Eighth time is not the charm!

Featured Case: Sankreacha v. Cameron J. and Beach Sales Ltd.

Martin Smith,
Partner

Marla Kuperhause,
Associate

December 2018

The Ontario Superior Court of Justice recently released its trial decision for Sankreacha¹ where Martin Smith, Managing Partner of the Ottawa office of McCague Borlack LLP, with the assistance of Marla Kuperhause, associate, successfully defended against a litany of tort claims brought by the plaintiff, Bharath Sankreacha, after the conclusion of a four week trial before Justice Charney.

Martin and his team defended the plaintiff's former employer and corporate owner of the Markham Canadian Tire franchise, Cameron J. and D. Beach Sales Ltd., as well as the plaintiff's former manager, Rod Brennan. Co-defendants' counsel appeared for the security contractor retained by the franchise, John Cowan, and his company JMC Legal Services Inc.

The plaintiff was a Service Advisor at the Canadian Tire automotive department in Markham, Ontario. He was dismissed from his employment in June 2010, after being accused of installing KGB spyware on his employer's computer and being charged by the police with unauthorized possession of credit card data. The charges were withdrawn by the Crown on August 10, 2011.

As the result of his dismissal, the plaintiff brought claims for wrongful dismissal, inducing breach of contract, injurious falsehood, intentional infliction of mental distress, defamation, false imprisonment, malicious prosecution, and civil conspiracy. A total of eight tort claims!

The plaintiff's position was that not only was he was not responsible for the installation of the KGB spyware on his manager's computer, but he was also set up. His conspiracy theory was that the KGB spyware was actually installed by Mr. Brennan and Mr. Cowan, acting in concert, in order to frame the plaintiff.

1. Wrongful Dismissal
Using his conspiracy theory as the backdrop, the plaintiff argued two hypotheses as to why he was wrongfully terminated. First, to fabricate a cause to dismiss the plaintiff for refusing to upsell and second, to act as a decoy from the subsequent pin pad fraud which befell the store, days after his dismissal.

Justice Charney found the evidence did not support the allegations that Mr. Brennan had any concern, let alone knowledge, of the plaintiff's refusal to upsell. With respect to the pin pad fraud cover-up theory, Justice Charney dismissed it on the basis that it was not pleaded in the plaintiff's statement of claim, nor was there any supporting evidence, even if it had been pleaded properly.

On a balance of probabilities, Justice Charney concluded that the plaintiff was, in fact, the one responsible for the KGB spyware installation on Mr. Brennan's computer. The surreptitious installation of spyware on an employer's computer constituted a clear breach of faith or trust inherent in the work-relationship and gave the employer just cause to terminate the plaintiff without notice.

In obiter, Justice Charney opined on the issue of a notice period and punitive damages. Had he decided there was a wrongful dismissal, the plaintiff would have been entitled to an award for his lost notice period. The plaintiff's lawyers argued for a ten-month notice period. Martin argued for four. Had there even been a wrongful dismissal, Justice Charney would have only awarded five. Further, Martin and the team repelled a claim for punitive damages entirely.

2. Inducing Breach of Contract
Second, the plaintiff argued that Mr. Cowan and Mr. Brennan conspired to procure a breach of his employment contract. The basis for this alleged breach was essentially identical to the conspiracy allegations against Mr. Cowan and Mr. Brennan in relation to the claim for wrongful dismissal. For the same reasons as the wrongful dismissal, Justice Charney dismissed the claim for inducing breach of contract.

3. Injurious Falsehood
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 of the publication of false and malicious statements concerning the plaintiff or his property calculated and intended to induce others not to deal with him.

Justice Charney rejected the plaintiff's claim for injurious falsehood because he already concluded that the plaintiff was not wrongfully accused of installing KGB spyware, the plaintiff was not wrongfully dismissed, and there was no evidence that any of the Canadian Tire employee's or defendants were actuated by malice.

4. Defamation
Prior to the plaintiff's dismissal, Mr. Cowan called the police to report the defendants' suspicions that the plaintiff might be responsible for the KGB spyware. It was Mr. Cowan's statements to the police that the plaintiff alleged were defamatory. Justice Charney rejected these arguments finding that Mr. Cowan's statements were "substantially true" and also protected by qualified privilege, the defences to a defamation claim.

5. Intentional Infliction of Mental Suffering
The plaintiff argued that the defendants' call to the police and his arrest resulted in the intentional infliction of mental suffering. 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.

Justice Charney concluded that, notwithstanding some errors in the information reported in the police call, the conduct was not flagrant or outrageous. Additionally, the medical evidence did not prove that the plaintiff had suffered a visible and provable illness.

6. False Imprisonment
The plaintiff alleged that, once he reported to work at 2:00 p.m., on the day he was dismissed, Mr. Cowan escorted him into the manager's office. Once there, he claims he was not free to leave and was deprived of his liberty. The plaintiff's story was that he was accused of serious misconduct, including theft, and was required to give an explanation or confess.

To substantiate false imprisonment, the plaintiff needed to prove three elements. 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.

Justice Charney found that the evidence did 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. He accepted the evidence of Mr. Cowan that, in accordance with his training, he advised the plaintiff that he was free to go at any time and was not under arrest. Accordingly, the false imprisonment claim was dismissed.

7. Malicious Prosecution
In this case, the plaintiff alleged that the prosecution of the plaintiff was initiated by Mr. Cowan rather than the police. Mr. Charney rejected this proposition when police witnesses testified they made the decision to arrest, not the defendants.

8. Civil Conspiracy
Finally, the eighth tort alleged by the plaintiff failed when he was unable to prove any of his conspiracy theories.

Conclusion

This case is significant for employers. In addition to dismissing all eight of the plaintiff's claims, Justice Charney found there was nothing improper about pleading an "after-acquired cause" and waiting until after examination for discovery to decide whether or not to advance the defence or abandon it. Pleading an after-acquired cause that is devoid of merit may have costs consequences at the conclusion of the trial, but the pleading itself cannot give rise to punitive and/or moral damages.

¹ Sankreacha v. Cameron J. and Beach Sales Ltd. 2018 ONSC 7216 [Sankreacha].

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