If you do suspect misconduct or misuse of confidential information, but there's no smoking gun, you might still be able to take the necessary steps to protect your business and other employees.
You suspect youremployee has engaged in misconduct or has breached a contractual obligation, but there's no direct proof. You're worried, but you don't think you can take action, because there's no smoking gun. What should you do?
In this, as in so many areas of life, football has some valuable lessons.
On 11 January 2016 the Court of Arbitration for Sport (CAS) handed down its arbitral award which banned 34 players from the Essendon Football Club from playing in the AFL for two years, closing out one of the longest-running scandals in Australian sporting history. It also took an approach to the probative value of circumstantial evidence which is very similar to that under Australian law, especially in the context of employment law.
Building the case against the Essendon 34 without a smoking syringe
CAS had to determine whether it was "comfortably satisfied" that each of the players used Thymosin B4 (TB-4) in the 2012 season. The test of "comfortable satisfaction" is said to be higher that the test of balance of probabilities (which applies in civil matters) but lower than the criminal standard of beyond reasonable doubt.
Presented with a raft of circumstantial evidence, there were two competing ways CAS could consider it:
- The World Anti-Doping Agency argued that CAS could be comfortably satisfied the players had engaged in doping based on the intertwining of various strands of circumstantial evidence. These, when taken together, would form a cable of sufficient strength to uphold a finding of comfortable satisfaction (the Strands in a Cable approach).
- The Essendon 34, on the other hand, said that WADA needed to prove each link in a chain ‒ from Essendon's sports scientist, Stephen Dank, obtaining the TB-4 to the TB-4 being actually injected into each player. If any link in the chain could not be established by WADA then the whole chain was broken and CAS could not be comfortably satisfied that the doping violation had occurred (the Links in a Chain approach).
The Links in a Chain approach was adopted by the AFL Anti-doping Tribunal in March 2015 when it found that some links in the chain could not be established and therefore ASADA's charges at the initial level could not be sustained.
CAS, however, determined that in anti-doping matters the Strands in a Cable approach is better because it takes into account the cumulative effect of circumstantial evidence.
No smoking gun? No worries
In Australian law circumstantial evidence can be used to prove allegations even if there is no single decisive piece of evidence ("the smoking gun") that proves an event occurred (for example evidence of an eyewitness). While a number of sporting commentators have questioned the Strands in a Cable approach to circumstantial evidence taken by CAS, there is strong support for that approach under Australian law. Indeed, it was expressly endorsed by the Full Federal Court in FWBII v CFMEU  FCAFC 8.
Courts and tribunals must consider all of the evidenceput before them. Where that evidence is circumstantial, they should consider whether each of the strands of evidence, when taken cumulatively, supports the finding that the allegations are proven to whatever the requisite standard of proof is in that matter. That standard may be the "balance of probabilities" (as in civil cases), "beyond reasonable doubt" (as in criminal cases) or some other standard such as that of "comfortable satisfaction" applied in anti-doping cases.
The higher the standard of proof, the stronger or more numerous the strands may need to be ‒ but Australian law recognises that strands of circumstantial evidence can be used to satisfy even the highest standards of proof in criminal matters.
How does the Strands in the Cable approach play out in employee misconduct?
Take, for example, an employer who suspects that an employee has engaged in theft of goods from the employer. The employer may not have an eyewitness to the theft but there may be a number of strands of circumstantial evidence such as:
- swipe card records that show that the employee was the only employee present at the depot when each set of goods was taken;
- evidence from a supplier that they saw the employee and his friend selling goods from a stall at a local market that were the same type as the employer's goods;
- an email message sent from the friend of the employee inadvertently to the employee's work email rather than his personal email asking if the employee had "got the stuff yet?" ; and
- a comment made by the employee to other employees in the lunch room in the context of a discussion about people taking stationary items home that "everybody takes stuff from work – it is like a bonus".
While each strand of evidence is not strong enough to make a finding that the employee engaged in theft (and therefore serious misconduct) and might, of themselves, be capable of innocent explanation, the cumulative effect of the strands when woven together may be strong enough for the employer (after proper investigation including giving the employee an opportunity to respond) to make a finding of serious misconduct.
How does the Strands in the Cable approach play out when an employee takes confidential information?
An employer may be concerned that an ex-employee has taken its confidential information and is using it to benefit a competitor. Sometimes these concerns may be prompted by information received from a client or a third party, but there will be no smoking gun. There may be however a range of circumstantial evidence – for example, the competitor knowing the exact price charged by the employer, evidence that the employee sent the information to her home email address, evidence from a customer that the ex-employee called them, on behalf of the competitor, on a private mobile number that is not publicly available, etc.
The strands of circumstantial evidence may be sufficient for the employer to form a reasonable belief that the ex-employee has taken the confidential information and is misusing it. This reasonable belief may be sufficient to commence proceedings against the ex-employee and convince a court that there is an arguable case and that the balance of convenience favours issuing an injunction.
So, if you suspect wrongdoing by an employee or ex-employee…
The first thing to remember is that an employer does not need to have direct evidence of wrongdoing by an employee in order to make a finding that he or she has engaged in misconduct or has breached a contractual obligation ‒ and that finding can be upheld by a court or a tribunal.
That means that if you do have suspicions, but your investigations do not lead to a smoking gun, you might still be able to take the necessary steps to protect your business and other employees.
On the other hand, you cannot proceed without sufficient evidence ‒ and assessing whether the strands form a strong enough cable can be a challenge.
Lawyers can assist you in conducting your inquiries/investigation and determining the strength of circumstantial evidence. Often clients find, with the right advice, more than enough evidence to weave together a cable of evidence strong enough to support the action the client needs to take.
Postscript: more appeals than Ian Healy
The 34 current and former players have lodged an appeal to the Swiss Federal Supreme Court. This appeal is expected to take a number of months to be heard and determined. It is unlikely, however, to have any impact on the approach that Australian courts and tribunals use to consider circumstantial evidence.