The Cost Of Destroying Evidence: The Supreme Court Of Canada Clarifies Spoliation In Canada

Introduction

Spoliation refers to the intentional destruction, alteration, mutilation, or concealment of evidence with a view to subverting the truth-finding process during litigation.¹ In SS&C Technologies Canada v Bank of New York Mellon Corp., 2026 SCC 29 [“SS&C”], the Supreme Court of Canada [“SCC” or the “Court”] addressed the doctrine for the first time in over a century, settling several key questions:

• what the test for spoliation is;
• what must follow once it is proved; and
• what does not.

The central holding is that once a court makes a finding of spoliation, a mandatory presumption arises that the destroyed evidence would have been unfavourable to the spoliator’s case.² At the same time, the mandatory rebuttable presumption does not dictate how or to what extent the destroyed evidence would have been unfavourable; that determination remains discretionary and context-specific, best left to the trial judge who can consider all of the surrounding facts.³

The SCC’s analysis is grounded in a broader principle: spoliation is ultimately a form of abuse of process. The Court observed that: “[t]he 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.”⁴ Consistent with that characterization, the Court held that remedies for spoliation are inherently discretionary, just as remedies for abuse of process are. It would be inconsistent to impose a bright-line, mandatory remedy for spoliation when the analogous doctrine of abuse of process attracts contextual, flexible remedies.⁵

Case Overview

The appellant, SS&C Technologies Canada Corporation [“SS&C Technologies”], is a Canadian data provider that acquires and processes specialised data to generate pricing information for financial services companies to value securities. The respondent, the Bank of New York Mellon Corporation [“BNY”], is the world’s largest custodial bank, holding over US$35 trillion in assets under custody.⁶

The parties entered into a volume-based licensing agreement operating on a per security basis: where BNY would pay SS&C Technologies once for data pertaining to a specific security.⁷ The agreement prohibited BNY from sharing, redistributing, or selling the data to other parties, including subsidiaries and affiliates.⁸ In 2016, SS&C Technologies discovered that its joint venture counterparty had been receiving data from BNY for free after their own agreement had been terminated.⁹ SS&C Technologies explicitly requested that BNY preserve information regarding how the data had been redistributed and to which affiliates.¹⁰ BNY refused to comply.

The trial judge found that BNY breached its agreement with SS&C Technologies, rejected both parties’ theories of damages, and awarded US$5,696,850 on a “rateable approach.”¹¹ Without making an express finding on spoliation, the trial judge drew two adverse inferences against BNY: that unaccounted-for data was used by unauthorized entities within the BNY group, and that their use was not de minimis.¹² The Ontario Court of Appeal upheld those inferences and made an express finding of spoliation against BNY.¹³

On appeal, the SCC confirmed that BNY committed spoliation and that once spoliation is established there is no discretion – courts must draw an inference that is adverse to the spoliator and capable of filling the gap left in the evidence. The trial judge’s inferences failed to level the evidentiary playing field, and the damage award was untethered from the evidence. The matter was remitted to the Superior Court for a reassessment of damages.

Issue 1: The Four-Part Test For Spoliation

To successfully prove spoliation, the alleging party must establish 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.
4. It is reasonable to infer that the evidence was destroyed to affect the litigation.¹⁴

The SCC held that where the alleging party establishes all four elements on a balance of probabilities, spoliation is made out. The burden then shifts to the spoliator to rebut this presumption by showing that the destroyed evidence was not harmful to its case. If the presumption cannot be rebutted, it becomes mandatory and adverse inferences must be drawn. Though at that stage, the spoliator may bring evidence to potentially narrow the scope of any adverse inferences drawn against it.¹⁵

The fourth element, that it is reasonable to infer the evidence was destroyed to affect the litigation, warrants particular attention. This element sits at the intersection of the test for spoliation and the rebuttable presumption that follows it. As the SCC demonstrated in SS&C, proof of the fourth element does not require direct evidence of subjective intent to destroy. Rather, where a party fails to offer any explanation for its failure to preserve evidence in the face of a clear preservation demand, a court may find that the only reasonable inference is that the evidence was destroyed or not produced in order to affect the litigation. In SS&C itself, the Court noted that in the absence of any argument to the contrary from BNY, this inference was available and spoliation was therefore clear. Practically, this means that a spoliator’s silence or failure to rebut the inference at the spoliation-finding stage will carry significant weight; not only in establishing the fourth element, but in shaping the scope of the mandatory adverse inferences that follow.

Applying this test, the Court found that each element was satisfied. The usage data was plainly relevant, as three levels of court confirmed. It was destroyed or not produced following SS&C Technologies’ explicit preservation demand.¹⁶ BNY had full notice that litigation was imminent yet declined to preserve the data on the basis that it disagreed with SS&C Technologies’ allegations – a position the SCC found wholly unjustified.¹⁷

Whether negligent destruction of evidence may satisfy the test for spoliation, and whether the doctrine should give rise to a freestanding tort in Canada, are questions the SCC expressly left open for another day, notwithstanding its recent willingness to engage with the development of new torts in Ahluwalia v Ahluwalia, 2026 SCC 16 [“Ahluwalia”]. The SCC stated:

Whether negligent destruction of evidence may qualify as spoliation, and whether spoliation should be recognized as an independent tort in Canada, are open questions in Canadian law. Without the benefit of full submissions, we leave these issues for another day.¹⁸

It is worth noting that SS&C Technologies did advance a “tort of spoliation” claim at the trial level; however, the trial judge declined to pronounce on whether spoliation constituted an independent tort applicable on the facts of the case, and the issue was not resolved on appeal.

Litigants will invariably seek to characterize the destruction of evidence as inadvertent or as the result of a failure to follow internal document-retention policies, rather than as intentional conduct. Courts will need to grapple with where the line falls between negligent and intentional destruction. Until the SCC addresses this question directly and applies the test for the creation of a new tort as set out in Ahluwalia, the boundaries of spoliation in this regard remain uncertain. Although the SCC did not engage with that test in SS&C, the Ahluwalia framework for determining when courts should recognize a novel tort is provided below for reference:

1. The facts must show a wrongful act that offends a recognized legal interest in private law.
2. The existing remedies must be inadequate.
   Together, these two elements measure the need for a new tort; it is only when the “felt necessities of the time” require the evolution of tort liability that a novel tort may be recognized. Should that need exist, the analysis proceeds to the third and final step.
3. Where a novel tort is tailored to address the wrong in a manner consistent with the purposes of tort law, and the parameters of the proper role of the judiciary.¹⁹

Issue 2: The Presumption Is Mandatory, But The Remedy Is Not

Once a court makes a finding of spoliation, the presumption that destroyed evidence would have been adverse to the spoliator’s case is mandatory.²⁰ That said, the presumption does not determine how or to what degree the destroyed evidence would have damaged the spoliator’s position. That question calls for a discretionary, fact-specific assessment, usually expressed through an adverse inference, that is best carried out by the trial judge with the full picture before them.²¹

The appropriate response to spoliation should be serious, but it should not operate blindly. Spoliation takes many forms and varies in degree, and a one-size-fits-all rule demanding the highest available remedy risks producing outcomes that bear no proportion to the wrong. Trial judges are well positioned to assess the prejudice suffered, weigh the seriousness of the spoliating conduct, and craft a response that fits the circumstances.²²

Beyond the adverse inference, courts have access to a range of further sanctions, including procedural orders, evidentiary presumptions, contempt proceedings, costs orders, and preservation orders. Depending on the case, a court may also strike a pleading or defence, draw adverse credibility inferences against a witness, award substantial indemnity costs or punitive damages, exclude expert reports, issue an injunction, or hold a party in contempt. The SCC noted that these remedies remain at the court’s disposal to be deployed as the circumstances of each case require.²³ Indeed, the SCC observed the range of available remedies as “almost unlimited” given the breadth of the court’s discretion. This discretion is not unconstrained, however. Consistent with the Court’s framing of spoliation as a form of abuse of process, the SCC held that remedies for spoliation are “inherently discretionary”.²⁴ A finding of spoliation should not attract a bright-line, mandatory remedy. Instead, in crafting additional remedies beyond the mandatory adverse inference, a court may consider the:

• spoliator’s culpability;
• intention or reason behind the destruction of evidence;
• prejudice suffered by the non-spoliating party; and
• impact of the spoliation on the court’s ability to fairly decide the issues.²⁵

Issue 3: The Trial Judge Drew Inferences That Were Weak And Incomplete

When spoliation is established, the precise shape of the adverse inference is a matter for the trial judge’s discretion. What is not discretionary, however, is the requirement that the inference actually be adverse to the spoliator and capable of filling the gap left in the evidentiary record.²⁶ The trial judge’s inferences in this case did little more than restate the arguments BNY had advanced in its own defence and reflect what the remaining evidence already revealed – placing the burden of the evidentiary vacuum on SS&C Technologies rather than on the party that created it.²⁷ The SCC characterized the inferences actually drawn as “weak and incomplete.”²⁸

The two inferences drawn that some unspecified number of unauthorized entities beyond CIBC Mellon used the data to some unspecified extent left the core factual questions unanswered: how many entities accessed the data, and how much of it did they use? The result was a set of vague ranges rather than findings of fact, and the practical consequences of BNY’s spoliation went unaddressed.²⁹

Properly drawn, the inferences should have yielded concrete findings adverse to BNY. In the absence of any explanation to the contrary, the trial judge could, for example, have inferred that all 65 entities capable of accessing the data did so, and that each used the full extent of the data available to it. This matters because this inference would fill the evidentiary gap with a clear, adverse finding against BNY, replacing the trial judge’s vague range of potential unauthorized use.³⁰

The U.S. Contrast

The SCC examined the U.S. remedial approach directly. Under r. 37(e) of the Federal Rules of Civil Procedure, 28 U.S.C. app. (2024), where electronically stored information that ought to have been preserved is lost because a party failed to take reasonable steps to do so, a court may [on finding prejudice] impose measures proportionate to curing it; or, on finding that a party acted with the intention of depriving another of the information’s use in litigation, may presume the lost information was unfavourable, instruct a jury that it may or must draw that inference, or dismiss the action or enter a default judgment.³¹

Despite r. 37(e)(2) standardizing the available sanctions for U.S. federal courts, a finding of spoliation does not compel the application of any particular measure, and discretion remains.³² Ultimately, the SCC declined to adopt the position that trial judges should be bound to presume the non-spoliating party had established its maximum damages position in every case where spoliation is proved.³³

As discussed above, the SCC also expressly left open whether Canadian law should recognize spoliation as a freestanding tort.³⁴ In several U.S. states, that question has been settled in the affirmative. Both first-party and third-party spoliation torts have been recognized in Alabama, Alaska, Louisiana, Montana, New Mexico, Ohio, and West Virginia, among others, allowing a plaintiff to sue separately to recover the value of the claim lost or compromised by the destruction of evidence.

The elements of the spoliation tort as recognized in several of these states share a common architecture. The cause of action generally requires:

1. the existence of pending or potential civil action;
2. the defendant’s knowledge of that action;
3. willful or intentional destruction or concealment of evidence designed to disrupt the lawsuit;
4. disruption of, or significant impairment to, the plaintiff’s ability to pursue that action;
5. a causal relationship between the spoliation and the disruption; and
6. damages.

These elements map imperfectly onto the Ahluwalia framework for novel torts. On the first limb, a wrongful act offending a recognized private law interest, the intentional destruction of evidence with the purpose of defeating litigation is a plausible candidate, particularly where a preservation demand has been made and refused. The second limb, adequacy of existing remedies, may now be harder to satisfy in Canada following SS&C itself. The SCC’s mandatory adverse presumption, combined with the broad remedial toolkit available to trial judges, arguably addresses the very harm that the U.S. spoliation tort was designed to remedy. The third limb, consistency with the purposes of tort law and the proper role of the judiciary, raises the concern that a “suit within a suit” requires courts to speculate about what would have happened in the underlying action.

Even in U.S. jurisdictions that have accepted the tort, the bar is high and the majority of courts have declined to cross it. These are questions that will need to be resolved with the benefit of fuller submissions.

Key Takeaways

SS&C is a timely reminder that the obligation to preserve evidence arises well before litigation is on foot and that a party’s opinion of the strength of a potential claim against it does not relieve it of its obligations under the applicable provincial or territorial rules of court or at common law to preserve relevant evidence.

Any business or individual placed on notice of pending or reasonably anticipated litigation should implement a litigation hold without delay and the hold should be comprehensive in scope, extending to all potentially relevant documents and data, regardless of the medium or format in which they are maintained.

In addition to implementing a litigation hold, parties should deliver a formal written preservation notice to any opposing party or third party who may hold relevant evidence as soon as litigation is contemplated. The SCC in SS&C specifically highlighted the significance of the preservation notice SS&C Technologies delivered to BNY on December 23, 2016, shortly after discovering the unauthorized usage of its data. That notice made SS&C Technologies’ position with respect to contemplated litigation clear and, in the Court’s words, “removed any doubt that BNY was under an obligation to preserve the data as relevant evidence.”³⁵ The preservation notice was therefore a critical factor in establishing that BNY knew of its obligations to preserve and yet failed to do so. Sending such a notice should be standard practice whenever litigation is anticipated.

SS&C clarifies that once spoliation is established, the presumption that destroyed evidence would have been adverse to the spoliator is mandatory, but its practical application remains discretionary and fact specific. The question of negligent spoliation and the independent tort are expressly left for another day. We will continue to monitor how SS&C is applied, particularly on the remitted damages hearing, and will report further as the law develops.

Footnotes

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

2. SS&C at para 124.

3. SS&C at para 84.

4. SS&C at para 1.

5. SS&C at paras 105 – 106.

6. SS&C at para 3.

7. SS&C at para 17.

8. SS&C at para 18.

9. SS&C at para 23.

10. SS&C at para 33.

11. SS&C at para 48.

12. SS&C at para 131.

13. SS&C at para 4.

14. SS&C at para 80.

15. SS&C at para 81.

16. SS&C at para 126.

17. SS&C at para 128.

18. SS&C at para 83.

19. Ahluwalia v Ahluwalia, 2026 SCC 16 at para 83.

20. SS&C at para 79.

21. SS&C at para 84.

22. SS&C at para 95.

23. SS&C at para 92.

24. SS&C at para 105.

25. SS&C at para 94.

26. SS&C at para 9.

27. SS&C at para 124.

28. SS&C at para 124.

29. SS&C at para 131.

30. SS&C at para 133.

31. SS&C at para 116.

32. SS&C at para 117.

33. SS&C at para 118.

34. SS&C at para 83.

35. SS&C at para 61.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2025