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Malicious Prosecution Case Allowed to Proceed
Published in the February 2007 issue of Litigation Notes - View Article
In March of 1997, Andrew Ferri, through a company he owned, offered to purchase a property in Welland, Ontario from the Toronto Dominion Bank (“TD Bank”). The Agreement of Purchase and Sale contained a clause requiring the vendor to remove all bank records and files stored in the building prior to closing. This clause was crossed out by the TD Bank’s representative and replaced by a clause stating that the purchaser accepted the building in an “as-is” condition.
The transaction was scheduled to close on May 30, 1997. Some time in April, Ferri retained the services of Pasquale Mammoliti to remove some 2,000 banker boxes containing confidential client files from the premises. This was apparently done pursuant to an authorization from the TD Bank, allowing Ferri to enter the premises prior to the closing to “clean up somewhat”.
On May 13, 1997 the TD Bank became aware that its files were in Ferri’s possession and entered into negotiations for their return. It thought that it had reached an agreement with Ferri to pay him approximately $500 for his labour and storage costs and to give him a release from lawsuits or damages. On this basis, the real estate transaction was completed on June 2, 1997.
Negotiations between TD Bank and Ferri continued until June 6, whereupon Ferri declared that the TD Bank should henceforth deal with Mammoliti. When Mammoliti was contacted, he requested $500,000 for the return of the files. TD Bank thereupon contacted Niagara Regional Police Service (“NRPS”). Negotiations between TD Bank and Mammoliti’s lawyer continued from June 11 through June 16. However, on June 13 TD Bank learned that Mammoliti had allegedly told a customer that he had read the customer’s file. On June 26, 1997 Mammoliti was arrested for extortion and possession of property obtained by crime and on July 9, Ferri was charged with attempted extortion and theft over $5,000. After a preliminary hearing, Ferri was committed for trial on the charge of theft only and Mammoliti was committed for trial on the charges of extortion and theft. On January 5, 2000, a Superior Court Judge quashed the order committing Ferri on the charge of theft, but upheld the order committing Mammoliti on the charges of theft and extortion. Subsequently the charges against Mammoliti were withdrawn on certain conditions, one of which was that he would return the TD Bank’s files.
Ferri and Mammoliti then commenced civil proceedings against TD Bank, the NRPS and several of its officers and against the Crown Attorneys who laid the charges. The actions sought damages for malicious prosecution, false arrest and imprisonment, negligence and various Charter breaches. The defendants brought motions for summary judgment to dismiss these actions. The motions judge held that all of the plaintiff’s claims, except the claims for malicious prosecution, were barred by section 7 (1) of the Public Authorities Protection Act.
In considering the claims for malicious prosecution, LaForme, J. A. of the Ontario Court of Appeal considered the four-part test set out in Nelles v. Ontario. For a claim in malicious prosecution to succeed: 1) The impugned prosecution must have been initiated or continued by the defendant; 2) The proceedings must have terminated in favour of the plaintiff; 3) The proceedings must have been instituted without reasonable and probable grounds; and 4) The defendant must have acted out of malice or for a primary purpose other than that of carrying the law into effect.
The motion judge dismissed Ferri’s claim for malicious prosecution against the Crown Attorneys on the basis that he failed to satisfy the first element of the test and dismissed his claim against The NRPS on the basis that he failed to satisfy the third and fourth elements. He dismissed Mammoliti’s claim against the NRPS on the basis that the second, third and fourth elements were not satisfied.
LaForme J.A. considered the various elements of the test. The first element was relevant only with respect to Ferri’s claim against the Crown Attorneys and in that case the motions judge had held that the Crown Attorneys did not initiate the prosecution against Ferri. This was a mistake, because the Crown Attorneys had earlier conceded that the first element of the test had been met.
With respect to the second element, the motions judge had held that the charges against Mammoliti could not be said to have been resolved in his favour because it had been resolved pursuant to a settlement. LaForme J concluded that it would be improper to bar a claim for malicious prosecution simply on the basis that some form of negotiated settlement had been entered into. Otherwise, the Crown and police, who are usually proceeding from a position of strength, “…could avoid scrutiny by simply entering into an agreement, arrangement, or compromise with an accused person, no matter how trivial, before withdrawing the charges against that person”. He went on to conclude that the underlying purpose of the settlement and the role of the NRPS were not matters that should be resolved at the summary judgment stage but were matters for a trial.
With respect to the third element, LaForme J. A. held that there were credibility issues with respect to the circumstances in which Ferri and Mammoliti came to be in possession of the files and whether or not they truly had the intent to extort money from the TD Bank. Consequently, he held that these were also matters for trial.
On the fourth element, LaForme J.A. pointed out that malice is essentially grounded “in the use of one’s office for an improper purpose”. In this case the primary submission of Ferri and Mammoliti was that the TD Bank, together with the Crown Attorneys and the NRPS acted against them for the purpose of protecting the TD Bank against the consequences of its own negligence. LaForme, J.A. considered that there was sufficient evidence to make it unclear as to whether or not this claim would succeed and that consequently the matter should be allowed to proceed to trial. He also allowed the charter claims and the negligence action to proceed to trial.
Juriansz, J.A. dissented and was of the view that all of the plaintiffs’ claims should have been dismissed. He was of the view that it was beyond question that the police and Crown Attorneys had reasonable and probable grounds to lay charges of theft and extortion. He was of the view that Ferri’s submission to the effect that he took possession of the 2000 banker boxes pursuant to an alleged right to “clean up somewhat” was not plausible. Furthermore, he was influenced by the fact that if Ferri’s real intention had been to clean up the premises, he would have thrown out the boxes rather than store them and then seek compensation from the TD Bank for their return.
Mammoliti v. Niagara Regional Police Service, 2007 ONCA 79 (CanLII)