New Changes to Ontario’s Rules of Civil Procedure regarding Disclosure of Partial Settlement Agreements
This week, an amendment to Rule 49 of Ontario’s Rules of Civil Procedure came into effect. As of June 16, 2025, the revised Rule 49.14 makes it mandatory for parties that have reached a partial settlement agreement to disclose the terms of said agreement to every other plaintiff and defendant that is not a party to the agreement.
Prior to the recent amendments made to Rule 49, Ontario courts had already established an obligation on settling parties to promptly disclose their partial settlement agreements to the non-settling parties in certain circumstances.
Some of the leading cases regarding this obligation include: Aecon Buildings v. Stephenson Engineering Limited, Handley Estate v. DTE Industries Limited, Tallman Truck Centre Limited v. K.S.P Holdings Inc., and, Waxman v. Waxman.[1]
While this new change to the Rules echoes the established case law, the new amendments provide litigants with greater clarity in regard to how, when, and to whom they must disclose partial settlement agreements.
Types of Partial Settlement Agreements
Partial settlement agreements are a useful tool for both plaintiffs and defendants during litigation. Two of the most common types of partial settlement agreements used today are Pierringer agreements and Mary Carter agreements.
A Pierringer agreement is a settlement agreement made between the plaintiff and at least one, but not all, defendants. Unlike Mary Carter agreements, the settlement amount is a fixed number, and not a cap of damages. As well, the settling defendant is removed from the litigation, and the plaintiff will typically agree to protect the settling defendant from the non-settling defendants by limiting the claims against the non-settling defendants to their several liability only.
A Mary Carter agreement, on the other hand, typically keeps the settling defendant in the litigation and the settling defendant’s exposure is capped at the settlement amount. The plaintiff will also typically provide indemnification to the settling defendant for claims made by the non-settling defendant. The settling defendant is still permitted to engage in the litigation and maintain any crossclaims or third-party claims against the non-settling parties, and the settling defendant’s liability is decreased in proportion to the increase of the non-settling parties’ liability.
The newly amended Rule 49.14 of the Rules of Civil Procedure provides clarification regarding what types of agreements will be considered “partial settlement agreements”.
Rule 49.14(1) states:
“partial settlement agreement” means a settlement agreement in a proceeding, whether written or unwritten, where,
(a) at least one plaintiff and at least one defendant are parties to the agreement,
(b) at least one defendant is not a party to the agreement,
(c) the agreement does not settle the proceeding in its entirety, although it may be settled in its entirety as between some parties, and the parties to the agreement intend that the proceeding will continue to some extent, and
(d) the agreement is binding on the parties to the agreement, subject to the requirement for judicial approval under rule 7.08 if applicable.
No Requirement to determine an Alteration of the Litigation Landscape
Previously, Canadian courts held that disclosure of partial settlement agreements was required when the agreement changed the “litigation landscape” or altered “the dynamics of litigation”.[2]
Under the newly amended Rule 49.14, there is no longer a requirement to show that the agreement either changed the litigation landscape or altered the dynamics of litigation. Instead, if a party has simply entered into a partial settlement agreement, as defined in Rule 49.14(1), they must disclose said agreement to the non-settling parties.
Specifically, Rule 49.14(4) states: “a plaintiff who is a party to a partial settlement agreement shall disclose the terms of the agreement, other than the monetary value of the settlement, if any, to every other plaintiff and defendant who is not a party to the agreement.”
Timing of Disclosure
The new amendments also provide clarity with respect to when a settling party must disclose their agreement.
The plaintiff must now disclose the agreement no later than seven days after the agreement is reached and before any party to the agreement takes any further step in the proceeding.
Additionally, if a hearing of the proceeding has commenced, the agreement must be disclosed immediately.
Also, as soon as possible after the disclosure and no later than seven days before the next court appearance, the plaintiff must record the terms of the agreement (except any monetary values) using a new Form 49E and have said form served and filed.
Available Remedies for Failing to Promptly Disclose
Previously, Canadian courts would typically impose a stay on proceedings when a party failed to promptly disclose a partial settlement agreement.
Rule 49.14(7) now provides the courts with multiple remedies when a plaintiff fails to either disclose the partial settlement agreement or fails to properly serve and file the new Form 49E.
The court may now, on any other party’s motion:
- Make an order for costs
- Order or permit further examinations for discovery conducted at the plaintiff’s expense
- Order additional disclosure or production of documents
- Strike all or part of a party’s evidence
- Adjourn a hearing or other step that permits or requires the attendance of parties
- Stay the proceeding
- Make such other order as is just
Takeaways
The recently added Rule 49.14 provides a codification of the existing common law regarding obligations to disclose partial settlement agreements. The most important takeaways from the new amendments include:
- All partial settlement agreements, as defined under 49.14(1) must be disclosed
- There is no longer a requirement that the settlement agreement changed the litigation landscape for it to be disclosed
- New timing requirements for when disclosure must occur
- New requirement to have Form 49E served and filed within seven days of disclosure
- Courts now have an array of remedies available when parties fail to disclose
[1] See Aecon Buildings v. Stephenson Engineering Limited, 2010 ONCA 898; Handley Estate v. DTE Industries Limited, 2018 ONCA 324; Tallman Truck Centre Limited v. KSP Holdings Inc., 2022 ONCA 66; Waxman v. Waxman, 2022 ONCA 311.
[2] See Hadley, supra note 1 at para 39.