Canadian Lawyer InHouse

By Henry Dinsdale and Jeff Goodman The potential risks of I contacting the police. In this second part of our series, we look at a recent Ontario Court of Appeal decision that introduces an additional risk for employers who con- tact the police before gathering all the facts — greater exposure to the tort of malicious prosecution. In Pate v. Galway-Cavendish and Harvey (Township), the appeal court made it far easier for employees to success- fully sue their former employers for mali- cious prosecution. The appeal court held that in certain circumstances by simply reporting criminal conduct to the police an employer can be found to have initiated criminal proceedings against an employ- ee, even if it is the police or the Crown that ultimately charge and prosecute the employee before the criminal courts. The township terminated John Gordon Pate's employment because of missing conduct before building permit fees allegedly collected by Pate, but not turned over to the township. The township terminated Pate without conducting a proper investigation or pro- viding Pate an opportunity to respond. Pate was simply told that if he immediately resigned the matter would not be referred to the police. Pate denied the conduct, refused to resign, and was terminated for just cause. The township then contacted the police and Pate was charged with theft. He was subsequently acquitted at his crim- inal trial based on evidence not provided to the police by the township. Pate sued the township for wrongful dismissal, special n the first part of our two-part series we discussed why employ- ers should conduct an internal investigation into alleged non- violent criminal jumping the gun Investigations avoid pitfalls of dismissal for criminal conduct. damages, and for malicious prosecution. Pate and the township settled the wrongful dismissal claim for 12 months of notice. The issues of special damages and mali- cious prosecution went to trial. The trial judge awarded Pate four months in Wallace damages, $7,500 in special damages, $75,000 in general and aggravated damages, and $25,000 in puni- tive damages. He noted that he would have awarded more in punitive damages if it would not offend the principles of proportionality. However, the trial judge dismissed the malicious prosecution action. A plaintiff must prove four elements to succeed in a malicious prosecution claim: 1. The proceedings must have been initi- ated by the defendant; 2. The proceedings must have terminated in favour of the plaintiff; 3. There must have been an absence of reasonable and probable cause; and 4. There must be malice. The trial judge held that Pate failed to knowingly withholds exculpatory infor- mation, and the plaintiff would not have been charged but for that omission. The appeal court also concluded that malice between private parties could be inferred from the surrounding circumstances and the absence of reasonable and probable grounds for contacting the police. The appeal court also questioned the trial judge's reasoning that the "principle of proportionality" barred him from award- ing higher punitive damages. The court ordered a new trial on the quantum of pu- nitive damages, encouraging the trial judge to award more at the new trial. The trial judge did just that, awarding Pate $550,000 in punitive damages, which is to date, the highest award of punitive damages in a Ca- nadian employment case. The township' Court of Canada on the issue of malicious prosecution was unsuccessful, and that part is headed for retrial. By extending the concept of initiating s appeal to the Supreme a prosecution to situations where an em- ployer contacts the police and withholds information, the Pate decision makes it much easier for employees to prove ma- licious prosecution against an employer than perhaps even against the police or Crown. Query whether this could be ex- tended to exculpatory information in an employer' satisfy the first and fourth factors of the test. Pate appealed the decision on mali- cious prosecution and on the quantum of punitive damages. The appeal court ordered a new trial on the malicious pros- ecution claim and on the quantum of punitive damages. It held that an employer does not have known existed and the need to conduct a fulsome investigation before contacting the police becomes even more evident. As we discussed in Part I in the last is- s possession that it should have to lay a private information or urge the police or Crown to pursue a charge in or- der for it to have initiated a prosecution. A private defendant, which unlike the police and Crown is not carrying out a public duty on behalf of the public, may initiate a prosecution where it contacts the police, are labour and employment law partners with Heenan Blaikie LLP in Toronto. INHOUSE JUNE/JULY 2012 • sue of Canadian Lawyer InHouse, handling criminal conduct in the workplace with a measured and cautious response can mini- mize the risk of high damage awards for malicious prosecution and punitive dam- ages. Having said this, employers have a number of duties to protect employees from workplace violence. We encourage employers dealing with instances of violent crime in the workplace to obtain police as- sistance. IH Henry Dinsdale and Jeff Goodman 9

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