Rule 7 Motions & Applications — Guidelines & Checklist for Counsel
Rule 7 of the Rules of Civil Procedure governs the approval of proposed settlements for parties under disability. Rule 1.03 defines a person under a disability as being a minor or someone mentally incapable within the meaning of section 6 or 45 of the Substitute Decisions Act, 1992 in respect of an issue in the proceeding. The latter definition includes a person who does not have the capacity to instruct counsel or to manage his or her property or make decisions regarding his or her health. Parties under a disability must be represented by a litigation guardian.
Rule 7.08 requires the approval of a judge for any proposed settlement on behalf of a party under a disability. This is done by way of a motion made in writing or if no action has been commenced, then the approval of a judge is obtained by way of an application. In Toronto, Rule 7 motions and applications are to be filed as in-writing motions through the civil intake office, in the motions department.
Rule 7.08(4) sets out what material is required for court approval: the affidavit of the litigation guardian which must include the position of the litigation guardian with respect to the settlement; the affidavit of the solicitor setting out the lawyer’s position on the settlement; if the person under a disability is a minor and over 16 years of age, his or her consent in writing; and a copy of the signed minutes of settlement.
Rule 7.09 states that money being paid to a person under a disability shall be paid into court, unless a judge orders otherwise.
It is the obligation of counsel to satisfy the court through the evidence filed on the motion that the proposed settlement is reasonable and is in the best interests of the party under a disability. The motion record should include:
- the pleadings;
- sworn affidavit of litigation guardian;
- sworn affidavit of solicitor;
- copy of signed consent if minor is over the age of 16 years;
- a copy of any applicable contingency fee agreement or other fee arrangement;
- executed Minutes of Settlement;
- draft approved judgment.
The Affidavit of the Litigation Guardian:
The litigation guardian must not simply state that he/she has reviewed the affidavit of counsel and agrees with its contents and the proposed fee. The litigation guardian must confirm that he/she has no interest adverse to that of the party under a disability. It is helpful to have the litigation guardian, who is often a parent of the minor or someone with whom the party under disability resides, set out the nature of the medical problems and/or limitations of the party under disability and state why he/she believes the proposed settlement is beneficial to that party.
In most cases, the settlement funds for the minor are paid into court until he/she reaches the age of 18, to be paid out with accrued interest when the minor reaches the age of majority. If there is a request for anything other than an order for payment into court, the litigation guardian should clearly set out why this order is being sought in the particular case.
If the proposed settlement includes a structure, the litigation guardian should address why the features of the chosen structure are to the benefit of the party under disability and how the structure will provide for payment of future expenses and needs.
The Affidavit of Solicitor:
This is the document that explains why the proposed settlement ought to be approved by the court. In this affidavit counsel must set out the theory of the Plaintiff’s case and include expert reports supporting the theory, both on liability and damages. It must detail the reasons counsel is of the view that the proposed settlement is advantageous to the party under disability as opposed to proceeding to trial. If there is a serious liability issue, that must be addressed, along with the evidence, expert and otherwise, that bears on this issue. If there is a limitation on the available insurance monies which impacts counsel’s view of the quantum of settlement, this information must be set out along with relevant evidence concerning the ability of the Defendant personally to pay a Judgment. If there is a legal issue or point of law which is relevant to counsel’s assessment of the case, that must be articulated and reference made to the applicable case law.
On the issue of damages, counsel must include important medical reports, including defence medical examination reports and address issues such as causation, pre-existing medical problems, the credibility of the Plaintiff and the reason that the proposed settlement is being recommended for acceptance. If the motion seeks approval of a proposed settlement of a personal injury claim for a minor there must be a medical opinion which contains a prognosis for the future.
The solicitor’s affidavit must set out the allocation of settlement funds among the plaintiffs, including Family Law Act claimants.
It is important that full disclosure be made to the court in the material for approval. If there is a companion action, for example, an action for accident benefits or disability benefits arising out of the motor vehicle accident or another claim for damages on which counsel acts for the party under disability, that information ought to be provided, along with the status of those actions.
The fee proposed can only be charged with the approval of the Court. The fact that a litigation guardian consents to the fee and that the fee charged may be less than what the contingency fee agreement or other fee agreement stipulates, or what the docketed time adds up to, does not entitle the solicitor to charge the proposed amount. It must be both fair and reasonable in the circumstances. Thus, the solicitor’s affidavit must detail sufficient information to enable the Court to evaluate the proposed fee. Counsel should indicate the point at which the settlement was arrived at, whether it was post-examinations for discovery, or just prior to trial. A summary of the work done and the hourly rates charged by the timekeepers must be included as well as a list of the solicitor/client disbursements to be paid. If there are treatment accounts that are to be paid out of the settlement funds, these must be set out and explained.
If the fee proposed to be charged is pursuant to a contingency fee agreement or some other fee arrangement, a copy of the agreement must be included in the materials. Counsel must address the issue of the risk that was undertaken on the file. The amount of fees proposed to be charged to all plaintiffs must be clearly stated, as well as the amount received from the Defendant(s) for partial indemnity fees and assessable disbursements.
The solicitor’s affidavit must also clearly set out the proposed management of funds for the party under disability. If the quantum of settlement is not large and the party under disability is a minor, the funds are usually paid into court. If a structure is chosen, the reasons must be provided as to why the particular structure recommended is in the best interests of the party under a disability. The lawyer and/or litigation guardian should clearly articulate how the chosen structure will assist the person under disability to meet their needs for the balance of their life.
The draft Judgment must be in the proper form and if funds are being paid into court to the credit of the party under disability, if the party is a minor, the Judgment must state that the funds are to be paid out with accrued interest when the minor turns 18, subject to further order of the court. If the Judgment includes a structure, the particulars must be appended as a schedule to the judgment.
The Order or Judgment approving the settlement should require service on the Children’s Lawyer for minors or the Public Guardian and Trustee if the incapable adult has a guardian of property.
Management of Funds
A guardian of property cannot be made in the same order approving a settlement for a party under disability. A separate application must be made to the Court under the Children’s Law Reform Act for a minor, or the Substitute Decisions Act for an adult, for the appointment of a guardian of property. Pursuant to the Practice Direction in Toronto, application under the Substitute Decisions Act must be scheduled through the Estates List. A formal management plan must be submitted for approval by the Court.
CHECKLIST FOR MATERIALS FOR RULE 7 MOTIONS & APPLICATIONS
- Sworn affidavit of litigation guardian
- Sworn affidavit of solicitor
- If the minor Plaintiff is over the age of 16 years, a signed consent
- Executed minutes of settlement
- Copy of any contingency fee agreement or other fee arrangement
- Copies of pleadings
- Copies of important damages and liability reports
- If the Judgment includes a structure, a printout of the structure proposal must be appended
- Draft Judgment with executed consents; a term of the Judgment should be service on the Children’s Lawyer for minors or the Public Guardian and Trustee for incapable adults