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

• Published date: 28 November 2022
• Law Firm: Lerners
• Author: Ms 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...