During the course of litigation, you may run into a situation where money is “paid into court.” Paying money into court is a way of protecting funds while the litigation is ongoing or until a minor reaches the age of majority. For example, where there is a dispute about who is entitled to insurance proceeds, the funds are often paid into court until the parties reach an agreement as to who is entitled to the funds or the litigation is resolved. Another common reason for paying funds into court is where money is owing to a minor (either as a beneficiary of an estate or pursuant to a settlement). In those cases, the funds must be paid into court until the minor becomes entitled to receive them.
(A.K.A. Do I lose all my money if it is paid into court?)
The Accountant of the Superior Court of Justice (the “Accountant”) accepts the payments into court and manages the funds until such time as they are ready to be paid out. The money is invested and earns monthly interest. The Accountant hires financial planners to make investment decisions. The Account also issues tax slips on income earned. While the Accountant does not automatically send out account statements, they are available on request.
The Accountant charges fees for his services: 3% of receipts and disbursements (other than on the original payments into court) and 3/5 of 1% per year of the average annual value of the funds under management. If the Accountant’s fees and HST (which are charged monthly) exceed the income, the fees will be reduced that month so that the capital is never diminished due to fees. However, the funds may increase or decrease with market changes.
(A.K.A. Let’s secure those funds!)
Along with a cheque representing the funds to be paid into court, the party sending the money to the Accountant must provide a written statement (usually in the form of a signed letter) confirming her authority to pay the funds into court. The party’s authority will either come from a court order (in which case, the party should also provide the Accountant with a copy of the court order) or reference the statute or rule which authorizes her to pay funds into court. The letter should also make clear why the funds are being paid into court: is it an asset in dispute in the litigation? In that case, the Accountant will hold the funds to the “credit of the application/action.” If the money is owing to a minor, then the Accountant will hold the funds to the “credit of the minor.”
Once the funds are received, the Accountant will provide the party who sent the funds with a receipt. Hold onto this receipt – it has information on it that (such as the account number assigned by the Accountant to the funds) that will make it easier to correspond with the Accountant about the funds going forward.
(A.K.A. What goes in must come out)
When funds have been paid into court as part of ongoing litigation, there are two main ways for the money to be paid out:
1. Pursuant to unanimous consent of the parties
In this case, the party seeking the funds must provide the Accountant with a written request for the funds, signed consents from all of the parties agreeing to the payment, and an affidavit confirming that neither the party who paid the funds into court nor the party who will receive the funds is under disability.
2. Pursuant to court order
In this case, the party seeking the funds must provide the Accountant with a written request for the funds, the court order directing the funds to be paid out of court, and an affidavit confirming that the time to appeal the court order has expired.
Where the funds were paid into court for the benefit of a minor, the minor must file the request when she becomes entitled to the funds. In this case, the minor must provide the Accountant with a written request for the funds and an affidavit proving her identity and age.
(A.K.A. If you don’t want to wait to turn 18…)
There are many occasions where the minor’s parent or guardian may wish to access the funds held in court before the minor reaches the age of majority. For example, the funds may be needed to help pay for the minors’ medical, educational, or dental expenses.
The Office of the Children’s Lawyer (the “OCL”) has established a Minors’ Funds department to process such requests. Some of the information needed to complete the application include:
1. Completed request for payment of funds out of court setting out, among other things, the purpose of the funds (copies of receipts, if appropriate, should be included with the request)
2. Financial statement completed by the minor’s parent/guardian confirming her need for assistance to pay for the minor’s expenses
3. If the minor is 14 years or older, her consent to the payment to the applicant
The Minors’ Funds department reviews the requests and then, once a month, brings them before a judge for review. If accepted, the judge will issue an order directing the payment of funds to the applicant.
The only trick to paying funds into or out of court is to make sure you are filing the correct paperwork – if you do, the process is straightforward and your application will be processed relatively quickly. The Accountant’s office is responsive and willing to answer questions at any stage of paying funds into or out of court. The Accountant’s office also has procedures in place to correct any errors that may have been made along the way, such as misspelling a minor’s name or birthdate. Links to the appropriate forms or guides have been provided throughout this blog to help you quickly locate additional information.