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Civil Litigation Cases - Settlement Disclosure - Post-R49.14 (2025). 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City) [interlocutory and final]
In 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City) (Ont CA, 2026) the Ontario Court of Appeal considered several appeals, these all requiring re-consideration of "the framework governing the disclosure of partial settlement agreements in multi-party civil litigation, and, in particular, the continued validity of the rule articulated in Handley Estate v. DTE Industries Limited."
Here the court extensively considers appeal routes (ie. interlocutory or final) for settlement disclosure issues:4. Reversing Handley Estate: The Issue of Jurisdiction
[71] In CHU, the respondent argued that a refusal to grant a stay was an interlocutory decision, and therefore, this court lacked jurisdiction to hear the appeal.[70] This court concluded that it was reasonable to treat the order under appeal as a final order for determining appeal rights, relying in part on Aecon Buildings v. Brampton (City).[71] The conclusion in CHU has been cited in at least one other setting involving an appeal from a denial of a stay.[72] Handley Estate itself also arose in the context of an appeal from a decision denying a stay on abuse of process grounds, though the court did not address the jurisdictional question in that case.
[72] Sections 6(1)(b) and 19(1)(b) of the Courts of Justice Act (“CJA”) make clear that only final orders are appealable to this court, while interlocutory orders are appealable to the Divisional Court, with leave.[73] A final order is one that determines the real matter in dispute between the parties, the very subject matter of the litigation, or any substantive right to relief of a plaintiff or substantive right of a defendant, while an interlocutory order is one which does not do so.[74]
[73] Having reversed the Handley Estate framework for challenges to partial litigation agreements and having broadened the abuse of process analysis along the lines set out above, we conclude it is appropriate to revisit the question of this court’s jurisdiction over appeals from challenges to partial litigation agreements. Questions regarding appeal routes from determinations under the new r. 49.14 are also sure to arise.
[74] While none of the parties raised this aspect of the Handley Estate framework in arguing these appeals, providing clear guidance at the outset of the partial settlement disclosure framework, which will govern future litigation, will avoid unnecessary disputes over the pathway of appeals.
[75] We also note that the stare decisis analysis is more straightforward in the jurisdictional context than in the context of reversing the Handley Estate rule itself. In our view, the Polowin framework is not engaged. Where this court has determined that a prior precedent establishing this court’s jurisdiction was wrong, that error will be corrected irrespective of whether it might meet or not meet the criteria in the second prong of Polowin.
[76] There are two jurisdictional issues to be addressed under the post-Handley Estate framework: (1) the appeal routes from remedies imposed under r. 49.14(7) or at common law following a finding of abuse of process; and (2) the appeal routes from a finding that r. 49.14 has not been violated or where a court has found no abuse of process occurred.
A. Appeal routes from a breach of r. 49.14 or a finding of abuse of process
[77] Under the current approach, where a stay is ordered after a challenge to a litigation agreement, that order is final, and an appeal lies to this court.
[78] However, under the new framework, an array of remedies short of a stay may be available to deal with litigation agreements, either under r. 49.14(7) or under the common law abuse of process analysis set out above.
[79] Most of the available remedies do not end the litigation, for example, costs, further examinations, or more extensive discovery. These are interlocutory orders from which the appeal will lie to the Divisional Court, with leave.
[80] As this court observed in Drywall Acoustic, the key distinction is whether the order below forecloses a substantive claim or defence on the merits. In the partial litigation agreement context, this means that a stay will generally result in appeals to this court because the claim is foreclosed, while remedies short of a stay (including the denial of a stay) will generally result in appeals to the Divisional Court, with leave, because the claim remains to be determined.
B. Appeal routes from a finding that r. 49.14 was not breached or that no abuse of process has occurred
[81] Generally, while orders granting stays of proceedings are final, orders denying such stays are interlocutory.[75] However, this rule generally has been read together with the broader principle that it is an order’s legal nature that governs appellate jurisdiction.[76] An order that forecloses a substantive claim or defence that could be determinative of the entire action has long been held to be final for the purposes of appeal.[77]
[82] This conclusion has been applied explicitly to orders denying stays on the basis of an abuse of process under r. 21.01(3)(d) of the Rules of Civil Procedure.[78] This context gave rise to the court’s conclusion in Aecon Buildings v. Brampton (City) that the denial of a stay on the basis of abuse of process in the context of failing to disclose a partial settlement agreement is interlocutory.[79]
[83] The reasoning from Ball v. Donais has been used to justify appeals to this court on the basis of denials of stays in other settings as well, for example, where it was argued that the court had no subject matter jurisdiction or should decline to exercise that jurisdiction on the basis of forum non conveniens.[80] As explained in Locking v. Armtec Infrastructure Inc., such cases were treated as final because they “involved access to the court system or the disposition of a substantial issue forming part of the dispute between the parties”.[81]
[84] While the broader jurisdictional question in these other areas of stay motions is not before us, the jurisdictional question in relation to partial litigation agreements, going forward, may be helpfully simplified.
[85] A finding that r. 49.14 has not been breached and that no remedy is warranted is an interlocutory decision, which would give rise to an appeal to the Divisional Court, with leave, pursuant to the CJA. This is because, to adapt the language from Locking, the decision does not determine access to the court system or dispose of any substantial issue forming part of the dispute between the parties. Rather, an alleged abuse of process arising from a partial settlement agreement is entirely collateral to the merits of the dispute. We distinguish such a case from those under r. 21.01(3)(d) in which the moving party is alleging an abuse of process on the basis of a collateral attack or res judicata, which concerns whether the merits of the case have already been determined in another forum.[82]
[86] Further, going forward, and contrary to this court’s earlier statement in Aecon Buildings v. Brampton (City) and CHU, where a stay for abuse of process is sought in relation to a partial litigation agreement but no abuse of process is found, that decision should be treated as interlocutory, because the litigation continues. . 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City)
In 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City) (Ont CA, 2026) the Ontario Court of Appeal considered several appeals, these all requiring re-consideration of "the framework governing the disclosure of partial settlement agreements in multi-party civil litigation, and, in particular, the continued validity of the rule articulated in Handley Estate v. DTE Industries Limited."
Here the court canvasses the new (at 2025) Rule 49.14 ['Partial Settlement Agreements'], explains it's rationale and it's integration with abuse of process common law:[38] The new r. 49.14 of the Rules of Civil Procedure sets out requirements for the disclosure of partial settlement agreements along with remedies for failing to do so. As we discuss below, the elements of the new rule reflect the discretion present in the broader common law abuse of process doctrine. We first address the origins and nature of the new rule before moving to our reasons for why Handley Estate should be overruled under the second prong of the test from David Polowin Real Estate Ltd. v. Dominion of Canada General Insurance Company.[41] The reasons for creating the new rule are closely connected to the reasons for why Handley Estate was wrongly decided.
2. The Application of Rule 49.14
A. Why a new rule was created
[39] Although the Handley Estate rule is of relatively recent vintage, it has been a source of significant controversy within the legal profession. Numerous academic articles have been published on the topic, and the rule has been heavily litigated in the courts. Concerns were expressed by both lawyers and judges which prompted the Civil Rules Committee to explore whether a new rule governing partial settlement agreements should be added to the Rules of Civil Procedure. The committee consulted with the bar and other stakeholders on the need for a new rule, and the terms of any such rule. The new rule, r. 49.14, came into force on June 16, 2025.
[40] The creation of the new rule was prompted by a number of concerns with the Handley Estate rule. First, and perhaps most importantly, the Handley Estate rule has been seen as unduly harsh.[42] As discussed above, in its blanket operation, it can lead to punitive and unfair outcomes. Indeed, this court previously recognized that the Handley Estate rule has taken on a deterrent role.[43]
[41] Second, the harshness of the rule has resulted in an understandable desire to limit the scope of the disclosure obligation. The rule has failed to adequately account for cases in which prejudice arises, but no stay is warranted.[44] To avoid the remedy, the disclosure obligation itself has been construed narrowly.[45] It has been limited to partial settlement agreements which “chang[e] entirely the landscape of the litigation in a way that significantly alters the dynamics of the litigation”.[46]
[42] Third, the obligation to disclose has been criticized for being unclear and uneven in its application.[47] Although the rule calls for “immediate” disclosure of partial settlement agreements, “immediacy” has been given a somewhat flexible interpretation. In some cases, the obligation has been satisfied even where disclosure was not made until several days, or even weeks, after the settlement was reached.[48] The “immediate” disclosure requirement has also, at times, been relaxed by allowing for rolling disclosure of the settlement terms.[49] The requirement to disclose “immediately” has been even less certain in cases involving parties under disability, given the requirement for court approval of a proposed settlement.
[43] The extent of the disclosure obligation has been unclear – both in terms of what types of agreements give rise to the disclosure obligation and, once the obligation is triggered, what terms of the agreements need to be disclosed. Identifying whether an agreement “chang[es] entirely the landscape of the litigation in a way that significantly alters the dynamics of the litigation” and which of the specific terms in the agreement has brought about that result is no easy task.
[44] Finally, as a result of the lack of clarity in the disclosure obligation and the harshness of the remedy, the Handley Estate rule has become a “trap for the unwary” and a tool for those who would seek to take advantage of minor slips and inadvertent non-compliance.[50] As the motion judge noted in the Thrive decision under appeal, the Handley Estate rule’s sole focus on the plaintiff’s failure to disclose ignores broader issues of unfairness in the litigation, including the defendant’s own conduct.
[45] The rule’s incentives have generated a whole host of unnecessary litigation – this court alone heard nearly a dozen cases dealing with the Handley Estate rule between 2022 and 2024.[51] In this way, the rule has done the exact opposite of securing “the just, most expeditious and least expensive determination of every civil proceeding on its merits.”[52]
B. How the new rule differs from the Handley Estate rule
[46] Rule 49.14 was created to address the concerns that have been identified. It differs from the Handley Estate rule in three key ways.
[47] First, the rule expands the scope of available remedies. Under r. 49.14(7), when a party fails to disclose a partial settlement agreement, the court has a number of remedies to choose from to address any prejudice caused by the non-disclosure. These approaches include ordering costs, ordering or permitting further examinations for discovery, ordering additional disclosure or production of documents, striking out all or a part of a party’s evidence, adjourning a hearing, staying the proceedings, or making any other order as is just.
[48] Second, the rule expands the scope of the disclosure obligation. Rule 49.14 is not limited merely to partial settlement agreements that “entirely” change the litigation landscape and “significantly” alter the dynamics of the litigation. Instead, the rule applies whenever there is a partial settlement agreement. This change avoids litigation surrounding whether or not the agreement needs to be disclosed.
[49] Third, the rule clarifies the disclosure obligation, both in terms of what must be disclosed and when disclosure must occur. The rule clarifies that all terms other than the monetary value of the settlement must be disclosed – a much clearer standard than all terms which “change the adversarial orientation of the proceeding”.[53] The rule also provides for a defined time limit for disclosure: in most circumstances, the settlement must be disclosed by the earlier of seven days after the agreement is reached or the taking of any further step in the proceeding. If the partial settlement requires court approval, the new rule sets out a specific procedure for the timing of the disclosure, tied to the filing of the motion record and the approval by the court.
[50] By clarifying the timing and extent of the disclosure obligation, expanding its scope, and making available a broader range of remedies, r. 49.14 empowers the court to address any type of prejudice arising from non-disclosure of partial settlement agreements in a fair manner, tailored to the facts of a particular case. It removes the mandatory stay of an action which has resulted in unfair outcomes and provides certainty to counsel concerning their obligations. It also removes the incentive for litigants who might be inclined to take advantage of minor inadvertent delays in disclosure. This will bring the law relating to partial settlement disclosure in line with the broader abuse of process framework.
C. The new rule and the common law abuse of process
[51] This discussion demonstrates that the substantive elements of r. 49.14 reflect what we believe is the nuanced position that the common law on abuse of process would have reached, in this narrow area of partial settlements in civil actions, had the Handley Estate rule not curtailed its development. The parties addressed whether r. 49.14 could or should be applied retrospectively. On close examination, this issue falls away because, having reversed Handley Estate, the rule and the common law are consistent with one another. While r. 49.14 adds technical details as to when a partial settlement agreement must be disclosed, a breach of the timelines in the rule does not automatically entail a finding that an abuse of process has occurred. It is a strong indicator, but under r. 49.14, both the finding of an abuse of process and the resulting remedy remain in the discretion of the judge. This approach is consistent with the common law abuse of process principles set out above. . 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City)
In 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City) (Ont CA, 2026) the Ontario Court of Appeal considered several appeals, these all requiring re-consideration of "the framework governing the disclosure of partial settlement agreements in multi-party civil litigation, and, in particular, the continued validity of the rule articulated in Handley Estate v. DTE Industries Limited."
Here the court summarizes this important case, which alters the prior Handley abuse of process doctrine respecting prompt disclosure of partial settlements and remedies on failure to do so, and as well considers the provisions of the new (at 2025) R49.14 ['Partial Settlement Agreements']:[3] At the centre of the common issues is the rule set out in Handley Estate, which provides that where parties enter into a partial settlement agreement that changes the adversarial landscape of the litigation, the agreement must be disclosed immediately to the non-settling parties and to the court; failure to do so constitutes an abuse of process; prejudice need not be shown; and a stay of proceedings is the only available remedy. The automatic and exceptionless nature of this rule is squarely in issue in these appeals.
[4] For the reasons that follow, we conclude that Handley Estate was wrongly decided. In our view, the rule departs from the fundamental principles that govern the doctrine of abuse of process. That doctrine has long required a contextual and discretionary assessment, directed to whether the impugned conduct results in unfairness, prejudice, oppression, or otherwise undermines the integrity of the administration of justice. These governing principles also require that any remedy be proportionate to the nature and consequences of the abuse. The Handley Estate rule, by contrast, mandates both a finding of abuse of process and the imposition of the most severe remedy, without regard to the circumstances of the case.
[5] Having determined that Handley Estate was wrongly decided, we must consider whether it should nonetheless be maintained in the interests of certainty and stability in the law. Applying the governing principles, we conclude that the advantages of overruling the decision outweigh any disadvantages. The rule has proven to be unduly rigid, capable of producing disproportionate outcomes, and a source of uncertainty and satellite litigation. The continued application of this rule would impede the principled development of the law governing abuse of process.
[6] We, therefore, overrule Handley Estate and restore the application of ordinary abuse of process principles to cases involving the non-disclosure of partial settlement agreements. Under this framework, the determination of whether there has been an abuse of process, and the selection of an appropriate remedy, are matters for the informed discretion of the court, to be exercised in light of all of the relevant circumstances.
[7] We also address the relationship between this common law framework and r. 49.14 of the Rules of Civil Procedure, which came into force after the events giving rise to these appeals. In our view, the rule reflects and reinforces the discretionary and proportionate approach that properly governs this area. Rule 49.14 clarifies the scope and timing of disclosure obligations and provides for a range of remedial responses, thereby avoiding the rigid consequences associated with the Handley Estate rule.
[8] Finally, we address the implications of this revised framework for appellate jurisdiction. We conclude that orders granting a stay of proceedings remain final and appealable to this court, while orders imposing remedies short of a stay, as well as orders declining to grant a stay in this context, are generally interlocutory and appealable to the Divisional Court, with leave. At paras 88-163 the court applies this new post-Handley settlement disclosure doctrine to four appeals, concluding as follows:V. CONCLUSION
[164] For the foregoing reasons, we conclude that the rule articulated in Handley Estate should not be sustained. That rule’s stipulation that non-disclosure of partial settlement agreements that change the adversarial landscape of the litigation constitutes, in every case, an abuse of process, even where prejudice was not shown, coupled with its prescription of a mandatory and exceptionless stay of proceedings as the sole remedy, is inconsistent with the fundamental principles that govern the doctrine of abuse of process. The doctrine has always required a contextual and discretionary inquiry, directed to whether the impugned conduct gives rise to unfairness, prejudice, oppression, or otherwise undermines the integrity of the administration of justice, and, if so, what remedy is appropriate and just in the circumstances.
[165] We, therefore, overrule Handley Estate. Going forward, failures to disclose partial settlement agreements are to be assessed under ordinary abuse of process principles. Such failures might, depending on the circumstances, constitute an abuse of process. However, that determination is not to be made categorically, but rather by reference to 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.
[166] Where an abuse of process is established, the remedy must be fashioned in accordance with the principle of proportionality. A stay of proceedings remains available, but only in the clearest of cases, where the prejudice to a party or to the integrity of the judicial process is such that no lesser remedy would suffice. In other cases, courts retain the discretion to impose a range of remedies responsive to the circumstances, including those now reflected in r. 49.14 of the Rules of Civil Procedure.
[167] In our view, r. 49.14 is consistent with, and reinforces, this approach. The rule clarifies the scope and timing of the disclosure obligation and provides for a spectrum of remedial responses. A breach of the rule does not, in and of itself, mandate a finding of abuse of process or the imposition of any particular remedy.
[168] We also clarify that, under the revised common law framework and r. 49.14, appeal routes are to be determined by the legal nature of the order in question. Orders granting a stay of proceedings are final and appealable to this court. Orders imposing remedies short of a stay, as well as orders declining to grant a stay in this context, are generally interlocutory and appealable to the Divisional Court, with leave.
[169] Applying these conclusions to the appeals before us, we allow the appeals in Welland and Thrive. We dismiss the appeals in Evertz and Howran. Where appropriate, matters are remitted for reconsideration in accordance with these reasons. If the parties cannot agree on the issue of costs, each party may make brief written submissions of no more than five pages, plus costs outlines, within 14 days of the release of these reasons.
[170] In the result, the law governing undisclosed partial settlement agreements is restored to a principled and flexible footing. The doctrine of abuse of process is to be applied in a manner that is attentive to context, guided by proportionality, and directed toward the fair and orderly administration of justice.
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