Civil Litigation: Spoliation of Evidence
SS&C Technologies Canada Corp. v. Bank of New York Mellon Corp, 2024 ONCA 675, 2026 SCC 29 (41543)
“In 1999, a Canadian company that acquires and processes specialized data used to generate pricing information for financial services companies to value securities entered into two separate data services agreements with a bank and a joint venture — the entity through which the bank provided global custody business services to its Canadian clients. The agreement between the data provider and the bank was volume-based and operated on a per security basis, where the bank would pay the data provider once for the data pertaining to a specific security, but the pricing information could be valuable to any number of customers holding accounts with the bank. The agreement prohibited sharing, redistributing, or selling the data to other parties, including subsidiaries and affiliates.
The agreement between the joint venture and the data provider was terminated in 2011 by the joint venture, who claimed that it no longer required the services provided. In 2016, the data provider discovered that the joint venture had been receiving data from the bank for free after the agreement had been terminated, thus circumventing the licensing scheme. The data provider then 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 data provider terminated its agreement with the bank and commenced litigation for breach of contract.
The trial judge found that the bank breached its agreement with the data provider. He then rejected both theories of damages advanced by the parties and awarded damages based on what he called a “rateable approach”. He found that the bank was able to account for less than half of the data that it received from the data provider and he inferred that the data the bank could not account for had been shared with unauthorized entities. Because he found that 44.6 percent of the data was accounted for, the bank had to pay for the remaining 55.4 percent of the data at what he understood to be the rate provided for in the agreement. This led to a damage award of US$5,696,850. In his assessment of damages, while not making an express finding of spoliation against the bank, the trial judge drew two adverse inferences against it based on its failure to produce and preserve relevant documents in the face of contemplated litigation: the data the bank could not account for was used by unauthorized entities within the bank family other than just the joint venture; and non-joint venture unauthorized users did not make de minimis use of the data.
Both parties appealed the award of damages. 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. The Court of Appeal found that to the extent that the trial judge held that the remedy for spoliation was limited to damages, and that adverse inferences were not available remedies where spoliation is proved, he erred in law. However, the Court of Appeal accepted the trial judge’s rateable approach to calculating damages and did not interfere with the damages awarded for the bank’s breach of the agreement with the data provider.”
The SCC (9:0) allowed the appeal.
Justices Côté and Moreau wrote as follows (at paras. 1-2, 76-78, 80-82, 88-90, 94, 105, 125-127, 134-135, 160-161):
“Spoliation refers to the intentional destruction, alteration, mutilation, or concealment of evidence with a view to subverting the truth-finding process during litigation. It is a creature of abuse of process that comes in various degrees and forms (see Trillium Power Wind Corp. v. Ontario (Ministry of Natural Resources), 2023 ONCA 412, 167 O.R. (3d) 321, at para. 22). The common thread unifying all findings of spoliation is a manifest disrespect for the trial process, the truth-seeking function of the court, and the justice system generally. Parties who commit spoliation should not be rewarded for the evidentiary vacuums they create. Rather, as the authors of their own misfortune, spoliators must carry the presumption that the impugned evidence would be unfavourable to their case.
This Court has not addressed the doctrine of spoliation since its seminal decision in St. Louis v. The Queen (1896), 25 S.C.R. 649. Since St. Louis was decided over a century ago, technology has become ubiquitous and demands on the civil justice system have evolved. Electronic document management is now the primary mechanism for record-keeping. Where once spoliation took the form of physical destruction of documents, in the digital age, spoliation is far more inconspicuous, occurring instantaneously at the click of a button (see G. Christian, “A ‘Century’ Overdue: Revisiting the Doctrine of Spoliation in the Age of Electronic Documents” (2022), 59 Alta. L. Rev. 901, at p. 902). This appeal invites the Court to clarify the doctrine of spoliation, from its principles to its practical function in modern civil litigation.
…
Engaging in spoliation runs contrary to two central tenets of the justice system: “. . . the establishment and maintenance of a fair trial process and the quest for the truth” (BCLI Report, at p. 1). It has been described as “a form of cheating” that “threatens to undermine the integrity of [the] civil trial process” (C. R. Nesson, “Incentives to Spoliate Evidence in Civil Litigation: The Need for Vigorous Judicial Action” (1991), 13 Cardozo L. Rev. 793, at p. 793).
The sanctity of the civil justice system depends on the honesty of parties and witnesses (see Doust v. Schatz, 2002 SKCA 129, 32 R.F.L. (5th) 317, at para. 27). Parties are duty-bound, through statute and common law, to preserve, disclose, and produce documents relevant to litigation. Discovery in the civil process “is central to the conduct of a fair trial and the destruction of relevant documents undermines the prospect of a fair trial” by striking at the heart of the legal process (para. 27; see also Dreco Energy Services Ltd. v. Wenzel, 2006 ABQB 356, 399 A.R. 166, at para. 47). The central pillar of our legal system is built upon the examination of evidence in the pursuit of truth, and it is only effective if all parties respect the process and disclose all relevant evidence (Dreco, at para. 47).
The principles underlying spoliation operate from two perspectives. As between the parties to litigation, the doctrine is concerned with ensuring an even playing field and trial fairness (G. Underwood and J. Penner, Electronic Evidence in Canada (loose-leaf), at § 8:1; BMW Canada Inc. v. Autoport Limited, 2021 ONCA 42, 456 D.L.R. (4th) 443, at para. 48). From the court’s perspective, there is concern for the viability and credibility of the fact-finding process (R. J. Sommers and A. G. Seibert, “Intentional Destruction of Evidence: Why Procedural Remedies Are Insufficient” (1999), 78 Can. Bar Rev. 38, at p. 42). As a form of abuse of process, spoliation amounts to egregious conduct that flies in the face of respect for the courts and the rule of law generally.
…
To successfully prove spoliation, the alleging party must prove 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 said litigation; and (4) it is reasonable to infer that the evidence was destroyed to affect the litigation … While the burden of proof rests on the party alleging spoliation, if relevant evidence is unjustifiably destroyed, altered, mutilated, or concealed in the context of reasonably contemplated or ongoing litigation, there should be little difficulty in concluding that this was done to affect the litigation. This test highlights the notion, implicit in the doctrine of spoliation, that at the time the spoliator destroyed the evidence, they were under an existing duty to preserve it (Christian, at p. 907; see also St. Louis, at p. 670).
The alleged spoliator may challenge any one or more of the above elements, as all four elements of the test are required to make out a finding of spoliation (see Cudmore, at § C:1, § 2.1, citing CMT v. Government of PEI, 2020 PECA 12). If the alleging party successfully establishes the four elements listed above, the court presumes that the destroyed evidence was unfavourable to the spoliator’s case. The burden then shifts to the spoliator to rebut this presumption. The spoliator can do so by showing that the destroyed evidence was not harmful to its case (as was the case in St. Louis). If the spoliator cannot rebut the presumption that the destroyed evidence was harmful to its case, then the presumption becomes mandatory and adverse inferences must be drawn. At this stage, the spoliator may bring evidence to potentially narrow the scope of any adverse inferences drawn against it pursuant to the presumption.
The consequences of the mandatory presumption associated with a finding of spoliation will depend on the facts of the case and the extent of the prejudice to the non-spoliating party. Even where a party successfully proves spoliation, it does not necessarily follow that the party will succeed on its broader claim.
…
Spoliation, as it relates to the civil process, intersects with the rules of court and the court’s inherent power to control its processes, including preventing abuses of process. While the “principal remedy for spoliation is the imposition of a rebuttable presumption of fact that the lost or destroyed evidence would not assist the spoliator” (McDougall, at para. 29), this is usually not the end of the story.
(a) The Practical Operation of the Mandatory Presumption
How the mandatory presumption practically applies depends on the facts of the case and the trial judge’s determination of how best to ensure fairness in the proceedings. After all, “it cannot be admitted that such a presumption should stand instead of all other evidence, and supply the total deficiency of proof” (St. Louis, at p. 685, citing W. D. Evans, A Treatise on the Law of Obligations, or Contracts, vol. II, Appendix (1806), at p. 169). On the contrary, in determining how best to give effect to the presumption that the destroyed evidence would be unfavourable to the spoliator’s case, trial judges should consider the context, scope, and impact of the destroyed evidence (see generally Endean v. Canadian Red Cross Society (1998), 157 D.L.R. (4th) 465 (B.C.C.A.), at para. 32).
In so doing, the trial judge must draw an adverse inference against the spoliating party that is capable of filling the gap left by spoliation, though this does not foreclose the possibility that other remedies are available. In most cases, such an adverse inference works to correct the imbalance created by spoliation, to undo some of the prejudice caused, to ensure the proper functioning of the court’s fact-finding role, and to remedy the abuse of the court’s process that spoliation represents (see BMW Canada, at para. 48; Trillium Power Wind, at para. 22; Casbohm v. Winacott Spring Western Star Trucks, 2021 SKCA 21, [2021] 4 W.W.R. 506 at para. 36; Doust, at para. 29).
(b) Remedies Outside of the Evidentiary Presumption
…
In crafting additional remedies, the court may find the following non-exhaustive list of considerations relevant: the level of culpability of the spoliator, 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 (see generally The Sedona Conference, “The Sedona Canada Principles Addressing Electronic Discovery, Third Edition” (2022), 23 Sedona Conf. J. 161, at p. 313).
(c) The Remedy for a Finding of Spoliation Is Not Necessarily the Highest Possible Inference
…
Like with the doctrine of abuse of process, remedies for spoliation are inherently discretionary. In Saskatchewan (Environment) v. Métis Nation – Saskatchewan, 2025 SCC 4, Rowe J., writing for a unanimous Court, stated that “[w]here an abuse of process has been established, a subsequent question arises: What remedy is to be granted? That decision is discretionary” (para. 32 (emphasis added) … Fixing a remedy for abuse of process is discretionary in order to allow judges to do justice in the array of circumstances in which abuses may arise. Spoliation requires similar flexibility.
…
The Court of Appeal found that BNY engaged in spoliation. Even so, for clarity, we briefly summarize and apply the test for spoliation in the circumstances. Establishing 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 said litigation; and (4) it is reasonable to infer that the evidence was destroyed to affect the litigation.
Each element is met in the instant case. The data usage evidence was clearly relevant, as three levels of court have now indicated. It was clearly destroyed or not produced, and this destruction or non-production followed the preservation notice sent by SS&C’s counsel. BNY was warned to preserve the data because of the pending litigation, and BNY therefore had full knowledge that litigation was going to be commenced. BNY refused to store the data on the basis that it rejected the allegations SS&C had made against it. In this context, and in the absence of argument to the contrary from BNY, the only possible inference is that the evidence was destroyed or not produced in order to affect this litigation. Spoliation was therefore clear. The fairness and truth-seeking functions of the trial were undermined by the destruction or non-production of records that would have shown the extent to which BNY had shared and sold the data.
(2) The Trial Judge Failed to Address the Scope and Impact of the Spoliation and Drew Inferences That Cannot Remedy the Spoliation
Because spoliation was established, it was mandatory that the trial judge draw an inference, or inferences, that is adverse to BNY and that meaningfully filled the evidentiary gap left by the spoliation. Considered in the concrete reality of each case, the adverse inference drawn should have flowed from the context and scope of the spoliation and from the impact of the destroyed evidence.
…
In this evidentiary and factual context, although the trial judge acknowledged that BNY had to bear the burden of an adverse inference (ruling on damages, at para. 187), the inferences he drew were not adequate to the task of assessing damages. They do not level the playing field, nor do they rectify the harm to the litigation process and the evidentiary gap that BNY’s spoliation created. By failing to turn his mind to the scope and impact of the destroyed evidence and by failing to draw inferences that were capable of filling the evidentiary gap in the concrete reality of the case, the trial judge erred.
C. The Rateable Approach Is Erroneous
The trial judge also erred with respect to the methodology that he used to calculate damages. While they may at times involve more art than science, and even come close to approximations, damage awards must always be tethered to the evidence before the court. Trial judges must always do their best to ensure that the damages they award accord with the evidence before them and the breach or loss that occurred. In this case, the rateable approach failed to take into account the nature and scale of the breaches found, focused on an unsupported use of centralized pricing, relied on an arbitrary rate that is not connected to the evidence, and was premised on the flawed assumption that only the unaccounted-for data was shared and that it was shared only once. The trial judge did reflect upon some of the shortcomings of his approach, but this does not rectify the palpable and overriding errors inherent in the rateable approach.
…
This case has been beset by both the absence of evidence and spoliation. Nonetheless, the trial judge was required to order BNY to properly and adequately compensate SS&C for the data that it improperly shared for its own profit. The trial judge failed to do so by drawing inferences that were weak and incomplete and by awarding damages that were unconnected to the facts of the case. These errors must be rectified. To do this, we would allow the appeal and remit the matter back to the Superior Court on only the issue of the quantification of SS&C’s damages. This matter should proceed on the basis of the existing record, but it will be open to the trial judge to accept evidence, expert or otherwise, with respect to pricing, based on the adverse inferences that must be drawn. The trial judge will be required to properly draw mandatory adverse inferences that remedy the effects of BNY’s spoliation. These adverse inferences will have to account for the errors identified and the context, scope, and impact of the destroyed evidence will have to be taken into consideration. In particular, the inferences should result in a concrete finding of fact relating to the unauthorized data usage (including both the number of entities that accessed the data and the number of times each entity accessed the data) and a concrete finding of fact about the value of that data. This usage and pricing information should then be used to arrive at the damages figure.”