The obligation to produce relevant evidence has been a longstanding bulwark of our civil justice system. The extent of the duty to preserve such documents in anticipation of litigation, however, has to some extent been in jurisprudential limbo.
Part of the reason is that it has been over 100 years since the Supreme Court of Canada dealt with the doctrine of spoliation, which governs the remedies available when parties are remiss in their duty to preserve.
It’s an issue that has until now flown under the radar. But the recent focus on electronically stored information has returned it to the fore.
“Spoliation has become a more important concern because of the degree to which e-records are amenable to deletion and the need to track these records,” says Jeffrey Kaufman, a senior partner at Fasken Martineau DuMoulin LLP’s Toronto office.
Fortunately, the Alberta Court of Appeal’s recent decision in McDougall v. Black & Decker Canada Inc. deals with the issue head-on.
“Black & Decker is the first comprehensive look at the law by a Canadian appellate court in more than a century,” says Jeffrey Landmann, an associate with Blake Cassels & Graydon LLP’s Calgary office.
In its reasons, the court enunciated six principles summarizing the law of spoliation in Canada:
• spoliation is the intentional destruction of evidence to affect existing or anticipated litigation;
• the main remedy for spoliation is the imposition of a rebuttable presumption of fact that the lost or destroyed evidence would not assist the spoliator;
• other remedies may be available even where evidence has been unintentionally destroyed, which remedies are based on the court’s rules of procedure and its inherent ability to prevent abuse of process. The remedies may include the exclusion of expert reports and costs sanctions;
• intentional destruction of evidence is not an intentional tort, nor is there a duty to preserve evidence for the purposes of the law of negligence, though these issues remain open;
• whether spoliation has occurred and the remedy for it are generally matters for trial; and
• pretrial relief may be available in rare cases.
But Don Wilson, a partner at Davis LLP’s Edmonton office, who represented Black & Decker, says the decision dilutes the doctrine of spoliation.
“By adding the requirement of deliberate behaviour as a condition for imposing an adverse presumption, the Court of Appeal has greatly circumscribed the doctrine’s ability to take hold,” he says. “Lawyers whose clients are subject to cross-examination on the destruction of evidence will make sure their clients understand that spoliation only applies if the conduct was intentional.”
Landmann says American courts have dealt with spoliation remedies more aggressively than the Court of Appeal did.
“U.S. courts have granted a variety of more serious remedies such as striking claims and have done so both before or during trial,” he says. “In some cases, they’ve gone so far as to rule that spoliation is an actionable tort in itself.”
Dan Michaluk, an associate with Hicks Morley Hamilton Stewart Storie LLP’s Toronto office, agrees that Canadian jurisprudence on preservation and spoliation remains wanting.
“The difficulty with McDougall is that it tells us what the law related to preservation is not - in the sense that it holds that no duty of care to preserve evidence currently exists in our law,” he says.
“On the other hand, it at least provides some clarity in making the distinction between deliberate conduct and conduct that is not intentional.”
The only Canadian jurisdiction that imposes an express positive duty to take preservation measures, Michaluk notes, is Nova Scotia.
“The absence of a standard otherwise is a problem because it’s the extent of the duty to preserve that gets lawyers nervous, not the bad faith stuff,” he says.
Kaufman believes, however, that it won’t be long before the Canadian law on spoliation and preservation crystallizes.
“The Alberta Court of Appeal’s approach has the advantage of being a very flexible one,” he says. “Although we’ll have to wait to see how trial judges apply it before we get a handle on the law, that shouldn’t take too long because there’s a lot of this stuff going on nowadays, especially in litigation with the financial industry over the credit crunch.”
The first kick at the can may come when the Ontario Court of Appeal considers the pending appeal in Tarling v. Tarling. There, the defendant had the testator’s computer wiped after the plaintiff threatened litigation and after he received correspondence from plaintiff’s counsel.
There was also at least one e-mail destroyed (although later produced by a third party) that supported the plaintiff’s claim of undue influence.
At trial, Superior Court Justice Thea Herman concluded that the defendant did not intentionally destroy relevant evidence and dismissed the plaintiff’s spoliation claim.
But it’s unclear whether Herman would have required both bad faith and prejudice to establish the claim. The decision also fails to consider the extent of the duty to preserve or whether such a duty even existed in this case.
“One of the difficulties in determining whether [the defendant] intentionally destroyed relevant evidence is that he is being asked to prove a negative,” Herman wrote.
“How can he prove that he did not destroy relevant evidence? As his father’s executor, [the defendant] was entitled to deal with his father’s papers. There was no preservation order in this proceeding.”
Michael Deverett, a senior lawyer at Deverett Law Offices, who represented the plaintiff at trial, has concerns whether Herman set the bar too high in Tarling.
“The judge raised the bar by effectively requiring the plaintiff to prove the relevance and significance of the evidence that the defendant destroyed,” he says. “Wouldn’t you think the guy destroying the evidence should be the one making notes of what was destroyed?”
However that may be, the Ontario Court of Appeal will have an opportunity to lend its voice to the jurisprudence. Here, it is notable that the court, in its 2000 decision in Spasic Estate v. Imperial Tobacco Ltd., refused to summarily dismiss a spoliation claim before trial on the grounds that it did not disclose a reasonable cause of action.
Meanwhile, lawyers and clients have by way of guidance only the general principle that all litigants have an obligation to preserve evidence and documents touching on matters in issue.
But general principles may not do the trick for parties struggling with what they should actually do when litigation is even remotely on the horizon. What is certain is that they will have to deal with some very specific, thorny issues.
“For example, when does the red flag go up?” asks Susan Wortzman, founder of Wortzman Nickle Professional Corp., a Toronto-based e-discovery and litigation management boutique.
“Is it when the phone call is received from opposing counsel that an employee whose employment has been terminated intends to commence an action, or does the duty to preserve commence as soon as the disgruntled employee’s job is terminated?”
While no Canadian court has articulated a precise test, Wortzman suggests that a standard focused on a “reasonable anticipation of litigation” is a workable starting point.
Indeed, that is the test articulated in the Sedona Canada Principles, which have filled a void in Canadian law by becoming a point of reference for courts dealing with e-discovery issues.
Most recently, the Alberta Court of Appeal’s June 2008 decision in Innovative Health Group Inc. v. Calgary Health Region made reference to Sedona. In November 2008, the Supreme Court dismissed an application for leave to appeal from the judgment.
The principles, which were drafted by leaders in the legal and e-discovery fields to provide workable solutions to the challenges created for litigants with reference to the preservation, collection, processing, review, and production of electronically stored information, also deal with the complex question of what a party must preserve.
Here, Principle 5 states that the parties “should be prepared to produce relevant electronically stored information that is reasonably accessible in terms of cost and burden.”
The commentary to the principle outlines the steps that should be taking to ensure that a litigation hold is properly in place and that relevant documents have been preserved. According to the commentary, the obligation is not to search all potentially relevant sources of information.
Instead, “the more costly and burdensome the effort to access electronically stored information from a particular source, the more certain the parties need to be that the source will yield relevant information.”
Part of the reason is that it has been over 100 years since the Supreme Court of Canada dealt with the doctrine of spoliation, which governs the remedies available when parties are remiss in their duty to preserve.It’s an issue that has until now flown under the radar. But the recent focus on electronically stored information has returned it to the fore.
“Spoliation has become a more important concern because of the degree to which e-records are amenable to deletion and the need to track these records,” says Jeffrey Kaufman, a senior partner at Fasken Martineau DuMoulin LLP’s Toronto office.
Fortunately, the Alberta Court of Appeal’s recent decision in McDougall v. Black & Decker Canada Inc. deals with the issue head-on.
“Black & Decker is the first comprehensive look at the law by a Canadian appellate court in more than a century,” says Jeffrey Landmann, an associate with Blake Cassels & Graydon LLP’s Calgary office.
In its reasons, the court enunciated six principles summarizing the law of spoliation in Canada:
• spoliation is the intentional destruction of evidence to affect existing or anticipated litigation;
• the main remedy for spoliation is the imposition of a rebuttable presumption of fact that the lost or destroyed evidence would not assist the spoliator;
• other remedies may be available even where evidence has been unintentionally destroyed, which remedies are based on the court’s rules of procedure and its inherent ability to prevent abuse of process. The remedies may include the exclusion of expert reports and costs sanctions;
• intentional destruction of evidence is not an intentional tort, nor is there a duty to preserve evidence for the purposes of the law of negligence, though these issues remain open;
• whether spoliation has occurred and the remedy for it are generally matters for trial; and
• pretrial relief may be available in rare cases.
But Don Wilson, a partner at Davis LLP’s Edmonton office, who represented Black & Decker, says the decision dilutes the doctrine of spoliation.
“By adding the requirement of deliberate behaviour as a condition for imposing an adverse presumption, the Court of Appeal has greatly circumscribed the doctrine’s ability to take hold,” he says. “Lawyers whose clients are subject to cross-examination on the destruction of evidence will make sure their clients understand that spoliation only applies if the conduct was intentional.”
Landmann says American courts have dealt with spoliation remedies more aggressively than the Court of Appeal did.
“U.S. courts have granted a variety of more serious remedies such as striking claims and have done so both before or during trial,” he says. “In some cases, they’ve gone so far as to rule that spoliation is an actionable tort in itself.”
Dan Michaluk, an associate with Hicks Morley Hamilton Stewart Storie LLP’s Toronto office, agrees that Canadian jurisprudence on preservation and spoliation remains wanting.
“The difficulty with McDougall is that it tells us what the law related to preservation is not - in the sense that it holds that no duty of care to preserve evidence currently exists in our law,” he says.
“On the other hand, it at least provides some clarity in making the distinction between deliberate conduct and conduct that is not intentional.”
The only Canadian jurisdiction that imposes an express positive duty to take preservation measures, Michaluk notes, is Nova Scotia.
“The absence of a standard otherwise is a problem because it’s the extent of the duty to preserve that gets lawyers nervous, not the bad faith stuff,” he says.
Kaufman believes, however, that it won’t be long before the Canadian law on spoliation and preservation crystallizes.
“The Alberta Court of Appeal’s approach has the advantage of being a very flexible one,” he says. “Although we’ll have to wait to see how trial judges apply it before we get a handle on the law, that shouldn’t take too long because there’s a lot of this stuff going on nowadays, especially in litigation with the financial industry over the credit crunch.”
The first kick at the can may come when the Ontario Court of Appeal considers the pending appeal in Tarling v. Tarling. There, the defendant had the testator’s computer wiped after the plaintiff threatened litigation and after he received correspondence from plaintiff’s counsel.
There was also at least one e-mail destroyed (although later produced by a third party) that supported the plaintiff’s claim of undue influence.
At trial, Superior Court Justice Thea Herman concluded that the defendant did not intentionally destroy relevant evidence and dismissed the plaintiff’s spoliation claim.
But it’s unclear whether Herman would have required both bad faith and prejudice to establish the claim. The decision also fails to consider the extent of the duty to preserve or whether such a duty even existed in this case.
“One of the difficulties in determining whether [the defendant] intentionally destroyed relevant evidence is that he is being asked to prove a negative,” Herman wrote.
“How can he prove that he did not destroy relevant evidence? As his father’s executor, [the defendant] was entitled to deal with his father’s papers. There was no preservation order in this proceeding.”
Michael Deverett, a senior lawyer at Deverett Law Offices, who represented the plaintiff at trial, has concerns whether Herman set the bar too high in Tarling.
“The judge raised the bar by effectively requiring the plaintiff to prove the relevance and significance of the evidence that the defendant destroyed,” he says. “Wouldn’t you think the guy destroying the evidence should be the one making notes of what was destroyed?”
However that may be, the Ontario Court of Appeal will have an opportunity to lend its voice to the jurisprudence. Here, it is notable that the court, in its 2000 decision in Spasic Estate v. Imperial Tobacco Ltd., refused to summarily dismiss a spoliation claim before trial on the grounds that it did not disclose a reasonable cause of action.
Meanwhile, lawyers and clients have by way of guidance only the general principle that all litigants have an obligation to preserve evidence and documents touching on matters in issue.
But general principles may not do the trick for parties struggling with what they should actually do when litigation is even remotely on the horizon. What is certain is that they will have to deal with some very specific, thorny issues.
“For example, when does the red flag go up?” asks Susan Wortzman, founder of Wortzman Nickle Professional Corp., a Toronto-based e-discovery and litigation management boutique.
“Is it when the phone call is received from opposing counsel that an employee whose employment has been terminated intends to commence an action, or does the duty to preserve commence as soon as the disgruntled employee’s job is terminated?”
While no Canadian court has articulated a precise test, Wortzman suggests that a standard focused on a “reasonable anticipation of litigation” is a workable starting point.
Indeed, that is the test articulated in the Sedona Canada Principles, which have filled a void in Canadian law by becoming a point of reference for courts dealing with e-discovery issues.
Most recently, the Alberta Court of Appeal’s June 2008 decision in Innovative Health Group Inc. v. Calgary Health Region made reference to Sedona. In November 2008, the Supreme Court dismissed an application for leave to appeal from the judgment.
The principles, which were drafted by leaders in the legal and e-discovery fields to provide workable solutions to the challenges created for litigants with reference to the preservation, collection, processing, review, and production of electronically stored information, also deal with the complex question of what a party must preserve.
Here, Principle 5 states that the parties “should be prepared to produce relevant electronically stored information that is reasonably accessible in terms of cost and burden.”
The commentary to the principle outlines the steps that should be taking to ensure that a litigation hold is properly in place and that relevant documents have been preserved. According to the commentary, the obligation is not to search all potentially relevant sources of information.
Instead, “the more costly and burdensome the effort to access electronically stored information from a particular source, the more certain the parties need to be that the source will yield relevant information.”
