Pate v. Galway-Cavendish (Township), 2011 ONCA 329

CITATION: Pate v. Galway-Cavendish (Township), 2011 ONCA 329

DATE: 20110428

DOCKET: C51565

COURT OF APPEAL FOR ONTARIO

Simmons, Cronk and MacFarland JJ.A.

BETWEEN

John Gordon Pate

Plaintiff (Appellant)

and

The Corporation of the Township of Galway-Cavendish and Harvey

Defendant (Respondent)

Jeffrey D. Ayotte and D.J.M. O’Neill, for the appellant

M. John Ewart and K. O’Dwyer, for the respondent

Heard: November 26, 2010

On appeal from the judgment of Justice Drew S. Gunsolus of the Superior Court of Justice dated December 16, 2009.

Simmons J.A.:

I. OVERVIEW

[1] After he had served as the Chief Building Official for the Township of Galway and Cavendish for about 9 years and then as a building inspector for the amalgamated Township of Galway-Cavendish and Harvey for about three months, the appellant, John Pate, was dismissed from his employment without notice on March 26, 1999.

[2] Mr. Pate was told that discrepancies had been uncovered with respect to permit fees that had been paid to him but not remitted to the Township (the former Township of Galway and Cavendish and the amalgamated Township will be referred to collectively and individually as the “Township”). Mr. Pate was not provided with particulars; nor was he given an opportunity to respond to the allegations. Rather, he was told that the matter would not be reported to the police if he resigned immediately.

[3] Mr. Pate did not resign, the matter was reported to the police and charges were laid. However, in December 2002, following a four-day criminal trial that was heard in a time frame that lasted more than a year Mr. Pate was acquitted of all charges. In December 2003, he commenced this action, claiming damages for wrongful dismissal and malicious prosecution.

[4] At the commencement of the civil trial, the Township conceded that Mr. Pate was wrongfully dismissed and the parties agreed on a 12-month notice period without prejudice to Mr. Pate’s right to litigate his remaining claims. Following the trial, the trial judge dismissed Mr. Pate’s claim for malicious prosecution but awarded additional damages as follows:

• a four-month bump-up for Wallace damages[^1];

• $75,000 for general 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.

[5] Mr. Pate raises two issues on appeal:

(1) Did the trial judge err in failing to find the Township liable to Mr. Pate for malicious prosecution?

(2) Did the trial judge err in assessing Mr. Pate’s punitive damages at only $25,000?

[6] For the reasons that follow, I would allow the appeal, set aside the trial judge’s order dismissing the malicious prosecution claim and the award of punitive damages and order a new trial concerning these two issues.

II. BACKGROUND

[7] Mr. Pate was employed by the Township of Galway and Cavendish as the Chief Building Inspector from 1989 until amalgamation on December 31, 1998. Following amalgamation, Mr. Pate was a building inspector for the newly-formed amalgamated Township.

[8] Mr. John Beaven, the Chief Building Official for the Township of Harvey prior to amalgamation, became the Chief Building Official for the new Township after amalgamation. On March 26, 1999, less than 3 months after amalgamation, Mr. Beaven called Mr. Pate into his office for a meeting. In this meeting, Mr. Beaven told Mr. Pate that discrepancies had been uncovered with respect to building permit fees and, as a result, Mr. Pate’s employment was being terminated. Mr. Beaven also told Mr. Pate that, if he resigned, the Township would not contact the police.

[9] On April 14, 1999, Mr. Beaven called the O.P.P. He subsequently met with Officer Greg Stokes on April 19, 1999, to report four cases of alleged theft of building permit fees. On April 20, 1999, Mr. Beaven provided Officer Stokes with statements he had prepared in relation to missing building permit fees. Mr. Beaven is a 27-year veteran of the Metropolitan Toronto Police Service, where he attained the rank of staff sergeant prior to his retirement. To prepare these statements, Mr. Beaven conducted his own investigation. Ultimately, Mr. Beaven provided Officer Stokes with statements relating to six different properties.

[10] At the criminal trial, it emerged that Mr. Pate had recorded receiving the fees for one of the properties under a name different from that of the property owner because he received the fees from the owner’s son-in-law. Mr. Pate had a note of this in a journal he kept. However, Mr. Beaven seized the journal when Mr. Pate was terminated and did not forward it to the police.

[11] During the criminal trial, it also emerged that some of the property owners paid their fees at a satellite office operated by the Township prior to amalgamation and that many of the files for that office had been lost during a move in 1998. Although municipal officials knew about the missing files, no one told the police.

[12] Finally, it emerged that, in 1995, the Township Building Committee had investigated one of the allegations and found no wrongdoing on the part of anyone. Again, no one provided the police with this piece of potentially exculpatory information.

[13] At the civil trial, Officer Stokes testified that if he had known in advance of laying charges about the information relating to the allegations that emerged at the criminal trial, he would not have laid charges. That said, he confirmed that the decision to lay the charges was his. Further, he indicated that, although he knew Mr. Beaven was a former police officer, he made some inquiries into the allegations. Officer Stokes also testified that, once the charges were laid, the decision to prosecute them was that of the Crown Attorney.

[14] Officer Stokes acknowledged receiving some internal pressure to lay the charges arising from complaints by the Township about delay. He also acknowledged that these cases were eventually turned over to another officer because of the complaints about his delay. The second officer gave reply evidence in which he confirmed that the Township was not involved in the decision to lay the charges or in the wording of the charges.

[15] At the civil trial, Mr. Pate and his former wife, Natalie Walsh, testified about the significant impact of the dismissal, the criminal trial and the associated publicity on their lives, on their marriage and on the ongoing viability of a business Ms. Walsh operated.

[16] Ultimately, the trial judge concluded that the actions of the Township “were a contributing factor to the end of [Mr. Pate’s] marriage and perhaps even to the business he operated with his spouse.” Moreover, Mr. Pate “suffered humiliation in the eyes of the public. ... To have been wrongfully dismissed and then to have been accused of criminal activity for which one is then exonerated, has left [Mr. Pate] with a feeling of the stigma of accusation. His career as a municipal official has never recovered.”

[17] Mr. Beaven was the only witness called by the Township. He claimed that he informed Mr. Pate at the March 26, 1999 meeting that Mr. Pate was going to be dismissed by Council on March 30, 1999. He said he told Mr. Pate about his investigation but did not provide Mr. Pate with particulars of the allegations. He also confirmed that he was instructed by the Chief Administrative Officer for the Township to tell Mr. Pate that the police would not be called if Mr. Pate resigned.

[18] Mr. Beaven testified that he assumed the police would conduct their own investigation based on the information he provided to them and would lay charges as they saw fit. According to Mr. Beaven, other than contacting an O.P.P. sergeant to determine the status of the case, he had no involvement with the police investigation after turning his statements over to the police. In his view, he did not encourage the police to lay charges. Moreover, he did not knowingly provide false information to the police, nor did he consciously withhold information from the police.

III. THE TRIAL JUDGE’S REASONS

(1) Malicious Prosecution

[19] As I have said, the trial judge dismissed Mr. Pate’s claim for damages for malicious prosecution. He found that Mr. Pate failed to satisfy two elements of the four-part test for establishing malicious prosecution.

[20] In particular, Mr. Pate failed to establish that the Township initiated the prosecution – part one of the test. Further, Mr. Pate failed to establish malice, or that the Township “intended to subvert or abuse the criminal justice system” – part four of the test as the trial judge characterized it.

[21] Because the trial judge’s analysis of the malicious prosecution issue is crucial to the determination of the appeal, I will set out in full the central portions of his reasons concerning initiation and malice:

In order for me to find malicious prosecution, the Plaintiff would be required to prove not only that no reasonable and probable grounds existed for the failed prosecution against him, but also that the Defendant Municipal Corporation intended to subvert or abuse the criminal justice system [footnote: See: Miazga v. Kvello Estate, 2009 SCC 51, [2009] 3 S.C.R. 339].

In this case, there is no evidence upon which I can find that the Defendant exercised such an improper purpose and I cannot simply infer malice in these circumstances. Indeed, there may have been incompetence, honest mistake, negligence or even gross negligence in the way in which the Defendant put in motion the pursuit of charges against the Plaintiff. However, that is not sufficient for a finding of malicious prosecution.

The actions of the Municipality came very close to malicious prosecution, given the Municipality’s failure to disclose relevant evidence to investigating officers. This included the fact that the Municipality had misplaced or lost a large number of files which may have, in fact, contained information relevant to the criminal investigation and the fact that the former Municipality of Galway-Cavendish had already conducted an investigation in relation to the Parker property (exhibit four) in 1995. However, in this case the police carried out the investigation and the Municipality was merely the complainant. The police were not in any way hindered or obstructed in relation to the nature and extent of the investigation that it undertook.

The investigating officers in this case acknowledged that it was their decision, after their own investigation, to lay charges. ... There was no evidence that the Municipality in any way obstructed or intentionally interfered with the conduct of the police investigation.

I do raise a concern that John Beaven, the former Chief Building Official, could not explain why he did not disclose the 1995 building committee investigation and the missing Municipal files. 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. However, I do not find that his actions amounted to a fraud committed against the criminal justice system and I am unable to find that he intentionally and knowingly withheld exculpatory evidence from the police. He was indeed misguided in doing so, however, in the end, the decision to prosecute Mr. Pate was a decision of the investigating police officers. No evidence was presented to suggest, had the police undertaken a questioning of other municipal employees or officials, that they could not have determined this information on their own accord.

To that end, the police in this instance had the ability to undertake a meaningful investigation and exercise their discretion to prosecute or not. In this case, the complainant Municipality cannot be found to have initiated the charge as laid by a police officer. [Citations omitted.]

Mr. Beaven provided the information which placed the police investigation into play. However, the decision to prosecute was that of the police. [Citations omitted.] Even where false information is provided to the police, even in circumstances where the complainant knows it to be false, this does not necessarily constitute “initiation”. (See: Mirra v. Toronto Dominion Bank, supra).

I, therefore, conclude that the Plaintiff has not made out a case for malicious prosecution. [Emphasis added.]

(2) Aggravated Damages

[22] Although the trial judge’s award of aggravated damages is not the subject matter of this appeal, some of his findings on this issue are relevant to the issue of malice.

[23] Before making his findings concerning aggravated damages, the trial judge reviewed the principles governing such an award. He noted, in particular, that aggravated damages “are to take into account the additional harm caused to the Plaintiff’s feelings by the Defendant’s outrageous and malicious conduct (emphasis added).” Further, he said, “[t]hey represent the expression of natural indignation of right-thinking people arising from the malicious conduct of a defendant (emphasis added).”

[24] In deciding to award aggravated damages, the trial judge relied in part on the fact that Mr. Beaven “failed to disclose information to the police which the evidence now shows would have resulted in no charges being levelled against [Mr. Pate].” Further, the trial judge said:

The evidence overwhelmingly shows that the [Township] decided to terminate [Mr. Pate] without advising him as to reasons; without providing him an opportunity to answer allegations made against him; terminated him and then mounted an investigation in order to build a case to justify the termination. I find the actions of [the Township] to have been unfair and insensitive.

I find further that the actions of the [Township] were highhanded and, indeed, oppressive. The [Township] could have met with [Mr. Pate] and disclosed the reasons for his termination. The [Township] could have given him an opportunity to answer the allegations made against him. ... The [Township] could have provided exculpatory evidence to the police in the form of lost files and the 1995 building committee inquiry. To that end, I find that [Mr. Pate] is entitled to aggravated damages ... [Emphasis added.]

(3) Punitive Damages

[25] After reviewing the principles relevant to awarding punitive damages, the trial judge said, “the facts of this case cry out for a punitive award.” He explained this conclusion in the following manner at para. 75 of his reasons:

I find that the actions of the [Township] in withholding exculpatory evidence in this matter to have been an arbitrary decision made by one of its officers which amounted to reprehensible conduct. Had the disclosure been made, no criminal charges would have been levelled against [Mr. Pate] in this matter. Such conduct, to this court, is a departure to a marked degree from ordinary standards of decent behaviour. In this case compensation for wrongful dismissal does not answer the fact that [Mr. Pate’s] career as a municipal official was destroyed as a result of the actions of the [Township]. [Emphasis added.]

[26] The trial judge concluded his reasons with a summary of the damages he awarded. After setting out the amounts awarded for each head of damages, he said, “I would order more, however, I am bound by the principles of proportionality.”

IV. ANALYSIS

(1) Did the trial judge err in failing to find the Township liable to Mr. Pate for malicious prosecution?

[27] The test for malicious prosecution is set out in Nelles v. Ontario, 1989 77 (SCC), [1989] 2 S.C.R. 170 at pp. 192-93:

There are four necessary elements which must be proved for a plaintiff to succeed in an action for malicious prosecution:

(a) the proceedings must have been initiated by the defendant;

(b) the proceedings must have terminated in favour of the plaintiff;

(c) the absence of reasonable and probable cause; and

(d) malice, or a primary purpose other than that of carrying the law into effect.

[28] In his reasons, the trial judge focussed on the issues of initiation and malice, and found that Mr. Pate failed to establish either of these two elements. In my opinion, the trial judge made three errors that undermine his conclusions on these issues and that require that a new trial be ordered.

[29] First, the trial judge set the threshold for proving malice too high. As noted above, relying on Miazga v. Kvello Estate, 2009 SCC 51, [2009] 3 S.C.R. 339, the trial judge framed the test for malice, and his conclusion on the issue, as follows:

In order for me to find malicious prosecution, [Mr. Pate] would be required to prove not only that no reasonable and probable grounds existed for the failed prosecution against him, but also that the [Township] intended to subvert or abuse the criminal justice system. [Citation omitted.]

In this case, there is no evidence upon which I can find that the [Township] exercised such an improper purpose and I cannot simply infer malice in these circumstances. Indeed, there may have been incompetence, honest mistake, negligence or even gross negligence in the way in which the [Township] put in motion the pursuit of charges against [Mr. Pate]. However, that is not sufficient for a finding of malicious prosecution. [Emphasis added.]

[30] The test for proving malicious prosecution is the test articulated in Nelles – and, under the fourth element, it is necessary to show that the defendant was motivated by “malice, or a primary purpose other than that of carrying the law into effect.” In Miazga, the Supreme Court of Canada reaffirmed the improper purpose test for establishing malice from Nelles, and went on to elaborate how the test must be proven in the case of a Crown attorney.

[31] The Supreme Court made it clear in Miazga that while the elements of the test for malicious prosecution remain the same whether a case involves private defendants or Crown defendants, “courts must take care not to simply transpose the principles established in suits between private parties to cases involving Crown defendants without necessary modification”. That is because, in a case involving Crown defendants, “the contours of the tort ... must be informed by the core constitutional principles governing that office.” Those principles led the Court in Nelles “to adopt a very high threshold for the tort of malicious prosecution in an action against a public prosecutor”: Miazga at para. 44.

[32] One of the issues in Miazga was whether an inference of malice can arise from the absence of reasonable and probable grounds. Having regard to the fact that private parties involved in malicious prosecution suits often have a pre-existing relationship, the Supreme Court of Canada noted that in the context of private parties, malice had sometimes been inferred from the surrounding circumstances and the absence of reasonable and probable grounds alone:

As a result, courts in early cases of malicious prosecution were prepared to infer malice from a finding that the prosecution was initiated absent reasonable and probable grounds. Indeed, the circumstances of these cases easily gave rise to the question: why else would a private person initiate a prosecution based entirely on facts not believed to be true, or worse still, known to be false (emphasis added): Miazga at para. 87.

[33] However, the same considerations do not apply to a Crown prosecution where, generally speaking, there is no such pre-existing relationship and, moreover, in making the decision to prosecute, Crown prosecutors are exercising their important role as a “minister of justice”.

[34] The Court concluded that in a case involving a Crown defendant, “a finding of absence of reasonable and probable grounds on the objective standard is entirely equivocal in terms of a Crown prosecutor’s purpose”: Miazga at para. 88.

[35] The Court explained at para. 85 that “a demonstrable ‘improper purpose’ is the key to maintaining the balance struck in Nelles between the need to ensure that the Attorney General and Crown prosecutors will not be hindered in the proper execution of their important public duties and the need to provide a remedy to individuals who have been wrongfully and maliciously prosecuted.” Moreover, “[b]y requiring proof of an improper purpose, the malice element of the tort of malicious prosecution ensures that liability will not be imposed in cases where a prosecutor proceeds absent reasonable and probable grounds by reason of incompetence, inexperience, poor judgment, lack of professionalism, laziness, recklessness, honest mistake, negligence or even gross negligence.” As stated by Lamer J. in Nelles at pp. 196-97:

It should be noted that what is at issue here [in a suit for malicious prosecution] is not the exercise of a prosecutor’s discretion within the proper sphere of prosecutorial activity as defined by his role as a “minister of justice”. Rather, in cases of malicious prosecution we are dealing with allegations of misuse and abuse of the office of the Crown Attorney. We are not dealing with merely second-guessing a Crown Attorney’s judgment in the prosecution of a case but rather with the deliberate and malicious misuse of the office for ends that are improper and inconsistent with the traditional prosecutorial function: [Emphasis added in Miazga.]: Miazga at para. 81.

[36] At para. 89 of Miazga, the Supreme Court summarized the requirements for proving malice against a Crown prosecutor:

In summary, the malice element of the test for malicious prosecution will be made out when a court is satisfied, on a balance of probabilities, that the defendant prosecutor commenced or continued the impugned prosecution with a purpose inconsistent with his or her role as a “minister of justice”. The plaintiff must demonstrate on the totality of the evidence that the prosecutor deliberately intended to subvert or abuse the office of the Attorney General or the process of criminal justice such that he or she exceeded the boundaries of the Office of the Attorney General. [Emphasis added.]

[37] In this case, the trial judge incorporated some of the standards set out in Miazga for establishing malice by a Crown attorney into the requirements for establishing malice by a private individual. In particular, he concluded that he could not simply draw an inference of malice from the surrounding circumstances and the absence of reasonable and probable cause, considered objectively. Rather, he also required Mr. Pate to establish that the Township intended “to subvert or abuse the criminal justice system” to establish malice. The trial judge thus recast and narrowed the language of the malice element of the cause of action from motivated by “malice, or a primary purpose other than that of carrying the law into effect” to “intended to subvert or abuse the criminal justice system.”

[38] In my opinion, in doing so, the trial judge set the standard for proving malicious prosecution against a private individual too high.

[39] The Supreme Court of Canada made it clear in Miazga that the standards for proving malicious prosecution against a Crown attorney are set at a very high threshold to ensure that courts do not engage in reviewing the prosecutorial discretion that rests, constitutionally, with Crown attorneys and to ensure that an action for malicious prosecution will lie against a Crown attorney only when he or she steps outside of his or her proper role as a minister of justice. The same considerations simply do not apply where the action is against a private individual.

[40] The trial judge’s second error consists of making findings about malice when addressing damages for wrongful dismissal that are inconsistent with his findings about malice in relation to malicious prosecution.

[41] For convenience, I again set out the trial judge’s findings at paras. 56 and 60 of his reasons concerning malice when addressing the issue of malicious prosecution:

In this case, there is no evidence upon which I can find that the [Township] exercised such an improper purpose and I cannot simply infer malice in these circumstances. Indeed, there may have been incompetence, honest mistake, negligence or even gross negligence in the way in which the [Township] put in motion the pursuit of charges against [Mr. Pate]. However, that is not sufficient for a finding of malicious prosecution.

I do raise a concern that John Beaven, the former Chief Building Official, could not explain why he did not disclose the 1995 building committee investigation and the missing Municipal files. 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. However, I do not find that his actions amounted to a fraud committed against the criminal justice system and I am unable to find that he intentionally and knowingly withheld exculpatory evidence from the police. He was indeed misguided in doing so, however, in the end, the decision to prosecute Mr. Pate was a decision of the investigating police officers. No evidence was presented to suggest, had the police undertaken a questioning of other municipal employees or officials, that they could not have determined this information on their own accord. [Emphasis added.]

[42] Despite these conclusions, when dealing with the issue of aggravated damages, which the trial judge indicated involve compensation for “malicious conduct”, the trial judge said, “[t]he facts of the case ... require the imposition of aggravated damages.” He relied, in part, on his findings that the Township made an “offer of clemency [to not call for a police investigation]” to Mr. Pate and that Mr. Beaven failed to disclose information to the police “which the evidence now shows would have resulted in no charges being levelled against [Mr. Pate].” Most importantly, he said,

The evidence overwhelmingly shows that the council of the [Township] decided to terminate [Mr. Pate] without advising him as to reasons; without providing him an opportunity to answer allegations made against him; terminated him and then mounted an investigation in order to build a case to justify the termination. [Emphasis added.]

[43] Particularly in the light of his findings that aggravated damages were justified, at least in part, because the Township terminated Mr. Pate’s services, offered him clemency if he would resign, subsequently mounted an investigation to justify its actions and failed to disclose exculpatory evidence to the police, the trial judge’s finding that this case calls for aggravated damages appears to contradict his conclusion that there was no evidence based on which he could find an improper purpose. Moreover, considered in the light of these circumstances, the lack of reasonable and probable grounds on an objective standard[^2] could also support a finding of malice.

[44] Further, as I have indicated, at para. 75 of his reasons, when addressing the issue of punitive damages, the trial judge said:

I find that the actions of the [Township] in withholding exculpatory evidence in this matter to have been an arbitrary decision made by one of its officers and which amounted to reprehensible conduct. Had the disclosure been made, no criminal charges would have been levelled against [Mr. Pate] in this matter. Such conduct, to this court, is a departure to a marked degree from ordinary standards of decent behaviour. [Emphasis added.]

[45] The findings that Mr. Beaven’s failure to disclose exculpatory evidence amounted to “reprehensible conduct” and “a departure to a marked degree from ordinary standards of decent behaviour” fly in the face of the trial judge’s earlier conclusions that the Township was no more than grossly negligent and that Mr. Beaven did not knowingly withhold exculpatory evidence from the police.

[46] The trial judge’s third error relates to the first step in the test for malicious prosecution – namely, a plaintiff must prove that the prosecution was initiated by the defendant.

[47] It is well-established that a defendant may be found to have initiated a prosecution even though the defendant did not actually lay the information that commenced the prosecution. Although this court has not determined “all the factors that could, in any particular case, satisfy the element of initiation”, it has held that a defendant can be found to have initiated a prosecution where the defendant knowingly withheld exculpatory information from the police that the police could not have been expected to find and did not find and where the plaintiff would not have been charged but for the withholding: McNeil v. Brewers Retail Inc., 2008 ONCA 405 at para. 52.

[48] In this case, the trial judge made two findings that are important to the issue of initiation. First, he said, “I do not find that [Mr. Beaven’s] actions amounted to a fraud committed against the criminal justice system and I am unable to find that he intentionally and knowingly withheld exculpatory evidence from the police.”

[49] Second, he found that, “in the end, the decision to prosecute Mr. Pate was a decision of the investigating police officers. No evidence was presented to suggest, had the police undertaken a questioning of other municipal employees or officials, that they could not have determined [the exculpatory evidence] on their own accord. To that end, the police in this instance had the ability to undertake a meaningful investigation and exercise their discretion to prosecute or not.”

[50] The trial judge’s misstatement of the test for malice and his inconsistent findings undermine his first finding in relation to initiation. Even so, the trial judge’s second finding, if unimpeachable, is fatal to the claim for malicious prosecution.

[51] However, if it is determined at a new trial that Mr. Beaven knowingly withheld exculpatory information from the police, to decide whether the element of initiation is satisfied, in my view, it will also be necessary to assess whether the conduct of Mr. Beaven undermined the independence of the police investigation and the independence of the decision-making process concerning whether to lay charges and prosecute.

[52] The trial judge stated that “[n]o evidence was presented to suggest, had the police undertaken a questioning of other municipal employees or officials, that they could not have determined [the exculpatory evidence] on their own accord.” But, the trial judge did not refer to the statements provided by Mr. Beaven, or make any findings concerning whether the manner in which they were presented impacted the independence of the police investigation.

[53] The statements provided by Mr. Beaven, in and of themselves, created reasonable and probable grounds for laying charges against Mr. Pate. Officer Stokes said so in his evidence. Moreover, in most of his statements, Mr. Beaven said he searched the records of the Township looking for an indication that permits had been issued concerning the relevant properties, and found that no such records existed. In these circumstances, if it is determined at a new trial that Mr. Beaven knowingly withheld exculpatory information, it will be necessary also for the trial judge to assess whether Mr. Beaven prepared his statements in a manner that misled the officers into not conducting their own search of the relevant records – and, if he did, whether that is sufficient in all the circumstances to satisfy the element of initiation. In this instance, the trial judge failed to carry out any such assessment.

[54] I am mindful of the fact that proving malicious prosecution presents a significant hurdle in relation to any defendant, whether Crown prosecutor, police officer or private citizen.

[55] In such circumstances, an appellate court should exercise considerable caution before ordering a new trial with respect to such a claim. In this case, however, even though he dismissed Mr. Pate’s claim, the trial judge found the Township “came very close to malicious prosecution.” Having regard to this finding, and the errors the trial judge made, I conclude that this is an appropriate case in which to order a new trial concerning Mr. Pate’s claim for malicious prosecution.

(2) Did the trial judge err in assessing punitive damages at only $25,000?

[56] The trial judge’s award of $25,000 on account of punitive damages relates to Mr. Pate’s claim for wrongful dismissal. If Mr. Pate’s claim for malicious prosecution succeeds at the new trial, it will be necessary for the trial judge to consider all heads of damages arising from the conduct giving rise to that claim.

[57] The remaining issue is whether the trial judge in this case erred in his award of punitive damages relating to the wrongful dismissal. In the particular circumstances of this case, I would hold that the punitive damages award should be set aside and a new trial ordered in relation to that issue.

[58] After addressing the issue of punitive damages, in the conclusion section of his reasons the trial judge listed the amount awarded for each head of damages and then said, “I would order more, however, I am bound by the principles of proportionality.”

[59] Although it may not be entirely clear, it is reasonable to conclude that the trial judge’s statement that he would order more referred to punitive damages – after all, proportionality in several dimensions is the “key to the permissible quantum of punitive damages”: Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595 at para. 111.

[60] The standard of appellate review applicable to punitive damages is whether a reasonable jury, properly instructed, could have concluded that an award in that amount, and no less, was rationally required to punish the defendant’s misconduct: Whiten at para. 96

[61] The trial judge made an express finding, when addressing the issue of punitive damages, “that the Defendant's egregious conduct in making unfounded claims, both in the criminal action and in its Statement of Defence respecting the employee's conduct, amounted to the intentional infliction of mental distress and social and economic damage.” That finding was not challenged on appeal. It was therefore open to the trial judge, on the applicable authorities, to award punitive damages: Vorvis v. Insurance Corp. of British Columbia, 1989 93 (SCC), [1989] 1 S.C.R. 1085 at pp. 1105-06; Whiten v. Pilot Insurance Co., supra at paras. 79-82; Honda Canada Inc. v. Keays, 2008 SCC 39, [2008] 2 S.C.R. 362 at paras. 68-69.

[62] Taking account of the trial judge’s findings of significant misconduct on the part of the respondent that lasted over a lengthy period and that had a devastating impact on the appellant’s life, as well as the amounts awarded under the other heads of damages, it is not immediately apparent why whatever higher amount of punitive damages the trial judge was considering would not have been appropriate. The trial judge gave no explanation for his conclusion that a higher award of punitive damages would offend the “principles of proportionality”. In these unusual circumstances, the trial judge’s reasons are not susceptible to appellate review and a new trial on this issue should therefore be ordered.

IV. CONCLUSION

[63] Based on the foregoing reasons, I would allow the appeal, set aside the trial judge’s order dismissing Mr. Pate’s claim for malicious prosecution and his award of punitive damages for wrongful dismissal and order a new trial concerning these issues. If the parties are agreeable, I would direct that the new trial be conducted before the same trial judge on such terms and conditions that are considered just in relation to calling further evidence and making further submissions.

[64] Costs of the appeal are to the appellant fixed in the amount of $10,000, inclusive of disbursements and all applicable taxes.

Signed: “Janet Simmons J.A.”

“I agree E.A. Cronk J.A.”

“I agree J. MacFarland J.A.”

RELEASED: “JS” April 28, 2011

[^1]: It appears that the trial judge and counsel relied on this Court’s decision in Slepenkova v. Ivanov, 2009 ONCA 526 to support their conclusion that, despite Honda Canada Inc. v. Keays, 2008 SCC 39, [2008] 2 S.C.R. 362, an award in the form of a “Wallace bump-up” was appropriate on the facts of this case. Nothing in these reasons should be taken as endorsing that proposition.

[^2]: The trial judge did not make a specific finding concerning the third step of the malicious prosecution test. However, given that he did not rely on the existence of reasonable and probable grounds as a basis for dismissing the claim and found that the Township “came very close to malicious prosecution”, it is reasonable to assume that he found an absence of reasonable and probable grounds.