Non-settling defendants challenge order amending pleadings in line with settlement terms
The Ontario Court of Appeal has found no error in a motion judge’s approval of a Pierringer agreement, rejection of the non-settling defendants’ prejudice claim, and refusal of their request to argue in favour of a proportionate reduction.
Cadieux v. Cadieux, 2025 ONCA 405, arose from an April 2010 motor vehicle accident. A man was driving a tractor-trailer leased by his employer, United Petroleum Transport Ltd., northbound along Merivale Road toward its intersection with Fallowfield Road in Ottawa.
Meanwhile, a minivan driver was going eastbound on Fallowfield Road, with his two minor children as passengers. He later admitted entering the intersection on a red light and hitting the tractor-trailer. The court deemed it highly likely that the minivan driver would hold primary liability for the collision.
The two children suffered catastrophic injuries. The plaintiffs – the children and their litigation guardian – made an April 2012 claim against the two drivers, two insurance companies, United Petroleum, and the City of Ottawa. The claim alleged that Ottawa was negligent in designing the intersection.
A cost-of-care report for one of the injured plaintiffs estimated that his future care costs could be over $14 million, exceeding the combined insurance coverage for the minivan driver and United Petroleum. Ottawa was not subject to a third-party limit since it was self-insured.
In October 2023, the plaintiffs and Ottawa reached a Pierringer agreement. Under this settlement, the plaintiffs would amend their claims to limit the non-settling defendants’ joint and several liability to the degree of their collective fault, and the trial court could apportion liability among all defendants, including Ottawa.
In April 2024, a motion judge of the Ontario Superior Court of Justice approved the agreement and ordered the amendment of the pleadings according to its terms. On appeal, the non-settling defendants sought to set aside the judge’s order.
The appellants asked the appeal court not to approve the agreement. Alternatively, they wanted the appeal court to let them argue for a proportionate reduction of their share of the underfunded amount to reflect their degree of fault vis-à-vis Ottawa’s fault after the trial court’s liability apportionment.
The appellants alleged that the agreement was prejudicial to them. They claimed that the law of restitution required a proportionate sharing of an underfunded amount due to a co-tortfeasor’s insolvency.
The appellants explained that the trial court would hold them jointly liable for the minivan driver’s share of the damage award, without Ottawa’s contribution, if the award exceeded his insurance policy’s limits and if he could not personally pay the balance.
The Ontario Trial Lawyers Association intervened to make submissions on Pierringer agreements’ implications in multi-party litigation.
The Court of Appeal for Ontario dismissed the appeal and confirmed the motion judge’s approval of the Pierringer agreement. The appeal court saw no error in denying the appellants’ prejudice claim and refusing to allow them to make a proportionate reduction argument.
The appeal court noted that it should assess the allegations of prejudice and proportionate reduction in the context of s. 1 of Ontario’s Negligence Act, 1990.
The court explained that s. 1 entitles plaintiffs to full compensation from any concurrent tortfeasor and allows the severally liable co-tortfeasors to seek contribution and indemnity from one another to their respective degrees of fault.
The appeal court found that this provision, in effect, can potentially compel a tortfeasor to pay the plaintiffs’ full damages without receiving any indemnity from co-tortfeasors not creditworthy, insured, or pursued by cross-claim, third-party action, or separate action.
The court said the legislation has a clear policy objective to make plaintiffs whole, even at the risk of one tortfeasor overpaying its share of liability, if the alleged enrichment favours the plaintiffs.
The appeal court added that the proportionate reduction requested by the appellants would restore Ottawa’s joint liability if the alleged enrichment favoured the city. The appeal court noted that this would remove the incentive for multi-party litigation defendants to settle and would undermine the public interest in encouraging settlements.
The court noted that a Pierringer agreement would:
The appeal court ruled that a Pierringer agreement should not lead to prejudice since it sought to spur settlements and incentivize a defendant to avoid joint liability with insolvent or impecunious co-defendants.
The appeal court held that this was especially true for complex multi-party cases that often relied on the first settlement to trigger what the intervener dubbed “cascading settlements.” The appeal court concluded that the public interest in reaching this outcome would outweigh any alleged prejudice to the appellants.
Lastly, the appeal court acknowledged the sense in some of the requested procedural orders aiming to facilitate Ottawa’s participation at trial. However, the appeal court said it should not interfere with the judge’s choice to leave these procedural issues to the trial judge or case management judge.
