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Civil Litigation Cases - Settlement Disclosure - Post-R49.14 (2025) (2). McCartney v. CDSPI Advisory Services Inc.
In McCartney v. CDSPI Advisory Services Inc. (Ont CA, 2026) the Ontario Court of Appeal, in the context of multiple (both individual and class) proceeding litigation, dismissed an appeal by a non-settling class defendant (Aviva), here where the "motion judge approved the settlement in the class action and denied Aviva’s motions for a stay".
Here the court considers the interaction of all of: (1) the former rule in Handley Estate regarding prompt notice to all litigants of partial settlments [overturned in 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City) (Ont CA, 2026)], (2) the applicability of this settlement-notice principle in class proceeding (where settlements must be judicially-approved) and (3) the new rule R49.14 ['Partial Settlement Agreements']:[14] Aviva argues that it was entitled to a stay of the proceedings against it because it did not receive timely disclosure of the class action settlement between the class action representative plaintiff and CDSPI. It further argues that it was entitled to disclosure of the settlement between the individual actions plaintiffs and CDSPI. Aviva submits that this is the case notwithstanding that the rule in Handley Estate has been recently overturned by this court in 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City), 2026 ONCA 352. because Welland (City) and the provisions of r. 49.14 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 still require immediate disclosure and apply to class proceedings.
[15] I see no error in the motion judge’s finding that the rule in Handley Estate, which required immediate disclosure of partial settlement agreements, did not apply to class proceedings because the Class Proceedings Act provides for its own disclosure regime. Handley Estate is no longer good law, having been overturned by this court in Welland (City). Nonetheless, it remains the case that the CPA has its own provisions that facilitate disclosure of partial settlements in class proceedings. In accordance with the CPA settlement approval process, Aviva received timely, and arguably immediate, disclosure of the proposed settlement between the class action representative plaintiff and CDSPI.
[16] As for the settlement between the individual actions plaintiffs and CDSPI, I agree with the motion judge that Aviva was not entitled to disclosure of this settlement because Aviva was not a party to those actions. In any event, if there was a disclosure obligation, Aviva was aware of both the class and individual settlements, and made submissions about both at the settlement approval hearing. Finally, I see no merit to Aviva’s argument that the respondents engaged in deceit and concealment. Aviva has failed to demonstrate an abuse of process or, for that matter, any other basis for a remedy.
[17] I will elaborate on these conclusions in the reasons that follow.
1. DISCLOSURE OF PARTIAL SETTLEMENTS IN CLASS PROCEEDINGS
THE MOTION JUDGE’S DECISION
[18] The motion judge observed that, pursuant to s. 27.1 of the CPA, class action settlements require court approval, and are not binding unless and until such approval is obtained. Non-settling parties may be participants in approval hearings. On this basis, the motion judge held that the rule in Handley Estate does not apply to class proceedings. As he put it at para. 40:
Accordingly, there is no Handley Estate concern that the non-settling party may be left in the dark about a change in the action. The protections afforded to the non-settling party are far more fulsome in the class action context than in an individual action. As counsel for the [class action representative plaintiff] observed in his argument, given the statutory context in which class action settlements take place, it is no surprise that no Ontario case has applied the common law partial settlement rule in Handley Estate to an action governed by the CPA. The Handley Estate rule exists for non-class actions precisely because those actions have no equivalent protection such as that provided by section 27.1 of the CPA.
[19] The motion judge went on to find that, in any event, there was no untimely disclosure or non-disclosure to Aviva of the class action representative plaintiff’s settlement of the class action with CDSPI. Aviva was served with the motion materials filed in the settlement approval hearing and was a full participant in the hearing. He continued, at para. 42:
The CPA makes clear that there was no enforceable class action settlement between the [class action representative plaintiff] and CDSPI at any time prior to the approval motion, and, in fact, there will be no enforceable settlement until the present judgment is released by the court. The Handley Estate rule is not applicable to class actions since the statutorily required court approval process subsumes that rule. But it is equally important here that Aviva was never deprived of any information about the settlement to which it had a right, and so although the Handley Estate rule is not formally applicable to this context, the Handley Estate principle of timely disclosure once the settlement is finalized and in place has been fully honoured. [Emphasis in original.]
THE RULE IN HANDLEY ESTATE IS NO LONGER GOOD LAW
[20] At the time of the proceedings below, the rule in Handley Estate governed the disclosure of partial settlements to non-settling parties. This rule stipulated that, if a partial settlement “change[d] the adversarial landscape”, the failure to disclose immediately to a non-settling party was automatically deemed an abuse of process, whether or not it resulted in unfairness or prejudice, or undermined the integrity of the administration of justice. The rule further stipulated that, in the event of non-disclosure, a stay of proceedings was the only remedy, thus curtailing the remedial discretion that would allow the court to tailor a remedy to the circumstances of the case.
[21] In the recent case of Welland (City), this court overturned the rule in Handley Estate, finding it to be a jurisprudential outlier. It could not be reconciled with the framework that has historically governed the doctrine of abuse of process. The doctrine of abuse of process is concerned with that which is unfair, improper, prejudicial, and/or oppressive and vexatious: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 35. The doctrine “engages the inherent power of the court to prevent misuse of its proceedings in a way that would be manifestly unfair to a party or would in some way bring the administration of justice into disrepute”: R. v. Varennes, 2025 SCC 22, 504 D.L.R. (4th) 583, at para. 53, citing Saskatchewan (Environment) v. Métis Nation – Saskatchewan, 2025 SCC 4, 500 D.L.R. (4th) 279, at paras. 33-36.
[22] The key features of the abuse of process doctrine are discretion and flexibility. The rigid rule in Handley Estate was the antithesis of this approach. In Welland (City), this court set aside the rule, replacing it with an approach that more faithfully reflects the nuances of the abuse of process doctrine. Neither a finding of abuse of process, nor the remedy of a stay, is automatic. The court must take a holistic view of the circumstances to determine whether there has been an abuse, and, if so, how it can best be remedied.
[23] As this court explained in Welland (City), at para. 16:
Neither the question of whether there has been an abuse of process, nor the question of remedy, is determined by categorical considerations. The question of whether there has been an abuse of process depends upon a host of factors, including the existence of prejudice, and the impact of the conduct on the repute of the justice system. The remedy for an abuse of process depends on, among other things, 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 the termination of the case. In some cases, a stay will flow from a showing of prejudice to the integrity of the administration of justice alone.
RULE 49.14 OF THE RULES OF CIVIL PROCEDURE
[24] The recently enacted r. 49.14 of the Rules of Civil Procedure, which came into force on June 16, 2025, deals with a plaintiff’s obligation to promptly disclose a partial settlement in certain but not all civil proceedings. This court explained in Welland (City) at paras. 39 to 45 that r. 49.14 was created to respond to a number of significant concerns with the application of the Handley Estate rule. These concerns included the rule’s unduly harsh and automatic effect and its unclear and uneven application, which has led to “a whole host of unnecessary litigation”: Welland (City), at para. 45.
[25] As this court further stated in para. 7 of Welland (City), r. 49.14, and the common law doctrine of abuse of process are consistent with one another because the rule “reflects and reinforces the discretionary and proportionate approach that properly governs this area”. This court went on to note that: “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”: paras. 7 and 51. 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 give rise to a remedy. Under r. 49.14, both the finding of an abuse of process and any resulting remedy remain in the discretion of the judge.
THE CPA FACILITATES DISCLOSURE OF PARTIAL SETTLEMENTS IN CLASS PROCEEDINGS
[26] The motion judge did not have the benefit of the Welland (City) decision. At the time he decided the case, the rule in Handley Estate was still good law. In his reasons, the motion judge explained why the Handley Estate rule did not apply to class proceedings. Even though Handley Estate has been overturned, the motion judge’s reasons continue to carry persuasive force. Neither the rule in Handley Estate, nor the new r. 49.14 apply to class actions, given the specific provisions in the CPA.
[27] It is helpful to step back and reflect on the mischief sought to be addressed by the rule in Handley Estate, and, moving forward, r. 49.14. The concern is that a non-settling party may be unaware of an agreement that adversely affects its position in the litigation. The disclosure requirement ensures that the non-settling party is aware of any binding settlements reached by other parties to the litigation.
[28] That being the animating concern, it is directly and effectively addressed by the provisions of the CPA. As noted by the motions judge, the CPA contains its own mechanism for ensuring that a party to the class proceeding (i.e., a non-settling defendant) is not kept in the dark about a class settlement to which it is not a party, but which affects its interests.
[29] Under the CPA, there is no binding settlement unless and until it has been approved by the court: ss. 27.1(1) and (3). Significantly, on a motion for approval of a settlement, the non-settling party will not only receive disclosure of the proposed settlement but may have the right to participate in the approval hearing. This offers more protection than the rule in Handley Estate did. It addresses the very mischief sought to be addressed by the partial settlement disclosure rule, namely that a non-settling party may not be aware of a settlement agreement that adversely affects its position in the litigation. In this case, Aviva was given full opportunity to contest the proposed settlement in the hearing before the motion judge. It had notice of the proposed settlement and, by virtue of the motion judge’s decision, it had disclosure of the fact that the settlement had been approved.
[30] It has long been understood that, when a settlement is subject to court approval, the underlying considerations motivating a disclosure requirement may not arise: see CHU de Québec-Université Laval v. Tree of Knowledge International Corp., 2022 ONCA 467, 162 O.R. (3d) 514, at paras. 4, 68-70. First, unlike conventional settlement agreements, a settlement that requires court approval is not binding until such approval is obtained. Second, when a non-settling party receives notice of the court approval hearing, this alerts the non-settling party to the proposed settlement, before it becomes a binding agreement.
[31] Rule 49.14 itself treats court-approved settlements differently than it does other settlement agreements. Rule 7.08 of the Rules of Civil Procedure governs settlements made by or against a party under a disability and requires that such settlements be approved by the court. In contrast to the timeline for disclosure of other partial settlements, r. 49.14(8) provides that a settlement under r. 7.08 be disclosed within seven days of the filing of the motion for court approval, not when the agreement is reached. This is eminently sensible. Until there is court approval, there is no binding agreement. Notice of the approval hearing therefore equates with notice of the proposed settlement.
[32] While the CPA is not explicitly referenced, r. 49.14(2) expressly provides that r. 49.14 applies “only to the extent that a statute or a court order provides otherwise”. The CPA is a separate statute governing class proceedings that “provides otherwise” with respect to settlements under the Act. As noted by the motions judge, s. 27.1(1) of the CPA provides that, “[a] proceeding under this Act may be settled only with the approval of the court”. Section 27.1(3) provides that, “[a] settlement under this section is not binding unless approved by the court”. Section 27.1(7) obliges the moving party on a motion for approval of a settlement to make full and frank disclosure of all material facts. Finally, s. 27.1(8) requires the court to consider whether notice of the settlement approval hearing should be given to non-settling parties. It provides that:The court shall consider whether notice of a hearing of a motion for approval of a settlement should be given under section 19 [notice to protect interests of affected persons], and whether such notice should include,
(a) a statement of the purpose of the hearing;
(b) the process for objecting to the approval of the settlement;
(c) any other prescribed information; and
(d) any other information the court considers appropriate. [33] As provided in r. 49.14(2), in the context of class actions, the provisions of the CPA supersede the more general Rules of Civil Procedure with respect to settlements. In any event, the settlement provisions of the CPA are not inconsistent with r. 49.14 because the latter rule does not require disclosure of partial settlement agreements prior to court approval. Rule 49.14(1)(d) clarifies that the rule applies to settlement agreements that are “binding on the parties to the agreement”. A class settlement is not binding unless and until it receives court approval, per the CPA.
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NO ENTITLEMENT TO DISCLOSURE OF THE SETTLEMENT IN THE INDIVIDUAL ACTIONS
[38] Aviva argues that it was entitled to disclosure of the settlement between the individual actions plaintiffs and CDSPI (as distinct from the class action and the class settlement). Aviva argues, as it did before the motion judge, that the individual actions were so linked to the class action that there was effectively a single settlement that applied to all of the proceedings. The motion judge rejected this argument, as do I.
[39] Aviva was not entitled to notice of the settlement in the individual actions because it was not a party to those actions. The fact that the individual actions settlement was conditional on approval of the class action settlement did not merge the agreements or create a single joint settlement. The individual action and class action settlements remained separate agreements reached in separate actions involving separate parties. It will be recalled that Aviva objected to being joined as a defendant in the individual actions brought against CDSPI. As the motion judge put it at para. 50: “‘Courts of equity’ – or, for that matter, courts of law – 'do not allow litigants to have their cake and eat it too’: Servus Credit Union Ltd. v. Miller, 2012 ABQB 765, [97 C.B.R. (5th) 137], at para. 38”.
[40] In any event, while Aviva was not entitled to disclosure of settlements in the individual actions, it received such disclosure. By the time of the approval motion, Aviva was aware, not only of the class action settlement, but also of the individual actions settlement between CDSPI and the individual actions plaintiffs, and was able to make submissions about both agreements.
[41] The motion judge put it persuasively at paras. 56-57 of his reasons:Accordingly, on its own, the Individual [Actions] settlement is not disclosable to Aviva as a non-party to the action being settled. Likewise, the Class Action settlement is disclosable to Aviva in the context of the settlement approval motion, which has been appropriately done. Aviva has no rights to enforce under either settlement agreement standing on their own, and thus has no rights to enforce if the two are considered together. Without putting too hard an edge on the point, and with the greatest of respect to Aviva and its counsel, the answer to Aviva’s stay motion is a matter of basic arithmetic:0 [zero] disclosure claim in the Individual Actions settlement + 0 [zero] disclosure claim in the Class Action settlement = 0 [zero] disclosure rights denied. To the extent that anything needed to be disclosed to Aviva, it was all properly disclosed in the lead up to the Class Action settlement approval motion. There was no disclosure obligation with respect to the Individual Actions settlement as Aviva is not a party to those actions; and, in any case, that settlement agreement was also disclosed well in advance of the settlement approval motion and formed a central part of Aviva’s argument in that motion.
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