2016 ONCA 656, 2016 CarswellOnt 13829, 270 A.C.W.S. (3d ...

495793 Ontario Ltd. v. Barclay, 2016 ONCA 656, 2016 CarswellOnt 13829

2016 ONCA 656, 2016 CarswellOnt 13829, 270 A.C.W.S. (3d) 415, 31 C.C.L.T. (4th) 63

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2016 ONCA 656Ontario Court of Appeal

495793 Ontario Ltd. v. Barclay

2016 CarswellOnt 13829, 2016 ONCA 656, 270 A.C.W.S. (3d) 415, 31 C.C.L.T. (4th) 63

495793 Ontario Ltd. c.o.b. as Central Auto and Ricardo P.Mercuri (Plaintiffs / Respondents) and Frank Barclay and City

of Thunder Bay Police Services Board (Defendants / Appellants)

Juriansz, Epstein, Pepall JJ.A.

Heard: March 1, 2016Judgment: September 2, 2016

Docket: CA C59053

Proceedings: reversing 495793 Ontario Ltd. v. Barclay (2014), [2014] O.J. No. 2753, 2014 CarswellOnt 7926, 2014 ONSC3517, H.M. Pierce R.S.J. (Ont. S.C.J.)

Counsel: C. Kirk Boggs, Jasmine T. Akbarali, David Litwin, for AppellantsPaul J. Pape, Joanna L. Nairn, for Respondents

Subject: Civil Practice and Procedure; Evidence; Public; Torts

Related Abridgment ClassificationsFor all relevant Canadian Abridgment Classifications refer to highest level of case via History.

Law enforcement agencies

I PoliceI.2 Duties, rights and liabilities of officers

I.2.c Conduct of officersI.2.c.vii Negligence

Remedies

I DamagesI.6 Valuation of damages

I.6.c Measure of damagesI.6.c.iv Businesses

Remedies

I DamagesI.6 Valuation of damages

I.6.j Miscellaneous

Torts

XVI NegligenceXVI.2 Duty and standard of care

XVI.2.b Standard of care

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HeadnoteLaw enforcement agencies --- Police — Duties, rights and liabilities of officers — Conduct of officers — Negligence

Plaintiff M owned auto parts recycling business — Investigation into business led to charges against M of possessionof stolen property — Charges were eventually withdrawn or resulted in acquittals — M and business brought actionagainst defendant police board and officer for negligent investigation — Both M and business were successful attrial, and were awarded $200,000 in non-pecuniary damages and $1,042,179 in economic damages — Police boardclaimed that standard of care was improperly determined — Police board claimed that improper findings resultedfrom standard of care that was imposed — Police board claimed that evidence was misapprehended, and thatdamages were improperly awarded — Police board and officer appealed from judgment — Appeal allowed — Trialjudgment set aside, except for agreed-upon amount of $70,000 awarded to business — Expert evidence was neededto determine standard of care, which was not presented in case at bar — Officer's apologies were not indication ofliability or egregious police conduct — Without egregious police conduct being proven, claim could not succeed —Appeal was allowed on this basis.

Remedies --- Damages — Valuation of damages — Measure of damages — Businesses

Plaintiff M owned auto parts recycling business — Investigation into business led to charges against M of possessionof stolen property — Charges were eventually withdrawn or resulted in acquittals — M and business brought actionagainst defendant police board and officer for negligent investigation — Both M and business were successful at trial,and were awarded $200,000 in non-pecuniary damages and $1,042,179 in economic damages — Police board claimedthat standard of care was improperly determined — Police board claimed that improper findings resulted fromstandard of care that was imposed — Police board claimed that evidence was misapprehended, and that damageswere improperly awarded — Police board and officer appealed from judgment — Appeal allowed — Trial judgeerred on damages issue — M's testimony as to effect of charges was unsupported, and could not ground damageaward — Trial judge did not have evidence as to standard of police communication with media — Trial judge couldnot ground economic damages in supposed police failure in this area.

Remedies --- Damages — Valuation of damages — Miscellaneous

Plaintiff M owned auto parts recycling business — Investigation into business led to charges against M of possessionof stolen property — Charges were eventually withdrawn or resulted in acquittals — M and business brought actionagainst defendant police board and officer for negligent investigation — Both M and business were successful at trial,and were awarded $200,000 in non-pecuniary damages and $1,042,179 in economic damages — Police board claimedthat standard of care was improperly determined — Police board claimed that improper findings resulted fromstandard of care that was imposed — Police board claimed that evidence was misapprehended, and that damageswere improperly awarded — Police board and officer appealed from judgment — Appeal allowed — Trial judgeerred on damages issue — M's testimony as to effect of charges was unsupported, and could not ground damageaward — Trial judge did not have evidence as to standard of police communication with media — Trial judge couldnot ground economic damages in supposed police failure in this area.

Torts --- Negligence — Duty and standard of care — Standard of care

Plaintiff M owned auto parts recycling business — Investigation into business led to charges against M of possessionof stolen property — Charges were eventually withdrawn or resulted in acquittals — M and business brought actionagainst defendant police board and officer for negligent investigation — Both M and business were successful attrial, and were awarded $200,000 in non-pecuniary damages and $1,042,179 in economic damages — Police boardclaimed that standard of care was improperly determined — Police board claimed that improper findings resultedfrom standard of care that was imposed — Police board claimed that evidence was misapprehended, and thatdamages were improperly awarded — Police board and officer appealed from judgment — Appeal allowed — Trialjudgment set aside, except for agreed-upon amount of $70,000 awarded to business — Expert evidence was neededto determine standard of care, which was not presented in case at bar — Officer's apologies were not indication of




liability or egregious police conduct — Without egregious police conduct being proven, claim could not succeed —Appeal was allowed on this basis.

Table of Authorities

Cases considered by Juriansz J.A.:

Bella v. Young (2004), 2004 NLCA 60, 2004 CarswellNfld 300, (sub nom. Young v. Bella) 241 Nfld. & P.E.I.R.35, (sub nom. Young v. Bella) 716 A.P.R. 35, 8 C.P.C. (6th) 131 (N.L. C.A.) — considered

Bella v. Young (2006), 2006 SCC 3, 2006 CarswellNfld 19, 2006 CarswellNfld 20, 343 N.R. 360, (sub nom.Young v. Bella) 261 D.L.R. (4th) 516, 21 C.P.C. (6th) 1, 37 C.C.L.T. (3d) 161, (sub nom. Young v. Bella) 254Nfld. & P.E.I.R. 26, (sub nom. Young v. Bella) 764 A.P.R. 26, [2006] 1 S.C.R. 108, (sub nom. Young c. Bella)[2006] R.R.A. 1 (S.C.C.) — considered

Bergen v. Guliker Estate (2015), 2015 BCCA 283, 2015 CarswellBC 1678, 79 M.V.R. (6th) 187, 21 C.C.L.T.(4th) 28, [2015] 11 W.W.R. 258, 75 B.C.L.R. (5th) 351, (sub nom. Bergen v. Guliker) 374 B.C.A.C. 80, (subnom. Bergen v. Guliker) 642 W.A.C. 80 (B.C. C.A.) — considered

Camaso Estate v. Egan (2013), 2013 BCCA 6, 2013 CarswellBC 69, 99 C.C.L.T. (3d) 173, 331 B.C.A.C. 258,565 W.A.C. 258 (B.C. C.A.) — referred to

Camaso Estate v. Egan (2013), 2013 CarswellBC 2014, 2013 CarswellBC 2015, 355 B.C.A.C. 320 (note), 607W.A.C. 320 (note), 463 N.R. 397 (note) (S.C.C.) — referred to

Chmielewski v. Niagara Regional Police Services Board (2007), 2007 CarswellOnt 7086, 830 A.P.R. 269, 272Nfld. & P.E.I.R. 269 (Ont. S.C.J.) — referred to

Chmielewski v. Niagara Regional Police Services Board (2009), 2009 ONCA 51, 2009 CarswellOnt 203 (Ont.C.A.) — referred to

Fragomeni v. Greater Sudbury Police Service (2015), 2015 ONSC 3937, 2015 CarswellOnt 10896 (Ont. S.C.J.)— referred to

Gioris v. Toronto Police Services Board (2012), 2012 ONSC 6396, 2012 CarswellOnt 15071 (Ont. S.C.J.) —referred to

Grann v. Thunder Bay Police Services Board (2015), 2015 ONSC 438, 2015 CarswellOnt 1066 (Ont. S.C.J.) —referred to

Hill v. Hamilton-Wentworth (Regional Municipality) Police Services Board (2007), 2007 SCC 41, 2007CarswellOnt 6265, 2007 CarswellOnt 6266, 50 C.C.L.T. (3d) 1, 50 C.R. (6th) 279, 87 O.R. (3d) 397 (note), 40M.P.L.R. (4th) 1, 285 D.L.R. (4th) 620, 64 Admin. L.R. (4th) 163, 230 O.A.C. 253, 368 N.R. 1, [2007] 3 S.C.R.129, [2007] R.R.A. 817 (S.C.C.) — followed

Kellman v. Iverson (2012), 2012 ONSC 3244, 2012 CarswellOnt 7016 (Ont. S.C.J.) — referred to




























Krawchuk v. Scherbak (2011), 2011 ONCA 352, 2011 CarswellOnt 3015, 332 D.L.R. (4th) 310, 82 C.C.L.T.(3d) 179, 5 R.P.R. (5th) 173, 106 O.R. (3d) 598, 4 C.L.R. (4th) 1, 279 O.A.C. 109 (Ont. C.A.) — referred to

Krawchuk v. Scherbak (2011), 2011 CarswellOnt 13567, 2011 CarswellOnt 13568, 430 N.R. 396 (note), 297O.A.C. 395 (note) (S.C.C.) — referred to

Lahaie v. Canada (Attorney General) (2008), 2008 CarswellOnt 7880, 63 C.C.L.T. (3d) 199, 303 D.L.R. (4th)213, 183 C.R.R. (2d) 214 (Ont. S.C.J.) — considered

Lahaie v. Canada (Attorney General) (2010), 2010 ONCA 516, 2010 CarswellOnt 5274, 75 C.C.L.T. (3d) 44,320 D.L.R. (4th) 385, 101 O.R. (3d) 241, 213 C.R.R. (2d) 272, 267 O.A.C. 135 (Ont. C.A.) — referred to

Lawrence v. Peel Regional Police Force (2009), 2009 CarswellOnt 2161 (Ont. S.C.J.) — referred to

Meady v. Greyhound Canada Transportation Corp. (2015), 2015 ONCA 6, 2015 CarswellOnt 46, 72 M.V.R.(6th) 213, 16 C.C.L.T. (4th) 55, 329 O.A.C. 173 (Ont. C.A.) — referred to

Mustapha v. Culligan of Canada Ltd. (2008), 2008 SCC 27, 2008 CarswellOnt 2824, 2008 CarswellOnt 2825,55 C.C.L.T. (3d) 36, 293 D.L.R. (4th) 29, 375 N.R. 81, 238 O.A.C. 130, [2008] 2 S.C.R. 114, 92 O.R. (3d) 799(note) (S.C.C.) — considered

Odhavji Estate v. Woodhouse (2003), 2003 SCC 69, 2003 CarswellOnt 4851, 2003 CarswellOnt 4852, 19 C.C.L.T.(3d) 163, 233 D.L.R. (4th) 193, 312 N.R. 305, 180 O.A.C. 201, [2003] 3 S.C.R. 263, 11 Admin. L.R. (4th) 45,70 O.R. (3d) 253 (note), [2004] R.R.A. 1, 2003 CSC 69 (S.C.C.) — considered

R. v. Boyle (1983), 41 O.R. (2d) 713, 35 C.R. (3d) 34, 5 C.C.C. (3d) 193, 148 D.L.R. (3d) 449, 5 C.R.R. 218,1983 CarswellOnt 88 (Ont. C.A.) — considered

R. v. Feeney (1997), 1997 CarswellBC 1015, 115 C.C.C. (3d) 129, 146 D.L.R. (4th) 609, 91 B.C.A.C. 1, 148W.A.C. 1, 44 C.R.R. (2d) 1, 7 C.R. (5th) 101, [1997] 6 W.W.R. 634, [1997] 2 S.C.R. 13, 212 N.R. 83, 1997CarswellBC 1016 (S.C.C.) — referred to

R. v. Mercuri (2004), 2004 CarswellOnt 3368 (Ont. S.C.J.) — referred to

R. v. Storrey (1990), 105 N.R. 81, [1990] 1 S.C.R. 241, 37 O.A.C. 161, 53 C.C.C. (3d) 316, 75 C.R. (3d) 1, 47C.R.R. 210, 1990 CarswellOnt 78, 1990 CarswellOnt 989 (S.C.C.) — followed

Roda v. Toronto Police Services Board (2016), 2016 ONSC 743, 2016 CarswellOnt 1434, 26 C.C.L.T. (4th) 247(Ont. S.C.J.) — referred to

Roy v. Canada (Attorney General) (2005), 2005 BCCA 88, 2005 CarswellBC 316, 38 B.C.L.R. (4th) 103, [2005]5 W.W.R. 298, (sub nom. Roy v. British Columbia (Attorney General)) 208 B.C.A.C. 222, (sub nom. Roy v.British Columbia (Attorney General)) 344 W.A.C. 222, 251 D.L.R. (4th) 233 (B.C. C.A.) — considered

Roy v. Canada (Attorney General) (2005), 2005 CarswellBC 1984, 2005 CarswellBC 1985, (sub nom. Royv. British Columbia (Attorney General)) 346 N.R. 199 (note), (sub nom. Roy v. British Columbia (AttorneyGeneral)) 225 B.C.A.C. 318 (note), (sub nom. Roy v. British Columbia (Attorney General)) 371 W.A.C. 318(note) (S.C.C.) — referred to





































Russell v. York Police Services Board (2011), 2011 ONSC 4619, 2011 CarswellOnt 7316, 85 C.C.L.T. (3d) 130,(sub nom. Russell v. York (Regional Municipality) Police Services Board) 242 C.R.R. (2d) 281 (Ont. S.C.J.)— referred to

Solomonvici v. Toronto Police Services Board (2009), 2009 CarswellOnt 4418 (Ont. S.C.J.) — considered

Solomonvici v. Toronto Police Services Board (2010), 2010 ONCA 85, 2010 CarswellOnt 523 (Ont. C.A.) —referred to

Thompson v. Ontario (1998), 1998 CarswellOnt 3824, 113 O.A.C. 82, (sub nom. Thompson v. Ontario (AttorneyGeneral)) 56 C.R.R. (2d) 112 (Ont. C.A.) — referred to

Webb v. Waterloo Regional Police Services Board (2002), 2002 CarswellOnt 2050, 161 O.A.C. 86, (sub nom.Webb v. Waterloo Regional Police Services) 95 C.R.R. (2d) 297, 101 C.R.R. (2d) 186 (note) (Ont. C.A.) —considered

Wiles v. Ontario (Police Complaints Commissioner) (1997), 1997 CarswellOnt 6039 (Ont. Div. Ct.) — referred to

Wong v. Toronto Police Services Board (2009), 2009 CarswellOnt 7412 (Ont. S.C.J.) — referred to

Statutes considered:

Canada Evidence Act, R.S.C. 1985, c. C-5s. 37 — considered

Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the CanadaAct 1982 (U.K.), 1982, c. 11

Generally — referred to

s. 8 — considered

Criminal Code, R.S.C. 1970, c. C-34s. 312(2) — considered

Criminal Code, R.S.C. 1985, c. C-46Generally — referred to

s. 2 "motor vehicle" — considered

s. 354 — considered

s. 354(1) — considered

s. 354(2) — considered

s. 354(3) "vehicle identification number" — considered

s. 355 — considered














APPEAL by police board and officer from judgment reported at 495793 Ontario Ltd. v. Barclay (2014), 2014 ONSC 3517,2014 CarswellOnt 7926, [2014] O.J. No. 2753 (Ont. S.C.J.), awarding damages to respondent individual and business.

Juriansz J.A.:

1 This appeal is from a judgment finding the appellants, a police officer and the City of Thunder Bay Police ServicesBoard, were negligent in investigating the individual and corporate respondents. The trial judge awarded substantialdamages. For the reasons that follow, I would allow the appeal.

A. BACKGROUND

2 Mr. Ricardo ("Rick") Mercuri, along with his father and other family members, ran an auto recycling company, therespondent, 495793 Ontario Ltd c.o.b. as Central Auto Parts ("Central"), in Thunder Bay, Ontario. In 1997, the ThunderBay Police Service began an investigation into stolen vehicles and auto parts in their community. On April 22, 1999, asearch warrant was executed on Mr. Mercuri's business premises. He was subsequently charged with eleven counts ofpossession of stolen property. Officer Frank Barclay was the lead investigator for the Thunder Bay Police Service. Histeam had the assistance of an officer from the Ontario Provincial Police ("OPP") Provincial Auto Theft Team ("PATT").

3 In November 2001, after a preliminary inquiry, Mr. Mercuri was committed for trial on all eleven counts. Six chargeswere withdrawn after the Crown was required to disclose information on the confidential vehicle identification number("CVIN") after an unsuccessful application under s. 37 of the Canada Evidence Act, R.S.C. 1985, c. C-5. An amendedindictment of five charges was presented at trial, but the Crown withdrew two more charges. There were acquittals, afterdirected verdicts, on two of the remaining three charges that proceeded to trial before Wright J. of the Superior Courtof Justice. On June 8, 2005, Wright J. found Mr. Mercuri not guilty on the remaining charge, without calling on thedefence for submissions.

4 In December 2005, Mr. Mercuri and Central sued Frank Barclay and the City of Thunder Bay Police Service intort for negligent police investigation.

B. THE TRIAL DECISION

5 On June 10, 2014, Pierce R.S.J., as she then was, issued judgment in favour of Mr. Mercuri and Central.

6 The trial judge found that the police did not meet the standard of care in four respects: (a) they failed to familiarizethemselves with the auto recycling industry practice; (b) they failed to understand the purpose or the scope of the CriminalCode or the case law relevant to their investigation; (c) they failed to consider, document, investigate and disclose innocentexplanations or indicia of innocence; and (d) they failed to secure and preserve the plaintiffs' property.

7 For numerous reasons, the trial judge rejected the expert opinion evidence on the standard of care, which wasprovided by an auto theft investigation police expert. Though called by the respondents, he testified that the police hadreasonable and probable grounds to arrest Mr. Mercuri for possession of stolen auto parts prior to the execution of thesearch warrant. The appellants did not call their own expert and relied on this testimony of the respondents' expert.

8 The trial judge observed that the courts have ruled on the reasonableness of the conduct of the police for centuries.She said although that oversight is often exercised in the context of criminal law, expert evidence is not necessarilyrequired to reach conclusions about whether an investigation was negligent. In her view, this was one such case. She foundthat the police conduct was egregious "[i]n certain instances", such as the failure to document and investigate innocentexplanations and the wanton destruction of the plaintiffs' property without legal authority. Moreover, she concluded thatthe lead investigator had conceded that the investigation was deficient and had apologized to the individual respondentduring the course of the trial for errors in the investigation.






9 The trial judge noted that there had been no real issue at trial that the defendants had a duty to secure and preserve theproperty they seized and that they failed to do so. The parties agreed there was a loss of $70,000 from the diminishmentin value of vehicles and other auto parts the police had stored in an open police compound and exposed to the elements,and the destruction of airbags during a search for secondary identifiers inside them. The parties also agreed that Mr.Mercuri had paid $268,937.62 in legal fees to defend the criminal charges against him. The trial judge held that thisamount should not be reduced to reflect the refusal of the criminal court to quash the search warrant.

10 The trial judge awarded non-pecuniary damages of $200,000 for the humiliation and worry suffered by Mr. Mercuriwhile the charges remained outstanding for six years. In awarding damages for loss of business income, the trial judgeconsidered the evidence of the experts tendered by each party on the quantum of business loss to Central as a result of theprosecution of Mr. Mercuri. The experts did not differ, for the most part, as to how damages should be quantified, butdisagreed as to the length of time that income loss was suffered. The trial judge rejected the appellants' expert's opinionthat the economic losses should be limited to 18 months, and awarded damages of $1,042,179.00 for the period fromMay 1, 1999 to September 30, 2008.

C. ISSUES

11 The main question for this court is whether the trial judge erred by determining the content of the standard of carewithout expert evidence in the particular circumstances of this case.

12 Second, the appellants allege that the trial judge, in formulating the content of the standard of care, erred byconsidering whether the police could prove Mr. Mercuri had knowledge that the auto parts were stolen rather thanwhether the officers had reasonable and probable grounds to believe that an offence had been committed.

13 Third, the appellants also allege the trial judge ignored or misapprehended relevant considerations, including thecommittal of Mr. Mercuri to trial, the legislation at issue, Mr. Mercuri's admissions, the evidence regarding the alteredvehicle identification numbers ("VINs"), and Mr. Mercuri's possession of stolen property.

14 Finally, the appellants take issue with the assessment of non-pecuniary damages and damages for loss of profits.

15 The respondents submit that the trial judge did not make any legal errors and that her factual findings are supportedby the evidence, are reasonable and are entitled to deference. The respondents submit that the appellants conceded attrial that the trial judge could determine the standard of care without expert evidence, and should not be allowed to resilefrom that position on appeal. This submission was not borne out on my reading of the transcripts. While the appellantsdid not call an expert and did concede that it was for the trial judge to decide whether the standard of care had beenbreached, they never conceded that expert evidence on the content of the standard of care was unnecessary.

16 Before addressing the issues raised by the appellants, it is necessary to briefly review the course of the policeinvestigation of Mr. Mercuri.

D. OVERVIEW OF THE INVESTIGATION

(1) The Investigation Commenced in 1997

17 The Thunder Bay Police Service began an investigation into stolen auto parts in 1997. Officer Frank Barclay, was anexperienced officer. He had worked in the identification branch and the intelligence unit and had training in informantdevelopment. At the time of this investigation, he worked in major case management. Officer Barclay's involvement inthe investigation began in February 1997 when an officer referred an informant to him. A second informant was referredto him by a different police officer in May 1997. One of the two informants was a former employee of Central. OfficerBarclay met with the first informant, who advised that vehicles stolen in Quebec were coming into Thunder Bay. Theinformant specifically identified Rick Mercuri of Central as a member of the group receiving stolen auto parts. Theinformant also identified a Quebec man, Gilles Joly, as a primary mover of the stolen property. Officer Barclay took




steps to verify this information and, although Mr. Joly did not have a criminal record, there were prior notations aboutMr. Joly in police reports concerning motor vehicles or motor vehicle parts.

18 The second informant told Officer Barclay that the informant and Mr. Joly had made a trip from Thunder Bayto Winnipeg to transfer a car. That vehicle later became a part of the police investigation. Officer Barclay receivedinformation from a police officer in another province that was consistent with that informant's information.

(2) The Nature of Auto Theft Investigations

19 I accept that auto theft investigations are complicated and technical.

20 Police officers must receive special training to conduct auto theft investigations, including learning how vehiclesare marked with vehicle identification numbers, or VINs. Each vehicle has a VIN and each character of the VIN conveysinformation, such as the make and year of the vehicle and where it was built. Public VINs are found on dashboards, butlabels on other parts, such as doors and glove boxes, also disclose the vehicle identification information. In addition,vehicles have confidential VINs, or CVINs, which are located in places not known to the public but disclosed bymanufacturers to police officers under an agreement of confidentiality. Police are trained to look for inconsistenciesbetween the VINs on different vehicle parts, and missing or altered VINs. VIN plates are often attached with rosetterivets, so police are also trained to look for VIN plates that have been glued on, indicating they may have been removedand reattached.

21 Since only one officer in Thunder Bay involved in the investigation had auto theft training, and additional staff wasrequired, Officer Barclay requested assistance from the OPP's PATT. In February 1999, Officer George Kleinsteiber,an auto theft investigator with 18 years' experience, was assigned to assist. In addition to his investigatory experience,Officer Kleinsteiber had created a province-wide course to train officers in auto theft investigation.

22 Another matter affecting auto theft investigations is that this court struck down a presumption in the Criminal Coderelating to this offence as unconstitutional, in R. v. Boyle (1983), 41 O.R. (2d) 713 (Ont. C.A.). The offence of possessionof property obtained by crime is set out in s. 354 of the Criminal Code. Section 354(1) provides that everyone commitsan offence "who has in his possession any property or thing or any proceeds of any property or thing knowing that all orpart of the property or thing or of the proceeds was obtained by or derived directly or indirectly from" the commission ofan indictable offence. Subsection (2) explicitly addresses wholly or partially removed or obliterated vehicle identificationnumbers and provides that:

[E]vidence that a person has in his possession a motor vehicle the vehicle identification number of which has beenwholly or partially removed or obliterated or a part of a motor vehicle being a part bearing a vehicle identificationnumber that has been wholly or partially removed or obliterated is, in the absence of any evidence to the contrary,proof that the motor vehicle or part, as the case may be, was obtained, and that such person had the motor vehicleor part, as the case may be, in his possession knowing that it was obtained,

(a) by the commission in Canada of an offence punishable by indictment; or

(b) by an act or omission anywhere that, if it had occurred in Canada, would have constituted an offencepunishable by indictment.

23 Subsection 354(3) defines "vehicle identification number" as "any number or other mark placed on a motor vehiclefor the purpose of distinguishing the motor vehicle from other similar motor vehicles". Section 2 of the Criminal Codedefines "motor vehicle" as "a vehicle that is drawn, propelled or driven by any means other than muscular power, butdoes not include railway equipment."

24 In 1983, this court in R. v. Boyle considered the presumption of guilty knowledge from possession of a vehiclewith an altered or obliterated VIN. The court declared the presumption of guilty knowledge in s. 312(2) (now s. 354(2))






constitutionally invalid but left intact the doctrine of recent possession in relation to possession of stolen goods as givingrise to an inference of guilty knowledge. Martin J.A., writing for the court, explained, at pp. 737-738:

Since, as I have held, the presumption is valid that a motor vehicle, the vehicle identification number of which hasbeen removed or obliterated, has been obtained by an indictable offence, that presumption together with otherevidence that shows that the indictable offence by which the vehicle was obtained was "recently" committed, e.g.,that the vehicle or part had been "recently" manufactured, may give rise to the doctrine of recent possession and theinference of guilty knowledge arising therefrom. Guilty knowledge, apart altogether from any inference arising frompossession of goods "recently stolen", may, of course, be proved by inferences from other circumstances, such as thegiving of inconsistent accounts by the accused as to how he came by the property, the purchase of the property atan unreasonably low price, or the surreptitious manner in which the transaction by which the accused acquired theproperty took place, and an infinite variety of other circumstances. For example, the possession of several motorvehicles the vehicle identification numbers of which were obliterated might very well support an inference of guiltyknowledge on the basis of the improbability of a person innocently acquiring a number of motor vehicles, the vehicleidentification numbers of which had been obliterated.

[Emphasis added.]

25 As a result of Boyle, the Crown in Ontario prosecuting an accused for auto theft cannot rely on the presumptionof guilty knowledge provided by s. 354(2).

26 Officer Barclay acknowledged at trial that he did not know of the court's decision in Boyle at the beginning ofthe investigation. However, he subsequently became aware that he could not rely upon s. 354(2)'s presumption of guiltyknowledge and that the investigation had to establish a suspect's knowledge. He was certainly aware of this by the timeof Officer Kleinsteiber's involvement in February 1999. Officer Barclay testified that he continued to be aware of thatrequirement as the investigation progressed and had always investigated with the need to prove knowledge in mind.Officer Kleinsteiber also testified that he spoke to the Thunder Bay Police about not relying on the presumption and thenecessity of proving knowledge. Officer Fuhrman, one of the Thunder Bay Police officers involved in the investigation,had taken Officer Kleinsteiber's two-week auto course. Officer Kleinsteiber testified that, during the course, a Crownhad spoken at length about knowledge and the inability to rely on the presumption.

(3) Review of Documentation and Examination of Vehicles

27 In addition to assessing the veracity of the information provided by the informants, the police began theirinvestigation by researching vehicle and company registration information. Ownership history could be traced throughregistration files maintained by the Ministry of Transportation ("MTO"). Vehicles with a suspect history were foundto have the common denominator of going through several Thunder Bay businesses, including Central. The policeresearched all vehicles registered under the registrant identification number of the business to identify suspect vehicles,and then conducted physical vehicle inspections.

28 The police also conducted surveillance on Mr. Joly when he came to Thunder Bay. They observed Mr. Jolyattending at Central. The police ran the plate of his vehicle and found that it was registered to a numbered companythey had identified as being of interest in their investigation. The police obtained the VIN from Mr. Joly's vehicle andfound it was connected to an Ontario company at an address in Toronto. Officer Barclay was told by a Toronto autotheft investigator that they had an ongoing investigation into that address.

29 This early investigation led police to believe that Mr. Mercuri and Central were associated with a number of vehicleswhose identity had been disguised. The police identified vehicles that had been sold as salvage by insurance companiesand registered to Central. They found that Central had purchased parts that appeared to be from stolen vehicles becausethe VIN plates and labels had been removed. The labels and VINs from the salvage vehicles were affixed to the suspected






stolen parts. The police identified at least three such vehicles. These vehicles had their public VIN numbers glued, ratherthan riveted, in place.

30 Police asked Mr. Mercuri to provide invoices to verify the origin of some of the suspected stolen parts. Someof the invoices were linked to companies that the police determined were non-existent or had phony addresses. Forinstance, a police officer examined a vehicle that Central had asked to be re-vinned. The cab, engine and transmissionwere identified as being from a vehicle that was stolen December 17, 1997. An invoice from December 20, 1997 forparts from Automobile Procarte to Central and a cancelled cheque were forwarded by Officer Barclay to the Sureté duQuébec. An officer attended at the address on the invoice, found it to be a vacant lot, and advised that the address onthe invoice represented a fictitious company. The officer spoke to a proprietor of the business next door, which had beenthere for a number of years, and was advised that there had never been an auto parts dealer at that location. The phonenumber on the invoice could only be linked to a pager. The police believed that invoice was fake since it was from anon-existent company. The police obtained a warrant for Central's phone records and compared the numbers with otherinvestigators. They found that some numbers were linked to individuals they believed were involved with the movementof stolen vehicles and parts.

31 The police also learned that a number of truck cabs that Mr. Mercuri had obtained from another Quebec company,which were shipped to Winnipeg, were seized there and determined to be stolen. The police only learned later that onlearning that the cabs were stolen, Central had reimbursed the Manitoba recycler for its costs and legal fees and hadbrought a civil action against the Quebec company. In his police interview, Mr. Mercuri had made some vague referenceto a civil action. The police misunderstood his acknowledgement of these transactions to be an admission that he wasknowingly dealing in stolen auto parts.

32 In 1998 there were some changes in the auto industry. The MTO introduced a branding program for rebuiltvehicles which altered the process for re-vinning vehicles. The program was not mandatory until 2003. In 1999, OfficerBarclay spoke to an MTO enforcement officer who advised that he was uncertain about the requirements for VINs beingswitched himself.

(4) A Search Warrant of Central's Business Premises is Authorized

33 Officer Barclay met with a Crown attorney on April 17, 1999, to advise him of the investigation. The Crownhad no objection to proceeding with an information to obtain a search warrant and provided input into the possiblecharges. Officer Barclay testified that he believed there were grounds to obtain the warrant at that time and that he stillmaintained that belief at trial.

34 The police obtained judicial authorization for a search of the Central premises, and the search was executed onApril 22, 1999.

(5) Mr. Mercuri's Voluntary Interview and the Search of Central

35 Mr. Mercuri voluntarily attended at the police station for an interview just after he had been served with the searchwarrant and the search at the Central premises had commenced. At the outset of the interview, Staff Sergeant Hobbscautioned him that, although he was not charged presently, he could be charged with possession of stolen propertyexceeding $5,000 contrary to ss. 354 and 355 of the Criminal Code.

36 During the interview, Mr. Mercuri made several apparent admissions, which the trial judge found to beunderstandable miscommunication. Here is an example of the "miscommunication":

Hobbs: Let's cut the crap here you know that some of this is stolen property okay

Mercuri: Definitely

Hobbs: You do know that some of this is




Mercuri: Well now I know yeah

Hobbs: Okay

Mercuri: I knew before

37 Towards the end of the interview, they continued:

Hobbs: Urn now would you be willing to to [sic] come back with us to Central

Mercuri: Yeah

Hobbs: Urn and point out all the stolen property now listen to me okay

Mercuri: Yeah

Hobbs: I want this to be very clear to you okay

Mercuri: Yep

Hobbs: The minute you do that

Mercuri: Yep

Hobbs: You're probably going to be charged with possession of stolen property okay

Mercuri: Yep

38 After cautioning Mr. Mercuri again of the potential jeopardy:

Hobbs: Okay would you be prepared to come back with us right now

Mercuri: Yeah

Hobbs: And point out the stolen property that's on your property

Mercuri: Yeah I can that I'm aware of

Hobbs: Oh we'll find other stuff okay

Mercuri: Yeah

[...]

Hobbs: So what I'm saying to you is the stuff that you obviously know is stolen okay I'd like you to point out stuffthat you're iffy about hey that's fine everybody you know I mean you can't know possibly known every single pieceof inventory that you have right

Mercuri: Yeah yeah

Hobbs: Would you be prepared to do that

Mercuri: Yeah




39 Mr. Mercuri also talked about having received stolen cabs from a Quebec company. As mentioned above, he onlymade a vague reference to his civil action against the Quebec company and did not mention he refunded his customers'money.

40 Following the interview, Mr. Mercuri returned to the Central premises and walked around with various officers.He identified a number of items which later formed the basis of some of the charges, including: pointing out a Sea-Doothat had its VIN removed and engine number removed, an Evinrude Motor with a partially obliterated serial numbertag, and a stolen Ford Econoline van from New York. Mr. Mercuri also assisted the police in identifying doors andglove boxes missing their labels and cabs without VIN plates.

41 Subsequent to the search, an employee of Central attended at the police station for an interview. He advised thathe had removed VIN plates from salvaged truck cabs and glued them to cabs that had no VIN plates at Mr. Mercuri'sdirection. Mr. Mercuri had also acknowledged this practice during his own interview. After charges were laid, Mr.Mercuri declined to speak any further with the police.

(6) Relevant and Related Judicial Proceedings

(i) Committal to Trial on All Charges After Preliminary Inquiry

42 After a multiple day preliminary inquiry in the fall of 2000 and into 2001 before Walneck J. of the Ontario Courtof Justice, Mr. Mercuri was committed to trial on eleven counts of possession of stolen property.

(ii) Application to Quash the Search Warrant

43 Mr. Mercuri challenged the search warrant under s. 8 of the Charter of Rights and Freedoms at his criminal trial.The challenge focused primarily on the alleged deficiencies in the information to obtain, including the failure to providethe authorizing Justice of the Peace with material facts such as the trade practice in the local auto recycling trade, and theallegedly unreasonable manner of search, including the testing and destruction of airbags. After an eleven-day hearing,Wright J. dismissed the motion. He concluded that, even excising all of the facts shown to be incorrect or unfair in theinformation to obtain, there was still sufficient reliable information to support the authorization: R. v. Mercuri, 2004CanLII 7053, [2004] O.J. No. 3415 (Ont. S.C.J.)

(iii) Crown Application under s. 37 of the Canada Evidence Act

44 After the application to exclude the search warrant evidence was dismissed, the defence demanded disclosure ofthe secret locations of CVIN numbers. The Crown brought an application for non-disclosure before Wright J., pursuantto s. 37 of the Canada Evidence Act, which allows the Crown to object to the disclosure of information on the basisof a specified public interest. The application was unsuccessful and the Crown was ordered to disclose the location ofthe CVINs. Rather than making the ordered disclosure, the Crown withdrew six charges and presented an amendedindictment of the remaining five counts. After argument on the new indictment, the Crown withdrew two more charges,and the trial continued.

E. ANALYSIS

45 For the reasons that follow, I conclude that the trial judge erred by deciding the content of the standard of carewithout expert evidence. There are two exceptions to the general rule that expert evidence is required. Neither exceptionapplies here. Without such evidence, there was no basis for determining the appropriate content of the standard of care ofa reasonable Thunder Bay police officer conducting a specialized investigation into stolen auto parts, and consequentlyno basis upon which the trial judge could find that the standard had been breached.






46 Moreover, as she proceeded, the trial judge committed the additional errors discussed below. With the exceptionof the parties' agreement as to damages for loss of and damage to seized property, the trial judge should have dismissedthe respondents' action.

(1) The Lack of Expert Evidence on Standard of Care

(a) The Standard of Care

47 The appropriate standard of care for the tort of negligent investigation was established by the Supreme Courtof Canada in Hill v. Hamilton-Wentworth (Regional Municipality) Police Services Board, 2007 SCC 41, [2007] 3 S.C.R.129 (S.C.C.). The "flexible overarching standard" is that of "a reasonable police officer in similar circumstances": Hill,at para. 68. As explained by the Chief Justice, at para. 73:

The standard is not perfection, or even the optimum, judged from the vantage of hindsight. It is that of a reasonableofficer, judged in the circumstances prevailing at the time the decision was made — circumstances that may includeurgency and deficiencies of information.

48 The conduct of a reasonable police officer may vary depending on the stage of the investigation and the legalconsiderations. In laying charges, the standard is informed by the legal requirement of reasonable and probable groundsto believe the suspect is guilty: Hill, at para. 55.

49 The Supreme Court of Canada in R. v. Storrey, [1990] 1 S.C.R. 241 (S.C.C.), at pp. 250-251, defined the concept ofreasonable and probable grounds as requiring an arresting officer to subjectively have reasonable and probable groundson which to base the arrest. It must also be justifiable from an objective point of view but need not demonstrate anythingmore. See also: R. v. Feeney, [1997] 2 S.C.R. 13 (S.C.C.), at para. 24. In other words, "a reasonable person placed inthe position of the officer must be able to conclude that there were indeed reasonable and probable grounds" to makean arrest: R. v. Storrey, at p. 251.

50 The police are not required to establish a prima facie case for conviction before making an arrest: R. v. Storrey,at p. 251; Wong v. Toronto Police Services Board, 2009 CanLII 66385, 2009 CarswellOnt 7412 (Ont. S.C.J.), at para. 54;Gioris v. Toronto Police Services Board, 2012 ONSC 6396, 2012 CarswellOnt 15071 (Ont. S.C.J.), at paras. 68-70. Asexplained by Thorburn J. in Wong, at para. 61:

The determination as to whether reasonable grounds exist is based upon an analysis of the circumstances apparentto the officer at the time of the arrest and not based upon what the officer or anyone else learned later. Reasonablegrounds still exist where the information relied upon changes at a future date or otherwise turns out to be inaccurate.The requirement is that the information be reliable at the time the decision was made to arrest the accused.

51 The function of police is to investigate incidents which might be criminal, make a conscientious and informeddecision as to whether charges should be laid and present the full facts to the prosecutor: Wong, at para. 56. Althoughthis requires, to some extent, the weighing of evidence in the course of investigation, police are not required to evaluatethe evidence to a legal standard or make legal judgments. That is the task of prosecutors, defence lawyers and judges:Hill, at para. 50.

52 Nor is a police officer required to exhaust all possible routes of investigation or inquiry, interview all potentialwitnesses prior to arrest, or to obtain the suspect's version of events or otherwise establish there is no valid defence beforebeing able to form reasonable and probable grounds: Kellman v. Iverson, 2012 ONSC 3244 (Ont. S.C.J.) (CanLII), [2012]O.J. No. 2529 (Ont. S.C.J.), at para. 16; Wong, at para. 59.

(b) The General Rule is that Expert Evidence is required






















53 The general rule is that the content of the standard of care of a professional, such as a police officer, will requireexpert evidence: Meady v. Greyhound Canada Transportation Corp., 2015 ONCA 6, 329 O.A.C. 173 (Ont. C.A.), at paras.34-35; Krawchuk v. Scherbak, 2011 ONCA 352, 106 O.R. (3d) 598 (Ont. C.A.), at para. 130, leave to appeal to S.C.C.refused, [2011] S.C.C.A. No. 319 (S.C.C.); Bergen v. Guliker Estate, 2015 BCCA 283, 75 B.C.L.R. (5th) 351 (B.C. C.A.),at paras. 114-131; Camaso Estate v. Egan, 2013 BCCA 6 (B.C. C.A.), at paras. 71-72, leave to appeal to S.C.C. refused,[2013] S.C.C.A. No. 92 (S.C.C.).

54 As Smith J.A. explained on behalf of the Court of Appeal for British Colombia in Bergen v. Guliker Estate, atpara. 131:

While there are cases in which the breach of the standard of care will be apparent without expert evidence, typicallywhen a suit is brought for professional negligence it is customary (and generally necessary), for there to be expertevidence on the standard of care. As the analysis in Hill makes clear, police officers are professionals and theirconduct should be assessed in the same way that other professional negligence claims are evaluated. [Citationsomitted.]

55 Strathy C.J.O. in Meady explained that that general rule is subject to the exception for "nontechnical matters orthose of which an ordinary person may be expected to have knowledge". See also Krawchuk, at para. 133.

56 Whether expert evidence as to the standard of care of a police officer is required turns on the nature of the issuesand the facts of each case, with particular regard to the specialized or technical nature of the circumstances, and whethera trier of fact can rely on its own knowledge and experience to determine the appropriate standard of care and whetherit is met.

57 Epstein J.A., on behalf of this court in Krawchuk, identified two exceptions to the general rule that it is notpossible to determine professional negligence without the benefit of expert evidence. The first, as mentioned above, is innontechnical matters within the knowledge and experience of the ordinary person. The second is where the impugnedactions are so egregious that it is obvious that the defendant's conduct has fallen short of the standard of care withouteven knowing precisely the parameters of the standard of care. Epstein J.A. explained, at para. 135, that "this secondexception involves circumstances where negligence can be determined without first identifying the parameters of thestandard of care rather than identifying a standard of care without the assistance of expert evidence."

58 Several appellate cases have considered the application of the general rule and its exceptions.

59 In Meady, this court deferred to the trial judge's decision that he did not require expert evidence to determine theprofessional standard of care and dismissed the appeal. Meady was an action in negligence against two OPP officers andtheir employer by a number of passengers and the driver of a Greyhound bus. The bus crashed after a man, with whomthe police had contact before boarding, grabbed the steering wheel. The trial judge held that the proposed police expertwas not properly qualified and that, in any event, expert police evidence was unnecessary. The issue of appropriate policetraining, policies, investigation techniques and interaction with the public fell within the understanding of the trier offact. The only live issue was whether crisis management should have been employed, and the training document to whichthe proposed expert referred was before the trial judge. The Chief Justice observed, at para. 47, that "[t]he exercise ofpolice powers of investigation, arrest and detention and police interactions with the public falling short of coercion, arepart of the daily diet of judges of the Superior Court." Expert evidence was not required to understand or apply thestandards set out in those materials or to assess whether the officers had properly applied their training.

60 The Court of Appeal for British Columbia in Bergen allowed an appeal by the province from a judgment findingit 20% liable for a collision following a police pursuit. The court found that the determination of whether the standardof care was breached, following commencement of the police pursuit in question, required expert evidence on howa reasonable police officer would have gone about apprehending a mentally unstable and suicidal individual in thecircumstances without causing harm to others. The court held that the proffered expert evidence was properly ruled

















inadmissible by the trial judge, but as a result, there was no basis for determining the appropriate standard of care and nobasis upon which the judge could make key findings of fact related to whether a breach of the standard of care occurred.The court concluded that the trial judge had erred. In the absence of expert evidence, the judge could not have determinedthe content of the standard of care and could not adjudicate the claim.

61 In Camaso Estate, the trial judge had found that expert evidence was required in a police negligence case in which theofficer fatally shot the respondent's husband. The Court of Appeal for British Columbia allowed the appeal because thetrial judge did not refer to the expert evidence but rather imposed his own standard of care without any evidentiary basis.

62 In Roy v. Canada (Attorney General), 2005 BCCA 88, 251 D.L.R. (4th) 233 (B.C. C.A.), leave to appeal to S.C.C.refused, [2005] S.C.C.A. No. 188 (S.C.C.), the death of an individual from extreme intoxication while in custody was atissue. On appeal, the majority of the court concluded that the trial judge erred by finding that the officers did not performany adequate assessment or investigation into Mr. Roy's state of consciousness or consider whether his significantlyreduced level of awareness might require medical examination, in the absence of evidence of what a competent policeofficer would do in the circumstances. The issue related to matters beyond common experience and it was not a matter ofa "nontechnical nature or of which an ordinary person may be expected to have knowledge" and as such, expert evidenceon the standard of care was necessary.

63 In those police negligence cases in which the judge has proceeded without expert evidence, the case has been straightforward in nature: see Russell v. York Police Services Board, 2011 ONSC 4619 (Ont. S.C.J.); Lawrence v. Peel RegionalPolice Force [2009 CarswellOnt 2161 (Ont. S.C.J.)], 2009 CanLII 19934; Wong.

64 In this case the trial judge erred in departing from the general rule. She made no specific reference to the generalrule, but her reasons suggest she considered she could rely on both exceptions. In my view, neither exception applied,as I explain below.

(a) This was a technical, complicated investigation

65 This was a technical, complicated investigation, and the reasons the trial judge gave for considering the policeconduct to be clearly egregious are flawed.

66 The trial judge took the position she could determine the content of the standard of care, saying, at para. 46:

For centuries the courts have ruled on the reasonableness of the conduct of the police. Some examples of negligenceare detailed in the jurisprudence concerning negligent police investigation. While the court's oversight is oftenexercised in the context of criminal law, I am of the view that the court may not necessarily need expert evidence toreach conclusions about whether an investigation was negligent. In my view, this is such a case.

67 I do not read the trial judge's reasons to suggest that the case was one involving nontechnical matters or within theknowledge and experience of the ordinary person. In fact, the trial judge rejected the testimony of Mr. Jeffrey Davis, aconsultant and experienced former police officer (with the Commercial Auto Crime Bureau of the Peel Regional Policefrom 1994 until his retirement in 2010) whom she had qualified as an expert in auto theft investigations, partly becausehe "made no comment on police conduct as it related to industry practice" and "nothing in his background suggests thathe is familiar with the auto recycling industry."

68 The trial judge listed the failure of the police to familiarize themselves with auto recycling practices as a significantreason for her conclusion that the police did not meet the standard of care. This was a failing she also found of Mr.Davis whom she qualified "to give expert evidence on auto theft investigation issues" and whom she said "was clearlyknowledgeable about auto theft policing".

69 Though called by the respondents, Mr. Davis testified that the police already had evidence of possession ofstolen property prior to the search warrant. He said he would have arrested Mr. Mercuri and would not have waited












until afterwards. The appellants did not call expert evidence. They took the position Mr. Davis' opinion established thestandard of care.

70 The trial judge did not accept the opinion of Mr. Davis. She explained, at paras. 40-45 of her reasons, why theevidence of Mr. Davis was, in her view, of limited use. It is not necessary to review her reasons for rejecting Mr. Davis'testimony here. This court must defer to her weighing of his testimony.

71 However, having rejected the available expert evidence, the question is whether the trial judge erred by departingfrom the general rule and deciding the case without any expert opinion as to the applicable standard of care in theparticular circumstances.

72 The case was replete with technical aspects of both legal and factual issues, such as what is a VIN; what partsof a vehicle constitute a "motor vehicle" under the Code; what parts contain a VIN; and the legitimate reasons in theauto recycling industry for transferring a VIN. The evidence disclosed a fundamental difference of opinion betweenautomotive recyclers and the police about these matters. As well, the MTO introduced and implemented a "brandingprogram" for rebuilt vehicles between 1998 and 2003. The trial judge noted, at para. 154, that "the police and the Ministryof Transportation were at odds about the process for re-vinning vehicles and that there was certainly confusion aboutwhat steps to take"

73 In proceeding to determine the case, the trial judge placed a great deal of weight on the police's lack of understandingof what she found to be standard practices in the auto recycling industry. The standard practices in the local auto recyclingindustry, as described by several witnesses at the civil trial, may have established that individuals in the local industrycould offer innocent explanations for the removal or reattachment of VIN and certificate information, but was notsufficient to conclude that the police investigators were negligent. All this evidence had been called before Wright J. whonoted in his ruling on the search warrant, at para. 58: "Much evidence and argument was put forward that this practice isa normal one in the trade. Perhaps it is. But the practice is one equally followed by those who are attempting to disguisestolen property." I agree with Wright J.'s observation. The local practice that the trial judge found provided an innocentexplanation for removal and reattachment of VINs could also be used by an auto recycler to camouflage dealing in stolenvehicles and parts. The trial judge failed to consider this.

74 The trial judge made factual findings in relation to the police misunderstanding of auto recycling practices, andthe investigators' failure to recognize evidence to the contrary in terms of: (i) the use of original VINs and the practiceof removing them, (ii) the ability to determine if a truck cab was "sanitized" absent knowledge of CVINs, (iii) the use ofrosette rivets and glue; and (iv) the re-use of certification labels on doors and glove box labels. However, much of heranalysis involved hindsight and the re-analysis of the issues which led to charges being withdrawn or to the acquittal.

75 It is my view that the trial judge so erred. This case involved a technical police investigation that did not fall withinthe standard knowledge and experience of a Superior Court judge. I do not accept the respondents' submission that bynot calling their own expert on the standard of care the appellants consented to the trial judge's proceeding withoutexpert evidence.

(b) This was not an egregious case

76 The trial judge offered three reasons why she considered the police conduct in this case to be egregious. She said,at para. 46:

In certain instances, police conduct was egregious: for example, the failure to document and investigate innocentexplanations and the wanton destruction of the plaintiffs' property without legal authority. Repeatedly, the leadinvestigator, Officer Barclay, conceded that the investigation was deficient. He even apologized to Mr. Mercuriduring the course of the trial for errors in the investigation.

77 I discuss each of these in reverse order.




(i) Officer Barclay's Apologies

78 First, as a general observation, the acknowledgement of omissions and mistakes in hindsight does not establish thestandard of care was breached in the context of the information known at the time. Second, Officer Barclay's apologiesmust be understood in context. Officer Barclay, while acknowledging some mistakes, maintained steadfastly throughouthis testimony that he had reasonable and probable grounds to lay charges based on the evidence known at the time.In fact, at trial he still believed the evidence demonstrated both knowledge and possession of stolen auto parts on thepart of Mr. Mercuri. The trial judge noted his testimony in this regard at para. 160 of her reasons. However, whileOfficer Barclay acknowledged various deficiencies in the investigation, neither Officer Barclay nor the Thunder BayPolice Services Board conceded that the investigation had been negligent.

79 For instance, Officer Barclay did apologize at the application to quash the search warrant and at the negligencetrial in relation to having incorrectly put in the wrong, lower amount in relation to a key invoice (the actual invoicehowever being appended to the ITO). The concern was that the lower amount could have given the authorizing judge aninaccurate view of the value of the vehicle, an under-market value price more strongly supporting the inference that thevehicle was stolen. Despite Officer Barclay's acknowledgment of this error, the search warrant was found, despite thisand other problems, to be sufficiently reliable to support an authorization: R. v. Mercuri.

80 Officer's Barclay's narrow and limited apologies provide insufficient support for the trial judge's conclusion thepolice conduct in this case was egregious.

(ii) The Wanton Destruction of the Respondents' Property

81 As has been noted above, there was no issue at trial that the police had failed to properly secure and preserve therespondents' property after it was seized. The trial judge's reference to wanton destruction of property refers to the policehaving blown up airbags in an attempt to retrieve numbers from them, and to storing other auto parts outdoors withthe result that they rusted and lost value over time. More importantly, it was not an issue that addressed the questionof whether the police had reasonable and probable grounds to arrest and charge Mr. Mercuri. At most, it was somecircumstantial post-charge evidence in terms of the overall conscientiousness demonstrated by the police.

(iii) The Police failed to Consider, Document, Investigate and Disclose Innocent Explanations or Indicia of Innocence

82 It is useful to remember that the exception for egregious conduct applies when the police conduct is "so egregiousthat it is obvious that the defendant's conduct has fallen short of the standard of care without even knowing precisely theparameters of the standard of care". Dictionary definitions of "egregious" include synonyms such as shocking, appalling,terrible, awful, horrendous, frightful, atrocious, abominable, abhorrent, and outrageous.

83 The trial judge had no evidence of the note taking, and disclosure practices expected of a police service in 1999.She had no proper framework to conclude the failures in this case were egregious.

84 Moreover, the trial judge's criticism of the police for failing to follow-up on, or take steps to become aware of,possible innocent explanations ignores the established jurisprudence that police are not required to exhaust all avenuesof investigation, establish that an accused has no defence, or even obtain an accused's version of events: Wong, at paras.57, 59, 68; Roda, at para. 73; Lawrence, at para. 48; Grann v. Thunder Bay Police Services Board, 2015 ONSC 438 (Ont.S.C.J.), at paras. 24-25; Wiles v. Ontario (Police Complaints Commissioner), [1997] O.J. No. 6274, 1997 CarswellOnt6039 (Ont. Div. Ct.).

85 In an exercise of hindsight, the trial judge fixated on whether there were innocent explanations and found thoseexplanations in the practices of the auto recycling industry and Mr. Mercuri's trial testimony

86 With respect, the police failures identified by the trial judge in this case were simply insufficient to support a findingtheir conduct was egregious.











(c) Conclusion on the Lack of Expert Evidence Issue

87 The trial judge erred in determining the content of the standard of care without expert evidence in the particularcircumstances of this case. This was a technical, complicated investigation outside the knowledge of an ordinary personand there was no basis for finding the police conduct was egregious.

88 This conclusion provides a sufficient basis to allow the appeal. However it is useful to discuss the other issues.

(2) Whether the Trial Judge Erred in Formulating the Content of the Standard of Care by Considering Whether PoliceCould Prove Mr. Mercuri Had Knowledge that the Auto Parts Were Stolen

89 Even if the trial judge could have determined the standard of care without relying on expert evidence, she erredin formulating the content of the standard of care. As mentioned above, the standard of care is informed by the legalrequirement of reasonable and probable grounds to believe the suspect is guilty: Hill, at para. 55.

90 The trial judge repeatedly used language that suggested that the police obligation was to prove Mr. Mercuri's guiltin order to be acting reasonably.

91 Whether police had reasonable and probable grounds to charge is what should have informed the standard of care.And it seems clear that police did so. During the investigation, there was a progression in the accumulation of a bodyof circumstantial evidence of knowledge that supported reasonable and probable grounds for the charges. This was soat least until the post-committal stage, when the credibility of Mr. Mercuri's apparent admissions would come into playand the potentially exculpatory evidence required ongoing assessment as to whether there was still sufficient evidence ofknowledge. But at that point, the ball was already in the hands of the Crown and the judiciary.

92 Further, the trial judge relied upon the alleged failure of the police to understand the purpose or scope of theCriminal Code or the case law relevant to their investigation. The trial judge commented that Officer Barclay did notknow that the knowledge presumption in the Criminal Code had been struck down when he commenced the investigationin 1997 and that one of the other officers involved was aware of it at the time of the search warrant. The trial judgeacknowledged that Officer Barclay testified that he was aware the presumption had been struck down after discussingit with the OPP officer early in the investigation and that he believed and insisted that knowledge could be proven bythe totality of the evidence without relying on the presumption.

93 Despite this recognition, the trial judge concluded that the police did not conduct the investigation as though theywere aware of that change in the law. She stated:

In this case, the police paid lip service to the requirement to prove Mr. Mercuri knew that vehicles or parts in hispossession were stolen. They did not evaluate the evidence they collected with proof of his knowledge in mind. Theydid not appear to turn their minds to the provision in s. 354(2) of the Code that "evidence to the contrary" providesa defence to possession of a motor vehicle with a VIN that is wholly or partially removed or obliterated. The failureto understand the law relevant to their investigation does not meet the standard of care for a police officer in thecircumstances.

94 Officer Barclay's testimony was clear that he did conduct the investigation on the basis of the need to prove and notjust presume knowledge. The course of the investigation is consistent with this. The trial judge's finding to the contraryis not supported by the evidence.

95 Guilty knowledge can be established a number of ways, as Martin J.A explained on behalf of the court in Boyle,at para. 61. The possession of several motor vehicles with obliterated VIN numbers which "might very well supportan inference of guilty knowledge" on the basis of the improbability of a person innocently acquiring such a number ofmotor vehicles, or "the giving of inconsistent accounts by the accused as to how he came by the property, the purchase






of the property at an unreasonably low price, or the surreptitious manner in which the transaction by which the accusedacquired the property took place, and an infinite variety of other circumstances."

96 As defence counsel for Mr. Mercuri at the criminal trial acknowledged during Mr. Mercuri's testimony at thecivil trial, the statement made by Mr. Mercuri was probably enough to deal with the knowledge issue for a preliminaryhearing, and could only be explained away at trial.

(a) Conclusion on the Content of the Standard of Care Issue

97 I would conclude that the trial judge, in formulating the content of the standard of care, erred by consideringwhether the police could prove Mr. Mercuri had knowledge that the auto parts were stolen rather than whether theofficers had reasonable and probable grounds to believe that an offence had been committed.

(3) Whether the Trial Judge Ignored or Misapprehended Relevant Considerations, including the Committal of Mr. Mercurito Trial and Other Judicial Proceedings

98 The trial judge's errors were compounded by her failure to accord proper weight to the fact that there had been acommittal to trial on all charges after a preliminary hearing, or to the role of the Crown and the criminal justice systemas the prosecution proceeded.

99 The trial judge said "[i]n my view, the police cannot hide behind a committal for trial to suggest that theirinvestigation was not negligent." The trial judge failed to consider the substantial body of jurisprudence holding that thefact that a preliminary hearing specifically concluded that there were reasonable and probable grounds for the chargeslaid is strong evidence that the investigation, to that point at least, did not violate the standard of care: Thompson v.Ontario (1998), 113 O.A.C. 82 (Ont. C.A.), 1998 CanLII 7180, at para. 39; Roda v. Toronto Police Services Board, 2016ONSC 743, [2016] O.J. No. 513 (Ont. S.C.J.) at para. 75; Fragomeni v. Greater Sudbury Police Service, 2015 ONSC 3937(Ont. S.C.J.), at para. 103; Wong, at para. 60; and Chmielewski v. Niagara Regional Police Services Board, 2007 CanLII31778, 2007 CarswellOnt 7086 (Ont. S.C.J.), at para. 38, aff'd 2009 ONCA 51 (Ont. C.A.).

100 At paras. 150-151, the trial judge expressed amazement that the police charged Mr. Mercuri with possession ofstolen goods that they knew were delivered to Central under contract to crush them, but persisted with the prosecutionof the charge until it was dismissed in 2005. She did not consider the fact that the police theory of that aspect of the casewas that keeping the goods that were supposed to be crushed was theft by conversion. This is a sound theory in law. Mr.Mercuri was committed for trial on this charge.

101 The trial judge also found, at paras. 32-33, that the police could not shift the onus onto the Crown once chargeswere laid, noting that the Crown's ability to evaluate the merits of the charges had been limited by the information thepolice gave him and that "Crown counsel assigned to the case became more dubious about the merits of the charges themore he learned about the case."

102 However, as Wilson J. stated in Solomonvici v. Toronto Police Services Board, 2009 CanLII 39060, 2009CarswellOnt 4418 (Ont. S.C.J.), aff'd 2010 ONCA 85 (Ont. C.A.), in dismissing an action for negligent investigation,at para. 12:

It is important to note that it is up to Crown Counsel to make the determination of whether or not there are sufficientgrounds upon which to proceed to trial in any particular case. The mere fact that the counsel was of the view thatthe chance of a conviction on the sexual assault charge was not strong does not mean that there were not reasonableand probable grounds upon which to lay the charge.

103 The Chief Justice emphasized in Hill, at para. 50, that while the standard of care of a reasonable police officerrequires police to weigh evidence to some extent during the course of an investigation, "they are not required to evaluate

















evidence according to legal standards or to make legal judgments", that being the task of prosecutors, defence counseland judges.

104 The trial judge failed to place any weight on the committal for trial. She also failed to fully assess the role thatthe Crown played in providing oversight of the prosecution despite the inadequacies in what was provided, and to givesufficient consideration to the fact that there were several relevant determinations in the criminal proceedings. Thesefailures further undermine the trial judge's conclusions that the standard of care in this case could be evaluated based onthe knowledge and experience of a Superior Court judge and that the conduct was clearly egregious.

105 Next, the trial judge did not give proper consideration to the fact that the deficiencies in the information to obtainthe search warrant had been considered in the course of the criminal proceedings and that the criminal trial judge hadconcluded that the deficiencies did not warrant exclusion of the evidence. Nor did the trial judge adequately considerthe connection between the withdrawal of charges and the s. 37 ruling requiring the Crown to disclose the location ofCVIN numbers. Those charges were not withdrawn because the Crown perceived some deficiency in the reasonable andprobable grounds to charge Mr. Mercuri. The Crown could have decided to reveal the CVINs and continue with theprosecution. The trial judge leapt from the withdrawal of those charges to a finding of negligence premised on the failureof the police. She failed to adequately focus on whether the police had reasonable and probable grounds at the timethey laid these charges.

106 I conclude that the trial judge erred in failing to properly consider Mr. Mercuri's committal for trial, the role ofthe Crown, and the ruling on the search warrant.

(4) Damages

107 In light of my proposed disposition of the appeal, it is not necessary to address the issue of damages. Nevertheless,it is worth making certain observations.

108 First, the trial judge did not distinguish between Mr. Mercuri and Central in awarding damages. She awarded allcategories of damages "to the plaintiffs" jointly. Central was not entitled to the non-pecuniary damages predicated onMr. Mercuri's personal experience, nor reimbursement of legal fees that Mr. Mercuri incurred personally for his defenceof the criminal charges. Mr. Mercuri was not entitled to a joint award of Central's business loss, let alone to the fullamount. Mr. Mercuri as one of several shareholders was not entitled to an independent share of the business loss.

109 Second, the evidence did not support the trial judge's substantial non-pecuniary award of $200,000. The trialjudge observed that there had been a "human cost to Mr. Mercuri in terms of his loss of reputation and emotional upset".She made no finding that Mr. Mercuri's "emotional upset" rose to the level of personal injury. There was nothing in theevidentiary record that would support such a finding.

110 The distinction between psychological or emotional upset and a disturbance that rises to the level of personalinjury must be kept in mind, as the Chief Justice explained in Mustapha v. Culligan of Canada Ltd., 2008 SCC 27, [2008]2 S.C.R. 114 (S.C.C.), at para. 9. She said that "[p]ersonal injury at law connotes serious trauma or illness" and addedthat "[t]he law does not recognize upset, disgust, anxiety, agitation or other mental states that fall short of injury."

111 lacobucci J. in Odhavji Estate v. Woodhouse, 2003 SCC 69, [2003] 3 S.C.R. 263 (S.C.C.), at para. 41, said: "it iswell established that compensation for psychiatric damages is available in instances in which the plaintiff suffers froma "visible and provable illness" or "recognizable physical or psychopathological harm". He also said that "as the lawcurrently stands, that the appellant has suffered grief or emotional distress is insufficient."

112 Here, the trial judge found Mr. Mercuri suffered "emotional upset" and summarized the basis for that conclusion.The charges had hung over his head for six years. He testified he was drawn away from his business pursuits and had tosell his vehicle. He felt humiliated and felt that no one would trust him again. He remarked, "it takes a toll on you". Hewas concerned about his aging father's health and worried about his family, his business, his employees and their families.







He felt his parents suffered the brunt of it, but his children were also affected at school. He felt that every question froma customer about whether they would have a problem with a part or whether a cop would seize it was like a "punch inthe face". Even the acquittal did not produce vindication from the cloud he lived under, in a small city, until the chargeswere dismissed, as doubt in the community still lingers.

113 As frustrated and upset as Mr. Mercuri may have been as a result of the charges against him, his unsupportedtestimony of emotional upset was insufficient to ground the substantial award of non-pecuniary damages the trial judgemade.

114 In making the award the trial judge relied on the Supreme Court's decision in Bella v. Young, 2006 SCC 3, [2006]1 S.C.R. 108 (S.C.C.), and on Lahaie v. Canada (Attorney General), 2008 CanLII 68124, [2008] O.J. No. 5276 (Ont.S.C.J.), a decision of the Superior Court. In Young, the Supreme Court upheld a substantial award of non-pecuniarydamages. However, there was expert evidence of actual psychological damage and suffering in that case: See the Courtof Appeal decision, Bella v. Young, 2004 NLCA 60, 241 Nfld. & P.E.I.R. 35 (N.L. C.A.), at paras. 129-130. Lahaie wasnot a negligence case but a claim for Charter damages. Furthermore, Lahaie was reversed by this court on the merits anddid not address the award of damages: see 2010 ONCA 516, 101 O.R. (3d) 241 (Ont. C.A.).

115 In awarding substantial loss of income damages, the trial judge seems to have relied heavily upon what sheviewed as the police's breach of the standard of care in communicating with the media. The tenor of the trial judge'sreasoning seems to be that police were liable for damages due to all press coverage after they had issued a press releaseor communicated with the media about charges that were laid. She said: "It does not now lie in the mouth of the policeto blame the press for damage to Central's business when the police provided the story." She even took into account theheadlines that accompanied the announcement of Mr. Mercuri's acquittal, noting they had a sting implying that Mr.Mercuri was operating a "chop shop" and was guilty even though the charges had not been proven.

116 Without expert evidence of what normal police practices in communicating with the media are or should be,the trial judge was not in a position to evaluate whether the action of the police chief in calling a press conference fellbelow the standard of care in this case. As in Webb v. Waterloo Regional Police Services Board (2002), 161 O.A.C. 86(Ont. C.A.), 2002 CanLII 41983, standard police media policies and practices and the public's right to know have tobe considered.

117 The newspaper articles about Mercuri's charges were entered as exhibits in this case to show that they werepublished, not for the truth of their contents. They were used by the accounting experts in their assessment as to whetherthe articles were related to the business losses. Putting aside that the trial judge appeared to rely upon them as substantiveevidence of the police conduct, both experts acknowledged that, although the timing of the first articles coincided with thetiming of loss of business profits subsequent to charges, there was no similar correlation with the later newspaper articles.

F. CONCLUSION

118 I would allow the appeal and set aside the trial judge's judgment, save for the award of $70,000 for the loss ofproperty improperly stored by the police. That award should be in favour of Central alone as it was the owner of theproperty.

119 The parties are encouraged to reach agreement on costs of the appeal and trial. If they are unable to do so theymay make written submissions, not exceeding seven pages submitted to the Senior Legal Officer of the Court.

Epstein J.A.:

I agree.

Pepall J.A.:

I agree.











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