Consent Orders – Hull on Estates #91

January 3, 2008 Hull & Hull LLP Hull on Estates, Hull on Estates, Podcasts Tags: , , , , , , 0 Comments

Listen to Consent Orders

This week on Hull on Estates, David Smith and Christopher Graham discuss what to consider as a lawyer seeking an order on consent.

Consent Orders – Hull on Estates Podcast #91

Posted on January 3rd, 2008 by Hull & Hull LLP

David Smith: Hello and welcome to Hull on Estates. You’re listening to Episode #91 on Wednesday, January 2nd, 2008.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada.  Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills. Now, here are today’s hosts.

David Smith: Hello, my name is David Smith and I’m here today with Chris Graham of my office. Hi Chris.

Chris Graham: Hi David.

David Smith: Chris, today we thought we’d discuss consent Orders and what you need to consider as a lawyer when you go in front of a judge seeking an Order on consent. It seems simple enough in the sense that if there’s several parties to a proceeding, all of whom agree to a certain form of relief, the general thinking is that if you go in front of a judge with an Order and say, judge, this Order is on consent, there’s a tendency to think that the judge will effectively be a rubber stamp and simply sign the Order. But, of course, that’s not the case, is it, Chris?

Chris Graham: That’s right, David. In most situations where you have a consent Order, what you’re asking the judge to do is usually a matter of judicial discretion. In other words, the judge has the option to grant the relief or not grant the relief.

David Smith: And I think that’s the important point, isn’t it? It’s really…certainly it’s disrespectful to even suggest that a judge is a rubber stamp. I mean, a judge has a role to play, the Court has an inherent jurisdiction over the proceeding. And I think sometimes the tendency as counsel is to think well, unless there’s a minor, unless there’s a party under disability, there’s going to be no reason for a judge not to sign a consent Order because everyone is represented by counsel. But the judge will often want to make that inquiry and Chris, what’s the basis upon which the judge will seek further evidence if necessary, and what situations do we commonly see a judge ask for further evidence?

Chris Graham: Well, one of the most common situations that I’ve noticed now that I’m starting to do this type of thing more and more often, is a situation where the parties may ask the judge to authorize the estate trustee, for instance, to make payments to some or all of the parties. One example of this would be to make a payment for legal fees. But, of course, that’s not the only example.

David Smith: And if we’re talking about the estate context, I guess what comes top of mind is a situation where you’ve got an estate trustee, likely an estate trustee during litigation appointed. And it’s important to remember that the estate trustee during litigation is entirely a creature of statute. He or she only functions under the supervision of the Court and cannot make any kind of distribution whatsoever without the direction and supervision of the Court. And so, if you’re in a litigious context where there’s no authority to distribute, on that authority alone the estate trustee during litigation will need the direction of the Court. And that’s when the judge may say, well, hold on a second, even if you’re all consenting to this Order, is this an Order that should be made? Chris, what kind of evidence is a judge looking for?

Chris Graham: Well, in order to make a decision on facts, the judge needs to know what the facts are. Of course, the only way to bring facts into Court on an application or a consent Order hearing is…well, you can do it through viva voce evidence which is where the lawyer gives evidence to the Court. But that’s not the best way to do it. Judges don’t like indulging in that way. What ideally what you should have is an Affidavit where one of the parties swears the Affidavit setting out the facts and then counsel explains and makes an argument submission to the judge based on the facts in the Affidavit.

David Smith: Right. And so that’s the type of evidence you have. And in terms of substantively what that evidence would include, I would think the concerns of the judge would be, does this Order that I’m about to make prejudice anybody? Does it prejudice any creditors of the estate, for example? Does it prejudice the beneficiaries? Obviously, that’s the foremost consideration. Is there sufficient money in the estate to pay obligations owing to the Canada Revenue Agency, for example? I think all of these are necessary. And if I’m a judge, I would think I would want to be concerned that the parties were not asking me to make an Order that benefits them to the possible exclusion of other people who could later complain (a) that they weren’t given notice; or (b) that they were not protected by the judge, whose role is as an overseer and as noted, to protect the interests of anyone who could possibly have a claim against those funds. I think that’s always a concern. So I think possibly the Affidavit might want to include evidence as to creditors, the tax situation, sufficient evidence to satisfy the Court that people will not be unduly prejudiced by the payment of legal fees or some kind of interim distribution to the parties, all of whom are consenting. Is there anything else we can think about, Chris?

Chris Graham: Yeah, I think you might want to make sure that the Affidavit or some other Affidavit that might already be before the Court, sets out the basic story, because at least I’ve found that judges like to know what the big picture is, the history of the estate. So maybe if the estate stretches back three, four or five years, you might want to just make sure that the Affidavit, if nothing else before the Court already does so, just gives the judge the very broad picture, especially if the judge is having a very busy day, for instance, may not have had time to refresh himself on the materials which he probably read a week ago.

David Smith: I think that’s a really good point, Chris. And, you know, the other thing is, and maybe it’s rather obvious but its worth repeating, is the Will is always front and centre. And even if you’ve got an estate challenge where the Will is being challenged, then have all the Wills in front of the judge, all of the parties who have a financial interest identified clearly for the judge, and then the other thing I think we focus on again, and perhaps its being repetitive but I think it bears repeating, is as much detail as possible about the assets of the estate and the liabilities of the estate. Because at the end of the day, that’s really going to be the judge’s concern, I think, is am I putting anybody at risk who has an interest here? And not that the judge should be suspicious of counsel but I think a judge will always want to ensure, to again repeat the phrase, want to ensure that he or she is not being used as merely a rubber stamp. And counsel must always be sensitive to the fact that judges play an important role in the process and while there’s litigation ongoing, nothing can be done without the sanction of the judge. And in some of these cases, you may have a Rule 37.15 judge or a Case Management judge who becomes familiar with the case, knows the estate rather intimately and this isn’t a bad thing because what it does is, it allows the judge to have greater knowledge of all of the facts. And in those kinds of situations, that kind of a judge may be better positioned to consider any issues of concern.

Chris Graham: Yeah, I’d add to that, that point…just…if you’re trying to get, for instance, an interim consent Order, one consideration that judges seem to pay a great deal of attention to is not depleting the assets of the estate at an early point. And if you’re asking them to do that, you’d better have a very good Affidavit, a very detailed Affidavit, setting out exactly why you want to make large withdrawals from the value of the estate.

David Smith: That’s right. Now, Chris, I know that this is really…this is expanding the ambit of the discussion a little bit. But let’s assume we do have minors in this estate with an interest in this estate. What’s the likely response of the Office of the Children’s Lawyer to a motion seeking the consent of the parties to an interim distribution, or for payment of legal fees? Have you had any experience with that particular issue?

Chris Graham: Yes, I’ve had some. I guess the first thing to say with respect to the Office of the Children’s Lawyer is, give them lots of notice or they’ll simply ask for an adjournment because they want to fully consider the issues pretty much every single time.

David Smith: The other thing I’ve found, too, Chris, in dealing with the Children’s Lawyer is they will commonly take the position, or she will commonly take the position that even if she doesn’t necessarily oppose what the other parties are seeking, she will not consent to it. She will say that is a subject for a judge. And if a judge knows that a minor has an interest in the estate, in my experience, the judge is very concerned to protect the minors and will always give that forefront consideration, as well as a similar situation where you’ve got parties under disability. In addition to protecting potential creditors, I think probably the first thing a judge will look at is to say, is anyone here under disability? Is anyone here a minor? And do I need to know…do I need to take specific steps to protect those people? 

So Chris, it’s been a really interesting discussion and certainly there’s more to consider than is commonly thought to be the case when you go to Court on a consent basis. And it’s good to always cross your “t”s and dot your “i”s.

Chris Graham: Thank you David.

David Smith: Thanks Chris.

This has been Hull on Estates with the lawyers of Hull & Hull. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

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