Del Grande (Litigation guardian of) v. Sebastian
AND IN THE MATTER OF the Substitute Decisions Act, S.O. 1992, Chapter 30, and Rule 14.05 of the Rules of Civil Procedure
Carmela Del Grande, also known as Carmella Del Grande, also known as Carmela Delgrande, by her Litigation guardian, the Public Guardian and Trustee, applicant, and
Anna Maria Sebastian, also known as Anna Marie Sebastian, also known as Mary Sebastian, respondent
Carmela Del Grande, also known as Carmella Del Grande, also known as Carmela Delgrande, by her Litigation guardian, the Public Guardian and Trustee, and Connie Nicholson, applicants (respondents by cross-application), and
Anna Maria Sebastian, also known as Anna Marie Sebastian, also known as Mary Sebastian, respondent (applicant by
 O.J. No. 1879
96 O.T.C. 374
27 E.T.R. (2d) 295
88 A.C.W.S. (3d) 910
Court File No. 05-0031/95
Heard: April 26, 1999.
Judgment: May 14, 1999.
Guardian and ward — Public Trustee or Guardian — Powers — Extent of — Practice — Intervenors.
Motion by the intervenor, Nicholson, for a declaration that a settlement between the applicant Public Guardian and Trustee and the respondent Sebastian was not binding. The Public Guardian was the statutory guardian of Del Grande’s property. Del Grande was the 98-year-old mother of Nicholson and Sebastian. Nicholson was the sole residuary beneficiary under the mother’s will. The Public Guardian brought proceedings against Sebastian to pass accounts of her dealings with her mother’s property under a power of attorney. There were allegations that Sebastian had gotten her mother to convey her gifts of cash and property by undue influence. Nicholson was granted leave to intervene in the proceedings. The trial was adjourned pending settlement discussions between the Public Guardian and Sebastian. They reached an agreement regarding the return of certain property by Sebastian. Their respective counsel, along with Nicholson’s counsel, attended before a judge who approved the settlement. Nicholson was opposed to the settlement.
HELD: Motion dismissed. As a beneficiary under the will, Nicholson had no proprietary interest but only an expectancy in her mother’s property. As the mother’s statutory guardian, the Public Guardian had the power to bind her in any dealings with her property, and an agreement between it and Sebastian was also binding on the beneficiaries of the mother’s estate. Nicholson’s intervenor status did not give her the right to veto a settlement between the other parties. She had expressed her opposition to the settlement at the hearing and her right stopped there.
Statutes, Regulations and Rules Cited:
Courts of Justice Act, s. 66(2)
Ontario Rules of Civil Procedure, Rules 7.08(1), 9, 10, 13.01, 14.05
Substitute Decisions Act, S.O. 1992, c. 30, s. 31(1)
Donald F. Bur, for the Public Guardian and Trustee. Joel P. Rochon, for Anna Maria Sebastian, respondent by cross-application. Mark E. Joseph, for Connie Nicholson, respondent by cross-application.
1 CULLITY J.:– By an order of Sheard J. dated June 21, 1996, Mrs. Connie Nicholson, was given leave to intervene in proceedings initiated by the Public Guardian and Trustee as statutory guardian of the property of Mrs. Nicholson’s mother, Mrs. Carmela Del Grande, who is 98 years of age and incapable as to property. In the event that she survives her mother, Mrs. Nicholson would be the sole residuary beneficiary under the last will executed by her mother.
2 In the course of the proceedings, the Public Guardian and Trustee obtained orders directing Mrs. Anna Maria Sebastian, another daughter of Mrs. Del Grande, to pass her accounts of her dealings with her mothers property under a power of attorney. In her motion seeking leave to intervene in the proceedings as an added party, Mrs. Nicholson also sought to amend the notice of application to include a request for an order compelling Mrs. Sebastian to reconvey to her mother a residential property (the “Marquette property”) in Toronto. Mrs. Nicholson alleged that a conveyance of this property to Mrs. Sebastian was procured by her undue influence. The order granting intervenor status to Mrs. Nicholson denied her the right to file affidavits, or to cross-examine on affidavits already filed, but otherwise it did not purport to define, or limit, her rights as a party. The motion to amend the notice of application was adjourned sine die.
3 Issues that arose out of the passing of accounts were subsequently tried. Mrs. Nicholson briefed counsel and participated in the trial. On June 3, 1997, judgment was given directing Mrs. Sebastian to repay gifts of cash allegedly made to her by her mother. In addition, the trial judge made an order directing a reconveyance of the Marquette property to Mrs. Del Grande. Although the notice of application had not been amended by Sheard J., the trial judge was prepared to permit the amendment and, in any event, he concluded that the issue was one that could properly be dealt with on the passing of accounts.
4 On appeal, a new trial was ordered – for reasons that have no relevance to the present motion – with respect only to the issue relating to the Marquette property. The trial was set down for April 12, 1999, and it was estimated that it would take several days. On April 13 the trial was adjourned pending settlement discussions between the Public Guardian and Trustee and Mrs. Sebastian and, subsequently, their counsel, together with counsel for Mrs. Nicholson, attended before Greer J. to seek approval of a settlement pursuant to rule 7.08(1). As the trial judge, I have not been given any details of the proposed settlement but I am informed that it was ultimately approved by Greer J. subject to conditions that were subsequently accepted. I am also informed that Mrs. Nicholson is opposed to the settlement and has not consented to it.
5 The issue in this motion concerns the effect, if any, of the settlement on the rights of Mrs. Nicholson as a party to the proceedings. The position of counsel for the Public Guardian and Trustee and for Mrs. Sebastian is that the lis has now disappeared and, apart from the question of costs, the proceedings have terminated and Mrs. Nicholson has no right or status that would enable her to insist that the trial should continue.
6 Counsel for Mrs. Nicholson, on the other hand, has submitted that, having been made a party to the proceedings by virtue of the order of Sheard J., no effective settlement is possible without her approval. He relied, in the first place, on authorities in which it is stated that, subject to any restrictions imposed by the order giving leave to intervene, an intervenor has all the rights of a party to the proceedings. He submitted also that, notwithstanding the traditional principle that a beneficiary under a will has no proprietary interest in the estate of a testatrix until her death, this is unrealistic in the present case of an individual who is 98 years of age, has lost capacity to manage property and testamentary capacity and who, as a practical matter, is not likely to regain either.
7 I think the starting point must be that, as Mrs. Del Grande’s statutory guardian, the Public Guardian and Trustee represents her and has power to enforce her rights and to bind her in any dealings with her property. An agreement made by the Public Guardian and Trustee and Mrs. Sebastian with respect to Mrs. Del Grande’s property would, prima facie, bind Mrs. Del Grande and effectively, also, her personal representatives after her death and the beneficiaries of her estate. The Public Guardian and Trustee acts for Mrs. Del Grande and has essentially the same powers over her property as she would have if she still had the requisite legal capacity. The main differences between their positions are that a statutory guardian has no power to make a will for the incapable person and it is always possible that actions by the guardian might be challenged as involving a breach of the guardian’s fiduciary duties.
8 Subject to the qualifications just mentioned, Mrs. Nicholson’s position now is arguably no different than it would be if a settlement had been reached between Mrs. Del Grande and Mrs. Sebastian while the former retained her full mental capacity. The position of a beneficiary under the will of a living person is indicated succinctly in the following passage from Williams on Wills (7th Edition, 1995) at p. 8: A will is a document which is of no effect until the testator’s death and until then is a mere declaration of his intention and is at all times until such death subject to revocation or variation. The execution of a will leaves the testator free during his life to dispose of his property as he pleases and operates subject to any such disposition inter vivos; and, on the other hand, a person named as a beneficiary in a will takes no interest whatever under it until the death of the testator and he will not then take any interest unless he is alive at that time. (citations omitted) Is the position significantly differently because the agreement was made in a settlement of proceedings to which Mrs. Nicholson had been added as a party intervenor and because the settlement may be incorporated in the judgment of the Court?
9 It is, I believe, clear that, if the trial had led to an adjudication, Mrs. Nicholson, as a party, would have been bound by the judgment of the court. At least at first glance, it might seem logical that any settlement of the proceedings would require her consent. The alternative view – supported by counsel for the Public Guardian and Trustee and counsel for Mrs. Sebastian – is that Mrs. Nicholson’s vulnerability to an order of the Court might justify an order giving her leave to intervene so that she can support the interests of her mother and her own “interests” in seeking a reconveyance, but it does not give her any right to veto an agreement made on behalf of her mother by the Public Guardian and Trustee. She was permitted not only to participate in the trial but, also, to make submissions to Greer J. on the question whether the settlement between the other parties should be approved. Her right to oppose the settlement, in their submission, stops there.
10 In my judgment, the submissions made by counsel for the Public Guardian and Trustee and for Mrs. Sebastian must prevail unless there is something express or implied in the Rules of Civil Procedure that requires a different conclusion. Pursuant to subsection 31(1) of the Substitute Decisions Act, a guardian of property has all the rights and powers that the incapable individual would have if she were fully competent, other than the power to make a will. She retains these powers when she acts as litigation guardian pursuant to the Rules subject to rule 7.08(1) that requires settlements of claims by, or against, parties under a disability to be approved by a judge. The rule is authorised by the provisions of paragraph 66(2)(b) of the Courts of Justice Act which authorises the Civil Rules Committee to make rules in relation to: joinder of claims and parties, settlement of claims by or against parties under disability, whether or not a proceeding has been commenced in respect of the claim, the binding effect of orders and representation of parties;
11 It is expressly provided that the rules may alter the substantive law and may supplement an Act in respect of practice and procedure though they must not conflict with it. Given the express words of the subsection and the extent to which the provisions of the Substitute Decisions Act preserve and extend the parens patriae jurisdiction of the court, I do not think it can be doubted that rule 7.08(1) is within the rule-making power. It is also possible that a provision in the rules requiring that intervenors added as parties must consent to any settlement would be intra vires the power conferred by paragraph 66(2)(b). If that is correct, the ultimate question on this motion is whether such a provision is contained in the rules either expressly or by implication.
12 It has been held that a representation order granted pursuant to a predecessor to rule 10 “cannot confer legal rights if none otherwise exist or allow a cause of action if none is otherwise maintainable”: Dehler v. Ottawa Civic Hospital (1979), 25 O.R. (2d) 748 (H.C.J.), at page 753 (affd., 29 O.R. (2d) 677 (C.A.)). Without suggesting that there is otherwise any close analogy with orders under Rule 10, I believe that, at least for the present purposes, the position is essentially the same when an order has been made under rule 13.01. A settlement is a contractual arrangement. A judgment incorporating a settlement can be enforced as a judgment but its basis in an agreement or contract does not disappear. It has been said that “the order is a mere creature of the agreement”: Huddersfield Banking Co., Ltd., v. Lister (Henry) & Son, Ltd.,  2 Ch. 273 (C.A.), at p. 276 and it has been doubted whether a judgment confirming, or incorporating a settlement can have the status of a judgment in rem rather than a judgment inter partes: see Halsbury’s Law of England (4th edition), Volume 16, para. 988.
13 A finding that an intervenor has a right to veto a settlement in the present circumstances would mean that the order granting leave to intervene would have created a legal right, or power, of the intervenor to negate, or override, the contractual rights of the other parties. I have not been referred to any provision of the rules that either expressly, or by implication, would justify such a conclusion. It could, I think, be supported only on the basis that a right to participate in a settlement is necessarily inherent in the status of any person who is a party to the proceedings.
14 While it is fair to say that certain rules – particularly rule 9 (estates and trusts) and 10 (representation orders) appear to reflect a natural assumption that, generally, all parties must participate in a settlement, I have not been able to find any sufficient implication that this is necessarily applicable to intervenors who become parties by virtue of an order of the Court pursuant to rule 13.01. If it were the case, it would surely be a factor to be considered on motions for leave to intervene. Certainly, in cases involving attorneys under continuing powers, statutory guardian and court appointed guardians of the property, one might expect motions under rule 13.01 to be vigorously contested by original parties to the proceeding whose interests would not be supported by the person seeking leave to intervene. No authorities have been cited to me in which the possibility that intervenors must consent to any settlement has been referred to.
15 General statements have been made in the cases that, subject to any restrictions imposed in the order granting intervenor status, such a party has all the rights of the other parties: (see, for example, Attorney General of Ontario v. Estate of Harold Edwin Ballard  O.J. No. 2487). The context in which such statements have been made indicate sufficiently in my opinion that the courts have been referring to procedural rights – such as rights to discovery, production of documents or cross-examination – exclusively. To permit an intervenor, who has no substantive legal rights – whether proprietary, contractual or other – to prevent the original parties from effectively agreeing with respect to the disposal or rearrangement of their own private substantive legal rights would, I believe, require a clear statement or implication in the rules.
16 As a beneficiary under the last will that her mother has executed, Mrs. Nicholson has, as I have already mentioned, no proprietary interest in any of her mother’s property. Although she may well have an “interest in the subject matter of the proceedings” within the meaning of those words in rule 13.01(1)(a), in terms of property law her “interest” is a mere expectancy. There is ample authority that the word “interest” in a statute or statutory instrument is not necessarily confined to interests recognized as such under the old law of property. If Mrs. Nicholson predeceases her mother, neither she nor her estate will have rights under the will on her mother’s death. If the will is set aside – and I have been informed that its validity is likely to be challenged – her “interest” under that instrument will disappear. It is primarily because she has no proprietary interest in the Marquette property that an order under rule 13.01 was required to enable her to protect her position. If she had such an interest, it is difficult to see how it could be affected by a judgment, or settlement, with respect to the rights of her mother and sister in the present proceedings between them. Her vulnerable position arises from her lack of a proprietary interest in the property and she could only protect her interest – in the broader sense – by supporting the claims advanced by the Public Guardian and Trustee on behalf of her mother. She is, essentially, claiming through her mother and, at the same time, effectively challenging the rights of her mother’s guardian for property – rights that are conferred by the Substitute Decisions Act.
17 In my view, while intervention in the circumstances of this case, and in similar cases that are now before the court, may well be justified as a means of permitting expectant beneficiaries to protect their hopes of inheritance, it does not give Mrs. Nicholson the right to override decisions of the Public Guardian and Trustee made on her mother’s behalf by claiming a right of veto in any settlement discussions – whether she claims to exercise such a right on her mother’s behalf, or, indeed, on her own.
18 I should add that in February of this year a motion was brought by Mrs. Nicholson after the possibility that the Public Guardian and Trustee might enter into negotiations for a settlement was raised. In that motion Mrs. Nicholson sought an interlocutory injunction restraining the Public Guardian and Trustee “from entering into any offer of settlement” without the written consent of Mrs. Nicholson. Juriansz J. declined to grant the injunction and, in an endorsement stated:
“The relief sought in paragraph 2 of the Motion is denied. Requiring the Public Guardian to obtain the Moving Party’s consent to any settlement would be incompatible with the fiduciary duty on it under s. 32(1) of the Substitute Decisions Act. Moreover, the Public Guardian has undertaken to give notice to all parties of any application to approve a settlement under Rule 7.08. The Moving Party will have the opportunity to make submissions as to the wisdom of any settlement that may be entered into, at that time.”
19 Although, strictly, neither the notice of motion nor the endorsement addressed the question whether Mrs. Nicholson’s consent would be required before an effective settlement could be reached, this may well have been implicit in the decision of Juriansz J. At the very least, the decision is consistent with the conclusion I have reached on this motion.
20 Accordingly, there will be an order that the settlement is effective to terminate the proceedings and that it binds Mrs. Nicholson to the extent that it determines the issue between her mother and Mrs. Sebastian with respect to the Marquette property. However, in any judgment of the Court giving effect to the settlement, Mrs. Nicholson’s refusal to consent should be noted.
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