In March of last year, I blogged on the decision in Hunt v Worrod which dealt with predatory marriages and an individual’s capacity to marry. There have been several developments in that case since then, most recently in a Court of Appeal decision released in June, concerning the issue of costs.
The facts of the case are set out in greater detail in my earlier blog, but a quick refresher may nonetheless be helpful. The application was commenced by the applicant, by his two litigation guardians, largely for the purposes of challenging the validity of his marriage to the respondent and its effect on her property rights as a spouse of the applicant. The respondent had been granted a legal aid certificate by Legal Aid Ontario (“LAO”), which funded her legal fees through trial. Importantly, LAO was not retained as counsel by the respondent. Rather, the respondent retained private counsel whose fees were funded by LAO.
The applicant was ultimately successful at trial and sought an order for costs against the respondent personally, the respondent’s counsel personally, and LAO. In his decision on costs, Justice Koke ordered the respondent was to pay the applicant’s costs on a full indemnity basis. However, he equally noted that, as a result of her limited means and tenuous financial position, it was unlikely that the respondent would be able to pay any amount of that costs award.
The trial judge then turned his mind to the request for costs payable by LAO. In reviewing the circumstances of LAO’s involvement in the case, the trial judge held that it had failed to carry out its mandate by continuing to fund the respondent’s fees notwithstanding the lack of merit. The trial judge ordered LAO to pay one-half of the amount of the costs award made against the respondent.
LAO appealed the costs award and was successful. In its reasons, the Court of Appeal plainly stated that the decision to award costs against LAO could not stand, as it had been made on a misapprehension of LAO’s role in the matter. While the trial judge had held that LAO purportedly failed to monitor the litigation that it had continued to fund, resulting in an abuse of process, the Court of Appeal took a markedly different view.
Notably, the Court of Appeal identified that LAO’s role was strictly limited to providing funding for the respondent to retain separate counsel in accordance with its statutory mandate. LAO itself did not act for the respondent, nor was it a party to the initial application.
Had LAO been a party to the litigation, the Court of Appeal held that they would properly have been exposed to a potential costs award, subject to the discretion of the trial judge. However, in the absence of evidence of any bad faith on the part of LAO in continuing to fund the litigation, the Court of Appeal held that a costs award against LAO was not appropriate in the circumstances.
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Estate litigation can be costly both financially and emotionally. As a result, there is often a strong incentive for parties to try to reach a negotiated settlement. Although entering into a settlement which resolves the estate litigation may appear straightforward from the outside, it may become more complicated if all potential financially interested parties are not signatories to the settlement. It is not uncommon in estate litigation for all beneficiaries of the estate to not actively participate in the litigation, leaving it to people such as the Estate Trustee or the other beneficiaries to defend a claim. As a settlement is in effect a contract between parties, if a settlement is reached which affects the interests of a non-signatory to the settlement can such a settlement bind the interests of the non-signatory?
I have previously blogged about section 48(2) of the Trustee Act, and an Estate Trustee’s ability to settle claims on behalf of the estate which can bind the interests of the beneficiaries. While section 48(2) would allow the Estate Trustee to bind the interests of all beneficiaries to the settlement, the Estate Trustee does so at their own potential liability, as it is possible that one or more of the beneficiaries may later challenge the decision of the Estate Trustee to enter into the settlement, potentially seeking damages against the Estate Trustee if they are of the position that the settlement was not reasonable or in the best interest of the estate. As a result of such a risk, it is not uncommon for an Estate Trustee to be hesitant to enter into a settlement on behalf of the estate in contentious situations, not wanting to potentially expose themselves to personal liability if one or more of the beneficiaries should later object to the terms of the settlement. If an Estate Trustee is hesitant to enter into a settlement on behalf of all beneficiaries, but all actively participating parties are otherwise in agreement with the settlement, is there a way to bind the interests of non-participating parties to the settlement?
The Rules of Civil Procedure provide the court with the ability to “approve” a settlement on behalf of parties who are not signatories under certain limited circumstances. This is done in accordance with rule 7.08 of the Rules of Civil Procedure, which allows the court to approve a settlement on behalf of a party who themselves cannot consent to the settlement on account of being under a legal disability (i.e. a minor). Perhaps importantly however, the court only has the authority under rule 7.08 to “approve” a settlement on behalf of a party under a legal disability, and rule 7.08 is not available in circumstances where the non-signatory is fully capable.
The Rules of Civil Procedure do not otherwise appear to provide any mechanism by which a settlement can be approved on behalf of a party who is not under a legal disability. As a result, if the non-signatory who you are you attempting to bind to the settlement is not under a legal disability, the court likely does not have the authority to “approve” the settlement on their behalf under the Rules of Civil Procedure.
Although the court likely does not have the ability to “approve” a settlement on behalf of an individual who is not under a legal disability in accordance with the Rules of Civil Procedure, this does not necessarily mean that there are no other ways to potentially bind the individual to a settlement. One potential solution may be to seek an Order “in accordance” with the terms of the settlement on notice to all interested parties. Should the court issue such an Order, which in effect repeats the terms of the settlement but as an Order of the court, the non-signatories would arguably then be bound to the terms of the settlement as it would now be in the form of an Order of the court.
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When can someone who is not a party to the litigation be examined? The Court may grant leave to examine for discovery any person who there is reason to believe has information relevant to a material issue in the action, other than an expert engaged by or on behalf of a party in preparation for contemplated or pending litigation.
Pursuant to Rule 31.10 of the Rules of Civil Procedure, such an order can be made if the Court is satisfied that:
a) the moving party has been unable to obtain the information from other persons whom the moving party is entitled to examine for discovery, or from the person the party seeks to examine;
b) it would be unfair to require the moving party to proceed to trial without having the opportunity of examining the person; and
c) the examination will not,
i. unduly delay the commencement of the trial of the action,
ii. entail unreasonable expense for other parties, or
iii. result in unfairness to the person the moving party seeks to examine.
In Ryndych v. Hamurak, 1999 Carswellont 4061,  O.J. No. 4718, Molloy J. allowed the examination of the minister who performed a marriage ceremony between the defendant and the deceased, who died intestate. The plaintiffs had attempted to interview the minister but she refused to answer questions. The validity of the marriage was central to the case and it was very likely that the minister had information relevant to the issues in this action that was not available from any party. The Court commented that it would be unfair to require the plaintiffs to go to trial without having the opportunity to examine the minister who officiated at the wedding.
Further, the Court found that it was not necessary for the plaintiffs to serve their notice of motion on the non-party they sought to examine. The intention of the Rules was not to require service of the notice of motion on the non-party. The position of the non-party was protected under the Rules because a person affected by an order obtained without notice was entitled to bring a motion to have the order set aside. There was also no requirement that plaintiffs examine the defendant prior to examining the non-party.
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