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Administrative - Disability. Sistermans v. CAA Insurance Co. [set aside of settlement on grounds of disability]
In Sistermans v. CAA Insurance Co. (Ont Div Ct, 2025) the Ontario Divisional Court dismissed a joint LAT SABS JR/appeal, here regarding a SABS claim settlement and "an application before the Tribunal, seeking to set aside the settlement agreement on the basis that he lacked capacity to enter into the agreement".
Here the court considers a disability-capacity issue:[50] Connor argues that the Tribunal failed to articulate and apply the governing legal standard to determine capacity and failed to consider relevant factors in making that determination. By doing so, Connor says the Tribunal made extricable errors of law.
[51] Connor submits that the purpose of the law relating to parties under disability is to protect the disabled and the integrity of the courts by requiring, among other things, court approval of settlements: see Costantino v. Costantino, 2016 ONSC 7279, at para. 44. He argues, however, that capacity to instruct counsel “is at the higher end of the competency hierarchy”: Carmichael v. GlaxoSmithKline Inc., 2020 ONCA 447, 151 O.R. (3d) 609, at para. 87. The law recognizes that capacity varies with the decision at issue: Carmichael, at para. 86. The capacity analysis must be “in relation to the issues in the litigation”, which includes being able to “appreciate the reasonably foreseeable consequences of a decision”, also described as “the capacity to assess risk, which requires consideration of a variety of results, both positive and negative”: see Costantino, at paras. 41, 43. As stated in Carmichael, at para. 110, “a person may display many indicators of cognitive capacity, yet still lack the capacity to commence a proceeding in respect of the claim because of their psychological condition.”
[52] In Bajwa v. Singh, 2022 ONSC 3720, at para. 14, the court stated that because the question was case specific, there is “no single definitive test to be applied in assessing whether a litigant has the capacity to instruct counsel.” The court then listed important factors to consider in assessing the litigant’s capacity to instruct counsel, including their ability to “understand and appreciate” based on their circumstances.
[53] Similarly, in Carmichael, at para. 94, the Court of Appeal provided a list of factors to consider relating to the capacity to commence a lawsuit. At para. 96, the court described these factors as “helpful indicators of capacity” but went on to caution that they were “neither necessary nor sufficient in themselves to establish incapacity; they are indicia that guide a holistic weighing of all the evidence on capacity in the context of the case” (emphasis in original). In Costantino, at para. 58, the court stated that “[i]ssues of mental capacity generally are to be decided on medical evidence”, but went on to state that courts “have, in some circumstances, considered various types of evidence in determining whether a litigation guardian should be appointed”, including: medical or psychological evidence on capacity; evidence from people who know the litigant well; the appearance and demeanour of the litigant; the testimony of the litigant; and the opinion of the litigant’s counsel: see also Carmichael, at para. 105.
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[56] I do not agree that the Tribunal made errors of law in its capacity analysis.
[57] As previously noted, the thrust of Connor’s error of law submissions is that the Tribunal made reversible errors by failing to articulate and apply the governing legal standard to determine capacity and by failing to consider relevant factors in making that determination.
[58] As Connor acknowledges in his factum, there is no definitive test for assessing capacity, given its case specific nature: Bajwa, at para. 14. As Connor also notes, previous caselaw has provided various “helpful indicators of capacity … that guide a holistic weighing of all the evidence on capacity in the context of the case”: Carmichael, at para. 96. Notwithstanding that acknowledgement, Connor’s counsel proceeds to argue that failure to address identify and address various of the “helpful indicators” referred to in previous cases rise to the level of reversible error on appeal. That approach does not assist Connor in identifying extricable errors of law.
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