Disclosure requirements regarding proportional share settlement (“Pierringer”) agreements have changed significantly in the past decade. The Court of Appeal for Ontario recently provided updated guidance on when a failure to disclose the existence of a proportional share settlement agreement may constitute an abuse of process and justify a stay of proceedings.
Ontario re-examines when late disclosure constitutes an abuse of process
The Ontario Court of Appeal’s decision in 1086289 Ontario Inc. v. Welland (City), 2026 ONCA 352 marks a significant shift in how Ontario courts assess the impacts of partial settlement agreements that are not immediately disclosed to the non-settling parties in the litigation. The Court rejected the inflexible framework governing disclosure obligations for nearly a decade and replaced it with a flexible, context-driven analysis grounded in the doctrine of abuse of process. In doing so, the Court diverged from the approach currently applied in Alberta and other Canadian jurisdictions in assessing the acceptable timelines for disclosure of the existence of partial share settlement agreements.
Proportional Share Settlement (“Pierringer”) Agreements
Pierringer agreements are practical and effective tools in multi-party litigation. They provide a mechanism by which certain defendants may resolve the claims against them without disturbing the plaintiff’s ongoing claims against the other defendants. This is particularly useful in complex actions involving several defendants or third parties.
Courts have recognized that such agreements promote settlement, reduce expense to the parties, and limit the use of scarce Court resources. However, proportional share settlement agreements fundamentally alter the litigation landscape. The Courts have long held that the existence of a proportional share settlement agreement must be swiftly disclosed to the non-settling parties or the plaintiff may risk a finding of abuse of process.
Ontario’s Former Bright-Line Rule
Prior to Welland, Ontario applied the strict Handley Estate framework. Under that approach, any failure to immediately disclose a partial settlement agreement that changed the litigation landscape constituted an abuse of process. Critically, no proof of prejudice was required, and the only available remedy was a mandatory stay of proceedings. This principle was reinforced in decisions such as Hamilton‑Wentworth District School Board v Zizek, 2022 ONCA 638, where the Court of Appeal emphasized that disclosure is not discretionary or context-dependent, but an absolute procedural requirement.
Alberta’s Adoption of the Same Approach
Alberta courts have recently embraced the Handley Estate approach. In Ball v 1979927 Alberta Ltd, 2024 ABKB 229, the Alberta Court of King’s Bench considered a Pierringer agreement that was disclosed nearly ten months after it was formalized. The plaintiffs argued that the delay caused no prejudice and that no substantive steps had occurred in the interim. The Court rejected that position.
Instead, the Court held that immediate disclosure is an absolute requirement where a settlement agreement “changes the entirety of the litigation landscape.”[1] The failure to disclose was found to constitute an abuse of process, and the action was stayed. The Court confirmed that Pierringer agreements fundamentally alter the litigation landscape and justify the need for immediate disclosure.
In reaching this conclusion, the Court relied heavily on Ontario jurisprudence, treating it as persuasive authority. It endorsed the principle that immediate disclosure is necessary to avoid unnecessary interlocutory disputes and increased litigation costs.
The Alberta Court also grounded this obligation in professional conduct rules, emphasizing that the duty of disclosure is not merely procedural, but ethical. The Law Society of Alberta Code of Conduct mirrors Ontario’s requirements in this respect.
Section 5.1‑2 provides that counsel must not mislead the tribunal about the true adversarial positions of the parties. Where a party enters into an agreement that guarantees recovery or alters which parties are adverse in interest, counsel must immediately disclose the existence and key terms of that agreement to both the court and all parties.[2]
More recently, Alberta reaffirmed this strict approach in CNOOC Petroleum North America ULC v. ITP SA, 2025 ABKB 589, confirming that Pierringer agreements must be disclosed immediately to the parties and the Court.
Ontario’s New Framework under Welland
Against this backdrop, Welland represents a significant shift in practice. The Ontario Court of Appeal overruled Handley Estate and rejected the more rigid bright-line rule. In doing so, the Court emphasized the need to move away from inflexible, automatic outcomes, noting that “the time has come to exchange the Handley axe for a more precise scalpel.”[3]
Under this new framework, the failure to disclose a partial settlement agreement is not automatically an abuse of process. Courts must now engage in a contextual inquiry, assessing whether the non-disclosure resulted in prejudice, unfairness, or harm to the integrity of the justice system.[4]
Equally important, the Court confirmed that remedies must be proportionate. A stay of proceedings remains available, but only in the clearest cases where no lesser remedy would suffice. In other cases, courts may impose a range of remedies, including costs, additional discovery, or evidentiary limitations, depending on what is just in the circumstances.
This approach aligns with Rule 49.14 of the Ontario Rules of Civil Procedure, which provides a structured but flexible framework for disclosure obligations and available remedies.
Subsequent Ontario decisions have reinforced Welland. In Peninsula Employment Services Ltd. v. Castillo, 2026 ONCA 450, the Court of Appeal set aside a stay imposed under the former Handley Estate framework, confirming that non-disclosure must now be assessed contextually rather than through a zero-tolerance approach.
A Clear Interprovincial Divergence
The result is a notable divergence between Ontario and Alberta. In Alberta, the bright-line rule continues to apply, where disclosure must be immediate, prejudice is irrelevant, and failure to comply may result in a stay of proceedings. In Ontario, by contrast, the law now emphasizes discretion, proportionality, and fairness.
This divergence has practical implications. In Alberta, parties must strictly follow disclosure obligations, as even technical delays may have serious consequences. In Ontario, while courts now have greater flexibility, prompt disclosure remains the safest course particularly where any delay could be viewed as misleading or strategic.
Conclusion
The Ontario Court of Appeal’s decision in Welland represents a clear move away from the former more rigid bright-line rule to a more balanced and flexible framework. Alberta continues to maintain strict immediate disclosure rules following the Handley Estate framework.
Time will tell whether Alberta’s courts reconsider the strict disclosure approach and follow Ontario’s shift. Until then, plaintiffs in Alberta must immediately disclose proportional share settlements that “drastically alter the litigation landscape” or face the prospect that the proceeding may be stayed in its entirety.
Please contact Gordon Becher or Reem Saraya in the DWF construction litigation group for further information.
[1] Ball v 1979927 Alberta Ltd, 2024 ABKB 229, at para 73, citing Skymark Finance Corporation v. Ontario, 2023 ONCA 234 at para 51.
[2] Law Society of Alberta Code of Conduct, Section 5.1-2, Commentary [1].
[3] 1086289 Ontario Inc. v. Welland (City), 2026 ONCA 352, at para 37.
[4] 1086289 Ontario Inc. v. Welland (City), 2026 ONCA 352, at para 164.