Calgary Workplace Investigations

 

 

At Calgary Workplace Investigations we analyze key case law affecting internal investigations.

When Privilege Isn’t Enough: The Risk of Reckless Workplace Investigations

Link to decision: Luan v. ADP Canada Co., 2020 ABQB 387

Employers often take comfort in the rule that communications made in the course of workplace investigations are protected by qualified privilege. This means that, even if an investigative report contains defamatory statements about an employee, the employer is shielded so long as the report was made in good faith and without malice.

But as the Alberta Court of King’s Bench decision in Luan v. ADP Canada Co. reminds us, privilege is not absolute. It can be lost where the investigation is not just careless, but reckless in its treatment of the truth.

The claim made was for defamation, not termination of employment. The employer was found liable. There is every reason to expect that the same principles would apply in a claim against the investigator, given such unusual facts.

Privilege and Its Limits

Qualified privilege attaches to communications made in the course of an employer’s duty to investigate alleged misconduct. Normally, this allows candid fact-finding without fear of defamation liability.

However, the privilege can be overridden where the plaintiff proves that the employer acted:

• With malice (spite, ill-will, or an improper motive), or
• With reckless disregard for the truth.

In Luan, the Court found no evidence of malice — there was no deliberate effort to fabricate allegations or to destroy the employee’s reputation. But the employer’s investigation was so biased and superficial that it amounted to recklessness, enough to defeat the defence of privilege.

The Flawed Investigation

ADP’s investigator, Russell Wong, was not an HR professional or trained external investigator. He was the company’s Chief Financial Officer, brought in because of his knowledge of Canadian sales transactions.

The Court was blunt in its assessment:

• Wong and his HR counterpart ignored obvious exculpatory evidence.
• They failed to interview or pursue witnesses who could have provided alternative explanations.
• They prematurely concluded that Ms. Luan had acted unethically, influenced partly by bias against her husband.

This was not malice, but it was reckless. This was enough to strip away privilege and leave ADP exposed to defamation liability.

Why Employers Should Use Neutral External Investigators

The Luan case highlights why using a neutral, external investigator is best practice:

• Impartiality: External investigators don’t bring the same internal biases or role conflicts.
• Expertise: They are trained to test evidence on both sides and to document findings in a manner that withstands judicial scrutiny.
• Credibility: Courts and tribunals give greater weight to independent investigations, which can preserve privilege and protect the employer’s reputation.

The Damages

The consequences for ADP were significant. The Court awarded Ms. Luan damages for lost income, bonuses, moving costs, and harm to her reputation, amounting to approximately US $170,000 plus CA $10,000, with pre-judgment interest.

What began as an internal investigation meant to address sales irregularities ended with a costly judgment — not because of malice, but because of recklessness.

The Lesson

Qualified privilege is a valuable shield, but it is not bulletproof. Employers who rely on poorly trained or conflicted internal investigators risk crossing the line from negligence into recklessness — and once that line is crossed, privilege is lost.

The solution is straightforward: invest in a neutral, external investigator who can ensure both the fairness of the process and the protection of the employer’s legal position.

This reasoning aligns with the 2020 Supreme Court of Canada’s decision in Bent v. Platnick, where the Court confirmed that qualified privilege can be defeated not only by malice, but also by recklessness. Even if a person honestly believes what they are saying, they can still be found reckless if they fail to verify the information, ignore obvious doubts, or act with indifference to the truth.

Together, Bent and Luan show that investigators who rush to judgment, fail to confirm facts, or lack the skills to properly assess evidence can lose the protection of qualified privilege — exposing themselves and their employers to defamation liability.

Key takeaway: Employers should retain experienced, external investigators to ensure reports are conducted competently, verified thoroughly, and documented carefully. A flawed investigation can not only undermine workplace trust — it can result in substantial legal damages.

Read Luan v. ADP Canada Co. on CanLII
Read Bent v. Platnick on CanLII

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