. He refers to the government making contributions “of up to 20%.” Is there a ceiling on those contributions both annually and over the lifetime of the RESP? Is there a maximum annual amount which may be paid into a RESP and, if there is, and if it is less than the amount of the settlement, what is to become of the balance of the settlement funds after the first maximum annual contribution is made and pending the contributions in future years? What occurs if Thomas does not commence or complete his post-secondary education? Finally, would the funds not have to become the property of Mr. Hoad in order for him to be the subscriber of the RESP of which Thomas would be the beneficiary? (In other words, may Thomas be both subscriber and beneficiary?)[34]
Alternatives to Guardianship in Relation to Minors
Payment to the Accountant of the Ontario Superior Court of Justice
Payment into court to the ASCJ often allows for a more flexible approach or option respecting unanticipated expenses for the minor. If any funds are required for the direct benefit of the child before the age of 18 years, the OCL has an informal procedure for parents or caregivers to request payments out of court for the direct benefit of the child when the parent/caregiver cannot afford the expense. The parent/caregiver may write directly to the OCL. Counsel from the OCL attends before a judge for a decision as to whether the money requested will be paid out of court to the parent/caregiver. Alternatively, the parent/caregiver may apply formally to the court on notice to the OCL pursuant to Rule 72 of the Rules of Civil Procedure.
The Office of the Public Guardian and Trustee operates the ASCJ. Funds held by the ASCJ are secure and earn interest at a competitive rate. The funds will be paid out to the minor when she/he attains the age of 18 years, unless a will, court order etc., establishes a later distribution date.
Trust Terms
Further alternatives may exist having some bearing on the appointment of a guardian under the CLRA, including various trust arrangements which may provide authority for the property to be held in trust by a parent or other individual/trustee, a will that contains trust terms, the designation of a trustee or a trust or trust settlement (inter vivos trust).
Litigation Guardian for Minors
In a civil case, a child under the age of 18 cannot sue or be sued in his/her name. A litigation guardian (“LG”) would need to be appointed.[35] One exception to this rule is in Small Claims Court cases for $500 or less.
An LG is an adult who makes decisions on behalf of a child in a court case. An LG is authorized to take all steps that the child would be able to take in the proceeding, as if the child were an adult. The LG must take all necessary steps to protect the child’s interest.[36] An LG must be represented by a lawyer.[37]
Litigation Guardian and Guardian of a Minor’s Property are Distinct Roles
In the case O’Connell v Snyder, a decision on a motion under Rule 7 to approve a settlement on behalf of a minor, the court considered the motion materials filed by the plaintiff, and stated:
The plaintiffs also seek an order appointing Jody O’Connell as litigation guardian. The settlement proposal does not direct payment of the minor’s settlement into court but, despite my request, no information has been provided to justify the proposal. The plaintiffs are reminded that the appointment of a litigation guardian is only for the purposes of the litigation. An appointment of a guardian of the property of the child is mandatory, pursuant to sections 47 to 60 of the Children’s Law Reform Act.[38]
Importantly, an LG is not the guardian that accepts payment of settlement proceeds or court awards. An LG therefore is not a guardian of the property or the person. It is the guardian of property appointed pursuant to a court order under the CLRA who receives payment of monies payable to the minor.
On a motion to appoint an LG, the applicant/moving party shall file an affidavit which speaks to:
the nature of the proceeding;
the date on which the cause of action arose and the date on which the proceeding was commenced;
service on the party under disability of the originating process and the request for appointment of litigation guardian;
the nature and extent of the disability;
in the case of a minor, the minor’s birth date;
whether the person under disability ordinarily resides in Ontario and,
except where the proposed litigation guardian is the Children’s Lawyer or the Public Guardian and Trustee, evidence,
concerning the relationship, if any, of the proposed litigation guardian to the party under disability;
whether the proposed litigation guardian ordinarily resides in Ontario;
that the proposed litigation guardian,
(i) consents to act as litigation guardian in the proceeding;
(ii) is a proper person to be appointed;
(iii) has no interest in the proceeding adverse to that of the party under disability; and
(iv) acknowledges having been informed that he or she may incur costs that may not be recovered from another party.[39]
The Children’s Lawyer for Ontario (“CL”) may initiate a proceeding on behalf of a minor, pursuant to Rule 7.02(2), which permits the CL to act as LG for a minor plaintiff or applicant, but the CL is a litigation guardian of last resort under Rule 7.04 and will act only if no parent, guardian or other adult exists who is willing and able to act as LG.
The most frequent proceedings initiated by the CL in the area of estates and trusts include motions or applications for an order requiring a passing of accounts, and dependant relief/support claims. The CL also reviews and approves settlements reached on behalf of minor litigants if a report is requested by the court pursuant to Rule 7.08.[40]
Notice to the OCL
Pursuant to the CLRA and the Rules, the OCL must be given notice of certain motions, applications and actions, including, for example, dismissal of a minor’s action for delay (Rule 24.02), removal of a minor’s litigation guardian (Rule 7.06(2)) and removal of the lawyer for a litigation guardian (Rule 15.04(3)).
The OCL represents minor respondents in a proceeding against their interest in a trust or estate by operation of law, unless the court orders otherwise, pursuant to Rule 7.03(2). The OCL will respond to, inter alia, the following types of claims on behalf of a minor, unborn or ascertained beneficiary:
Variation of trusts;
Applications to pass accounts;
Removal of trustees;
Will challenges;
Will interpretations;
Applications for directions;
Dependant relief/support applications under the Succession Law Reform Act[41] (“SLRA”);
Sale/encumbrances of a minor’s real estate; and
Guardianship applications brought in respect of a minor’s property.
Guardianship of the property of incapable adults
The Substitute Decisions Act, 1992
The SDA governs the appointment of guardians of the property for adults. Section 22(1) of the SDA states that “[t]he court may, on any person’s application, appoint a guardian of property for a person who is incapable of managing property if, as a result, it is necessary for decisions to be made on his or her behalf by a person who is authorized to do so.”[42] In the absence of these two conditions (incapacity to manage property, and resulting necessity of having decisions made by another person), a guardian should not be appointed.[43] Importantly, those seeking to be appointed as guardian of the property for an incapable adult cannot, themselves, be incapable of making decisions regarding the management of property.[44]
The purpose of the SDA is to protect the vulnerable while at the same time ensuring that the dignity and privacy of the individual are “assiduously protected.” Autonomy of the person and the presumption of capacity are paramount. In Park v Park, Turnbull J identified the balance which courts must achieve between the fundamental rights of citizens and their vulnerability to abuse when they become incapable:
The court is therefore placed in a position where it must weigh the fundamental rights of each citizen against the danger that that vulnerable person may be taken advantage of due to his/her incapacity to protect or care for her/himself or his/her assets and property. In doing that, the court must be cognizant that the capacity to perform certain functions differs, depending on the nature of the function.[45]
Pursuant to s 6 of the SDA, a person is incapable of managing property if:
[t]he person is not able to understand information that is relevant to making a decision in the management of his or her property or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision.
The Public Guardian and Trustee
The Office of the Public Guardian and Trustee (“OPGT”) is a corporation created under the Public Guardian and Trustee Act.[46] The OPGT is part of the Victims and Vulnerable Persons Division of the Ministry of the Attorney General. Lawyers at the OPGT may be assigned to conduct litigation in family law, general civil, trusts and estates law and corporate law. Other lawyers do solicitor’s work, including opinions, policy, the administration of estates, contracts, privacy and real estate law. Specialized legal work such as personal injury or bankruptcy is done by retainer of private-sector lawyers, where appropriate.
Overview of the role of the PGT[47]:
Acts as guardian of property and in certain instances of the person in circumstances of last resort for incapable adults under the SDA;[48]
Acts as statutory guardian of property for incapable adults, when appointed by s 16 of the SDA (pursuant to a capacity assessment), and by s 15 of the SDA (pursuant to a Mental Health Act[49] (“MHA”) certificate) and when court ordered for some clients;
Acts as guardian for personal care when court ordered pursuant to the SDA;
Conducts investigations into allegations of risk of serious adverse effects to incapable adults under the SDA;
Reviews and comments upon private applications to the Ontario Superior Court of Justice for guardianship under the SDA, taking a formal position in a proceeding if necessary;
Makes treatment and long-term care placement decisions under the Health Care Consent Act, 1996[50];
Under the Crown Administration of Estates Act,[51] administers certain estates of deceased persons who die in Ontario without a will and without known next of kin in Ontario;
Performs the functions of the ASCJ;
Acts as litigation guardian or legal representative of last resort of incapable adults in litigation under the Rules, the Family Law Rules[52] and the Rules of Small Claims Court[53];
Provides reports to the court under Rule 7.08(5) on settlements affecting adult parties under disability;
Administers perpetual care trust funds of some cemeteries under the Cemeteries Act (Revised),[54] and pursuant to the Escheats Act[55] may take possession of corporate property forfeit to the Crown under the Ontario Business Corporations Act,[56] or property escheating to the Crown under the SLRA or other statutes; and
Monitors the use of charitable property in Ontario, to ensure protection of the public interest under the Charities Accounting Act[57] and other statutes.
Appointment of the PGT as “Statutory Guardian”
A statutory guardianship does not require the court appointment of the guardian.
The PGT may be appointed as a “statutory guardian” of property, pursuant to s 15 or s 16 of the SDA in circumstances where an incapable person has not executed a valid power of attorney, or alternatively, if no application for guardianship of property is brought under the SDA and the assessment has issued under the SDA or the MHA, automatically activating their statutory appointment as guardian of property.
After becoming a person’s statutory guardian of property, the PGT must ensure that the person is informed in a manner that the PGT considers appropriate, that the PGT has become the person’s statutory guardian of property and that the person is entitled to apply to the Consent and Capacity Board for a review of the assessor’s finding that the person is incapable of managing property.[58]
If a certificate issues under the MHA certifying that a person who is a patient of a psychiatric facility is incapable of managing property, the PGT is the person’s statutory guardian (s 15 of the SDA). Under s 16 of the SDA, if the person is not a patient in a psychiatric facility anyone can request that a capacity assessor perform an assessment of the person to determine if the person is capable of managing property. If the person does not refuse to be assessed and the capacity assessor finds the person incapable of managing property, the prescribed forms are forwarded to the OPGT and the PGT thereafter automatically becomes the person’s statutory guardian of property.
When the PGT is acting as statutory guardian for an incapable person it can, in turn, appoint certain people to act in its place, or agree to be replaced on application to replace the PGT. A relative, spouse or partner of the incapable person may, for example, be appointed by the PGT. Applications can be made to replace the PGT as statutory guardian.[59]
The PGT shall appoint the applicant as the incapable person’s statutory guardian of property if the PGT is satisfied that the applicant is suitable to manage the incapable person’s property and that the management plan is appropriate.[60] The PGT must also consider the incapable person’s wishes and the closeness of the application’s relationship to the person.[61] As a condition to an appointment to replace the PGT, the PGT may require the applicant to post security. However, the court may order on an application that security be dispensed with or that the amount of security be reduced and subject to conditions.
If the PGT refuses the application for a replacement, there shall be written reasons given to the applicant.[62] If the applicant disputes the refusal by giving the PGT notice in writing, the PGT shall apply to the court to decide the matter.[63] It must be remembered, however, that a person can always bring a guardianship application to unseat the statutory guardian and is not restricted to applying to the PGT as a replacement.
While the PGT is limited as to who it can appoint, a court is not. The court also has the exclusive authority to appoint a guardian to replace an attorney under a CPOAP. As the court held in Valente v Valente, “where there is a Power of Attorney in existence and the court determines that there is strong evidence of misconduct or neglect, on the part of the Attorney, the court may ignore the wishes of the donor.”[64]
Procedure under the SDA for Guardianship Applications
Part III of the SDA prescribes the procedure to be followed in applications to appoint guardians of property for incapable adults. Importantly, s 69(1) lists the persons who must be served with the application. Far too often, litigants seeking guardianship appointments fail to bring their applications in accordance with section 69 by, amongst other things, failing to serve the appropriate or required persons and entities. Section 69(1) states that the application must be served on the following people, together with the documents referred to in section 70(1), and those referred to in section 72 if applicable:
The person alleged to be incapable of managing property.
The attorney under his or her continuing power of attorney, if known.
His or her guardian of the person, if known.
His or her attorney for personal care, if known.
The Public Guardian and Trustee.
The proposed guardian of property.
The remainder of section 69 of the SDA prescribes the procedure for various other steps in or types of proceedings related to guardianship including termination of guardianship and is reproduced at Appendix “A” to this chapter.
Section 70 of the SDA prescribes documents which must accompany a guardianship application (which would not ordinarily be required, for example in other applications under the Rules):
An application to appoint a guardian of property shall be accompanied by,
the proposed guardian’s consent;
if the proposed guardian is not the Public Guardian and Trustee, a plan of management for the property, in the prescribed form; and
a statement signed by the applicant,
(i) indicating that the person alleged to be incapable has been informed of the nature of the application and the right to oppose the application, and describing the manner in which the person was informed, or
(ii) if it was not possible to give the person alleged to be incapable the information referred to in subclause (i), describing why it was not possible.
A precedent Plan of Management is attached hereto as Appendix “B” to this chapter.
Routes to Guardianship in Applications under the SDA
Section 72 of the SDA addresses the procedure to be followed by an applicant who seeks an application for guardianship to be dealt with by way of summary disposition under section 77 of the SDA. Sections 72 and 77 of the SDA state (in relevant part):
- (1) If the applicant wishes an application to appoint a guardian of property to be dealt with under section 77 (summary disposition), it shall also be accompanied by two statements made in the prescribed form, one by an assessor and the other by an assessor or by a person who knows the person alleged to be incapable and has been in personal contact with him or her during the twelve months before the notice of application was issued.
[…]
- (1) In an application to appoint a guardian of property or guardian of the person or a motion to terminate a guardianship of property or guardianship of the person, the court may, in the circumstances described in subsection (2), make an order without anyone appearing before it and without holding a hearing.
Criteria a Court Will Consider in Appointing a Guardian for an Incapable Adult
Section 24 of the SDA lists the criteria the court will consider when determining whether to appoint a guardian of the property for a decisionally incapable adult, and as a result, the supporting affidavit of the potential guardian applicant should speak to these criteria. Subsection 24(5) states:
Except in the case of an application that is being dealt with under section 77 (summary disposition), the court shall consider,
whether the proposed guardian is the attorney under a continuing power of attorney;
the incapable person’s current wishes, if they can be ascertained; and
the closeness of the relationship of the applicant to the incapable person and, if the applicant is not the proposed guardian, the closeness of the relationship of the proposed guardian to the incapable person.
The degree of importance of consideration of the incapable person’s express wishes is demonstrated in the case Lazaroff v Lazaroff, in which Corbett J stated, “[the incapable person’s] wishes should be accorded significant consideration in appointing her guardian of property [see SDA, ss. 8, 9, and 12(1)(c)]. But they should not dispose of the issue.”[65]
Duties and Obligations of a Guardian for Incapable Adults: SDA sections 31-42
The duties and obligations (including potential liabilities) of a guardian for an incapable adult are prescribed at ss 31-42 of the SDA. Some of the most foundational principles which apply to and govern guardians are as follows:
Guardians of property are required to keep accounts pursuant to s 32(6) of the SDA. The contents of accounts are prescribed by O Reg 100/96 under the SDA. The format of accounts for the passing of an estate or guardian’s accounts is outlined in Rule 74.17 of the Rules, which is the same format required for estate trustees pursuant to Rule 74.17, except there is no obligation to distinguish between income and capital accounts as a guardianship is not a testamentary accounting.[66]
Guardians of property are fiduciaries for and of the incapable person; their powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit.[67]
Guardians may do on the incapable person’s behalf anything in respect of the incapable person’s property that the person could do if capable.[68]
The guardian’s powers are subject to the SDA and any conditions imposed by the court.
If the guardian’s decision will have an effect on the incapable person’s personal comfort or well-being, the guardian shall consider that effect in determining whether the decision is for the incapable person’s benefit.[69]
A guardian must encourage the incapable person to participate in the guardian’s decision regarding the incapable person’s property.[70]
A guardian shall consult from time to time with supportive family members and friends of the incapable person who are in regular personal contact with the incapable person and the persons from whom the incapable person receives personal care.[71]
A guardian shall explain to the incapable person what the guardian’s powers and duties are.[72] A guardian shall also encourage the incapable person to participate, to the best of his or her abilities, in the guardian’s decisions about the property.
Guardians must act in accordance with their management plan and/or guardianship plan, as approved by the court or the PGT. If a guardian must amend a plan because circumstances have changed, an amended management plan or amended guardianship plan may be submitted to the PGT pursuant to its statutory authority in sections 32(10) and (11) of the SDA.
A guardian who does not receive compensation for managing the property shall exercise the degree of care, diligence and skill that a person of ordinary prudence would exercise in the conduct of his or her own affairs.[73]
A guardian who receives compensation for managing the property shall exercise the degree of care, diligence and skill that a person in the business of managing the property of others is required to exercise.[74]
A guardian of property is liable for damages resulting from a breach of the guardian’s duty.[75]
Compensation of Guardians of Property for Incapable Adults under the SDA
Section 40 of the SDA describes the circumstances, manner and quantum in which a guardian of property may take compensation for performing their duties:
- (1) A guardian of property or attorney under a continuing power of attorney may take annual compensation from the property in accordance with the prescribed fee scale.
(2) The compensation may be taken monthly, quarterly or annually.
(3) The guardian or attorney may take an amount of compensation greater than the prescribed fee scale allows,
in the case where the Public Guardian and Trustee is not the guardian or attorney, if consent in writing is given by the Public Guardian and Trustee and by the incapable person’s guardian of the person or attorney under a power of attorney for personal care, if any; or
in the case where the Public Guardian and Trustee is the guardian or attorney, if the court approves.
(4) Subsections (1) to (3) are subject to provisions respecting compensation contained in a continuing power of attorney executed by the incapable person if,
the compensation is taken by the attorney under the power of attorney; or
[…]
the compensation is taken by a guardian of property who was the incapable person’s attorney under the power of attorney.
The Regulations enacted under the SDA permit a guardian to take compensation based on 3% of disbursements of capital and revenue plus an annual care and management fee of 0.6% of the fair market value of assets under administration by the guardian.
Courts consider appropriate compensation for guardians in light of the percentages indicated in the Regulations to the SDA, but have also in their decisions adopted factors originally used in the case law to assess executors’ compensation, and in consideration of section 61 of the Trustee Act, which states:
[a] trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice.
The recent case Goetz v Goetz provides an example of the way in which courts will address the question of compensation to guardians (or in this particular case, an estate trustee):
Courts have attempted to set down specific rules for dealing with estate trustees’ compensation (see: Widdifield on Executors and Trustees, 6th ed. at p. 11.4). The leading cases continue to be Toronto General Trusts Corp. v. Central Ontario Railway (1905), 6 O.W.R. 350 (Ont. H.C.); and Atkinson Estate, Re (1951), [1952] O.R. 685 (Ont. C.A.). More recent cases have considered the application of the percentages discussed in Atkinson Estate, Re Estate. In Jeffery Estate, Re (1990), 39 E.T.R. 173 (Ont. Surr. Ct.), Killeen J. held that the percentages should be used as a preliminary guide for the audit judge. However the audit judge should consider the mathematical result against the factors from the Toronto General Trusts Corp. case. Those five factors are:
1) the size of the trust;
2) the care and responsibility involved therefrom;
3) the time occupied in performing the duties;
4) the skill and ability shown;
5) the success resulting from its administration.[76]
Rule 7.08 Settlements and Payment into Court under Rule 7.09
This topic is addressed more fully in this collection in Chapter 6 of this Collection, “Court Approval of Settlements”, by Heather Hogan. Nevertheless Rule 7.08 motions will be briefly canvassed in this chapter.
Where an incapable person, who has no attorney under a CPOAP, is the plaintiff in a tort action or a claim for lump-sum Statutory Accident Benefits and there is or will be funds flowing to the incapable person, it is important to arrange for a guardianship of property appointment at the earliest opportunity.
If the adult is declared incapable and cannot manage funds, the OSCJ will not pay funds to the incapable person on the motion for approval of the settlement under Rule 7.08. Rule 7.09 provides that those funds must be paid into court, unless the court orders otherwise; therefore, the application under the SDA should precede the Rule 7.08 motion or application.
It is a more efficient, cost-effective and timelier service to a person under disability to avoid payment into court where guardianship is or should be arranged.
If a guardian is already in place at the time of the approval of the settlement, there may be additional terms imposed on the guardian as a result of the settlement, and in any event it is likely the management plan in place, if any will need to be revised; for example, respecting the posting of a bond, or the formal passing of accounts, or other terms. If these pending legal proceedings are known at the time the guardianship is initiated, they should be included and listed in “Legal Proceedings” in the proposed management plan. The review of the management plan by the OPGT should then trigger a consideration of terms to be included in the original guardianship order, to avoid amendments at a later date upon court approval of the settlement.
Payment out of Court to a Guardian of Property for an Incapable Adult
As noted, a litigation guardian is a distinct role from that of a guardian for property appointed under both the SDA and the CLRA.
In the decision of Stinson J, 626381 Ontario Ltd. v Kagan, Shastri, Barristers & Solicitors, the court described the relationship and distinction between a litigation guardian and a guardian appointed pursuant to an order made under the SDA. His Honour stated:
It is important to highlight that, while the definition of disability in the Rules borrows from the SDA, the latter is a different legislative regime with a different purpose than Rule 7. Unlike Rule 7, which is designed to protect the integrity of the court process, the focus of the SDA is solely on the protection of the individual, and rightly so. There is much more at stake, in regards to an individual’s dignity, privacy, and legal rights, when, following a court-ordered capacity assessment under s. 79 of the SDA, he or she is deemed incapable of managing his or her personal care or property. As Strathy J stated in Abrams v. Abrams, [2008] O.J. No. 5207 (S.C.), at para. 48, SDA proceedings “are not a lis or private litigation in the traditional sense. The interests that these proceedings seek to balance are not the interest of litigants, but the interests of the person alleged to be incapable as against the interest and the duty of the state to protect the vulnerable.”
In non-SDA matters, however, when the nature of the proceedings before the court has nothing to do with the type of substitute decision making governed by the SDA, different considerations apply. Indeed, when a matter simply involves a litigant who is a person under a disability, the procedures outlined in Rule 7, including the mandatory appointment of a litigation guardian (rule 7.01(1) and the mandatory court approval of any settlement (rule 7.08(1)), are designed and intended to provide adequate safeguards not just for the litigant under a disability, but also the other litigants, and the entire court process.[77]
A guardian of property appointed by the court for a minor or incapable adult, whether under the CLRA or SDA, requires a specific term in a court order directing the ASCJ to pay to “[minor or incapable person], by his/her guardian of property, X, the funds held in Court File No. xxx/14 (or, if this is in respect of a guardianship order, held in trust for X including all accrued interest) in the Ontario Superior Court at Toronto.”
If such a term is not included in the guardianship order, a separate order, obtained on motion in the original proceeding (e.g., Court File No. xxx/15) is required, directing the ASCJ to pay out the funds. The order should not specify the exact amount of the funds, as interest accrues monthly. Rule 72.03(5) provides that interest is automatically included in the payment out of court, unless the order provides otherwise.
Conclusion
This chapter aimed to provide the reader with an overview of the relevant legislation and case law related to guardianship of property of persons under disability in Ontario. As the reader will no doubt have gleaned, guardianship applications are substantially different from other types of applications, despite procedural similarities which exist under the Rules. Different legislative regimes govern guardianship of property in relation to adults (the SDA) and minors (the CLRA), and both substantively and procedurally, litigants must ensure they comply with the requirements of the correct statute in any guardianship proceedings in which they are involved. The OCL and OPGT are also different entities and, under the CLRA and the SDA, have different duties and powers. Too, a litigation guardian is different from a guardian of property appointed under the CLRA or the SDA.
The distinctions, procedures and principles considered in this chapter are very important, particularly for the purposes of minimizing costs to litigants who act erroneously in the context of guardianship litigation.
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[1] Much of the content included in this chapter derives from a paper drafted by Kimberly A. Whaley for the Society of Trust and Estate Practitioners Toronto Branch Program, held January 14, 2015, at Osgoode Hall, Toronto.
[2] SO 1992 c C.30.
[3] RSO 1990, c C.12.
[4] See, for example, Teffer v Schaefers, 2008 CanLII 46929, 93 OR (3d) 447 (SC), regarding the removal of an appointed attorney under a power of attorney for misconduct despite the grantor’s wishes.
[5] RRO 1990, Reg 194.
[6] See generally, Dixon v Hinsley, 2001 CanLII 38986, 22 RFL (5th) 55 (Ont. CJ)
[7] CLRA, supra note 3, s 51; Office of the Children’s Lawyer for Ontario: http://www.attorneygeneral.jus.gov.on.ca/english/ family/ocl/propguard.asp.
[8] CLRA, supra note 3, s 51(1).
[9] Ibid, s 51(4).
[10] Ibid, s 47.
[11] Ibid, s 48.
[12] Ibid, s 18(1).
[13] Ibid, s 59(1).
[14] Ibid, s 47(2).
[15] RSO 1990, c T.23
[16] CLRA, supra note 3, s 53.
[17] Ibid, s 56.
[18] Ibid, s 49.
[19] Ibid, s 55.
[20] See also Cusson v Denofrio, 2006 CarswellOnt 9912, a case in which the court declined to dispense with the requirement that a bond be posted.
[21] CLRA, supra note 3, s 49(a).
[22] Ibid, s 49(b).
[23] Jones (Litigation Guardian of) v Downing, [2001] OJ No. 1307 (SC) at paras 14-16.
[24] CLRA, supra note 3, s 59(2).
[25] Ibid, s 53.
[26] Ibid, s 54.
[27] Ibid, s 55.
[28] Ibid, s 55(2).
[29] Green v Green Estate, 1993 CarswellOnt 1771.
[30] RSO 1990, c F.3.
[31] CLRA, supra note 3, ss 52-53.
[32] Section 52 of the CLRA has been compared to s 42(6) of the SDA in relation to voluntary accounting by guardians, in Silver Estate, Re, 1999 CarswellOnt 4217 at para. 36, 31 ETR (2d) 256 (SC).
[33] CLRA, supra note 3, s 54.
[34] Hoad v Giordano, 1999 CarswellOnt 607 (Gen Div) at para 9; see also Martin v Robins, 2006 CarswellOnt 1405 (SC).
[35] See Rule 7 of the Rules of Civil Procedure, supra note 5.
[36] Ibid, Rule 5.05(1).
[37] Ibid, Rule 7.05(3).
[38] O’Connell v Snyder, 2002 CarswellOnt 1954 (SC) at para 5.
[39] See Rule 7.03(10) of the Rules of Civil Procedure.
[40] Motions under Rule 7.08 are discussed more fully by Heather Hogan in Chapter 6 of this collection.
[41] RSO 1990, c S.26.
[42] The “court” referred to is the Superior Court of Justice.
[43] Deschamps v Deschamps, [1997] OJ No 4894 at para 11, 75 ACWS (3d) 1130 (SC).
[44] SDA, supra note 2, s 55.
[45] 2010 ONSC 2627 at para 48.
[46] RSO 1990, c P.51.
[47] See the Office of the Public Guardian and Trustee: http://www.attorneygeneral.jus.gov.on.ca/english/family/pgt/overview. asp.
[48] See, as authority for example, the case of Public Guardian and Trustee v. Lico, 2012 ONSC 1872 whereby the PGT sought to be appointed guardian of property pursuant to s.22 of the SDA.
[49] RSO 1990 c M.7.
[50] SO 1996, c H.2.
[51] RSO 1990, c C.48.
[52] O Reg 114/99.
[53] O Reg 258/98.
[54] RSO 1990 c C.4.
[55] RSO 1990 c E.20.
[56] RSO 1990 c B.16.
[57] RSO 1990, c C.10
[58] SDA, supra note 2, s 16(6).
[59] Ibid, s 17.
[60] Ibid, s 17(4).
[61] Ibid, s 17(5).
[62] Ibid, s 18(1).
[63] Ibid, s 18(2).
[64] 2014 ONSC 2438, 100 ETR (3d) 134; Valente provides an overview of the appointment of guardians under the SDA. In this case a son and daughter-in-law were appointed as joint guardians of the property and of personal care of an elderly woman who was suffering neglect at the hands of her grandson and daughter (who were removed as her attorneys for property by reason of misconduct). See also: Glen v Brennan, [2006] OTC 18 (SC), at paras 8-10; Teffer v Schaefers, supra note 4 at para 52.
[65] 2005 CarswellOnt 7007 at para 17, 23 ETR (3d) 75 (SC).
[66] For further guidance on fiduciary accounting, see: “Whaley Estate Litigation on Fiduciary Accounting: Guardianship Accounts; Attorney Accounts; Estate Accounts; Trust Accounts,” http://whaleyestatelitigation.com/resources/WEL_On_Fiduciary_Accounting_2014.pdf.
[67] SDA, supra note 2, s 31.1.
[68] Ibid, s 31(1); This includes collecting and depositing income, paying bills, making purchases, selling assets, handling investments, managing real estate and looking after legal matters. The only matter of a financial nature that a guardian of property cannot do is make or change a will on behalf of the incapable person.
[69] Ibid, s 32(1.1).
[70] Ibid, s 32(2).
[71] Ibid, s 32(5).
[72] Ibid, s 32(2).
[73] Ibid, s 32(7).
[74] Ibid, s 32(8).
[75] Ibid, s 33.
[76] 2014 ONSC 729 at para 54, 99 ETR (3d) 167; see also Shibley Estate, Re., 2004 CarswellOnt 5536 (SC) at para 33.
[77] 2013 ONSC 4114 at paras 19-20, 116 OR (3d) 202.
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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.
