November 3, 2026
Every party to a lawsuit has an obligation to disclose all relevant documents to the opposing parties. This principle of discovery prevents “trial by ambush’ and helps ensure fair trials.
Intentionally destroying or concealing relevant documents is called by the legal term “spoliation”. We wrote an article previously entitled “What is Spoliation?” which explains the concept further.
Spoliation may spoil your lawsuit.
THE ISSUE
The earlier article featured an Ontario Court of Appeal decision. The losing party in that case applied for leave to appeal to the Supreme Court of Canada but were not given permission to have their case heard. So that was the end of the matter.
Except now, another Ontario Court of Appeal decision dealing with spoliation HAS been reviewed by the Supreme Court of Canada, which updates our understanding of the law regarding spoliation.
THE BOTTOM LINE
As we said above, spoliation may spoil your case.
Spoliation triggers a mandatory presumption that the destroyed evidence was unfavourable to your case.
What difference this makes to the result will be up to the trial judge in the overall context of your case. The more important the evidence was, the worse the impact. But it is never a good thing.
THE CASE
SS&C Technologies Canada Corp. v. Bank of New York Mellon Corp is a high-stakes dispute between a major bank and an IT provider which supplied sensitive information use in pricing investments by customers. Their contract provided that the information could not be provided to other users. It was proven that the bank provided the information to an affiliate, in breach of the agreement.
The issue was how to calculate the damages. Sounds boring and technical, but the damages were claimed to be $890 million dollars.
When the provider discovered the breach, they explicitly requested that the bank preserve information with respect to how the data had been redistributed and to which affiliates, and how much the bank had earned from the redistribution. The bank refused to comply.
The trial judge did not label this as spoliation, but he did make the inference that the evidence would have been harmful to the bank’s case. He ultimately awarded damages of over $5 million.
The Court of Appeal accepted the trial judge’s adverse inferences and made an express finding of spoliation against the bank, noting that its conduct smacked of contempt for the justice system. They upheld the damages award.
The Supreme Court of Canada agreed that this was spoliation. They went on to say that when spoliation has been established, there is no discretion. Courts must draw an inference that is adverse to the spoliator to fill the gap left in the evidence. What that inference is will depend on the circumstances of the case. The goal is to “level the playing field”.
They decided the trial judge had not done so and referred it back for a new trial on damages. In doing so they recognized the damage rewards will not always be perfect, and the trial judges must just do the best that they can with the evidence they have in the inference that they draw from that evidence.
Spoliation, they clarify, is the intentional destruction, alteration, mutilation or concealment of evidence with a view to subverting the truth-finding process during litigation.
Since the quest for truth is a central goal of the legal system, a fair trial process is essential. Fair fairness depends upon the honesty of parties and witnesses and parties are bound to preserve, disclose, and produce documents relevant to litigation.
The Court confirms that spoliation is a rule of evidence and a form of abuse of process it shows a lack of respect for the courts and the rule of law.
They confirmed that proving spoliation requires proof of the following elements on a balance of probabilities:
(1) the evidence was intentionally destroyed, altered, mutilated, or concealed;
(2) at the time of destruction, litigation was ongoing or reasonably contemplated;
(3) the evidence was relevant to the litigation; and
(4) it is reasonable to infer that the evidence was destroyed to affect the litigation.
The party alleged to have destroyed the evidence may challenge any of these elements and failure to prove any one of them prevents a finding of spoliation.
Although the presumption is mandatory, the party who destroyed the evidence may rebut the presumption. If they cannot do so it is mandatory that adverse inferences must be drawn.
The effect of these inferences will depend upon each individual case. It will depend upon how much prejudice the other party suffered as a result of the destruction of the evidence.
Remedies might include:
- procedural remedies,
- evidentiary presumptions,
- contempt proceedings,
- costs orders,
- preservation orders,
- striking a claim or defence,
- an adverse credibility finding against a party’s testimony,
- substantial indemnity costs or punitive damages,
- excluding expert reports, and
- an injunction to prevent further bad behaviour.
That is a very long list. None of these are good things to have happen to you.
Factors which the judge might consider in choosing the remedy include:
- The spoliator’s level of culpability;
- The intention or reason behind the destruction of the evidence;
- The prejudice to the non-spoliating party; and
- The impact of the destruction of evidence on the court’s ability to fairly dispose of the issues.
The Supreme Court did not decide in this case whether in Canada, like in the United States, spoliation in itself is a cause of action which might directly lead to damages. But they did leave that question open.
Even if spoliation is not an independent cause of action, it may spoil your lawsuit.
TAKEAWAYS
This decision reinforces the importance of the takeaways in our previous article, which were:
- Every party to a lawsuit has a duty to disclose all relevant documents.
- As a result, hiding or destroying documents is a bad idea.
- Penalties for spoliation will arise if you intentionally destroy evidence in the face of a lawsuit.
- This applies even if you have not yet been sued.
- Contemplating that you MIGHT be sued is enough to be penalized.
- Though damages have not yet been awarded for spoliation itself, the penalties can be devastating.
- Having a suitable retention and destruction policy is important.
- Following that policy consistently is more crucial.
HOW WEILERS LLP CAN HELP YOU
Preservation and production of relevant documents is a tricky subject. The real takeaway from this article, we hope, is to encourage you to obtain legal advice early when faced by a potential lawsuit.
Lawyers, such as the litigation team at Weilers LLP, have training and experience in the rules of evidence. We can advise you even before you face a claim about preservation of document policies. We can provide effective representation throughout the discovery process.
We are capable advocates on motions or trials on evidentiary issues. If you think we might be the right lawyers for you, give us a call.
Our corporate commercial lawyers are also available to assist and advise on record retention policies to reduce the risk of a claim of spoliation.