Furtado v. DeSousa, 2026 ONSC 3356
Pierringer Agreements and the Prevention of Double Recovery
On June 10, 2026, Justice Heeney of the Ontario Superior Court of Justice released his reasons in Furtado v. DeSousa, 2026 ONSC 3356, addressing an important question in multi-party personal injury litigation: to what extent must settlement monies paid under a Pierringer agreement be deducted from the damages a non-settling defendant is found liable to pay by a jury?
The decision confirms that only the net settlement proceeds paid under a Pierringer agreement should be set off against the jury award, after deducting an appropriate amount for the plaintiff’s costs of pursuing the settling defendant, assessed on a full indemnity basis.
Background
The plaintiff, Maria Furtado, was the front seat passenger in a vehicle owned and driven by her boyfriend, Edward De Sousa. He failed to stop at a stop sign on an icy road, slid into the intersection and collided with an oncoming vehicle driven by Ms. Masschelein, who had the right-of-way. The violent impact to the passenger side caused extensive injuries to the plaintiff.
Ms. Furtado sued both Mr. De Sousa and Ms. Masschelein. Days before trial, Ms. Masschelein settled with the plaintiff under a Pierringer agreement for an all-inclusive sum of $150,000. The action was dismissed against Ms. Masschelein and she did not participate in the trial. The liability of Mr. De Sousa was limited to his several liability only, rather than the joint and several liability that would otherwise flow from s. 1 of the Negligence Act.
The jury was told of the agreement’s existence but not its terms and was still asked to apportion liability between the two defendants. The jury awarded total damages of $415,500 (net $359,740 after deduction of accident benefits against only the drive De Sousa). Critically, the jury found that Ms. Masschelein was not negligent — Mr. De Sousa was 100% liable for the plaintiff’s losses. Following the jury’s verdict, and after they were discharged, the sealed envelope containing the Pierringer agreement was opened and revealed that Ms. Masschelein had paid $150,000 under the Pierringer agreement despite ultimately bearing no legal responsibility whatsoever.
The Decision
Counsel for Mr. De Sousa immediately requested that this sum be deducted from the damages payable by his client, in the same manner as collateral benefits would be deducted. The plaintiff agreed, in principle, that she was not entitled to double recovery, and that the amount received from Ms. Masschelein must be taken into account, but argued that it should only be deducted after she received credit for her full indemnity costs of having pursued Ms. Masschelein throughout the litigation. Mr. De Sousa argued the entire $150,000 should be deducted, contending that the settlement agreement did not expressly allocate any portion to costs.
Justice Heeney applied the foundational principle from Ratych v. Bloomer, [1990] 1 S.C.R. 940, that an injured person should be compensated for the full amount of their loss, but no more. He followed Lauden v. Roberts, 2009 ONCA 383 and Terpstra Farms Ltd. v. Argue & Associates, 2010 ONSC 921, confirming that settlement proceeds must be deducted from the jury award to prevent overcompensation.
However, Justice Heeney agreed with the plaintiff and held that only the net settlement proceeds — after deducting the plaintiff’s reasonable solicitor-and-client costs of pursuing the settling defendant — should be set off against the damages. This followed the Alberta Court of Appeal’s reasoning in Bedard v. Martyn, 2010 ABCA 3 and CNRL v. Wood Group Mustang, 2018 ABCA 305, which held that until the plaintiff is fully indemnified for the costs of recovering the settlement, there is no “surplus” and no basis to confer any benefit on the non-settling defendant.
The wording of the Pierringer agreement was important to the court’s conclusion that the settlement with Ms. Masschelein did in fact include both damages and costs. Schedule A of the Pierringer agreement described the $150,000 as an “all-inclusive sum” without allocating any specific portion to costs. However, looking at the agreement itself, Justice Heeney found that it was beyond doubt that the settlement funds represented compensation not only for the plaintiff’s damages but for her costs as well. Specifically, within the agreement, the plaintiff waived and forever discharged that proportion of “the total claims, causes of action, damages, interest, costs or claims for relief generally” for which the settling defendant may be ultimately liable. The plaintiff further agreed that she would “not seek to collect and will have no right to collect any legal costs or disbursements, taxable or otherwise, directly or indirectly from the settling defendant in the action, other than the funds required for settlement as set out in Schedule A.” As such, the entire amount of the settlement could not logically be attributed to damages.
Justice Heeney emphasized that the plaintiff’s costs of prosecuting against Ms. Masschelein were not speculative — they were a practical reality of the litigation. Costs were incurred for discoveries (conducted by two sets of counsel instead of one), judicial pretrial attendances with three parties, analysis of Ms. Masschelein’s expert reports, correspondence, trial preparation and ultimately the settlement negotiations themselves.
The court observed that denying the plaintiff any deduction for costs would produce a windfall for Mr. De Sousa that was difficult to justify. He had sought to shift liability onto Ms. Masschelein and “utterly failed,” resulting in 100% liability to himself, yet was now positioned to benefit indirectly from a deduction equivalent to 41.7% liability. To enlarge that windfall by denying the plaintiff compensation for the costs of obtaining the settlement would be “simply unjust.”
In sum, Mr. De Sousa was entitled to deduct the settlement amount from the jury award, after deducting from that sum an appropriate amount for the costs incurred by the plaintiff in pursuing the claim against Ms. Masschelein. Such costs would be determined on a full indemnity basis.
Both counsel were expected to agree between themselves as to an appropriate amount for the costs to be deducted, however if they were unable to do so, the costs would be fixed. It was also left to resolve between themselves whether prejudgment interest was to be calculated before the deduction of the settlement amount (net of the allowance for costs) or after. Importantly, the court determined that: “the rule against double compensation is a rule of law, not a rule of contract and operates apart from the intentions of the parties or the contract itself.”
Conclusion
Every Pierringer agreement involves a prediction about future fault allocation. In this case, that prediction proved wrong in a striking way: the settling defendant paid $150,000 to the plaintiff, but the jury ultimately found she bore no liability. For the plaintiff, the agreement still produced a meaningful recovery, subject only to the post-verdict accounting required to prevent double recovery.
Furtado therefore confirms both the utility and the complexity of Pierringer agreements. Justice Heeney made clear that in accordance with Rule 57 supplemented by a wealth of case law, the court has sufficient authority and experience to determine an appropriate costs figure even where the settlement does not expressly allocate damages, interest and costs. Still, an agreed breakdown may reduce the scope for post-trial disputes. Just as importantly, detailed records of the work performed and costs incurred in pursuing each defendant will likely be critical to establishing the appropriate costs deduction before set-off is applied.