Passing of Accounts in Ontario: Holding Attorneys and Guardians Financially Accountable
Passing of accounts in Ontario is a legal mechanism designed to ensure transparency and accountability when an attorney or guardian manages someone else’s property. When financial mismanagement is suspected, the court can compel a detailed review of accounts through this process. Whether you are a family member, beneficiary, or concerned third party, understanding how this process works is essential to protecting the interests of the grantor or incapable person.
What Is the Passing of Accounts?
The passing of accounts is a formal legal process in which a fiduciary—typically an attorney for property or guardian of property—submits a detailed report of all financial transactions made on behalf of the grantor or incapable person. The Ontario court then reviews these records to ensure proper management.
Why It Matters
- Ensures the attorney or guardian is acting in the best interests of the person they represent
- Prevents or exposes financial abuse or negligence
- Provides peace of mind to family members and beneficiaries
Who Can Apply to Compel the Passing of Accounts?
Under Section 42 of the Substitute Decisions Act (SDA), the following parties may apply to the court to compel an accounting:
| Eligible Applicant | Eligibility Description |
|---|---|
| The grantor or incapable person | The person whose property is being managed |
| Any attorney or guardian for property | Including co-attorneys or alternate guardians |
| Attorney for personal care / guardian of the person | Where property management affects personal care decisions |
| Dependant of the grantor or incapable person | Spouses, children, or other financial dependants |
| Public Guardian and Trustee / Children’s Lawyer | Statutory watchdogs to prevent abuse |
| Judgment creditor | If the grantor has outstanding debts |
| Any other person (with court leave) | Must demonstrate a genuine interest in the person’s welfare |
What Is the Test for Leave?
If you’re not one of the parties automatically entitled, you may still apply under the “any other person” category. To be granted leave, you must show:
- A genuine interest in the welfare of the grantor or incapable person
- Reasonable belief that the court may order the fiduciary to pass their accounts
The Ontario court in Groh v. Steele noted that leave should be granted sparingly due to the invasive nature of reviewing private financial records.
Can Estate Beneficiaries Compel an Accounting?
Beneficiaries do not automatically gain rights to an accounting during the grantor’s lifetime. However, they may apply for leave under Section 42(4) if they suspect financial misconduct or mismanagement.
Special Case: Attorney Is Also Estate Trustee
According to Spar Roofing & Metal Supplies Ltd. v. Glynn, if the attorney becomes the estate trustee after the grantor’s death, there can be no true accountability unless leave is granted under the SDA. In such cases, beneficiaries can still pursue the passing of accounts for the period before the grantor’s death.
When Will a Court Compel the Passing of Accounts?
The court may order a fiduciary to pass accounts based on:
- The extent of the fiduciary’s financial involvement
- Presence of significant concerns about mismanagement
This is a discretionary decision. The applicant must demonstrate legitimate concerns and the fiduciary’s role must be substantial enough to warrant judicial review.
FAQs About Passing of Accounts in Ontario
1. What documents must be included in a passing of accounts?
Typically, financial statements, receipts, disbursement logs, investment summaries, and bank records are submitted to the court.
2. Is a passing of accounts always required?
No. It is usually triggered by a formal court application, unless required by law or a court order.
3. Can a fiduciary refuse to pass accounts?
If a court orders a passing of accounts, the fiduciary must comply or risk legal consequences.
4. How long does the passing of accounts process take?
It varies by complexity but can take several months, particularly if objections are raised.
5. Can legal fees be recovered?
Yes. Legal fees may be paid out of the estate if the application was made in good faith.
Conclusion
Passing of accounts in Ontario is an essential legal tool for ensuring that fiduciaries—whether attorneys for property or guardians—are held accountable for their financial decisions. With the power to manage property comes the duty to act in the best interests of another. The SDA offers a structured legal avenue to compel transparency, and courts balance privacy with the need for oversight. If you have genuine concerns about how an attorney or guardian is handling finances, seeking legal advice on initiating a passing of accounts could help safeguard the financial well-being of your loved one.
