In the recent decision of Correia v. Canac
Kitchens the Ontario Court of Appeal found that employers
cannot be held liable for negligent investigation leading to the
dismissal of an employee. In that case, an employer suspected that
its employees were stealing and dealing drugs in its plant. The
employer hired a private investigator who placed an undercover
agent in the plant. In coordination with police, the agent
identified a suspect and collected evidence of the alleged
offences. When the investigation was complete the employer
dismissed several employees who were charged by the police,
including the plaintiff.
The only problem: the plaintiff was the wrong man.
As a result of investigative errors, instead of firing the
correct suspect, the employer dismissed the plaintiff, who had a
similar name. Once the error was uncovered, the plaintiff sued his
employer, the private investigator and the police for negligent
The tort of negligent investigation
In 2007, the Supreme Court of Canada held in Hill v.
Hamilton-Wentworth Regional Police Services Board that a
police force which is negligent in the way it conducts
investigations may be liable for injuries consequently inflicted on
a suspect. In his claim, the plaintiff sought to expand liability
for negligent investigation from police to encompass employers and
In a significant victory for employers, the Court of Appeal held
that employers cannot be liable for negligent investigation. There
were two grounds for the decision. First, the Court held that to
recognize a duty of care on employers in these circumstances could
have a "chilling effect" on reports of criminality by
honest citizens to the police.
Second was the finding by the Supreme Court of Canada in
Wallace v. United Grain Growers Ltd. that there is
no separate action in tort for breach of a good faith obligation in
the dismissal of an employee. The Court of Appeal held that making
employers separately liable for negligent investigations which lead
to the dismissal of an employee would violate this rule.
Although the Supreme Court reconsidered Wallace
in the Keays v. Honda Canada Inc. decision, which
was released three days after Correia, it does not
appear that the reasoning in Keays changes the
basis for the Court of Appeal's decision.
What does this mean for your business?
The Court of Appeal has drawn a bright line, explicitly refusing
to hold employers liable for negligent investigations that lead to
terminations. While this decision is good news for employers, it
should be noted that an employer who conducts a negligent
investigation of an employee may still be liable for wrongful
dismissal and other torts, such as infliction of mental distress.
In order to mitigate the likelihood of such claims, an employer
should ensure that it diligently pursues any claims that the
information used to support the dismissal is inaccurate.
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
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