Furtado v. DeSousa, 2026 ONSC 3356

Furtado v. DeSousa, 2026 ONSC 3356

Court File No.: CV-22-3358 Date: 2026-06-10 Ontario Superior Court of Justice

Between: Maria Furtado, Plaintiff – and – Edwardo De Sousa and Yvonne Masschelein, Defendants

Counsel: Alan Rachlin, for the Plaintiff Kieran Dickson, for the Defendant De Sousa

Heard: March 31 to April 29, 2026 at Stratford

Before: Heeney J.

Reasons for Judgment

1This ruling concerns the extent to which settlement monies paid by a defendant who settles the plaintiff’s action against them, pursuant to a Pierringer agreement¹, should be deducted from the damages that a non-settling defendant was found liable to pay pursuant to the verdict of the jury.

2The case involves a motor vehicle accident, where the plaintiff was the front seat passenger in a vehicle owned and driven by her boyfriend, the defendant Edward De Sousa. He failed to stop at a stop sign on an icy road and slid into the intersection, directly into the path of an oncoming car, driven by the defendant Ms. Masschelein, who had the right-of-way. Ms. Masschelein’s vehicle violently struck the passenger’s side of Mr. De Sousa’s vehicle, causing extensive injuries to the plaintiff.

3The plaintiff, unsurprisingly, sued both Mr. De Sousa and Ms. Masschelein for the damages she sustained in the accident. She was wearing a seatbelt and there were no allegations of contributory negligence.

4A matter of days before the trial commenced, a settlement was reached between Ms. Masschelein and the plaintiff, pursuant to the aforesaid Pierringer agreement. The impact of the agreement on the litigation was as follows:

• The defendant Ms. Masschelein paid an all-inclusive sum, as set out in Schedule “A” attached to the agreement, in settlement of all claims against her;
• The action was dismissed as against her, and she did not participate in the trial;
• The liability of Mr. De Sousa would be limited to his several liability only, not the joint and several liability that would otherwise flow from the application of s. 1 of the Negligence Act, R.S.O. 1990, c. N.1;
• The jury was advised of the existence of the agreement, and the fact that the action against Ms. Masschelein had been dismissed, but not as to the terms of the agreement;
• The jury was advised that, despite the dismissal of the action as against Ms. Masschelein, it would still be their task to determine whether she bore any liability for causing or contributing to the accident and, if so, to apportion liability as between Ms. Masschelein and Mr. De Sousa;
• The agreement itself was placed in a sealed envelope and marked as a registrar’s exhibit, and was not to be opened until after the jury rendered its verdict.

5At the conclusion of the trial, the jury rendered their verdict, and awarded damages totalling $415,500. After the deduction of accident benefits paid by the plaintiff’s insurance company, the net amount of the award was $359,740.

6In answering the jury question as to whether Ms. Masschelein had been negligent, and whether her negligence was a direct, contributing cause of the collision, the jury answered “no”. Since negligence had been conceded by Mr. De Sousa, he was, therefore, found to be 100% liable for the plaintiff’s losses.

7Following the jury’s verdict, and after they were discharged, the envelope was opened and it was revealed that the defendant Ms. Masschelein agreed to pay the sum of $150,000 in settlement of the claims against her.

8Counsel 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. Counsel for the plaintiff opposed this request. The issue was adjourned pending the receipt of written argument from counsel, which is now in hand.

9Mr. De Sousa relies on a series of authorities that stand for the proposition that deduction of the monies paid under the agreement is necessary in order to prevent double recovery. In other words, if the plaintiff received $359,740 from Mr. De Sousa, representing the full amount of her damages as assessed by the jury, she would be overcompensated if she were allowed to keep the settlement amount of $150,000, since that money was paid toward satisfaction of the same losses.

10In Ratych v. Bloomer, [1990] 1 S.C.R. 940, the court considered whether wages which were paid to the plaintiff by his employer during his convalescence, pursuant to his collective agreement, should be deducted from his damages award for loss of income. The majority of the Court acknowledged that if the plaintiff could show that the payment of wages was a benefit for which some form of payment was directly or indirectly made, it would be analogous to a private insurance policy, the proceeds from which are generally not deductible from a damages award. Failing such proof, deduction was necessary in order to prevent the plaintiff from being overcompensated.

11McLachlan J. (as she then was), speaking for the majority, said this, at paras. 21 - 22:

It is a fundamental principle of tort law that an injured person should be compensated for the full amount of his loss, but no more. This is implicit in the principles governing the recovery of damages for personal injury set forth by this Court in the trilogy of Andrews v. Grand & Toy Alberta Ltd., [1978] 2 S.C.R. 229, 3 C.C.L.T. 225, [1978] 1 W.W.R. 577, 83 D.L.R. (3d) 452, 19 N.R. 50, 8 A.R. 182, 83 D.L.R. (3d) 452, Thornton v. Prince George Board of School Trustees, [1978] 2 S.C.R. 267, 3 C.C.L.T. 257, [1978] 1 W.W.R. 607, 19 N.R. 552, 83 D.L.R. (3d) 480, and Arnold v. Teno, [1978] 2 S.C.R. 287, 3 C.C.L.T. 272, 19 N.R. 1, 83 D.L.R. (3d) 609.

In the trilogy, this Court affirmed that the purpose of awarding damages in tort is to put the injured person in the same position as he or she would have been in had the tort not been committed, in so far as money can do so. The plaintiff is to be given damages for the full measure of his loss as best that can be calculated. But he is not entitled to turn an injury into a windfall. In each case, the task of the Court is to determine as nearly as possible the plaintiff’s actual loss. With respect to non-pecuniary damages, the task is necessarily imprecise, and resort must often be had to conventional figures. But where pecuniary damages are at issue, it is the actual pecuniary loss sustained by the plaintiff which governs the amount of the award.

12Ratych was applied by the Ontario Court of Appeal in Lauden v. Roberts, 2009 ONCA 383. There, one of the defendants settled with the plaintiff for the total sum of $438,000. This was paid pursuant to a “Mary Carter” agreement², which is similar, but not identical, to a Pierringer agreement. The primary differences are that the exposure of the settling defendant is “capped” at a specified amount, and that defendant remains in the lawsuit. The jury assessed the plaintiff’s total damages at $312,021, which was less than the amount paid under the agreement, even before reducing it by the plaintiff’s contributory negligence of 11%. The trial judge refused to deduct the settlement amount from the total damage award, and awarded judgment against the non-settling defendant for $121,688, which was 39% of the plaintiff’s damages, in accordance with the jury’s finding of 39% liability on the part of that defendant.

13In overturning the trial judge’s decision, MacFarland J.A., speaking for the court, cited Ratych in stating the following, at para. 27:

It is the fundamental principle of tort law in this country that an injured plaintiff should be neither over nor under, but fully compensated by way of damages for injury sustained by the negligence of others.

14The court ruled that since the jury’s award was less than the amount the plaintiff received from the settling defendant, to permit him to recover any amount from the non-settling defendant would result in double recovery. Accordingly, the action against that defendant was dismissed with costs.

15Lauden was applied by Bielby J. in Terpstra Farms Ltd. v. Argue & Associates, 2010 ONSC 921. That case did involve a Pierringer agreement, not a Mary Carter agreement, but Lauden was held to be applicable anyway. The defendant Argue paid $295,000 inclusive of damages, interest and costs pursuant to the agreement, following which the action was dismissed against him. The jury assessed damages at $391,775, and found Argue 15% at fault, and the non-settling defendant Lorentz 85% at fault.

16Bielby J. ruled that a deduction of the settlement amount from the jury award was necessary in order to prevent against double recovery, but made it clear that the court must also ensure that the plaintiff receives full and fair compensation. Thus, only the net proceeds of settlement, after an appropriate deduction for costs incurred in prosecuting the claim against the settling defendant, were deducted. Bielby J. assessed those costs at $34,088, and deducted that amount from the $295,000 settlement, such that only the net amount of $260,912 was deducted from the judgment.

17Presumably in view of the weight of these authorities, the plaintiff agrees, in principle, that she is not entitled to double recovery, and that the amount received from Ms. Masschelein must be taken into account. The plaintiff proposes that the settlement amount be deducted from the jury award, but only after the plaintiff has received credit for her full indemnity costs of having pursued Ms. Masschelein in this litigation, and ultimately securing the settlement. This will ensure that the plaintiff is neither undercompensated nor overcompensated for her losses.

18Mr. De Sousa objects to this proposal, on the basis that the settlement agreement did not expressly identify what portion of the $150,000 was exclusively for costs. He submits that, absent an express allocation of a portion of the settlement amount towards costs, the entire amount should be deducted.

19Schedule “A” to the settlement agreement does not make a specific allocation of a portion of the amount towards costs. Instead, it states that the “Settlement Amount of the Action is the all-inclusive sum of $150,000”. This begs the question, all-inclusive of what? The answer is in the agreement itself. In para. 7, the plaintiff waives and forever discharges that proportion of “the total claims, causes of action, damages, interest, costs or claims for relief generally” that the settling defendant may be ultimately liable for. In para. 13, the plaintiff agrees that she “will 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””.

20It is, therefore, beyond doubt that the settlement funds represent compensation not only for the plaintiff’s damages, but for her costs as well. While the portion of that amount that is attributable to costs is not specified, neither is the portion that is attributable to damages. To attribute the entire amount to damages is no more, or less, logical than to attribute the entire amount to costs.

21Bielby J. found himself in the identical situation in Terpstra. There, as here, the settlement figure “was all inclusive, without a breakdown as to damages, interest and costs”. At para. 26 he said:

While it would be much easier if the Agreement in issue would have broken down the settlement amount as to damages, interest and costs, I still need to ensure the plaintiff’s judgement against the remaining defendant allows for the compensation to which Terpstra is entitled.

22He relied on Bedard (Next Friend of) v. Martyn, 2010 ABCA 3, where the Alberta Court of Appeal said the following, at paras. 18 – 19:

The trial judge in this case carefully considered the competing policy objectives at issue. He correctly concluded that the current state of Canadian law is that the concern over double compensation outweighs the public interest in encouraging settlements. We agree with the trial judge’s analysis of the law and his conclusion that the amount of monies received under the Pierringer agreement should be credited to the damages awarded against the non-settling defendant.

We would add this qualification. The end result following the deduction of settlement proceeds should be that the appellants receive the full level of compensation for which the trial judge found the non-settling defendants liable. We have no way of knowing whether the settlement amount included a provision for costs, but it seems obvious that some legal costs would have been incurred in connection with the settled claim. Only the net settlement proceeds, after an appropriate deduction for costs incurred in the claim against the settling defendants, should be set off against the damage award at trial. If the parties cannot agree on quantum, they can apply to Queen’s Bench for a determination.

23The approach taken in Bedard was followed and reinforced by the Alberta Court of Appeal in Canadian Natural Resources Limited v. Wood Group Mustang (Canada) Inc. (IMV Projects Inc.), 2018 ABCA 305 (“CNRL”). Slatter J.A., speaking for the court, said the following, at paras. 156 - 157:

The issue here, however, is not whether the Pierringer agreements did or did not include solicitor and client costs in the settlement, it is not whether those costs were sufficiently quantified in those agreements, nor is it whether CNRL was entitled to solicitor and client costs under the Memorandum of Agreement. The rule against double compensation of plaintiffs (thus entitling a non-settling defendant to the benefit of any “windfall” or “surplus” arising from a Pierringer situation) is a rule of law, not of contract. The rule operates apart from the intention of the plaintiff, the settling defendants, or the non-settling defendants (who are not even parties to the contract). The parties cannot contract themselves into or out of the rule against double compensation, and the real issue is the scope of that rule.

The law requires the plaintiff to account for any “windfall” or “surplus” to prevent double recovery, the effect being that the non-settling defendant will pay less than the court felt it was liable for in law. As a matter of policy, there is no justification for requiring the plaintiff to account for any “surplus” until it has been fully compensated for the expenses incurred in recovering the settlement amounts. Until the plaintiff is fully indemnified for its costs, there is no “surplus”, no double compensation, and no basis on which to confer any benefit on the non-settling defendant. As a general rule, in accounting for any “windfall” or “surplus” arising under a Pierringer agreement, the plaintiff should be entitled to deduct its reasonable solicitor and client costs incurred in pursuing the settling defendants.

24Mr. De Sousa argues, in para. 10 of his written submissions, that these Alberta cases are not applicable “because when deducting the settlement proceeds of partial settlement agreements, Alberta courts must completely ignore the terms of that settlement.” The only authority he cites in support of that proposition is CNRL, at paras. 156 - 157. I have already quoted those paragraphs, above, and they say no such thing.

25Mr. De Sousa places heavy reliance on a decision from the British Columbia Court of Appeal, Henry v. British Columbia (Attorney General), 2017 BCCA 420. At trial, Hinkson C.J. held that any portion of the settlement monies paid under a Pierringer agreement that had been identified as exclusively for costs should not be included in any reduction, but the balance of the fund would be deducted from the damages award. Since the final order deducted the entirety of the settlement fund, the B.C. Court of Appeal concluded that no portion of the settlement funds had been identified as costs.

26Tysoe J.A., speaking for the Court, said this, at para. 76:

In this jurisdiction, the legal costs to prosecute a claim are not regarded as recoverable damages. Partial indemnity for costs is governed by the Supreme Court Civil Rules, B.C. Reg. 168/2009, which provide for payment of party and party costs (an award of special costs, which approximates full indemnity, can be made if there is reprehensible conduct in the course of the litigation). In my opinion, there is not a principled basis to treat legal costs as if they were damages for the purposes of the principle against double recovery. It is my view that Hinkson C.J.S.C was correct in not treating them as the same when he directed any amount of the settlement funds identified as costs not be included in the reduction of the damages assessed against the Province. They should not be treated the same in the converse situation.

27With respect, I fail to see the logic in this conclusion. What is at issue is not whether costs are or are not to be treated as damages. Instead, what is at issue is the operation of the rule against double recovery, and the fact that it has two aspects to it: while the plaintiff must not be overcompensated, it is equally important that she not be undercompensated. To bestow all of the benefits of the settlement on the non-settling defendant, while denying any compensation to the plaintiff for the costs of pursuing the settling defendant and obtaining that settlement, amounts to undercompensation.

28Since it appears that the law on this issue in British Columbia is different than the law in Alberta, I choose to follow the Alberta line of cases. I do so both because I agree completely with the reasoning contained therein, and because it has already been adopted by this court in Terpstra.

29It is important to emphasize that the plaintiff’s costs of prosecuting this action against Ms. Masschelein are not a matter of mere speculation. They are a practical reality in the world of civil litigation. There is simply no doubt that costs were incurred by the plaintiff in pursuing her claim against Ms. Masschelein. She was examined for discovery, and her counsel examined the plaintiff. Discoveries were longer because each party was discovered by two lawyers instead of one. Costs were incurred for preparation and attendance at discoveries, as well as for transcripts afterward. Costs for attendances such as at a judicial pretrial would have been lengthier and more expensive, with three parties participating instead of two. Any expert’s reports obtained by Ms. Masschelein would have to be analyzed and, perhaps, responded to. There would have been many letters to and from, and telephone and email correspondence with, counsel for Ms. Masschelein during the life of the file. Given that the settlement did not materialize until shortly before the trial, there would have been costs incurred in preparing the plaintiff’s case against Ms. Masschelein. Negotiations took place, which ultimately resulted in a settlement.

30Mr. De Sousa argues that the court “has no basis for knowing what, if any, amount was actually paid in relation to costs”. That misses the point. As noted in the authorities referred to above, it is not what the parties agreed to regarding costs that is important, but rather what is an “appropriate” amount to apportion with regard to costs.

31Suppose Schedule “A” had included a proviso that the settlement amount was allocated $75,000 to damages and $75,000 to costs? I have no doubt that Mr. De Sousa would have objected that costs in that amount is unreasonable, and serves to unjustifiably reduce the amount that should be deducted from the damages awarded by the jury. He would, I suspect, have sought the intervention of the court to fix an amount of costs that is appropriate.

32The Alberta Court of Appeal specifically commented on this possibility in CNRL, at para. 155. The court noted that a settling defendant is content to pay a certain lump sum amount to resolve their exposure and risks in the litigation, and would presumably be indifferent to whether the settlement amounts were allocated to damages, interest or costs. The settling plaintiff, on the other hand, might find it advantageous to increase the allocation to costs.

33The court commented at para. 156 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. The rule contemplates that there is no surplus or windfall to the plaintiff arising from the payment under a Pierringer agreement until the plaintiff has been fully compensated for their reasonable solicitor and client costs in pursing the settling defendant.

34I agree with those comments.

35Section 131(1) of the Courts of Justice Act, R.S.O. 1990 c. C.43 states that “the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.” This is a very broad grant of discretion, and in my view includes the discretion to determine what fit and just proportion of the settlement figure should be attributed to costs.

36This court is well-equipped to do so. Indeed, fixing costs forms part of the everyday work of the court, guided by Rule 57 and a wealth of caselaw.

37Furthermore, the plaintiff has a presumptive entitlement to costs. Since Ms. Masschelein agreed to pay a substantial sum to the plaintiff, it follows that the plaintiff is the successful party, and is, therefore, presumptively entitled to costs, absent some objectionable behaviour on her part. This supports the inference that costs did form a component of the settlement amount.

38Although it is not, strictly speaking, legally relevant, it is difficult to ignore the fact that this deduction is a windfall for the defendant Mr. De Sousa. He sought to shift some liability onto Ms. Masschelein and utterly failed to do so, resulting in 100% liability to himself. Notwithstanding that failure, he is now able to get indirectly something he was unable to obtain directly. Deducting the entire $150,000 from the damages award is equivalent to the amount Ms. Masschelein would have had to pay had the jury found her to be 41.7% liable.

39It would simply be unjust to enlarge the windfall that Mr. De Sousa will be receiving by denying the plaintiff compensation for the costs she incurred in obtaining the very generous settlement that generated the windfall.

40I find that Mr. De Sousa is 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 shall be determined on a full indemnity basis.

41Since both counsel are experienced litigators, I fully expect that they will be able to agree between themselves as to an appropriate amount, and will so advise the court within 15 days. If they are unable to do so, I will fix the amount of costs to be deducted. I will receive written submissions from the plaintiff in that regard within 20 days, with Mr. De Sousa’s response within 15 days thereafter and any reply within 10 days thereafter.

42There is one additional issue that must be addressed concerning the deduction of the settlement amount, and that relates to prejudgment interest. Is prejudgment interest to be calculated before the deduction of the settlement amount (net of the allowance for costs) or after?

43If counsel cannot resolve this question between themselves, they should include argument on this point in their submissions as to an appropriate amount for costs.

T. A. Heeney J.

Released: June 10, 2026

CITATION: Furtado v. DeSousa, 2026 ONSC 3356
COURT FILE NO.: CV-22-3358

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:
MARIA FURTADO
Plaintiff
– and –
EDWARDO DE SOUSA and YVONNE MASSCHELEIN
Defendants

REASONS FOR JUDGMENT ON DEDUCTIBILITY OF SETTLEMENT PROCEEDS

Heeney J.

Footnotes

1. 1Derived from Pierringer v. Hoger, 124 N.W.2d 106 (Wis. S.C. 1963), the essential terms of which are described by George J.A. in Cadieux v. Cadieux, 2025 ONCA 405 at para. 13
2. 2Derived from Booth v. Mary Carter Paint Co., 202 So.2d 8 (Fla. Dist. Ct. App. 1967), the history of which is discussed by Ferrier J. in Pettey v. Avis Car Inc., 13 O.R. (3d) 725, [1993] O.J. No. 1454 (Gen. Div.)