A cautionary tale for HR managers

The Ontario Court of Appeal decision in Correia v. Canac provides a cautionary tale for employers conducting investigations of employees.

“The Court of Appeal has drawn a bright line, explicitly refusing to hold employers liable for negligent investigations that lead to terminations,” says Brett Harrison, a partner with McMillan LLP.


“While this decision is good news for employers, it should be noted that an employer who conducts a negligent investigation of an employee may still be liable for wrongful dismissal and other torts, such as infliction of mental distress.


“In order to mitigate the likelihood of such claims, an employer should ensure that it diligently pursues any claims that the information used to support the dismissal is inaccurate.”


Canac Kitchens, a subsidiary of Kohler Ltd., suspected drug dealing and theft was taken place at its Toronto-area plant. It hired Aston Associates Investigations Ltd. to look into the matter.


Following the investigation, a long-time employee named Joao Correia, 62, was accused of theft, dismissed from the company with cause, and turned over to York Regional Police.


It was later discovered that through a human resources mishap Correia was mistaken with another, younger employee with a similar name — Joao Corriero.


Four months later, Crown prosecutors dropped their criminal case against Correia when they discovered the mistaken identity.


As a result of the investigation and dismissal, Correia and his family claimed they suffered serious injury. The Correias sued the parent company, the private investigation firm, the police force, and several individuals under various causes of action, including the human resources manager Marilyn Smith.


Several of the causes of action were dismissed by Ontario Superior Court Justice Wailan Low. They included claims for negligent investigation, malicious prosecution, false arrest, intentional infliction of mental distress, inducing breach of contract and intentional interference with contractual relations. The Correia’s appealed the dismissals.


In June 2008, the Ontario Court Appeal ruled to allow the appeal “to the following extent: the claim for negligent investigation may proceed as against the Aston defendants; the claim for wrongful infliction of mental distress may proceed as against Canac, Marilyn Smith, Kohler, and the Aston defendants. The claims over by the York Police respondents in respect of the claims that have been reinstated are also reinstated. We would dismiss the balance of the appeal and cross-appeal.”


The court dismissed the claim of negligent investigation against the employer defendants. The employer could not be held liable for actions taken flowing from an investigation, believing the information was accurate. Even though in this case the information was a case of mistaken identity.


However, by allowing the case to proceed against the human resources manager, the court allowed the appellant’s claim for intentional infliction of mental distress to proceed to trial.

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