A recent decision from the Judicial Committee of the Privy Council (JCPC) is seen as opening the door to the previously precluded civil tort of malicious prosecution.
Angela M. Juba, of McCarthy Tétrault LLP, reviews the case, which originated in the Cayman Islands, for the “Canadian Appeals Monitor.” A chartered surveyor and the new vice-president of the company he did contract work for, had a history of acrimony. The vice-president launched an internal investigation and apparent smear campaign against the contractor, then discontinued an action days before the civil trial.
A trial judge concluded that the surveyor had established all of the elements of the tort of malicious prosecution, but that the law did not allow for the extension of the tort to civil proceedings. Malicious prosecution has traditionally been available only against the Attorney General or Crown prosecutors, after criminal proceedings instituted for an improper purpose.
In June, the JCPC panel found that the purpose of the tort is to recompense the victims of malicious actions who have suffered substantial damage beyond the costs of defending themselves, given the inability of a successful defendant to sue for defamation in respect of malicious allegations raised during legal proceedings. It also found that there is no principled reason to preclude recovery for economic loss caused by malicious prosecution of proceedings — whether criminal or civil — where the causation was foreseeable.
While the controversial decision could be persuasive in certain circumstances, liability for malicious prosecution following civil proceedings has not been established in Canada. The JCPC is the highest court of appeal for a number of independent nations, British Crown Dependencies, and British Overseas Territories. In 1959, the Privy Council heard its last Canadian civil appeal.
The current test for malicious prosecution in Canada requires that:
- (i) criminal proceedings be instituted by the defendant against the plaintiff;
- (ii) the criminal proceedings be concluded favourably for the plaintiff;
- (iii) there was a lack of probable cause for the defendant’s conduct; and
- (iv) there was an improper purpose underlying the defendant’s conduct, as opposed to an honest belief in guilt. (see: Nelles v. Ontario,  2 S.C.R. 170).