Ontario Superior Court clarifies Pierringer agreement costs rules

A defendant found zero percent liable still handed the plaintiff $150,000. The Ontario Superior Court then had to answer a question nobody had clearly answered before: how much of that Pierringer agreement sum was actually for costs?

In Furtado v. De Sousa et al, 2026 ONSC 4916, the court ruled that $74,934.33 of the $150,000 Pierringer agreement settlement represented full indemnity costs, leaving $75,065.67 to be deducted from the jury’s award against the non-settling defendant. The court noted it was navigating “largely in uncharted waters,” with no prior authority directly on point for calculating the costs component of an all-inclusive Pierringer settlement.

How Pierringer agreement costs are calculated in Ontario

The case arose from a motor vehicle collision in which plaintiff Maria Furtado, a passenger in De Sousa’s vehicle, was injured when De Sousa failed to stop at a stop sign on an icy road. A second driver, Yvonne Masschelein, struck the passenger side.

The jury found De Sousa 100 percent liable and Masschelein zero percent liable. Days before trial, Masschelein settled with Furtado under a Pierringer agreement for $150,000. It represented a lump sum covering damages, costs, and prejudgment interest, with no allocation to each component.

With no clear precedent to follow, the court built its own framework, rejecting De Sousa’s argument that only “incremental” costs from having two defendants should count. The court held that all costs to the date of settlement were the right starting point with the settlement’s share of the total jury award as the proportionality anchor:

• gross jury award: $415,500
• net jury award (after collateral benefits): $359,740
• settlement as a share of net award: 41.7 percent

The court applied 25 percent of total fees and other disbursements to Masschelein. Two engineering reports by Joe Correia of HBC Engineering, totalling $28,681.66, were allocated at 100 percent to Masschelein, as the court found they related exclusively to her liability and likely drove her to settle. The costs totalled:

• fees: $26,250 (25 percent of $105,000)
• Correia disbursements: $28,681.66 (100 percent)
• other disbursements: $11,761.51 (25 percent of $47,046.05)
• HST on all items: $8,241.16
• total: $74,934.33

Why the court rejected the Terpstra approach

In Terpstra Farms Ltd. v. Argue & Associates, 2010 ONSC 921, costs were attributed to a settling defendant using the jury’s liability percentage, which is 15 percent in that case.

Applying that method in this case would have given Masschelein a zero percent cost share, because the jury found her zero percent liable. That would have sent the entire $150,000 straight to De Sousa’s benefit as a damages deduction.

The court found no logic in that outcome, noting the zero percent finding did not mean the plaintiff lost. It meant plaintiff’s counsel had achieved what the judge called “a smashing success” and “a classic example of good lawyering” by extracting $150,000 from a defendant the jury ultimately cleared.

Contingency fees and statutory accident benefits

Plaintiff’s counsel was retained on a 30 percent contingency fee. Under ss. 20 and 20.1(1) of the Solicitors Act, the court confirmed costs must be assessed in the ordinary manner regardless of any contingency arrangement, capped at what the client actually owes counsel; here, it is $107,922. As such, the contingency fee did not lower the assessment.

On statutory accident benefits (SABs), the plaintiff sought $5,552 in related costs after recovering $55,760 in accident benefits, a sum that reduced De Sousa’s damages liability. Following Cadieux v. Cloutier, 2018 ONCA 903, the court disallowed that claim against Masschelein, as she received no benefit from the SABs recovery. It further held that the plaintiff may raise SABs costs again in the separate determination against De Sousa.

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