By Sophie Luesby
As Rule 7.08(1) of the Rule of Civil Procedure states:
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.
Which legislation governs capacity-related issues?
Firstly, it’s important to note that two pieces of legislation govern issues relating to capacity:
- Substitute Decisions Act, 1992
- Mental Health Act
The Mental Health Act addresses capacity with respect to patients in psychiatric facilities. The Substitute Decisions Act, 1992 can apply in virtually all circumstances.
What is the purpose of court approval?
The purpose of court approval is to protect the party under disability. It ensures that their legal rights are not compromised or surrendered without proper compensation. 
Getting your settlement approved by the court is challenging, especially if you are unfamiliar with its process. Ultimately, you should make careful considerations before entering into settlement negotiations.
For example, one must consider whether they have commissioned the appropriate reports, gathered the relevant evidence, and updated their dockets. You should also consider whether:
- You have studied the relevant case law on general damages and liability?
- You have kept detailed notes on how the court has valued similar claims and why?
Understanding approval of the court
Any time a settlement agreement is reached on behalf of a person under disability, approval of the court is required.
A person is considered to be “under disability” where they are a minor; or where they are deemed to be mentally incapable within the meaning of section 6 or 45 of the Substitute Decisions Act, 1992.
Approval can be sought either by way of application to the court where the agreement for the settlement is reached before a proceeding is commenced; or by way of a motion where the agreement for the settlement is reached after a proceeding is commenced.
What is required within the application or motion materials?
Rule 7.08(4) provides for the required materials that must be included with the notice of motion or notice of application:
- An affidavit of the litigation guardian setting out the material facts and the reasons supporting the proposed settlement and the position of the litigation guardian in respect of the settlement;
- An affidavit of the lawyer acting for the litigation guardian setting out the lawyer’s position in respect of the proposed settlement;
- Where the person under disability is a minor who is over the age of sixteen years, the minor’s consent in writing, unless the judge orders otherwise; and
- A copy of the proposed minutes of settlement
However, in order for the court to be able to properly assess the appropriateness of the settlement, the application or motion record must be thorough and complete.
The Honourable Madam Justice Sylvia Corthorn identified three critical points that must be addressed in the supporting materials:
- Reasonableness of the settlement;
- Management of the settlement funds; and
- Approval of the solicitor-client account 
What must the application materials achieve?
In particular, the materials must provide an overview of the nature of the action. This includes:
- Providing a description of the incident;
- Describing the resulting injuries and impairments;
- Presenting a chronology of the relevant medical assessments and treatments;
- Providing a summarization of the settlement and the proposed fees; and
- Highlighting what will be done with the funds by the plaintiff
What about Cost of Future Care reports?
If the plaintiff is making a claim for attendant care services, housekeeping services, and/or medical and rehabilitative treatment, then a Cost of Future Care report must be commissioned. This report must specify:
- The type of treatment and rehabilitation services the plaintiff has received, and/or continues to receive as a result of the collision;
- The frequency of the treatments and services;
- The expenses incurred to date for the treatments and services, this includes, if possible, on an annualized basis;
- The recommendations of the treatment and service providers as to future treatments and services for the plaintiff; and
- Any other matters relevant to consideration of the expenses that the plaintiff will incur in the future for treatment, services, and other items
In order for the court to consider approving the settlement, the court must understand the future care needs of the plaintiff to ensure that the settlement appropriately compensates the plaintiff.
Quantifying an income loss claim
If the plaintiff is advancing a loss of income claim, then relevant employment files, tax records, and information on available collateral benefits should be included. This is in order to quantify and justify the value of the claim. You should consider commissioning a forensic accounting report that will breakdown the arithmetic of the plaintiff’s past and/or future income loss.
What if the plaintiff is a minor?
To demonstrate the impact the incident has had on the child’s schooling, records such as report cards and individualized education plans can and should be requested.
What responsibility does the solicitor of record have?
The solicitor of record must provide a detailed rationale for the proposed fees by explaining and identifying:
- The length of time counsel had carriage of the case;
- The risks involved in this case (financial risk, liability risk, litigation risk, etc);
- The likelihood of success and complexity of the issues;
- Why and how they made certain decisions; and
- How they valued the case
Counsel should also include dockets, a list of disbursements, and relevant receipts.
As The Honourable Madam Justice Sylvia Corthorn explains in her article entitled “Court Approval of Settlements,”
It is in the best interests of a person under a disability, for whom a settlement has been reached, that court approval not contribute to delay in the conclusion of litigation that may well have already taken a number of years. 
Therefore, is it imperative that the solicitor of record prepares thorough and complete materials that will assist the court in approving the settlement and avoiding any unnecessary delays.
 Wu Estate v Zurich Insurance Co, 2006 CanLII 16344 (ON CA)