Settling on Pierringer Agreements: What they are and how they work in Ontario


As stated by Justice Abella in Sable Offshore Energy Inc. v. Ameron International Corp., “a Pierringer Agreement allows one or more defendants in a multi-party proceeding to settle with the plaintiff and withdraw from the litigation, leaving the remaining defendants responsible only for the loss they actually caused. There is no joint liability with the settling defendants, but non-settling defendants may be jointly liable with each other.”[1] The action then continues against the non-settling defendants, but only for their ‘several’ share of damages.[2]

In other words, if a plaintiff settles with one defendant for a lesser amount than its ultimate share of fault, it is the plaintiff who carries this loss rather than the other defendants.[3] At the same time, since the settling defendant is being let out of the action, other parties may object to a loss of discovery rights against it. The courts have weighed the procedural prejudice to the non-settling defendants against the public interest in favour of settlement agreements, and have generally ruled for the approval of Pierringer Agreements.[4] 

The plaintiff is, prima facie, entitled to have its Statement of Claim amended provided that there is no prejudice to the defendants that cannot be compensated for through costs. This entitlement remains applicable when seeking to remove the settling party(ies) from an action through the use of a Pierringer Agreement. Subsequently, the settling party becomes entitled to have the non-settling defendants’ crossclaims struck (that are dependent on the plaintiff’s action).[5] The court will still have to determine the several liability, if any, of the parties (settling and non-settling). This is consistent with the Negligence Act [6], as the non-settling defendants cannot recover from the settling party any portion of their several liability; therefore, any declarations sought in terms of third party claims are of no practical effect.[7] However, in order to protect the evidentiary rights of the non-settling parties, the court, where necessary, may still order the Discovery of the settling party (prior to the dismissal of the claim against the settling defendants).[8] The court may also assign the costs incurred during the Discovery of the settling parties onto the non-settling defendants that are asserting their rights.[9]

The courts lean heavily towards the prima facie approval of Pierringer Agreements as they facilitate the administration of justice. As far as the parties are concerned, the settling parties obtain the usual benefits (and risks) associated with settlements, namely: reduced costs, more efficient proceedings, and the removal of parties to the action. Conversely, the courts will halt the implementation of a Pierringer Agreement in cases where the prejudice to the non-settling parties is significant and more than purely procedural.

Also of note, is the fact that the terms of a Pierringer Agreement must always be disclosed to the court and to all of the other parties to the action as soon as possible, yet the settlement amount must not be disclosed as it is protected by settlement privilege.[10]

Due to the many possible outcomes of litigation, the choice of entering into a Pierringer Agreement is not always beneficial to the plaintiff, nor to the settling defendant(s), and is not necessarily detrimental to the non-settling party(ies). While a Pierringer Agreement may be the appropriate instrument for a plaintiff who seeks to focus their attention on certain defendants, the general risks associated with settlements must always be considered before renouncing the claim against any party to the action.

Note, Pierringer Agreements are named after the 1963 court case, Pierringer v. Hoger (124 N.W.2d 106, 21 Wis.2d 182).  Pierringer Agreements are also known as “BC Ferry Agreements” (named after the 1995 case of British Columbia Ferry Corp v. T&N plc) in other provinces of Canada, and generally as “Good Faith Settlements” in the U.S., each with their own nuances, limitations, and procedures.

[1] Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, para 6 [Sable Offshore].

[2] James v Miller Group, 2013 ONSC 3266 at paras 3, 4 [James]

[3] Wright (Next Friend of) v. VIA Rail Canada Inc, 2000 ABQB 8, 256 A.R. 148, paras 22 and 46 [Wright]; Murphy Canada Exploration Co. v. Novagas Canada Ltd., 2009 ABQB 455, A.R. 134, para 30, [Murphy]; Pierringer v. Hoger (1963), 124 N.W.2d 106, 21 Wis. 2d 182, para 111-2.

[4] Allianz c Canada (Attorney Genera), 2017 ONSC 4484 at para 9 [Allianz]; Amoco Canada Petroleum Co. v. Propak Systems Ltd, 2001 ABCA 110, 281 A.R. 185, para 38 [Amoco].

[5] Murphy, supra note 3atpara 63; Wright, supra note 3 at paras 6, 12, 13.

[6] Negligence Act, RSO 1990, c N-1; Contributory Negligence Act, RSA 2000, c C-27.

[7] See e.g. supra note 2.

[8] The non-settling parties may still examine the settling parties under the Rules respecting the examination of a non-party. The discretion of the court as to the Discovery rights of the non-settling parties as against the settling parties will only be exercised where the Rules respecting the examination of non-parties are insufficient, and the non-settling parties would suffer a prejudice that is more than purely procedural – Murphy, supra note 3at paras 56-66. In Murphy, supra note 3 at paras 72-76, 91, the court considered the potential prejudice to be significant, and approved the Pierringer Agreement but exercised its discretion to retain one of the settling defendants as a party to the action until the Discovery of that party was completed by the non-settling defendants. However, the costs of this Discovery were to be payable by the examining, non-settling, defendants (para 91(4)).

[9] Wright, supra note 3 at para 7 (this is Justice Rooke’s opinion, but the decision was not based on this consideration); Murphy, supra note 3 at para 91(4).

[10] Sable Offshore, supra note 1 at para 12;  Amoco, supra note 4at para 41; Allianz, supra note 4atpara 31.

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