From Settlement to Stay: The Ontario Court of Appeal Affirms the Importance of Prompt Disclosure of Settlement Information to Related Parties

  • 27 avril 2023
  • Grace Murdoch

In its recent decision, Skymark Finance Corporation v Ontario, 2023 ONCA 234[1], the Ontario Court of Appeal took the opportunity to comment on the importance of immediate disclosure of settlement minutes to other parties in an action and to clarify the meaning of the phrase “to change the entirety of the litigation landscape."

The Immediate Disclosure Rule

The immediate disclosure rule provides that that in litigation involving multiple parties, settlement agreements and their terms must immediately be disclosed to all if they change the litigation landscape for the non-settling parties. Though explicit in the title, it bears emphasis that the timeline for doing so is immediate – not “eventual” or “when it is convenient”[2]. A failure to do so constitutes an abuse of process with the resulting remedy of a stay being placed on the non-disclosing party’s claim(s) against the non-settling parties.

Because violation of this rule can result in one of the court’s most severe remedies, careful consideration should be paid to the foundational aspect of the rule – that is, changing the legal landscape. The immediate disclosure rule exists so as to prevent prejudice to non-settling parties who will find themselves entangled in a landscape with shifted adversarial relationships, requiring new strategy. The remedy of staying the action is enforced for the purpose of allowing the court to control its own processes and correct imbalances of justice.[3]