Court of Appeal Upholds Stay of Proceedings for Failure to Disclose Settlement: Key Lessons in Litigation Strategy and Ethics
- Greg Weedon
- Jul 15
- 2 min read
In a recent decision from the Ontario Court of Appeal, Rosemont Management Inc. v. Cityzien Properties Limited, 2025 ONCA 198, the Court dismissed an appeal brought by the applicants after their application was stayed as an abuse of process. The decision reinforces the strict obligation to disclose settlement agreements that materially affect the litigation landscape and the serious consequences of failing to do so.
Facts of the Case:
Rosemont contracted to sell its leasehold interest in a Toronto apartment building to Cityzien Properties.
Under an amendment to the agreement, Cityzien began managing the property and granted a 15-year lease at $1/year to its lawyer, our client, as repayment for legal fees.
The transaction failed to close. Rosemont initiated an application against both Cityzien and Faraci, seeking to invalidate our client's lease.
On August 5, 2021, Rosemont and Cityzien reached a settlement agreement and aligned themselves against our client —yet failed to disclose the agreement to him until August 17, 2021.
Our client brought a motion to stay the application against him, citing abuse of process.
Lower Court Decision:
The Superior Court ruled that Rosemont had breached the “immediate disclosure” rule, which requires that settlements that fundamentally alter the litigation landscape must be disclosed promptly.
The Court stayed Rosemont’s proceeding against our client for abuse of process, citing the delayed disclosure and lack of candour.
Court of Appeal Ruling:
The Court of Appeal upheld the stay, finding no legal error in the lower court’s fact-based conclusion.
It confirmed that:
Disclosure was not “immediate”—a delay of 12 days in this context was unacceptable.
Rosemont’s argument that the settlement was unenforceable was irrelevant to its disclosure obligations.
Even where a settlement later fails, disclosure is still required if the parties acted on it as binding at the time.
The Court reiterated that the settlement disclosure rule is essential to fairness in litigation and must be strictly complied with.
The appeal was dismissed, and ourt client was awarded $10,000 in costs.
Key Takeaways:
Disclosure Obligations Are Strict – Settlements that shift litigation positions must be disclosed immediately, not at a party’s convenience.
Abuse of Process Has Teeth – Failing to disclose can lead to the extreme remedy of a stay, even where the merits of the claim may be valid.
Candour and Transparency Are Paramount – Strategic concealment of settlement agreements, even for days, undermines the integrity of the judicial process.
Enforceability Isn’t the Test – The obligation to disclose arises from the existence of a settlement, not whether it is later enforced.
This decision underscores the importance of litigation ethics and procedural fairness. Weedon Law was proud to represent our client and secure this appellate victory.
If you are facing complex real estate litigation or dealing with strategic settlement issues, contact our office for trusted legal representation.
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