Workplace Investigations

Pate v Galway 2013

This is an unusual case.

The plaintiff was fired due to allegations of fraud. Criminal charges were also laid on which the plaintiff was acquitted.

The end result, following two trips to the Court of Appeal, was an award of punitive damages of $450,000 due to the failure of the internal investigator appointed by the employer to present the full extent of his findings to the police which led to criminal charges being laid against the plaintiff. An award of aggravated damages of $75,000 was also made. A voluntary payment of one year’s severance was made prior to the first trial.

The case is regrettable for the way in which the late Mr. Pate was treated by his employer. The allegations were clearly serious. A fair and proper investigator may well have concluded there was no wrongdoing and spared the plaintiff and his employer the disgrace, emotional angst, costs and the damage award which followed.

Pate v Galway - The First Trial - November 2009

At the outset of the first trial, the parties had agreed to settle the wrongful dismissal claim at 12 months. Also, the plaintiff had abandoned his claim for damages for loss of reputation, all of which was without prejudice to the remaining claims.

Mr. Pate was initially hired by the township as its Chief Building Officer. He was employed from 1989 through the time of the merger of the two defendant municipalities on December 31, 1998, after which time he held the position of building inspector. Less than three months after the merger, on March 26, 1999, he was dismissed. He then earned an annual salary of $34,100 plus other benefits and was 43 years of age. As of the date of the first trial, he was 54.

On the date of termination, Mr. Pate was advised that certain discrepancies had been noted with respect to permit fees, which were alleged to have been received by him and not given to the township. He was instructed by his superior, Mr. John Beaven, a former police officer, that failing his resignation, the police would be called in. Mr. Pate refused to do so and offered to call the police himself. No details of the allegations were given to Mr. Pate. On the same day, Mr. Pate noted that his ledger of permit applications was not given to him with his personal possessions. The employer stated it was township property and refused to provide it to him. This ledger card had been maintained by Mr. Pate. He had requested that the municipal clerk initial reconciled entries each month. At the trial it was discovered that the plaintiff’s journal had recorded receiving fees for one of the properties under a different name as he had received the fees from the owner’s son-in-law.

Criminal charges were laid against Mr. Pate. He was acquitted of all charges on December 17, 2002. The trial lasted four days over a one year time period. The Crown withdrew one charge when the above referenced ledger card was provided to it. The local newspaper published stories on the trial on at least three occasions, including headlines. Mr. Pate testified that his marriage ended shortly after the commencement of the criminal charges. He described this as one of numerous stressors which contributed to the separation. Mr. Pate and his former spouse had operated a local restaurant, known as the Loon’s Nest. It closed in 2000. Mr. Pate, whose evidence was accepted by the trial judge, testified that the allegations against him, locals stopped their patronage. He felt that these issues contributed to, but were not the sole cause of, its demise.

Mr. John Beaven, a retired experienced police officer, and the superior of the plaintiff on termination, conducted an investigation into the issues dealing with the permit fees and provided his report to the police. He was the sole witness for the employer at this trial.

Mr. Beaven initially claimed to have given all relevant evidence to the police. However, he admitted that he retained the plaintiff’s journal, including his notes relating to building permit applications and application fees. He could not state what had happened to the journal or produce it. He also admitted that he did not tell the police that the employer had lost a large number of files, including building permit files. During the criminal trial, it was proven that some of the property owners had paid their fees at a satellite office operated by the township prior to amalgamation and that many of the files had been lost during a move in 1998. Although municipal officials knew about the missing files, no one told the police of this.

The trial judge found that Beaven had admitted that exculpatory evidence had been held back from the police. In particular, one of the allegations had been examined in a 1995 building committee investigation, which had concluded that there was no wrongdoing. This information was not given to the police.

The investigating police officer at the civil trial testified that had he known of the all the information which emerged at the criminal trial, he would not have laid charges.

 First Trial

The trial judge awarded a Wallace bump of four months. 1

The tort of malicious prosecution was unsuccessful at trial. The trial judge found that the employer had not intended to subvert or abuse the criminal justice process and that the decision to prosecute was that of the police and that it had been also reviewed by a Crown Attorney in advance. This was the case, notwithstanding the trial judge’s evident severe criticism of the conduct of the municipality in withholding important evidence.

Aggravated damages were awarded in the sum of $75,000, in addition to the legal costs of his defence of the criminal trial of $7,500.

Punitive damages were also awarded in the sum of $25,000. In so doing, the trial judge stated that he “would order more, but I am bound by the principles of proportionality”.

 Pate v Galway – The First Appeal

The appellant, Mr. Pate, raised two issues:

  1. The dismissal of the malicious prosecution claim; and
  2. The quantum of punitive damages.

The Court found in the appellant’s favour on both issues and ordered a new trial on both matters.

The Court of Appeal delivered its decision on April 28, 2001.

On the issue of malicious prosecution, the court determined that in claims against a private wrongdoer, the standard of proving this claim is not as high as that required for a case against a Crown Attorney. Further, the court examined the trial judge’s findings on the issues of aggravated and punitive damages concluding that the employer had acted in a reprehensible manner and was a departure from ordinary standards of decent behaviour, to show support for an apparent malicious conduct. In addition, the court concluded that the employer need not have actually laid the information to commence the criminal prosecution.

As to the punitive damage award, the court of appeal found that the trial judge’s statement that a higher award would offend principles of proportionality to be without explanation, and hence set aside the decision and ordered a new trial.

 Pate v Galway - The Second Trial

The case returned to Mr. Justice Gunsolus on November 7, 2011. The parties agreed to rely upon the prior evidence at the first trial. No new evidence was called. The trial judge noted that no apology had been delivered, nor had the municipality offered in any way a sign that it had accepted responsibility for its actions. Given the findings of misconduct, the fact that such misconduct was found to be lasting over a period of 10 years, the impact of the criminal proceedings and the effect on the plaintiff’s life, his employability, his marriage and the fact that these actions were intentional and foreseeable, an award of $550,000 was made for punitive damages. Mr. Pate regrettably had passed away by the time of the release of this decision.

Second Time to the Court of Appeal – Punitive Damages - $450,000

The issue of the punitive damage award was again revisited by the Court of Appeal. In this instance, the Court made it clear that the failure of the investigator to provide to the police the full extent of the evidence could be used to support the concept of the punitive damage award. Although the sum awarded was reduced for other reasons from $500,000 to $450,000, the substantive aspect of the finding was upheld unanimously. The following passage is from the reasons of Lauwers J.A., who dissented in part. This excerpt was agreed to by the majority:

   In the First Trial reasons, at para. 69, the trial judge found that: “the defendant Municipality, through its former chief building official Mr. Beaven, failed to disclose information to the police which the evidence now shows, would have resulted in no charges being leveled against the Plaintiff.” He concluded that the Township: “mounted an investigation in order to build a case to justify the termination” only after terminating Mr. Pate.

[38]     Perhaps the most damning finding of the trial judge was the following, at para. 51(q) of the First Trial reasons:

In the end, this witness [Mr. Beaven] admitted that exculpatory evidence was held back and he either could not or would not explain why. For example, in relation to the Parker property, exhibit four, he had knowledge of the 1995 building committee investigation and he had knowledge that many Municipal files had gone missing after the move to new offices. He could not explain why he did not tell police these facts. When asked if this would have been exculpatory toward Mr. Pate, he agreed. He was not able to explain why he did not include this information in his statements, (exhibits four through eight). He acknowledged that such information should have been included in his statements and disclosed to the police.

[39]     The trial judge repeated this finding in the First Trial reasons, at para. 60, and added this observation: “I find it very troubling that he could give no explanation, satisfactory to this court, which would justify this withholding of what appeared to be exculpatory information.”

[40]     Both investigating officers, Officer Stokes and Officer Vrbanic, confirmed that no one from the Township advised them of the 1995 Building Committee investigation or that files were missing: First Trial reasons, at paras. 16-17 and 39.

[41]     One key piece of evidence that was withheld was Mr. Pate’s journal.  The trial judge found that Mr. Beaven retained the journal, including Mr. Pate’s notes relating to building permit applications and building permit application fees, although he did show the journal to the police. The trial judge noted that Mr. Beaven “could not tell the court what happened to the journal, nor could he produce it”: First Trial reasons, at para. 51(a).  Surprisingly, however, two pages of the journal showed up at trial, which led to the Crown withdrawing charges in relation to one property reflected in those pages: First Trial reasons, at para. 28. In the Malicious Prosecution reasons, at para. 37, the trial judge repeated his view of the importance of the missing journal that Mr. Beaven had retained.

[42]     The trial judge’s ultimate finding, at para. 23 of the Malicious Prosecution reasons, that the Township, through its representative, Mr. Beaven, knowingly withheld exculpatory information from the police, is amply made out on the evidence.