Correia v. Canac Kitchens,

• Jurisdiction: Ontario
• Judge: O'Connor, A.C.J.O., Rosenberg and Feldman, JJ.A.
• Neutral Citation: 2008 ONCA 506
• Date: 20 December 2007
• Court: Court of Appeal (Ontario)

Correia v. Canac Kitchens (2008), 240 O.A.C. 153 (CA)

MLB headnote and full text

Temp. Cite: [2008] O.A.C. TBEd. JN.107

Joao Correia, Maria Correia, Julia Correia and Natalia Correia (plaintiffs/appellants) v. Canac Kitchens, a Division of Kohler Ltd., the Estate of Phil Sunstrom, Deceased, Marilyn Smith, Kohler Co., Paul J. Helson, Aston Associates Investigations Limited, Farshid Dhanji, Gord Osborne, Teresa Speciale, York Regional Police, Gord Smyth, Paul Carey, Brad Law, Bryan Shea, Kerry Vincent, Michael Godber, John Doe, John Doe2, John Doe3 and John Doe4 (defendants/respondents)

(C46712; 2008 ONCA 506)

Indexed As: Correia v. Canac Kitchens et al.

Ontario Court of Appeal

O'Connor, A.C.J.O., Rosenberg and Feldman, JJ.A.

June 24, 2008.

Summary:

A private investigation firm hired by an employer identified several employees involved in theft and drug dealing at the employer's plant. Correia, a long-time employee, was accused of theft and fired for cause and at the same time arrested by police. As it turned out, Correia was innocent and, through a series of mistakes, had been confused with another employee with a similar name. Correia sued the employer, the parent company, the private investigation firm, the police and several individuals, raising several causes of action. All the defendants, except the police defendants, moved for summary judgment to have the action against them dismissed.

The Ontario Superior Court, in a decision reported [2007] O.T.C. Uned. 63, granted summary judgment and dismissed the claims against the defendants for negligent investigation, intentional infliction of mental distress, intentional interference with economic relations and inducing breach of contract, except that the judge dismissed the employer's motion for summary judgment on Correia's claim based on intentional infliction of mental distress. Correia appealed and the employer cross-appealed.

The Ontario Court of Appeal allowed the appeal to the following extent: the claim for negligent investigation was allowed to proceed as against the private investigation firm and its employees; the claim for wrongful infliction of mental distress was allowed to proceed against the employer, its human resources manager, the parent company, the private investigation firm and its employees. The court dismissed the balance of the appeal and the cross-appeal.

Master and Servant - Topic 3675

Liability of master for acts of servant - Torts - General - [See first Torts - Topic 8710 ].

Master and Servant - Topic 4601

Liabilities of servant - To third parties - [See first Torts - Topic 8710 ].

Torts - Topic 5021

Interference with economic relations - Elements of liability - General - [See second Torts - Topic 5208 ].

Torts - Topic 5024

Interference with economic relations - Elements of liability - Malice or intent to injure - [See first Torts - Topic 5208 ].

Torts - Topic 5043

Interference with economic relations - Master and servant - What constitutes interference - [See first Torts - Topic 5208 ].

Torts - Topic 5208

Interference with economic relations - Contracts - Inducing or procuring breach of contract - Following an investigation by a private investigation firm hired by an employer, Correia, a long-time employee, was accused of theft, fired for cause and arrested by police - This was all a mistake and Correia was innocent - Correia sued the employer's parent company and the private investigation firm (the defendants), alleging inducing breach of contract and intentional interference with economic relations - The basis of the claims was that the employer terminated Correia because the actions of the defendants in conducting and implementing a negligent investigation caused the employer to wrongly terminate him - The defendants moved for summary judgment dismissing the claim against them - A motions judge granted summary judgment, holding that neither tort could be proved at trial - Correia appealed - The Ontario Court of Appeal dismissed the appeal, agreeing that the claims based on these two causes of action should be dismissed - Correia's claim based on these torts failed because he could not show that the defendants' conduct was intentional - See paragraphs 91 to 108.

Torts - Topic 5208

Interference with economic relations - Contracts - Inducing or procuring breach of contract - The Ontario Court of Appeal (the court) pointed out that the House of Lords in OBG Ltd. v. Allan et al. (2007) attempted to clear up the confusion between the elements of the torts of intentional interference with economic relations and inducing breach of contract - The result was a clear definition of the two torts and their elements, which the court reviewed - The court stated that in defining the two torts, the Lords emphasized that they were both intentional torts that aimed to give redress in the context of deliberate commercial wrongdoing - See paragraphs 94 to 104.

Torts - Topic 5906

Negligent investigation - Private investigation firms, employees, investigators, etc. - Following an investigation by a private investigation firm hired by an employer, Correia, a long-time employee, was accused of theft, fired for cause and arrested by police - This was all a mistake and Correia was innocent - Correia sued the private investigation firm, alleging negligent investigation - The private investigation firm moved for summary judgment - The motions judge granted summary judgment dismissing the negligent investigation claim for want of duty of care - Correia appealed - The Ontario Court of Appeal allowed this aspect of the appeal, holding that the claim for negligent investigation could proceed as against the private investigation firm and its employees - The court was satisfied that there existed a triable issue as to whether the relationship between Correia and the moving defendants disclosed sufficient foreseeability and proximity to establish a prima facie duty of care - Policy considerations favoured recognizing a duty of care in respect of a private investigation firm retained by an employer to investigate criminal wrongdoing - The court emphasized that its 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" - See paragraphs 15 to 69.

Torts - Topic 5907

Negligent investigation - Employers (incl. criminal or drug investigations) - Following an investigation by a private investigation firm hired by an employer, Correia, a long-time employee, was accused of theft, fired for cause and arrested by police - This was all a mistake and Correia was innocent - Correia sued the employer, the parent company, and several employees (the defendants), alleging, inter alia, negligent investigation - The defendants moved for summary judgment - The motions judge granted summary judgment dismissing the negligent investigation claim for want of duty of care - Correia appealed - The Ontario Court of Appeal dismissed this aspect of the appeal, agreeing that there was no duty of care - The court stated that to recognize a tort of negligent investigation for an employer would be inconsistent with Wallace v. United Grain Growers (SCC 1997) - Further, the court stated that it would not recognize a duty of care on the defendants because of the potential chilling effects on reports of criminality by honest citizens to the police - See paragraphs 71 to 75.

Torts - Topic 5907

Negligent investigation - Employers (incl. criminal or drug investigations) - The Ontario Court of Appeal stated that "the fundamental premise of the employer-employee relationship in Canada is the right, subject to contractual terms to the contrary, of either party to terminate the relationship. Thus, in Wallace [1997], the Supreme Court of Canada rejected the submission that an employer must have good faith reasons for dismissal or that there could be an independent action or head of damages for breach of such alleged duty of good faith, either in contract or in tort. In our view, it would be inconsistent to nevertheless recognize a duty on an employer not to conduct a negligent investigation regarding an employee. To do so would be to do indirectly what the Supreme Court expressly rejected in Wallace. 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 [the employer] 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" - See paragraphs 72 and 73.

Torts - Topic 8710

Duty of care - Particular relationships - Claims for nervous shock and emotional suffering - Intentional infliction of - Following an investigation by a private investigation firm hired by an employer, Correia, a long-time employee, was accused of theft, fired for cause and arrested by police - This was all a mistake and Correia was innocent - Correia sued, among others, the employer's human resources manager, alleging intentional infliction of mental distress - The manager moved for summary judgment - The motions judge granted the motion and dismissed the claim against the manager because, although she was the employee who carried out the dismissal, she was acting only in the course of her employment - Correia appealed - The Ontario Court of Appeal allowed this aspect of the appeal, holding that the motions judge erred in law on this issue - The court stated that an employee acting in the context or course of employment could be personally responsible in law for his or her tortious conduct - "Marilyn Smith [the human resources manager] was the person who terminated Mr. Correia and facilitated turning him over to the police to be charged with criminal offences following the negligent investigation, in which she herself made the error that caused blame to be falsely cast on him. In law she may be held personally liable for her conduct. The rule in Said v. Butt [K.B. (Eng.) 1920] does not apply here, because we are talking about responsibility for a separate actionable tort, not for the wrongful termination of the contract of employment itself" - See paragraphs 86 to 88.

Torts - Topic 8710

Duty of care - Particular relationships - Claims for nervous shock and emotional suffering - Intentional infliction of - Following an investigation by a private investigation firm hired by an employer, Correia, a long-time employee, was accused of theft, fired for cause and arrested by police - This was all a mistake and Correia was innocent - Correia sued, among others, the private investigation firm (Aston) and its employees, alleging intentional infliction of mental distress - The Aston defendants moved for summary judgment - A motions judge granted the motion - Correia appealed - The Ontario Court of Appeal noted that the motions judge did not consider the Aston defendants' conduct sufficiently outrageous to meet the first prong of the test for intentional infliction of mental distress - However, the appeal court was allowing a cause of action against the defendants for negligent investigation to proceed - If it was found that the defendants were negligent in their investigation, in the context where they knew the serious consequences of a wrongful charge of criminal conduct against an employee, their conduct might well be found to be outrageous and to meet the requirement for intentional infliction of mental distress - When the motions judge's reasons for dismissing the claims for intentional infliction of mental distress against the defendants were viewed in light of that possibility, as well as the motion judge's decision to permit this claim to proceed against the employer, the judge's reasons did not provide a sufficient basis for granting summary judgment in favour of the Aston defendants on this cause of action (i.e., the claim against the Aston defendants for intentional infliction of mental distress could proceed) - See paragraph 89.

Torts - Topic 8710

Duty of care - Particular relationships - Claims for nervous shock and emotional suffering - Intentional infliction of - Following an investigation by a private investigation firm hired by an employer, Correia, a long-time employee, was accused of theft, fired for cause and arrested by police - This was all a mistake and Correia was innocent - Correia sued, among others, the employer (Canac), alleging intentional infliction of mental distress - The employer moved for summary judgment to have the claim against it dismissed - The motions judge refused to grant summary judgment - The employer appealed - The Ontario Court of Appeal dismissed the employer's appeal - The court stated that "It is implicit in the reasons of the motion judge that she was satisfied on the facts before her that Canac's conduct could be found to meet the three-pronged test [to establish the tort of intentional infliction of mental stress]. It was flagrant and outrageous; it was calculated to cause the distress it did because it was clearly foreseeable that it would; and it caused Mr. Correia significant mental distress. We agree with this conclusion and that there is therefore a triable issue in respect of the intentional infliction of mental distress claim against Canac" - See paragraphs 81 to 85.

Cases Noticed:

BMG Canada Inc. v. Antek Madison Plastics Recycling Corp. et al., [2006] O.A.C. Uned. 509 (C.A.), dist. [para. 16].

Hill et al. v. Hamilton-Wentworth Regional Police Services Board et al., [2007] 3 S.C.R. 129; 368 N.R. 1; 230 O.A.C. 253, refd to. [para. 18].

Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), refd to. [para. 19].

Nielsen v. Kamloops (City) and Hughes, [1984] 2 S.C.R. 2; 54 N.R. 1, refd to. [para. 19].

BMG Canada Inc. v. Antek Madison Plastics Recycling Corp., 2006 CarswellOnt 8663 (Sup. Ct.), refd to. [para. 22].

Elliott v. Insurance Crime Prevention Bureau et al. (2005), 236 N.S.R.(2d) 104; 749 A.P.R. 104 (C.A.), refd to. [para. 22].

Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701; 219 N.R. 161; 123 Man.R.(2d) 1; 159 W.A.C. 1, refd to. [para. 31].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201, refd to. [para. 32].

Keays v. Honda Canada Inc. (2006), 216 O.A.C. 3; 82 O.R.(3d) 161 (C.A.), refd to. [para. 32].

Cooper v. Hobart - see Cooper v. Registrar of Mortgage Brokers (B.C.) et al.

Cooper v. Registrar of Mortgage Brokers (B.C.) et al., [2001] 3 S.C.R. 537; 277 N.R. 113; 160 B.C.A.C. 268; 261 W.A.C. 268, refd to. [para. 34].

Mortensen v. Laing; South Pacific Manufacturing Co. v. New Zealand Security Consultants & Investigations Ltd., [1992] 2 N.Z.L.R. 282 (C.A.), refd to. [para. 51].

Mirra et al. v. Toronto-Dominion Bank et al., [2004] O.T.C. 365 (Sup. Ct.), refd to. [para. 74].

Prinzo v. Baycrest Centre for Geriatric Care (2002), 161 O.A.C. 302; 60 O.R.(3d) 474 (C.A.), refd to. [para. 77].

Said v. Butt, [1920] 3 K.B. 497, refd to. [para. 79].

Rahemtulla v. Vanfed Credit Union (1984), 51 B.C.L.R. 200 (S.C.), refd to. [para. 82].

London Drugs v. Kuehne & Nagle - see London Drugs Ltd. v. Brassart and Vanwinkel.

London Drugs Ltd. v. Brassart and Vanwinkel, [1992] 3 S.C.R. 299; 143 N.R. 1; 18 B.C.A.C. 1; 31 W.A.C. 1, refd to. [para. 86].

Alper Development Inc. v. Harrowston Corp. et al. (1998), 107 O.A.C. 318; 38 O.R.(3d) 785 (C.A.), refd to. [para. 86].

ADGA Systems International Ltd. v. Valcom Ltd. et al. (1999), 117 O.A.C. 39; 43 O.R.(3d) 101 (C.A.), refd to. [para. 86].

Meditrust Healthcare Inc. v. Shoppers Drug Mart et al. (1999), 124 O.A.C. 137 (C.A.), refd to. [para. 86].

Drouillard v. Cogeco Cable Inc. et al. (2007), 223 O.A.C. 350; 282 D.L.R.(4th) 644 (C.A.), refd to. [para. 92].

Mainstream Properties Ltd. v. Young - see OBG Ltd. et al. v. Allan et al.

OBG Ltd. et al. v. Allan et al., [2007] UKHL 21; 369 N.R. 66, refd to. [para. 92].

Lumley v. Gye (1853), 2 E. & B. 216 (Q.B.), refd to. [para. 94].

Garret v. Taylor (1620), Cro. Jac. 567 (K.B.), refd to. [para. 95].

Tarleton v. McGawley (1794), 1 Peake NPC 270 (K.B.), refd to. [para. 95].

GWK Ltd. v. Dunlop Rubber Co. (1926), 42 T.L.R. 376 (H.L.), refd to. [para. 96, footnote 2].

Merkur Island Shipping Corp. v. Laughton, [1983] 2 A.C. 570 (H.L.), refd to. [para. 97, footnote 3].

Millar v. Bassey, [1994] E.M.L.R. 44 (C.A.), refd to. [para. 97, footnote 3].

Torguay Hotel Co. v. Cousins, [1969] 1 All E.R. 522 (C.A.), refd to. [para. 97, footnote 3].

Thomson (D.C.) & Co. v. Deakin, [1952] Ch. 646 (C.A.), refd to. [para. 97, footnote 3].

Dimbleby & Sons v. National Union of Journalists, [1984] 1 W.L.R. 67 (H.L.), refd to. [para. 97, footnote 3].

Quinn v. Leathem, [1901] A.C. 495 (H.L), refd to. [para. 97, footnote 3].

Reach M.D. Inc. v. Pharmaceutical Manufacturers Association of Canada et al. (2003), 172 O.A.C. 202; 65 O.R.(3d) 30 (C.A.), refd to. [para. 104].

Bank Leu AG v. Gaming Lottery Corp. et al., [2001] O.T.C. 854; 29 B.L.R.(3d) 68 (Sup. Ct.), affd. (2003), 175 O.A.C. 143; 231 D.L.R.(4th) 251 (Ont. C.A.), refd to. [para. 110].

Authors and Works Noticed:

Canada, Law Commission, In Search of Security: The Roles of Public Police and Private Agencies (2002), pp. 5 [para. 44]; 11 [para. 45]; 15, 16, 19 [para. 46].

Counsel:

Rebecca Nelson, for the appellants;

J. Murray Davison, Q.C. and Matthew Biderman, for the respondents York Regional Police, Gordon Smyth, Paul Carey, Brad Law, Bryan Shea, Kerry Vincent and Michael Godber;

Brett Harrison and Lisa Brost, for the respondents Canac Kitchens, Kohler and Marilyn Smith;

Lisa La Horey and Laurie Murphy, for the respondents Aston Associates Investigations Ltd., Farshid Dhanji, Gord Osborne and Teresa Speciale.

This appeal and cross-appeal were heard on December 20, 2007, by O'Connor, A.C.J.O., Rosenberg and Feldman, JJ.A., of the Ontario Court of Appeal. The following decision was delivered for the court by Rosenberg and Feldman, JJ.A., on June 24, 2008.