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CCCA_V2No3_Col-Litigat-FIN.qxd:CCCA_V1No2_Col-Litigat-V1.qxd 9/17/08 5:09 PM Page 46 Litigation The price of mistaken identity Proceed with caution when investigating employee criminality. he Court of Appeal for Ontario’s recent care to a suspect. Is the same true of a private need not have good faith reasons for dismissal. Tdecision in Correia v. Canac Kitchens security firm or the employer that hired it? Although the employer could not be sued (2008 ONCA 506) is a must-read for coun- Applying the two-part test in Anns v. for negligent investigation, it was not out of sel advising in respect of the investigation Merton London Borough Council [1978], A.C. the woods. The court noted that, if the and termination of employees involved in 728 (H.L.), the court held it was foreseeable employer “was negligent in its investigation, criminal activity. The case is a cautionary that a negligently conducted investigation in the context where it knew the serious tale, highlighting the serious legal pitfalls could harm the employee. consequences of a wrongful charge of crimi- that can arise when criminality is suspected In a previous decision, BMG Canada Inc. v. nal conduct against an employee, its conduct and investigated. Antek Madison Plastics Recycling Corp. [2006], may well be found to be outrageous and to O.J. No. 4577 (S.C.J.); November 14, 2006 meet the requirement for intentional inflic- Background (Ont. C.A.), the court had held that an tion of mental distress.” This claim was When Canac Kitchens and its parent com- employer could not foresee that police would allowed to proceed. pany suspected theft and drug dealing at lay charges based only on the employer’s find- The court dismissed the claims for inten- one of Canac’s plants, they hired private ings. In this case, the employer and security tional interference with economic relations investigators, including an undercover firm had conducted the entire investigation, and inducing breach of contract. agent. The police were kept apprised, but then “handed a completed case to the police,” were not directly involved. The investiga- so it was potentially foreseeable that the police Proceed with caution tion disclosed that several employees were would lay charges without further verification. This decision underscores the need for care engaged in criminal activity. As well, the court considered that, just as in when investigating employee criminality. Among the identified wrongdoers was a Hill, the employee had “high interests” at When a security firm is engaged, it is now long-time employee, 62. He was brought stake, including “his freedom and his reputa- foreseeable that the police may arrest into his employer’s human resources office, tion,” which supported finding a relationship employees based only on the firm’s find- accused of theft, fired for cause, turned over of proximity and a duty of care. ings. It is therefore imperative that the firm to the police, and arrested. There was just one The court also considered the argument and employer ensure that the investigation problem: he was innocent. He had been con- that recognizing a duty of care may discour- is fair and, to use the Court of Appeal’s fused with another employee. age employers from reporting criminal activ- word, “careful.” It may also be wise to The plaintiff sued the employer, parent ity, but essentially held that this concern does involve, from the start, outside counsel with company, security firm, police, and certain not apply to sophisticated private security some criminal law expertise. individuals for, inter alia, negligent investiga- firms that otherwise would operate unsuper- In situations where the company investi- tion, intentional infliction of mental distress, vised. Moreover, unlike in the insurance con- gates “in-house” without a security firm, it inducing breach of contract, intentional text, contract law does not provide adequate should make clear to the police in writing interference with economic relations, and remedies. The court ruled that the security that it is not a professional investigator, the wrongful dismissal. firm may owe a duty of care to the plaintiff, investigation was not conducted for the pur- The court allowed the “negligent investi- rejecting the argument that this duty would pose of a criminal prosecution, and it expects gation” claim to proceed against the security distort the relationship between employer, the police to conduct their own investigation firm, but not against the employer. employee, and investigator: there is “no inco- prior to taking any action. To determine whether an employer herence in requiring a private investigator to and/or a private investigation firm could owe be careful in its investigation; surely the client Christopher A. Wayland is a partner at duties of care to an employee, the court would expect nothing less…” McCarthy Tétrault LLP. Mr. Wayland clerked at began with the Supreme Court’s decision in However, the court found that imposing a the Supreme Court of Canada and has a master’s Hill v. Hamilton-Wentworth Regional Police duty of care on the employer, which was not degree in law from Oxford University. He has a Services Board [2007], 3 S.C.R. 129, where it in the investigation business, would be incon- broad litigation practice, with a focus on criminal was held that the police can owe a duty of sistent with existing law that an employer and administrative law (cwayland@mccarthy.ca). 46 CCCA Canadian Corporate Counsel Association FALL 2008