Effective June 16, 2025, significant changes are coming to Ontario’s Rules of Civil Procedure regarding the disclosure of partial settlement agreements, as set out in O. Reg. 50/25. The amendments to Rule 49 mandate immediate disclosure of any partial settlement agreement and provide the Court with various powers and discretion to address non-compliance.
Under the revised Rule 49.14, immediate disclosure of any partial settlement agreement is required, whether the agreement is written or unwritten. This must occur within 7 days of the agreement being reached, or sooner, if a settling party takes a further step in the proceeding or if a hearing is already underway. These amendments apply to both actions and applications.
What Is a Partial Settlement Agreement?
The new rule defines a partial settlement agreement as one where:
- At least one plaintiff/applicant and one defendant/respondent are parties to the agreement;
- At least one defendant/respondent is not part of the agreement;
- The agreement does not resolve the entire action/application;
- The parties intend for the litigation to continue in some form; and
- The agreement is binding on its parties.
There is no longer a need to determine the materiality/impact of the partial settlement agreement and whether it alters the litigation landscape.
Key Disclosure Requirements
The plaintiff/applicant must:
- Disclose the terms of the agreement (other than monetary value) to all other parties that are not a party to the agreement; and
- Serve and file a new Form 49E outlining the settlement terms (other than monetary value).
If a hearing has started, disclosure must be made immediately. Otherwise, it must occur no later than 7 days after the agreement is reached or before any party to the agreement takes a further procedural step, whichever comes first.
Consequences of Non-Compliance
Previously, immediate disclosure of partial settlement agreements was required where the agreement would alter the landscape of the litigation. Failure to do so would result in a draconian stay of proceedings.
The amendments now mandate the disclosure of any partial settlement agreement, eliminating the more subjective test and expanding the Court’s discretion where there is non-compliance.
Potential consequences now include:
- Cost orders against the non-compliant party, regardless of the outcome of the proceeding;
- Further examinations for discovery at the plaintiff’s expense;
- Orders for additional disclosure or production of documents;
- Striking out of all or part of a party’s evidence, including any affidavit made by the party;
- Adjournments of a hearing or other steps that permits or requires the attendance of the parties;
- A stay of the proceedings; or
- Any other order as is just.
More Clarity for Litigants
These amendments bring clarity to disclosure obligations, timing, and consequences, following a myriad of jurisprudence which struggled to bring predictability to partial settlements.
Now, parties no longer need to determine whether a partial settlement agreement alters the litigation landscape, as disclosure of all partial settlement agreements is mandatory. The new rules provide guidance on the timing required for disclosure, removing the question of what constitutes immediate disclosure in most instances. It is also clear that all terms, except monetary value, must be disclosed. Finally, the Court now has wide discretion in addressing non-compliance and is not restricted to staying proceedings.