Stayin’ Alive: no more automatic stays for failing to disclose a partial settlement agreement

Ontario’s framework for disclosing partial settlement agreements in multi-party litigation just got a major overhaul. In 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City)¹, a rare five-judge panel of the Court of Appeal for Ontario scrapped the prior rule from Handley Estate—which automatically stayed proceedings if a plaintiff failed to immediately disclose a partial settlement—and replaced it with a discretionary approach grounded in existing abuse of process principles. Stays remain on the table but are no longer the default.

What you need to know

• What’s new is old again. The discretionary framework asks whether an impugned action is (i) fueled by improper intent, (ii) has resulted in prejudice, oppression or unfairness, or (iii) whether it has otherwise undermined the integrity of the administration of justice. While this framework is new in the context of partial settlement agreement disclosure, it is well established more generally as the framework for abuse of process.
• No more automatic stays. Courts now have discretion to grant tailored remedies instead of automatically staying the proceeding. A stay, while still possible, is exceptional and limited to the rarest of cases.
• Disclosure remains immediate. The obligation to disclose a partial settlement right away hasn’t changed; only the consequences for failing to do so.
• Rule 49.14 provides guidance. The Court aligned its framework with the new Rule 49.14, which requires disclosure of all partial settlement agreements—including all terms, except the monetary amount—generally within seven days of agreement.

Background: the Handley Estate rule and Rule 49.14

In multi-party civil litigation disputes, plaintiffs may enter “partial settlement agreements”, which settle the dispute as between some parties but not others. A plaintiff is obliged to disclose partial settlement agreements because these can change the litigation landscape and create new strategic considerations for non-settling parties. Failure to disclose can give rise to an abuse of process.

The Handley Estate rule

The Court of Appeal in Handley Estate² set down severe consequences for failing to immediately disclose partial settlement agreements that changed the adversarial landscape of the litigation. Failure to disclose constituted an abuse of process in every case—even absent prejudice—and a stay of proceedings was automatic.

The Handley Estate rule was widely criticized for being unduly harsh, punitive, and unfair. Its mandatory nature left no room for judicial discretion, either in finding an abuse of process or fashioning a remedy. Courts tried to soften its edges by narrowly reading “changing the adversarial landscape” and “immediacy”, but as the court in Welland noted, the rule became a “trap for the unwary” and a tool misused to take advantage of minor slips and inadvertent non-compliance³.

Rule 49.14

Rule 49.14 was introduced in June 2025 to address concerns with the Handley Estate rule. Rule 49.14 sets out a regime for the disclosure of partial settlement agreements, which differs from Handley Estate in a few important ways:

• it requires disclosure of all partial settlement agreements (not just agreements that “entirely” change the litigation landscape), eliminating litigation over whether this threshold is met;
• it prescribes what must be disclosed (i.e., all terms other than the monetary value of the settlement) and when (generally, the earlier of seven days after agreement or the taking of any further step in the proceeding; if court approval is required, specific timing tied to the motion record and approval applies); and
• it offers a range of available remedies—costs, further examinations for discovery, additional disclosure, striking evidence, and other just relief—beyond an automatic stay.

Court of Appeal overturns Handley Estate

In the face of mounting litigation and confusion over the disclosure of partial settlement agreements, the Court of Appeal heard four appeals decided under Handley Estate; its reasons in Welland are the outcome of those appeals. Ultimately, the Court took the opportunity to revisit Handley Estate and address the relationship between the common law and the new Rule 49.14 moving forward.

Handley Estate was wrongly decided

The Court of Appeal held that Handley Estate was wrongly decided: “The rule departs from the fundamental principles that govern the doctrine of abuse of process”⁴.

There were two problems with the rule. First, it mandates an abuse of process without analysis of context and circumstances: the hallmark of the abuse of process framework. Second, it automatically imposes a stay—the most severe remedy—preventing the court from crafting proportionate remedies.

Abuse of process framework for disclosure of partial settlement agreements

The Court of Appeal chose to “exchange the Handley axe” for a “more precise scalpel”. Going forward, failures to disclose partial settlement agreements should be assessed under existing abuse of process principles through a contextual inquiry⁵. This inquiry centres on a holistic evaluation of the non-disclosure, and asks whether it is (i) fueled by improper intent, (ii) has resulted in prejudice, oppression or unfairness, or (iii) whether it has otherwise undermined the integrity of the administration of justice⁶. Courts will examine the particular facts of the case, including the nature of the non-disclosure, its timing, its effect on the litigation, and any resulting prejudice or harm to parties or to the administration of justice.

The possible remedies are flexible and tailored to the nature of the abuse, the character of the prejudice, and the extent to which the aggrieved party can be adequately redressed by something less draconian than a stay, which is reserved for the “clearest of cases”⁷. The Court provided guidance on where it draws the line: in one of the appeals (Evertz) under review, an 8-month disclosure delay, coupled with repeated refusals to disclose the settlement and misleading the court on what was disclosed and when, warranted a stay.

The Court’s framework brings the common law approach to disclosure of partial settlement agreements in line with Rule 49.14, and the Court affirmed that the Rule is a helpful guide for when and what to disclose. Cases under appeal that were originally decided before the Rule’s implementation will be decided consistent with it moving forward.

Implications

For settling plaintiffs, the core obligation is unchanged: disclose partial settlements immediately and completely. Rule 49.14 provides a clear roadmap: all terms except the monetary amount must be disclosed, generally within seven days. Lawyers should treat that timeline as the benchmark and document it clearly. Under the new framework, good faith and transparency will matter. A party that discloses promptly but imperfectly may be in a fundamentally different position than one that does nothing for months.

For non-settling parties, the tactical calculus has shifted. Handley Estate gave access to an automatic and powerful remedy for non-disclosure: a stay of proceedings. The change to more targeted remedies may make non-disclosure remedies less attractive and less common.

For all parties, the Evertz example offers a useful bright line. Abusive conduct—prolonged concealment, misleading the court, piecemeal drip-feeding of information—is more likely to attract a stay. In contrast, short delays, good-faith oversights, or genuine disputes about whether a settlement triggers a disclosure obligation are less likely to be treated as abuse. Although the application of the abuse of process framework to the disclosure of partial settlement agreements is new, the framework itself is not. Courts and litigants will draw on the existing body of abuse of process case law to shape how this new application develops. Expect courts and litigants to draw on the established body of abuse of process caselaw to shape how this new application develops.