On June 16, 2025, new Rule 49.14 of the Rules of Civil Procedure came into force. The rule codifies a line of case law which imposed significant consequences on parties who failed to disclose partial settlements. This article reviews the requirements of the new rule and provides practical guidance for practitioners navigating the transition.
Rule 49.14 Requirements
According to subrule 49.14(1), a “partial settlement agreement” is a binding written or unwritten agreement between at least one plaintiff and at least one defendant in an action, where at least one defendant is not party to the agreement, and the agreement does not settle the action in its entirety.
The crux of the new rule is found in subrules 49.14(4) and (5): the obligation to promptly disclose. This obligation belongs to the settling plaintiff(s), who must disclose the terms of the settlement agreement, excluding monetary value, to every other party to the proceeding who is not party to the settlement agreement. Disclosure must be made immediately if the hearing has commenced, or otherwise within 7 days (earlier if another step occurs in the proceedings). A new form, Form 49E, must be served and filed with the court.
Importantly, parties cannot contract out of the disclosure obligation, pursuant to subrule 49.14(6).
Subrule 49.14(7) allows the court to impose a range of consequences for non-compliance, including but not limited to: orders for costs, further examinations for discovery, striking out evidence, staying proceedings, and such other orders as are just. This marks a departure from previous jurisprudence which required the courts to stay the proceedings if a party failed to disclose (see Handley Estate v. DTE Industries Ltd, 2018 ONCA 324 [Handley]).
Although they go beyond the scope of this article, counsel and litigation guardians should be aware of the additional requirements relating to settlement agreements involving parties under disability, found in subrules 49.14(8) and (10).
What are the limits of disclosure?
The rule appears straightforward: if you are a plaintiff and involved in a partial settlement, you must disclose the terms of that agreement within the prescribed timeline. In Smialek v. Status Construction Ltd., 2025 ONSC 5229, the court confirmed rule 49.14 now applies more broadly to all partial settlement agreements regardless of their impact on the adversarial landscape, which was the previous test grounded in the abuse of process doctrine (see Gowing Contractors Ltd. v. Walsh Construction Co Canada, 2025 ONSC 2671 [Gowing]; Poirier v. Logan, 2022 ONCA 350; Handley).
The new rule is less clear regarding the obligation to disclose when there is, for example, an agreement in principle but the parties have not agreed to or executed Minutes of Settlement. There is not yet a bright line as to how concrete the terms need to be before the disclosure obligations arise. On one hand, the rule seems to state that it does not arise until the terms are certain, since the terms themselves must be disclosed. On the other hand, the court may wish to prevent parties from dragging their feet in agreeing to precise terms in order to push back the disclosure obligation. While this question remains unanswered, prudent counsel should disclose the settlement as early as possible after an agreement in principle has been reached.
Further, is the duty owed to anyone who isn’t party to the litigation? In Gowing, the court considered the scope of the partial disclosure rule prior to rule 49.14’s enactment. The court confirmed that parties not directly involved in the litigation but who are connected to related proceedings must receive disclosure from the settling parties, following the principles set out in Aecon Buildings v. Stephenson Engineering Limited, 2010 ONCA 898 [Aecon].
It is uncertain whether Gowing and Aecon remain good law under the new rule. In the meantime, prudent counsel should err on the side of caution and consider whether any parties in related actions may be affected by the partial settlement and whether disclosure is appropriate.
Consequences for non-disclosure – a word of caution
Although the new rule broadens the range of relief available for non-disclosure, the court in Smialek made it clear that harsher consequences are not off the table. In Smialek, the court found that rule 49.14 does not overturn Handley, which mandated a stay of proceedings for failure to disclose a partial settlement which changes the adversarial landscape.
Notably, the disclosure in Smialek was made prior to the enactment of rule 49.14. The court declined to comment on whether the new rule applies retroactively. For now, it appears that a stay of proceedings remains the default remedy for partial settlements that were disclosed late, or not at all, before June 16, 2025.
As a result of the decision in Smialek, the test for whether the settlement changes the adversarial landscape may not be entirely moot. Justice Schabas clarified that Handley continues to apply where the circumstances reflect the previous doctrine. It follows that the lesser consequences provided under the rule are only available where the partial settlement does not change the adversarial landscape.
The Ontario Court of Appeal has, however, granted leave to hear the issue of whether Handley is mandatory before a five-judge panel. But until that decision is released, it appears that Handley continues to be the dominant authority regarding partial settlements despite the introduction of the new rule.