Court File and Parties

COURT FILE NO.: CV-17-129350 DATE: 2018-12-03

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Bharath Sankreacha Plaintiff

– and –

Cameron J. and Beach Sales Ltd., John Cowan, JMC Legal Services Inc., and Rod Brennan Defendants

COUNSEL: James Jagtoo, Frances Jagtoo, for the Plaintiff Martin A. Smith, Desneiges Mitchell, Marla Rosenblatt-Worth, for the Defendants, Cameron J. and Beach Sales Ltd. and Rod Brennan Andrew W. Graham, for the Defendants, John Cowan and JMC Legal Services Inc.

HEARD: May 14-18, 22-25, 28-31, June 1, 4 and September 14, 2018

REASONS FOR JUDGMENT

TABLE OF CONTENTS

Page

Introduction

A. Facts

The Discovery of the KGB Spyware - June 21, 2010

The Arrest of Mr. Sankreacha

Discovery of the Thumb Drive on the Key Chain

Mr. Sankreacha is Dismissed

Installation of the KGB Spyware

The Pin Pad Fraud – June 22, 2010

B. Analysis

Wrongful Dismissal

Who installed the KGB Spyware?

The “Upsell” Theory

The Pin Pad Fraud Diversion Theory

Conclusion Re: Proof of Just Cause

Was Installation of the KGB Spyware Just Cause for Dismissal?

Disposition: Wrongful Dismissal

Notice Period

Punitive and/or moral damages

Inducing Breach of Contract

Injurious Falsehood

Defamation

Intentional Infliction of Mental Suffering

False Imprisonment

Malicious Prosecution

Were the proceedings initiated by the defendant?

Did the defendants have reasonable and probable grounds to initiate the prosecution?

Was Mr. Cowan actuated by malice?

Disposition: Malicious Prosecution

Civil Conspiracy

Limitation Period

Conclusion

CHARNEY J.:

Introduction

[1] The plaintiff, Bharath Sankreacha, is a former Service Advisor at the Canadian Tire store in Markham, Ontario. He was dismissed from his employment on June 21, 2010, after being accused of installing spyware on his employer’s computer and being charged by the police with unauthorized possession of credit card data.

[2] The charges against Mr. Sankreacha were withdrawn by the Crown on August 10, 2011.

[3] Mr. Sankreacha brought this claim for wrongful dismissal, inducing breach of contract, injurious falsehood, intentional infliction of mental distress, defamation, false imprisonment, malicious prosecution, and civil conspiracy.

[4] Named as defendants in this action are: i) Mr. Sankreacha’s former employer and corporate owner of the Markham Canadian Tire franchise, Cameron J. and D. Beach Sales Ltd., ii) the Service Manager at the Markham Canadian Tire store’s automotive department and Mr. Sankreacha’s former manager, Rod Brennan, iii) the contractor retained by the franchise to provide security services in the Markham Canadian Tire store, John Cowan, and iv) the corporation owned and operated by Mr. Cowan to provide these security services, JMC Legal Services Inc.

A. Facts

The Discovery of the KGB Spyware - June 21, 2010

[5] On June 21, 2010, the defendant, Rod Brennan, the Automotive Service Manager at the Markham Canadian Tire store, arrived at work sometime around 6:45 a.m. He logged on to the computer in his office using his password and noticed a minimized tab at the bottom of the screen. When he clicked on the tab it brought up an email.

[6] The email appeared to be on Mr. Sankreacha’s personal Hotmail email account. The email was from bharath_sankreacha@hotmail.com to bharath_sankreacha@hotmail.com. There is no dispute that this was the plaintiff’s personal email address.

[7] In addition to the sender and recipient, there was other information on the screen. The email subject was “Rod” (Mr. Brennan’s first name) and referenced “KGB monitoring system”. It also showed the words “17/06/2010 4:41:12 PM Stop recording”. The email was dated Sunday, June 20, 2010, at 8:53 a.m. and contained an attachment.

[8] Mr. Brennan was not sure what to make of this, but he was concerned. He called two other employees into his office to look at his computer screen and ask them their opinion. At about 8:00 a.m., he called in the General Manager, Sasha Issa, and the owner of the Markham Canadian Tire franchise, Cameron Beach. They too looked at the screen and all agreed that the image on the screen looked suspicious.

[9] Mr. Issa told Mr. Brennan that the image on his screen looked like Mr. Sankreacha was recording something on Mr. Brennan’s computer with spyware, and Mr. Issa printed a copy of the screen and the 48-page attachment to preserve the information. Mr. Beach stated that it looked to him as though data was being sent via the email. He was particularly concerned because there were folders referencing “CTC mastercard” and “CTC0399”, which he thought might relate to credit card information of the store or its customers.

[10] Mr. Issa reviewed the 48-page printout. Several items on the printout contained the letters “SCODEF” followed by numbers and “CREDAT” followed by numbers. Mr. Issa thought that this could relate to Bank of Nova Scotia credit cards. Several other items contained the words “Scotia OnLine Sign-On” followed by a series of numbers, or “Scotia OnLine”, or “Scotia Bank”.

[11] Mr. Brennan testified that he only looked at the first page of the 48-page printout.

[12] Mr. Sankreacha was not scheduled to start work until 2:00 p.m. Mr. Brennan’s first thought was to call Mr. Sankreacha to ask if he could explain what was on the computer screen. Mr. Sankreacha worked in the automotive department and reported to Mr. Brennan. Mr. Brennan described Mr. Sankreacha as his “right-hand man”; he trusted Mr. Sankreacha, and had given Mr. Sankreacha the password to his computer so that Mr. Sankreacha could do the employee scheduling and check his personal emails from work. There is no dispute that only Mr. Brennan and Mr. Sankreacha knew the password to Mr. Brennan’s computer.

[13] Mr. Brennan called Mr. Sankreacha at home at about 7:00 a.m. to ask if he could explain the email, but Mr. Sankreacha did not answer. Mr. Brennan left Mr. Sankreacha a voicemail message telling him that there was something serious involving an email on the computer in his office.

[14] Mr. Sankreacha called Mr. Brennan back at about 7:30 a.m., but there was no answer. Mr. Sankreacha then stopped by the store at about 9:00 a.m., but was told by Mr. Brennan that everything was fine and to return to the store for his scheduled shift at 2:00 p.m.

[15] Mr. Brennan called the defendant, John Cowan, who is under contract with the Markham Canadian Tire store to provide security services, including loss prevention and corporate investigations. Mr. Cowan arrived at the store at about 9:15 a.m. and viewed the email on Mr. Brennan’s computer screen and the printout of the attachment. He believed that there was banking information on the printout and he advised Mr. Beach to call someone with computer expertise.

[16] Mr. Beach called in his IT contractor, Allan Valencia, at around 9:30 a.m. to come in and look at the computer screen.

[17] Mr. Valencia provides sales, installation, support and services to his clients’ electronic systems, including telephone, surveillance and computer systems. He attended the store that morning, sometime between 10:30 – 11:00 a.m., and went to see the computer in Mr. Brennan’s office.

[18] Mr. Valencia observed that he was looking at an email to a Hotmail account from the plaintiff’s email address to the plaintiff’s email address. He noted the reference to the KGB Monitoring Software, which he knew was a type of spyware. It is used to record all keystrokes on a computer and take screen shots of the websites the computer is visiting. KGB continuously and secretly monitors the activity of the computer, and the data is collected and put in a log. A password is required to access the data collected by KGB after installation. This data can be used to access bank accounts because the website information will reveal the bank and the keystrokes can be used to figure out the account numbers and password.

[19] Mr. Valencia testified that KGB spyware must be installed on the computer intentionally and manually by a person downloading it from the internet or bringing it in on a CD or USB drive. Since he had installed Sonicwall on the store’s computers to protect them from viruses and malware, it was unlikely that the KGB spyware had been installed from the internet.

[20] When Mr. Valencia looked at the email on the computer, there was a banner at the top which read: “Please sign in again. To help protect your personal information, we periodically sign you out (for example, after 24 hours or when you sign in to a different account).” Mr. Valencia explained that this banner appears when the account has “timed out” due to inactivity. After 24 hours, Hotmail signs the user out automatically as a safety feature. Notably, that banner was not present when Mr. Brennan had opened his computer and printed the screen that morning.

[21] Mr. Valencia believed that Mr. Sankreacha had sent the email from himself to himself. Mr Valencia explained that since the Hotmail account had been logged out, he was looking at cache memory. He could not click on or open any of the attachments because the account had been timed out. Based on this information Mr. Valencia was of the opinion that the email account was opened on Mr. Brennan’s computer the day before, and less than 24 hours before Mr. Brennan had opened it that morning. Mr. Valencia believed that Mr. Sankreacha had opened it the day before and had likely forgotten to close it and sign out.

[22] Mr. Valencia isolated the computer from other computers on the network and conducted a virus scan. The scan confirmed that there was KGB spyware on Mr. Brennan’s computer. There was a KGB folder in the computer’s hard drive, but Mr. Valencia could not open it and view the contents because he did not have the password to open the spyware. He then shut the computer down so it could be used as evidence.

[23] Mr. Valencia concluded that whoever installed the spyware on the computer was sending an email with the data captured by the spyware to himself. He told Mr. Beach that the spyware could have been installed on the computer in the hope of harvesting credit card, banking, and personal identification information that could be used or sold. He advised Mr. Beach that the spyware had captured numbers that could potentially relate to bank accounts. He did not, however, advise Mr. Beach, Mr. Issa, Mr. Cowan, or the police, that the printout contained any credit card or Mastercard information.

[24] Mr. Cowan left the store at about 10:30 a.m. for about 3 hours in order to deal with other matters. While away he called a “contact” who informed him that Mr. Sankreacha’s previous employer had accused Mr. Sankreacha of stealing a hard drive from the employer’s computer. Mr. Cowan believed that Mr. Sankreacha had previously been charged with computer related offences.

[25] Mr. Cowan returned to the store at about 1:00 p.m., and spoke to Mr. Issa who relayed Mr. Valencia’s opinion that there was spyware on the computer. Mr. Issa told Mr. Cowan that there appeared to be credit card data on the printout. Mr. Cowan thought, incorrectly, that Mr. Issa’s information regarding credit card data had come from Mr. Valencia.

The Arrest of Mr. Sankreacha

[26] At 2:00 p.m., Mr. Sankreacha arrived at the store to begin his shift. He was escorted by Mr. Cowan to Mr. Issa’s office to be questioned about the email and see if he had any explanation. Messrs. Issa, Cowan, Beach and Brennan were present for some or all of the interview. Mr. Cowan advised Mr. Sankreacha that he was opening an investigation, but that Mr. Sankreacha was not under arrest, did not have to speak to him, and was free to go at any time. The door to the office was left open.

[27] They showed Mr. Sankreacha the printout of the email and he responded that he did not know anything about it.

[28] They asked Mr. Sankreacha to open his Hotmail account from Mr. Issa’s computer, which he did. The email from Mr. Sankreacha to Mr. Sankreacha with the subject “Rod” that was on the printout was not in Mr. Sankreacha’s email or in his trash. Mr. Sankreacha had no explanation for the email that Mr. Brennan had found on his computer that morning.

[29] Mr. Cowan suspected that Mr. Sankreacha deleted the email after he received Mr. Brennan’s telephone call that morning at about 7:00 a.m.

[30] Mr. Beach and Mr. Cowan decided to call the police. Mr. Beach and Mr. Brennan left and returned to their respective offices.

[31] Mr. Cowan advised Mr. Sankreacha that he could either leave or wait for the police. Mr. Sankreacha chose to remain.

[32] Mr. Cowan called the police at about 2:58 p.m. A transcript of this phone call was made an exhibit to the trial and forms the basis of several of Mr. Sankreacha’s claims. In this phone call Mr. Cowan introduced himself as security for the Markham Canadian Tire store and made the following comments:

We have an employee…it appears at this point he accessed an internal computer and downloaded some spyware on it and collected a whole bunch of personal information regarding the manager’s, all of the manager’s bank accounts as well as internal CTC Mastercard accounts and all of that. He has got a bit of a history of it from his past employer as well so I would like the police to come in.

He basically downloaded a whole bunch of information like tons of CTC Canadian Tire account numbers, everything that would be on a computer from the mainframe he downloaded and sent it to his email. The forensic computer, forensic auditor came in today and confirmed that he was in fact in possession of it and when he is cautioned and then questioned about it he denied having using his account so he is definitely responsible for it and he has got a past before from doing the same thing in another company.

I’m just going to give you the information in a second…he is not detained or anything, he is cooperating at this point.

I don’t know I have never been faced with this type of investigation but I know where there is possession of all this stuff that went to him well it’s all in the paper so what basically happened is that the forensic computer guy came in and confirmed that all of this stuff went to his email address and it was the result of him installing software on the computer so there would be no other way for him to send all of this stuff to him unless you know he was the one who installed the software because it’s going to his email account so he is definitely responsible for the theft of the information so they may call the detectives and there may be enough evidence to bring him in for it right because this involves all kinds of accounts.

[33] Police Constable Marshall of the York Regional Police came to the Markham Canadian Tire store at about 3:16 p.m. and spoke to Mr. Cowan, who showed him the email and the 48-page printout. P.C. Marshall then spoke with Mr. Sankreacha at 3:45 p.m. Mr. Sankreacha was calm and cooperative. P.C. Marshall placed Mr. Sankreacha under arrest for unauthorized possession of credit card data contrary to s. 342(3) of the Criminal Code. Mr. Sankreacha was handcuffed in the office and taken out to the police vehicle where he was read his right to counsel.

[34] P.C. Marshall testified that the decision to arrest and handcuff Mr. Sankreacha was his decision, and no one at the Canadian Tire store encouraged him to do this. He made this decision based on his review of the 48-page printout, which he believed included credit card information. He decided that there were reasonable and probable grounds to arrest Mr. Sankreacha.

[35] Prior to coming to the store, and pursuant to his usual practice, P.C. Marshall ran a Canadian Police Information Centre (CPIC) check on Mr. Sankreacha and discovered that Mr. Sankreacha had previously been charged with theft of data/mischief to data, but the charges had been withdrawn. P.C. Marshall testified that this factor did not have much weight in his decision to charge Mr. Sankreacha.

Discovery of the Thumb Drive on the Key Chain

[36] At this point Mr. Sankreacha’s evidence differs markedly from the evidence of Mr. Cowan and P.C. Marshall, This difference is significant to each of the claims made in the Statement of Claim.

[37] Mr. Sankreacha testified that Mr. Cowan asked Mr. Sankreacha to turn over his store I.D. and his store key. Mr. Sankreacha was nervous, so he gave Mr. Cowan his entire wallet and his entire key chain, including his house key and his car key. He testified that when he gave the key chain to Mr. Cowan there was no USB key or “thumb drive” on the key chain.

[38] Mr. Sankreacha testified that Mr. Cowan gave the key chain to P.C. Marshall. When P.C. Marshall took Mr. Sankreacha to the police vehicle, he asked Mr. Sankreacha if that was his key chain. Mr. Sankreacha confirmed that it was. Mr. Sankreacha did not know that a thumb drive had been placed on the key chain, likely by Mr. Cowan, before it was handed to P.C. Marshall.

[39] Mr. Sankreacha testified that the thumb drive was not his and that he had never seen it before.

[40] Mr. Cowan testified that he was not aware that Mr. Sankreacha had a store key and denied asking Mr. Sankreacha for the store key. He denied receiving Mr. Sankreacha’s wallet and key chain, and denied giving them to P.C. Marshall. Mr. Cowan testified that he did give P.C. Marshall an empty plastic shopping bag in which to place Mr. Sankreacha’s personal items.

[41] P.C. Marshall testified that he took the key chain with the thumb drive on it directly from Mr. Sankreacha, although he was not certain whether that occurred in the office or at the police car. He asked Mr. Sankreacha whether these were his keys, and Mr. Sankreacha responded in the affirmative. P.C. Marshall returned the keys, but he seized the thumb drive and completed a Seized Property Report. Mr. Sankreacha was released at the scene on a “Form 9 Appearance Notice” (promise to appear) with a court date of July 27, 2010.

[42] P.C. Marshall’s evidence in this regard was consistent with his contemporaneous notes, which state: “Asked accused if he drove to work today – Accused says yes. Pick up car key and say with these? Accused says yes. Take Thumb drive from car keys and lodge in property bag. Thumb drive black/silver.”

[43] P.C. Marshall’s evidence was also consistent with the report he prepared at the end of the day, which indicates that “the accused was searched before entering the police vehicle and police located 1 thumb drive, black/silver in colour. The thumb drive was placed in evidence bag…”

[44] P.C. Marshall’s only other involvement in the case was to request a warrant to search the thumb drive on February 14, 2011. He was not the officer in charge of the investigation, and his involvement in the case ended at that stage.

[45] The search of the thumb drive revealed that the KGB spyware was on the thumb drive and it could have been used to install the KGB spyware on Mr. Brennan’s computer.

[46] After the charges against Mr. Sankreacha were withdrawn by the Crown in 2011, the thumb drive was not claimed by anyone and it was eventually destroyed by the police.

Mr. Sankreacha is Dismissed

[47] Mr. Beach testified that he believed that Mr. Sankreacha was responsible for downloading the KGB spyware after discussing the matter with Mr. Valencia. This belief was based on the fact that the email with the data captured by the KGB spyware appeared to have been sent from Mr. Sankreacha’s personal Hotmail email account to Mr. Sankreacha’s personal Hotmail email account on Mr. Brennan’s computer.

[48] Mr. Beach decided to dismiss Mr. Sankreacha on June 21, 2010 when he learned that Mr. Sankreacha had been charged by the police.

[49] The following day Mr. Beach received a telephone call from Mr. Sankreacha’s lawyer, who asked about Mr. Sankreacha’s employment status. Mr. Beach told the lawyer to tell Mr. Sankreacha that he was no longer employed at the Markham Canadian Tire store.

Installation of the KGB Spyware

[50] The defendants called Mr. Jason Green as an expert in computer forensic examination in relation to hard drives. He was asked to examine Mr. Brennan’s computer hard drive to determine whether spyware had been installed, how the spyware program got there, and where the information went.

[51] In order to conduct the examination, Mr. Green was given the whole computer and he made an image of the hard drive so as not to change the original.

[52] After examining the hard drive, Mr. Green confirmed that the “KGB Keylogger” had been installed and used to extract data from the system. He was, however, unable to conclude who had installed the program on the basis of his examination of the computer hard drive.

[53] Mr. Green determined that the KGB spyware had been installed on the system using a USB key on May 21, 2010. The USB key used to install the spyware was inserted at 14:56:21, and the KGB spyware was installed at 15:01:00. Mr. Green testified that it might take only one minute to install the program. The spyware program was then run at 15:35:33 on the same day, meaning that it was fully installed at that time. Nothing was going on between 15:01 and 15:35 – the spyware was just sitting on the computer and waiting to be used.

[54] These times are important to the central issue in this case. The plaintiff argues that these times prove that he could not have been the person who installed the KGB spyware, while the defendants argue that these times prove that he was the person who installed the spyware. I will return to this question later in these Reasons.

[55] The KGB spyware is designed to be covert; there is no KGB icon on the screen, so a person using the computer would not know that it was installed. The KGB spyware can be purchased and downloaded from the internet.

[56] Once installed and running, the spyware acts as a “keylogger” by registering all keys pressed by a user and captures all data entered on the keyboard. The spyware also records all websites visited on the computer.

The Pin Pad Fraud – June 22, 2010

[57] On June 22, 2018, Canadian Tire Corporation Ltd. corporate security received a fraud alert from Moneris, which operated the credit card “pin pads” (the hand held electronic device used in debit and credit card transactions) in the Canadian Tire franchise stores. Canadian Tire Corporation Ltd. is a separate legal entity from the franchise stores, such as the Markham Canadian Tire store, the franchise owned by Mr. Beach.

[58] The fraud alert indicated that a pin pad in the automotive department at the Markham Canadian Tire store had been compromised. Corporate security advised the Markham store by telephone and the pin pad was immediately taken out of operation.

[59] Geoff Lawson, the Corporate Security Manager for Canadian Tire Corporation Ltd., attended the store on June 23, 2010. He met with Francis Tzigeris, the HR Manager of the Markham store, who gave him the automotive department pin pad. Mr. Lawson did not meet with or talk to anyone else in the store, and, in particular, did not meet with or talk to any of the defendants in this case. Mr. Lawson completed an integrity inspection of all the pin pads in the store, including the one in the automotive department. His inspection found obvious signs of tampering on the automotive department pin pad, including a foreign device (a skimming mechanism) behind the access panel located at the bottom of the pad. This device would record and transmit information collected by the pin pad, including the user’s Personal Identification Number (“PIN”) and the information contained on the card’s magnetic strip. Both these pieces of information are necessary to make a counterfeit debit or credit card.

[60] Mr. Lawson noted that there was video surveillance at the store, but the camera did not provide a field of view of the pin pad station at the automotive department. There was, therefore, no video to show who might have installed the skimming mechanism on the pin pad. Mr. Lawson removed the pin pad and sent it for inspection. He also contacted the York Regional Police and filed an occurrence report.

[61] While Mr. Lawson was at the store on June 23, 2010, he was advised by Ms. Tzigeris that an employee of the store was arrested on June 21, 2010 in relation to an allegation that he put spyware on the automotive manager’s computer. Mr. Lawson noted this in his report. He was not advised of the name of the employee or any other details surrounding the incident.

[62] The investigation by Moneris revealed that the skimming device was installed on the pin pad on or before May 21, 2010. The skimming began on May 21, 2010 and continued until June 21, 2010. The fraud activity took place on June 22, 2010, when the information collected from the pin pad was used to withdraw approximately $85,000 from several bank accounts across the GTA.

[63] The Moneris report was not communicated to anyone at the Markham franchise because the financial losses associated with the pin pad fraud are those of the credit card company and the bank; the franchisee has no liability for credit card fraud.

[64] On June 24, 2010, Mr. Lawson emailed a contact at the York Regional Police to alert them to the pin pad fraud and a possible connection between the spyware incident and the pin pad fraud. He stated:

Hi Andrew, wanted to let you know about the incident with our Markham store. See the summary at the bottom and feedback from our financial services folks for risk to our Canadian Tire branded cards. The interesting note is that the store one day earlier had YRP [York Regional Police] attend and arrest of one of their employees was made as it is alleged that he put spyware software on the automotive manager’s computer. Ironically this employee worked in the automotive service area, the same area that the compromised pin pad was located.

[65] Mr. Lawson took no further steps to identify the person who had tampered with the pin pad in the automotive department. He had no evidence that Mr. Sankreacha or any other employee at the Markham Canadian Tire store had been involved. Indeed, he had no evidence other than the compromised pin pad.

[66] It is fair to say that the staff at the Markham Canadian Tire store that heard about the pin pad fraud suspected that Mr. Sankreacha was involved. Their suspicion stemmed from several coincidences:

a) the coincidence of timing between Mr. Sankreacha’s dismissal on June 21, 2010 and the discovery of the pin pad fraud on June 22, 2010;

b) the coincidence that the KGB spyware was installed on an automotive department computer and the skimming device was installed on an automotive department pin pad; and

c) the coincidence that the KGB spyware was installed on May 21, 2010, and the skimming activity on the pin pad also began on May 21, 2010.

[67] Mr. Sankreacha was not, however, ever questioned by the police with regard to the pin pad fraud and he was never charged in relation to that incident.

[68] In the end, no one was ever charged with the pin pad fraud, and Canadian Tire Corporation Ltd. does not know who was responsible. There was no evidence that any store employee was responsible for the pin pad fraud. The crime remains unsolved.

[69] The plaintiff called as an expert witness Mr. Len McGowan, a Senior Fraud Investigator of TD Bank Financial Group who is responsible for VISA and eBank investigations. He was qualified as an expert on counterfeiting of credit cards and skimming devices and schemes. He was involved in the investigation of the pin pad fraud at the Markham Canadian Tire store.

[70] Mr. McGowan testified that 103 bank cards had been compromised by collecting data (“skimming”) from cards used on the Markham Canadian Tire store’s automotive department’s pin pad between May 21 and June 21, 2010. All of the money withdrawn was from various accounts across the Greater Toronto Area (GTA) in a “fraud run” on June 22, 2010.

[71] Mr. McGowan explained that this type of credit card fraud is a very involved process that is rarely, if ever, committed by one person acting alone. The scheme has three distinct parts: i) acquisition of data, ii) manufacture of cards, and iii) use of cards.

[72] In order to acquire the data, a person with technical knowledge and skill would have to obtain the pin pad from the store because it takes between one to two hours to install the skimmer. Usually the pin pad would be taken at the end of the day and replaced with a dummy pin pad, and then returned the next morning when the store is not busy.

[73] Once installed in the pin pad, the skimmer is capable of capturing the PIN entered by the customer, as well as the information that is encoded on the magnetic strip on the back of the debit or credit card. For the scheme to work, both the PIN number and the information on the magnetic strip are required – one is useless without the other.

[74] After acquiring the data from the skimmer, the perpetrator would have to manufacture a card with a magnetic strip containing the information skimmed from the pin pad. This would create a card that can be used at an ATM machine to obtain funds from the customer’s account. This was a common scam between 2010 and 2012, before the introduction of chip technology on bank cards.

[75] Once the data was collected and the card manufactured, the perpetrator can use the completed counterfeit card to remove funds from the customer’s account at an ATM machine. The perpetrators have a limited period of time to conduct a “fraud run” to acquire funds from bank ATM machines because the bank’s computer will identify the fraud run and shut the cards down within about five minutes. As a result, the fraud run requires a number of people to use their cards at the exact same time at different locations. The perpetrators withdraw as much money as fast as they can on each card until the cards are shut down by the banks.

[76] In Mr. McGowan’s opinion, the pin pad fraud incident in this case was not perpetrated by one person acting alone.

[77] Mr. McGowan testified that the information obtained from Mr. Brennan’s computer and listed on the 48-page printout could not be used to manufacture fraudulent bank cards. In his view, the 48-page printout did not contain sufficient information, standing alone, to allow anyone to monetize or profit from it.

[78] Mr. McGowan testified that, in his experience, 99.5% of pin pad frauds are committed without involvement of employees, and that it would be very rare to have an employee involved. These frauds are usually perpetrated by a group of criminals external to the employer. In his opinion, the employees of the Markham Canadian Tire store were likely unaware that a device had been installed in the store.

[79] Mr. McGowan could offer no opinion as to the identity of the individual or individuals who tampered with the pin pad. He did not examine the pin pad device or interview any of the employees. He was never asked to investigate who committed the pin pad fraud.

B. Analysis

[80] The plaintiff relies on eight separate causes of action. I will address each one in turn. There is considerable overlap among the essential elements of each cause of action and certain factual findings are common to more than one of the claims raised.

1) Wrongful Dismissal

[81] The plaintiff takes the position that he was not responsible for the installation of the KGB spyware on Mr. Brennan’s computer. He argues that the KGB spyware was actually installed by Mr. Brennan and Mr. Cowan, acting in concert. He alleges that Mr. Brennan and Mr. Cowan installed the KGB spyware on Mr. Brennan’s computer and framed Mr. Sankreacha for one of two reasons:

i. to fabricate a cause to dismiss Mr. Sankreacha because he refused to “upsell” to customers in the automotive department; or

ii. to set Mr. Sankreacha up as a “decoy” or diversion for the pin pad fraud of June 22, 2010, which, the plaintiff alleges, was actually orchestrated by Mr. Brennan and Mr. Cowan. He alleges that Mr. Brennan and Mr. Cowan installed the KGB spyware on Mr. Brennan’s computer and made it look like Mr. Sankreacha had installed it in order to cast suspicion for the June 22, 2010 pin pad fraud on Mr. Sankreacha.

[82] During the trial, the plaintiff’s conspiracy theory was expanded to include Mr. Beach as a co-conspirator.

[83] This conspiracy theory is central to all of the claims made by the plaintiff. To a certain extent, the success of each cause of action hinges on the court’s acceptance of one of these two theories.

[84] The defendant argues that Mr. Sankreacha was dismissed for installing KGB spyware on Mr. Brennan’s computer, and that this, in itself, constituted just cause for the dismissal.

[85] While Mr. Beach and Mr. Cowan initially believed that the 48-page printout contained confidential customer credit card and Canadian Tire Mastercard information when they first reviewed it on June 21, 2010, there is no dispute that this was an error. The printout did not contain any customer credit card information or any Canadian Tire Mastercard information, although it did contain confidential banking information of one Canadian Tire employee. Accordingly, theft of confidential customer credit card and Canadian Tire Mastercard information is not advanced as a ground for dismissal.

[86] In addition, the defendants’ Statement of Defence included a claim of “after-acquired cause”, which alleged that Mr. Sankreacha was responsible for or involved in the June 22, 2010 pin pad fraud. This defence was formally withdrawn by the defendants at a pre-trial conference in April 2017, more than a year before the trial began. The defendants acknowledge that, notwithstanding the suspicions raised by the coincidences listed at para. 66 of these Reasons, there is no evidence linking Mr. Sankreacha to the pin pad fraud.

[87] By all accounts, Mr. Sankreacha was a valuable and dedicated employee who was well liked by Mr. Beach and Mr. Brennan. The only reason he was dismissed was the discovery of the KGB spyware on Mr. Brennan’s computer and the conclusion that Mr. Sankreacha had installed it.

[88] Accordingly, there are only two issues in relation to the wrongful dismissal claim:

i. Have the defendants proven, on a balance of probabilities, that Mr. Sankreacha was responsible for the installation of the KGB spyware on Mr. Brennan’s computer? and

ii. If the answer to the first question is yes, is the installation of KGB spyware on an employer’s computer just cause for dismissal?

Who installed the KGB Spyware?

[89] Counsel for the defendant employer acknowledges that the burden of proof is on the employer when dismissal for cause is alleged. The employer must demonstrate, on a balance of probabilities, that it had just cause to terminate the employee’s employment without notice or compensation in lieu of notice: McKinley v. BC Tel, 2001 SCC 38, [2001] 2 SCR 161, at para. 49; De Jesus v. Linamar Holdings Inc. (Camcor Manufacturing), 2017 ONCA 384, at para. 7.

[90] The employer relies on the following evidence to support just cause:

[91] The password to Mr. Brennan’s computer was known only to Mr. Brennan and Mr. Sankreacha.

[92] The email that opened on Mr. Brennan’s computer when he logged on in the morning of June 21, 2010, was Mr. Sankreacha’s personal Hotmail email account. The email displayed was from bharath_sankreacha@hotmail.com to bharath_sankreacha@hotmail.com. There is no dispute that this was the plaintiff’s personal email address.

[93] The email account was opened on Mr. Brennan’s computer the day prior, on the morning of Sunday June 20, 2010. Mr. Brennan was not at work on June 20, 2010. Mr. Sankreacha was at work from 8:30 a.m. to 12:00 p.m. and from 12:30 p.m. to 5:00 p.m. Mr. Sankreacha was the only Service Advisor at work from 8:30 a.m. until 10:00 a.m. This supports the defendant’s position that it was Mr. Sankreacha who logged on to Mr. Brennan’s computer on the morning of June 20, 2010, opened his Hotmail account and sent the email containing the attachment to himself.

[94] Since Mr. Brennan was not at the store on June 20, 2010, he could not have been the one to open his computer, log onto the plaintiff’s personal email account, and then leave his computer on for 24 hours. There was no evidence that Mr. Brennan had remote access to his workplace computer or that any of these acts could have been performed remotely by Mr. Brennan. Moreover, it defies logic that Mr. Brennan would send the email on the morning of June 20, 2010 and leave the email open on his computer all day knowing that the plaintiff was at work that day and had access to Mr. Brennan’s workplace computer throughout the day on June 20, 2010.

[95] In addition, if Mr. Brennan had sent the email to Mr. Sankreacha’s email address on June 20, 2010, Mr. Sankreacha would have received the email and, not knowing what it was, brought it to someone’s attention. Mr. Sankreacha’s position is that he never received the email.

[96] The email included an attachment containing data collected on June 17, 2010. The data was collected using KGB spyware that had been installed on Mr. Brennan’s computer using a USB key on May 21, 2010. The USB key used to install the spyware was inserted on May 21, 2010 at 14:56:21, and the KGB spyware was installed at 15:01:00. That program was then run at 15:35:33 on the same day.

[97] Both Mr. Brennan and Mr. Sankreacha were at work on May 21, 2010. Mr. Brennan was at work from 7:00 a.m. to 5:00 p.m. Mr. Sankreacha was at work from noon to 3:00 p.m., when he left for a 30 minute break to pick up his daughter from day care, and returned to work from 3:30 p.m. until 9:00 p.m.

[98] The defendants argue that the time of installation and running of the KGB spyware are critical. The timing suggests that Mr. Sankreacha inserted the USB key and installed the KGB spyware just before his 3:00 p.m. break, but was interrupted and had to leave the store. He returned to work at 3:35 and ran the spyware. Since Mr. Brennan was in the office from 7:00 a.m. to 5:00 p.m., there was no reason for a gap from 3:00 p.m. to 3:35 p.m., as he could have installed and run the spyware at any time without interruption.

[99] The plaintiff argues that the gap supports his theory of the case. He argues that Mr. Brennan waited until Mr. Sankreacha was on break to install and run the spyware.

[100] Based on the evidence I have reviewed, I find the defendants’ theory more credible and consistent with the timelines provided.

[101] When Mr. Sankreacha was arrested by the police on June 21, 2010, the police found a USB key with the KGB spyware on his key chain. There are two explanations as to how the USB key got onto the key chain. P.C. Marshall testified that the USB key was on the key chain when he took it from Mr. Sankreacha. Mr. Sankreacha testified that the USB key was not his and that it must have been surreptitiously placed on his key chain by Mr. Cowan when he gave Mr. Cowan his key chain.

[102] Mr. Sankreacha’s allegation that the USB key was planted by Mr. Cowan was not pled and particularized in the Amended Statement of Claim, but was raised for the first time at trial.

[103] Based on the evidence, I am satisfied on a balance of probabilities that the USB key was on Mr. Sankreacha’s key chain when it was taken from Mr. Sankreacha by P.C. Marshall. There are three reasons for this conclusion. First, it is consistent with the evidence of P.C. Marshall, who testified that he took the key chain directly from Mr. Sankreacha. P.C. Marshall is not a party to this litigation, and there is no reason for him to not tell the truth about this. On the whole, I found P.C. Marshall’s evidence to be credible. He acknowledged when he could not remember certain details, and his evidence on this point was consistent with the report he made at the end of the day.

[104] Second, I find Mr. Sankreacha’s evidence on this point to strain credulity. Even if I accept Mr. Sankreacha’s evidence that he was asked by Mr. Cowan to return his store key, it is unlikely that Mr. Sankreacha would have given Mr. Cowan his entire key chain, including his car and house keys, when asked only for his store key. Moreover, there is no way that Mr. Cowan could have anticipated that Mr. Sankreacha would hand over his entire key chain when asked for his store key. As such, it strikes me as very unlikely that Mr. Cowan would have been in a position to surreptitiously put the USB key on the key chain.

[105] The evidence indicates that Mr. Brennan called Mr. Sankreacha at approximately 7:00 a.m. on the morning of June 21, 2010 to ask him for an explanation about the email. Mr. Brennan testified that he called Mr. Sankreacha because he trusted him and thought that Mr. Sankreacha might have an innocent explanation for what Mr. Brennan saw on his computer.

[106] The defendants suspect that this “heads up” inadvertently gave Mr. Sankreacha an opportunity to erase the email before he came to work that day. That is why the email was no longer in Mr. Sankreacha’s Hotmail account when he opened it from Mr. Issa’s computer when confronted that afternoon by Messrs’ Beach, Issa and Cowan.

[107] Mr. Sankreacha takes the position that Mr. Brennan’s telephone call that morning was also part of the conspiracy. He takes the position that the email was never on his Hotmail account, and that Mr. Brennan called him at 7:00 a.m. so that Mr. Brennan, Mr. Cowan and Mr. Beach would have an explanation as to why the email was not found when Mr. Sankreacha opened his Hotmail account in Mr. Issa’s office. The difficulty that I have with this rather convoluted theory is that there is no dispute that the screen shot printed and made an exhibit is indeed an image of Mr. Sankreacha’s Hotmail account. It includes all of the folders that he acknowledges were in his Hotmail account. No explanation or expert evidence was offered for how the screen shot could be an image of Mr. Sankreacha’s Hotmail account, but the email was never in his Hotmail account.

[108] Some of these questions might have been answered if Mr. Sankreacha had retained his personal computer, but six months after he was dismissed he had his personal computer “recycled” and it was long gone by the time he issued his Statement of Claim. Mr. Sankreacha also acknowledged that he never contacted Hotmail to see if they could determine how or from where his Hotmail account was accessed on June 20, 2010.

[109] The plaintiff points out that while his email account was opened in Mr. Issa’s office, the defendants did not ask him to open any of his folders. They were focused exclusively on finding the email. Had they opened the folders they would have discovered that the contents were innocuous and did not include any confidential credit card information as the defendants suspected. He argues that their failure to ask him to open the folders is evidence that they were setting him up – they did not ask to open the folders because then it would be known that there was no credit card data in Mr. Sankreacha’s Hotmail account, and they would have no reason to call the police.

[110] The defendants argue that, at the time, they either did not know that they could open the folders or simply did not think of asking Mr. Sankreacha to open any of the folders other than his inbox and trash.

[111] In my opinion, it is hardly surprising that their exclusive focus was finding the email and that they did not think of asking Mr. Sankreacha to open other folders in his account. I accept the defendants’ evidence in this regard and I do not agree that their failure to ask Mr. Sankreacha to open the other folders in his account is evidence that the defendants were involved in a conspiracy to set Mr. Sankreacha up as a patsy or decoy.

[112] Mr. Sankreacha’s theory also begs the question of why Mr. Brennan, Mr. Cowan and Mr. Beach would want to delete all traces of the email from Mr. Sankreacha’s account if they wanted to frame him. One would have thought that the better strategy would be to make sure that the email was in his account when he opened it in Mr. Issa’s office that day.

[113] There is also considerable evidence that Mr. Sankreacha has a sophisticated knowledge of computers, and the requisite knowledge to download and operate the KGB spyware. He has taken computer science courses and has a diploma in AutoCAD and Computer Science from Farnborough College of Technology in England. He also worked with computers as a Systems Administrator at his previous employer. He acknowledged that he bought and sold computer parts on eBay. Furthermore, two former Canadian Tire employees testified that Mr. Sankreacha openly discussed his knowledge about computers and offered to assist co-workers with their computer problems.

[114] One former employee, Mr. Gavin Chow, testified that when his laptop could not boot up, he told Mr. Sankreacha and Mr. Sankreacha said he knew how to fix it. Mr. Chow gave the laptop to Mr. Sankreacha, and the laptop worked when Mr. Sankreacha returned it. Mr. Chow paid Mr. Sankreacha for his services. Mr. Chow had no reason to fabricate this story. In 2010 he was a student working part-time as a Service Advisor at the Canadian Tire store, but currently has no connection to Canadian Tire or any of the defendants. Mr. Sankreacha denied that this ever happened.

[115] A second employee, Mike Sue, testified that Mr. Sankreacha built him a home computer. Mr. Sue did not actually see the plaintiff build the computer, but Mr. Sue testified that the plaintiff told him he was going to build him a computer and then provided him with a computer. Mr. Sankreacha denied building the computer.

[116] In my opinion, Mr. Sankreacha deliberately understated his knowledge of computers during his testimony.

[117] In contrast, the evidence indicates that Mr. Brennan lacked the computer skills necessary to accomplish the elaborate conspiracy postulated by the plaintiff. Mr. Sue and Mr. Chow both testified that, in their experience working with Mr. Brennan, he had limited computer skills.

[118] Another important conflict in the evidence relates to the plaintiff’s evidence that when he was in the Canadian Tire store on Sunday June 20, 2010, he could not have accessed Mr. Brennan’s computer because another employee, Mr. Chow, was assigned by Mr. Brennan to prepare the store’s promotional flyer using Mr. Brennan’s computer. According to Mr. Sankreacha, Mr. Chow was in Mr. Brennan’s office preparing the promotional flyer for 6 or 7 hours.

[119] Mr. Chow testified that while he would occasionally use Mr. Brennan’s computer to print school assignments if he was working right before school, he was never asked by Mr. Brennan to prepare or print promotional flyers. He stated that he never prepared a promotional flyer for Canadian Tire because the flyers are professionally printed and are not prepared or printed “in-house” or in Mr. Brennan’s office. He testified that he would have remembered if he had sat for 6 or 7 hours to make flyers. Again, Mr. Chow would have no reason to fabricate this evidence.

[120] Finally, for the plaintiff’s position to make any sense at all there would have to be some motive for Mr. Brennan, Mr. Cowan and Mr. Beach to engage in an elaborate scheme to frame an employee who earned slightly more than minimum wage.

[121] As indicated above, the plaintiff has advanced two possible motives for the defendants wanting to frame him.

The “Upsell” Theory

[122] In his Amended Statement of Claim the plaintiff alleged that Mr. Brennan’s compensation package included a profit sharing component that was based in part on the automotive department’s sales. In order to increase sales, automotive department staff, including Mr. Sankreacha, were encouraged to “upsell” to customers. The Amended Statement of Claim defines this as actively persuading customers they need additional services that may not be necessary. Mr. Sankreacha alleges that he refused to “upsell” and that this refusal jeopardized Mr. Brennan’s ability to generate profit sharing revenue.

[123] The plaintiff alleges that as a result of his refusal to upsell, Mr. Brennan wanted to get rid of Mr. Sankreacha. In order to fabricate grounds for dismissal, Mr. Brennan, in combination with Mr. Cowan, devised the following plot: Mr Brennan gave Mr. Sankreacha his computer password in 2009 and permitted Mr. Sankreacha to use the computer at work. Mr. Brennan then downloaded the KGB spyware on to his own work computer, opened the plaintiff’s Hotmail account with the plaintiff’s user name and password somewhere away from the office using the internet, and attached the data generated by the KGB spyware to the plaintiff’s Hotmail account to make it appear as though Mr. Sankreacha had sent an email to himself with the data. Mr. Brennan then pretended to find the email on his computer when he came to work on the morning of June 21, 2010. At the same time Mr. Brennan erased all traces of the email from Mr. Sankreacha’s Hotmail account so that when Mr. Sankreacha accessed his Hotmail account in Mr. Issa’s office on the afternoon of June 21, 2010 there would be no trace of the email that was on Mr. Brennan’s computer in the morning. Mr. Brennan called Mr. Sankreacha at 7:00 a.m. so that when no trace of the email could be found on Mr. Sankreacha’s Hotmail account, Mr. Cowan could claim that it was Mr. Sankreacha who erased it.

[124] In closing submissions, the plaintiff all but abandoned the upsell theory as Mr. Brennan’s motive to frame him. In closing submissions, Mr. Jagtoo, counsel for Mr. Sankreacha, stated that upselling was a “small factor”, “not an important factor”, and “if it is a reason it is insignificant”. Since it was not abandoned completely, I will address it.

[125] The plaintiff’s evidence is that there was one source of disagreement between him and Mr. Brennan: upselling. The plaintiff points to his employee review of February 2007 as evidence of this disagreement. The employee review, which was prepared by Mr. Brennan, was generally positive. Mr. Sankreacha was rated “Superior” or “Good” in all categories. His “strengths” were listed as “customer service, very patient with customers and staff, handling issues”. His “three areas to improve upon” were listed as “upselling, work on less time explaining to the customer, more overseeing on what is going in the garage when being duty manager”.

[126] The 2007 employee review is the only reference to “upselling” as a weakness. For example, the 2010 employee review, also prepared by Mr. Brennan, lists Mr. Sankreacha’s strengths as “excellent customer service, very personable and calm, reliable”, and lists “three areas to improve upon” as “needs to keep time with customers shorter, leadership”.

[127] I found Mr. Sankreacha’s testimony on the issue of upselling to be very confused and confusing. Mr. Sankreacha worked at the service desk. His job was to act as a liaison between the customer and the mechanic. He would write down why the customer brought the car in for service and would communicate the mechanic’s recommendations for vehicle repair and maintenance to the customer. Mr. Sankreacha is not a mechanic and did not look at the cars.

[128] Mr. Sankreacha testified that there were two types of vehicle repair and maintenance: required repairs and maintenance and recommended repairs and maintenance. It was the mechanic’s job to indicate which repairs and maintenance were required and which were recommended. For example, if a customer brought the car in for an oil change, the mechanic would conduct an inspection, and might recommend that the customer also get new brakes or new tires if the brakes or tires were worn. These could be “recommended” rather than “required” because they did not have to be done immediately, but might have to be done soon. This is what we would usually think of as preventative maintenance. Whether something was required or recommended was the decision of the mechanic based on his or her expertise. It would be up to the customer whether he or she wanted to proceed with the repairs and maintenance recommended by the mechanic.

[129] Mr. Sankreacha initially suggested that upselling was telling the customer that the recommended repairs or maintenance were required, and that he refused to do this. He then explained that communicating the recommendation was upselling, and Mr. Brennan told him that he had to communicate both the required maintenance and the recommended maintenance. He later changed this to mean that upselling meant trying to persuade customers to accept recommended repairs and that he refused to persuade customers, although he did communicate the mechanic’s recommendations. He stated that he would only tell the client what the mechanic had recommended, but “would not go beyond that”. He explained that telling customers what was recommended by the mechanics was not upselling, so he would tell the client what the recommendation was, but would not explain why the recommendation was made. For example, if the mechanic recommended that the vehicle needed an alignment, he would communicate that information to the customer, but refuse to explain to the customer why the additional service is recommended. He then stated that making the recommendation was not upselling, but convincing or explaining to the customer was upselling. He explained that he always recommended, but did not go beyond that by encouraging the customer.

[130] Mr. Sankreacha acknowledged that there was no record of what he did or did not do to “persuade” customers to accept recommended service or maintenance. The work order would set out what was necessary and what was recommended and indicate whether the customer accepted or declined the recommended service/maintenance. There was, however, no report or tracking of “upsell” activity as Mr. Sankreacha defined it. There were no records of whether any Service Advisor tried to “convince” a customer to accept recommended repairs or maintenance, and no report that tracked the success or failure rate of any employee with respect to customer acceptance of recommended repairs or maintenance.

[131] Mr. Sankreacha’s evidence with respect to the meaning of “upselling” was inconsistent with the evidence of all the other current and former automotive department employees who testified. They testified that “upselling” meant communicating the mechanic’s maintenance recommendations to the customer. If the customer had questions about the recommendations, the customer would often speak directly to the mechanic who made it. None of the witnesses were aware that Mr. Sankreacha refused to “upsell” as they understood the word.

[132] Mr. Brennan explained that his reference to upselling in Mr. Sankreacha’s 2007 employee review related to a single incident in which a customer complained that his tires wore out prematurely and that Mr. Sankreacha had failed to recommend a wheel alignment when he brought his car in for service. Apart from this incident, Mr. Brennan was unaware that Mr. Sankreacha had ever failed or refused to make the appropriate recommendations or “upsell”. There was no reference to upselling on Mr. Sankreacha’s subsequent employee reviews and Mr. Brennan thought that since 2007 Mr. Sankreacha had done a good job of upselling.

[133] Mr. Brennan noted that there were no targets for upselling and no way to track or record whether any Service Advisor was upselling. Both Mr. Beach and Mr. Brennan testified that if an employee refused to upsell he would not be dismissed, but the employee would be transferred to a different department within the store. The Markham Canadian Tire store had approximately 100 employees and Mr. Sankreacha worked in three different departments during his four years at the store. If Mr. Sankreacha had refused to upsell, it would be a simple matter to transfer him back to one of these departments.

[134] The evidence does not support Mr. Sankreacha’s definition of “upsell” and it does not support his contention that he refused to “upsell”, whatever definition is used. Assuming that Mr. Sankreacha’s definition of “upsell” is correct, and he was refusing to explain to customers why the mechanic was recommending service such as a wheel alignment or coolant change, and assuming that Mr. Brennan had any knowledge of this refusal, I would fully expect to see some reference to this refusal on Mr. Sankreacha’s 2010 employee review. Instead, the 2010 employee review, written by Mr. Brennan, commends Mr. Sankreacha for “excellent customer service”. If Mr. Brennan was intent on dismissing Mr. Sankreacha, a negative employee review would be a much easier tack than the convoluted computer conspiracy advanced by Mr. Sankreacha.

[135] In my view, the evidence does not support the allegation that Mr. Brennan had any concern, let alone knowledge, of Mr. Sankreacha’s alleged refusal to upsell. Nor does the evidence support the allegation that this alleged refusal had anything to do with his dismissal, or that it could have provided any motive for Mr. Brennan or Mr. Cowan or Mr. Beach to conspire against Mr. Sankreacha.

The Pin Pad Fraud Diversion Theory

[136] The second motive alleged by the plaintiff was to set Mr. Sankreacha up as a “decoy” or diversion for the pin pad fraud of June 22, 2010, which the plaintiff alleges was actually committed by Mr. Beach, Mr. Brennan and Mr. Cowan. The plaintiff argues that to help get away with the pin pad fraud, Mr. Beach, Mr. Brennan and Mr. Cowan installed the KGB spyware on Mr. Brennan’s computer and made it look like Mr. Sankreacha had installed it in order to cast suspicion for the June 22, 2010 pin pad fraud on Mr. Sankreacha and “inoculate Messrs. Cowan and Brennan from blame or investigation”.

[137] In his closing submissions the plaintiff alleged that Mr. Brennan, Mr. Cowan and Mr. Beach “were motivated by an improper purpose – to earn money from the sale of debit and credit card data to organised crime”.

[138] This allegation is not in Mr. Sankreacha’s Amended Statement of Claim. The Amended Statement of Claim, at para. 45e(xv), alleges only that Mr. Beach had knowledge of the pin pad fraud on June 23, 2010 and failed to tell the police that the plaintiff was not involved. The conspiracy alleged in the Amended Statement of Claim, at para. 45e(xvi), is the alleged conspiracy of the defendants to withhold exculpatory evidence from the police.

[139] Nowhere in the Amended Statement of Claim does Mr. Sankreacha allege that Mr. Brennan, Mr. Cowan, and/or Mr. Beach had any involvement in, or foreknowledge of, the pin pad fraud. Mr. Beach is not named as a defendant in the action. The defendants object to Mr. Sankreacha making this allegation as part of his case without having pled it. They argue that they were ambushed by this new theory at the beginning of the trial.

[140] The issues in a civil action must be decided within the boundaries of the pleadings. In Musicians’ Pension Fund of Canada (Trustees of) v. Kinross Gold Corp., 2014 ONCA 901, the Ontario Court of Appeal held, at para. 84:

As this court has consistently emphasized, it is central to the litigation process that issues in a civil action be decided within the boundaries of the pleadings. Fundamental fairness and the efficacy of the civil litigation process demand no less.

[141] Similarly, in Wilson v. Beck, [2013] ONCA 316, leave to appeal to S.C.C. refused, [2013] S.C.C.A. No. 300, at para. 27, MacPherson J.A. set out the principle that “[i]t is fundamental to the litigation process that lawsuits be decided within the boundaries of the pleadings.” This principle is frequently repeated: see Holmes v. Hatch Ltd., 2017 ONCA 880, at para. 7, and 460635 Ontario Limited v. 1002953 Ontario Inc., 1999 CanLII 789 (ON CA), at para. 9.

[142] The same principle has been affirmed by the Supreme Court of Canada in Lax Kw'alaams Indian Band v. Canada (Attorney General), 2011 SCC 56, at para. 43:

Pleadings not only serve to define the issues but give the opposing parties fair notice of the case to meet, provide the boundaries and context for effective pre-trial case management, define the extent of disclosure required, and set the parameters of expert opinion. Clear pleadings minimize wasted time and may enhance prospects for settlement.

[143] I agree with the defendants that the allegation that Mr. Brennan, Mr. Cowan and Mr. Beach committed or orchestrated the pin pad fraud, and that they framed the plaintiff on June 21, 2010 in order to use him as a decoy or diversion from the fraud run on June 22, 2010, is not pleaded in the Amended Statement of Claim. Accordingly, it would not be fair to make any finding of liability and resulting damages against a defendant on a basis that was not pleaded in the statement of claim.

[144] That said, I should add that in my view, the plaintiff has advanced no evidence to support his allegation that Mr. Brennan, Mr. Cowan or Mr. Beach, together or individually, had any involvement in the pin pad fraud. In the absence of such evidence, there is no basis to conclude that involvement in the pin pad fraud provided the defendants with a motive to frame or conspire against Mr. Sankreacha.

[145] This finding is relevant to a number of the causes of action raised by Mr. Sankreacha, that rely on a finding of bad faith or malice as an element of the claim. To the extent that the plaintiff’s claims are premised on his pin pad fraud diversion theory, each of these claims must fail, even if the pin pad fraud diversion theory were properly pleaded.

Conclusion Re: Proof of Just Cause

[146] Based on the foregoing analysis, I find that the defendants have proven, on a balance of probabilities, that Mr. Sankreacha was responsible for the installation of the KGB spyware on Mr. Brennan’s computer.

Was Installation of the KGB Spyware Just Cause for Dismissal?

[147] The second question is whether the installation of KGB spyware on an employer’s computer is just cause for dismissal?

[148] In closing submissions, plaintiff’s counsel acknowledged that, if the allegation were true, downloading and installing spyware on an employer’s computer was sufficiently serious to warrant dismissal. His position is that the employer had not met its onus of proving that Mr. Sankreacha was responsible.

[149] In Dowling v. Ontario (Workplace Safety and Insurance Board) (2004), 2004 CanLII 43692 (ON CA), 246 D.L.R. (4th) 65 (C.A.), at paras. 49-50, leave to appeal to S.C.C. refused, [2005] S.C.C.A. No. 25, the Ontario Court of Appeal, following the Supreme Court of Canada’s decision in McKinley v. BC Tel, 2001 SCC 38, held that the core question in wrongful dismissal claims is whether the employee’s misconduct was sufficiently serious that it struck at the heart of the employment relationship. To answer this question, the court must:

determine the nature and extent of the misconduct;
consider the surrounding circumstances; and
decide whether dismissal was warranted.

[151] In McKinley, at para. 48, the Supreme Court stated that one way to express the test is “that just cause for dismissal exists where the dishonesty violates an essential condition of the employment contract, breaches the faith inherent to the work relationship, or is fundamentally or directly inconsistent with the employee’s obligations to his or her employer.”

[152] The Supreme Court mandated a “contextual approach”, which involves an examination of “both the circumstances surrounding the conduct as well as its nature or degree”: McKinley, at paras. 34 and 51. When examining whether an employee’s conduct – including dishonesty – justifies the employee’s dismissal, the question to be addressed is whether, in the circumstances, the behaviour was such that the employment relationship could no longer viably subsist: McKinley, at para. 29. The Supreme Court stated, at para. 57:

I favour an analytical framework that examines each case on its own particular facts and circumstances, and considers the nature and seriousness of the dishonesty in order to assess whether it is reconcilable with sustaining the employment relationship. Such an approach mitigates the possibility that an employee will be unduly punished by the strict application of an unequivocal rule that equates all forms of dishonest behaviour with just cause for dismissal. At the same time, it would properly emphasize that dishonesty going to the core of the employment relationship carries the potential to warrant dismissal for just cause.

[153] In certain contexts, the court directed at para. 51, that this contextual approach leads to a “strict outcome”:

Where theft, misappropriation or serious fraud is found, the decisions considered here establish that cause for termination exists.

[154] The Supreme Court noted: “[a]n effective balance must be struck between the severity of an employee’s misconduct and the sanction imposed”: McKinley at para. 53.

[155] In my view, the surreptitious installation of spyware on an employer’s computer constitutes a clear breach of faith or trust inherent in the work relationship. It “violates an essential condition of the employment contract” and “breaches the faith inherent to the work relationship”: McKinley, at para. 30.

[156] This was not a case of an employee simply using a work computer to access his personal email or the internet for personal purposes. This is not even a case in which an employee uses his credentials to access confidential information for personal purposes: see Steel v. Coast Capital Savings Credit Union, 2015 BCCA 127, 383 D.L.R. (4th) 481; Carias v. CIBC, 2003 BCSC 587. In this case, the employee surreptitiously installed spyware on the employer’s computer that had only one purpose: the wholesale collection of the employer’s or his co-workers’ confidential information.

[157] It matters not in these circumstances that most of the information collected on June 17, 2010 was inconsequential. The evidence indicates that the spyware was running for one month prior to the date of its discovery by Mr. Brennan, and we cannot know what other information was collected. We do know that the data collected on June 17, 2010 included the confidential banking information of one of Mr. Sankreacha’s co-workers.

[158] The evidence indicates that this was neither a single incident nor a momentary lapse of judgment. The installation of the spyware took considerable planning and subterfuge. It remained on the employer’s computer, collecting data, for one month before it was discovered.

Disposition: Wrongful Dismissal

[159] Based on the foregoing analysis, I conclude that the plaintiff has failed to establish that he was wrongfully dismissed on June 21, 2010.

Notice Period

[160] Had I concluded that the plaintiff was wrongfully dismissed, which I do not, I would have to consider the proper notice period using the factors set out in Bardal v. Globe & Mail Ltd., 1960 CanLII 294 (ON SC), 24 D.L.R. (2d) 140 (H.C.J.). These factors include the character of the employment, the length of service, the age of the employee, and the availability of similar employment.

[161] At the time of his dismissal the plaintiff was 49 years of age, had 4.5 years of service, worked as a Service Advisor in the automotive department, and acted as the Manager’s right-hand man. He was employed at $12.50 per hour (approximately $25,000 per year), somewhat more than the minimum wage at the time ($10.25 per hour).

[162] The plaintiff claims that he is entitled to ten months’ notice ($20,500) for wrongful dismissal. The plaintiff relies on the following cases to support this period of time: Partridge v. Botony Dental Corporation, 2015 ONCA 836 (12 months’ notice for a 7 year employee, a highly skilled dental hygienist and office manager); Bergeron v. Movati Athletic (Group) Inc., 2018 ONSC 885 (3 months’ notice for a 16 month employee working in a middle to upper management position); Cyr v. Banting Property Management Inc., [1994] O.J. No. 1566 (4 months’ notice for a 3 year employee with a mixture of clerical and modest managerial duties); Lippert v. Barkingside Investments Ltd. [1990] O.J. No. 504 (4 months’ notice for a 2 year employee, a registered nurse acting in an administrative capacity)

[163] The defendants argue that the case law supports only four months’ pay in lieu of notice (approximately $8,200), subject to the plaintiff’s duty to mitigate. The defendants rely on the following cases in which notice periods of four to five months were ordered in similar circumstances: Goodman v. Medi-Edit Communications Inc. 2002 CarswellOnt 2608 (5 months’ notice for a 4.5 year salesperson), Ross v. 413554 Ontario Limited (Chouinard Bros. Roofing), 2008 CanLII 44716 (ON SC) (5 months for a 5.5 year salesperson); Schlachter v. Westlock Chevrolet Oldsmobile Ltd., 2007 ABQB 481 (4 months’ notice for a 4.5 years salesperson).

[164] The defendant points out that the plaintiff was employed in a retail store in a customer service role that required no formal education and no specialized knowledge. The plaintiff’s expert witness with respect to income loss, Jim Muccilli, agreed that these types of retail jobs were readily available.

[165] In my view, the cases relied upon by the defendants are closer to the mark. Based on the Bardal factors, and in particular the plaintiff’s age at the time of dismissal, which has been described as “a vulnerable time for most workers”: Cyr, at para. 29, I would have found that the plaintiff was entitled to six months, or $12,300, had he been wrongfully dismissed.

[166] However, based on the evidence relevant to mitigation, I would have reduced that notice period by one month by reason of his failure to make any effort to mitigate his loss.

[167] It is well established that in wrongful dismissal cases employees are obliged by law to mitigate the damages that flow from the wrongful dismissal by seeking an alternative source of income in the absence of a pre-determined fixed notice period or other agreement to the contrary: Bowes v. Goss Power Products Ltd., 2012 ONCA 425, at paras. 23-25, and 34.

[168] The plaintiff was unable to produce a list of jobs for which he applied following his dismissal. He provided no specific examples of job applications except for an application to the TTC in April 2015, nearly five years after he was dismissed. At trial, the plaintiff testified that he had applied for minimum wage jobs. This testimony was contradicted by his discovery transcript, where he stated that he had not applied for such jobs, and his counsel took the position that he had no duty to apply for such jobs and refused further questions on the point.

[169] I agree with the defendants that the plaintiff did have an obligation to apply for minimum wage jobs. His job at Canadian Tire started as a minimum wage job and at the time of his dismissal he was earning just over the minimum wage. Given the evidence about the availability of retail jobs, I would have reduced the period for which the plaintiff was entitled to damages to five months ($10,250), had I concluded that he was wrongfully dismissed.

Punitive and/or moral damages

[170] Had I concluded that the plaintiff had been wrongfully dismissed, I would have rejected his claim for punitive and/or moral damages.

[171] In Honda Canada Inc. v. Keays, 2008 SCC 39, the Supreme Court of Canada set out the legal principles relating to the calculation of damages in wrongful dismissal cases. The case makes clear that punitive damages are available only in exceptional cases where the employer engages in conduct that is “unfair or is in bad faith” and “harsh, vindictive, reprehensible and malicious”. The Court stated, at paras. 50, 56, 57, and 68:

An action for wrongful dismissal is based on an implied obligation in the employment contract to give reasonable notice of an intention to terminate the relationship in the absence of just cause. Thus, if an employer fails to provide reasonable notice of termination, the employee can bring an action for breach of the implied term … The general rule … is that damages allocated in such actions are confined to the loss suffered as a result of the employer’s failure to give proper notice and that no damages are available to the employee for the actual loss of his or her job and/or pain and distress that may have been suffered as a consequence of being terminated.

…The contract of employment is, by its very terms, subject to cancellation on notice or subject to payment of damages in lieu of notice without regard to the ordinary psychological impact of that decision. At the time the contract was formed, there would not ordinarily be contemplation of psychological damage resulting from the dismissal since the dismissal is a clear legal possibility. The normal distress and hurt feelings resulting from dismissal are not compensable.

Damages resulting from the manner of dismissal must then be available only if they result from the circumstances described in Wallace, namely where the employer engages in conduct during the course of dismissal that is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive”.

…Courts should only resort to punitive damages in exceptional cases … The independent actionable wrong requirement is but one of many factors that merit careful consideration by the courts in allocating punitive damages. Another important thing to be considered is that conduct meriting punitive damages awards must be “harsh, vindictive, reprehensible and malicious”, as well as “extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment”. [Citations omitted.]

[172] Pre and post-termination conduct may be considered in an award for moral damages, so long as it is “a component of the manner of dismissal”: Gismondi v. Toronto (City), 2003 CanLII 52143 (ON CA), 64 O.R. (3d) 688 (C.A.), at para. 23, leave to appeal to S.C.C. refused [2003] S.C.C.A. No. 312; Doyle v. Zochem Inc., 2017 ONCA 130, at para. 13.

[173] In the present case, the plaintiff claims that the employer acted in an unfair and callous manner in terminating his employment because the employer:

a. Accused the plaintiff of installing KGB spyware despite lack of evidence;

b. Accused the plaintiff of downloading credit card data;

c. Called the police to report that the plaintiff had downloaded credit card data;

d. Tried to coerce a confession from the plaintiff;

e. Planted a USB key containing the KGB spyware on the plaintiff in an effort to frame him;

f. Collected “will-say” statements from Canadian Tire employees who lost money from their accounts in the pin pad fraud on June 22, 2010;

g. Thought that there was a relationship between the installation of the KGB spyware and the pin pad fraud;

h. Pleaded after-acquired cause and did not abandon this defence until April 2017; and

i. Mr. Beach testified in cross-examination that he still believed that the plaintiff was involved in the GTA fraud even though he has no evidence to support the belief.

[174] Based on the evidence reviewed above and the various factual findings made, I do not find the presence of any grounds to support the plaintiff’s claim for punitive and/or moral damages for the manner in which he was terminated.

[175] Firstly, I find that the defendants had reasonable and probable grounds on the morning of June 21, 2010, to suspect that Mr. Sankreacha had downloaded KGB spyware onto Mr. Brennan’s computer. Given those reasonable and probable grounds, the employer acted reasonably in calling in Mr. Valencia to confirm that KGB spyware had been downloaded onto the computer. Given the conclusions reached by Mr. Valencia, it was reasonable for the employer to meet with Mr. Sankreacha to give him an opportunity to respond to the questions asked and provide an explanation for the email found on Mr. Brennan’s computer. The evidence does not support the allegation that Mr. Cowan, Mr. Issa, Mr. Beach or Mr. Brennan tried to coerce a confession from Mr. Sankreacha.

[176] While Mr. Cowan was incorrect in his belief that the 48-page printout contained confidential credit card and Canadian Tire Mastercard information, there were reasonable grounds for him to form that opinion in the exigencies of the situation. Given that honest but mistaken belief, and the knowledge that KGB spyware had been installed on the employer’s computer, it was reasonable to suspect that a crime had been committed and to call the police. I have already rejected the contention that Mr. Cowan planted the USB key on the plaintiff’s key chain.

[177] Given the proximity of timing and location between the dismissal of the plaintiff on June 21, 2010, the pin pad fraud that took place on June 22, 2010, and the fact that both incidents involved the collection of data from the automotive department, it is hardly surprising that anyone who knew of both incidents would find these coincidences suspicious. Mr. Lawson, the Corporate Security Manager for Canadian Tire Corporation Ltd., who was called by the plaintiff, testified that since both frauds involved the surreptitious collection of computer data, and happened so close together in time at the same location, this was noteworthy information that should be given to the police.

[178] In this regard, while P.C. Marshall did not investigate the pin pad fraud, he agreed that the timing of the compromised bank accounts was suspicious, and that it made sense to pass this information on to the police to investigate.

[179] On June 22, 2010, six Markham Canadian Tire employees, including Mr. Brennan, were advised by their banks that their bank cards or bank accounts had been compromised.

[180] On June 23, 2010, each of these six employees prepared a will-say, stating that their bank had advised them that their bank card or account had been compromised from their place of employment, the Markham Canadian Tire store, on June 22, 2010. None of these will-says accused or even referred to Mr. Sankreacha. These will-says were collected by Mr. Brennan and Mr. Cowan and forwarded to P.C. Marshall, who attached them to the original report.

[181] There was nothing “unfair” or “untruthful, misleading or unduly insensitive” in any of these will-says. The authors had each been the victim of a credit card fraud, and there was nothing inappropriate about providing this information to the police. Again, given the coincidence of timing and location, it was not unreasonable for Mr. Cowan or Mr. Brennan to believe that the two events might be connected, and give the information to the police to follow-up.

[182] The defendants did plead after-acquired cause, but abandoned the claim a year before the litigation commenced. While a pleading of after-acquired cause that is devoid of merit may have costs consequences at the conclusion of the trial, the pleading itself cannot give rise to punitive and/or moral damages. As Lederer J. stated in Chrabalowski v. BMO Nesbitt Burns Inc., 2011 ONSC 3392, at para. 19:

Moral damages are meant to compensate for the harm inflicted by the manner of dismissal. They do not prevent an employer from defending itself on the basis of investigating whether there is "after-acquired cause".

[183] There is, in my view, nothing improper about pleading after-acquired cause and waiting until after discovery to decide whether to advance the defence or abandon it.

[184] Moreover, an allegation in a Statement of Defence cannot give rise to a claim for damages because such statements are protected by the doctrine of absolute privilege. The doctrine of absolute privilege was summarized by the Ontario Court of Appeal in Salasel v. Cuthbertson, 2015 ONCA 115, at para. 35:

The doctrine of absolute privilege contains several basic elements: no action lies, whether against judges, counsel, jury, witnesses or parties, for words spoken in the ordinary course of any proceedings before any court or judicial tribunal recognised by law; the privilege extends to documents properly used and regularly prepared for use in the proceedings.

[185] In Samuel Manu-Tech Inc. v. Redipac Recycling Corp., 1999 CanLII 3776 (ON CA), 124 O.A.C. 125, at para. 20, the Court of Appeal held that the immunity afforded by absolute privilege “extends to any action, however framed, and is not limited to actions for defamation”.

[186] Moreover, the conduct meriting punitive or moral damages must relate to “a component of the manner of dismissal”, not Mr. Sankreacha’s displeasure with an answer given by Mr. Beach to a question posed by Mr. Sankreacha’s counsel in cross-examination eight years later.

[187] Witness testimony is also protected by absolute privilege, and Mr. Beach’s answer to Mr. Jagtoo’s question cannot form the basis of a claim for damages against the defendants. The policy reasons for this absolute privilege were explained by Borins J.A. in Reynolds v. Kingston (Police Services Board), 2007 ONCA 166, at para. 14:

The rationale for witness immunity, which has become less an evidentiary rule than a rule of substantive law, is that the proper administration of justice requires full and free disclosure from witnesses unhampered by fear of retaliatory lawsuits.

[188] Accordingly, if I had found that the plaintiff was wrongfully dismissed, the plaintiff’s claim for punitive and/or moral damages would be dismissed. The defendants’ conduct was neither egregious nor outrageous in the circumstances, and the evidence does not support the allegation that any of the defendants acted in bad faith when the plaintiff was dismissed.

2) Inducing Breach of Contract

[189] The plaintiff argues that Mr. Cowan and Mr. Brennan procured a breach of his employment contract. The basis for this alleged breach is essentially identical to the conspiracy allegations alleged against Mr. Cowan and Mr. Brennan in relation to the claim for wrongful dismissal. For the same reasons that I have dismissed the wrongful dismissal claim, the claim for inducing breach of contract must also be dismissed.

3) Injurious Falsehood

[190] The plaintiff alleges that he was wrongfully accused of downloading KGB spyware onto Mr. Brennan’s computer, downloading credit card data, compromising the pin pad and stealing money from Canadian Tire employees’ and others’ bank accounts. He seeks damages for the tort of injurious falsehood.

[191] The tort of injurious falsehood is similar to the tort of defamation but protects a different interest. Defamation protects a person’s personal reputation while injurious falsehood protects an interest in one’s property, products or business. In order to recover for injurious falsehood, there must be a false statement made with malice and malice must be proven. Injurious falsehood consists in the publication of false and malicious statements concerning the plaintiff or his property calculated and intended to induce others not to deal with him; see Husky Injection Molding Systems Ltd. v Schad, 2016 ONSC 2297, at para. 415, citing Fleming, The Law of Torts, 9th ed., at pp. 778-779.

[192] This claim cannot succeed.

[193] Firstly, I have already found that the plaintiff was not wrongfully accused of downloading KGB spyware onto Mr. Brennan’s computer. The defendants have proven, on a balance of probabilities, that Mr. Sankreacha was responsible for the downloading of KGB spyware.

[194] Second, as previously outlined, I have found that the plaintiff was not wrongfully dismissed and that the employer had just cause for dismissal on the basis of plaintiff’s conduct in downloading KGB spyware onto his employer’s computer.

[195] Third, there is no evidence that any of the defendants wrongfully accused the plaintiff of stealing money from Canadian Tire employees or others’ bank accounts, or of being involved in the pin pad fraud. The will-says provided to the police did not contain false statements, nor did they accuse or even refer to Mr. Sankreacha, and they were not actuated by malice.

[196] As explained above, to the extent that such an allegation was in the Statement of Defence as part of the defendants’ later abandoned after-acquired cause defence, it is protected by absolute privilege and cannot form the basis of a claim for injurious falsehood or defamation.

[197] The plaintiff is correct that some of the information reported by Mr. Cowan in his telephone call to the police, reproduced at para. 32 of these Reasons, was incorrect. Mr. Cowan reported that the 48-page printout contained the “manager’s bank accounts as well as internal CTC Mastercard accounts” and “tons of CTC Canadian Tire account numbers”. While the printout included the banking information and password of another employee (Mike Sue), it did not contain Mr. Brennan’s bank account information and it did not contain any Canadian Tire Mastercard information.

[198] Mr. Cowan was also incorrect when he reported to the police that “the forensic computer, forensic auditor came in today and confirmed that he was in fact in possession of it”. While Mr. Valencia confirmed that KGB spyware had been downloaded, likely by Mr. Sankreacha, Mr. Valencia did not confirm that the 48-page printout contained any Canadian Tire Mastercard account information.

[199] I have already concluded that Mr. Cowan’s honest but mistaken belief in this regard was reasonable in the exigencies of the situation. There were folders on the email referencing “CTC mastercard” and “CTC0399”, which Mr. Cowan thought might relate to credit card information of the store or its customers. Several other items in the print out contained the words “Scotia OnLine Sign-On” followed by a series of numbers, or “Scotia OnLine”, or “Scotia Bank”, which Mr. Cowan mistakenly believed related to Mr. Brennan’s personal bank account (it actually related to Mr. Sue’s personal bank account).

[200] Finally, the plaintiff has failed to prove, on a balance of probabilities, that Mr. Cowan’s telephone call to the police was actuated by malice. The malice alleged was Mr. Cowan’s alleged involvement in the conspiracy to frame Mr. Sankreacha in order to have him dismissed for his refusal to upsell, or to use him as a diversion for the pin pad fraud in which Mr. Cowan was involved. For the reasons given above, I have rejected both of these allegations.

[201] Accordingly, the claim for injurious falsehood is dismissed.

4) Defamation

[202] The Supreme Court of Canada in Grant v. Torstar Corp., 2009 SCC 61, at paras 28-34, discussed the elements of defamation and available defences. To succeed on a defamation claim, the plaintiff must establish that the impugned words: 1) would tend to lower the plaintiff's reputation in the eyes of a reasonable person; 2) referred to the plaintiff; and (3) were communicated to at least one person other than the plaintiff.

[203] If words are defamatory, then there are two defences that are available to a defendant: justification and privilege. Justification means that the words are substantially true: Grant v. Torstar, at para. 33. Qualified privilege means that on the occasion that the communication was made, the person who made it had an interest or a legal social, or moral duty to make it.

[204] The plaintiff alleges that Mr. Cowan’s call to the police on June 21, 2010 was defamatory. Mr. Cowan alleged that Mr. Sankreacha had downloaded “all of the manager’s bank accounts as well as internal CTC Mastercard accounts” and that he was “definitely responsible for the theft of the information.” The plaintiff alleges that this information was not true and that Mr. Cowan deliberately exaggerated the evidence to bolster his veracity and ensure that criminal charges were laid against Mr. Sankreacha.

[205] There is no dispute that Mr. Cowan’s call to the police referred to Mr. Sankreacha and was communicated to at least one other person.

[206] In my opinion, the plaintiff has not proven that the content of Mr. Cowan’s telephone call to the police “would tend to lower the plaintiff’s reputation in the eyes of a reasonable person”. The “eyes of a reasonable person” must be viewed in the context of to whom the call was made. In this case, the call was made to a single individual, the police dispatch, and Mr. Cowan concluded by stating: “there may be enough evidence to bring him in for it”.

[207] In Guergis v. Novak, 2013 ONCA 449, the Court of Appeal noted that a reasonable person would know the difference between an allegation and proof of guilt. The Court stated, at para. 57:

A reasonably thoughtful and informed reader would understand the difference between allegations and proof of guilt. Such a person would bear in mind that an accused person is presumed innocent until proven guilty: Miguna v. Toronto (City) Police Services Board, [2004] O.J. No. 2455 (S.C.), at paras. 4-6, aff’d [2005] O.J. No. 107 (C.A.), at para. 4.

[208] The police frequently obtain complaints and reports from members of the public. The police, better than anyone else, must understand that such complaints and reports are nothing more than allegations and requests for a police investigation; they are not proof of guilt. It is ultimately up to the investigating officer to determine for him or herself whether there is sufficient evidence to lay charges. P.C. Marshall confirmed this when he testified at the trial.

[209] Assuming that the communication meets all three elements of defamation, Mr. Cowan relies on both the justification and qualified privilege defences. He argues first that the action for defamation must fail because the statements he made to the police were “substantially true”, and, in the alternative, were protected by qualified privilege.

[210] Truth is a complete defence to an action for defamation. The test is substantial truth and it is therefore not necessary to prove the truth of each word. It is a sufficient defence if the substance of the allegations is justified: Jiang v. Sing Tao Daily Ltd., 2014 ONSC 287, at para. 46.

[211] Pursuant to s. 22 of the Libel and Slander Act, R.S.O 1990, c. L.12, the defence of justification will not fail by reason only that the truth of every allegation of fact is not proved if “the words not proved to be true do not materially injure the plaintiff’s reputation having regard to the truth of the remaining charges”: DEI Films Ltd. v. Tiwari, 2018 ONSC 4423, at para. 30.

[212] In the present case, the defendants have proven on a balance of probabilities that it was Mr. Sankreacha who downloaded the KGB spyware on Mr. Brennan’s computer, and downloaded confidential information, which he then forwarded to himself. This much was confirmed by Mr. Valencia, the “forensic auditor” referred to by Mr. Cowan in his telephone call to the police.

[213] As indicated above, Mr. Cowan was incorrect when he reported that the 48-page printout contained the “manager’s bank accounts as well as internal CTC Mastercard accounts” and “tons of CTC Canadian Tire account numbers”. While the printout included the banking information and password of another employee, it did not contain Mr. Brennan’s bank account information and it did not contain any Canadian Tire Mastercard information.

[214] In my view, the information provided by Mr. Cowan was “substantially true”. It was the action of downloading the KGB spyware and collecting confidential information from his employer’s computer that constituted the substance of the allegation. The specifics of the confidential information collected are not central to the substance of the allegation of wrongdoing in this case.

[215] Moreover, P.C. Marshall testified that had he known that there was no evidence of credit card data in the 48-page printout, he still would have charged Mr. Sankreacha with theft of data. This is a case in which “the words not proved to be true do not materially injure the plaintiff’s reputation having regard to the truth of the remaining charges.”

[216] I also find that Mr. Cowan’s telephone call to the police was protected by qualified privilege.

[217] The defence of qualified privilege is described in Raymond E. Brown, The Law of Defamation in Canada, 2nd ed. (loose-leaf) (Toronto: Carswell 1999) at p. 13-4, as follows:

There are certain occasions on which a person is entitled to publish untrue statements about another, where he or she will not be liable even though the publication is defamatory. One such occasion is called a conditional or qualified privilege. No action can be maintained against a Defendant unless it is shown that he or she published the statement with actual or express malice. An occasion is privileged if a statement is fairly made by a person in the discharge of some public or private duty, or for the purpose of pursuing or protecting some private interest, provided it is made to a person who has some corresponding interest in receiving it. The duty may be either legal, social or moral. The test is whether persons of ordinary intelligence and moral principal, or the great majority of right-minded persons, would have considered it a duty to communicate the information to those to whom it was published.

[218] Professor Brown describes the following situation in which qualified privilege may attach to businesses and companies sharing information concerning company personnel with others, at p. 13-95:

When company personnel are investigating a theft, shortage of accounts, misappropriate of property, or failure to follow company accounting procedures, other officials of the company who have an interest in the matter may share in that information and the investigators may exchange information with each other.

See: Lewis v. Terrace Tourism Society, 2008 BCSC 361, at paras. 54, 55, reversed on other grounds, 2010 BCCA 346, 321 D.L.R. (4th) 122.

[219] In this case, Mr. Cowan was tasked with investigating an email on the employer’s computer that revealed both the downloading of KGB spyware and the transfer or theft of confidential information. He clearly had an interest in sharing this information with the police in these circumstances, and the police had a corresponding interest in receiving this information. Mr. Cowan’s report was therefore protected by qualified privilege, and even with the errors made, he can be held liable for defamation only if the plaintiff can prove that the statements were actuated by malice.

[220] The plaintiff argues that Mr. Cowan had a positive obligation to determine whether the email and 48-page printout actually included any CTC Mastercard information before reporting this allegation to the police and making unequivocal statements of culpability to the police. His failure to confirm this allegation – while falsely stating to the police that it was confirmed by a forensic auditor - showed a reckless disregard for the truth, and a reckless disregard for the truth is evidence of malice: see Alleslev-Krofchak v. Valcom Limited, 2009 CanLII 30446 (Ont. S.C.), at para. 240, affirmed, 2010 ONCA 557, 322 D.L.R. (4th) 193, leave to appeal to S.C.C. refused, [2010] S.C.C.A. No. 403:

Recklessness as a form of malice has been described in R.E. Brown, The Law of Defamation in Canada, looseleaf 2d ed. (Toronto: Carswell, 1994) 16-72 to 16-77 as follows:

Speaking recklessly and in utter disregard of the consequences, or in knowing or reckless disregard for the truth, or at least speaking without caring whether what one says is true or false, is certainly strong, if not conclusive evidence of malice. Even a defendant who makes a defamatory assertion without any, or at least sufficient, knowledge to warrant it, or without having made reasonable inquiry where the means or sources were otherwise readily available to him, or who deliberately refrains from making any inquiry, may be guilty of reckless and, therefore, malicious conduct.

[221] The plaintiff’s argument goes beyond mere recklessness, however. He argues that Mr. Cowan made the false complaint to the police for the dominant purpose of having Mr. Sankreacha charged, so that Mr. Sankreacha could serve as a “decoy” for the pin pad fraud run orchestrated by Mr. Cowan, Mr. Brennan and Mr. Beach the next day “so that focus and blame would be on the Plaintiff and his termination instead of on Brennan and Cowan”.

[222] As indicated above under “injurious falsehood”, I have rejected the contention that Mr. Cowan’s phone call to the police was actuated by malice.

[223] Given the evidence available to Mr. Cowan, he had “reasonable and probable grounds” for suspecting Mr. Sankreacha. Mr. Cowan’s failure to make further investigations before calling the police does not qualify as recklessness. Based on the information available to him, Mr. Cowan essentially handed the investigation over to the police, which was the proper conduct in the circumstances.

[224] To the extent that the allegation of malice is based on the pin pad fraud diversion theory, the allegation is rejected for the reasons set out above at paras.136-145 above.

[225] Accordingly, the plaintiff’s action based on defamation must fail.

5) Intentional Infliction of Mental Suffering

[226] The test for intentional infliction of mental suffering has three elements. The defendants’ conduct must have been (a) flagrant and outrageous, (b) calculated to harm the plaintiff and (c) it must have caused the plaintiff to suffer a visible and provable illness: Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419, 120 O.R. (3d) 481, at para. 41; West v. Mex Precision Wire Corporation, 2018 ONSC 6572, at para. 16.

[227] The specific conduct relied upon by Mr. Sankreacha is Mr. Cowan’s telephone call to the police, which resulted in Mr. Sankreacha being arrested by P.C. Marshall and charged with unauthorized possession of credit card data.

[228] I have already concluded that, notwithstanding the errors contained in his message to the police, Mr. Cowan’s conduct that day was reasonable in the exigencies of the circumstances, and was not flagrant or outrageous. Given the information known to Mr. Cowan at the time, his purpose was to protect the security of the store’s compromised computer data, and not to harm the plaintiff.

[229] Moreover, as will be discussed in greater detail below under malicious prosecution, P.C. Marshall made it clear in his testimony that he never heard Mr. Cowan’s message to the police dispatcher. He independently reviewed the 48-page printout and came to the conclusion that it contained credit card information and that he had reasonable and probable grounds to arrest Mr. Sankreacha. He independently decided to arrest Mr. Sankreacha, and independently decided on the charges to be laid and the method of arrest. Had he known that there was no credit card data on the printout, he testified that he still would have arrested Mr. Sankreacha and charged him with theft of data.

[230] Finally, the medical evidence does not prove that the plaintiff suffered a visible and provable illness. No medical expert was called and no medical records were introduced to support the plaintiff’s claim. On cross-examination Mr. Sankreacha acknowledged that his doctor’s notes indicate that he was not suffering from depression or anxiety, he was not prescribed any medication and did not receive any counselling.

[231] In many respects, the legal principles relating to a claim for intentional infliction of mental suffering resulting from dismissal from employment are identical to the legal principles relating to a claim for punitive and/or moral damages resulting from dismissal from employment: Correia v. Kohler Ltd., 2007 CanLII 691 (ON SC), at para. 45, varied, but not on this point, 2008 ONCA 506 at para. 81. Since these claims essentially overlap, my reasons for dismissing the claim for punitive and/or moral damages apply to the claim for intentional infliction of mental suffering.

[232] Accordingly, the claim for intentional infliction of mental suffering is dismissed.

6) False Imprisonment

[233] The plaintiff must prove three elements to establish the tort of false imprisonment. He must have been totally deprived of liberty, this deprivation must have been against his will, and it must be caused by the defendant. The onus then shifts to the defendant to justify the detention, based on legal authority under common law or statute: Kovacs v. Ontario Jockey Club, 1995 CanLII 7397; 126 D.L.R. (4th) 576 (Ont. S.C.), at para. 46; Dr. X v. Everson, 2013 ONSC 6134, at para. 190.

[234] In Kovacs, Cummings J. set out the following summary of the tort at para. 46:

It is unnecessary that there be actual physical force in making the arrest or in obliging the detained person to remain in one place. All that is required is that there be a reasonable belief that an attempt to leave could result in force being used against the detainee… It is clear that “moral pressure” may suffice to constitute imprisonment, such as a situation where a plaintiff submits to the defendant’s acts for fear of public embarrassment. [Citations omitted.]

[235] The plaintiff alleges that once he reported to work at 2:00 p.m., Mr. Cowan escorted him into Mr. Issa’s office. Once there, the plaintiff argues that he was not free to leave and was deprived of his liberty. The plaintiff was advised that he was accused of serious misconduct, including theft, and was required to give an explanation or confess. He was asked to open his Hotmail account to prove whether the email was there. Mr. Sankreacha testified that he did not feel free to leave the office. He also testified that when asked for his store key and company I.D., he handed over his entire key chain and wallet, including his house key, car key, and driver’s licence, to Mr. Cowan, and that because he did not have these items he could not leave.

[236] Mr. Sankreacha also testified that he heard Mr. Cowan telephone the police, and that he did not think that he could leave once the police were called. Mr. Sankreacha alleges that he was detained by Mr. Cowan in the office from 2:00 p.m. until the police arrived at approximately 3:15 p.m.

[237] In para. 102 of his written submissions, the plaintiff’s counsel argues: “All of that created pressure on the Plaintiff to stay put, or be arrested elsewhere. The Plaintiff exercised good judgment and remained where he was, until police arrived.”

[238] The evidence of Mr. Beach and Mr. Cowan was that the purpose of the meeting was to give Mr. Sankreacha an opportunity to explain the email discovered on Mr. Brennan’s computer. Mr. Cowan advised Mr. Sankreacha that he was opening an investigation but Mr. Sankreacha was not under arrest, did not have to speak to him, and he was free to go at any time.

[239] Even after the police were called, Mr. Cowan testified that he advised Mr. Sankreacha that he was free to go, but Mr. Sankreacha told him that he did not want to be arrested at home.

[240] There is no dispute that the door to Mr. Issa’s office was left open throughout the meeting and that Mr. Sankreacha sat in the chair closest to the door.

[241] P.C. Marshall confirmed that when he arrived at the store, the plaintiff was not under arrest and was not restrained in any way. Mr. Sankreacha appeared to be calm and cooperative.

[242] The plaintiff acknowledged on cross-examination that he heard Mr. Cowan tell the police that Mr. Sankreacha was cooperating and was not under arrest. He also agreed that no one from the Markham Canadian Tire store told him that he could not leave.

[243] In my view, the evidence does not support the contention that the plaintiff was totally deprived of liberty, or that he held a reasonable belief that an attempt to leave would result in force being used to detain him. I accept the evidence of Mr. Cowan that, in accordance with his training, he advised Mr. Sankreacha that he was free to go at any time and was not under arrest. Indeed, once the police were called, there would have been no reason for Mr. Cowan to detain Mr. Sankreacha. Mr. Sankreacha’s identity and address were both known and there was no suggestion that the police would be unable to find him.

[244] I have already rejected the plaintiff’s contention that he gave his entire key chain and wallet to Mr. Cowan: see paras. 101 – 104. This allegation was not referenced in the plaintiff’s pleading under false imprisonment.

[245] Accordingly, the claim for false imprisonment is dismissed.

7) Malicious Prosecution

[246] The test for malicious prosecution was set out by the Supreme Court of Canada in Nelles v. Ontario, 1989 CanLII 77 (SCC), [1989] 2 S.C.R. 170, at pp. 192-193:

There are four necessary elements which must be proven 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.

[247] See also: Pate Estate v. Galway-Cavendish and Harvey (Township), 2013 ONCA 669, at para. 21.

[248] Mr. Sankreacha was charged by the police with unauthorized possession of credit card data on June 21, 2010. The charges against Mr. Sankreacha were withdrawn by the Crown on August 10, 2011.

Were the proceedings initiated by the defendant?

[249] In the present case, the plaintiff alleges that the prosecution of the plaintiff was initiated by Mr. Cowan, rather than the police.

[250] In D’Addario v. Smith, 2018 ONCA 163, the Ontario Court of Appeal commented on the circumstances in which a claim for malicious prosecution may be made against a private party, at paras. 24 and 25:

Malicious prosecution is difficult to establish. It is even more difficult to establish if a plaintiff seeks to establish that a private party is liable, as opposed to the police. Absent exceptional circumstances, the court will view the police officer who laid the charge as being the person who initiated the prosecution: Kefeli, at para. 24.

The first element of the test from Nelles requires that the proceedings must have been initiated by the defendants… This court has discussed the circumstances in which a private party can be found to have initiated a prosecution in a series of cases… In Pate Estate, the court made clear that the test is a high bar, but it is not necessary to demonstrate that it was “virtually impossible” for the police to exercise any independent discretion or judgment. [Citations omitted]

[251] The cases indicate that if a private party “knowingly withheld exculpatory information from the police which the police could not be expected to find” or “actively and deliberately misled” the police in circumstance in which the police rely on the private party this could undermine the independence of the police investigation and qualify as initiation of the prosecution: McNeil v. Brewers Retail Inc., 2008 ONCA 405, at paras. 52-53; see also: Pate Estate at para. 32.

[252] I also adopt the following statement of Wilton-Siegal J. in Mirra v. Toronto Dominion Bank, 2004 CanLII 17192 (ON SC), at para. 35:

[I]t is clear that no responsibility is incurred by a private citizen who confines his conduct to bringing before some proper authority information which he or she does not disbelieve, even though in so doing he or she hopes that a prosecution will be instituted, if the prosecution is actually instituted as a result of independent discretion on the part of that authority

[253] Similarly, in Correia at para. 89:

In my view, even where a citizen gives his fullest cooperation and assistance, there is no compelling reason to deem him an initiator of a prosecution where the actual initiator is readily identifiable and has had the ability to exercise an independent discretion whether to lay charges or not.

[254] Many alleged victims of crime provide documents or statements to the police because they wish criminal charges to be laid and actively encourage the police to lay charges. If the police can carry out their own independent investigation and do not have to rely solely on what the complainant is telling them, then the complainant is not the “initiator” of the prosecution.

[255] The plaintiff argues that Mr. Cowan’s call to the police on June 21, 2010 was designed to have the police charge Mr. Sankreacha. The plaintiff argues that all of the allegations in that phone call were false, but I have already concluded that the allegations relating to the downloading of spyware were true. Mr. Cowan’s phone call did, however, also include information that we now know was false. In particular, the allegation that the 48-page printout contained confidential credit card and Canadian Tire Mastercard information, and that this had been confirmed by a “forensic auditor”. The plaintiff alleges that Mr. Cowan “manipulated the police into laying the charge and undermined police independence”, and that the false information related directly to the specific charge laid by the police: unauthorized possession of credit card data.

[256] P.C. Marshall testified that he laid the charge against Mr. Sankreacha because he believed that the 48-page printout contained confidential credit card information. The plaintiff alleges that P.C. Marshall’s belief in this regard was based on his conversation with Mr. Cowan.

[257] In addition, the plaintiff alleges that in July 2012, Mr. Beach, through his counsel, confirmed that there was no customer or Canadian Tire credit card information on the printout, but failed to disclose this exculpatory information to the police.

[258] The plaintiff also alleges that the defendants failed to advise the police that there was no evidence that Mr. Sankreacha was responsible for the pin pad fraud. Given that Mr. Sankreacha was never charged in relation to that incident, I fail to see the relevance of this point to the claim for malicious prosecution. In any event, a claim for malicious prosecution against a private party must be based on an allegation that the private party withheld exculpatory evidence or actively misled the police – it cannot be based on a private party’s failure to tell the police that he has no evidence.

[259] The plaintiff’s claim is entirely inconsistent with the evidence given by P.C. Marshall, who testified that it was his decision alone to charge Mr. Sankreacha and that he concluded independently that he had reasonable and probable grounds to charge the plaintiff with unauthorized possession of credit card data. P.C. Marshall testified that he reached this decision after his own independent investigation. In particular, he reviewed the 48-page printout, and observed references to “CTC Mastercard” and “CTC 0399”, that several items on the printout contained the letters “SCODEF” followed by numbers and “CREDAT” followed by numbers, several other items contained the words “Scotia OnLine Sign-On” followed by a series of numbers, or “Scotia OnLine”, or “Scotia Bank”, which P.C. Marshall thought related to Bank of Nova Scotia credit cards. P.C. Marshall confirmed with Mr. Beach that Mr. Sankreacha was not authorized to copy or download personal information from this computer. He also confirmed that KGB spyware had been downloaded on the computer.

[260] P.C. Marshall testified that no one at the Markham Canadian Tire store encouraged him to arrest Mr. Sankreacha. He testified: “I made the decision – I have to wear it.” This statement is consistent with the general principle that the police, rather than a private party, “must shoulder the responsibility for determining whether adequate grounds exist to support the laying of charges”: Mirra, at para. 43.

[261] In my view, it cannot be said that Mr. Cowan was the “initiator” of the prosecution, as the term has been interpreted by the courts. While Mr. Cowan was not correct about the contents of the 48-page printout, the evidence does not support the plaintiff’s contention that Mr. Cowan either knew this information was false or deliberately misled the police in this regard. Nor does the evidence support the contention that P.C. Marshall relied solely on Mr. Cowan for his investigation. Mr. Cowan’s statement was just one factor in P.C. Marshall’s decision to lay the particular charges.

[262] Finally, the plaintiff alleges that Mr. Beach knew by July 2012 that there was no customer or Canadian Tire credit card information on the 48-page printout, but failed to disclose this exculpatory information to the police. The fact is, however, that the charges against Mr. Sankreacha were withdrawn by the Crown the year before, on August 10, 2011. There is no evidence that Mr. Beach or Mr. Cowan had knowledge that there was no credit card information on the 48-page printout prior to August 10, 2011. The knowledge of the defendants subsequent to the withdrawal of the charges is irrelevant to the claim.

Did the defendants have reasonable and probable grounds to initiate the prosecution?

[263] The defendants argue, in the alternative, that if they initiated the prosecution, they had reasonable and probable grounds.

[264] The plaintiff’s position on this issue is based on the premise that he did nothing wrong, that the defendants knew this, and that it was the defendants who planted the KGB spyware on Mr. Brennan’s computer. I have already rejected those allegations.

[265] At the time that Mr. Cowan called the police, the defendants had reasonable and probable grounds to believe that a crime had been committed. This belief was based on the discovery of an email from Mr. Sankreacha’s Hotmail address to his Hotmail address that appeared on Mr. Brennan’s computer screen, and the 48-page attachment containing information downloaded from the computer. The printout contained confidential data, including one employee’s banking information and bank password, and Mr. Brennan’s email password. The belief that a crime had been committed was also based on Mr. Valencia’s confirmation that KGB spyware had been installed onto Mr. Brennan’s computer. All the evidence at that time pointed to Mr. Sankreacha as the likely suspect.

[266] The fact that the defendants wrongly believed that there was credit card information on the printout does not negate the reasonable and probable grounds that did exist.

Was Mr. Cowan actuated by malice?

[267] The defendants argue, in the further alternative, that the plaintiff has failed to prove that Mr. Cowan was actuated by malice or any other improper purpose.

[268] I have already rejected the allegation of malice made against Mr. Cowan and the other defendants. The malice alleged was Mr. Cowan’s alleged involvement in the conspiracy to frame Mr. Sankreacha in order to have him dismissed for his refusal to upsell, or to use him as a diversion for the pin pad fraud in which Mr. Cowan was involved. For the reasons given above, I have rejected both of these allegations.

Disposition: Malicious Prosecution

[269] Accordingly, the claim for malicious prosecution is dismissed.

8) Civil Conspiracy

[270] The final cause of action raised by the plaintiff is civil conspiracy.

[271] The tort of civil conspiracy was described by the Supreme Court of Canada in Canada Cement LaFarge Ltd. v. B.C. Lightweight Aggregate Ltd., 1983 CanLII 23 (SCC), [1983] 1 S.C.R. 452, at pp. 471-472:

Although the law concerning the scope of the tort of conspiracy is far from clear, I am of the opinion that whereas the law of tort does not permit an action against an individual defendant who has caused injury to the plaintiff, the law of torts does recognize a claim against them in combination as the tort of conspiracy if:

(1) whether the means used by the defendants are lawful or unlawful, the predominant purpose of the defendants’ conduct is to cause injury to the plaintiff; or,

(2) where the conduct of the defendants is unlawful, the conduct is directed towards the plaintiff (alone or together with others), and the defendants should know in the circumstances that injury to the plaintiff is likely to and does result.

In situation (2) it is not necessary that the predominant purpose of the defendants’ conduct be to cause injury to the plaintiff but, in the prevailing circumstances, it must be a constructive intent derived from the fact that the defendants should have known that injury to the plaintiff would ensue. In both situations, however, there must be actual damage suffered by the plaintiff.

[272] See also: Agribrands Purina Canada Inc. v. Kasamekas, 2011 ONCA 460, at para. 24.

[273] In his Amended Statement of Claim, the plaintiff’s claim for civil conspiracy is based on the “upsell” theory: that Brennan and Cowan conspired to have the plaintiff fired for cause because of his refusal to upsell to customers. He also alleges a conspiracy by Brennan and Cowan to withhold exculpatory evidence from the police.

[274] In his written submissions, the plaintiff relies primarily on the pin pad fraud diversion theory which, as indicated above, was not pled in the Amended Statement of Claim.

[275] I have already concluded that the plaintiff has not proven any of these conspiracy theories (assuming that he is even permitted to rely on the pin pad fraud diversion theory given that it was not pleaded in his Amended Statement of Claim). My analysis and conclusions with regard to these issues at paras. 122 – 145, 258 and 262 above are equally applicable to the civil conspiracy claim, which is, therefore, dismissed.

Limitation Period

[276] The plaintiff was brought to Mr. Issa’s office on June 21, 2010, and formally dismissed from his employment on June 22, 2010.

[277] The charges against him were withdrawn by the Crown on August 11, 2011.

[278] The original Statement of Claim was issued on October 6, 2011; this was two months after the charges were withdrawn by the Crown.

[279] In September 2012, the plaintiff put the defendants on notice that he intended to move to amend his Statement of Claim to add Rod Brennan and JMC Legal Services Inc., and include a claim for conspiracy between Mr. Brennan and Mr. Cowan.

[280] The motion to amend the Statement of Claim was originally returnable on December 10, 2012, but was adjourned three times until it was heard by Master Hawkins on March 11, 2015. He granted the plaintiff leave to amend the Statement of Claim, with leave to Mr. Brennan and JMC Legal Services Inc. to raise the limitation defence.

[281] The defendants take the position that these amendments are out of time, and that the limitation period expired on June 22, 2012, two years after the plaintiff was dismissed from his employment, and three months before they were given notice of the proposed amendments.

[282] The plaintiff takes the position that he could not have known the information needed to make the claim of conspiracy until January 27, 2011, the date on which he obtained police disclosure in relation to his criminal charges. This is the date that the plaintiff was first given the will-says of Mr. Brennan and the other bank employees that were collected by Cowan and Brennan and given to the police. It was only with the receipt of this information, he argues, that he became aware that Brennan and Cowan had conspired to have him dismissed. He argues that further information came to light only during the discovery of Mr. Cowan on July 30, 2012.

[283] Whatever suspicions he may have had, the plaintiff argues that the conspiracy was not discoverable until January 27, 2011 at the earliest. Measured from January 27, 2011, the limitation period would not expire until January 27, 2013, which was after the original return date of the plaintiff’s motion to amend.

[284] When a limitation period begins to run is a question of fact. The application of the discoverability rule to the facts of a particular case requires a finding of fact about when the plaintiff discovered the facts in respect of his claim or through reasonable diligence ought to have discovered the facts.

[285] Section 5 of the Limitations Act, 2002, S.O. 2002 c. 24, Sched. B, sets out the principles governing the discoverability doctrine. Section 5 provides as follows:

(1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause(a).

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

[286] Section 5(2) creates a presumption that a claimant acquired knowledge of his or her claim on the date the act or omission on which the claim is based took place. In this case, by reason of s. 5(2), in the absence of evidence to the contrary, Mr. Sankreacha was presumed to have discovered the material facts on which his claims against Brennan and JMC Legal Services Inc. were based on the day that he was dismissed: Miaskowski v. Persaud, 2015 ONCA 758, at para. 24; Placzek v. Green, 2009 ONCA 83, at para. 23.

[287] This case is complicated by the fact that it also includes a claim for malicious prosecution, and the limitation period for malicious prosecution does not begin to run until the cause of action is complete, that is when the proceedings have terminated in favour of the plaintiff – in this case August 11, 2011: Hill v. Hamilton-Wentworth Regional Police Services Board, 2007 SCC 41, at para. 96; Diaz v Tossa, 2017 ONSC 54, at para. 47; Winmill v Woodstock Police Services Board et al., 2017 ONSC 2528, at para. 21, reversed on other grounds, 2017 ONCA 962; 138 O.R. (3d) 641, leave to appeal to S.C.C. refused, [2018] S.C.C.A. No. 39.

[288] That said, as far as I can tell from the pleadings and closing submissions, the allegation of malicious prosecution is directed only at Mr. Cowan.

[289] The principle of discoverability applies to both the discoverability of facts and to the discoverability of the tortfeasor’s identity: Pepper v. Zellers Inc. (2006), 2006 CanLII 42355 (ON CA), 83 O.R. (3d) 648 (C.A.), at para. 17.

[290] The Court of Appeal discussed the application of the discoverability principle in Longo v. MacLaren Art Centre, 2014 ONCA 526, at para. 42:

A plaintiff is required to act with due diligence in determining if he has a claim. A limitation period will not be tolled while a plaintiff sits idle and takes no steps to investigate the matters referred to in s. 5(1)(a) [of the Limitations Act]. While some action must be taken, the nature and extent of the required action will depend on all of the circumstances of the case.

[291] In my view, the claims against JMC Legal Services Inc. are statute barred because the existence of this corporation was discoverable by due diligence before the limitation period expired. It is, in any event, unclear from the pleadings what allegations are being made against JMC Legal Services Inc.

[292] It is more difficult to determine a precise date of discoverability for the tort of conspiracy. Conspiracies are by nature concealed from view. The plaintiff may know the individual actions of the conspirators without knowing or understanding that two or more persons have conspired. A plaintiff may harbour suspicions, but when do the plaintiff’s suspicions crystalize into discoverability? This point was addressed by the Court of Appeal in Tran v. University of Western Ontario, 2016 ONCA 978, at para. 17:

First, I observe that the most successful conspiracy is one in which the target remains completely unaware of it. The crucial element, which the motion judge did not mention or take into account in his assessment of discoverability, is when Dr. Tran became aware of the conspiracy. This was an error. While she knew of certain actions taken by the defendants, her understanding of those actions as indicative of a conspiracy could only be retrospective. This aspect of the cause of action in conspiracy plainly engages the discoverability elements of the Limitations Act, 2002.

[293] The discoverability doctrine is even more difficult to apply to the tort of conspiracy if there was no conspiracy. In the present case, I have concluded that the evidence does not support the plaintiff’s contention that Brennan and Cowan conspired to have him dismissed. Since the tort complained of never happened, when should the plaintiff, through reasonable diligence, have discovered it?

[294] In the present case, I am prepared to accept the plaintiff’s argument that while he knew of certain actions taken by Mr. Brennan and Mr. Cowan, his understanding of those actions as indicative of a conspiracy could not crystalize until he was given additional information in the form of the Crown’s disclosure in his criminal proceeding. As such, I find that the plaintiff’s conspiracy claim against Brennan and Cowan was made within two years after it was discovered and is not barred by the expiry of the limitation period.

[295] Given my findings in relation to the various causes of action, my decision with respect to the limitation period does not affect the result of this decision.

Conclusion

[296] For the foregoing reasons, the plaintiff’s claims are dismissed.

[297] If the parties are unable to agree on costs, the defendant may file costs submissions of no more than three pages each, plus costs outline and any offers to settle, within 30 days. The plaintiff will have 20 days thereafter to reply on the same terms, (three pages per reply for a total of six pages for submissions).

Justice R.E. Charney

Released: December 3, 2018

Court File and Parties

REASONS FOR JUDGMENT

Introduction

A. Facts

The Discovery of the KGB Spyware - June 21, 2010

The Arrest of Mr. Sankreacha

Discovery of the Thumb Drive on the Key Chain

Mr. Sankreacha is Dismissed

Installation of the KGB Spyware

The Pin Pad Fraud – June 22, 2010

B. Analysis

1) Wrongful Dismissal

Who installed the KGB Spyware?

The “Upsell” Theory

The Pin Pad Fraud Diversion Theory

Conclusion Re: Proof of Just Cause

Was Installation of the KGB Spyware Just Cause for Dismissal?

Disposition: Wrongful Dismissal

Notice Period

Punitive and/or moral damages

2) Inducing Breach of Contract

3) Injurious Falsehood

4) Defamation

5) Intentional Infliction of Mental Suffering

6) False Imprisonment

7) Malicious Prosecution

Were the proceedings initiated by the defendant?

Did the defendants have reasonable and probable grounds to initiate the prosecution?

Was Mr. Cowan actuated by malice?

Disposition: Malicious Prosecution

8) Civil Conspiracy

Limitation Period

Conclusion

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Expert Witnesses

Issues

Statutory Provisions 3

Legal Tests 8

Legislation 3