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Civil Litigation - Pierringer Orders. Cadieux v. Cadieux
In Cadieux v. Cadieux (Ont CA, 2025) the Ontario Court of Appeal dismissed an appeal brought by non-settling defendants from a motion judge's approval of a Pierringer agreement:Issue 1. Did the motion judge err by approving the Agreement?
[13] It is useful to start by discussing the nature of a Pierringer agreement and specifically what they are designed to achieve. Pierringer agreements are a valuable tool to encourage settlement in multi-party litigation. They shield the settling defendant from any claims by non-settling defendants for contribution and indemnity because the settling defendant is assured to only pay damages commensurate with their degree of fault found at trial: Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, 359 D.L.R. (4th) 381, at para. 23. To achieve this, essential terms include 1) the plaintiff limiting its claim against any non-settling defendant to their several liability, 2) the settling defendant no longer seeking contribution and indemnity from any non-settling defendant, and 3) the plaintiff indemnifying the settling defendant against any claim over by a non-settling defendant: Endean v. St. Joseph's General Hospital, 2019 ONCA 181, 54 C.C.L.T. (4th) 183, at para. 52.
[14] There is a strong public interest in encouraging, and upholding, Pierringer agreements as they contribute to “reducing litigation’s stubbornly endemic delays, expense and stress”: Sable, at paras. 1 and 11; M.(J.), at para. 65. Furthermore, by carving itself out of further exposure a Pierringer agreement allows a defendant to achieve finality.
[15] Although not all Pierringer agreements require court approval by their own terms, approval is often necessary to amend pleadings and to stay or dismiss crossclaims: Allianz v. Canada (Attorney General), 2017 ONSC 4484, 139 O.R. (3d) 424, at para. 10.
[16] In what circumstances should a court decline to approve a Pierringer agreement? It would only be appropriate to do so when the agreement significantly prejudices a non-settling defendant and when that prejudice outweighs the public interest in encouraging settlements.
[17] There would be significant prejudice when, for example, the terms of the Pierringer agreement materially curtail the non-settling defendant’s ability to know and present their case, or to pursue their own settlement: Sable, at para. 27. The prejudice must be more than the disadvantages to a non-settling defendant that are inherent in the basic form of a Pierringer agreement, such as their defence no longer being assisted by the settling defendant or the settling defendant no longer sharing in any joint and several liability.
[18] As they did in the court below, the appellants use the following scenario to illustrate how they are prejudiced by the Agreement: if the damages ordered exceed Mr. Cadieux’s policy limits, and if Mr. Cadieux is unable to personally pay them, the appellants would be jointly liable to the respondents for Mr. Cadieux’s share of the judgment without any contribution from Ottawa.
[19] The appellants argue that the law of restitution demands a proportionate sharing of the underfunded amount caused by a co-tortfeasor’s insolvency. They ask us to either set aside the motion judge’s order and decline to approve the Agreement, or allow them to argue, after liability has been apportioned by the trial court, that a proportionate reduction be made to their share of the underfunded amount to reflect their degree of fault vis-à-vis Ottawa’s.
[20] In my view, the motion judge did not err in rejecting the appellants’ claim of prejudice, nor did he err in declining to grant them permission to argue for a proportionate reduction.
[21] The prejudice alleged and the availability of proportionate reduction must both be assessed in the context of the Negligence Act. Section 1 of the Act provides that:Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and, where two or more persons are found at fault or negligent, they are jointly and severally liable to the person suffering loss or damage for such fault or negligence, but as between themselves, in the absence of any contract express or implied, each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at faut or negligence. [22] This section makes clear that a victim is entitled to full compensation from any one concurrent tortfeasor. It also makes clear that liability, as among co-tortfeasors, is several and that they can seek contribution and indemnity from each other to the degree to which they are respectively at fault. In other words, the plaintiff is to be made whole, and the risk that the tortfeasor from whom the plaintiff claimed full damages has to pay more than their own share of fault is on that tortfeasor. The effect of this section is that a tortfeasor may well have to “pay 100% of the plaintiff’s damages and recover no indemnity” from co-tortfeasors who are “not pursued by cross-claim, third party action or separate action” or “not creditworthy or insured”: Endean, at para. 49, citing Taylor v. Canada (Health), 2009 ONCA 487, 95 O.R. (3d) 561, at paras. 18-20. See also Chinook Group Ltd. v. Foamex International Inc. (2004), 2004 CanLII 33017 (ON SC), 72 O.R. (3d) 381 (S.C.), at para. 6.
[23] The appellants’ alternative argument that they should be permitted to seek, at trial, a proportionate reduction based on the apportionment of liability, is precluded by the Negligence Act as it could result in the plaintiffs receiving less than the total judgment obtained.
[24] This court in Renaissance Leisure Group Inc. v. Frazer (2004), 2004 CanLII 21044 (ON CA), 242 D.L.R. (4th) 229 considered the argument that the Negligence Act does not contemplate the need to spread risks in situations of insolvency or impecuniosity: at para. 52. Acknowledging the Ontario Law Reform Commission’s recommendation that courts be expressly allowed to divide the share of an insolvent tortfeasor (Report on Contribution Among Wrongdoers and Contributory Negligence (Toronto: Ministry of Attorney General, 1988), at pp. 47-48),[3] Sharpe J.A. emphasized that the Ontario Legislature has yet to act on it. Sharpe J.A. ultimately held that there was no basis to apportion damages in relation to someone not involved in the same suit.
[25] The appellants rely on Sharpe J.A.’s comment at para. 52 that “[t]he situation as among wrongdoers who are all sued and all found to be jointly and severally liable … may be different”. This, however, does not apply here as the settling defendant in this case, Ottawa, will not be jointly and severally liable with the appellants should the Agreement be approved.
[26] Acknowledging that Ontario’s Negligence Act does not explicitly provide for a proportionate reduction, the appellants argue that it is available as a form of restitution rooted in equity. They point to Moore v. Sweet, 2018 SCC 52, [2018] 3 S.C.R. 303, where the majority held at paras. 70-73 that the Insurance Act, R.S.O. 1990, c. I.8, by providing for the designation of beneficiaries, does not oust equitable rights that others may have in policy proceeds. The essence of the appellants’ argument on this point is that the Negligence Act likewise does not extinguish its claim in equity here.
[27] Assuming for the moment that there is an enrichment and corresponding deprivation, and that s. 1 of the Negligence Act does not meet the “irresistible clearness” standard to serve as a juristic reason for the enrichment (Moore, at para. 70), I would still reject this argument. That is because, if the alleged enrichment is said to flow to the plaintiffs, the Negligence Act expresses the clear policy objective to make them whole even if it subjects one of the tortfeasors to the risk of overpaying their share of liability. And, if the alleged enrichment lies with Ottawa, the proportionate reduction the appellants seek would be tantamount to putting Ottawa back in the position of joint liability, which would remove a key incentive for defendants in multi-party litigation to settle, thereby undermining the public interest in encouraging settlements.
[28] I note further that co-tortfeasors being liable to each other with respect to their degree of fault has been in effect under Ontario’s Negligence Act since 1930. In my view, the longstanding and well-established principle that the risk of an insolvent or impecunious tortfeasor falls onto other joint tortfeasors (and not the victim), as the necessary implication of a statutory requirement, cannot itself give rise to prejudice.
[29] The appellants’ argument that the Agreement gives rise to prejudice is based partly on the understanding that it would otherwise be entitled to seek “equitable restitution” for unsatisfied portions of Mr. Cadieux’s liability. As I already explained, such a claim is not available with or without the Agreement. I therefore reject the submission that the appellants suffered substantive prejudice by virtue of them losing the opportunity to make a restitution claim.
[30] As I note above, a Pierringer agreement does not inherently prejudice non-settling defendants. As Zarnett J.A. explains in Endean, at para. 53, the design of Pierringer agreements reduces plaintiffs’ recovery from the non-settling defendant by the degree of fault attributable to the settling defendant, which “effectively put(s) the non-settling defendant in the same economic position as if it paid the plaintiff in full and recovered any indemnity from the settling defendant”. Put differently, the settling defendant no longer sharing joint liability also frees the non-settling defendant from any liability for the fault of the settling defendant.
[31] When there is an insolvent or impecunious co-defendant, there is always a risk of having to pay more than one’s proportionate share. This was a risk to Ottawa, as well as the appellants, from the start of the litigation. And if the objective is indeed to encourage settlements, as the Supreme Court puts it in Sable, at para. 29, “someone has to go first”, and in this case Ottawa did. The ability to avoid joint liability with an insolvent or impecunious co-defendant is an incentive to settle and should not give rise to prejudice.
[32] This is particularly important because complex multi-party litigation often relies on the first settlement to trigger what the intervener calls “cascading settlements”. The public interest in facilitating such an outcome outweighs any prejudice the appellants can be said to have suffered.
[33] The motion judge therefore did not err in approving the Agreement. . Kingdom Construction Limited v. Perma Pipe Inc.
In Kingdom Construction Limited v. Perma Pipe Inc. (Ont CA, 2024) the Ontario Court of Appeal dismissed an appeal of a stay motion denial, here grounded in the Handley abuse of process doctrine and focussing on the presence of a Pierringer agreement in the settlement:ii. The Use of the Term Pierringer Agreement Does Not Undermine the Motion Judge’s Conclusion
[49] The Minutes contemplated York, Durham, and Kingdom entering into a “Pierringer Agreement”. The appellants argue that this means immediate disclosure was required in this case. They point to the following statement in Handley Estate, at para. 39:The obligation of immediate disclosure is not limited to pure Mary Carter or Pierringer agreements. The disclosure obligation extends to any agreement between or amongst parties to a lawsuit that has the effect of changing the adversarial position of the parties set out in their pleadings into a cooperative one. [50] I do not read Handley Estate, which was not a case about a Pierringer agreement, as authority for the proposition that the mere use of the words “Pierringer agreement” is determinative on whether a settlement requires immediate disclosure, without considering whether the substance of what the parties agreed to involved changing an adversarial position into a cooperative one.
[51] When Handley Estate mentioned Pierringer agreements, it referred to their generally understood content, one aspect of which is a provision requiring the settling defendants “to co-operate with the plaintiff by making documents and witnesses available for the action against the non-settling defendants”: Handley Estate, at para. 39, footnote 2; see also Endean v. St. Joseph’s General Hospital, 2019 ONCA 181, 54 C.C.L.T. (4th) 183, at para. 52.[5] The importance of that kind of term to the analysis of whether a settlement requires immediate disclosure is underscored by the fact that Handley Estate’s reference to a Pierringer agreement was immediately followed by: “The disclosure obligation extends to any agreement between or amongst parties to a lawsuit that has the effect of changing the adversarial position of the parties set out in their pleadings into a cooperative one”: Handley Estate, at para. 39.
[52] As described above, the settlement here in issue did not include, either in the Minutes or in the more complete documents that implemented the settlement, any provision whereby York and Durham agreed to cooperate with Kingdom (or Catlin) in the pursuit of claims against the appellants, by providing witnesses or documents, or in any other way. In the absence of such a provision, the use of the word “Pierringer”, or even the presence in the settlement of other terms commonly found in Pierringer agreements was not determinative.
[53] The motion judge’s conclusion, based on the substance of what the parties actually agreed to, is not undermined by the presence of the term “Pierringer Agreement” in the Minutes. . Maio v. Kapp Contracting Inc.
In Maio v. Kapp Contracting Inc. (Ont CA, 2022) the Court of Appeal considered a Pierringer agreement:[8] While the motion judge did not specifically refer to any case law dealing with this issue, nor was he required to, his decision is consistent with this court’s decision in Endean v. St. Joseph's General Hospital, 2019 ONCA 181, where the court dealt with a similar Pierringer Agreement. In Endean, the court explained the general rule that plaintiffs are entitled to recover one hundred percent of their damages from any tortfeasor who is found liable for damages, even if other tortfeasors are also responsible for the same damages. A tortfeasor can then avoid paying all damages by making crossclaims or third-party claims. The court explained that the effect of a Pierringer Agreement must be understood in the context of these principles. As the court held, at para. 52, “the purpose of a Pierringer Order is to facilitate a settlement between a plaintiff and a defendant who wishes to settle (a settling defendant), while maintaining a level playing field for the remaining (non-settling) defendant against whom the plaintiff wishes to proceed to trial”.
[9] Accordingly, a Pierringer Agreement that limits a plaintiff’s ability to recover for the several liability of remaining defendants does not limit a plaintiff’s recovery to only those damages directly attributable to the remaining defendants. Rather, unless the agreement is specifically worded otherwise, the effect of such an agreement is to ensure that the plaintiff does not recover any damages attributable to the defendant released in the Pierringer Agreement.
[10] In this case, at the time the respondents and the City entered into the Pierringer Agreement, everyone was aware that there were third- and fourth-party claims. As is typical when parties enter into Pierringer Agreements, and as discussed in Endean, the concern was to ensure that the plaintiff could not recover damages attributable to the City from other parties. Otherwise, the settlement would be prejudicial to the remaining defendants – and, by extension, to the third and fourth parties – because they would be unable to recover any damages attributable to the City from the City through crossclaims. However, there is no basis for finding that the parties to the Pierringer Agreement intended to reduce the respondents’ damages to those that could only specifically be attributed to the remaining defendants, which by now is only Mer. The appellant was not a party to the agreement and there is no basis for finding that the Pierringer Agreement and the Order were meant to benefit the appellant, nor any other third or fourth parties, in this way.
[11] The appellant argues that the motion judge erred in failing to follow this court’s decision in Taylor v. Canada (Health), 2009 ONCA 487. It is worth noting that Taylor did not involve a Pierringer Agreement. As the court explained in Endean, at para. 66, Taylor involved a unique situation where the plaintiff intended to avoid any third-party claims by only seeking damages attributable to the defendant. This is not the case here. By entering into the Pierringer Agreement, the respondents sought to settle their claim against the City and to pursue their claims against the remaining defendants. There is no evidence that, by doing so, they intended to recover only those damages specifically attributable to the remaining defendants, thereby releasing all third and fourth parties from any potential liability.
[12] The appellant further argues that the motion judge’s reasons are insufficient. We disagree. The motion judge was asked to address a discrete issue, namely the effect of the Pierringer Agreement and the Order on the third- and fourth-party claims. The motion judge rejected the appellant’s argument in clear and succinct reasons. The basis for his decision is readily understandable. He was not required to address every argument made by the appellant. . Endean v. St. Joseph's General Hospital
In Endean v. St. Joseph's General Hospital (Ont CA, 2019) the Court of Appeal considers Pierringer orders:[52] This brings us to the Pierringer Order in the Hearsey Action. Named after Pierringer v. Hoger, 124 N.W. 2d 106, 21 Wis. 2d 182 (U.S. Wis. S.C. 1963), the purpose of a Pierringer Order is to facilitate a settlement between a plaintiff and a defendant who wishes to settle (a settling defendant), while maintaining a level playing field for the remaining (non-settling) defendant against whom the plaintiff wishes to proceed to trial: see Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, [2013] 2 S.C.R. 623, at paras. 6, 23-26. It does this by certain essential provisions:(1) The settling defendant settles with the plaintiff;
(2) The plaintiff discontinues its claim [against] the settling defendant;
(3) The plaintiff continues its action against the non-settling [defendant] but limits its claim to the non-settling defendant's several liability (a 'bar order');
(4) The settling defendant agrees to co-operate with the plaintiff by making documents and witnesses available for the action against the non-settling defendant;
(5) The settling defendant agrees not to seek contribution and indemnity from the non-settling defendant; and
(6) The plaintiff agrees to indemnify the settling defendant against any claims over by the non-settling defendants.
Handley Estate v. DTE Industries Limited, 2018 ONCA 324, 421 D.L.R. (4th) 636, at para. 39, citing Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 3d ed. (Toronto: LexisNexis Canada, 2017), at p. 762. [53] These essential provisions of a Pierringer Order are informed by the discussion of liability above. The non-settling defendant will have cross-claimed against a settling defendant because it wants to recover the settling defendant’s share of fault from it as indemnity, should the non-settling defendant have to pay more than its proportionate share of the plaintiff’s damages. The non-settling defendant’s need to do so disappears under a Pierringer Order, because it requires the plaintiff to effectively put the non-settling defendant in the same economic position as if it paid the plaintiff in full and recovered any indemnity from the settling defendant. It does this by requiring the plaintiff to reduce its recovery from the non-settling defendant by the percentage of fault to be attributed to the settling defendant, and thus by the amount the non-settling defendant would have been able to recover from the settling defendant as indemnity: see M.(J.) v. Bradley (2004), 2004 CanLII 8541 (ON CA), 71 O.R. (3d) 171, 187 O.A.C. 201 (C.A.), at paras. 30-31.
[54] To use an example, suppose defendants A and B were each creditworthy and cross-claimed against each other for indemnity. Suppose each is found liable at trial and fault was apportioned 50% to each. The plaintiff makes A pay 100% of the damages. But A recovers from B, on a cross-claim, for B’s 50% proportionate liability as indemnity. At the end of the day, A’s net payment is only 50%, commensurate with A’s liability. [55] Now suppose the plaintiff settled with B before trial. In the Pierringer Order situation, the plaintiff reduces their recovery from A (who did not settle) by the amount it is determined that B is at fault. At trial, A and B are each found to be 50% at fault. The plaintiff reduces their claim against A by the amount of fault attributed to B. A’s net payment is the same 50%.
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