Under Ontario’s Rules of Civil Procedure,[1] a ‘person under disability’ is defined in Rule 1.03 as either:

• A minor;
• Someone who is mentally incapable pursuant to section 6 or section 45 of the Substitute Decisions Act (“SDA”);[2] or
• An absentee pursuant to the Absentees Act.[3]

Section 6 and section 45 of the SDA provide the statutory criteria for determining the capacity to manage one’s property and personal care, respectively.

A person under disability must generally be represented by a ‘litigation guardian’. A litigation guardian is an individual or trust company appointed to act on behalf of a party under disability in respect of a legal proceeding or legal issue.[4]

Rule 7 of the Rules of Civil Procedure governs the process upon which parties under disability may bring, defend or settle legal proceedings. Rule 7.08(1) specifically provides that a settlement of a claim by or against a party under disability is not binding on that party without the approval of the court.[5] Court approval is also required for consent judgments in favor of or against a party under disability.[6] These are colloquially referred to as ‘Rule 7 Motions’.

Rule 7 Motions require full and frank disclosure of the rationale behind a settlement and there are certain materials that must be provided to the court. These materials must include: an affidavit from the litigation guardian, indicating their support for the settlement being proposed; and an affidavit from the lawyer representing the litigation guardian, setting out their position with respect to the proposed settlement. A copy of the proposed minutes of settlement must also be provided. The affidavit from the litigation guardian must also set out the material facts in the litigation, which generally includes the parties, the procedural history and the benefits of the settlement agreement.[7]

A litigation guardian acting on behalf of a party under disability is responsible for ensuring that a settlement is in the best interests of that party. In Wu Estate v. Zurich Insurance Co,[8] the Ontario Court of Appeal stated that:

The duty of the court is to examine the settlement and ensure that it is in the best interests of the party under disability […]. The purpose of court approval is plainly to protect the party under disability and to ensure that his or her legal rights are not compromised or surrendered without proper compensation.[9]

If the court is not convinced that the settlement is in the person under disability’s best interests, it will not approve the settlement. For example, the court may be of the view that the party under disability should have received more money under the proposed settlement terms. Alternatively, the court may request additional evidence before determining the merits of the settlement.

Where a litigation guardian has already been appointed, Rule 7.08(5) permits a court to require that the motion be provided to the Office of the Children’s Lawyer or the Public Guardian and Trustee.[10] The Children’s Lawyer or Public Guardian and Trustee may also be directed by a court to prepare a report enumerating whether there are any objections or recommendations to the settlement and reasons to support their analysis.[11]

Concluding Comments

Clients who act as litigation guardians for a person under disability should understand that the settlement of any legal dispute is contingent upon the approval of the court. On a Rule 7 Motion, it is of utmost importance for the moving party to convince the court that the proposed settlement is in the disabled party’s best interests.

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[1] Rules of Civil Procedure, RRO 1990, Reg 194 (the “Rules”), Rule 1.03.

[2] Substitute Decisions Act, 1992, S.O. 1992, c. 30 at s.6 and s.45.

[3] Absentees Act, R.S.O. 1990, c. A.3

[4] See Rule 7.02 of the Rules.

[5] Rule 7.08(1) of the Rules.

[6] Rule 7.08(2) of the Rules.

[7] Rule 7.08(4) (a) – (d) of the Rules.

[8] Wu, Re, 2006 CanLII 16344 (ON CA).

[9] Ibid. at para 10.

[10] Rule 7.08(5)(a) of the Rules.

[11] Rule 7.08(5)(b) of the Rules.