The Test to Appoint a Litigation Guardian

A case review of 626381 Ontario Ltd. v. Kagan, Shastri, Barristers & Solicitors and Rule 7

What test does the court apply when deciding if a person is under a disability that requires a litigation guardian? This question was addressed in 626381 Ontario Ltd. v. Kagan, Shastri, Barristers & Solicitors[“Kagan”].¹ Its importance stems from the fact that the definition of capacity is often situation and statute specific. It’s also important because it reminds us that the rationale and threshold for compelling someone to undergo a medical examination in the context of a substitute decisions matter is very different than in the context of a Rule 7 motion.  Let’s start our discussion with the facts of the case.

N.A. owned and controlled 626381 Ontario Ltd. (“626”). N.A. was engaged in a lot of litigation and Justice Stinson was chosen to case manage her 20 cases. In one of the actions the defendants brought a motion to dismiss the case because N.A. refused to comply with numerous orders and chronically declined to comply with her obligations under the Rules. In response, N.A. claimed to be under a disability and asked for the motion to be dismissed. N.A. also brought a cross-motion rationalizing her non compliance with numerous court orders and rules by claiming she was a party under a disability and in need of a litigation guardian. Based on an assessment obtained by N.A., the PGT was appointed as litigation guardian in five of the 20 cases. There was no litigation guardian for the other 15 cases.

In its capacity as litigation guardian for N.A., the PGT settled one of the five cases and, in keeping with its obligation under Rule 7,  was in the process of seeking approval of the court for the settlement. In response, N.A. told the court that she was bringing a motion under Rule 7.06(1)(b) to remove the PGT as her litigation guardian and that she planned to continue the litigation. Now you might ask, didn’t N.A. just claim that she was a person under disability? Well that was then, but under Rule 7.06(1)(b) when a party under disability for whom a litigation guardian has been acting ceases to be under disability, the party may move without notice for an order to continue the proceeding without the litigation guardian. So that is what N.A. tried to do.

In support of her motion to remove the PGT as litigation guardian, N.A. provided a second capacity assessment. Unlike the first one, which concluded that she did not have capacity to represent herself in litigious proceedings, the second report concluded that she did.  N.A. resisted the defendants’ efforts to have her assessed by an examiner of their choice.

The defendants then brought a motion seeking an order that N.A. undergo a mental examination to determine if she was a party under a legal disability who must be represented by a litigation guardian.²

Against this background, there were a number of issues that the court had to address:

1. Does this court have jurisdiction to order a party to undergo a mental examination to determine whether he or she is a party under a legal disability?

In paragraph 41, Justice Stinson concluded, “that this court has jurisdiction under s. 105 of the Courts of Justice Act, [CJA]³ to compel a party to undergo a mental examination for the purposes of providing evidence to decide whether the party is a person under a disability for whom a litigation guardian is required pursuant to rule 7.01(1).”

Justice Stinson’s answer to this question involved a four part discussion: (a) the purpose of Rule 7; (b) the definition of legal disability; (c) the evidentiary basis for determining whether a party is under a disability; and (d) whether  the court has jurisdiction to compel a party to undergo a mental examination for purposes of a Rule 7 motion?

Regarding the purpose of Rule 7, the court referred to Cameron v. Louden,⁴ for the following proposition,

“The purpose of a rule requiring a litigation guardian for parties under disability is drawn for protection to the party, the other parties and the Court itself. The rule offers protection to the party by ensuring that a competent person with a duty to act for the party’s benefit is there to instruct counsel and take steps in the litigation on the party’s behalf. To the other parties, the rule offers the protection of a competent person who instructs counsel on how the proceeding is to be conducted, is responsible for costs and is responsible for seeing that the court’s eventual judgment is obeyed. A litigation guardian offers assurance to the court that its process is not abused by or against a party under disability and that its order will be obeyed.

In his analysis, Justice Stinson explained how the Rules’ purpose colours and informs the definition of a “party under disability” and application.  In addressing the definition, Justice Stinson explained the subtle difference between a “person under disability” under Rule 7 and incapacity under the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (“SDA“).

When dealing with the issue of a person under disability under the Rules, one has to keep in mind the different purpose between the respective regulation and statute. Notwithstanding that the Rules incorporate into the definition of “disability” the meaning of a “mentally incapable person” within sections 5⁵ or 45⁶ and 6⁷ of the SDA, one has to deal with the purpose of the rules when applying the definition to a particular set of facts. In SDA proceedings, the focus is only on protecting the person who is alleged to be incapable, while in Rule 7 proceedings the courts are mindful that the Rules are designed to also protect the integrity of the court process. Justice Stinson’s conclusion in paragraph 21 is a good summary of his thoughts on the definition and test to be applied.

21      Taken together, then, in a non-SDA proceeding governed by the Rules, in my opinion, the definition of “disability” in rule 1.03(1)(b) ⁸ should be read along with s.6 of the SDA to mean that someone will be considered a person under a disability if he or she is not able to understand information that is relevant to making a decision in the management of his or her property in respect of an issue in the proceeding, or if the person is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision in respect of an issue in the proceeding. This definition imports the language of s. 6 of the SDA within the confines of rule 1.03(1)(b) and reflects the overall purpose of Rule 7 and rule 7.04(1)(b) in particular

While the appointment of a litigation guardian under the Rules is less intrusive than the appointment of a guardian under the SDA it is still a significant ask. As His Honour stated in paragraph 25, “.…the question is whether the person is able to understand information that is relevant to making a decision in respect of an issue in the proceeding or able to appreciate the reasonably foreseeable consequences of a decision or lack of decision in respect of an issue in the proceeding..”  In making its decision the court will largely base its decision on the medical evidence.  But, what if the person involved does not want to be examined?

Justice Stinson considered N.A.’s proposition that the lack of an express mechanism in the Rules providing the court with the jurisdiction to compel that a party undergo a medical examination could be interpreted as a deliberate omission and indicating that a court does not have jurisdiction to compel a party to undergo a mental examination for Rule 7 purposes. However, the court dismissed that argument and accepted instead that the court had jurisdiction to compel a party to attend a mental examination under  s. 105(2) of the CJA. While His Honour did not mention it, there is also the inherent and pares patriae jurisdiction of the court to consider.

Justice Stinson made the point that a s. 105 order to compel an examination should be the exception and not the rule. It should not be granted lightly without good reason and the particular requirements of s. 105 (3) should be satisfied. That section provides, “(3) Where the question of a party’s physical or mental condition is first raised by another party, an order under this section shall not be made unless the allegation is relevant to a material issue in the proceeding and there is good reason to believe that there is substance to the allegation.”

2. Does a court order to undergo a mental examination violate the Charter?

There is an open question whether the Charter⁹ applies to court orders based upon statutory authority. Given that ambiguity, Justice Stinson dealt with the issue on the assumption that the Charter does apply. At issue was whether a s.105 order under the CJA directing a party in a civil action to undergo a medical examination adheres to the principles of fundamental justice or if it contravenes the Charter provisions dealing with security of the person. In reviewing Rule 7 and s. 105, the court considered the procedural safeguards built into the process and concluded, in paragraph 62 of its decision,

“while an order requiring a party to undergo a mental examination for purposes of the potential appointment of a litigation guardian may engage s. 7 liberty and security rights, I conclude that there is good reason to believe that such an order would only be made in accordance with the principles of fundamental justice. I therefore hold that, assuming the Charter is applicable to a court action in this context, the exercise of the authority granted by s. 105 of the CJA does not violate s. 7 of the Charter.”

Conclusions and Takeaways

The significance of this decision is evidenced by the fact that it was judicially considered 32 times since 2013. It behooves lawyers who are arguing a Rule 7 or s.105 motion to review this case in detail and ensure that they understand the purpose of the Rule and the test for determining whether the party in question is a person under disability.

A party may have bad judgment and make ill-advised strategic decisions dealing with litigation, but that does not make them a person under disability necessitating the appointment of a litigation guardian. The test is whether the party cannot understand information relevant to making a decision, or consequences of decision or lack thereof, in regards to management of her property in respect of proceeding. Justice Stinson draws a distinction between “failing to understand and appreciate risks and consequences and being unable to understand and appreciate risks and consequences. It is only the latter that can lead to a finding of incapacity.” ¹⁰

The purpose of Rule 7 informs and influences its application. Under cases dealing with the SDA where the best interests of the allegedly incapable person is the only issue,¹¹ Rule 7 proceedings balance the interest of all the litigants against the court’s duty to protect the vulnerable.