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Municipality liable for malicious prosecution after withholding exculpatory evidence from police.
Following a direction from the Court of Appeal to reconsider liability for malicious prosecution, the court determined whether a municipality could be liable for initiating criminal proceedings against a former employee.
The court applied the four‑part test from Nelles v. Ontario and examined whether the municipality initiated the prosecution, lacked reasonable and probable grounds, acted with malice, and whether the proceedings terminated in favour of the plaintiff.
The court found the municipality withheld exculpatory information from police regarding missing municipal files and prior internal investigations, thereby undermining the independence of the police investigation and becoming the proximate cause of charges that resulted in an acquittal.
The court concluded the prosecution was pursued to justify the employee’s dismissal and shield the municipality from civil liability.
Liability for malicious prosecution was established, but damages were fixed at a nominal amount pursuant to agreement of counsel.
Appeal allowed and new trial ordered for malicious prosecution where trial judge applied incorrect malice standard.
The appellant, a former municipal building official, was wrongfully dismissed and subsequently charged criminally after the municipality reported alleged missing permit fees to the police.
After being acquitted, he sued for wrongful dismissal and malicious prosecution.
The trial judge awarded damages for wrongful dismissal but dismissed the malicious prosecution claim, finding no initiation or malice by the municipality.
The Court of Appeal allowed the appeal, holding that the trial judge erred by applying the high threshold for malice applicable to Crown prosecutors to a private defendant, and by making inconsistent findings regarding the municipality's conduct.
A new trial was ordered for the malicious prosecution claim and the quantum of punitive damages.
