Law Times

Law TiMes • March 16, 2009 NEW An online resource tool 1.800.263.3269 Bestcase earlug.indd 1 3/26/08 11:52:01 AM Focus On LITIGATION system. The extent of the duty to preserve such documents in anticipation of litiga- tion, however, has to some extent been in jurisprudential limbo. Part of the reason is that it has been over he obligation to produce relevant evidence has been a longstand- ing bulwark of our civil justice 100 years since the Supreme Court of Can- ada dealt with the doctrine of spoliation, which governs the remedies available when parties are remiss in their duty to preserve. It's an issue that has until now flown under the radar. But the recent focus on electronically stored information has re- turned it to the fore. "Spoliation has become a more impor- Law of spoliation enjoys resurgence in Canada T It's been 100 years since Supreme Court dealt with the doctrine BY JULIUS MELNITZER For Law Times • whether spoliation has occurred and the rem- edy for it are generally matters for trial; and an intentional tort, nor is there a duty to preserve evidence for the purposes of the law of negligence, though these issues remain open; The only Canadian jurisdiction that im- poses an express positive duty to take preserva- tion measures, Michaluk notes, is Nova Scotia. "The absence of a • pretrial relief may be available in rare cases. But Don Wilson, a partner at Davis LLP's Ed- monton office, who rep- resented Black & Decker, says the decision dilutes the doctrine of spoliation. "By adding the re- tant concern because of the degree to which e-records are amenable to deletion and the need to track these records," says Jeffrey Kaufman, a senior partner at Fasken Mar- tineau DuMoulin LLP's Toronto office. Fortunately, the Alberta Court of Ap- peal's recent decision in McDougall v. Black & Decker Canada Inc. deals with the issue head-on. "Black & Decker is the first comprehen- standard otherwise is a problem because it's the extent of the duty to pre- serve that gets lawyers nervous, not the bad faith stuff," he says. Kaufman believes, asked to prove a negative," Herman wrote. "How can he prove that he did not destroy relevant evidence? As his father's executor, [the defendant] was entitled to deal with his father's papers. There was no preservation order in this proceeding." Michael Deverett, a senior lawyer at sive look at the law by a Canadian appellate court in more than a century," says Jeffrey Landmann, an associate with Blake Cassels & Graydon LLP's Calgary office. In its reasons, the court enunciated six principles summarizing the law of spolia- tion in Canada: • spoliation is the intentional destruction of evidence to affect existing or antici- pated litigation; quirement of deliberate behaviour as a condition for imposing an adverse presumption, the Court of Appeal has greatly circumscribed the doctrine's ability to take hold," he says. "Lawyers whose cli- ents are subject to cross-examination on the destruction of evidence will make sure their clients understand that spoliation only ap- plies if the conduct was intentional." Landmann says American courts have dealt with spoliation remedies more aggres- sively than the Court of Appeal did. "U.S. courts have granted a variety of Dan Michaluk says the only Canadian jurisdiction that impos- es an express positive duty to take preservation measures is Nova Scotia. however, that it won't be long before the Canadian law on spoliation and preservation crystallizes. "The Alberta Court have to wait to see how trial judges apply it before we get a handle on the law, that shouldn't take too long because there's a lot of this stuff going on nowadays, espe- cially in litigation with the financial in- dustry over the credit crunch." The first kick at the can may come when of Appeal's approach has the advantage of be- ing a very flexible one," he says. "Although we'll more serious remedies such as striking claims and have done so both before or dur- ing trial," he says. "In some cases, they've gone so far as to rule that spoliation is an actionable tort in itself." Dan Michaluk, an associate with Hicks • the main remedy for spoliation is the im- position of a rebuttable presumption of fact that the lost or destroyed evidence would not assist the spoliator; • other remedies may be available even where evidence has been unintentionally destroyed, which remedies are based on the court's rules of procedure and its in- herent ability to prevent abuse of process. The remedies may include the exclusion of expert reports and costs sanctions; • intentional destruction of evidence is not Morley Hamilton Stewart Storie LLP's Toronto office, agrees that Canadian juris- prudence on preservation and spoliation remains wanting. "The difficulty with McDougall is that it tells us what the law related to preservation is not — in the sense that it holds that no duty of care to preserve evidence currently exists in our law," he says. "On the other hand, it at least provides some clarity in making the distinction between deliberate conduct and conduct that is not intentional." the Ontario Court of Appeal considers the pending appeal in Tarling v. Tarling. There, the defendant had the testator's computer wiped after the plaintiff threatened litiga- tion and after he received correspondence from plaintiff's counsel. There was also at least one e-mail destroyed (although later produced by a third party) that supported the plaintiff's claim of undue influence. At trial, Superior Court Justice Thea Herman concluded that the defendant did not intentionally destroy relevant evidence and dismissed the plaintiff 's spoliation claim. But it's unclear whether Herman would have required both bad faith and prejudice to establish the claim. The deci- sion also fails to consider the extent of the duty to preserve or whether such a duty even existed in this case. "One of the difficulties in determining whether [the defendant] intentionally de- stroyed relevant evidence is that he is being PAGE 9 Deverett Law Offices, who represented the plaintiff at trial, has concerns whether Her- man set the bar too high in Tarling. "The judge raised the bar by effec- tively requiring the plaintiff to prove the relevance and significance of the evidence that the defendant destroyed," he says. "Wouldn't you think the guy destroying the evidence should be the one making notes of what was destroyed?" However that may be, the Ontario Court of Appeal will have an opportunity to lend its voice to the jurisprudence. Here, it is notable that the court, in its 2000 deci- sion in Spasic Estate v. Imperial Tobacco Ltd., refused to summarily dismiss a spoliation claim before trial on the grounds that it did not disclose a reasonable cause of action. Meanwhile, lawyers and clients have by way of guidance only the general principle that all litigants have an obliga- tion to preserve evidence and documents touching on matters in issue. But general principles may not do the trick for parties struggling with what they should actually do when litigation is even remotely on the horizon. What is certain is that they will have to deal with some very specific, thorny issues. "For example, when does the red flag go up?" asks Susan Wortzman, founder of Wortzman Nickle Professional Corp., a Toronto-based e-discovery and litiga- tion management boutique. "Is it when the phone call is received from opposing counsel that an employee whose employ- ment has been terminated intends to com- mence an action, or does the duty to pre- serve commence as soon as the disgruntled employee's job is terminated?" While no Canadian court has articu- lated a precise test, Wortzman suggests that a standard focused on a "reasonable antici- pation of litigation" is a workable starting See Alberta, page 10 The McKellar Structured Settlement™ With The McKellar Structured Settlement is a sure thing. Tax-free. Guaranteed. Billions of dollars invested, not a penny lost. Untitled-2 1 www.lawtimesnews.com www.mckellar.com 1-800-265-8381 3/11/09 2:07:04 PM

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