Case Report – Motion for discovery sanctions dismissed, conduct not proven to be deliberate

On January 29th the New Brunswick Court of Queen’s Bench dismissed a contempt motion and a request for sanctions in a protracted discovery dispute.

Based on an earlier motion, decided on July 16, 2006, the defendants were ordered to provide a further and better affidavit of documents and to provide direct access to a computer system (including active and archived data). They did not provide such access and were sluggish in disclosing documents. The plaintiffs then brought a second motion in June 2007, asking the Court to infer malfeasance from the sluggishness and the fact that the defendants had continued to disclose documents after certifying earlier that they did not exist.

The plaintiffs’ motion was initially heard in June but concluded in late December. While the Court remained seized of the motion, in late November and December, the defendants provided two further and better affidavits and provided access to the computer system as previously ordered (without a cost-shifting order as they had requested). The Court held that the plaintiffs had received meaningful production by December 2007 and rejected the plaintiffs’ sanction request.

The Court stressed the high standard for the requested order – framed as a contempt order and striking a defence which the court said had merit. While it held that the defendants were not diligent in preventing electronic information from being downgraded (i.e. altered to be stored in a less accessible form) and even stated that it wondered whether this downgrading was purposeful, it held that this conduct did not merit a contempt order. It also did not draw an inference of malfeasance from the defendant’s sluggishness, recognizing that the discovery task wasn’t easy:

However, as we know, the parties were dealing, amongst other things, with 498 bankers’ boxes of documents and 427 backup tapes that contained information from Spielo’s previous computer system. Certain discrepancies in disclosure, or the misplacement or inadvertent overlooking of a document, is understandable given the enormous volume of material involved in this matter. This is not necessarily indicative of any culpable conduct or malfeasance on the part of the defendants.

While dismissing the motion, the Court did note that cross-examination at trial may shed more light on the issue of deliberate non-disclosure.

Doucet v. Spielo Manufacturing Inc., [2008] N.B.J. No. 27 (QL) (N.B. Q.B.). [CanLII award not yet available.]

Case Report – Ontario court says spoliation inference doesn’t hinge on bad faith

In this product liability case, the Ontario Superior Court of Justice dismissed a defendant’s motion for a spoliation inference brought because the plaintiff destroyed a ventilation fan that it later argued had caused the damaging fire.

The plaintiff ultimately failed in making its claim that the defendant breached a duty to warn them of the inherent dangers in using the fan and the need to address these dangers through regular maintenance. The plaintiff did, however, meet its first evidentiary hurdle – proof that the fan actually caused the fire, a point disputed by the defendant partly based on the plaintiff’s destruction of the fan.

The fire occurred in mid-September. The fire inspector from the local fire department concluded the fan had caused the fire, and in early October the plaintiff’s insurer retained an expert who reached the same conclusion. In February of the following year the expert disposed of the fan after receiving an instruction from the plaintiff’s insurance adjuster. The plaintiff filed its claim over three and a half years later. Given the missing evidence, the defendant produced an expert report that was based on a review of photographs and other documentary production rather than the fan itself.

The Court made a number of broad statements in disposing of the spoliation motion. Most significantly, it held that in Ontario (as opposed to the approach seemingly favoured British Columbia) proof of bad faith is not required to support an inference that the evidence destroyed would have been favourable to the party who destroyed it. There are other elements of the spoliation decision that are more difficult to decipher but, in the end, the Court decided for the defendant on other grounds.

Dickson v. Broan-NuTone Canada Inc., [2007] O.J. No. 5114 (Q.L.) (S.C.J.).

Case Report – Sask QB rejects spoliation claim

On November 23rd, the Saskatchewan Court of Queen’s Bench held there is no independent tort of spoliation in dismissing a claim against a doctor for destroying patient charts and other hospital records.

The Court dismissed the claim because there was no duty to preserve the records at the time they were destroyed, which was before litigation was filed, apparently pursuant to a routine records management process and in accordance with a compliant records retention period. The Court did not comment on whether litigation was reasonably foreseeable at the time the records were destroyed.

In the alternative, the Court cited the British Columbia Court of Appeal’s decision in Endean v. Canadian Red Cross Society for the proposition that spoliation is only a rule of evidence, not an independent tort. It did not deal with the Ontario Court of Appeal’s decision in Spasic (Estate) v. Imperial Tobacco Ltd., where the Court held it was not plain and obvious that a pleading based on the tort of spoliation discloses no reasonable cause of action and therefore that claims based on the tort should be allowed to proceed to trial.

Galenzoski v. Awad, 2007 SKQB 436 (CanLII).

Case Report – Duty to mitigate weighs against preservation of evidence

In this October 5th Ontario Superior Court of Justice decision, Patillo J. held that a party’s duty to mitigate loss weighed against its duty to preserve relevant evidence.

The case is about damage to high-priced Persian carpets caused while they were under the defendant’s carriage. The defendant made two claims of spoliation, both of which were rejected.

First, the defendant asked that an adverse inference be drawn because the plaintiff could not produce records of similar carpet purchases. Patillo J. disagreed with the defendant’s assertion that the missing records would have been evidence of the value of the carpets that were damaged and rejected its request.

The defendant also claimed that evidence of damage to the carpets was unavailable because the plaintiff sold the carpets shortly after it delivered them into the plaintiff’s possession. Patillo J. held that the dispute was live when the carpets were still in the defendant’s possession. Moreover, he held that the plaintiff was blameless for selling the carpets because it had a duty to mitigate and put the defendant on notice of its mitigation plans:

In my view the presumption does not arise in this case in respect of the carpets. KLM submits that the issue of discoloration and whether the damage to the carpets was irreparable only arose in December 2000. In my view it was clear that the issue of damage to the carpets was one that had been in existence from the time that the carpets were returned by the US Customs Authority in April 2000. Following their return, KLM had the carpets in its possession for many months before World of Art reclaimed them. It retained Mr. Mekhael, its carpet expert, in April 2000 for the express purpose of determining the extent of the damage to the carpets. He looked at the carpets on at least two occasions before December 2000. He had ample time to inspect the carpets and document their condition.

Mr. Ziai testified that he thought Mr. Mekhael wanted to put chemicals on the carpet to test it and that is why he refused permission for testing on December 1, 2000. On December 2 and 3, 2000, after Mr. Mekhael had been refused permission to test a carpet, the carpets were put on public auction by World of Art. KLM’s lawyers were present at the auction. There was nothing to prevent KLM from buying a carpet if it felt it was necessary. The offer to purchase it made on December 8, 2000, was not firm in that it contained no specific price. In any event, if testing of the carpets was so important to KLM, it still had time to move in the Action for an order to preserve property and/or to test. World of Art and Mr. Ziai were proceeding to mitigate World of Art’s damages by selling the carpets. KLM knew that but took no steps to secure a carpet for testing beyond its general offer to purchase. In the circumstances, I am hard pressed to understand how the presumption in respect of spoliation arises.

Ziai v. Maatschappij (KLM Royal Dutch Airlines), 2007 CanLII 41896 (ON S.C.).