Tuesday, November 20, 2007

Ontario Appeal: "Headhunter" Liable to Employer for Failure To Check Candidate's References

Via Mondaq, we note the Court of Appeal for Ontario's decision earlier this year, upholding a trial court's award of damages against a recruiting agency that failed to conduct a reference-check of a candidate it placed for employment. The employee ultimately defrauded the employer of "more than $263,000.00."

The employer sued the recruiter and was awarded $130,975.90 at trial. The Court of Appeal affirmed the trial judge's decision.

From the Appellate court's reasons in The Treaty Group Inc. v. Drake:

The basis of the law suit, which alleged both breach of contract and tort, was that Drake failed to conduct reference checks on Simpson and did not check her background.

... Drake was not being sued for fraud but for different torts, negligent misrepresentation contained in its fee schedule about the calibre of its service, negligence in failing to conduct reference checks, and for breach of contract.

Although the trial judge found Drake liable for Leather Treaty’s loss, he held that Leather Treaty contributed to its own losses in that its failure to supervise Simpson facilitated the fraud. The trial judge reduced the damages by 50 per cent. While contributory negligence does not ordinarily reduce damages for breach of contract, the trial judge was of the opinion that the result should be the same whether Leather Treaty recovered in contract or tort. Consequently, he also apportioned the damages for breach of contract.

...The trial judge gave very comprehensive reasons which are reported at 2005 CanLII 45406 (ON S.C.), (2005), 36 C.C.L.T. (3d) 265, 15 B.L.R. (4th) 83. He dealt with all of the issues raised on this appeal and the related jurisprudence in a very thorough manner. Inasmuch as I agree with his decision and the reasons he gave, I propose to deal with the issues raised on this appeal in a summary fashion.

- Garry J. Wise, Toronto

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