2007 BCSC 1619 Canada Safeway Limited v. Brown

Before: The Honourable Mr. Justice Cohen

Reasons for Judgment

Counsel for the plaintiff	P.A. Mazzone
Counsel for the defendant	G.N. Kent
Date and Place of Trial:	October 17, 2007
	Vancouver, B.C.

I. Background

[1] The plaintiff, Canada Safeway Limited (“Safeway”) is the operator of a chain of grocery stores in Western Canada. The defendant, Sharon Ann Brown (“Brown”) was formerly employed by Safeway. Her employment was suspended on September 8, 2005, and subsequently terminated.

[2] At the time of her suspension, Brown worked at Safeway’s store in Cranbrook, British Columbia, as a cashier, customer service representative and in the cash office. In these positions, Brown had access to cash and accounting records.

[3] In or about July 2005, Safeway began investigating unexplained cash and inventory shortages. It was determined that there were a number of refunds processed without supporting records. Safeway began to closely track both merchandise and bottle refunds and arrangements were made to install security cameras.

[4] On September 6, 2005, Safeway’s security officer, Delroy McNees (“McNees”) attended at the store and removed the digital image recorders. He determined that returns and refunds were not being properly documented and that this was a method by which monies were being stolen. Three days of surveillance were picked at random to review: August 15, 18 and 20, 2005.

[5] From his investigation, McNees determined that Brown was stealing money from the store. He interviewed Brown on September 8, 2005, at the store. Brown was suspended following the interview. She was later charged with theft over $5,000. She pled guilty to theft under $5,000 and was sentenced on December 19, 2006.

II. Safeway’s Claim

[6] This is an application by Safeway, pursuant to Rule 18A, for an order that Brown pay Safeway such damages as the court may determine, and interest pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79.

III. Cash Stolen from Safeway

[7] Due to the manner of the theft, Safeway is unable to determine precisely how much money Brown stole. However, as Safeway’s counsel pointed out, this application is for an assessment of damages, not a precise calculation.

[8] Based on its surveillance video, interview of Brown, data analysis and certain admissions of Brown on discovery, Safeway seeks damages of $6,000 (20 shifts x $100 per day x three months) as its loss of cash due to Brown’s theft.

[9] When asked at her discovery when she began taking money from Safeway Brown said, “As far as I can recall, the June/July, more so in August of 2005.” She was asked if there was a typical amount that she took and she said, “Well, I – I can’t say for sure but I guess it’s a hundred dollars a day, but I did not take that hundred dollars a day…some days I did do that…” She was asked if she agreed that it was often as much as a hundred dollars a day that she was taking and she said, “I’d like to disagree with that.” She also said that she really began in August and that she started slowly before that, in say the June/July period, and then became serious in August. She was asked whether once she began taking money if she did it every shift and she answered, “Yes, at the end, yes, I did.”

[10] At her interview with McNees, she said that some days she took a hundred dollars a shift. McNees told her that when he reviewed the surveillance video and reviewed the data, he concluded that she was taking money every shift and she replied, “I will admit it.” However, she disagreed with McNees that she was taking one hundred dollars a day. She could not recall exactly when she started taking money but suggested probably a year before she was caught.

[11] In her affidavit sworn July 23, 2007, Brown admitted that she did steal money from Safeway but said, “However, I am sure that I did not steal more than $1,500 from them.” She has paid restitution in this amount as part of the terms of her probation.

[12] Brown’s position is that nothing in her interview with McNees, or in her discovery testimony indicates that she stole more than $1,500. She argues that Safeway’s assertions that she may have stolen more than $1,500 are based on nothing more than suspicion, conjecture and speculation. I disagree.

[13] In my opinion, Brown’s evidence that she is certain that she did not steal more than $1,500 is not credible. She tendered no evidence to corroborate her certain position. Moreover, she did not examine a representative of Safeway to challenge Safeway’s analysis of how much cash she stole, and her evidence and interview answers reveal anything but a certainty on her part regarding the time over which she stole money from Safeway or the amount of cash she stole. For example, she said:

Q Now, in the interview, Mr. McNees explained to you, to some extent, that his investigation showed that you were taking a hundred dollars a day, at least for the time that he had investigated the matter, correct, do you remember that?

A Yeah. I don’t remember the dates but he – I do know that he had this magic number.

Q And do you have any reason to disagree with the notion that during the time that Mr. McNees was investigating this in August of 2005, umm, that the numbers show about a hundred dollars a day being taken? Do you agree that that could be a correct number in terms of what you were taking at that time?

A Umm, I know I wasn’t so what the numbers are –

Q So how much would you say that, on average, during the time that you did this, and on your evidence, was actually a fairly short period of time –

A Um-hmm.

Q - how much were you taking?

A Some days 20, some days 80.

Q Was that every shift?

A I wouldn’t take every shift, no. I would do refunds every shift, yes. I kept raising it to get that magic – not a magic, I guess that’s a word – but to get that figure because I knew there would be a red flag.

[14] On the other hand, in his affidavit sworn June 1, 2007, McNees deposed, as follows:

In or about July 2005, I began investigating unexplained cash and inventory shortages at the store. By reviewing various store reports generated by the store’s data bases, it was determined that there were a number of refunds processed through the store without supporting documentation. The store therefore began to closely track both merchandise and bottle refunds and arrangements were made to install security cameras (digital image recorders) which were in due course installed in the store’s cash office on August 15, 2005.

On September 6, 2005, I attended at the store and removed the digital image recorders. Upon reviewing the images recorded and comparing them with store paperwork I determined, with the assistance of Safeway employees Rod McCallum and Stacey Kucheran, that store returns and refunds were not being properly documented and that this was apparently a method by which monies were being stolen from the store.

Three days of surveillance were picked at random for review. These days were August 15, 18 and 20, 2005.

On August 15, 2005, nine fraudulent refunds were identified with the assistance of the recorded images for a total loss of $104.61. This included tobacco, bottle and department refunds in various amounts.

On August 18, 2005, twelve fraudulent refunds were identified for a total of $96.43.

On August 20, 2005, eleven fraudulent refunds were identified for a total of $100.20.

It was observed on the recorded images that the defendant would complete the refund from a customer, discard the paperwork and record the amount of the refund on a piece of paper she kept in her smock. On the August 20, 2005 surveillance the defendant was observed doing a cash withdrawal from the customer service desk and as she walked into the back cash office she pocketed the cash.

I was able to conclude the defendant was stealing money by watching her movements on the recorded images and marking the time of various transactions she was undertaking. I then compared the observed transaction with the paper record to see if the transaction was properly recorded. If it was not, I concluded the defendant had “pocketed” the cash corresponding to the transaction.

Attached hereto and marked collectively as exhibit “A” are copies of refund summaries from Store No. 2271 for the years 2003 and 2004 and for the year 2005 up to September 1, 2005. The defendant’s Employee No. was 5461871. The records show the defendant was consistently high in terms of processing refunds for the store.

Attached hereto and marked collectively as exhibit “B” is a copy of a record of processed refunds from various Safeway stores and various clerks for the period June 1 to August 31, 2005. Again the defendant is comparatively much higher than her co-workers with respect to processing refunds. Based upon my investigation and my knowledge of the manner in which the stores operate, I believe the reason the defendant is comparatively higher than her colleagues is the fact that she was improperly processing refunds and pocketing the cash.

[15] Brown asserts that McNees’ opinion, set out in his affidavit, i.e. Brown was “consistently high in terms of processing refunds for the store” is not admissible as expert testimony. Even if admissible, his opinion ought to carry no weight because he did not provide the facts and assumptions on which it is based.

[16] I disagree with Brown’s position. Safeway does not rely on McNees’ evidence as being that of an expert giving an opinion. It is evidence which is factual in nature and content and the supporting documents are attached to his affidavit. Moreover, McNees’ evidence stands unchallenged as Brown chose not to cross-examine him on his affidavit.

[17] I find that Safeway’s manner of assessing its cash loss due to Brown’s theft is based on the best evidence available and is a reasonable and fair approach. Brown admitted that over the three days of surveillance she took cash on every one of her shifts; she conceded at one point in her interview that the period of time she stole cash was three months and at another point probably for a year; she did not agree that she took $100 every shift, but McNees’ evidence based upon his review of Safeway’s surveillance video and store data supports Safeway’s conclusion that Brown stole cash in the thousands of dollars.

[18] Thus, when I consider the whole of the testimony and material before me I am satisfied and find that Safeway has proven, on a balance of probabilities, that it is entitled to an order for damages in the amount of $6,000 for its loss of cash.

IV. Safeway’s Investigation Costs and Expenses

[19] In his affidavit, McNees deposed that Safeway incurred significant expenses directly with respect to the investigation of the theft of cash and prosecution of Brown for the theft. He says that broadly speaking, time was spent on travel time to and from the Cranbrook store from his office in Calgary; meetings with Safeway employees and Crown counsel with respect to the investigation and with police and Crown counsel to outline the criminal case against Brown; setting up its surveillance; and reviewing surveillance and analyzing documentation to identify and prove its loss.

[20] Apart from McNees, there were several employees involved in the investigation including Lisa Van Oosten, a data analyst, Rod McCallum, store manager, and Stacey Kucheran, assistant store manager.

[21] McNees attached documentation to his affidavit setting out the hours expended by Safeway employees, including McNees, to investigate and prosecute the theft with supporting invoices for expenses, as well as copies of invoices for expenses incurred by Safeway with respect to the surveillance. He based the hourly rates for each of the employees upon a reasonable estimate of an effective hourly rate taking into account a combination of the cost of each employee including salary, employee benefits and pension costs. He deposed that the hours spent by all of them is Safeway’s best and reasonable estimate of the amount of time spent on the investigation (no specific time records were kept). In para. 32 he deposed, as follows:

The claim for investigation related expenses is as follows:

(a)	Expenses related to investigation by Delroy McNees	$16,500.00
(b)	Expenses related to Lisa Van Oosten	$ 2,924.65
(c)	Expenses in relation to Rod McCallum	$ 2,871.90
(d)	Expenses in relation to Stacy Kucheran	$ 1,062.45
(e)	Surveillance and transcription costs	$ 4,078.26
	TOTAL	$27,437.26

[22] Brown claims that McNees’ evidence as to the number of hours spent in the investigation and the “effective hourly rate” is inadmissible since it is opinion, hearsay and not based on business records. She says apart from McNees, there is no direct evidence as to how much time employees spent on the investigation, or the actual hourly rate paid to each employee.

[23] Further, Brown submits that the investigation was completed when she admitted to McNees during her interview that she had stolen cash. Brown argues that unlike some of the authorities relied upon by Safeway in support of its claim for the investigation costs, in the instant case there was not a serious contest involving a lengthy trial as to whether a fraud had been committed as she conceded the theft from the outset of the investigation.

[24] Brown argues that there is no authority for the proposition that compensatory damages should extend into the time spent dealing with the police and giving testimony in criminal proceedings, or dealing with counsel throughout the civil proceeding as those are not investigative costs but rather prosecution costs.

[25] Brown also contends that there is no evidence that Safeway has incurred higher salary and benefit costs because of the theft. Regarding its out of pocket costs relating to the time before the McNees interview of Brown, according to Brown they appear to be, to some extent, inflated and unsubstantiated. In particular, Brown challenges Safeway’s claim for costs associated with security consulting, and CCTV equipment rental costs. Brown is only prepared to concede that Safeway is entitled to investigative costs and expenses in the amount of $2,627.93.

[26] Brown contends that having regard to the admissible evidence, Safeway has not proven its recoverable investigative costs and expenses exceed what Brown is entitled to receive from Safeway ($2,844) for what is owing to her in relation to her employment. Thus, she submits that Safeway’s claims ought to be dismissed.

[27] I disagree with Brown’s argument. First, I find McNees’ evidence to be admissible for the same reason I allowed his evidence on Safeway’s cash loss. Secondly, I find that awarding compensation to Safeway for the use of its corporate resources to investigate the theft and assist the Crown and the police in the prosecution of the theft is fair, appropriate and not too remote. It is settled in law that a party is entitled to be reimbursed for the costs and expenses incurred when it is a victim of theft.

[28] According to the text Lewis Klar et al., Remedies in Tort, looseleaf (Toronto: Carswell, 1987) vol. 1 at 4-31, 4-33, under the heading “Compensatory Damages” the author states, “In an action for conversion, the normal measure of damages is the value of the chattel at the date of conversion, together with any consequential damage flowing from the conversion, provided that it is not too remote to be recovered in law…In addition to the value of the chattel, the plaintiff is also entitled to compensation for any special damages which the law does not regard as too remote, such as loss of profits or loss of rental income.”

[29] In Insurance Corp. of British Columbia v. Sanghera, [1991] 4 W.W.R. 714, 55 B.C.L.R. (2d) 125 (C.A.), three “plaintiffs” sued two “defendants” for damages resulting from an alleged motor vehicle accident. I.C.B.C. then added itself as a third party and sued all five for damages for fraud, alleging that the accident never occurred or was intentionally caused. The Court held, inter alia, that I.C.B.C. was entitled to recover the benefits paid and its expenses of processing and investigating the claims. At page 727 Southin J.A. asks, “So, to what damages is an insurer entitled as against his insured when, as here, insureds under separate policies are part of a joint enterprise to file false proofs of loss and receive payments?” She then states that in her opinion the insured is entitled to, “(a) recovery of all sums paid out to those persons; (b) the costs of processing their claims; (c) the costs of investigating their claims.” Her Ladyship states, “In an action brought for the purpose of recovering those sums, the court may award such costs as, in its discretion, it considers appropriate.”

[30] In this case, McNees and the other Safeway employees were taken away from their normal duties to investigate and prosecute Brown’s theft of cash from Safeway. Accordingly, I disagree with the defence contention that a line should be drawn after the McNees interview to limit Safeway’s recoverable costs and expenses associated with its investigation of the theft.

[31] However, I note on the estimated cost for McNees’ involvement that it includes “Preparation of documents and video for civil litigation. 25 hours $1,875.00” and “Travel time, Perry Mazzone civil litigation with Sharon Brown’s attorney. 14 hours $1,050.00”. I do not think that these items relating to the civil litigation ought to be included given Safeway’s claim to recover consequential damages for the expenditure of its corporate resources on the criminal investigation and prosecution of Brown’s conduct. Accordingly I find that Safeway is entitled to damages in the amount of $24,512.26.

V. Conclusion

[32] In the result, Safeway is entitled to a judgment for $6,000 as damages for the cash stolen by Brown, and $24,512.26 as damages for its criminal investigation and prosecution costs, plus interest.

[33] No order is made as to costs, as defence counsel requested that the court not deal with costs until after judgment is rendered.

“B.I. Cohen J.”
The Honourable Mr. Justice B.I. Cohen

Citation:	*Canada Safeway Limited v. Brown,*
	2007 BCSC 1619