Date: Tue, 28 Oct 2008 15:51

From: Jason Neyers

Subject: Negligent Investigation, Infliction of Distress, and Economic Torts

Dear Colleagues:

In a recent (and controversial) decision the Ontario Court of Appeal has decided that private investigators can be liable for the tort of negligent investigation, that the tort of intentional infliction of mental distress can be committed negligently, and that the economic torts of inducing breach and unlawful interference require a true intention. The facts of Correia v Canac Kitchens were as follows.

[2]         In 2002, Joao Correia’s employer Canac Kitchens and its parent company Kohler Ltd. suspected that there was theft and drug dealing occurring at the Canac plant.  They therefore retained a private investigation firm to conduct an investigation. The firm placed an undercover agent in the firm and he identified several employees engaged in theft and drug dealing. The firm kept the local police force apprised of the investigation, but the police force did little if any independent investigation. 

[3]         On October 24, 2002 Mr. Correia, a long-time employee aged sixty-two years, was brought into his employer’s human resources office, accused of theft and fired for cause. He was then taken to another office and arrested by police officers for theft. The only problem is that Mr. Correia was innocent. Through a series of mistakes, he was confused with another employee with a similar name but who was almost forty years younger.  Eventually, the mistake was discovered, but by then Mr. Correia claims to have suffered serious injury.

The negligent investigation claim was allowed to proceed against the investigation company because, in essence, the plaintiff suffered a loss which our out-dated law of defamation and malicious prosecution wouldn't remedy, because it is unfairly focused on things like intention and malice (see Hill v. Hamilton-Wentworth Regional Police Services Board, [2007] 3 S.C.R. 129).  Moreover, someone has to supervise these companies if the legislature would not. The negligent investigation claim was struck out against the employer since this would conflict with its right to fire at will (see Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701) and would discourage citizens from reporting crime [71-75].

The intentional infliction of mental distress was allowed to go ahead against all the defendants since there was evidence the actions were "flagrant and outrageous; it was calculated to cause the distress it did because it was clearly foreseeable that it would; and it caused Mr. Correia significant mental distress" [85]. As the court noted, the intentionality requirement for the economic torts is stricter than this.

[T]he requirement for intentionality may be stricter for these economic torts than for the tort of intentional infliction of mental distress, where, at least when a person is accused of criminal conduct, the foreseeability of the inevitable consequences of reckless conduct can amount to intent. The difference of approach is justified in this case. The two economic torts are strictly limited in their purpose and effect in the commercial world, where much competitive activity is not only legal but is encouraged as part of competitive behaviour that benefits the economy. In contrast, intentional infliction of mental distress is a personal tort that regulates improper activity that causes mental suffering, which is never socially beneficial. What degree of intent is required may depend on the nature of the conduct that causes the mental distress. As held in Rahemtulla, when a person is accused of criminal activity, the potential for mental distress consequences is clearly foreseeable.

There is also a nice discussion in [92-107] of recent developments in the economic torts and a conclusion that the torts are an exception to the general requirement of privity of right (see [107]: "The intentional torts exist to fill a gap where no action could otherwise be brought for intentional conduct that caused harm through the instrumentality of a third party").

Happy Reading,

Disclaimer: writer of this note not responsible for any emotional upset or aneurism caused by reactions to the court’s reasoning.

--  
Jason Neyers
Associate Professor of Law & 
Cassels Brock LLP Faculty Fellow in Contract Law
Faculty of Law
University of Western Ontario
N6A 3K7
(519) 661-2111 x. 88435

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