City of Vancouver v. Falbo Date:, 2012 BCPC 106

Citation: City of Vancouver v. Falbo Date: 20120412 2012 BCPC 0106 File No: 1135261 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: CITY OF VANCOUVER CLAIMANT AND: JOHNNIE FALBO aka JOHN FALBO DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE J.O'C. WINGHAM Counsel for the Claimant: B. Parkin Counsel for the Defendant: G. Bruce Place of Hearing: Vancouver , B.C.

Date of Hearing: February 27, 2012 Date of Judgment: April 12, 2012 INTRODUCTION [ 1 ] The defendant, John Falbo, has applied to set aside an agreement which he entered into with the Claimant, the City of Vancouver (the City”), after a mediation conducted under Rule 7.4 of the Small Claims Rules . BACKGROUND [ 2 ] The defendant is a former employee of the Claimant. In 2000 he suffered injuries as a result of a work place incident. He subsequently applied for and obtained a disability pension from WorkSafe BC.

The City claims that the Defendant received overpayments of funds from its insurer, Great West Life, in the amount of $21,500 and commenced this action to recover that sum. [ 3 ] On January 21, 2012 a mediation was conducted pursuant to Rule 7.4 of the Small Claims Rules which provides for mediation of Claims over $5,000.00 which are filed in the Robson Square Small Claims Registry [ 4 ] The evidence on this application indicates that the mediation lasted approximately three hours and that it resulted in an agreement being entered into which provided that the Defendant would pay $18,000.00 to the Claimant in settlement of all issues.

The money was to be paid in 36 monthly installments of $100.00 each and a final lump sum payment of $14,400.00 on March 1, 2015. The agreement provided that it could be filed in Court. [ 5 ] The mediation occurred on a Friday afternoon. On the following Monday the Defendant called the Court Registry and on

Wednesday, January 25, 2012 he attended at the Registry and filed his application to have the agreement set aside. ISSUES [ 6 ] The defendant says that the mediation agreement was signed by him under duress and that it should be set aside. He has now retained counsel and says that he wants disclosure, an accounting and an explanation from the City of its right to bring an action against him. [ 7 ] Counsel for the City says that on the facts of this case duress is not made out.

He submits that as the mediation process in this case is mandated by the Small Claims Rules there should be compelling evidence justifying the setting aside of any agreement reached through that process. THE EVIDENCE [ 8 ] The evidence on the application consisted of two affidavits. One affidavit was sworn by the Defendant. The other was sworn by David Hill, counsel for the City who attended at the mediation. Neither party sought to cross examine the affiant on either affidavit. Affidavit of John Falbo [ 9 ] In his affidavit Mr. Falbo states that he was “forced” to sign the mediation agreement.

At paragraph 10 of his affidavit he lists various conditions for which his WorkSafe BC claim was accepted. Those are: “Permanent aggravation of underlying degenerative condition at C5-6; Cloward fusion; Permanent aggravation of chronic impingement of right shoulder; Neck strain; Hypertension; concentration impairment; Memory impairment; Suprspinatus tendinopathy; bicipital tendonitis; Mild rotator cuff tendonitis; Hypertrophic C4-5 changes; Psychomotor agitation; Adhesive capsulitis; Depression; Anxiety; and Sleep disorder”. [ 10 ] Mr.

Falbo does not attach any documentation or medical reports to his affidavit; nor does he state or provide any documentation which would suggest how any of those enumerated conditions affected his ability to participate in the mediation. [ 11 ] With respect to the mediation itself Mr. Falbo deposed, at paragraphs 20 - 27 of his Affidavit: 20. I was not comfortable about being in an enclosed space due to my disabilities and I said so. 21. I did not like the pressure that was put on me and the comments that were made about me, which suggested I was taking taxpayer’s money. 22.

The mediation went on too long, almost three hours. I was in pain, agitated and confused. I took three Tylenol 3 pills during the course of it. 23. I told them at the outset that it was not a good time to meet because my mother was in the hospital and I had to deal with that, particularly as no one else from the family could visit her on Friday and she does not speak English very well. 24. No one listened to me. 25. Late in the day I signed the Mediation Agreement so I could get out of there. 26. Everyone was urging me to sign including the two union guys, Mike Jackson and Frank Lee.

They put a lot of pressure on me. They said that it was better to sign and get it over and that a lawyer will cost too much. They also said that I would be in big trouble if it went to Court and that the City of Vancouver would not lose and I would have to pay Court fees and the City of Vancouver’s fees. This was all said when everyone else was out of the room. During the mediation they didn’t say anything and had told the mediator they were just observers. 27. I did not expect the mediation to go the way it did. I said I wanted to leave. I said I wanted to talk with a lawyer. No one listened.

Affidavit of David Hill [ 12 ] Mr. Hill’s affidavit is directed mostly toward the conduct of the mediation. He deposed that the Defendant attended with Donna Huls, a consultant with Huls and Associates Workplace Consultants. Also present were two representatives from the Canadian Union of Public Employees, the union which the Defendant had belonged to when he was employed by the City. When asked by the mediator Mr. Hall consented on the City’s behalf to the presence of the two union representatives. [ 13 ] At paragraphs 8 - 11 and paragraphs 14 - 15 Mr. Hill deposed: 8.

At the outset all were invited to speak up if anyone needed a break at any time. Mr. Falbo said he had neck and back problems. The mediator told Mr. Falbo to let him know if he needed us to pause during mediation. Mr. Falbo said that he didn’t think he would need to ask for a pause, but that he might need to stand up on occasion, as it would help his back. During the course of the mediation session Mr. Falbo did stand up from time to time. He did not ask to stop the mediation session due to back pain.

9. The mediation session began at approximately 1:30 p.m. At approximately 4:30 p.m. Mr. Falbo and his advisors asked themediator and me to leave the room so they could have a discussion, which they did for about 15 minutes. The mediator and I wereinvited back into the room. Mr. Falbo then said that he would accept the settlement proposal then on the table. 10. The settlement was reduced to writing by the mediator, who recited its terms aloud as he wrote. Mr. Falbo, his advisors and Icommented on the drafting of the terms as the mediator wrote. 11. Mr.

Falbo and I then signed the first page of the Mediation Agreement, and initialed the second and third pages. 14. The mediator made some concluding remarks. We left the courthouse at approximately 5:00 p.m. 15. At no time during the mediation did I threaten, either verbally or physically, Mr. Falbo or any of his advisors. Neither Mr. Falbonor his advisors made any remark which indicated that anyone felt threatened. THE LAW [14] Counsel for Mr. Falbo referred the Court to a number of cases which have considered the issue of duress. [15] In Midland Walwyn Capital Inc. v. Roderick C. Clark [1992] B.C.J.

No. 2195 (BCSC) Mr. Justice Tysoe considered a casewhere a stock broker claimed he should not be held accountable for five promissory notes he gave to his employer. One of hisarguments was that he signed the notes under duress as he believed that he would lose his job if he did not sign them. Mr. Justice Tysoereviewed some of the authorities dealing with economic duress. At page 14 he stated: Even if Mr. Clark did genuinely believe that he would lose his job if he did not sign the notes, there was no duress in law. The case ofStott v.

Merit Investment Corp. (1988), (ON CA), 48 D.L.R. (4th) 288 (O.C.A.) involved an allegation of duress by astock broker who signed an acknowledgment of liability for a loss in a client's account. The majority of the Ontario Court of Appealdiscussed the concept of economic duress at p. 305: • The term "economic duress" as used in recent cases, particularly in England, is no more than a recognition that in our modern lifethe individual is subject to societal pressures which can be every bit as effective, if improperly used, as those flowing from threats ofphysical abuse.

It is an expansion in kind but not class of practices that the law already recognizes as unacceptable such as those resultingfrom undue influence or from persons in authority. But not all pressure, economic or otherwise, is recognized as constituting duress.

Itmust be a pressure which the law does not regard as legitimate and it must be applied to such a degree as to amount to "a coercion of thewill", to use an expression found in English authorities, or it must place the party to whom the pressure is directed in a position where hehas no "realistic alternative" but to submit to it, to adopt the suggestion of Professor Waddams (S. M. Waddams, The Law of Contract,2nd ed. (1984), at p. 376 et seq.).

Duress has the effect of vitiating consent and an agreement obtained through duress is voidable at theinstance of the party subjected to the duress unless by another agreement or through conduct, either express or implied, he affirms theimpugned contract at a time when he is no longer the victim of the duress. [16] At page 16 of Midland Walwyn the Court stated: The topic of economic duress was also considered by the Ontario High Court of Justice in Gordon v. Roebuck (1989), (ON SC), 64 D.L.R. (4th) 568. The Court said the following at p. 572: • Lord Scarman in Universe Tankships Inc. of Monrovia v.

International Transport Workers' Federation, [1982] 2 All E.R. 67 at p.88 (H.L.), considered the second element, the legitimacy of the pressure exerted. He says that one must analyze the nature of the demandmade and the nature of the pressure exerted and that not every commercial pressure constitutes duress in law. To succeed on the ground of economic duress, the plaintiff must prove that his will was coerced and that the pressure exerted to do thatwas not legitimate. Lord Scarman has set out four factors to consider in determining if a party's will has been coerced. They are: •

(1) Did he protest? •

(2) Was there an alternative course open to him? •

(3) Was he independently advised? •

(4) After entering the contract did he take steps to avoid it? [17] Those four factors were referred to in Karaim v. United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, AlliedIndustrial and Service Workers International Union, Local 1-85 and Coulson Manufacturing Ltd., a decision of the British ColumbiaLabour Relations Board dated February 21, 2008, Case No. 56865. In that case the Claimant alleged that he entered into a terminationagreement, which was negotiated by the Union, under duress. He alleged that the Union did not sufficiently inquire into his mentalstatus at the time.

While he did not provide any medical documentation to the Union at the time of the agreement he did provide somedocumentation to the Labour Relations Board. The Board dismissed the complaint. It noted that the medical documentation did notindicate that the complainant suffered from a mental condition consistent with a lack of capacity, but consistently referred to anxietyarising from a conflict at work (para. 7).

The Board considered that Karaim had declined to follow the Union’s recommendation topreserve his employment and not resign and that he did not object to the validity of the agreement or allege duress until six weeks later. [18] In Schlenker v. Schlenker (BC SC), [1999] B.C.J. No. 2930 (BCSC) the Court considered the issue of settingaside an agreement under s. 65 of the Family Relations Act and the concept of unfairness as referred to in that section. At para. [9] theCourt commented that “A person who is properly advised of his or her legal rights and of the significance of a contemplated agreement is

less likely to be a victim of duress and undue influence or to enter into an unfair bargain”. At para. [10] the Court stated that “Althoughthe lack of independent legal advice is not a necessary prerequisite to a valid agreement (Little v. Little 91982), (BCSC), 29 R.F.L. (2d) 370 (B.C.S.C.); Colbrow v.

Colbrow, [1982] B.C.D. 1680-02 (S.C.)) it affords the courts some reassurance that theparties have been properly made aware of the consequences of the document they are signing”. [19] As noted, counsel for the City in this case submits that given that Rule 7.4 requires the parties to attend mediation there shouldbe compelling evidence before the Court to set aside an agreement reached in mediation. In Kang v. Young Men’s ChristianAssociation of Greater Vancouver, [2011] B.C.J.

No. 600 (BCSC) the Court found that the Provincial Court has jurisdiction to hear anapplication to set aside an agreement reached in mediation. The Court noted that the grounds for setting aside an agreement include lackof authority of counsel, common mistake, fraud, collusion, duress and illegality. [20] In Kang, Ms. Kang had signed an agreement at a mediation under Rule 7.4. Immediately after executing the agreement,however, she rejected the agreement and asked to cancel it.

She argued that she was misled and did not sign the mediation agreementvoluntarily, that the YMCA had brought new documents to the mediation which were not previously disclosed, that she was not in goodhealth at the mediation and that all disputes were not resolved when the mediation agreement was entered into. [21] Fitzpatrick, J. dismissed Ms. Kang’s application for judicial review. The Court noted that Ms. Kang had been actively involvedin the negotiations which suggested that there was no coercion or that she was acting against her will.

In respect of her claims that shewas not feeling well the Court noted that the only medical evidence before Judge Yee was a doctor’s note which described some medicalconditions such as insomnia, stress and mood conditions. At paras. [53] and [53] the Court concluded: 53 As stated in Square "G" at para. 10 citing Saballoy: • It is not for the court to interfere with a negotiated settlement only on the basis that it turned out to be a bad economic decision forone side or the other. While I feel some sympathy for Ms.

Kang's position, in my view Judge Yee's decision was a reasonable one in the circumstances and itshould not be set aside. In fact, I would have come to the same conclusion as he did had I been hearing the matter. [22] There is no mention in Kang on the onus being any greater on an application to set aside agreement reached in mediation. I amof the view that the burden which the applicant must meet on an application to set aside an agreement on the basis of duress is one of abalance of probabilities, applying the test set out in authorities and summarized by the Court in the Midland Walwyn Capital Inc. case,supra.

ANALYSIS [23] In order to succeed in his application to have the mediated agreement set aside on the basis of duress Mr. Falbo must establish ona balance of probabilities that pressure was exerted upon him to such a degree that it amounted to a “coercion of the will”. Indetermining that issue the Court must consider the four factors described in Midland Walwyn Capital Inc., Stott v. Merit and Gordon v.Roebuck, supra. Was There Pressure Exerted Upon Mr. Falbo? [24] In his affidavit Mr. Falbo states that he did not like the pressure that was put on him.

Other than a reference to “the commentswhich were made about me, which suggested I was taking taxpayer’s money” he did not give any other examples of anything which wassaid to him by either the mediator or counsel for the City which would amount to pressure. Counsel for the City deposed that themediator told Mr. Falbo to let him know if he needed to pause during the mediation. He also deposed that at no time during themediation did he threaten Mr. Falbo and that neither Mr.

Falbo nor any of his advisors said anything which indicated that anyone feltthreatened. [25] The evidence indicates that the mediation lasted about three hours and that at the end Mr. Falbo met privately with the two unionrepresentatives and Ms. Hul for about 15 minutes, after which he indicated that he was prepared to settle the claim. Mr. Falbo’sevidence was that the two union representatives put pressure on him when they met with him privately toward the end of the mediation,telling him that it was better to sign the agreement as a lawyer would cost too much. [26] Mr. Falbo did not refute the evidence of Mr.

Hill that while the agreement was being written by the mediator Mr. Falbo and hisadvisors made comments on the drafting of the terms of the agreement. [27] Mr. Falbo’s affidavit indicates that he found the mediation to be too long and that it was a bad time for him as his mother was ill. He also stated that he was in pain. He said that he signed the agreement so he could “get out of there”. [28] Mr. Falbo deposed in his affidavit that during the course of the mediation he said that he wanted to leave and that he wanted totalk to a lawyer. [29] In my view, despite the assertions of Mr.

Falbo, the evidence does not establish that pressure was applied by the City or by themediator to have Mr. Falbo sign the agreement or that there was pressure on Mr. Falbo which would amount to a “coercion of his will”. Did Mr. Falbo Protest? [30] The evidence indicates that Mr. Falbo participated in the mediation session even though he may have been physicallyuncomfortable and he may have preferred not to participate. I accept the evidence of Mr. Hill that Mr. Falbo did not ask to end themediation session as a result of back pain. At the end of three hours Mr. Falbo, the union representatives and Ms.

Hul asked to meetwithout the presence of the mediator and counsel for the City. The fact that they were given that opportunity supports the evidence ofMr. Hill that there was no pressure put on Mr. Falbo by the City or by the mediator. It is also an indication that Mr. Falbo was being

listened to, contrary to his assertion that “no one listened”. They met for fifteen minutes and invited the mediator and counsel for the City back into the mediation room and Mr. Falbo said that he would sign the agreement. [ 31 ] I find that on that evidence Mr. Falbo did not protest either to the mediator or to counsel for the City. Did Mr. Falbo have an alternative Course open to him? [ 32 ] Mr. Falbo did have an alternative course open to him. While mediation is mandated under Rule 7.4, the parties are not required to reach an agreement. If they do not reach an agreement the case is set for trial. All Mr.

Falbo had to do was say that he was not prepared to settle and the case would have been set for trial. There is no evidence of any threats or coercion by either the City or the mediator which would lead to the conclusion that Mr. Falbo did not have that option open to him. Was he independently advised? [ 33 ] While Mr. Falbo was not represented by a lawyer at the mediation he did bring a consultant, a Ms. Huls. As noted, he took time to consult with the representatives from the Union and with Ms.

Hul before he indicated that he would sign the mediation agreement. [ 34 ] He had had legal advice in the past in dealing with the City’s request for reimbursement of what it said was an overpayment of insurance benefits, but he did not engage the services of a lawyer when the City renewed its request and brought this action. While it would have been preferable for him to have had legal representation the lack of such advice is does not necessarily indicate that the agreement was entered into under duress ( see Schlenker , supra, at para. [10] ). Did Mr.

Falbo take steps to avoid the Agreement after he signed it? [ 35 ] The evidence is that Mr. Falbo signed the mediation agreement on a Friday afternoon. He had the weekend to think about it and he apparently changed his mind and called the Court registry on the following Monday morning. He attended at the Court Registry the following Wednesday and made his application to have the agreement set aside. [ 36 ] There is no question that he took prompt action to have the agreement set aside. While that fact might be consistent with Mr.

Falbo feeling that he entered the contract under duress it is equally consistent with him having second thoughts about the agreement and regretting his decision. The fact that he acted promptly to have the agreement set aside is not determinative as to the issue of duress. All of the circumstances have to be considered in determining whether there was duress. [ 37 ] The evidence does not, in my view, support a finding of duress. There was no pressure put on Mr. Falbo by the mediator or by the City. Mr. Falbo had an alternative course open to him. That would have been to go to trial.

He could have left the mediation. While he did not have counsel advising him at the time he did have a representative (Ms. Hul) of his choosing. The evidence establishes that once he announced his agreement he participated, along with his advisor, in the drafting of the working of the agreement. [ 38 ] I find that the defendant has not shown that he suffered duress at the mediation. His application to set aside the agreement is dismissed. ____________________________________ The Honourable Judge J. O’C. Wingham Provincial Court of British Columbia