The Need to Investigate

Human Rights

In the human rights regime, the need to conduct a proper and effective investigation of a human rights complaint is important for two reasons, over and above the mandate to do so as part of the statutory obligation under the human rights statute and any other relevant statutory obligation.

The first issue is that the failure to take immediate investigative steps may allow the abuser to continue the harassment and cause further harm to the victim.

The second is that an allegation of just cause for termination of the offender is a serious allegation which imposes upon the employer a duty to investigate before taking disciplinary steps. This is true for both common law and human rights remedies.

Statutory Mandate

The obligation to investigate such allegations of sexual harassment are, in any event, mandated now by statute in many jurisdictions. ¹

Alberta requires, by Part 27 of the Occupational Health & Safety Act that the employer;

• define workplace harassment and violence in all forms, including domestic and sexual violence;
• investigate incidents of violence and harassment and take corrective action;
•  develop violence and harassment prevention plans;
• review of plans at least once every 3 years; and,
• advise workers of treatment options if harmed by violence or harassment; workers are entitled to wages and benefits while attending treatment programs.

Similar requirements can be found in the Ontario Occupational Health and Safety Act (“OHSA”), but with some significant distinctions. In Ontario, employers must provide a workplace harassment policy and include within it a process for investigating complaints. This investigation must be appropriate in the circumstances. Further, Ontario employers must inform the complainant, in writing, as to the investigation results and any corrective actions.

Importantly, Bill 132 grants OHSA inspectors the power to order an employer to retain at its own expense, an impartial person to investigate workplace harassment.

Canada Labour Code’s Work Place Harassment and Violence Prevention Regulations also creates an extensive legislative regime in Canada regarding investigations. Following a failed conciliation attempt under Section 23 or 24 of the regulations, “an investigation of the occurrence must be carried out if the principal party requests it.” The federal regulations set out detailed requirements ranging from selecting an investigator, confidentiality, relevant information, and the nature and substance of the Investigator’s report.

Common Law

Modern common law cases have imposed a duty upon the employer to investigate serious allegations of wrongdoing before taking disciplinary action. The failure to do so may lead to awards of aggravated and/or punitive damages. Often this is an important issue in an employment law mediation.

The historical general common law view had been that the employer has no obligation to conduct such an investigation. ²

This issue was also addressed in the debate as to the need for a fair process prior to termination ³ and concluded that those advocating for an investigation and fair process must be in contradiction to the concept that the employer need not state the reason for dismissal.

This position, at common law, is no longer accurate, given serious allegations, both as to the need to investigate and to be open and truthful as to the reason for termination. ⁴

The failure to conduct an investigation in circumstances calling out for this, such as a termination for serious misconduct such as sexual harassment, will expose the employer to significant liability over and above traditional severance claims. ⁵

Such an obligation was required of the employer in terminating a person accused of stealing cash deposits, ⁶ financial irregularities of a licensed financial advisor, ⁷ and criminal wrongdoing. ⁸

Bhasin Duty of Good Faith

The Supreme Court of Canada decision of Bhasin v Hrynew, by which it demanded a good faith obligation between contracting parties to a commercial agreement suggests that this new duty demands that the employer must be honest with respect to the reason for termination, even if the employer has stated the termination is not for cause.

This is the death knell for the proposition that the employer need not state the reason for termination, in a context where the true reason is the suspicion of serious wrongdoing of the employee. In this circumstance, the employer cannot simply state the termination is “without cause” or even “with cause”, without conducting an investigation and obtaining the employee’s version of the events.

Furthermore, it is apparent that a severance term or other provision in a written contract cannot exclude such a duty of good faith. ⁹

In Bhasin, the defendant in fact followed the terms of the contract between the parties by providing the agreed upon notice not to renew the agreement. The Supreme Court nonetheless found an actionable breach of the duty of good faith as the defendant had misled the plaintiff as to its motivation for ending the agreement, which was intended to allow the plaintiff’s competitor access to the plaintiff’s agents and book of business.

The cases which have gone to hearing have shown a general theme of significant damage awards against the employer when the investigative technique used has been unfair or none at all was effected.

Failure to Investigate May Enhance Damages Suffered

The cases are very much fact driven as the failure of the investigation and extent of the personal damages suffered will drive the incremental awards of aggravated and punitive damages and indeed other tort claims, such as the intentional infliction of mental suffering. ¹⁰

Sexual harassment cases take on a different dimension as the victimized plaintiff may also assert that the failure to conduct a speedy and effective investigation led to a continuum of the damages.

The City of Calgary case also involved a successful plea for past and future lost income, apart from a “general damage” award. The case was unusual as the parties had agreed that all forms of potential relief, human rights, arbitral and common law would be determined collectively by the arbitrator. The finding was made that the failure to investigate promptly added to the plaintiff’s emotional turmoil, which ultimately prevented the complainant from permanently returning to work.

All of the above background is important as the award, apart from $125,000 for what was, in essence, aggravated damages, also allowed for additional sums of lost past income of $125,000, a future income loss of $500,000 and a future pension loss of $65,000. ¹¹

This is reflective of the same motivator for prompt steps to investigate a complaint particularly of this nature, in which the conduct may be a continuum. ¹²

In this case the need to investigate came from a unique layer of forces mandating just that. This included not only human rights requirements, but also the collective agreement and health and safety legislation and the City’s Respectful Workplace Policy.

The Board found that rather than put into place these safeguards, there was no compliance whatsoever and that “the Griever was treated as a problem to be managed, as opposed to a victim to be supported”.

The very failure to implement these policies and start an effective investigation “contributed significantly to the ultimate state in which the Griever finds herself”.

This context takes the failure to investigate to a new level of significance. It is not purely a matter of a flawed investigation coming to the incorrect or biased result. Now, the failure to investigate itself has exacerbated the very damage the process was intended to stop.

The failings of the process did include the following for further reference of what not to do:

1. The alleged abuser was left in charge of the work site;
2. The alleged victim was left in an unsafe environment when evidence had been presented of the wrongdoing, which was discounted;
3. When the complainant complained about steps to safeguard her personal safety, she was threatened with discipline for being disrespectful;
4. Given strong evidence to the contrary, the employer maintained a position of defending the grievance;

It may be a slight exaggeration to state that the magnitude of the total award of $800,000 stemmed solely from the failure to investigate promptly and fairly, but is certainly clear that this failure added very much to the damage claim and is a step which could have readily caused the offensive behaviour to have been readily curtailed. As noted, this failure to investigate is distinctive as this became the very cause of heightened distress and suffering.

Each case, however, does pivot on a common lever, namely that the allegations of misconduct are of a grave nature, a flawed investigation has followed and serious harm has been suffered by the innocent party.

Examples of Punitive and Aggravated Damages

Significant sums have been awarded for punitive damages such as $450,000 ¹³, $100,000 ¹⁴, $50,000¹⁵ $40,000  ¹⁶.

Handsome sums have been awarded for aggravated damages such as $200,000¹⁷, $125,000 ¹⁸, $85,000 ¹⁹ $75,000 ²⁰, $50,000 ²¹, $30,000 ²², and $20,000 ²³

The cases are anecdotal in their factual context, which, of course, differ from case to case. The manner in which each investigation floundered may add to the knowledge base of what standards may be expected.

The 2011 Alberta Court of Appeal decision of Elgert v Home Hardware provided a further example of the adverse consequences which may be suffered by a company for failing to conduct a fair and proper investigation.

Daniel Elgert was wrongly accused of sexually harassing two female employees. Following his termination, he sued for wrongful dismissal, aggravated and punitive damages against the employer and further for damages for defamation against the personal defendants who had made the allegations of sexual harassment against him.

At trial, the plaintiff succeeded in his claim against the employer and was awarded two years lost income as the dismissal claim, $200,000 for aggravated damages and $300,000 in punitive damages, a decision which underwent a considerable re-write on appeal. The aggravated damage award was then set aside and the punitive damage award was reduced to $75,000, which nonetheless remains a significant sum.

More importantly, the appellate court agreed in principle that a claim for aggravated and punitive damages were each possible, had the evidence supported the emotional anguish, given the unfairness of the investigative process.

An investigation was conducted by the senior human resources person, Kirck, a long-time acquaintance of the senior Bernier. Kirck had not conducted such a prior investigation in his 26 years of employment with Home Hardware.

The award of 2 years as a notice claim was upheld.

On the issue of the aggravated damage award, the Court of Appeal found that there was no case to submit to the jury as no evidence had been led of the degree of emotional suffering undergone by the plaintiff.

The Court of Appeal, however, acknowledged that the legal basis existed for such an award of aggravated damages based on Honda where the manner of dismissal was inherently unfair, in the context where the “manner of dismissal” was “untruthful, misleading or unduly insensitive” ²⁴

The Court of Appeal agreed that there was at trial, a factual underpinning of unfairness demonstrated to allow for the potential of an award of aggravated damages and also of punitive damages. The Court was very critical of the manner of the investigation and saw such conduct as theoretically supportive of incremental damage awards, both of aggravated and punitive damages.

The Court of Appeal decision appears to be based on the proposition that the question posed to the plaintiff at trial dealt with the question he was asked at trial as to the impact of the “termination” as opposed to the consequences to him of the “manner of termination”, which draws an uniquely unnecessarily fine distinction in the evidence.

While Home Hardware may have avoided a significant damage claim on the aggravated damage award, the moral of the story is apparent. There is an imperative need to conduct a fair and unbiased investigation.

As to the punitive damage award, the Court of Appeal reduced the sum awarded to $75,000, led by the principle that the message was well delivered by this lower sum.

Poor Investigation within Manner of Dismissal

The most significant aspect of this decision was that it recognized that the flawed investigative process was part of the, “manner of dismissal” to allow an award of aggravated damages to fit within the words of the Supreme Court in Keays v Honda. ^{25 26 27}

The Supreme Court of Canada in its November 2014 decision in Bhasin referenced above also spoke to the issue of “honest performance” throughout the entirety of the relationship and that this duty of good faith is no longer limited to the “moment of termination”, as it arguably once was so confined. ²⁸

All this being so, the right to prove the case to date has been undeterred by the failure of the company to investigate or to investigate fairly. ²⁹

Defence When Inadequate Investigation

Topolniksi J. also considered this argument in Foerderer v Nova Chemicals, and concluded that the employer may nonetheless succeed in such a defence even when the investigation was inadequate.

This conclusion was also reached by Master Prowse in the Alberta Queen’s Bench decision of Watkins v Willow Park Golf. The issue came before the court on a motion for summary judgment brought by the plaintiff following his termination for alleged sexual harassment. No investigation had been done. The company’s action were premised on the position that the complainant’s allegations were valid. The court denied the plaintiff’s summary motion on the basis that the law still allows the employer to prove its case, even absent a preliminary investigation.

In the 2009 B.C. Supreme Court decision of van Woerkens v Marriott Hotels of Canada of Pearlman J., also considered this issue. The court concluded that the fact the company had not followed its stated policy document as to the investigative process was not an impediment to the successful proof of its plea of just cause. In this instance the plaintiff had been led to expect that he would have the opportunity to discuss the complaint and his rebuttal to it with the company before its final decision. This did not occur. He was terminated for cause nonetheless. His action was dismissed.

In this instance, nonetheless, the court found that there was just cause for dismissal due to the deceit of the plaintiff in the investigative process, and his conduct which was found to be sexual harassment of a co-worker.

Yet lurking in the background is the influence to be given to the refrain of Bhasin in this context. Might the obligation to investigate, contractual, statutory or implied be subject to the “duty of honest performance, which requires the parties to be honest with each other in relation to the performance of their contractual obligations”. The full extent of this duty has yet to unfold.

In Bhasin itself, Cromwell J. spoke to this issue, noting that there is no compendium of situations and relationships which may attract good faith obligations, stating “the application of the organizing principle of good faith to particular situations should be developed where the existing law is found to be wanting”.

A court may well deny the employer’s right to assert cause in such a context, impose costs penalties or deny costs in a proper situation.

 

1. Ontario, Alberta, Canada, PEI, NWT and Saskatchewan
2.   van Woerkens v Marriott Hotels: To the same import is the Alberta Queen’s Bench decision of 2010 in Elgert referencing Leach v Canadian Blood Services
3. Fleming v Ricoh 
4. As discussed with respect to Bhasin v Hrynew
5. This will be so, even if the employment contract contains a valid severance clause, as in Boucher v Walmart.
6. The Superior Court of Justice in Ontario in Baughn v Offierski
7. Supreme Court of British Columbia in Ogden v Canadian Imperial Bank of Commerce, delivered by Wong J. in February of 2014; This decision was set aside on appeal and a new trial ordered, but not on this issue.
8. Paulich v Westfair Foods
9. Boucher v Wal-Mart
10. Such awards were made in Boucher v Walmart of $100,000 and also in Downham of $20,000.
11. These numbers are not precise.
12. As discussed above re  Harriott v National Money Mart
13. Pate v Galway, Ontario Court of Appeal 2013
14. Boucher v Walmart Ontario Court of Appeal 2014, Downham v County of Lennox and Addington 2005, Ontario SC trial;  Tl’azt’en First Nation v Joseph 2013, Federal Court upholding the adjudicator’s award under the Canada Labour Code
15. Elgert v Home Hardware Alberta Court of Appeal 2011
16. An early case to award punitive damages due to the lack of a fair process was that of the 1992 decision of the Ontario Court of Appeal in Francis v CIBC. The Court of Appeal did set aside the award of aggravated damages made at trial as no medical evidence was introduced to support this claim. It did, however, double the punitive damage award to $40,000 and maintain the trial award of solicitor-client costs.
17. Boucher v Walmart above
18. City of Calgary v CUPE 2013 The damages in this case were described as general damages but are to the same effect
19. Tl’azt’en First Nation v Joseph, above
20. Pate v Galway Ontario Supreme Court, trial level 2009 on first instance  
21. Downham above
22. Lau v Royal Bank of Canada 2015 S.C.B.C.
23. Chapell v CPR June 2010
24. Wallace v United Grain Growers Ltd, 1997 CanLII 332 (SCC), [1997] 3 SCR 701, 152 DLR (4th) 1 at para 97-98.
25. See to the contrary Vernon v B.C.  
26. And in support Ogden v Canadian Imperial Bank of Commerce (reversed on unrelated issues) as below
27. This decision was reviewed and set aside by the B.C. Court of Appeal and a new trial ordered. The issue, however, in debate, that is, whether the re-termination process may be considered part of the “manner of termination” to fit within the Wallace principle was not the subject of appeal.
28. As was stated in Wallace v United Grain Growers Ltd, 1997 CanLII 332 (SCC), [1997] 3 SCR 701, 152 DLR (4th)
29. Pitt J. came to this conclusion in Quirola v Xerox Canada Inc, [1996] 16 CCEL (2d) 235, CLLC 210-019 (Ont Ct J (Gen Div))