The Ontario Court of Appeal affirmed the use of Pierringer Agreements as an important tool for resolving multi-party litigation despite the joint and several liability impacts resulting to the non-settling defendants.
In Cadieux v. Cadieux et al (2025 ONCA 405), the plaintiffs had entered into a Pierringer Agreement with the defendant, The City of Ottawa. Like all Pierringer Agreements, the agreement carved out the defendant from the ongoing litigation and eliminated the legal basis for ongoing crossclaims. In other words, the Pierringer Agreement ended The City of Ottawa’s direct involvement in the litigation and precluded other parties from implicating them financially.
In Cadieux, the non-settling defendant with resources took issue with the implications of the Pierringer Agreement on them. They argued that the proposed amendments to restrict the plaintiffs’ claim to the combined liability of the non-settling defendants would be prejudicial to them as they would then be solely responsible to cover the debt of the improvident non-settling co-defendant.
In a motion decision by Justice Kaufman, the court approved the Pierringer Agreement and rejected the defendant’s argument about prejudice.
In a well-worded decision, the Ontario Court of Appeal affirmed the lower court decision and makes strong comments about the importance and value of Pierringer Agreements in multi-party litigation. For example, the Ontario Court of Appeal writes:
[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.
The Cadieux Decision will increase the use of Pierringer Agreements in multi-party litigation throughout Ontario.
The key takeaway is that any “rich” defendant with ample assets/insurance would be wise to reach out first to the plaintiffs to come to a Pierringer Agreement to avoid being saddled with the obligation to cover the debt of the “poor” defendant pursuant to the principle of joint and several liability. The “rich” settling defendant can enter a Pierringer Agreement and carve out their financial responsibility while leaving the other “rich” defendant holding the bag for the “poor” one.
OTLA Intervention!
Thank you to OTLA members Joseph Y. Obagi and Elizabeth A. Quigley for intervening in this case!
