Arbitration board dismisses spoliation motion

On May 6th, the Ontario Grievance Settlement Board dismissed a union motion for the ultimate spoliation remedy – granting of a grievance based on an abuse of process.

The Union made its motion in a seemingly hard fought discipline and discharge case. The Union’s pursuit of electronically stored information “to review the life cycle of certain documents that were exhibits in order to test the integrity and reliability of the documents” began after the employer had put its case in through 40 days of witness testimony. The ESI motion itself took 13 days, and at some point the employer agreed to conduct a forensic examination of certain data. Unfortunately, just before it was about to pull the data, three computers were wiped as part a routine hardware renewal process. Ooops.

Based on two more hearing days the Board held the destruction of the data was inadvertent and not even negligent. Arbitrator Petryshen said:

It is not surprising that the Employer or FIT did not arrange for the imaging of the three bailiff computers prior to September of 2017 because no one considered that there was a risk of losing that data.  Although management at the OTO unit and FIT knew that government computers were replaced every four years, it was reasonable for OTO management to expect that they would be notified when the computers in OTO unit were about to be refreshed. 

Although this is quite forgiving, Arbitrator Petryshen’s finding that the “the granting of grievances due to a loss of potentially relevant documents is an extraordinary remedy” is quite consistent with the prevailing law. In 2006, the Court of Appeal for Ontario quashed an arbitration award that allowed a grievance based on an employer’s inadvertent destruction of relevant evidence, and the Court of Appeal for Alberta’s leading decision in Black & Decker says that even negligent destruction of relevant evidence will not amount to an abuse of process.

Ontario Public Service Employees Union (Pacheco) v Ontario (Solicitor General), 2020 CanLII 38999 (ON GSB).

Party can call evidence about contents of lost video

On January 22nd, Vice-Chair Harris of the (Ontario) Grievance Settlement Board held that an employer can call testimony from witnesses who had viewed a video tape before it was inadvertently destroyed. He held that exclusion was an inappropriate remedy for inadvertent spoliation given the employer’s case rested on the proposed evidence. He also held that the proposed evidence was not hearsay and was not excluded because the best evidence was unavailable.

The overwhelming strength of the authorities is that such secondary evidence is admissible when the trier of fact is satisfied that the original existed, has been lost or destroyed and a proper explanation has been given of the absence of the better evidence. Here, that explanation has been given and accepted by the union.

Ontario Public Service Employees Union (Phagau) v Ontario (Liquor Control Board of Ontario), 2016 CanLII 7445 (ON GSB).

Arbitrator says privacy concern did not justify altering records, wiping phone

On July 2nd, Arbitrator Peltz affirmed the discharge of a university support staff employee who altered billing records for his employer-owned cell phone and later wiped the phone after being directed to retrieve it so it could be examined.

The grievor worked in the university’s technology transfer office in a position of trust. After the university confronted him about excessive personal use of his phone the grievor deleted parts of phone records that showed his calling history. These records were stored on a university shared drive and were therefore to accessible to other employees in the grievor’s department. The grievor said he did this because he was concerned about the disclosure of his call history.

The university discovered the alterations. It called the grievor to an investigation meeting in which it heard the grievor’s position and advised the grievor that he would be placed on paid leave pending an examination of his cell phone and computer records. The grievor went to his office to retrieve his phone. When he did not return his supervisor investigated and found the grievor wiping his phone. The grievor continued over over his supervisor’s direction to stop, responding “I’m just deleting my personal information.”

Arbitrator Peltz found the grievor’s alteration of records to be culpable. He commented:

It is one thing to say that digital privacy is now highly valued in Canadian society. It is something else to claim a unilateral self help remedy without even consulting the employer whose records are being altered.

Arbitrator Peltz also held that the grievor was insubordinate because he intentionally frustrated the university’s plan to conduct a reasonable search. He said that the university had a reasonable concern about “all the greivor’s communications” and that due diligence required a “complete review, excepting personal matters.” Some effort to minimize the impact of the search may have been required according to Arbitrator Peltz, but the grievor should have stated his privacy concern rather than take matters into his own hands by wiping his phone.

University of Manitoba v Association of Employees Supporting Educational Services, 2015 CanLII 49535 (MB LA).

BCCA Ruling Suggests that Duty to Preserve is not Based on Size of Potential Claim

On February 4th, the British Columbia Court of Appeal affirmed a ruling that a gaming company had no duty to preserve betting slips redeemed by an individual to whom it denied a prize claim for over $6.5 million.

The plaintiff claimed he submitted 20 to 25 betting slips into the gaming company’s redemption machine, and that the machine retained five to 10 tickets as winning slips. The machine then produced a voucher for $6.5 million, which the gaming company would not pay based on a claim that the voucher was produced in error. It based this conclusion on an examination of a winning slip that was stamped by the machine as associated with a $6.5 million win but that did not reveal a winning wager at all. At the time it denied a payout, the gaming company also denied the plaintiff’s request to see his other slips that were retained by the machine. The gaming company destroyed these slips in the ordinary course of its business a week or two later, well before the plaintiff threatened or commenced an action.

Last March, Justice Fisher of the British Columbia Supreme Court held that the gaming company had no duty to preserve when it destroyed the records. She said:

While perhaps it may have been prudent for the defendants to have contacted Mr. Patzer before the betting slips were destroyed, I cannot accede to Mr. Laxton’s submission that they had a positive duty to do so. I appreciate that the error of issuing a cash voucher for such a large amount of money is significant. I accept that Mr. Patzer asked to see his betting slips on November 6, 2004 but he did not follow up this request further. More importantly, if Mr. Patzer was not satisfied with the explanation he had been given, he should have advised the defendants. They would then have been at least put on notice that the matter had not been put to rest.

Here, the slips were destroyed in the ordinary course of business before the defendants were aware that Mr. Patzer was considering litigation or even challenging their explanation for the error. While it is unfortunate that they were destroyed so soon after the event, the defendants did not intentionally destroy the winning betting slips in an effort to suppress the truth. Accordingly, there is no basis to apply the doctrine of spoliation.

As there is no common law duty to preserve property which may possibly be required for evidentiary purposes and given these findings, the plaintiff’s claim based on the defendants’ destruction of the betting slips must fail.

The Court of Appeal affirmed this ruling. It stressed that the gaming company had provided the plaintiff with an immediate denial and explanation and that the plaintiff, despite attending one day later with legal counsel, did not provide the company formal notice of his intention to claim before he sued two years later.

Patzer v. Hastings Entertainment Inc., 2011 BCCA 60 (CanLII).

Case Report – Court says duty to preserve doesn’t spring from mere happening of adverse event

On December 7th, the Ontario Superior Court of Justice dismissed a motion for an adverse inference based on the destruction of hospital records.

The hospital destroyed, during a routine purge, a medical chart related to a minor’s labour and delivery more than ten years after the procedure but less than ten years from the minor’s 18th birthday. The Court held that the destruction of the chart was inadvertent rather than intentional. Its reasoning is very fact-specific but for the following comment on one of the bases the plaintiff raised in support of an inference:

He also submitted that the fact of an adverse outcome [in the medical procedure at issue] is sufficient to suggest motivation to destroy records. I reject these submissions. Many medical procedures and hospitalizations may not have the desired outcome, but that does not automatically lead to the conclusion there will be litigation.

This is a (thankfully) forgiving take on the duty to preserve.

Gutbir v. University Health Network, 2010 ONSC 6752 (CanLII).

Case Report – Spoliation remedy granted in favour of bereaved dog owner

On May 21st, the Ontario Superior Court of Justice held that a kennel failed to meet it’s standard of care based on an inference it drew because of a missing record.

The plaintiff brought an action against the kennel after her dog needed to be euthanized shortly after its stay. Her theory was that the kennel should have been more attentive to her dog’s physical deterioration and intervened. The kennel argued that the deterioration occurred rapidly. However, it was hampered in making this argument because it had lost its record of the dog’s care.

The deputy judge did not make an express finding of bad faith, but did note that the owner’s evidence on the loss of the record was was “vague.” The record’s probative value being apparent, he drew an adverse inference and held that its loss “tipped the balance” in favor of the plaintiff on the issue of care.

This case is not earth-shattering, but is a nice scenario for raising the issue about whether negligent or reckless loss of a record is enough to support a spoliation remedy. In light of the Alberta Court of Appeal’s Black & Decker decision, the vague evidence finding was likely essential to the remedial award in this case.

Arnold v. Bekkers Pet Care Inc., [2010] O.J. 2153 (S.C.J.).

Case Report – Court says duty to preserve doesn’t spring from gravity of potential dispute

On March 30th, the British Columbia Supreme Court held that a gaming company had no duty to preserve betting slips redeemed by an individual to whom it denied a prize claim for over $6.5 million.

The plaintiff claimed he submitted 20 to 25 betting slips into the gaming company’s redemption machine, and that the machine retained five to 10 tickets as winning slips. The machine then produced a voucher for $6.5 million, which the gaming company would not pay based on a claim that the voucher was produced in error. It based this conclusion on an examination of a winning slip that was stamped by the machine as associated with a $6.5 million win but that did not reveal a winning wager at all. At the time it denied a payout, the gaming company also denied the plaintiff’s request to see his other slips that were retained by the machine. The gaming company destroyed these slips in the ordinary course of its business a week or two later, well before the plaintiff threatened or commenced an action.

The Court held that the gaming company had no duty to preserve when it destroyed the records. It said:

While perhaps it may have been prudent for the defendants to have contacted Mr. Patzer before the betting slips were destroyed, I cannot accede to Mr. Laxton’s submission that they had a positive duty to do so. I appreciate that the error of issuing a cash voucher for such a large amount of money is significant. I accept that Mr. Patzer asked to see his betting slips on November 6, 2004 but he did not follow up this request further. More importantly, if Mr. Patzer was not satisfied with the explanation he had been given, he should have advised the defendants. They would then have been at least put on notice that the matter had not been put to rest.

Here, the slips were destroyed in the ordinary course of business before the defendants were aware that Mr. Patzer was considering litigation or even challenging their explanation for the error. While it is unfortunate that they were destroyed so soon after the event, the defendants did not intentionally destroy the winning betting slips in an effort to suppress the truth. Accordingly, there is no basis to apply the doctrine of spoliation.

As there is no common law duty to preserve property which may possibly be required for evidentiary purposes and given these findings, the plaintiff’s claim based on the defendants’ destruction of the betting slips must fail.

Patzer v. Hastings Entertainment Inc., 2010 BCSC 236 (CanLII).

“Zubulake Revisited” a warning to Canadian litigants, but our law is different

On January 11th, Judge Schira Scheindlin of the United States District Court, Southern District of New York issued an opinion she entitled “Zubulake Revisited” – named after a series of landmark spoliation opinions she issued six years earlier. Since Zubulake, the Canadian law on spoliation has clearly diverged from that in the United States. While Judge Scheindlin’s recent dissection of corporate preservation processes contains excellent learning for Canadian organizations charged with meeting their preservation duties, it should not be the basis for assessing the merits of Canadian spoliation claims given our more forgiving remedial approach nor should it draw Canadian litigants to distraction from the merits of their litigation.

Judge Scheindlin’s most recent judgment is called The Pension Committee of the University of Montreal Pension Plan, et al. v. Banc of America Securities, LLC, et al. She orders an adverse inference instruction and costs against six plaintiffs who she finds grossly negligent in meeting their preservation duties and costs against seven other plaintiffs she finds guilty of mere negligence. In doing so, Judge Scheindlin describes how a court should use its inherent jurisdiction to control its process to deal with negligent preservation.

Judge Scheindlin says the purpose of a spoliation sanction is to (1) deter litigants from “engaging in spoliation,” (2) shift trial risks to the responsible party and (3) cure prejudice. She holds that a party who negligently destroys records in breach of a preservation duty may face a “severe sanction” such as dismissal, preclusion or imposition of an adverse inference if the other party proves prejudice. In cases of gross negligence, Judge Scheindlin argues for a rebuttable presumption of prejudice.

Compare this to the Canadian position as described by the Alberta Court of Appeal in its October 2008 Black & Decker decision:

In addition [to an inference of fact drawn from willful spoliation], the courts have a broad discretion to fashion remedies to avoid abuse of process, and the court’s rules of procedure are designed to assist the parties in ensuring trial fairness. Obviously, where the goal is to award remedies to even the playing field, the reason for destruction is less important. Generally such remedies are covered, and should be covered, through application of existing practice rules (or the development of further rules) and the exercise of the court’s discretion to avoid an abuse of process or award costs. Intention may not be necessary in those circumstances. But the unintentional destruction of evidence is not spoliation, and it is not appropriate to presume that missing evidence would tell against the person destroying it where the destruction is unintentional and the trier of fact cannot draw the adverse inference that the evidence was destroyed because it would tell against the spoliator.

Black & Decker is the current leading Canadian case on the remedies that flow from the breach of the duty to preserve. Unlike Judge Scheindlin, who says remedies should be granted (at least in part) to deter culpable conduct, the Alberta Court of Appeal suggests that the maintenance of trial fairness should be the primary guide to the exercise of discretion. Furthermore, it warns that that the striking of an action is an extraordinary remedy that must rest on willful misconduct: “While the court always has the inherent jurisdiction to strike an action to prevent an abuse of process, it should not do so where a plaintiff has lost or destroyed evidence, unless it is beyond doubt that this was a deliberate act done with the clear intention of gaining an advantage in litigation, and the prejudice is so obviously profound that it prevents the innocent party from mounting a defence.”

Ironically, Judge Scheindlin does express concern about litigation becoming “a ‘gotcha’ game rather than a full and fair opportunity to air the merits of the dispute.” Our own law has developed in a manner that more fully addresses this concern.

Big hat tip to Dominic Jaar of Ledjit for passing on this decision. For more on Canadian conservatism and the duty to preserve, see this Slaw article.

POSTSCRIPT. Following the publication of this post, Judge Scheindlin withdrew her originally-issued order and issued a revised order with clarifications that do not alter the point made in this post. The amending order is here and the consolidated amendment is here. Hat tip to Ralph Losey for covering the breaking news here.

Case Report – Court reminds us the spoliation inference is based on more than a missing record

On December 18th, Mr. Justice Flynn of the Ontario Superior Court of Justice dismissed an argument for a spoliation-based adverse inference.

The respondents argued against an application for occupation rent that was brought by a tenant in common’s estate trustees. They claimed, in part, that the applicants suppressed a letter referred to in the testator’s will that was in their favour.  The applicants couldn’t find the letter, which they claimed they had never seen. In dismissing the spoliation argument, Flynn J. said:

The onus to prove that such a missing letter actually existed and that it is being suppressed by the Applicants – a serious allegation – is clearly and heavily on the Respondents and the Respondents’ evidence has not risen above mere speculation or conjecture.

Gladding Estate v. Cote, 2009 CanLII 72079 (ON S.C.).

Case Report – Manitoba sunglasses at night case illustrates key requirement for spoliation inference

A June 30th Manitoba Court of Queen’s bench decision nicely illustrates that an adverse inference for spoliation requires proof of intentional misconduct.

The Court held that the plaintiff contributed to her slip and fall injury because she was wearing her sunglasses at dusk. The defendant’s evidence supporting this conclusion went in through a witness who viewed the incident as it occurred via feed from a surveillance camera and testified that the plaintiff was wearing her sunglasses. The defendant also adduced a photo frame taken from the surveillance tape that showed the plaintiff holding her sunglasses in her hand after the accident. The defendant destroyed the tape itself, however, even though it had made a preservation request to its security department.

The Court rejected the plaintiff’s argument for an adverse inference because it had not proved the tapes were destroyed intentionally (citations omitted):

…there is no evidence that the tape was intentionally or deliberately destroyed so as to justify any spoliation inference, i.e., the presumption that intentionally destroyed evidence would tell against the spoliator. I cannot infer that the evidence was destroyed to affect the litigation. There is no indication that Ms. Park had anything to do with the tape being unavailable (the only evidence the court heard in this regard was hearsay – Ms. Park was told it was taped over). Nor can I conclude that the unavailability of her notes was due to any deliberate act. In any event, Ms. Park saw the incident as it occurred through the camera and she was subject to cross-examination. She maintained that Ms. Kulynych was wearing sun-glasses. I found her to be convincing in her evidence and forthright and reliable.

The Court did not consider whether a remedy should be granted under the abuse of process doctrine in consideration of the apparent prejudice to the plaintiff, though the Alberta Court of Appeal’s leading Black & Decker case suggests that an abuse of process remedy will also only be available if there is proof of intentional spoliation.

Kulynych v. Manitoba Lotteries Corp., 2009 MBQB 187 (CanLII).