In Pate v. Township of Galway-Cavendish, the Ontario Court of Appeal reviewed the Trial Judge’s decision of the dismissal of an employee’s claim of malicious prosecution and the award of punitive damages arising from the termination of his employment.
The Appeal Court ordered a new Trial with respect to the claim of malicious prosecution because the Trial Judge set too high a standard for proving malicious prosecution against a private individual, made findings about malice when addressing damages for wrongful dismissal that are inconsistent with his findings about malice in relation to malicious prosecution, and with respect to the test for malicious prosecution that a plaintiff must prove that the prosecution was initiated by the defendant. A new Trial regarding the award of punitive damages was based on these damages being reconsidered in the event malicious prosecution is determined at Trial, and given the evidence of significant misconduct by the Employer that lasted over a lengthy period with a devastating impact on Mr. Pate, with no explanation by the Trial Judge why a high award of punitive damages would offend the “principles of proportionality”.
Mr. Pate had worked as a Chief Building Official for about 9 years and then as a building inspector for 3 months when he was dismissed without notice. The dismissal was as a result of alleged discrepancies regarding permit fees that were paid to him and not remitted to the Township. Particulars were not provided to Mr. Pate nor was he given the opportunity to respond to the allegations. Rather he was told that the matter would not be reported to the police if he immediately resigned. Mr. Pate didn’t resign, the matter was reported to the police with allegations of theft, he was charged and thereafter acquitted of all charges.
At Trial the parties agreed on a 12 month notice period for wrongful dismissal. The claim for malicious prosecution was dismissed, a four month bump-up for Wallace damages was awarded, also awarded was $75,000 for general damages and aggravated damages for intentional infliction of mental distress and social and economic damages, $7,500 for special damages, and $25,000 for punitive damages.
Impact of Decision on Employers
Employers should ensure that proper investigations of misconduct are performed and that the results are put to the employee for explanation. The objective should be full disclosure of all information in the investigation process rather than building a case to justify the termination. Reporting allegations to the Police can be considered egregious conduct by an Employer and should only be done in exceptional circumstances and only with advice by Employment Law counsel.
Impact of Decision on Employees
Employees should be aware that Employers are required to perform thorough investigations and that allegations of misconduct should be put to them prior to any termination. Police involvement initiated by Employers is fraught with issues and done at great risk to Employers. If the Employer reports allegations of misconduct to the Police and the Employee is charged criminally, with the criminal charges being acquitted at Trial, the Employer may have to pay substantial damages for intentional infliction of mental distress and punitive damages. Employees should consult with experienced Employment Law counsel to review the circumstances surrounding the termination including a thorough review of the investigation process.
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See also, “Dismissed employee gets retrial of malicious prosecution claim“ published in Canadian Employment Law Today.