Lessons from Lau v. RBC: Ensuring Workplace Investigations Result in Reliable Findings

Ashley Lattal

By Ashley Lattal

A recent B.C. case, Lau v. Royal Bank of Canada, 2015 BCSC 1639, confirms that courts will carefully scrutinize the sufficiency of employers’ investigation, particularly where it is relied upon to terminate an employee for cause.  In Lau, the court found significant flaws in an investigation and rejected the defendant’s cause argument.  Of particular interest, the court awarded plaintiff $30,000 in aggravated damages for the manner of dismissal without medical evidence of mental distress. 

Lau was an Account Manager with outstanding performance reviews over the course of his five-year employment.  In January 2012, a client complained about Lau’s advice that she transfer maturing GIC funds into mutual funds, a move she later regretted.  Following receipt of the complaint, RBC confirmed that an investment retirement planner (Tse) was noted to be at the meeting (as required) but when asked, the client denied this. 

RBC’s Corporate Investigation Services (CIS) commenced an investigation into this issue, as well as a separately identified issue of improper fund tracking by Lau and others.  The investigation concluded that Lau lied about Tse being present and falsified bank records.  As a result, he was dismissed for cause.

The court was critical of weaknesses in the process and evidence relied upon in the investigation (as well as other defendant conduct). Below are some takeaways from Lau for those conducting or advising on investigations to help ensure well-founded conclusions are reached that can be relied upon in litigation.

1.  Test the Complaint and Be Vigilant about Confirmation Bias

The court was critical of CIS’ failure to question the client’s statement that Tse was not present at the interview, notwithstanding contemporaneous evidence suggesting that he was.  CIS relied upon a translated discussion with the client set out in an email but never obtained a direct statement from her or interviewed her.

In the court’s view, RBC believed from the outset that the client was telling the truth and Lau was not.  The investigators might have been impacted by confirmation bias, the unconscious tendency to seek evidence that confirms an initial hypothesis.  Investigators are highly susceptible to such bias and must avoid unconsciously “building a case” against a party.

2.  Where possible, investigators should directly review key evidence themselves.

The Court criticized the investigation for having relied upon, “hearsay upon hearsay”.  In other words, Investigator Crowther’s final report to RBC relied upon Investigator Kwai’s initial April 25th report to him, which in turn relied upon review of video footage of Lau’s office by another employee.  That employee claimed that her review indicated only Lau and the client entered Lau’s office and that no one left before the client. The investigators never reviewed the video footage, though they claimed to be “confident” in what it showed. 

3.  Provide respondent meaningful opportunity to respond to conflicting evidence. 

The Court was critical of the failure to provide Lau an opportunity to respond meaningfully to evidence that contradicted his own.  He was not advised that Tse had allegedly admitted during his interview that he was not in Lau’s office.  Instead, the investigators only asked Lau if he wanted to change any of his evidence, which he declined to do.  Further, he was not advised of the videotape evidence until his dismissal meeting and was not permitted to respond to it.

4.   Retain key evidence.

Several pieces of evidence on which the investigators relied were not retained following the investigation, including the video footage and interview recordings.  The court stated that the failure to muster or preserve cogent evidence, “may have a reductive effect on the positive evidence adduced” since it does not allow for a, “qualitative contextual analysis of the misconduct”.

5.  Document everything.

Crowther’s interview notes were partially illegible and unclear, and he was not called as a witness.  Kwai, who was called as a witness but took no interview notes, had little independent recollection of the interviews outside of Crowther’s notes.

Further, during the review of the video footage no notes were taken detailing what was reviewed and observed, or what the employee was asked to look for.  The court found this troubling, in part, due to the frailties of eye witness evidence, particularly given how busy the branch was.

Conclusion

While numerous flaws in this investigation rendered the findings unreliable, any one of them may bring an investigation’s integrity into question.  Lau makes it clear that where employers investigate misconduct, particularly serious allegations, they must be careful to avoid reaching conclusions before carefully testing and analyzing the evidence. Otherwise, they risk making unreliable findings, increasing their liability, and/or losing what may otherwise be a legitimate cause argument.