2019 ONSC 371
COURT FILE NO.: 2/18 DC
DATE: 2019/01/14
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
Girolamo Falletta and Centennial Law Group LLP
Appellants
- and -
Mathews Kulanjipurakal Physiotherapy Professional Corporation, also known as Physiotherapy Rehabilitation Centre
Respondent
Counsel:
Ronald Allan, for the Appellants
Thomas Mathews, for the Respondent
HEARD at Welland, Ontario: January 8, 2019
On appeal from the judgment of Deputy Judge McDowell of the Ontario Superior Court of Justice, Small Claims Court, dated March 14, 2018.
The Honourable Justice T. Maddalena
DECISION ON APPEAL
The Issues
[1] The appellants, Girolamo Falletta (“Falletta”) and Centennial Law Group LLP (“Centennial Law”), appeal the judgment of Deputy Judge McDowell of the Small Claims Court dated March 14, 2018.
[2] Deputy Judge McDowell, in his judgment dated March 14, 2018, ordered Falletta and Centennial Law to pay $1,300 plus prejudgment and post-judgment interest to the respondent. The $1,300 has been paid by the appellants and is currently sitting in the trust account of the respondent’s counsel.
[3] In addition, Deputy Judge McDowell ordered Falletta personally to pay to the respondent $5,000 in punitive damages.
[4] In this appeal, the appellants argue as follows:
(1) Deputy Judge McDowell erred in law in permitting correspondence dated October 24, 2017, pertaining to settlement conference disclosure, to be filed with the court. This was an error in law which tainted the whole trial. As a result, all claims against the appellants should be dismissed and/or a new trial ordered.
(2) Secondly, Deputy Judge McDowell erred in law in granting an award of punitive damages of $5,000 as against Falletta personally.
The Legal Test
[5] The legal test for this court is outlined by the Supreme Court of Canada in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. At para. 10, p. 8, of the Housen decision, the Supreme Court of Canada noted,
The standard of review for findings of fact is that such findings are not to be reversed unless it can be established that the trial judge made a “palpable and overriding error” ….
[6] In this appeal the appellants concede there are no errors in fact made by the trial judge. The only real issues pertain to questions of law.
[7] The Supreme Court held in Housen that the standard of review on the question of law is that of correctness. In para. 8 of Housen, the Court noted as follows:
On a pure question of law, the basic rule with respect to the review of a trial judge’s findings is that an appellate court is free to replace the opinion of the trial judge with its own. Thus the standard of review on a question of law is that of correctness: Kerans, supra, at p. 90.
Settlement Conference Disclosure
[8] The appellants argue that the trial judge, in permitting the correspondence of October 24, 2017 to be filed, so tainted the trial process that a new trial is required or, in the alternative, all claims against the appellants should be dismissed.
[9] The impugned correspondence filed by the respondent at trial stated, in part, as follows:
Given the threat came from a lawyer, it had added weight to intimidate, especially for someone not familiar with the law. As Mr. Falletta was quickly advised at the case conference, the deputy judge was not pleased – to say the least – and issued a stern warning.
[10] Both parties agree that the reference to the “case conference” in the correspondence was an error and should have been noted as a “settlement conference”. Thus, it is a reference to evidence that would normally be without prejudice and/or privileged communication.
[11] The trial judge himself raised the problem when the respondent filed the correspondence, and noted that rule 13.03(4) of the Small Claims Court Rules does not permit disclosure of settlement conference communications at trial.
[12] The trial judge ultimately ruled that the correspondence could remain as filed, notwithstanding rule 13.03(4). The trial judge ruled that the disclosure would be “outside the exception because of the seriousness of the allegation contained”. He further noted, “because if true it would be a tort or a possible criminal offence …”.[^1]
[13] At law, the confidential nature of settlement conference discussions is clearly recognized. It remains undisputed both in the Small Claims Court Rules, the Rules of Civil Procedure, and case law that communications arising from settlement conference discussions cannot be raised with the trial judge. The protection of privileged communication is clear in law. Further, these principles are clearly enunciated in case law.
[14] In the Royal Bank of Canada v. Hussain, 2016 ONCA 637, 133 O.R. (3d) 355, the Court of Appeal noted clearly that if rules at settlement conferences are not followed, it would undermine the public confidence in the administration of justice.
[15] Further, in Lucy v. Kitchener (City), [2013] O.J. No. 190, the court again noted that one cannot compromise the sanctity of the pretrial process. The court noted that to do so would discourage full and frank discussions and would compromise encouragement of settlements.
[16] In the current case, the trial judge, who was a very experienced trial judge, considered the rules and the case law with respect to settlement. He used his discretion to permit the correspondence to remain. He advised that if he found a tort and/or criminal act was committed, the privilege would be usurped.[^2]
[17] Further, I note that the disclosure was not mentioned by witnesses who gave evidence for the respondent. It was not introduced in the trial as evidence nor was it addressed in the reasons for the judgment of the trial judge.
[18] I find that the admission in the correspondence of October 24, 2017 to the trial judge was of no consequence to the trial or the outcome of the trial. The egregious and highly improper actions of Falletta were crystal clear on the record itself. The conduct of Falletta was sufficiently egregious on its own and stood alone.
[19] I do not find that the disclosure at the settlement conference in any way tainted the trial process or affected the outcome of the trial.
[20] At trial the appellants called no evidence. The emails in question that threatened criminal prosecution in a civil proceeding were not contested by the appellants. The trial judge came to his own conclusions and was not influenced by any of the disclosure in the correspondence of October 24, 2017. I find no evidence that the trial judge afforded any weight to the disclosure in the correspondence. I find there was no error in law made by the trial judge by the admission at issue.
Punitive Damages
[21] At trial, the respondent sought to increase the punitive damages claim to $23,000. This was done with the consent of the appellants.
[22] I find that the trial judge, in his Reasons for Judgment, correctly reviewed the law on punitive damages. In the instant case, he correctly found that punitive damages were appropriate. The trial judge described the conduct of Falletta as “wrong” and “deserving of condemnation”.
[23] In his Reasons for Judgment, the trial judge described Falletta’s conduct further as “reprehensible”, as offending the “court’s sense of decency”, and further as “terribly wrong and totally inappropriate for someone called to the Bar”.[^3]
[24] Mr. Falletta is a member of the Ontario Bar. It is clear and unrefuted that on two occasions he threatened the respondent with criminal prosecution in a civil action. His emails are crystal clear.
[25] On March 2, 2017 Falletta wrote to the respondent as follows:
Go ahead. My client states that the amounts you charged were not what was agreed upon. In my opinion that constitutes fraud. If you want to proceed with that I will be attending at the local prosecutors office to lay charges for fraud. You should be careful the next time you threaten someone. I am copying my client on this email and I am sure that she agrees with my statements.
[26] A second threat was made by Falletta to the respondent on March 22, 2017 by email as follows:
I am not going to give you free legal advice. Please take this warning as a gesture to your incompetent clinic … Furthermore, my “threats” as you refer to them in my last email will be initiated forthwith. I have spoken to my client and she fully intends to cooperate with me.
[27] The trial judge found such threats were made with the clear intent of preventing the respondent from pursuing civil action. Falletta knew or ought to have known that the threats he made, not once but twice, were contrary to the Criminal Code as well as contrary to the Rules of Professional Conduct. The threat of criminal prosecution in a civil action by anyone, especially a member of the bar, is egregious and by any reasonable standard, is worthy of condemnation. It is reprehensible conduct most worthy of punitive damages.
[28] The trial judge correctly assessed the evidence, and more particularly Falletta’s personal conduct. The trial judge carefully reviewed the law on punitive damages and found that punitive damages were appropriate under these circumstances. I fully agree with the findings of the trial judge in this regard. I find no error either in law or fact in the findings of the trial judge.
[29] Any retrial would have the exact same result. The actions of Falletta speak for themselves.
[30] Accordingly, the appeal is dismissed.
Costs
[31] The parties shall make written submissions on costs, limited to two pages, double-spaced, plus a bill of costs. The respondent shall serve and file written costs submissions by January 22, 2019. The appellants shall serve and file written costs submissions by January 30, 2019. No reply is permitted. If submissions are not received as requested, they shall not be considered.
Maddalena J.
Released: January 14, 2019
2019 ONSC 371
COURT FILE NO.: 2/18 DC
DATE: 2019/01/14
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
Girolamo Falletta and Centennial Law Group LLP
Appellants
- and –
Mathews Kulanjipurakal Physiotherapy Professional Corporation, also known as Physiotherapy Rehabilitation Centre
Respondent
DECISION ON APPEAL
Maddalena J.
Released: January 14, 2019
[^1]: Transcript of proceedings at trial December 13, 2017, page 8. [^2]: Transcript of the proceedings at trial dated December 13, 2017, p. 12, lines 10-15. [^3]: See Reasons for Judgment of the trial judge dated March 14, 2018.