Simon's Legal Resources

Abuse of Process - Settlement Disclosure - post-Handley (2)

. West York Sales and Leasing Inc. v. Dominion of Canada General Insurance Company (Travelers Canada)

In West York Sales and Leasing Inc. v. Dominion of Canada General Insurance Company (Travelers Canada) (Ont CA, 2026) the Ontario Court of Appeal allowed an insurance appeal, here brought against "the application judge’s decision requiring it to defend the action and indemnify" the respondent.

Here the court considers recently-active law regarding the non-prompt disclosure of settlements in multi-party litigation:

The Third Issue: Whether West York’s failure to disclose that it had entered a partial settlement with its broker should disentitle it from coverage

[84] Finally, if coverage were otherwise provided, although Dominion was not told that West York had entered into a partial settlement agreement with its broker, I would see no reason to deny West York coverage on this basis.

[85] The failure to disclose an agreement that effectively converts an adversarial relationship into a co-operative one amounts to a change in the “litigation landscape” must be disclosed: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 49.14(7); 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City), 2026 ONCA 352, at paras. 46-50.

[86] There was no change in the litigation landscape in this case, and no evidence of unfairness, prejudice or oppression occasioned to Dominion by the decision not to disclose the settlement with Baird to Dominion: Welland, at para. 15. The insurance broker’s evidence did not serve to assist West York in the litigation.

[87] Baird’s position regarding coverage under OPCF 21A (c) was inconsistent with West York’s coverage argument and supportive of Dominion’s.

[88] The only evidence that could have been relied on by the application judge from the broker’s testimony was that, “the whole monthly reporting is premised on the basis that at the time of the effective date of the Policy … you cannot add a vehicle through the monthly reporting if you owned it on September 15th, 2019, and it was not scheduled”. There was therefore no prejudice.

[89] Moreover, West York was not a party to the underlying action and had in fact, actively refused to participate in that action. As such, Dominion had no legal right to be informed of the partial settlement in the third party claim within the underlying action.