How Are Costs Split After a Pierringer Settlement in Ontario?

What Is a Pierringer Agreement and Why Does It Affect Costs?

A Pierringer agreement is a partial settlement arrangement where one defendant in a multi-party lawsuit pays an agreed amount and steps out of the case, while the litigation continues against the remaining defendants. The settling defendant is protected from further liability, and the plaintiff carries on — but the settlement money must eventually be accounted for against any jury award.

Costs become complicated in this situation because the plaintiff’s legal fees were incurred pursuing all defendants together, not just one. The court has to decide: how much of those fees is fairly attributable to the defendant who settled?

In Furtado v. De Sousa et al, 2026 ONSC 4916 (CanLII), the Ontario Superior Court of Justice worked through exactly this problem after a jury trial in a motor vehicle accident case. The decision provides a detailed roadmap for how courts approach costs in Pierringer situations.

How Does the Court Decide What Portion of Costs to Attribute to the Settling Defendant?

The court uses the factors set out in Rule 57.01 of the Rules of Civil Procedure, with particular attention to the result achieved and proportionality. One practical tool the court applied here was comparing the settlement amount to the total jury award — that ratio helps signal how significant the settling defendant was to the overall litigation.

In this case, the court set the apportionment at 25% of shared costs, plus any disbursements that were incurred specifically because of that defendant. Defendant-specific engineering reports, for instance, were allocated entirely to the settling defendant rather than being split. The 25% figure was not arbitrary — it reflected a considered judgment about the settling defendant’s relative weight in the litigation.

This approach matters for our Ontario motor vehicle accident lawyers because it means the costs calculation is not simply a mechanical split. The court exercises genuine discretion based on the evidence before it.

Does a Contingency Fee Agreement Change How Costs Are Calculated?

A contingency fee agreement does not change the method of calculating costs, but it does set a ceiling on what can be awarded. Under sections 20 and 20.1 of the Solicitors Act, costs are still assessed in the ordinary way under the rules of court — the existence of a contingency arrangement does not reduce the award on its own.

However, the total costs award cannot exceed the amount the client would actually owe under the retainer. Here, the court calculated the cap as 30% of the net jury award and applied it as an upper limit. If the costs calculated under Rule 57.01 had exceeded that figure, the award would have been reduced to match the cap.

This is an important protection for defendants: they cannot be ordered to pay more in costs than the plaintiff’s own lawyer is entitled to collect.

Are Accident Benefits Costs Recoverable Against a Settling Defendant?

Not automatically — and in this case, they were disallowed against the settling defendant. The court noted that the statutory accident benefits reduction from the jury award accrued only to the benefit of the non-settling defendant. Because the settling defendant had no connection to that dispute, it would be unfair to charge those costs against them.

The court referenced the Cadieux v. Cloutier factors that govern when accident benefits costs can be included in a tort costs assessment, but found the information needed to apply those factors was missing. The claim for accident benefits-related costs was disallowed without prejudice — meaning it could potentially be pursued against the appropriate party in the right circumstances.

If you are dealing with both a tort claim and accident benefits issues, our team handling accident benefits claims in Ontario can help you understand how those two streams interact.

How Are Disbursements Handled at Full Indemnity?

Disbursements — the out-of-pocket expenses paid during litigation — are recoverable at full indemnity, but only if they were actually paid and were reasonable. The court reviewed each category carefully.

HST on disbursements was addressed using the Canada Revenue Agency’s policy statement P-209R, which distinguishes between disbursements billed as agent (no HST) and those billed as principal (HST applies). An expense for an assessment that produced no report was disallowed as not justified. Accident benefits-related disbursements were also disallowed for the same reasons as the costs discussed above. Engineering reports that were specific to the settling defendant were allocated to them at 100%.

The final full indemnity costs figure, after all of these adjustments, was fixed at $74,934.33.

Why Is the Timing of the Costs Calculation Important?

The court fixes costs as of the date of settlement, not the date of trial. This matters because it limits the settling defendant’s exposure to costs incurred after they left the litigation. Costs run up during the trial itself — which may have been lengthy and expensive — do not get charged to a defendant who settled before it began.

This timing rule also affects how the settlement credit is applied. The settlement proceeds, minus the costs component, are what gets credited against the jury award. Getting the costs figure right at the right point in time is essential to preventing the plaintiff from recovering twice for the same loss.

For those involved in accidents in the Hamilton or Burlington area, our Burlington motor vehicle accident lawyers and Hamilton motor vehicle accident lawyers are familiar with how these cost issues play out in practice.

Questions and Records to Discuss with a Lawyer

• What settlement amount was received from the settling defendant, and when was the settlement finalized?
• What disbursements were incurred specifically in connection with the settling defendant, versus costs shared across all defendants?
• Is there an ongoing accident benefits claim, and how does it relate to the tort proceeding?
• What does the contingency fee retainer say about the percentage and how net recovery is calculated?
• Are there any engineering, expert, or assessment reports that were commissioned specifically for one defendant?

If you have questions about how costs work in a motor vehicle accident case involving multiple defendants or a partial settlement, the team at UL Lawyers is available to discuss your circumstances at ullaw.ca/connect.

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This article is automated commentary on a public court decision and is for general information only — not legal advice. Decisions rely on facts unique to each case. If you are affected by a similar issue, contact a lawyer for advice specific to your situation.