SCC to Consider Spoliation: Remedies for Document Destruction
The Supreme Court of Canada granted leave in a case that could clarify spoliation remedies, and particularly where a party destroys or refuses to produce documents relevant to damages. The case involves the world’s largest hedge fund and private equity administrator, SS&C Technologies Canada Corp. (“SS&C”), and the world’s largest custodial bank, Bank of New York Mellon Corporation (“BNY”) and its affiliate, CIBC Mellon Global Securities Services Company (“CIBC Mellon”).
SS&C had a contract with BNY’s predecessor and a similar one with CIBC Mellon for the provision of market pricing data for securities. CIBC Mellon subsequently terminated its contract with SS&C and began sourcing data from BNY. SS&C discovered this and commenced an application alleging breaches of contract by BNY and CIBC Mellon.
SS&C’s counsel put BNY on notice of its obligation to preserve relevant documents. BNY failed to preserve and produce relevant documents relating to damages for data sharing with third parties.
The court below
The central issue on the application was the meaning of the term ‘client’ under the BNY contract – whether it only included BNY, or BNY and several affiliates, including CIBC Mellon. The trial judge concluded that ‘client’ referred to only BNY and the entities its predecessor owned when it entered the contract. It did not include CIBC Mellon. Therefore, BNY breached its contract with SS&C. The trial judge awarded damages of approximately $6.6 Million USD.
SS&C’s spoliation claim against the respondents, for failure to preserve and produce documents relevant to damages, did not impact the trial judge’s damages calculation. It also did not lead to any additional damages being awarded. The trial judge drew an adverse interest against BNY, specifically that unauthorized entities within the BNY Group, other than CIBC Mellon, used the data and such use was not de minimis. The trial judge noted that this adverse inference had nothing to do with spoliation. It was based on a party’s failure to produce evidence to support a proposition it was advancing.
On appeal
The Ontario Court of Appeal upheld the trial judge’s finding that ‘client’ referred to BNY. However, it disagreed with the trial judge that BNY’s predecessor affiliates were authorized to access the data. The court reduced the damages award by $922,887 USD to prevent double compensation.
Importantly, it appeared the trial judge erred on the law of spoliation. Regardless of whether spoliation is treated as merely an evidentiary rule or a standalone tort claim, the appellate court held that an adverse inference is an available spoliation remedy. SS&C established spoliation and the reasonable inference was that BNY’s refusal to preserve and produce the relevant data was to “suppress the truth in the litigation”.
Despite this finding, the appellate court declined to draw a broader adverse inference than the one made by the trial judge and did not to disturb the trial judge’s approach to assessing damages.
Looking ahead
The Supreme Court’s ruling may provide needed clarity on the range of available Canadian spoliation remedies. It may also provide further guidance on the scope of the remedy for destroying or withholding necessary documents to assess damages.
See the Ontario Court of Appeal’s full decision in SS&C Technologies v. Bank of New York Mellon.
