Don’t throw out the evidence: SCC clarifies strict rules on spoliation

The Supreme Court of Canada has released a significant decision clarifying the law of spoliation and the serious consequences that follow when parties fail to preserve relevant evidence.

Background 

In SS&C Technologies Canada Corp. v. Bank of New York Mellon Corp. (“BNYM”), 2026 SCC 29, SS&C entered into separate data services agreements with the BNYM and a joint venture. The BNYM agreement prohibited sharing or redistributing SS&C’s data. After the joint venture terminated its contract, SS&C discovered that it continued receiving data from BNYM for free. SS&C demanded that BNYM preserve records detailing how its data was being redistributed, to which affiliates, and the revenues earned from that redistribution. When BNYM refused, SS&C terminated the agreement and sued for breach of contract. 

Lower court decisions

At trial, the judge found that the bank breached its agreement. Because BNYM could only account for 44.6% of the data it had received from SS&S, the judge inferred that the unaccounted for data had been shared with unauthorized entities and used more than minimally. The judge applied a “rateable approach” to calculating damages, ordering BNYM to pay the remaining 55.4 percent of the data at what he understood to be the rate provided for in the agreement. The Court of Appeal upheld the damages award, accepted the adverse inferences, and went further by making an express finding of spoliation against the bank.

Supreme Court of Canada decision 

The SCC confirmed that the test for spoliation requires proof of the following elements on a balance of probabilities: (1) the evidence was intentionally destroyed, altered, mutilated, or concealed; (2) at the time of destruction, litigation was ongoing or reasonably contemplated; (3) the evidence was relevant to said litigation; and (4) it is reasonable to infer that the evidence was destroyed to affect the litigation.

Key findings:

• Mandatory adverse inferences – Once spoliation is established, courts have no discretion: they must draw inferences against the spoliator that fill evidentiary gaps. In this case, the trial judge’s inferences were too weak, leaving SS&C burdened by uncertainty and gaps in the evidence rather than placing that burden on the bank.
• Damages must be evidence based – The method of calculating damages must be connected to the facts in evidence. The trial judge’s rateable approach failed to consider the nature and scale of the breaches found and applied an arbitrary rate for pricing for unaccounted-for data based on accounted-for data. The damages award was therefore set aside and remitted to the trial judge for re-assessment.
• Spoliation is an abuse of process – Courts may impose serious sanctions on spoliators to remedy the spoliation including, among other things, excluding expert reports, rendering adverse credibility findings, awarding substantial indemnity costs, and even striking a claim or defence. 

Significance for clients 

• Preservation protocols are critical – Strong retention policies and immediate litigation holds must be activated when disputes are anticipated. 
• Adverse presumptions are automatic – Destroyed or missing evidence will be treated as harmful to the spoliator. 
• Sanctions risk is significant – Courts can impose a broad range of remedies against a spoliator, with the potential to seriously undermine their claim or defence. 

For our insurance clients, failing to preserve evidence can severely compromise coverage positions, subrogation prospects, or liability assessments. Experts and adjusters should be instructed to retain all potentially relevant evidence, recognizing that items appearing insignificant at the outset may become central if litigation unfolds. It is also essential to preserve the underwriting file, as these records often contain critical risk assessments, communications, and historical data that may become highly relevant once a dispute arises.

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