PETERBOROUGH COURT FILE NO.: 328/03

DATE: 2012-12-03

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: The Estate of John Gordon Pate, Plaintiff

AND:

The Corporation of the Townships of Galway-Cavendish and Harvey, Defendants

BEFORE: Mr. Justice D.S. Gunsolus

COUNSEL:
Mr. Jeffrey D. Ayotte and Mr. D.J.M. O’Neill, for the Plaintiff
Mr. George Avraam and Mr. Mark Mendl, for the Defendant

HEARD: November 19, 2012

ENDORSEMENT

Background

[ 1 ] This matter was originally heard by me on November 16, 17, 18, 20, 24 and 25, 2009. On November 19, 2012, I heard a re-argument of the facts and law related to the issue of malicious prosecution.

[ 2 ] During the original trial, counsel advised that the parties had consented to a finding that the Plaintiff had been wrongfully terminated by the Defendant. They agreed that the damages for that aspect of the claim would be an amount equivalent to twelve months’ pay in lieu of notice, inclusive of costs and interest.

[ 3 ] In addition to the above, I rendered judgment in this matter and granted the Plaintiff the following relief:

(i) 4 months income as a Wallace bump up: $23,413;

(ii) Special damages: $7,500;

(iii) General and aggravated damages: $75,000;

(iv) Punitive damages: in the amount of $550,000. [1]

(v) Pre-judgment interest: $74,032;

(vi) Substantial indemnity costs, disbursements and GST: $74,149

[ 4 ] Mr. Pate served the Corporation of the Township of Galway-Cavendish, as Chief Building Official from 1989 until December 31 st , 1998. At that time, the Township amalgamated with the Township of Harvey, resulting in the Defendant, the Corporation of the Township of Galway-Cavendish and Harvey. As a result of amalgamation, Mr. Pate became a building inspector in the newly created Building Department, with Mr. John Beaven assuming the role as Chief Building Official.

[ 5 ] On the 26 th day of March, 1999, Mr. Beaven, in accordance with instructions directed to him by Chief Administrative Officer John Millage, Mr. Beaven terminated Mr. Pate, indicating that discrepancies had been uncovered with respect to building permit fees. Mr. Pate was never provided particulars of these allegations and was told that if he resigned, the Municipality would not contact the police.

[ 6 ] Subsequent to these events, the Municipality conducted an investigation and in the result, turned some information over to the Ontario Provincial Police and in the face of the reluctance by the investigating officers to lay charges, exerted pressure through those higher in command within the Ontario Provincial Police organization. In the result, charges were laid and Mr. Pate was the subject of a four day criminal trial which ultimately resulted in his acquittal on all charges.

[ 7 ] The local media reported extensively on these criminal proceedings and Mr. Pate remained in the public spotlight from his wrongful dismissal on the 26 th of March, 1999 until his acquittal on the 17 th of December 2002. Mr. Pate did not obtain employment in the municipal field again, and sadly, passed away in January, 2011.

[ 8 ] This matter was brought back before me as a result of the Ontario Court of Appeal decision, dated the 28 th of April, 2011. By that decision, the Ontario Court of Appeal required, inter alia , a reconsideration of the issue as to whether or not the Defendant Township should be found liable to the Plaintiff for malicious prosecution.

[ 9 ] The Court of Appeal specifically directed a new trial on this issue, stating that if the parties were agreeable, that the new trial be conducted before me as trial judge on such terms and conditions that are considered just, in relation to calling further evidence and making further submissions.

[ 10 ] Counsel for the parties urged me to reconsider this issue, based upon the existing evidentiary record and did not wish to, and did not, call any additional evidence.

[ 11 ] Further, counsel acknowledged that, given the entire range of damages I have already awarded in this matter, even if I were to find malicious prosecution to have occurred as a result of the actions of the Defendant Township, additional damages would be in the nominal amount of $1. This was an acknowledgment by the parties that the damages that I have ordered to date adequately compensate the Plaintiff in the circumstances of this case. Further, counsel agreed that costs would be fixed in the amount of $20,000, inclusive of HST and disbursements payable in the cause, to the victorious party.

The Law

[ 12 ] For the purposes of this reconsideration of the law and evidence, the test for malicious prosecution is set out in Nelles v. Ontario 1989 , [1989] 2 S.C.R. 170 at pages 192-193: 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;

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

[ 13 ] In the matter before me, counsel centred their arguments on the issues of initiation and malice.

[ 14 ] The test as articulated in Nelles , supra , under the fourth element, requires proof that the defendant was motivated by “malice, or a primary purpose other than that of carrying the law into effect”. [2]

[ 15 ] By 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. [3]

[ 16 ] As stated by the Court of Appeal in Pate:

The Supreme Court of Canada made it clear 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 they step outside of their proper role as a minister of justice. The same considerations simply do not apply where the action is against a private individual. [4]

[ 17 ] The Court of Appeal has made it clear that the test to be applied in this case is that applicable to an “individual”, as opposed to a Crown attorney. Where the Crown attorney is a defendant, the conduct must rise to the level of malice, defined as:

A deliberate and improper use of the office of the Attorney General or Crown Attorney, a use inconsistent with the status of minister of justice, and one in which the “Defendant” perpetrated a fraud in the process of criminal justice, and in doing so perverts or abuses their office and the process of criminal justice. [5]

[ 18 ] In this case, the Defendant is not the Crown, but rather a municipality which derives its powers from legislation, as in this case, passed by the provincial legislature and as proclaimed into force by the Crown. The allegations here are not against the Crown and perhaps, therein lies the difference in the test to be applied. In a case involving Crown defendants, the test for the tort of malicious prosecution reflects the constitutional principles governing that office. It is those principles that were applied in Nelles such that a very high threshold was adopted for the tort of malicious prosecution when the action is against the Crown. Simply put, the Defendant Municipality in this case, does not enjoy the same degree of immunity, as does the Crown. [6]

[ 19 ] Further, the Plaintiff in this case must prove that the prosecution was initiated by the Defendant. The Defendant may be found to have initiated a prosecution even though the Defendant did not actually lay the information that started the prosecution. As stated in Pate :

Although this court has not determined “all the factors that could, in any particular case, satisfy the element of initiation”, the Court of Appeal 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. [7]

[ 20 ] “Proving malicious prosecution presents a significant hurdle in relation to any Defendant, whether Crown prosecutor, police officer or private citizen.” [8] A Plaintiff bringing a claim for malicious prosecution has “no easy task”. [9] In proving malicious prosecution, the bar has been set at a very high level and has a very difficult burden to meet to make out such a claim. [10]

Initiation of Proceedings

[ 21 ] A Defendant may be found to have initiated a prosecution, even where the Defendant has not actually laid the information to commence the prosecution. This was the case in McNeil v. Brewer’s Retail Inc., 2008 ONCA 405 , [2008], O.J. No. 1990 (C.A.), where the Court of Appeal held that the Defendant had initiated the prosecution where it 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 of the information. [11] It should be noted that in McNeil , the information was actually given to the police; however, they apparently did not have the expertise to discover the information on the tapes provided to them. One wonders why they did not access such expertise? As suggested by Mr. Ayotte in this case, it leaves one to speculate that McNeil was not just about the fact of withholding the information, but rather one must look at the conduct of the Defendant in that case. The impugned conduct in McNeil was the failure to point out the exculpatory information, within the disclosure, which seems to be the root of that decision.

[ 22 ] As in the McNeil case [12] , the Municipality had information that it withheld. It would be next to impossible for the O.P.P. to have uncovered this withheld information, given the statements prepared by Mr. Beaven, which indicated that a careful search had been undertaken and that files relating to these issues did not exist. John Millage, Chief Administrative Officer, knew that the Municipality had lost files, as did others within the Defendant Municipality – it being “common knowledge”. This fact was never disclosed by the Defendant.

[ 23 ] Finally, the Court of Appeal has determined that a private individual may be treated as prosecutor for the purposes of a claim of a malicious prosecution in certain exceptional circumstances, including where the complainant intended that the Plaintiff be prosecuted; based upon facts within the complainant’s knowledge such that it would be virtually impossible for investigating police to exercise independent judgment; and the complainant furnished information which they knew to be false or withheld information which the complainant knew to be true, or both. [13] This too would only apply to the Defendant in this case.

Did the Defendant initiate the proceedings against Mr Pate?

[ 24 ] The Court of Appeal has acknowledged that it has not determined all of the factors that could, in any particular case, satisfy the element of initiation. [14]

[ 25 ] There are a number of ways in which a Defendant could be found to have initiated proceedings, including withholding potentially exculpatory information [15] and being “the proximate cause or the initiation of charges.” [16]

[ 26 ] In this case, the Chief Building Official’s conduct in withholding exculpatory information (the fact that the files relating to the issues in question had been lost during a move of the municipal offices and the fact that at least one of the cases had already been determined by a committee of council to be without foundation) not only undermined the independence of the police investigation, but was, as I found then, “reprehensible conduct”.

[ 27 ] In fact, the evidence of the Investigating Officer Stokes was that, had he known of the existence of the evidence withheld by the Municipality, he would not have laid charges.

[ 28 ] As Officer Stokes acknowledged, the statements provided by Mr. Beaven, the Chief Building Officer of the Defendant Municipality, in relation to each of the counts laid against Mr. Pate, provided the reasonable and probable grounds for laying the charges against Mr. Pate. Mr. Beaven told the police that he had searched the records of the Municipality looking for an indication that the permits had been issued concerning the relevant properties and found that no such records existed. He did not go on to advise the police that many files and records had been lost during a move of the municipal office in question. Further, the evidence of Juenne Simpson, a municipal employee, was that she had, at the request of Mr. Beaven, reviewed the statements that he had prepared. While Mr. Ayotte argued that she could have, at that point in time, ensured that the police were aware that files were lost during the move, her evidence was that this fact concerning the missing files was “common knowledge” and clearly that was within Mr. Beaven’s knowledge even though, in evidence, he came across as being unclear on this point.

[ 29 ] Acting on the instructions of Mr. Millage, the Chief Administrative Officer of the Municipality, Mr. Beaven conducted his own investigation and it was not until he decided that there were reasonable and probable grounds that he turned his statements and information over to the police.

[ 30 ] Again, Officer Stokes gave information at the trial of this action, that had he known that the Parker matter had already been investigated by the 1995 Galway-Cavendish Building Committee, he would not have laid charges in relation to the Parker property. Further, he advised the court that had he known about the missing municipal files, he would not have laid charges in relation to the Pruenster, Robertson, Miller, Barillaro and Hottot properties. Officer Stokes knew that Mr. Beaven was a retired police officer, having been a staff sergeant for many years prior to his retirement. It was clear from Officer Stokes’ evidence that he accepted the statements provided by Mr. Beaven as forming the foundation for the reasonable and probable grounds he developed in order to lay charges against Mr. Pate.

[ 31 ] Officer Stokes gave evidence that when he reviewed the statements as prepared by Mr. Beaven, he was told that the case against Mr. Pate was “going to be very big”. He confirmed that he formed reasonable and probable grounds to lay charges on each of these matters “when he received and read the statements” as authored by John Beaven.

[ 32 ] In McNeil v. Brewer’s Retail , the police received all of the evidence in the possession of the complainant, albeit not the expertise to discover all of the evidence within that disclosure. In the case before me, the police were not given all of the information, and by failing to provide the exculpatory evidence, I find that the Defendant initiated these proceedings.

Proximate Cause

[ 39 ] I further find that there is sufficient evidence to conclude that the Township’s conduct was the proximate cause of this prosecution. In this case, the Township supplied evidence by way of statements prepared by Mr. Beaven to the police. It was based upon these statements that the police formed the foundation for reasonable and probable cause to pursue the charges. Evidence of the investigating officers disclosed that they and the Crown relied almost entirely on this evidence. And of course, we know that, had they been provided the aforementioned exculpatory evidence, no charges would have been laid against Mr. Pate.

[ 40 ] This is not a case where withholding of exculpatory information could be considered an “honest mistake” as in Mirra v. Toronto Dominion Bank .

Reasonable and Probable Grounds

[ 41 ] In an action for malicious prosecution, it is necessary to determine whether or not there was reasonable and probable cause for instituting the prosecution.

[ 42 ] If the Plaintiff can establish that the Defendant either lacked a bona fide belief in the existence of such cause, or that the grounds for initiating the prosecution were objectively unreasonable, the Plaintiff will have established this element. In this case, I accepted the evidence of Officer Stokes when he said that had he known:

a. The Building Committee of the Defendant in 1995 had investigated the Parker permit issue and decided that no charges were warranted;

b. The Defendant knew that no building permit was required for the Hottot renovation; and

c. Knew that many files had been lost or gone missing after the closing of the Defendant’s Cavendish satellite office;

he would have not laid the charges against Mr. Pate.

[ 43 ] Given all of this knowledge, the Municipality cannot argue that it had reasonable and probable grounds to believe that Mr. Pate had committed any crimes. Objectively, it is clear that a reasonable person, knowing all that the Township knew, could not think that reasonable and probable grounds existed for the laying of criminal charges.

Malice

[ 44 ] As stated before, the Supreme Court of Canada in Nelles describes the fourth element of malicious prosecution as being malice, or a primary purpose other than that of carrying the law into effect. At trial, it was determined that the evidence overwhelmingly showed that the council of the Defendant terminated Mr. Pate without providing him reasons and without providing him an opportunity to answer allegations made against him. After taking these steps, the Municipality mounted an investigation in order to build a case to justify the termination.

[ 45 ] Malice has also been described as “use of the criminal justice system for an improper purpose.”

[ 46 ] The Defendant’s failure to disclose exculpatory evidence to the investigating officers amounted to reprehensible conduct and a marked departure from ordinary standards of decent behaviour.

[ 47 ] The evidence of Mr. Beaven was that he had been instructed by his superior to dismiss Mr. Pate and offer clemency from criminal charges if he, Mr. Pate agreed to resign. He further gave evidence that he had been instructed to build a case against Mr. Pate, subsequent to this wrongful dismissal. Therefore, there is evidence that the Township initiated proceedings for “a reason other than simply bringing the law into effect.” We also have the evidence of Officer Stokes that pressure was brought upon him by his superiors to lay charges. In fact, Officer Stokes described a very odd turn of events. He indicated that the criminal matters were turned over to another investigating officer, which he confirmed was very unusual, but it was done because “The Township had complained that I took too long to lay charges in this matter.” He again confirmed that he laid the charges based upon the package of statements provided by Mr. Beaven as he believed the statements “would stand up in court”. It was his evidence that the Municipality wanted charges laid, as this civil action had already been commenced. In fact, he was removed from the prosecution of this matter and was “written up”, allegedly for his tardiness in deciding whether to lay charges

[ 48 ] All the foregoing leads one to the conclusion that there was more than ample evidence to conclude that the Township initiated the criminal proceedings against Mr. Pate without reasonable and probable grounds to believe that he had committed the thefts and it did so maliciously in order to avoid civil liability for the termination of his employment. The Defendant offered no evidence to refute this. Indeed, Officer Stokes indicated that he reviewed the matter with a local Crown attorney, who did not recommend that charges be laid, and who allegedly opined, that the Township should “undertake its own dirty work”. While I do not make my decision based upon such a statement, it underlines the backdrop against which the Defendant’s actions were taken through its authorized officer, Mr. Beaven.

[ 49 ] While the Defendant’s actions in this matter could be described as sloppy, negligent or reckless, they went well beyond this. They were malicious in that the Defendant provided misleading statements and failed to provide exculpatory evidence through Mr. Beaven such that, the Defendant undermined the independence of the police investigation and the independence of the decision making process concerning the laying of charges and ultimate prosecution against Mr. Pate. But for the statements provided by Mr. Beaven and but for his failure to provide the police with the exculpatory evidence in his possession, it is clear from the evidence of the investigating officers, that no charges would have been laid against Mr. Pate.

Were the criminal proceedings terminated in favour of the Plaintiff?

[ 50 ] Finally, in relation to the second element of the Nelles test, of course, Mr. Pate was successful in having all charges against him dismissed. Termination of the criminal proceedings was clearly in his favour.

Summary

[ 51 ] All the foregoing leads to only one possible conclusion. The Defendant Municipality pursued criminal charges against Mr. Pate for a purpose other than bringing the law into effect. It wanted to shield itself from his civil action.

[ 52 ] All four elements of the test for malicious prosecution as set out in Nelles v. Ontario , have been satisfied.

Finding

[ 53 ] I therefore find:

(1) The Municipality to be liable to Mr. Pate for malicious prosecution;

(2) Pursuant to the agreement of counsel, I award damages to the Plaintiff in the amount of $1.00;

(3) The Defendant shall pay to the Plaintiff, costs as agreed, in the amount of $20,000, inclusive of HST and disbursements, payable in the cause.

“Mr. Justice D.S. Gunsolus”

Date: December 3, 2012