Introduction
Individuals who are unable to manage their own finances and personal care and who are not capable of making their own financial or personal care decisions are vulnerable and may be susceptible to abuse. Guardianship, often a choice of last resort, is one means of managing the affairs of individuals under disability. There are various guardianship regimes recognized under the Substitute Decisions Act [1] (“SDA”), The Children’s Law Reform Act [2] (“CLRA”) and the Rules of Civil Procedure. [3] Across these regimes there are two basic categories of guardianship: of the person, and of property.
This introduction will seek to provide the reader with a broad overview of the guardianship regime in Ontario. The overview will describe the appointment process and powers and obligations of guardians under the various statutes, and will include an introduction of the rigorous accounting and reporting obligations of guardians, as well as the procedures surrounding the appointment of a guardian. The subsequent chapters in this book will then offer the reader a more focused exegesis on guardianship law in Ontario.
Guardianship under the Substitute Decisions Act
The purpose of the SDA is to protect the vulnerable while at the same time ensuring that the dignity, privacy and autonomy of the individual are “assiduously protected.” [4] The SDA presumes a person is capable. [5] Sections 22(3) and 55(2) of the SDA require that a court “shall not” appoint a guardian if it is satisfied that the need for decisions can be satisfied by an alternative course that is less restrictive of the person’s decision-making rights.
Guardians of property and of the person are fiduciaries. These obligations are codified under subsection 32(1) and 66(1) of the SDA.
There are a number of ways a guardian can be appointed under the SDA. The first is an open-court hearing by way of application, while the second is by way of a summary disposition under sections 72, 74 and 77 of the SDA. The summary method of appointment avoids the involved parties having to attend court but requires more by way of documentary evidence before the application can be considered by a judge. Generally, the summary method for the appointment is utilized where the guardianship appointment is unopposed. [6]
If a certificate is issued under the Mental Health Act [7] certifying that a person who is a patient of a psychiatric facility is incapable of managing property, and that person has not appointed an attorney, the Public Guardian and Trustee (“PGT”) becomes the person’s statutory guardian. [8] A person may request that a capacity assessor perform an assessment of his/her own capacity or of another person’s capacity to determine whether the PGT should become the statutory guardian. [9] If the assessor finds the person incapable of managing property, statutory guardianship takes effect as soon as the incapable person receives a copy of the certificate issued by the assessor indicating that lack of capacity. [10] Statutory guardianship is different from other types of guardianship due to its automatic mechanism. Once the above-mentioned criteria occur, the guardianship is triggered.
Once a statutory guardianship takes effect, any of the following persons may apply to the PGT to replace the PGT as an incapable person’s statutory guardian:
Guardianship of Property
1. Court appointment
A guardian for property can be court appointed to manage the financial affairs of a person who is declared mentally incapable of doing so.
Before appointing a guardian for property, the court must be satisfied that the following two conditions are met:
the person is incapable of managing property; and
as a result of such incapacity, it is necessary for decisions to be made by a person authorized to do so. [13]
In the absence of these two conditions, a guardian should not be appointed. [14]
A person is incapable of managing property if the person “is not able to understand information that is relevant to making a decision in the management of his or her property or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision.” [15]
In deciding who should be appointed a guardian, a court shall consider whether the proposed guardian is the acting attorney under a continuing attorney for property, the incapable person’s wishes (if they can be ascertained) and the closeness of the relationship between the proposed guardian and the incapable person. [16]
Guardians under the SDA cannot be the same people who provide health care, residential, social, training or support services to the incapable person for compensation. The exception is where the person providing the services is a spouse, partner or relative or is the person’s attorney for property or personal care. [17]
The court shall not appoint the PGT as a guardian unless the guardianship application proposes the PGT as guardian, the PGT consents and there is no other “suitable” person available and willing. [18]
The wishes of the incapable person play an important role in deciding who should be appointed a guardian, as was recognized in Lazaroff v Lazaroff. The court there held that the incapable person’s wishes that her sister not be appointed should be respected; the PGT was appointed instead. [19]
An order appointing a guardian may:
When considering who should be appointed guardian where there are conflicting guardianship applications, the court’s main focus will be the best interests of the incapable person. [21]
2. The guardian’s powers and obligations
A guardian for property can do anything the incapable person could normally do in relation to his/her own property. This includes collecting and depositing income, paying bills, making purchases, selling assets, handling investments, managing real estate and looking after legal matters. The only matter of a financial nature that a guardian of property cannot do is make, or change, a will on behalf of the incapable person. [22]
A guardian’s authority ends if and when the person under guardianship dies.
There are general rules that dictate how a guardian for property shall use his/her powers. A guardian of property must encourage the incapable person to participate, to the best of his/her abilities, in the guardian’s decisions about property. [23] The guardian shall consult with family and friends of the incapable person who are in regular contact with the incapable person and from whom the incapable person receives care. [24] A guardian for property must keep accounts as prescribed by the regulations under the SDA. [25]
A guardian shall act in accordance with the management plan established for property. [26] The only exception to this requirement concerns the Office of the Public Guardian and Trustee (“OPGT”), which is not required to file a management plan and acts in accordance with the policies of that office. If there is a management plan, then pursuant to section 32(11) of the SDA, the plan may be amended from time to time with the PGT’s approval. Note that notwithstanding any requirement by a court order for court approval, the statute states that the PGT may approve the amendment of a management plan.
A guardian of property who does not receive compensation for managing property shall exercise the degree of care, skill and diligence that a person of ordinary prudence would exercise in the conduct of his or her own affairs. A guardian who is compensated for managing property is required to exercise a higher degree of skill, care and diligence, akin to that of a person in the business of managing the property of others. [27]
A guardian of property is liable for damages arising from breach of the guardian’s duty. [28] However, if the court is satisfied that the guardian has acted “honestly, reasonably and diligently”, even though there has been a breach of duty, the court may relieve the guardian of all or part of the liability.
Subsection 32(12) of the SDA expressly states that the Trustee Act [29] does not apply to the exercise of a guardian’s powers or the performance of a guardian’s duties.
The compensation allowed for a guardian of property is higher than the percentages recognized at common law for estate trustees. Based on the regulations to the SDA, a guardian is allowed compensation based on 3% of disbursements of capital and revenue plus an annual care and management fee of .6% of the fair market value of assets under administration by the guardian. Section 40(2) of the SDA directs that compensation may be taken by the guardian monthly, quarterly, or annually. In determining the appropriate level of compensation, courts have taken the percentage approach that is specified in the regulations and “cross-checked” it against the factors listed in Toronto General Trusts Corp v Central Ontario Railway Co [30] and Jeffrey Estate (Re) [31] to have a more holistic approach in determining income. [32] Those factors include:
4. Court appointment procedure
An application to appoint a guardian of property for an incapable person must include:
The guardian may be required to post a bond pursuant to section 25(2)(b) of the SDA. The courts have been strict with requiring guardians to post a bond. Often the PGT is of the position that a bond should be posted. In Gryszczuk v Gryszczuk, the court required a spouse to post a bond even though he was the only beneficiary of his wife’s estate. The court stated at para 7:
I agree with the submission of the Public Guardian and Trustee that the fact that Mr. Gryszczuk is the only beneficiary of his wife’s estate is not determinative of the issue of whether or not he ought to be required to post security. This issue must be considered from the perspective of what is in the best interests of Dinah Gryszczuk. The duty of the court is to ensure that Dinah Gryszczuk and her property are protected. The law is clear that security for the due performance of the duties of a guardian of property is to guard against the unforeseeable and unexpected. [34]
In an application to appoint a guardian for property the following parties must be served with the application material:
The notice of application and accompanying documents shall also be served on all of the following persons by ordinary mail sent to the person’s last address:
In Boyd v Thomson Justice MacKenzie approved of dispensing with service on family members of the allegedly incapable person for the purposes of a guardianship application. The court held that notice is the right or entitlement of the family members under section 69(6) of the SDA. The court therefore ruled it was open to the family members of the incapable person to waive their right or entitlement to receive notice of the application record. [37] If family members waive their right, they do not need to be served.
[1] Substitute Decisions Act, 1992, SO 1992, c 30.
[2] Children’s Law Reform Act, RSO 1990, c C.12.
[3] Rules of Civil Procedure, RRO 1990, Reg 194.
[4] Park v Park, 2010 ONSC 2627 at para 47, [2010] OJ No 1840.
[7] Mental Health Act, RSO 1990, c M.7.
