Canada: Canadian Courts ‘Rock The Boat’ On Spoliation Law

In June 2014, our product liability group reported on a number of developments in the law of spoliation pertaining to product liability.  Less than one year later, it is already time to reassess the courts' approach to the issue of what is to be done when one party destroys the central evidence in a case, due to new decisions in Nova Growth Corp. v. Andrzej Roman Kepinski1  and the maritime case of Forsey v. Burin Peninsula Marine Service Centre.2

The State of Spoliation Law in Canada Prior to the Decision in Forsey v. Burin Peninsula Marine Service Centre

In our 2014 article, we discussed Stilwell v. World Kitchen Inc.3  and Leon v. Toronto Transit Commission4  - both cases in which one party destroyed relevant evidence within 24 hours of the incident giving rise to legal action.

In those two cases, the court found that there was no reason to believe the alleged spoliator intended to destroy the evidence for the purpose of foiling the litigation.  Leon in particular drew upon Gutbir v. University Health Network,5  which held that just because a lawsuit could follow an adverse event does not mean that the court should assume litigation was contemplated.

These two new cases, however, have shown a change in approach by the courts.

In Nova Growth, Justice Newbould adopted a prominent Alberta spoliation case,6  condensing its principles into a clear test:

  1. The missing evidence must be relevant;
  2. The missing evidence must have been destroyed intentionally;
  3. At the time of destruction, litigation must have been ongoing or contemplated; and
  4. It must be reasonable to infer that the evidence was destroyed in order to affect the outcome of the litigation.7

Prior to this decision, Canadian spoliation law was essentially stuck in the 19th century, with no proper test for spoliation other than the unhelpful 1896 case of St. Louis v. Canada.8

We appeared to have righted the ship on spoliation at last, only to have the Forsey case rock the boat – literally.

The State of Spoliation Law in Canada Post-Forsey

In Forsey, the Federal Court dealt with a ship that was destroyed after tipping over in dry dock. The plaintiff claimed that the defendant had used substandard materials to secure the ship and disposed of those materials a day or two after the accident, destroying crucial evidence.

Justice Heneghan adopted the Nova Growth test, and found that the defendant intentionally disposed of the evidence to frustrate the litigation. This was a departure from Stilwell and Leon, where the judges found that destruction of evidence within 24 hours was not sufficient to show that the parties had thought about litigation and were trying to interfere with the process.  In Gutbir as well, the court held that just because an adverse event occurred did not mean litigation should necessarily be contemplated.

In Forsey, however, this appears to be exactly what the Federal Court was prepared to assume. The Forsey defendant took about the same amount of time taken by the plaintiff in Stilwell and only a few hours longer than the defendant in Leon to destroy the relevant evidence, but was not given the same benefit of the doubt when he claimed his intention was just to clean up an oily mess. The court weighed the credibility of the defendant, and determined that the evidence was destroyed because it would have been damaging to the defendant's case.

So what can we take away from this year's spoliation cases? It appears that 2014 brought us two new factors to consider when key evidence has been destroyed:

  1. There is a new, formal test to establish when an adverse inference ought to be drawn against a party that hinders the litigation process by disposing of relevant evidence.
  2. The crucial question of whether litigation was contemplated at the time of destruction will be a highly fact-driven inquiry. Forsey suggests that the previous spoliation cases did not establish legal presumptions that:
  • a quick disposal is forgivable; that
  • parties do not contemplate litigation in the immediate aftermath of an adverse event; or that
  • 'cleaning up' is an adequate justification for disposing of evidence.
     

This is encouraging news for manufacturers. In the course of the past year, Canadian jurisprudence finally evolved a proper test for spoliation, and in at least one case took a more nuanced (and less generous) view of when an individual ought realistically to know that debris from an accident is important evidence that ought not to be destroyed.

Footnotes

1.  2014 ONSC 2763.

2. 2014 FC 974.

3. 2013 ONSC 3354.

4. 2014 ONSC 1600.

5. [2010] O.J. No. 5386.

6. McDougall v. Black & Decker Canada Inc., 2008 ABCA 353.

7. There remains a reasonable question as to whether, given Steps 2 and 3, Step 4 really ought to be necessary, and whether it is actually unfair to a moving party to have to establish subjective foresight of a specific result, rather than negligence or recklessness as to the disposal of evidence known to be relevant to ongoing or contemplated litigation.  One might ask if a party could recover against a spoliator in negligence on the basis of 2 and 3 alone.

8. (1896), 25 S.C.R. 649

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