Spoiler Alert: SCC Clarifies The Doctrine Of Spoliation For The 21st Century

The Supreme Court of Canada has addressed the doctrine of spoliation (i.e., the intentional destruction, alteration, or concealment of evidence in existing or reasonably contemplated litigation) for the first time in over a century. In SS&C Technologies Canada Corp., the Court unanimously clarified the test for spoliation, imposed a mandatory presumption when a finding of spoliation is made, and set out the adverse inference that must be drawn when the spoliator fails to rebut that presumption.

What you need to know

• Spoliation requires intention. The party alleging spoliation must prove that relevant evidence was intentionally destroyed at a time when litigation was ongoing or reasonably anticipated, and that it is reasonable to infer that the evidence was destroyed to affect the litigation.
• Spoliation results in a mandatory presumption. When spoliation is proven, the court must presume that the destroyed evidence would have been unfavourable to the spoliating party’s case; however, the spoliating party can rebut this presumption.
• The magnitude of the adverse inference is discretionary and context-specific. If the spoliator cannot rebut the presumption, the court must draw a mandatory adverse inference to fill the evidentiary gap. The remedy is discretionary and should consider the context, scope, and impact of the destroyed evidence.

This decision provides important guidance to litigants at a time when the scope of potentially relevant evidence is vast and constantly expanding. A party faced with ongoing or reasonably contemplated litigation should make best efforts to preserve—and document the preservation of—evidence. Fast and effective preservation often begins with good data governance practices, including an awareness of data retention and deletion policies and implementing effective legal hold procedures, which can be developed in consultation with counsel well in advance of any litigation.

Background

SS&C Technologies Canada Corporation (SS&C) is a company that acquires and processes data used to generate pricing information, which it sells to financial services companies who then use the data to value securities. The counterparty to the litigation is a global financial services firm (the Bank), with whom SS&C had a licensing agreement. The dispute concerned whether that agreement permitted affiliates within the Bank’s corporate family to access and use SS&C’s proprietary data. The courts concluded that it did not.

The Bank had failed to preserve usage data that would have demonstrated the extent to which it had shared SS&C’s data with its affiliates.

The doctrine of spoliation

Spoliation is “the intentional destruction, alteration, mutilation, or concealment of evidence with a view to subverting the truth-finding process during litigation”¹. For parties to litigation, the doctrine of spoliation “is concerned with ensuring an even playing field and trial fairness” and for the courts, the doctrine stems from a concern “for the viability and credibility of the fact-finding process”². Accordingly, spoliation is considered to be “egregious conduct that flies in the face of respect for the courts and the rule of law generally”³.

The party alleging spoliation must prove four 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.

If the first three elements are satisfied, the Court commented that there should be “little difficulty in concluding that” the evidence was destroyed to affect the litigation⁴.

A finding of spoliation gives rise to a mandatory presumption that the destroyed evidence would have been unfavourable to the spoliator’s case. The spoliator may rebut the presumption by showing that the destroyed evidence was not harmful to their case.

If the presumption is not rebutted, the court must draw an adverse inference to fill the “evidentiary gap” left by the spoliator’s conduct. That inference must “level the evidentiary playing field” but will not necessarily be the highest adverse inference possible, which would impose the maximum penalty on the spoliator. Rather, the remedy is discretionary and should consider the context, scope, and impact of the destroyed evidence, including the prejudice to the non-spoliating party resulting from the evidentiary gap and any fact evidence that tends to support—or refute—the inference. In practical terms, this may require a court to make specific, detailed inferences about what the missing evidence would have shown in order to fill the gap.

In addition to this inference, the court retains discretion to impose other remedies for spoliation. They include striking a claim or defence, making an adverse credibility finding against a party’s testimony, ordering substantial indemnity costs or punitive damages, or, in extreme cases, making a finding of contempt. Factors such as the spoliator’s culpability, the reason behind the destruction of evidence, the prejudice to the non-spoliating party, and the impact of the destroyed evidence on the court’s ability to fairly dispose of the issues can inform the selection of such additional remedies.

The Court intentionally declined to address two topics related to spoliation. First, it confined its decision to spoliation as a rule of evidence: it declined to comment on whether spoliation should be recognized as an independent tort. Second, because the destruction of evidence in this case was found to be intentional, the Court did not consider whether negligent destruction of evidence can constitute spoliation.

The impact of spoliation on damages assessment

In this case, the spoliated evidence was relevant to calculating damages. Though the trial judge developed an approach to damages assessment that relied on two adverse inferences, the Supreme Court found that those inferences were too vague to fill the evidentiary gap caused by spoliation. In the absence of findings as to how many affiliate entities used the proprietary data, and how much data they used, the Court concluded that the trial judge’s approach failed to fill the evidentiary gap left by spoliation and lacked key usage and pricing information that should have been used in calculating damages. The Court therefore remitted the issue of damages back to the trial judge, to be redetermined based on its guidance.

Footnotes

1 SS&C Technologies Canada Corp. v. Bank of New York Mellon Corp., 2026 SCC 29 at para. 7 [SS&C].

2 SS&C at para. 78.

3 Ibid.

4 SS&C at para. 80.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.