A recent decision from the Ontario Court of Appeal has reaffirmed the public interest value of Pierringer Agreements. Used in multi-party litigation, these agreements allow one or more defendants to settle with the plaintiff and exit the litigation while protecting themselves from future claims for contribution, particularly when other co-defendants may be insolvent.

In Cadieux v Cadieux, 2025 ONCA 405, the Court recognized a hard truth of litigation: when one party can’t pay, others risk footing more than their proportionate share. Pierringer Agreements help mitigate that risk and, importantly, encourage the domino effect of resolution. By incentivizing early settlement and reducing the drag of protracted trials, the Court held that these agreements do more than protect individual parties; they serve the broader public interest in efficient and fair dispute resolution.

Background

The underlying action arises out of a motor vehicle accident which occurred in the City of Ottawa, when Patrick Cadieux ran a red light and collided with a tractor-trailer driven by Scott Ray. Mr. Cadieux’s children, Kalob and Jakin, were passengers in his vehicle at the time of the accident and claimed to have suffered catastrophic injuries. Mr. Cadieux, Mr. Ray and his employer United Petroleum (“United Petroleum”), as well as the City of Ottawa were named as defendants in the action. United Petroleum and the City filed statements of defence and crossclaims claiming contribution and indemnity against their co-defendants.

The Plaintiffs estimated Kalob’s future care costs at over $14 million. All parties agreed that Mr. Cadieux was likely to be found liable in the action, and there were concerns that he would not be able to fund any portion of a judgment over his insurance limits of $2 million. As a result, both United Petroleum and the City were at risk of funding more than their proportionate share of a judgment should they be found liable at trial.

The Pierringer Agreement

In October 2023, the plaintiffs and the City entered into a Pierringer Agreement, which required the plaintiffs to limit their claim for damages to the non-settling defendants’ (Mr. Cadieux and United Petroleum) collective joint and several liability. This would extinguish any crossclaims for contribution or indemnity against the City. As with all Pierringer Agreements, the court would still have the ability to apportion liability as between all defendants, including the City.

United Petroleum opposed the plaintiffs’ motion to approve the Pierringer Agreement on the basis that it caused them substantial prejudice, as they may be required to pay not only their share of damages but also a larger portion of Mr. Cadieux’s share of the damages than they would be required to pay if the City remained jointly and severally liable in the underlying action. 

Motion judge’s decision

The motion judge rejected United Petroleum’s argument and approved the Pierringer Agreement, noting the important public policy goal of encouraging settlement in complex multi-party cases. The motion judge also found the alleged prejudice claimed to be speculative, as various trial outcomes could render this concern irrelevant. As such, the motion judge left the door open for United Petroleum to argue a claim of prejudice following trial, once the actual consequences of the Agreement were clear.

United Petroleum appealed this decision.

The Ontario Court of Appeal upheld the motion judge’s decision

The Court of Appeal held that the motion judge did not err in approving the Agreement, emphasizing the importance of Pierringer Agreements as a tool in a litigator’s toolbox, designed to encourage settlement in multi-party cases by shielding settling defendants from further liability and contribution claims. There is a strong public interest in encouraging such agreements for promoting efficiency, reducing litigation costs, and achieving finality for settling parties. The Court emphasized that these agreements should only be rejected if they cause significant prejudice to non-settling defendants beyond what is inherently part of the agreement structure.

On Appeal, the Appellants once again argued they would face undue prejudice if Mr. Cadieux was unable to pay his proportionate share of the damages, as they would be the only “deep pocket” defendant left in the action able to fund a judgment. The Court found this concern to be speculative and not sufficient to outweigh the public interest in encouraging settlements.

The Appellants argued that equitable restitution should be applied in this case to ensure a fair distribution of the shortfall caused by one tortfeasor’s insolvency among all joint tortfeasors.The Court of Appeal rejected this argument, noting that under the Negligence Act,[1] tortfeasors always carry the risk of not being able to recover from a joint tortfeasor who is insolvent or underinsured. Section 1 of the Negligence Act allows a plaintiff to recover 100% of a judgment from any one joint tortfeasor, while limiting claims by tortfeasors for contribution and indemnity from other tortfeasors to their several share of liability. Allowing for a claim in restitution over and above the principle of contribution and indemnity under the Negligence Act would undermine the benefits and policy considerations inherent in Pierringer Agreements.  

The Court of Appeal also rejected the Appellants’ argument that they should be permitted to seek, at trial, a proportionate reduction in damages awarded to the plaintiffs based on the proportionate share of the underfunded portion of the judgment attributed to the City, as this could result in the plaintiffs’ receiving less than the total judgment obtained. The Negligence Act expresses the clear policy objective to make plaintiffs whole even if it subjects one of the tortfeasors to the risk of overpaying their share of liability.

Key takeaways

Ultimately, the Court of Appeal emphasized the importance of Pierringer Agreements as a tool in resolving complex multi-party litigation, which often relies on the first settlement to trigger “cascading settlements.” The public interest in facilitating settlement in complex litigation outweighs any prejudice the Appellants alleged they may suffer in being the only “deep pocket” defendant left to fund a judgment. The Court made it clear that a defendant no longer sharing in joint and several liability does not amount to “significant prejudice” which would warrant a court interfering with a Pierringer agreement.

This case also highlights the strategic value in being the first of multiple defendants to settle with the plaintiffs, particularly if a defendant is at risk of being found jointly and severally liable with an underfunded defendant. By settling early and extricating themselves from the litigation, defendants can avoid having to pay more than their proportionate share of a judgment. 

[1] Negligence Act, RSO, 1990, c. N1.