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Fraud Victims, Whistleblowers, and Breach of the Confidential Informant Undertaking

Canadian Fraud Lawyer

At Investigation Counsel, in addition to assisting fraud victims in their recovery efforts and in preparing criminal complaints, we often represent those who wish to be whistleblowers for civil actions or confidential informants for criminal complaints. We have previously blogged on this subject

 

In this blog we discuss the legal issues for confidential informants for criminal complaints and why confidential informants should use counsel to negotiate an agreement with police. This issue is timely as the Ontario Superior Court recently created new law imposing on police civil liability for breaching an agreement to keep the identity of a confidential informant confidential. The Court awarded significant damages (approximately $350,000) and detailed the new standard of care by which police must abide when acting on information received from a confidential informant.

 

Reporting Crime Confidentially to Police

 

As most people are aware, crime can be reported to police on a confidential basis through their local Crime Stoppers program. Other times, such as in fraud cases, the matter at issue may be too complex to make a complaint through a hotline, and face-to-face communication with the police is necessary. In these cases, if a person wishes his identity to remain confidential, he should ask the police whether they will consider entering into a confidential informant agreement.

 

The Law on Confidential Informant Agreements

 

The law on confidential informant agreements is as old as criminal law itself. If a person provides information to police in exchange for a promise of anonymity, that anonymity must be guaranteed. There is only one exception to this form of legal privilege – when disclosure is required to prevent a miscarriage of justice where innocence is at stake. One court summed up the law this way:

 

Informer privilege is an ancient and hallowed protection which plays a vital role in law enforcement. It is premised on the duty of all citizens to aid in enforcing the law. The discharge of that duty carries with it the risk of retribution from those involved in crime. The rule of informer privilege was developed to protect citizens who assist law enforcement and to encourage other to do the same: R. v. Leipert. See also Bisaillion v. Keable (Supreme Court of Canada).

 

Until the recent case of Nissen v. Durham Regional Police (2015 ONSC 1268), Ontario Courts had never provided a remedy in cases where the police disclosed the identity of someone from whom they received information under the promise of anonymity. As a result, there was a perception amongst some informants that they were at risk, despite promises made by police to maintain the confidence of their identity and their reporting of crime. The Nissen decision goes some distance to provide the police with further incentive to honour their agreements where the well-being of their informants is at stake.

 

The Stack Story: Police Breach of a Confidential Informant Agreement

 

Ms. Stack was the confidential informant in the Nissen case. Her story is not complex. It is a case involving weapons, not fraud, but the principles apply to confidential informant cases generally.

 

Ms. Stack was told by her neighbour that another neighour’s teenage son was in possession of handguns stolen during a break and enter. The neighbour boy’s name was Patrick Ellison. Ms. Stack was quite concerned as Patrick Ellison occasionally looked after her kids for her. Ms. Stack’s neighbour did not wish to report the crime as the guns were stolen from her house. Ms. Stack felt that she had to tell police, but she did not want the Ellison family to know that she was the one who reported the matter. Ms. Stack decided to contact police and ask for anonymity. In retrospect, she likely should have just called Crime Stoppers.

 

The intake officer promised Ms. Stack that the police would not disclose her identity. The police were very eager to meet her. Ms. Stack reluctantly told the police what she knew in a videotaped interview in a police station after receiving a verbal assurances her identity would remain confidential. Shortly thereafter Patrick Ellison was arrested. His father then began threatening the well-being of Ms. Stack and her family by such means as driving his vehicle at her, constant harassment and overt surveillance. It turned out that the police had disclosed the videotaped interview as part of Crown disclosure to the Ellisons’ defence lawyer.

 

Patrick Ellison was convicted, but the psychological damage that his father inflicted on Ms. Stack and her family was significant. The Stack family had to move out of the neighbourhood to escape the ongoing trauma. But for the breach of the confidential informant agreement by police (and the criminal conduct of the Ellison family), the Stack family would not have had to leave. The Ellisons were not worth suing, so Ms. Stack sued the police.

 

Negligent Investigation

 

The legal claim pursued by Ms. Stack’s counsel is a branch of negligence law commonly referred to as negligent investigation. The tort of negligent investigation was established approximately ten years ago when an accused person sued the police when it was learned that the police had not investigated his alibi, and he had been wrongfully convicted of string of bank robberies – see Hill v. Hamilton Wentworth Police, 2007 SCC 41. The Stark case was the first time a confidential informant sued the police for negligence in their investigation.

 

The legal analysis for this case may be summarized as follows. For a Court to find a defendant negligent, the Court must first determine that the defendant police owed the plaintiff a duty of care. If a duty of care is found to exist, the Court must find that the defendant police breached their standard of care. If the police breached their standard of care, the Court must find that the breach was the cause of the plaintiff’s loss. The last part of the analysis requires the Court to determine whether the breach was the proximate cause of the loss, and whether the plaintiff mitigated her damages.

 

In the Nissen case, the Court held that as a general proposition, the police owe confidential informants a duty of care. The Court further held that this duty of care in this case was such that public policy reasons should not restrict a plaintiff from recovery on the basis that it would open a floodgate of litigation against police. In other words, police breaches of confidential informant agreements are rare.

 

With respect to the standard of care issue, the Durham Police argued that they had not breached their own internal policies and that Ms. Stack had not produced an expert witness on police practices to support her allegation that they breached their standard of care, and accordingly the case against them should be dismissed. The Court held, however, that on issues such as contractual agreements with confidential informants, it did not require expert evidence. The Court further held that when considering a breach of the standard of case, it was not restricted by the wording of police internal policy directives, and could resolve the issue without hearing from experts. The Court found that the Durham Police had in fact, by their oral contact and their representations, agreed to maintain the confidentiality of Ms. Stack’s identity, and that they had carelessly released it to the accused Patrick Ellison.

 

Damages for a Police Breach of a Confidential Informant Agreement

 

With respect to causation of damages, the Court utilized the “but for” test to decide whether the Durham Police should be liable to pay general damages for emotional trauma to Ms. Stack, as well as losses associated with the sale of the family home, employment losses and loss of companionship by the family members of Ms. Stack. The Court concluded that damages arising from the sale of the family home and for lost income were not appropriate in the circumstances of this case. The Court did, however, conclude that general damages for emotional and psychological injury were appropriate. The Court held:

 

[351] Ms. Stack herself described the effect on her of the disclosure of her identity and the harassment that she and her family suffered at the hands of the Ellisons. She said the harassment was unbearable, to the point that the family could no longer go in and out of the house through the front door, and ultimately they had to sell their home. Since these events, she feels hopeless and depressed. There are triggers that increase her symptoms of terror. She is paralyzed with fear. She has extreme anxiety. She wakes up terrified, at least weekly.

 

[352]  These effects were testified to by many other witnesses. Mr. Nissen testified that his wife is not the same person. She is scared all the time, she is not happy, she is depressed, and she is not outgoing or confident. Her sleep is affected. She panics easily. He testified that his own life has been affected. There is a strain on him and he is afraid for the safety of his family. He is depressed, and there is a strain on their relationship.

***

[360]  In order to claim for psychological injury, it must rise above ordinary upset or anxiety. As stated by McLachlin C.J.C. in Mustapha, supra, at para. 9:

 

This said, psychological disturbance that rises to the level of personal injury must be distinguished from psychological upset. Personal injury at law connotes serious trauma or illness: see Hinz v. Berry, [1970] 2 Q.B. 40 (C.A.), at p. 42; Page v. Smith, at p.189; Linden and Feldthusen at pp. 425-427. The law does not recognize upset, disgust, anxiety, agitation or other mental states that fall short of injury. I would not purport to define compensable injury exhaustively, except to say that it must be serious and prolonged and rise above the ordinary annoyances, anxieties and fears that people living in society routinely, if sometimes reluctantly, accept.

 

[361] Based on the evidence called in this case, I have no hesitation in concluding that the psychological injury caused to Ms. Stack meets this test. It is serious and prolonged and rises above the ordinary annoyances, anxieties and fears that people living in society routinely accept. The injury is severe and debilitating and has had a significant impact on Ms. Stack’s life. It is compensable at law.

 

[362]  What must next be considered is whether the injuries suffered by Ms. Stack were too remote, in the sense that it was not reasonably foreseeable that they might occur in a person of ordinary fortitude.

 

[363] In Mustapha, the plaintiff developed a major depressive disorder with associated phobia and anxiety as a result of seeing flies in a bottle of water. The Supreme Court of Canada held that a person of ordinary fortitude would not suffer serious injury from seeing flies in a bottle of water, and that such a consequence would not reasonably be foreseen by a defendant.

 

[364]  This case is not analogous to seeing flies in a bottle of water. This case has to do with a breach of a privilege, which is said to be almost absolute, one purpose of which is to prevent retribution to an informer. If retribution occurs, psychological injury might well occur. Where the privilege is breached and retribution occurs, I have no difficulty concluding that a defendant would reasonably foresee that a person of ordinary fortitude could suffer psychological damage. Once that is established, the defendant must take the plaintiff as it finds him or her for purposes of the extent of damage. As stated by McLachlin C.J.C. in Mustapha at para. 16:

 

Once a plaintiff establishes the foreseeability that a mental injury would occur in a person of ordinary fortitude, by contrast, the defendant must take the plaintiff as it finds him for purposes of damage. As stated in White, at p. 1512, focusing on the person of ordinary fortitude for the purposes of determining foreseeability is “not to be confused with the ‘eggshell skull’ situation where as a result of breach of duty the damage inflicted proves to be more serious than expected”. Rather, it is a threshold test for establishing compensability of damages at law.

 

[365]  As stated by Rouleau J.A. in Degennaro v. Oakville Trafalgar Memorial Hospital, supra, at para. 27, “The defendant needs to reasonably foresee damages suffered by a person of reasonable fortitude. Where, as here, the damages suffered are more extensive because the plaintiff was “thin-skulled”, the defendant is nonetheless liable.”

 

[366] It is difficult to fix a reasonable amount for the damages suffered in this case. Any damages awarded must take into account any aggravating features. There is no separate head of “aggravated” damages; rather any aggravating features are taken into account in fixing an amount for general damages: see McIntyre v. Grigg, supra, at para. 50.

 

[367]  There are certain aggravating features here. First, as noted, the police did nothing whatsoever to preserve Ms. Stack’s anonymity. Second, once they became aware of the harassing behaviour by Mr. Ellison, they did almost nothing about it. Apart from one brief conversation with Mr. Ellison, in which it is doubtful that the importance of the problem was impressed on Mr. Ellison, the police did nothing. There was no evidence of any follow-up with Mr. Ellison. Indeed, somewhat inexplicably, no one even followed up with Mr. Nissen or Ms. Stack to advise them that Mr. Ellison had been spoken to.

 

[368]  The effect on Ms. Stack has been severe. Her life has been irretrievably altered. On a balance of probabilities, I am satisfied, based on the evidence of Dr. Silver, that it is unlikely that she will ever be the same as she was before these incidents.

 

[369]  General damages for psychological injury were upheld by the Supreme Court of Canada, in the amount of $400,000 in Cinar Corporation, supra, and in the amount of $430,000 in Young v. Bella, supra. In both cases, the court held that damages in those amounts were not barred by the “cap” on general damages in personal injury cases. That cap is approximately $350,000 at present, having regard to inflation.

 

[370]  In my view, the psychological injury in this case is not as severe as those in issue in Cinar and Young v. Bella. I think something less in this case would be appropriate. The issue of whether the cap applies is moot because I do not intend to award damages that would exceed the cap.

 

[371]  In the final analysis, I think the amount of $345,000 is an appropriate amount for general damages for Ms. Stack, and I so award.

 

The Nissen case establishes that police owe a legal duty to the individuals who agree to act as confidential informants, that the standard of care of police is not restricted to a review of their policy documents by experts, and that significant damages for emotional trauma resulting from the breach of the duty and standard of care may result. Of course Ms. Staples would prefer to have never gone through this experience. Those who wish to become confidential informants should seek a written agreement with police signed off by those they trust to better protect their interests.

 

 

Inquiries

 

If you wish to become a confidential information for police, we recommend that you seek counsel to assist you with that agreement. Often the police will pay for your information and your cooperation. The police will also pay the cost of you retaining counsel to negotiate the agreement. At Investigation Counsel PC, our interest is in assisting victims of fraud as well as those seeking to assist the administration of justice. Inquiries by those considering a role as a confidential informant to police are welcome.

 

Disclaimer

Norman Groot

About Norman Groot

Based on my police experience and my experience thereafter as a litigator, I have joined forces with other lawyers with police experience and created the law firm Investigation Counsel Professional Corporation.

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