January 16, 2024

Minors and incapable persons are protected in a variety of ways in Ontario’s court system. One form of protection comes through Rule 7 of Ontario’s Rules of Civil Procedure (the “Rules”). In particular, subrule 7.08(1) provides:

“No settlement of a claim made by or against a person under disability, whether or not a proceeding has been commenced in respect of the claim, is binding on the person without the approval of a judge.”

Because settlement agreements are private contracts between parties, courts do not ordinarily need to pronounce upon their validity. Subrule 7.08 ensures that a judge must review and determine the validity of any settlement agreement which purports to impact the rights of a minor or incapable person (often referred to in the litigation process as a “person under disability”).

Minors and incapable adults are often impacted (directly or indirectly) by estate litigation. Naturally, this means that estate litigators must pay special attention to rule 7.08 whenever a settlement has been reached by the parties. Where the settlement is likely to impact the rights of a person under disability, the parties must go before the court to seek approval of the settlement.

Generally, there are two ways in which a party can seek court approval of the settlement. First, the parties may bring a motion for approval, which is brought within the context of a pre-existing legal proceeding (i.e., an action or application has already been commenced by one of the parties). Second, if no legal proceedings have been commenced, one of the parties may bring an application for approval. Court approval of a settlement is most frequently sought by way of a motion, and is usually consented to or otherwise unopposed by the other parties to the settlement.

Motions for approval may be heard “in writing.” This means that a judge may dispense with the need for an oral hearing, and may instead decide the matter (i.e., whether to approve or not approve the settlement) by simply reading the written materials submitted by the parties.

Until recently, there was some uncertainty in the case law as to whether an application for court approval of a settlement could be heard “in writing.” In the 2018 case, Leonard v Saint-Vincent Hospital (“Leonard”), the Court held that applications for approval of a settlement were required to be heard orally. This conclusion was based in large part on a strict reading and application of the Rules. According to the Court, a party could be exempt from the requirement for an oral hearing only by tendering sufficient evidence that an application in writing was “necessary and in the interests of justice.”

In a more recent case from 2023, Orr v TD General Insurance Company (“Orr”), the Court decided that it was “time to put a stake through” the reasoning in Leonard. According to the Court, Leonard applied an overly technical interpretation and rigid application of the Rules. The Court reasoned that the requirement that an application for court approval of a settlement be heard orally defies “common sense,” as it does not promote judicial economy, does not yield a more just result, does not better serve the administration of justice, and does not confer any benefits on the parties that an application in writing could not just as well provide.

If anything, allowing an application for court approval to proceed in writing promotes judicial economy and better serves the administration of justice, as it gives the judge hearing the matter “adequate time to read, digest and critically consider the material.” Moreover, dispensing with the need for an oral hearing will reduce delay, as it can take many months to schedule the hearing of the application; and will save on costs, as there will be no need for the parties’ lawyers to prepare for, attend, and make oral submissions at the hearing.

As Orr suggests, there is a judicial preference in Ontario for motions and applications for approval of a settlement to be heard in writing. While an oral hearing may be necessary in some situations, such as when one of the parties opposes the motion or application, generally it is more cost-effective to proceed in writing. For a brief primer on the procedure involved in bringing a motion or application for approval of a settlement under rule 7.08, see our blog post here.