When the Supreme Court of Canada released a unanimous decision this summer in a dispute between a Canadian data provider and the Bank of New York Mellon, lawyers across the country were keen to see the high court’s new framework for establishing spoliation – the intentional destruction, alteration, mutilation, or concealment of evidence.
A key reason for this interest was that the SCC had not addressed the issue of spoliation in a long time. By the time the high court issued its ruling in SS&C Technologies Canada Corp. v. Bank of New York Mellon Corp. in July, its last ruling on the spoliation doctrine was 130 years old. That 19th-century case, St. Louis v. The Queen, involved a man who had burned records so they would not be available as evidence at trial.
Needless to say, evidence can look very different today. Over the last few decades, businesses across Canada have overwhelmingly shifted from paper to electronic records – a development that only accelerated during the COVID-19 pandemic, when many businesses shut down in-person operations and began operating virtually. Electronic storage options, from USB flash drives to cloud storage, have evolved and continue to change. Destroying evidence looks different, too; rather than, say, burning physical records, individuals can now potentially eliminate or tamper with evidence with the click of a button.
“I think this issue of spoliation is more relevant today than it was in the past because of the ease with which documents are generated and potentially destroyed,” says Ren Bucholz, a partner at Paliare Roland Rosenberg Rothstein LLP, who was part of the team that represented SS&C in the high court case.
Despite these major shifts over the past 130 years, however, the SCC’s ruling says little about how the doctrine of spoliation specifically applies to modern evidence. Michael Watson, a partner at Gowling WLG who is not affiliated with either party in the case, argues that the value of the high court’s ruling lies instead in how it affirms the way provincial courts have approached spoliation for years, and how it brings these approaches together under a single framework.
“Different courts of appeal have used different language in expressing what the principles of spoliation are, and now what we have is… one place where all of this is set out,” Watson says. “I consider [SS&C Technologies Canada Corp.] to be important not because it radically or really much at all changes the law, but because it sets it out for all of Canada, and in a way that is easily understood.”
In its ruling, the SCC outlined a four-part test for establishing spoliation. On a balance of probabilities, a court must find that evidence was intentionally destroyed, altered, or concealed; that litigation was underway or expected at the time of the destruction; that the evidence was relevant to the litigation; and that the evidence was destroyed, altered, or hidden to influence the litigation.
If a court determines that spoliation has occurred, there is a rebuttable presumption that the destroyed evidence would have harmed the spoliator’s case. The alleged spoliator can then challenge the finding that they destroyed evidence. If they can’t do so successfully, the court must proceed under the assumption that the destroyed evidence was unfavourable to the spoliator.
Watson notes that over the last few decades, several provincial appellate courts have issued rulings on spoliation that have laid out similar principles. In its 2023 decision in Trillium Power Wind Corporation v. Ontario, for example, the Ontario Court of Appeal ruled that there was an “ample evidentiary basis” to support allegations that the Ontario government had deliberately destroyed emails and other documents relevant to a lawsuit.
In that ruling, the OCA cited other appellate decisions from Ontario, Saskatchewan, and Alberta that addressed spoliation. These decisions explain that there is a rebuttable presumption that destroyed evidence “would have been unfavourable to the party who destroyed it”; that parties have an obligation to preserve and produce relevant documents in civil proceedings; and that spoliation occurs when a party intentionally destroys evidence “in circumstances where a reasonable inference can be drawn that the evidence was destroyed to affect the litigation.”
These principles do not specifically address modern forms of evidence, such as electronic records. Still, the SCC’s amalgamation of these principles in its SS&C Technologies Canada Corp. framework provides a useful guide for companies that are involved in – or expect to be involved in – litigation today.
Bucholz notes that the SCC’s ruling affirmed that to establish spoliation, it must be proven that a party intentionally destroyed evidence. The big takeaway for businesses expecting to file a lawsuit is to send out a litigation hold letter – i.e., a notice instructing the defendant to preserve all potentially relevant documents – as soon as possible. If it later turns out that the defendant has not preserved some evidence, having a litigation hold letter on the record makes it easier to prove that the failure to preserve the evidence was intentional, Bucholz says.
The lesson for defendants, on the other hand, is to take litigation hold letters and their production obligations seriously.
“You should ensure that notice of the claim or notice of the litigation hold letter are sent to your counsel and also to the relevant custodians within your organization, and you should ensure that you’ve done everything in your power to preserve the documents, even if you disagree with the basis for the request to preserve them,” Bucholz says.
The litigator adds that if companies take appropriate steps to preserve relevant documents, those steps could help them defend against claims that they intentionally destroyed evidence. If “there’s a flood and [the documents] are lost, or somebody misses a repository of documents that should have been preserved, and then it gets deleted, but not intentionally, that can be a defence to a claim of spoliation or an allegation of spoliation,” Bucholz says.
Companies should also review their data storage and retention policies. Bucholz cautions that companies could inadvertently destroy evidence if their data is regularly overwritten due to space constraints, automated procedures, or regulatory requirements.
Watson agrees that companies should review these policies, adding that they need to include provisions addressing litigation and potential litigation, particularly requirements that any individual working at a company report to senior management any indication that litigation may be coming. Assigning a specific person to oversee compliance with the obligation to preserve relevant evidence could also be helpful, he says.
“Most people – and this includes most businesses – are surprised, maybe even shocked, when they are told by lawyers in the context of a lawsuit that they have to produce to the opposite party… documents that may be harmful or even fatal to their case,” Watson says. “How can that be fair? How can we be required to produce things that are against our interests?
“Well, that is the law,” Watson says. The SCC’s ruling, he says, confirms this will continue to be the case.