Legal Blog

Spoliation

“Spoliation is ‘the destruction or material alteration of evidence or…the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation’.” It is the law’s response to the age-old excuse that “the dog ate my homework.”

A party to an action is under a duty to preserve documents and information that the party knows, or reasonably ought to know, are relevant to a legal action. Accordingly, “where a party fails in this duty, the doctrine of spoliation imposes ‘a rebuttable presumption of fact that the lost or destroyed evidence would not assist the spoliator. The presumption can be rebutted by evidence showing the spoliator did not intend, by destroying the evidence, to affect the litigation, or by other evidence to prove or repel the case’.”

With that in mind, we discuss the decision of the Ontario Court of Appeal in Trillium Power Wind Corporation v. Ontario 2023 ONCA 412.

Cancelled

The plaintiff wanted to operate a wind farm, but needed provincial authorisation and the ability to tap into the province’s funding program. Midway through the authorisation process, the province placed a moratorium on all wind farm projects. That effectively terminated the plaintiff’s approval application and the plaintiff’s third party project financing, which had been slated to close on the day of the moratorium announcement.

By way of a 2013 Ontario Court of Appeal decision, the plaintiff’s action was reduced to one allegation: misfeasance in public office. The plaintiff later amended its pleadings to include a claim of spoliation after it had learned that the province had destroyed thousands of documents and other evidence allegedly relating to internal government communications before the moratorium.

Misfeasance

The plaintiff alleged that the timing of the moratorium announcement was intended to, and did, disrupt its financing arrangement and decided to bring a summary judgment motion. The motion judge dismissed the misfeasance aspect of the claim on an evidentiary basis. He held that it was merely a coincidence that the public announcement of the moratorium and the closing of the project financing took place at the same time. The judge further held that even if the funding had closed, the plaintiff could not prove that it would have succeeded in reversing the province’s moratorium decision, no matter how large its war chest, and that the project was not economically feasible without the government funding program that the moratorium ended.

The Court of Appeal agreed with the motion judge and also noted that the Court had already decided, in the 2013 decision, that the plaintiff could not compel the province to reverse the cancellation of the program, nor could it insist that the province continue to offer project funding. As such, no amount of funding from an outside party could accomplish what the plaintiff could not achieve with the province.

Destruction

The motion judge had concluded that (i) no reasonable inference could be drawn that the province had deleted or destroyed documents in an attempt to affect the litigation and (ii) the evidence demonstrated that the destruction of records was in keeping with practice at the relevant time to purge email accounts for departing employees upon a change in government.

The Court reversed this finding in light of the undisputed facts and the motion judge’s own findings in the case. The Court noted that the destruction was deliberate and in accordance with an improper government policy. Further, the destruction occurred after the commencement of the plaintiff’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 were aware of the plaintiff’s claim.

The Court held that, as a party to the proceedings, the province was required to preserve any potentially relevant documents in order to fulfil its disclosure obligations. Those documents included the documents in the possession of the departing employees. Further, whether the province’s intention was to destroy relevant evidence for use in this litigation or in all litigation was a distinction without a difference. The purpose of the destruction was to destroy any incriminating documents. The Court refused to allow the province to bypass its clear documentary obligations because, to do so, would amount to an abuse of process. In essence, the province deliberately destroyed potentially relevant evidence from which the reasonable inference could be drawn that the destruction was done to affect all litigation, including the litigation in the specific action.

It seems that the province did not claim that the dog ate its homework. It admitted that it fed the homework to the dog.

Damages

The Court recognized that spoliation was not a novel issue; it arises out of the obligation to preserve and produce relevant documents in a civil proceeding. A court’s intervention is required because spoliation undermines a fair trial process and interferes with the quest for the truth in judicial proceedings. Accordingly, the destruction of evidence carries a rebuttable presumption that the evidence destroyed would have been unfavourable to the party who destroyed it.

Thus far, the law has recognized spoliation solely as a rule of evidence. It is not yet an independent cause of action (i.e., the plaintiff had no right to claim damages merely because the province had engaged in spoliation). In this case, the Court was not about to rule on whether there was a standalone cause of action – because it did not matter. Spoliation or no, standalone cause of action or no; the plaintiff still had to prove damages.

The Court concluded that the plaintiff could not demonstrate it suffered damages as a result of the spoliation. The Court reasoned that, even if the destroyed evidence had been unfavourable to the province, the project was not viable without government funding – which had been withdrawn independently of the alleged spoliation. Accordingly, the Court held that there was no purpose in remitting the issue of damages to the Superior Court. There were no damages.

Despite the Court setting aside the motion judge’s dismissal of the spoliation claim, nothing came of it – until the disposition of costs.

Costs

Notwithstanding the lack of damages, the Court was not about to let the province, as spoliator, to emerge scot-free from this action and its spoliation of documents. The Court held that the spoliation was an abuse of process and, as such, it felt that the appropriate remedy was to deprive the province of the costs that it had already been granted for winning the motion judge and grant the plaintiff its costs of the appeal fixed at $30,000.

The award of costs was probably nowhere near what the plaintiff was claiming in damages, but at least it provided some balm for its wounds. In this case, costs were used as a deterrent against the destruction of evidence, providing a measure of accountability, even when the plaintiff could not prove any damages arising from the destruction.

 

Image courtesy of stux.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.