Pate v. Galway-Cavendish and Harvey: The Next Chapter

This is a case I've followed for a time, making this entry in May 2011, and this one in March 2012.

The case involved Mr. Pate, who was fired from the Township of Galway-Cavendish and Harvey in 1999 on allegations of serious criminal misconduct (i.e. that there were missing permit application fees on a number of transactions), and charged criminally, with the Township withholding exculpatory evidence from the police.  Mr. Pate has since passed away, but the saga continues.

He beat the criminal charges, and sued his employer in wrongful dismissal and malicious prosecution, seeking punitive damages.  He succeeded on the wrongful dismissal action, but the trial judge dismissed the malicious prosecution claim, and also awarded $25,000 in punitive damages, finding that he was limited by principles of proportionality.

The Court of Appeal, in April 2011, allowed the plaintiff's appeal on punitive damages and malicious prosecution, sending it back to the trial judge for new decisions on both.

In November 2011, the Court increased the punitive damage award to $550,000.  I've seen some reports suggesting that this is being appealed, this time by the employer, which wouldn't surprise me.

Those who read my March 2012 entry will know that I noted parenthetically that the judge made no mention of malicious prosecution.  The judge recently released a new decision on malicious prosecution, finding that the malicious prosecution test was satisfied, and awarding damages of $1, plus $20,000 in costs.

The Malicious Prosecution Test

The test for malicious prosecution is well-established as having four elements:

1. The criminal proceedings must have been initiated by the defendant;
2. The proceedings must have terminated in favour of the plaintiff;
3. The proceedings must have been commenced without reasonable and probable cause; and
4. The underlying purpose for the prosecution must have been malice, or something other than carrying the law into effect.

Initiated by the Defendant

This isn't simple in an action of this nature.  Establishing that the proceedings were at the instance of the employer can be tricky.  But in this case...

The Chief Building Official was the one who made the allegations of wrongdoing, following his own investigation.  He was a former police officer himself.  He seized Mr. Pate's journal, which included his notes on the questioned transactions, and didn't provide it to police.  There was other exculpatory evidence, which was withheld.  And much of the 'incriminating' evidence was in the absence of records of issued permits for which Pate had collected permit fees...whereas it was well-known that large numbers of such records had been lost in an office move.  Ultimately, the CBO provided police with only the information that supported the inference that Mr. Pate had engaged in criminal wrongdoing, and this led to the laying of charges.  This, the trial judge determined, led to a conclusion that the municipality had in fact initiated the criminal proceedings.

Terminated in favour of the plaintiff

Many malicious prosecution actions fall apart because of this requirement - whether brought too early, or following a guilty plea, etc. - but this case was simply academic:  Pate was acquitted.

No Reasonable and Probable Cause

As it happens, the Municipality had previously investigated some of the irregularities in question.  The charging officer gave evidence that, had he known of the various exculpatory factors in issue, all of which the Municipality was aware, he never would have laid charges.  This made the charge objectively unreasonable, and satisfied this part of the test.

Malice

The employer buried itself here by using criminal proceedings as leverage against civil liabilities:  They told him to resign, and go away quietly, or else they would fire him and press charges.  When he refused, they called the police and made their selective disclosures to try to convince the officer to lay charges.

On the judge's findings, it's pretty clear that they were chasing criminal charges pretty intently, because they saw their own interests at stake.  This met the 'malice' standard.

Damages

This appears to have been the subject of an agreement between the parties:  $1 for damages, $20,000 for costs.  The nominal damages were a reflection of the fact that a wide spectrum of compensatory and punitive damages had already been awarded, and awarding significant damages for the malicious prosecution would probably have resulted in double-recovery.

So why proceed to deal with an issue for which there is no remedy?  I can only speculate:  The costs may have been the key issue here, as this was an issue fought about at the original trial, so the question of who was right can reasonably lead to meaningful differences in the cost treatment, but in the scale of this litigation, even that's a relatively modest sum.  As it stands, Pate has won over $800,000 in compensatory damages, Wallace damages, punitive damages, interest, and costs.

My suspicion is that the scattered reports I've seen of an appeal pending (can anybody confirm this?) may be accurate, and that Pate's estate wanted to get this issue dealt with to strengthen its position on appeal.  An award of $550,000 in punitive damages is absolutely enormous, and the question is going to be whether or not the employer's conduct rose to such a level that warrants punishment on that scale:  A finding of tort liability for malicious prosecution would be very helpful for such an argument.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.