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Evidence - Spoliation. Trillium Power Wind Corporation v. Ontario
In Trillium Power Wind Corporation v. Ontario (Ont CA, 2023) the Court of Appeal considers, and applies, the evidentiary doctrine of 'spoliation':(a) Governing principles
[20] Spoliation arises out of the destruction of potentially relevant evidence. It "occurs where a party has intentionally destroyed evidence relevant to ongoing or contemplated litigation in circumstances where a reasonable inference can be drawn that the evidence was destroyed to affect the litigation”: McDougall v. Black & Decker Canada Inc., 2008 ABCA 353, 440 A.R. 253, at para. 18.
[21] The motion judge correctly stated that “while spoliation as a self-standing cause of action is still open to question, Ontario courts have recognized spoliation as an evidentiary rule where there has been destruction of evidence by a party who reasonably anticipated litigation in which that evidence would play a part” and that this rule of evidence gives rise to a rebuttable presumption that the evidence destroyed would have been unfavourable to the party who destroyed it. He also rightly determined that he would not dismiss the spoliation claim at that stage on the basis that the cause of action is somewhat novel. While this court has not yet definitively resolved whether spoliation is a cause of action, it has permitted it to proceed to trial as a novel cause of action: Spasic Estate v. Imperial Tobacco Ltd. (2000), 2000 CanLII 17170 (ON CA), 49 O.R. (3d) 699 (C.A.), at paras. 12 and 22, leave to appeal refused, [2000] S.C.C.A. No. 547. It is unnecessary for the purposes of this appeal to resolve the issue.
[22] While a novel standalone cause of action, spoliation is not a novel issue. It arises out of a party’s breach of the well-established obligation to preserve and produce relevant documents in civil proceedings. The court’s intervention is required because spoliation undermines a fair trial process and interferes with the quest for the truth in judicial proceedings: Casbohm v. Winacott Spring Western Star Trucks, 2021 SKCA 21, at para. 36. As such, it amounts to an abuse of process.
[23] In St. Louis v. Canada (1896), 1896 CanLII 65 (SCC), 25 S.C.R. 649, at pp. 652-653, the Supreme Court established that the destruction of evidence carries a rebuttable presumption that “the evidence destroyed would have been unfavourable to the party who destroyed it”. The Court of Appeal of Alberta described the Supreme Court’s conclusion from St. Louis as follows, in McDougall, at para. 19:Spoliation in law does not occur merely because evidence has been destroyed. Rather, it occurs where a party has intentionally destroyed evidence relevant to ongoing or contemplated litigation in circumstances where a reasonable inference can be drawn that the evidence was destroyed to affect the litigation. Once this is demonstrated, a presumption arises that the evidence would have been unfavourable to the party destroying it. This presumption is rebuttable by other evidence through which the alleged spoliator proves that his actions, although intentional, were not aimed at affecting the litigation, or through which the party either proves his case or repels the case against him. [24] The court’s jurisdiction to grant remedies in response to spoliation springs from rules of civil procedure, its inherent power to control an abuse of its process, and its inherent discretion with respect to costs: McDougall, at para. 22. Remedies granted have mostly included but are not limited to the application of the adverse presumption referenced above in St. Louis, and costs: McDougall, at para. 29. Whether damages, including punitive damages, may be awarded if spoliation is treated as a standalone cause of action is an issue for another day and need not be resolved in this appeal: Armstrong v. Moore, 2020 ONCA 49, 15 R.P.R. (6th) 200, at para. 37.
(b) Principles applied
[25] Respectfully, the motion judge erred in dismissing the claim by holding that the evidentiary basis for the appellant’s claim was absent and by concluding that the unfavourable presumption against Ontario because of its destruction of documents was rebutted by the implementation of a government policy that the motion judge acknowledged was improper.
[26] First, there was an ample evidentiary basis to support spoliation by Ontario.
[27] Based on the motion judge’s own findings, there can be no question that the destruction in issue was deliberate and in accordance with an improper government policy. The motion judge found, based on an investigative report by the Information and Privacy Commission of Ontario, that the improper destruction of hand-held devices, emails and documents by the Premier’s Office under former Premier Dalton McGuinty was a notorious violation of record-keeping obligations and raised serious issues of political accountability.
[28] Moreover, there is no dispute that the impugned destruction occurred subsequent to the commencement of the appellant’s claim and concerned likely relevant documents in the possession of individuals who, as the motion judge found, were intimately involved in the relevant events and who were aware of the appellant’s claim. These individuals included Messrs. Mullin, Chris Morley, former Chief of Staff, and Jamison Steeve, among others, who were so engaged in the events giving rise to the wind farm moratorium and the appellant’s claim that they provided affidavits in support of Ontario’s summary judgment motion.
[29] The motion judge also discussed how the destruction of this evidence may have affected the litigation of this case, at para. 21:The parties have engaged in documentary exchange, examinations for discovery, etc. During this time, it has become apparent that, among other things, the Ontario government is unable to locate and produce any emails from the email servers of any former [Office of the Premier] personnel. This lack of documentation is significant as [Office of the Premier] personnel were centrally involved in considering the offshore wind decisions in issue here, including both the decision to put a stop to offshore projects and the decision to announce that policy change on February 11, 2011. [30] It is no answer to the appellant’s allegation of spoliation that Ontario’s right hand did not know what the left hand was doing. Ontario is a party to these proceedings and knew about the appellant’s claim prior to its destruction of documents, emails and devices. As a party to these proceedings, Ontario was required to preserve any potentially relevant documents in order to fulfill its disclosure obligations. Such documents included any potentially relevant emails, including those in the possession of departing employees who Ontario knew had relevant evidence – so relevant that Ontario put them forward as its own affiants in support of its motion for summary judgment. That these documents were potentially relevant to the issues in these proceedings is obvious from the gaps in the email exchanges that have been produced. Ontario’s deliberate destruction of evidence is clear.
[31] Importantly, whether Ontario’s intention was to destroy relevant evidence for use in simply this litigation or in all litigation is a distinction without a difference. As the motion judge referenced, it is a matter of public record that the subsequent inquiry into Ontario’s destruction policy in 2013 and related criminal proceedings against Mr. Morley’s successor as Chief of Staff demonstrated that the intention of the spoliators was to destroy any incriminating documents, at paras. 23-25:It is a matter of public record that during the McGuinty period the practice within the [Office of the Premier] was for the email accounts of departed personnel to be “decommissioned” – i.e. deleted in their entirety. Furthermore, there is evidence that the handheld devices used by the [Office of the Premier] personnel at the time were, after their departures from the [Office of the Premier], either reset or, in the case of former Chief of Staff Morley, physically destroyed.
Evidence of this practice was canvassed before the Legislative Committee investigating the deletion of documents in the context of the McGuinty government’s gas plant cancellation: Standing Committee on Justice Policy, Legislative Assembly of Ontario, 2nd Sess., 40th Parl., June 18, 2013. It was likewise the subject of an investigative report by the Information and Privacy Commission of Ontario, which concluded that the email destruction practice was a violation of the Archives and Recordkeeping Act, 2006, SO 2006, c. 34 and raised serious issues of political accountability: IPC, Deleting Accountability: Records Management Practices of Political Staff, June 5, 2013, at 32.Most notably, the device destruction and email deletion policy was also thoroughly canvassed during the course of the criminal trial of Chris Morley’s successor as chief of staff, David Livingston. It was there described by the court in rather scathing terms as a “plan to eliminate sensitive and confidential work-related data…[which] amounted to a ‘scorched earth’ strategy, where information that could be potentially useful to adversaries, both within and outside of the Liberal Party, would be destroyed”: R. v. Livingston, 2018 ONCJ 25, at para 176. [Emphasis added.] [32] The motion judge failed to look at the question of spoliation in the broader context of Ontario’s obligations to preserve and produce relevant documents. He therefore applied a very narrow construction to the meaning and effect of Ontario’s intentional destruction of evidence that Ontario knew it had to preserve and produce. Allowing Ontario to by-pass its clear documentary obligations in this way would amount to an abuse of process. Applying the correct analytical lens leads to the conclusion that spoliation occurred: there was a deliberate destruction of potentially relevant evidence from which the reasonable inference can be drawn that the destruction was done to affect litigation, including the present litigation.
[33] As a result, the motion judge’s dismissal of the spoliation claim must be set aside.
[34] The appellant submits that in the event that the motion judge’s dismissal of its spoliation claim is set aside, this court should remit the case to trial for a determination of the appropriate quantum of damages arising from the spoliation.
[35] I would not do so. The appellant’s spoliation claim is inextricably tied up with its misfeasance claim. The setting aside of the motion judge’s dismissal of the spoliation claim does not affect the dismissal of its claim for misfeasance in public office, including any claim for damages. Even if an adverse inference were drawn against Ontario that the destroyed evidence would have been unhelpful to its position in this litigation, the appellant could not have compelled Ontario to reverse its moratorium or fund its wind farm project and therefore suffered no damages, even if Ontario’s timing of the announcement of its moratorium had targeted the timing of the appellant’s financing. Moreover, the timing of the announcement even proved beneficial in that the appellant did not incur the cost of funding the cancelled project. As the appellant would not be able to demonstrate that it suffered any damages as a result of Ontario’s spoliation, there is no purpose in remitting it to the Superior Court for a trial on damages.
[36] This does not mean, however, that the appellant is left without any remedy flowing from Ontario’s deliberate spoliation. In my opinion, the circumstances of Ontario’s spoliation amount to an abuse of process: McDougall, at paras. 22, 29. As such, the appropriate remedy is to deprive Ontario of its costs below and grant the appellant its costs of the appeal. . Jacobi v. Winners Merchants International LP
In Jacobi v. Winners Merchants International LP (Div Ct, 2022) the Divisional Court considered the law of spoliation of evidence:[28] ... Of the four aspects of the test for spoilation of evidence, at least two are missing here. The evidence must have been “destroyed intentionally” and it must be reasonable to infer that the evidence was destroyed to affect the outcome of the litigation: Yang v. Co-operators General Insurance Company, 2021 ONSC 1540; McDougall v. Black & Decker Canada Inc., 2008 ABCA 353, para. 29. .... . BMW Canada Inc. v. Autoport Limited
In BMW Canada Inc. v. Autoport Limited (Ont CA, 2021) the Court of Appeal considered an issue of interim possession of chattel property (as an evidence spoliation issue) under R45:[18] In determining whether to grant an interim preservation order under r. 45.01, the Master referred to and purported to apply the three-part test set out in Taribo Holdings Ltd. v. Storage Access Technologies Inc., [2002] O.J. No. 3886 (S.C.), at para. 5: (1) the asset sought to be preserved constitutes the very subject matter of the dispute; (2) there is a serious issue to be tried regarding the plaintiff’s claim to that asset; and (3) the balance of convenience favours granting the relief sought by the applicant or moving party.
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(1) The Relevant Principles
[38] The parties invited the court on this appeal to address the test for r. 45.01 motions, clarifying the role of balance of convenience and whether there is a presumption in favour of the preservation of evidence in a proceeding. As I will explain, it is inappropriate to prescribe a single test for r. 45.01 motions, including a Taribo-type test that focusses on “balance of convenience”, having regard to the variety of circumstances in which such motions can be brought. In a case such as the present, where the condition of property is at issue in the action and its preservation is sought for the purpose of inspection, the goal is to best ensure fairness in the litigation process. I will also explain why it is unnecessary to determine whether there is a presumption in all cases in favour of preserving evidence for litigation, but that r. 45.01 permits the court to address trial fairness concerns that would arise before evidence is destroyed.
(a) What is the Appropriate Test for Interim Preservation of Property in this Case?
[39] Rule 45.01 is available to parties as an interim measure during litigation. Rule 45.01(1) provides that the court may make an interim order for the custody or preservation of “any property in question in a proceeding or relevant to an issue in a proceeding”. The order is discretionary. Although the rule provides that the court “may authorize entry on or into any property in the possession of a party or of a person not a party”, and r. 45.01(2) permits the court to order the property to be sold in such manner and on such terms as are just, there are no criteria prescribed by the rule for the exercise of the court’s discretion under r. 45.01 and there is no limitation on the terms and conditions that can be imposed.
[40] Rule 45.01 is available in a wide variety of circumstances in which interim preservation of property may be sought. The court, in considering whether to make such an order and on what terms, will take into consideration the evidence on the motion and make the order that best responds to the circumstances. The only precondition for preservation or custody is that the property is “in question in a proceeding or relevant to an issue in a proceeding”. As I will explain, it is inappropriate to attempt to prescribe and apply a single test (such as that set out in Taribo or a derivation of such test) to all r. 45.01 motions.
[41] In some cases a r. 45.01 motion will seek to preserve the very property the plaintiff or applicant is pursuing in its litigation. In Taribo, for example, the litigation involved a dispute about shares that former employees of the respondent corporation had tendered in consideration for a reduction of their obligations under promissory notes. The shares were pledged and deposited with a third party. The moving parties’ motion for an interim preservation order sought what was essentially a form of injunctive relief – to prevent the corporate respondent from having the shares released from deposit to it and then converting or cancelling the shares.
[42] The motion judge in Taribo articulated and applied a three-part test requiring that: (1) the assets sought to be preserved constitute the very subject matter of the dispute; (2) there is a serious issue to be tried regarding the plaintiff’s claim to that asset; and (3) the balance of convenience favours granting the relief sought by the applicant or moving party. She relied on two cases involving r. 45.02, which provides that where the right of a party to a specific fund is in question, the court may order the fund to be paid into court or otherwise secured on such terms as are just: News Canada Marketing Inc. v. TD Evergreen, [2000] O.J. No. 3705 (S.C.); Sun v. Ho (1998), 18 C.P.C. (4th) 363 (Ont. Gen. Div.). The Taribo test has been applied in other cases involving r. 45.01 where the moving party is seeking to preserve property that it seeks to recover in the litigation: see e.g., Progressive Moulded Products Ltd. v. Great American Group, 2007 CanLII 12205 (Ont. S.C.); Meade v. Nelson Resources Limited (2005), 2005 CanLII 44818 (ON SC), 14 B.L.R. (4th) 244 (Ont. S.C.).
[43] I accept that the Taribo three-part test is appropriate where a r. 45.01 motion is brought to preserve property that the moving party is claiming in its litigation. In such cases, the moving party seeks to limit or constrain what the responding party may do with property that is in its possession, and to preserve the property for the benefit of its claim. Factors such as whether the property is unique and whether damages claimed in the alternative would be an adequate remedy are also relevant and can fit within the “balance of convenience” analysis: see Auto Enterprise Ltd. v. Oakville Motors Sales & Leasing Inc., [1995] O.J. No. 716 (Gen. Div.), at paras. 10-14. And, where an interim preservation order would “tilt the scales in favour of a plaintiff on the basis of unproven allegations” the court must exercise caution before making such an order: see Stearns v. Scocchia (2002), 27 C.P.C. (5th) 339 (Ont. S.C.) involving a motion under r. 45.02.
[44] While the Taribo test is appropriate for r. 45.01 motions where the moving party claims an interest in property, or for r. 45.02 motions where the claim is to a specific fund, it is not required to be applied or adapted for all motions for interim preservation of property. This is apparent from the wording of the rule itself. Rule 45.01(1) authorizes the court to make an order for entry into any property, including the property of third parties, for the purpose of an interim order under the rule. Likewise, r. 45.01(2) permits the court to order the sale of property. The test articulated in Taribo, even as modified by the Divisional Court, would be insufficient and would not account for the range of factors that would need to be considered where entry into property, third party interests, or sale of property arises in a r. 45.01 motion.
[45] Similarly, a Taribo-type test focussing on “serious issue to be tried” and “balance of convenience” is neither necessary nor appropriate in a case like the present, where the r. 45.01 motion sought to preserve evidence to permit inspection. In my view, the overall consideration in such motions is to make an order that is consistent with a fair litigation process. In making or refusing the order, and in establishing terms, the court should have regard to the issues in dispute in the litigation, the relevance and materiality of the property as evidence, the purpose for which interim preservation is sought and its proposed duration (whether for the entirety of the proceeding or for an interim period to permit the evidence to be documented, inspected, tested, and the like), and the benefits and harm or prejudice to the interests of each party in the litigation.
(b) Is There a Prima Facie Obligation to Preserve Evidence?
[46] The parties joined issue in the courts below and in this appeal on whether there is a prima facie obligation in all cases to preserve property that is the subject matter of litigation, or more narrowly, to preserve evidence for trial. It is unnecessary to determine that issue in this appeal. First, any attempt to delineate the scope of such a rule would be met by a range of factors, which could be characterized as exceptions to or limitations on such a rule, such as considerations of the importance of the evidence to the proceeding, the perishability of the property, the feasibility of its preservation, and the like. Second, the determination of the relatively narrow issue on the r. 45.01 motion in this case and accordingly on appeal would not turn on any such obligation or presumption. Autoport seeks interim preservation of the vehicles for a limited time and purpose, and BMW characterizes the question as simply one of cost.
[47] While it is unnecessary to determine whether there is a prima facie obligation to preserve evidence, and its scope, I do not agree with the Divisional Court’s unqualified rejection of the duty of litigants to preserve evidence, and BMW’s assertion in this court that parties must be free to deal with their property as they see fit. The principle advanced by BMW, articulated so broadly, would apply whether or not the property is evidence and whether or not its temporary preservation or pre-trial destruction would affect trial fairness.
[48] The courts have long recognized the doctrine of spoliation of evidence: see McDougall v. Black & Decker Canada Inc., 2008 ABCA 353, 302 D.L.R. (4th) 661 for a useful summary of the case law and principles. Underlying the doctrine is the trial fairness principle that parties to litigation are expected not to destroy important evidence, at least until the opposing party has had a fair opportunity to examine that evidence. The remedies are informed by considerations of trial fairness: the imposition at trial of a rebuttable presumption of fact that the missing evidence, had it been preserved, would have been unfavourable to the party who destroyed it, and other possible remedies to “level the playing field”, such as the exclusion of expert reports: see Gutbir v. University Health Network, 2010 ONSC 6752, at para. 13; McDougall, at paras. 18, 29; Stilwell v. World Kitchen Inc., 2013 ONSC 3354, 47 C.P.C. (7th) 345, at para. 55; and Endean v. Canadian Red Cross Society (1998), 1998 CanLII 6489 (BC CA), 157 D.L.R. (4th) 465 (B.C.C.A.), at para. 32, leave to appeal granted but appeal discontinued, [1998] S.C.C.A. No. 260. The debate in the cases about whether there is a standalone tort of spoliation, and whether remedies are available for negligent spoliation (the cases are summarized at paras. 19 to 22 of McDougall), does not undermine the animating principle: that the destruction of evidence can be harmful to trial fairness.
[49] Rule 45.01 permits the court to address trial fairness concerns that would arise if property constituting evidence were to be destroyed prior to its destruction, and so avoid the kind of harm in the litigation process that spoliation remedies address. . Armstrong v. Moore
In Armstrong v. Moore (Ont CA, 2020) the Court of Appeal held that spoliation of evidence did not justify awarding punitive damages (yet). This is my mind makes it a candidate for tort status soon:[37] However, we defer to another day whether a court is entitled to rely on spoliation of evidence as providing a basis for awarding punitive damages. Ontario jurisprudence has yet to resolve definitively whether spoliation is a cause action: See Spasic Estate v. Imperial Tobacco Ltd. (2000), 2000 CanLII 17170 (ON CA), 49 O.R. (3d) 699 (C.A.), at paras. 12, 22; leave to appeal refused, [2000] S.C.C.A. No. 547. In our view, that issue need not and should not be resolved in this appeal. . Kiden Used Furniture v. Pearson
In Kiden Used Furniture v. Pearson (Ont CA, 2015) the Court of Appeal stated with respect to spoilation of evidence that: The usual remedy for spoliation is a presumption that the destroyed evidence would have been unfavourable to the party who destroyed it. But this adverse evidence inference is not capable of being positive proof of the landlord’s negligence. The appellant had the obligation of establishing that negligence and causation could be proven at trial and failed to do so on the motion.
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