Hope On The Horizon? Abrametz And The Potential Impact On Disclosure Of Partial Settlement Agreements

Published date28 November 2022
Subject MatterLitigation, Mediation & Arbitration, Trials & Appeals & Compensation
Law FirmLerners
AuthorMs Rebecca Shoom and William Pepall

In recent months, there has been much ado about the relatively little-known yet risk-fraught requirements regarding the disclosure of partial settlement agreements. Ontario courts, relying on the Ontario Court of Appeal's decisions in Aecon Buildings v Stephenson Engineering Limited1 and Handley Estate v DTE Industries Limited,2 have crafted a rule requiring that, where a partial settlement agreement (i.e., a settlement agreement with some, but not all, parties) is not disclosed to the non-settling parties immediately, this necessarily amounts to an abuse of process that can only be remedied by a stay of proceedings. This rule applies not only to Mary Carter agreements but to all settlement agreements that "change entirely the landscape of the litigation" (which threshold has not been clearly defined by the courts). Applying these strict principles, Ontario courts have stayed numerous proceedings, including where the delay in disclosing was as brief as three weeks.3

This immediate disclosure rule, and its harsh automatic consequences, depart significantly from the established legal principles generally applicable to the doctrine of abuse of process and stays of proceedings. However, the Supreme Court of Canada's recent decision in Law Society of Saskatchewan v Abrametz4 may provide an opening for a change in approach.

The Abrametz decision arose out of disciplinary proceedings brought by the Law Society of Saskatchewan against one of its member lawyers. The lawyer at issue was found guilty of four charges of conduct unbecoming a lawyer. In the course of the disciplinary proceedings, the lawyer unsuccessfully sought a stay of proceedings on the basis of inordinate delay amounting to an abuse of process. The lawyer appealed both the result of the disciplinary proceedings and the denial of a stay. The Saskatchewan Court of Appeal dismissed the conduct appeal but allowed the appeal of the stay decision on the basis that there had been inordinate delay resulting in significant prejudice, such that the public's sense of decency and fairness would be affected and the disciplinary process brought into disrepute. The Law Society appealed. The SCC allowed the appeal on the basis of an incorrect application of the standard of review, finding no error in the Law Society Hearing Committee's findings of a lack of inordinate delay or significant prejudice.

In its analysis, the SCC took the opportunity to address the doctrine of abuse of process in the context of...

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