When an employee is convicted of a criminal offence, employers can be left wondering what to do. Depending on the nature of the crime, an employer may feel that the worker’s continued employment is not tenable and may wish to end that relationship for that reason. However, the question arises as to whether the employer is entitled to rely on the findings of a court in a criminal proceeding to justify employment-related decisions or to defend against a civil claim by an employee. In some cases the criminal activity clearly makes the employee incompatible with the job, but in other cases the criminal activity might not relate to the work being performed but the employer is nonetheless uncomfortable with employing a convicted criminal. A recent case from the Ontario Court of Appeal, Plate v Atlas Copco Canada Inc. [Plate] has shed light on when and how criminal findings may be evoked and the weight they will be accorded in civil employment matters.
In Plate, an employee who held a high-ranking position with his employer was convicted of being involved in a scheme to defraud his employer for $20 million. After the criminal trial, the employer brought an action against the employee to recover the amounts he had received by way of fraud. The employer sought summary judgment and the motion judge granted summary judgement, finding that the criminal conviction handed down by the sentencing judge was sufficient for the case to be disposed of without need for a civil trial. The motions judge sided with the employer and ordered the employee to repay the employer on the basis that he’d breached his fiduciary duty to the employer. The employee appealed, arguing that the sentencing judge’s findings regarding fiduciary duty were inadmissible and that if they were admissible, the motion judge had given them too much weight in coming to a decision. The Court of Appeal ultimately delivered a mixed result, finding that the sentencing judge’s findings would have been admissible but that since the sentencing judge had not properly considered the doctrine of fiduciary duty in reaching his conclusions, the matter was not appropriate for summary judgement.
The Court’s Analysis
The Court of Appeal considered legal doctrine surrounding the admissibility of criminal findings in civil proceedings and concluded that there was no bar to considering the findings of a sentencing judge in a civil trial. In fact, the Court found that allowing an individual to relitigate an issue which had already been judicially decided amounted to abuse of process. In that regard, the motions judge had been entitled to rely on the sentencing judge’s finding that fraud had been committed by the employee. The motions judge could rely, “only on those findings accepted by the sentencing judge as express or implied in the jury’s verdict pursuant to s 724(2)(a) of the Criminal Code.” The Court found that while findings made in the criminal context may not rely on the same considerations as would be the case in the civil context nor relate to the individual’s civil liability, it is still a judicial finding and therefore could be relied upon in subsequent civil proceedings. The Court cited principles from past case law which held that admitting prior criminal judgements in subsequent civil actions promoted efficiency in litigation and reduces overall costs to the parties.
Ultimately, however, the Court of Appeal found that the motions judge had erred in granting summary judgement in favour of the employer. The Court did so not because the findings of the criminal trial were inadmissible, but because the sentencing judge had not properly considered the question of fiduciary duty as it applies in the employment context in handing down a decision. While both fraud and an employee’s fiduciary duty to his or her employer involve a breach of trust, a fiduciary duty involves more than just a relationship of trust and thus a finding of fraud is insufficient on its own to conclude that an individual has violated their fiduciary duty. Although the sentencing judge had mentioned that the employee had violated his fiduciary duty in the sentencing document, the decision clearly revealed that no actual analysis had been conducted to assess whether or not the employee was a fiduciary of the employer. In essence the sentencing judge had made a passing remark using the term and the motions judge had incorrectly concluded that a fiduciary duty had been established when in fact all that had been established in the criminal proceedings was that a relationship of trust had existed. Accordingly, the Court dismissed the employer’s motion for summary judgment and the civil matter was sent back to the Ontario Superior Court for determination at trial. In reaching this conclusion however, the Court was clear that the employee would not have the opportunity to relitigate issues which had already been decided by the criminal court, but that instead, the civil court was only to consider the issues which had not been substantively dealt with in the criminal matter.
Although the Court of Appeal ultimately ruled against the employer and remitted the issue back to the Superior Court, the principles set out in the case nonetheless clarify questions that linger in many employers’ minds in the event of criminal conduct by employees. The case shows that employers are entitled to rely on findings in criminal proceedings in subsequent civil proceedings related to employment. This situation comes up often for employers when an employee who drives as part of his or her employment is convicted of impaired driving or in relation to charges of drug possession. Clearly, an employer will not be justified in taking any action it sees fit merely on the basis of a criminal conviction; the criminal act must have some bearing on the employment relationship. This is not to say that the criminal act must be committed on duty, nor that it must be directly tied to some function of the employee’s job. In certain circumstances, off-duty criminal conduct which is not directly related to the employee’s role can even justify a termination with cause if it sufficiently undermines the employment relationship, but it must be clear how the criminal conduct interferes with the employment relationship or the employer’s business. In any event, employers can indeed rely on criminal convictions to justify discipline or discharge of an employee if challenged in court whether the dismissal was for cause or without cause.
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This information is not intended as legal advice.