By Kristian Bonn
Partial settlements are intended to narrow litigation, reduce risk, and encourage resolution. But when one defendant settles under a Pierringer agreement and the plaintiff later succeeds at trial against a non-settling defendant, a second dispute can arise: how much of the pre-trial settlement should be credited against the judgment?
The recent case, Furtado v. DeSousa, 2026 ONSC 3356, and the subsequent costs ruling, Furtado v. De Sousa et al., 2026 ONSC 4916, provide practical guidance. Together, they confirm that the rule against double recovery requires a setoff, but only after the plaintiff receives credit for the reasonable costs of obtaining the settlement.
The collision, settlement and verdict
The plaintiff was a passenger in a vehicle driven by Edward De Sousa. On an icy road, De Sousa failed to stop at a stop sign and slid into the path of a vehicle driven by Yvonne Masschelein, who had the right of way. The plaintiff sued both drivers.
Days before trial, Masschelein settled for an all-inclusive amount of $150,000 under a Pierringer agreement. The action against her was dismissed, and De Sousa’s exposure was limited to his several liability. The jury was told that a settlement had occurred, but not its terms, and was still required to decide whether Masschelein was negligent and to apportion fault.
The jury assessed damages at $415,500, which was reduced to $359,740 after deduction of accident benefits. The jury found Masschelein was not negligent, and De Sousa was 100 per cent liable. Once the sealed Pierringer agreement was opened, De Sousa asked that the entire $150,000 be deducted from the net award.
The real issue was the size of the credit
Justice Thomas Heeney accepted that the settlement had to be considered. That conclusion follows the compensatory principle stated in Ratych v. Bloomer, [1990] 1 S.C.R. 940: a plaintiff should be fully compensated but should not turn an injury into a windfall. The Ontario Court of Appeal applied the same principle to a partial settlement in Lauden v. Roberts, 2009 ONCA 383. In Terpstra Farms Ltd. v. Argue & Associates, 2010 ONSC 921, the court applied Lauden in the Pierringer context and deducted only the net settlement proceeds after an allowance for costs.
The more important question in Furtado was what constituted the net settlement. The agreement described the payment as all-inclusive and did not allocate the money among damages, interest and costs. De Sousa argued that, without an express allocation, the entire payment should be treated as damages.
Justice Heeney rejected that submission. The agreement released claims for damages, interest and costs. More importantly, the plaintiff had incurred real costs pursuing Masschelein through discoveries, correspondence, expert work, pretrial preparation and negotiations. Treating the entire payment as damages would ignore the expense required to produce the settlement.
No surplus until the plaintiff’s costs are recognized
The court followed the Alberta approach in Bedard v. Amin, 2010 ABCA 3, and Canadian Natural Resources Limited v. Wood Group Mustang (Canada) Inc. (IMV Projects Inc.), 2018 ABCA 305. Those cases treat the prohibition against double compensation as a rule of law, not a matter controlled by the parties’ contractual allocation. A plaintiff must account for a true surplus, but there is no surplus until the reasonable cost of recovering the settlement has been recognized.
Justice Heeney declined to follow the different approach taken in Henry v. British Columbia (Attorney General), 2017 BCCA 420. In his view, the analysis must guard against under compensation as well as overcompensation. He therefore held that De Sousa could deduct the $150,000 settlement only after subtracting an appropriate amount for the plaintiff’s costs of pursuing Masschelein, assessed on a full-indemnity basis.
The follow-up ruling puts numbers to the principle
The later costs ruling, 2026 ONSC 4916, is important because it shows how the analysis works in practice. Justice Heeney held that the costs component was not limited to incremental expenses caused by the presence of a second defendant. The exercise could include a reasonable proportion of the fees and disbursements incurred in pursuing both defendants, together with costs specific to Masschelein.
The court fixed the full-indemnity costs component at $74,934.33. The resulting setoff was therefore $75,065.67, not the full $150,000. That outcome gives practical effect to the central point in the first ruling: the non-settling defendant receives credit for the net benefit attributable to compensation for the same loss, not for the portion reasonably required to fund the settlement itself.
Practical takeaways
First, keep defendant-specific cost records from the beginning. Dockets, discovery preparation, expert retainers, liability investigations and settlement work should identify which defendant or issue generated the work. The record may later determine the size of the setoff.
Second, do not assume that an all-inclusive settlement automatically makes the full amount deductible. Furtado confirms that the court can determine an appropriate costs component even where the agreement is silent.
Third, an allocation in the agreement is useful, but it is not conclusive. Because the rule against double recovery is a rule of law, an artificial allocation will not bind the non-settling defendant or the court. The better practice is to use a reasonable allocation supported by the file record.
Finally, address the post-trial mechanics before signing. Counsel should consider the treatment of costs, disbursements and prejudgment interest, the evidence required to support an allocation, and the process for resolving any disagreement after verdict.
Furtado does not weaken the prohibition against double recovery. It defines when double recovery begins. A plaintiff must account for a genuine surplus, but the non-settling defendant should not receive the benefit of a settlement without recognizing the reasonable cost of achieving it. For trial lawyers, that is both a principled result and a reminder that the value of a Pierringer agreement depends not only on its wording, but on the records maintained long before the case reaches trial.