Workplace Investigations

Liability of Investigator in Negligence

Responsibility in Tort for Negligent Investigation

The Supreme Court of Canada broke new ground in its 2007 decision of Hill v Hamilton-Wentworth Police Services in which it held the police responsible for the tort of negligent investigation.

The Ontario Court of Appeal the following year considered whether such a claim could be made against the employer and/or the investigative company hired by the employer in Correia v Canac Kitchens.

Due to certain suspicions held by the company, it retained a private investigative firm, Aston Associates Investigations Ltd., to explore the validity of its concerns. This company, in turn, placed an undercover agent into the workplace. It and the employer determined that certain Canac employees were engaged in theft and drug dealing.

The investigator named in its first report a list of suspects. Regrettably, it erred in its second report in the spelling of the accused person, incorrectly citing one Jaoa Correia, and not the correct suspect, Jaoa Corriero. The photographic identity cards were not cross-referenced. The wrongly accused person was 62 years old, some 40 years older than the correct suspect.

The company terminated the wrong person due to this error. He was also arrested by the police and faced criminal charges of theft.

He was held in custody for three hours and released. Four months later, the charges were dropped. Canac offered to reinstate but the plaintiff was too shocked to return to work.

The plaintiff sued an assortment of defendants, including the employer, the investigative company, its part owner and head investigator in this case, the individual investigator, the Head of Human Resources personally, the parent company of Canac, its head of security and the police for assorted forms of relief, including the intentional infliction of mental distress and negligence in the conduct of the investigation.

Certain defendants moved to dismiss the action in a summary judgment motion before Low J., which succeeded in part. It was from this motion that the plaintiff appealed to the Court of Appeal.

Low J. had found, with respect to the claim for negligence in the investigation, that there could no claim against the investigator, nor the employer, in law:

The motions judge found that the plaintiff did not stand in a relationship with any of the moving defendants (i.e., everyone except the police defendants) which could fall within a category or in a position analogous to an established category in which a duty of care has been recognized. She held that the plaintiff was a stranger to Aston and to all of the individual defendants. While he [page363] had a contract of employment with Canac, that did not create a duty of care contemplated by the claim. An employer has a right to terminate employment and the fact that "in coming to its decision the employer acted on misinformation negligently gathered does not augment the employee's rights; nor is the employer's obligation diminished if it acts without negligence". In the absence of a duty of care, no action for negligent investigation lies.

Claim against Investigator Allowed

The Court of Appeal disagreed with the motions judge and allowed the claim to proceed against the private investigator based on a broad policy perspective:

Private investigation firms occupy an increasingly important role in society. As the Law Commission of Canada said in its discussion paper In Search of Security: The Roles of Public Police and Private Agencies (Ottawa: Law Commission of Canada, 2002), at p. 5: [page371]

Something quite remarkable has been happening to the organization of policing in Canada over the last 30 years. Many functions that were once the exclusive domain of public police forces are now being performed by private agencies. In some instances, this means that private security is doing things that the public police used to do. In other instances, it means that whole new areas of activities -- services that did not exist or were not widely available -- can now be purchased. (Emphasis added)

[45] This case is an example. It is difficult to imagine that 30 years ago a private investigation firm would be conducting an investigation into drug dealing, but that is what Aston was doing at Canac. Yet, as the Law Commission points out at p. 11 of the same discussion paper, these firms and their clients operate largely unregulated; certainly they are not obviously governed by the many checks and balances that constrain the public police. Put simply, they can often exercise functionally equivalent powers but without the same constraints:

Private security officers also have ostensibly considerable authority to deprive individuals of their liberty. Like the public police, private security officers arrest, detain and search individuals on a regular basis. But, for the most part, private security officers do not operate under the same constraints as the public police . . . in many facets of their work private security officers are not subject to the Canadian Charter of Rights and Freedoms.

[46] At pp. 15-16, the discussion paper draws attention to the fact that there is little effective public oversight of private policing and that injured persons have limited avenues of redress: "There exists in Canada a regulatory system for monitoring the performance of the public police. The problem, however, is that there is little effective oversight of private security." Finally at p. 19, the paper points out that the public police and private investigation firms often cooperate; this "contributes to the blurring of the relationship between public and private". Again, this case is an example. The investigation was carried out by Aston, but with the knowledge and cooperation of the York Regional Police.

[47] In our view, the fact that private investigation firms perform public policing functions but with limited oversight or clear lines of redress to those injured by their activities strongly favours extending tort liability. Where, as here, the private firm performs a function analogous to the public police, they ought to be subject to similar liability.

The Court did offer this limitation upon its conclusion:

In our view, the policy considerations discussed above favour recognizing a duty of care in respect of a private investigation firm retained by an employer to investigate criminal wrongdoing. We emphasize that this conclusion applies only to the liability of private investigation firms in this specific context: when a relationship is created between a private investigator hired by an employer and a specific employee who is being investigated. The question whether there existed such a duty on the facts of the case is a matter that should be determined after a trial.

Ironically, the Court saw no potential claim in law against the employer in negligence. This conclusion was based on policy considerations: 1

The Supreme Court, for policy reasons explained in Wallace, has refused to recognize an action in tort for breach of a good-faith and fair-dealing obligation. In this case, Canac fired the plaintiff for cause. It concedes that it was wrong in doing so and it may have been negligent. But, in our view, to recognize a tort of negligent investigation for an employer would be inconsistent with the holding in Wallace. It would, in effect, carve out an exception from the broad holding in Wallace where the reason for the dismissal was an allegation of criminality. We can see no principled reason for so doing.

[74] The second reason that we would not recognize a duty of care on Canac lies in the potential chilling effect on reports of criminality by honest citizens to the police. Unlike Aston, Canac was not in the business of investigation. It was in many ways in the same position as any other citizen who reports criminal activity to the police. Public policy favours encouraging the reporting of criminality to the police. Someone not in the business of private investigation who honestly, even if mistakenly, provides information of criminal activity should be protected: see Mirra v. Toronto Dominion Bank, [2004] O.J. No. 1804, [2004] O.T.C. 365 (S.C.J.).

The above words were written in 2008, well before the Supreme Court decision in 2014 in Bhasin, which imported the duty of honest performance throughout the employment relationship, as has now been interpreted. There is good reason to doubt the propriety of the reference to Wallace. The second policy consideration relates to potential criminal action, which is often not a factor in employer investigations.

The door is certainly open for such a modern claim. Indeed, the concept of a prohibition of a negligence claim against the employer is very questionable. Many cases have succeeded in a negligence action arising from the employment relationship, none of which were discussed in the above decision. This issue is reviewed here.

The Alberta court came to the same conclusion in 2020, again citing the Wallace reasoning as above, which is today clearly staledated. 2

The Court of Appeal also allowed the claim for the intentional infliction of mental distress to proceed against the employer, the investigator and the Head of Human Resources in her personal capacity.

The British Columbia Court of Appeal agreed with the above decision of the Ontario Court of Appeal in its November 2008 case of Hildebrand v Fox and Board of Education.  3

The plaintiff, an elementary school principal, was accused by a teacher’s assistant of grabbing the assistant while she was in a classroom, pulling her into a corridor towards a parent, while squeezing and bruising her arm.

Her superior, Inspector Fox, the personal defendant, ordered the plaintiff to be off work, and then allowed her to return after five days.

A third party investigation ensued. Interviews were conducted with the assistant, the relevant parent and the plaintiff. Missing from the list of those interviewed was the teacher in the room, and all students who had been present in the classroom.

In the course of the investigation, the plaintiff was given a summary of the allegations.

The investigator prepared a final report which resulted in a letter of discipline, without providing the plaintiff the opportunity to respond.

The plaintiff’s counsel requested that Fox withdraw the letter and not send it to the professional body until the plaintiff could respond to the report. These requests were not granted.

The motions judge had allowed for the dismissal of the action against Fox, a decision which was appealed to the Court of Appeal. The claim was based on “gross negligence”, a plea which was required as the relevant legislation allowed for only such claims.

The Court of Appeal allowed the claim against Fox to continue:

Correia does stand for the proposition that an employer does not owe a duty of care to an employee in connection with a criminal investigation leading to the termination of the employee.  In considering a claim of negligent investigation, the Ontario Court of Appeal first conducted an analysis pursuant to the two-part test for determining whether a person owes a duty of care to another, as formulated in Anns v. Merton London Borough Council, 1978 CanLII 745 (AB QB), [1977] 2 All E.R. 492, [1978] A.C. 728 (H.L.), and first adopted by the Supreme Court of Canada in Kamloops (City) v. Nielsen, 1984 CanLII 21 (SCC), [1984] 2 S.C.R. 2, 66 B.C.L.R. 273.  On the first part of the test, the court held that there was a triable issue as to whether sufficient foreseeability and proximity existed to establish a prima facie duty of care on the part of the private investigation firm and the employer.  On the second part of the test, the court concluded that, if a prima facie duty were found to exist, it would be negated by policy considerations in the case of the employer, but not the investigation firm.  Hence, the employer was found not to owe a duty of care to the employee in connection with the investigation leading to his dismissal.

[36]           The court relied on two policy considerations to negate a prima facie duty on the part of the employer.  The first was the existence of a contract between the employer and the employee (see paragraphs 72 and 73 quoted above).  The second policy consideration was that the imposition of a duty of care on the employer would have a chilling effect on the willingness of honest citizens to report criminal activity to the police.

[37]           The head of the employer’s human resources department was also named as a defendant in the action.  The plaintiff had sued this senior employee for the tort of intentional infliction of mental distress, and the court allowed this claim to proceed to trial.  It appears from the court’s description of the plaintiff’s claims that the senior employee was also being sued for negligent investigation, but the court’s discussion of the Anns/Kamloops test does not refer to this employee.

[38]           The court held in Correia that there was a triable issue as to whether the relationship between the employer and the terminated employee disclosed sufficient foreseeability and proximity to establish a prima facie duty of care (i.e., the first part of the Anns/Kamloops test).  Similarly, in this case, it is not plain and obvious that the relationship between Mr. Fox and Ms. Hildebrand fails to disclose sufficient foreseeability and proximity to establish a prima facie duty of care.

[39]           It is also my view that, unlike the situation in Correia, it is not plain and obvious that policy considerations should negate the prima facie duty of care (i.e., the second part of the Anns/Kamloops test).  Neither of the policy considerations relied upon in Correia is present in this case.  Mr. Fox did not raise on this appeal any other policy considerations that would negate a prima facie duty if one were found to exist (but he is at liberty to do so at trial if he wishes).

[40]           In my opinion, it is not plain and obvious that Mr. Fox did not owe a duty of care to Ms. Hildebrand.  Her claim against him should not be struck on this ground.

As to the issue of personal liability of Fox, the Court of Appeal determined that the claim was not foreclosed:

   I have reviewed these authorities at some length to demonstrate that there does not appear to be a clear consensus as to what the law is or should be in connection with personal liability of employees.  The law is relatively clear that, based on Said v. Butt, an employee of a company which has breached a contract is not personally liable for the tort of inducing breach of contract or for another claim that is a disguised attempt to make a non-party liable on a contract.  That is not the situation in this case.  Based on London Drugs and ADGA Systems, it is at least arguable that the principle in Said v. Butt does not extend to the tort of negligence even where the negligent act or omission occurred in the performance by the employee of a contract between the employee’s corporate employer and the plaintiff.

[71]           On the basis of my review of these authorities, it is my view that it is not plain and obvious that the statement of claim does not disclose a cause of action against Mr. Fox on the ground that it fails to demonstrate that he had an identity or interest separate and apart from the Board.

The case settled and hence did not reach trial for a final determination on the merits.

The law is not as clear as has been suggested by the Ontario Court of Appeal to date.