Dispensing with Bonds in Guardianship Applications

July 9, 2014 Hull & Hull LLP Guardianship 0 Comments

The Substitute Decisions Act governs the appointment of guardians for property.  According to section 25, when a Judge orders an appointment for a guardian of property, he or she may “require that the guardian post security in the manner and amount that the court considers appropriate.”  The purpose of the bond requirement is to protect the incapable person from the risk of losing their property or its value being significantly diminished.  Because the Public Guardian and Trustee and trust corporations’ assets are significant enough to replenish an incapable person’s property if necessary, they are not required to post security.

An applicant who wishes to dispense with the security requirement must address it in an affidavit and explain why dispensing with the bond does not expose the incapable person to risks. As McCartney J. summarized in Sundell v Donylyk, “the law is clear that the bond is to protect the beneficiary … and if it is to be dispensed with, reasons should be given why there would not be risk if such a bond were not posted.”  The fact that an applicant is the sole beneficiary of the incapable’s estate is not determinative of whether the bond requirement should be dispensed with.

In dispensing with the bond requirement, the court may attach other conditions to ensure that primary consideration is given to the interest of the incapable person.  In Bytyci v Bytyci, for example, Pitt J. dispensed with the bond requirement but required the applicant to obtain court approval to encumber or dispose of the matrimonial home so as to protect the incapable from the risk of selling the home contrary to their best interests.

In Barnes v Barnes, the court rejected two schemes to avoid the bond requirement.  In the first scheme, the guardian would have filed an “irrevocable direction” to the corporate trustee, which would have directed the trustee “not to pay any monies to me other than in repayment for funds expended on [the incapable] … and then only upon delivery of receipts for said funds.” By keeping the money out of the applicant’s hands, the scheme would have alleviated any concerns over conflict of interest.  The court rejected this argument on the grounds that, once one is appointed a guardian, one may not delegate those powers to another.

In the second scheme, the guardian would have any expenditures pre-approved by the Public Guardian and Trustee.  The court rejected this scheme as unworkable: “The Public Guardian and Trustee has neither the authority nor the resources to micro-manage the estate of every incompetent in Ontario.”

These decisions make it clear that each request for a dispensation of the bond requirement will be determined on a case-by-case basis.

Thank you for reading,

Suzana Popovic-Montag

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