More cases seem to settle these days than ever before. Whether it is the result of the increased prevalence of mediation, or as a result of the increased costs of litigating, more people seem to be settling their disputes, sparing themselves a lengthy and expensive trial process. But a question arises of what happens when a settlement involves a person under a disability? Can the person under a disability (or their litigation guardian of their behalf) enter into a settlement and be bound by it? How do we ensure that the person under a disability is not being taken advantage of by those closest to them?
Rule 7.08(1) of the Rules of Civil Procedure provides that no settlement of a claim made by or against a person under a disability, whether or not a proceeding has been commenced in respect of the claim, is binding on the person without the approval of a judge. The Rules of Civil Procedure defines a person under a disability as a minor, a mentally incapable person within the meaning of section 6 or 45 of the Substitute Decisions Act, or an absentee within the meaning of the Absentee Act. Put simply, before any settlement is binding on any person falling under these categories, the settlement must be approved by a judge.
In determining whether or not to approve a settlement on behalf of a person under a disability, the court provides in Giusti (Litigation Guardian of) v. Scarborough Hospital that it is the court's duty in determining whether to approve the settlement to protect the party under a disability and to ensure that the settlement is in the best interest of that party.
On a practical note, whenever a settlement involves the interests of a person under a disability you should almost always pre-emptively serve the Office of the Children's Lawyer or the Public Guardian and Trustee (depending on the facts of your case) with a copy of the motion materials when seeking approval of the proposed settlement. Although rule 7.08(5) provides that it is at the judge's discretion as to whether they would like to direct the materials to either government body, on the practical side, it is almost always wisest to pre-emptively serve them with the materials in order to ensure a smooth approval process. A judge will always be more willing to grant approval of the settlement with the knowledge that the Office of the Children's Lawyer or the Public Guardian and Trustee has approved of the settlement, and if you do not seek the approval of either body the court will almost certainly ask why you have not.
By requiring court approval of any settlement affecting the rights of a party under a disability the law ensures that those under a disability are not taken advantage of. Although many may see it as an unnecessary extra step in the litigation process, the process is designed to safeguard the rights of those who are perhaps the most vulnerable amongst us. Without the approval of a judge, no settlement is binding on a person under a disability.
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