Spoliation occurs where a party has intentionally destroyed evidence relevant to current or contemplated litigation and a reasonable inference can be drawn that the evidence was destroyed in order to affect the litigation.3
All types of evidence can be subject to spoliation and spoliation can occur in various ways. For example, spoliation can occur when documents are shredded, emails are erased, physical evidence is sold, destroyed or hidden, and in circumstances where evidence is otherwise rendered unavailable for trial. The doctrine of spoliation becomes especially important in matters involving electronic discovery of evidence. With the simple click of a mouse, electronic evidence such as an email can be permanently deleted. Often times, electronic records such as emails or text messages are notoriously difficult to retrieve since parties often clear their inboxes or delete messages they think they may not need again.
As we move towards a "paperless" society where the destruction of physical documents becomes routine, it is important to remain cognizant of the difference between simple, routing shredding of documents and the intentional destruction of documents relevant to existing or pending litigation.
Intentional vs. Unintentional Spoliation
In situations where evidence is destroyed by accident, does spoliation still arise? The short answer is no. The Ontario Superior Court of Justice has articulated that the following four elements must be established on a balance of probabilities in order to find that spoliation has taken place:
- The missing evidence must be relevant;
- The missing evidence must have been destroyed intentionally;
- At the time of destruction, litigation must have been ongoing or contemplated; and,
- It must be reasonable to infer that the evidence was destroyed in order to affect the outcome of the litigation.4
... intent to destroy the evidence for the purpose of affecting the litigation. |
In addition to the above, the Ontario Superior Court of Justice also found that there must be evidence that a particular piece of evidence was destroyed.
It is also important to draw a distinction between spoliation as a legal concept and spoliation as a common sense concept. The destruction of evidence on its own is not sufficient to trigger the adverse inferences that can be made by a Court when spoliation is found. There must also be intent to destroy the evidence for the purpose of affecting the litigation.
Consequences of Spoliation
In Ontario, Courts derive their power to impose sanctions on spoliators by virtue of their inherent jurisdiction and from the Rules of Civil Procedure. It is generally incumbent on the party pleading spoliation to request that the Court impose sanctions.
The Court's inherent power to find adverse inference serves three basic functions:
- Deters spoliators
- Promotes accuracy
- Compensates victims of spoliation
Once spoliation is established, the Court presumes the evidence would have been unfavourable to the party who destroyed it.5 Courts are able to draw an adverse inference against parties that spoliate evidence. In other words, when applied, spoliation of evidence gives rise to a rebuttable presumption of fact that the missing evidence, had it been preserved, would have been unfavourable to the party that destroyed it. Courts can also make an adverse inference that the spoliator had some motivation to destroy the evidence (i.e. the email was deleted because it was unfavourable). Once a Court finds that intentional spoliation has taken place, the spoliator faces an uphill battle in that the Court can conclude that the evidence that was spoliated would have been unfavourable to the spoliator.
...parties in Canada can be sanctioned by Courts for destroying evidence recklessly, or inadvertently through negligence. |
Although Courts generally draw an adverse inference in situation where evidence has been intentionally destroyed, sanctions may also be imposed for the unintentional destruction of evidence. For example: Courts can impose sanctions on a party that destroys evidence when that party knew or ought to have known that the evidence was relevant to existing or pending litigation. In other words, parties in Canada can be sanctioned by Courts for destroying evidence recklessly, or inadvertently through negligence.
These sanctions can be applied in the form of costs, preclusion of evidence and in rare circumstances, even dismissal of an entire action. However, it should be noted that there is a very high threshold for the imposition of a sanction dismissing an entire action. The primary remedy for spoliation is the imposition of the rebuttable presumption of fact that the lost or destroyed evidence would not assist the spoliator at trial. This presumption can be rebutted by evidence that shows the spoliator did not intend, by destroying the evidence, to affect the litigation.
On the present state of the law in Canada, it is clear that spoliation requires intentional conduct (i.e. the evidence in question was destroyed with the knowledge that the evidence would be required for litigation purposes). When the destruction is not intentional, it is not possible to draw the inference that the evidence would tell against the person who has destroyed it.6 Examples of unintentional spoliation includes: video surveillance of a loss or incident that is automatically erased every 30 days.
Who Spoliated the Evidence?
Issues involving spoliation are very common when subrogation is considered by an insurer after a loss. The prospect of successful subrogation hinges almost entirely on the strength of the direct or circumstantial evidence available to establish 1) liability and 2) damages. Spoliation can take place when evidence is destroyed by the insurer, insured or a third party. In situations where evidence is spoliated by the insured, the insurer will have little recourse since it cannot subrogate against its own insured. If the evidence in question is spoliated by the insurer, the opportunity to subrogate can be lost entirely and an adverse inference will likely be imposed on the insurer in a subrogated action since it has a real interest in the subrogated action. If the evidence is spoliated by a third party however, then the insurer would be in a position to seek an adverse inference to be made by the Court against that third party.
Takeaway for Subrogation Claims
The key to avoiding spoliation is preservation. From the early stages of a claim, adjusters should attempt preserve all the evidence possible from the outset of a loss, even if the evidence does not appear to be relevant at that time.
For example, in property damage cases, before any remediation or repairs take place following a loss, it would be prudent, at the very least, to take photographs of all evidence and try to preserve as much physical evidence as possible. In subrogated claims where property damage is usually at issue, hiring an expert origin and cause engineer from the outset in order to preserve and store evidence is crucial. In addition, any destructive testing should be put on hold until the third party has been put on notice and has been provided with an opportunity to attend the proposed destructive testing.
In fire or water losses arising from a defective component or part, preserving physical evidence is often the only way to ensure that no adverse inferences are drawn and that no sanctions (i.e. costs) are awarded against the party. It is rare that an insured will independently anticipate litigation and retain evidence in order to assist an insurer in any subrogation efforts. An insured may look at a failed electrical or plumbing component as garbage and simply throw it away. However, without a closer examination as to the cause of failure, potential recovery is disregarded from the outset and so are any possibilities to subrogate. Indeed, it may very well be the case that the electrical or plumbing component in question is the subject of a recall or failed due to a manufacturing defect.
Although it may at times be difficult to determine what evidence is relevant during the initial investigation of a loss, communication with the insureds from the outset of the claim with respect to retaining and preserving all evidence can go a long way.
1 Armory v Delamirie [1722] EWHC J94.
2 Spasic Estate v Imperial Tobacco Ltd., 2000 CanLII 17170 (ON CA).
3 St. Louis v R. (1896), 25 S.C.R. 649 (S.C.C.))
4 Nova Growth Corp. v Kepinski, [2014] ONSC 2763 at para 296.
5 McDougall v Black & Decker Canada Inc., 2008 ABCA 353 at para. 18.
6 McDougall v Black & Decker Canada Inc., 2008 ABCA 353 at para. 24.
