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Guardianship Bonds

Courts in Ontario will sometimes require a Guardian of Property to obtain a bond for security as a condition of being appointed as guardian. It is for the protection of the incapable person whose property will be under the management of the guardian. The requirement is found in a number of sections of the Substitute Decisions Act, 1992 (the “SDA”), which is the provincial legislation governing guardianships in Ontario.

In circumstances where an applicant is seeking to replace the Public Guardian and Trustee (“PGT”) as the statutory guardian, the PGT can require that the applicant provide security in a manner and for an amount the PGT must approve of. Otherwise, the PGT can refuse to appoint the applicant as guardian. If that occurs, the Court can override the PGT and either reduce or dispense with the need to provide security, but that is not easily done.

In circumstances where the PGT is not acting as statutory guardian, the applicant may still be required to provide security. Under s. 24(4) of the SDA, the starting point for a non-resident of Ontario is that they must provide security for the value of the property that will be under their management, subject to a waiver by the court. Under s. 25(2)(a), which applies to residents, security is not mandatory, but the court “may require that the guardian post security in the manner and amount that the court considers appropriate.”

What is Security?

A guardianship bond is in insurance product which protects the incapable person against financial misuse by the guardian. If there is financial loss to the property, a claim can be made against the bond, requiring the bond issuer to compensate for the loss.

To obtain a guardianship bond, the guardian will have to make an application to an insurer or through an insurance broker. The cost of the bond will generally depend on the value of assets to be protected, and an assessment of the applicant, including his/her financial circumstances (e.g. net worth).

Cases Addressing Security

The court has looked at a number of factors in determining whether a proposed guardian of property needs to post security.

In the 2008 Ontario Superior Court of Justice case, Barnes v. Barnes, 2008 ONSC 36908 (CanLii), security was required from the applicant who was the niece of her incapable aunt. The applicant was also a beneficiary under her aunt’s will, and while there was no suggestion that she acted against her aunt’s best interests, the court noted that the less that the applicant spent on her aunt’s care, the more she stood to inherit. In the mind of the judge, Justice Langdon, the applicant was therefore in a position of a potential conflict of interest.

Justice Langdon also cited the case Re: Gryszcuk in which the judge there stated the following:

The duty of the court is to ensure that [the beneficiary] and her property are protected. The law is clear that security for the due performance of the duties of a guardian of property is to guard against the unforeseeable and unexpected. … It is not unjust to burden the estate with the cost of securing a bond.

In the 2010 Ontario Superior Court Case, Sundell v. Donyluk, 2010 ONSC 3019 (CanLii), the court appointed a daughter of an incapable person and relied on the following facts to dispense with security:

a. The Public Guardian and Trustee did not recommend that security be posted;

b. The person requesting security was a sibling of the applicant whose own conduct had prompted the applicant to bring the application in the first place;

c. The incapable person will be residing with someone other than the applicant;

d. The applicant has offered to prepare annual financial accounts; and

e. The parties have the ability to demand passing of accounts by the applicant at any time.

In Brown v. Rowe, 2016 ONSC 5153 (CanLii), the applicant was appointed as guardian of property for his minor child. In dispensing with security, the judge noted that the PGT did not insist on a bond, and the child’s mother took no position on that issue. Her honour also indicated that the father had shown he had his child’s best interests in mind, there was no reason to believe he would be dishonest with his own son’s funds, and would be held accountable by providing a regular accounting.

In Connolly v. Connolly and PGT, 2019 ONSC 4148 (CanLii), the judge waived any requirement to post security on the basis that the guardian would only have easy access to a very small amount of the incapable person’s assets, and the cost of a bond for security would erode the capital.

If you have questions about guardianships, contact MZS Lawyers today. We offer cost effective service in handling guardianship applications of all kinds.

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