In the case of McDougall v. Black and Decker Inc. et al., 2008 ABCA 353 ("McDougall"), the Alberta Court of Appeal summarized and clarified the current state of the law of spoliation of evidence in Canada.

The decision can be found at http://www.canlii.org/en/ab/abca/doc/2008/2008abca353/2008abca353.html.

The loss of critical evidence, whether by plaintiffs or defendants, is an issue frequently faced by insurers and their insureds in litigation. Documents and equipment are disposed of before their significance is appreciated for later use in litigation. With advancements in technology and increased interest in new forms of electronic evidence comes the additional potential for loss (accidental or otherwise) of evidence prior to or during the course of litigation. Participants in insurance litigation, both defence and subrogated claims, are well advised to understand the current status of the law of spoliation.

Facts

The McDougall case concerned a house fire, which was alleged to have been caused by a malfunctioning cordless electrical drill, manufactured by the defendant, Black and Decker. An investigator hired by McDougall's property insurer (the subrogated insurer) inspected the fire scene and retained the suspect drill.

The fire scene itself was effectively wiped clean, due to the fact that the house was rebuilt prior to Black and Decker being put on notice of a possible claim. Black and Decker was, therefore, unable to inspect the fire scene in its unaltered state. Moreover, certain parts of the suspect drill went missing for reasons which were unclear.

Black and Decker brought a pre-trial application to have the case dismissed, on the grounds that due to the spoliation of the evidence, it was unable to properly defend itself. The chambers judge agreed with Black and Decker and dismissed the claim.

Law of Spoliation of Evidence

The Court of Appeal overturned the chambers judge's decision and restored the claim. In so doing, the Court of Appeal canvassed the noteworthy authorities in this area of law in Canada. The main points made clear by the Court of Appeal are as follows:

  1. Spoliation of evidence requires that a party intentionally destroy or dispose of evidence, where it can be reasonably be inferred that the evidence was destroyed to affect litigation. Negligent destruction of evidence does not amount to spoliation, but may still give rise to procedural remedies.
  2. The principal remedy for spoliation is the imposition of a rebuttable presumption of fact (an adverse inference) that the lost or destroyed evidence would not have assisted the spoliator's case. The presumption can be rebutted by evidence showing the spoliator did not intend, by destroying the evidence, to affect litigation, or by other evidence to prove or repel the case.
  3. A court should not strike an action unless it is beyond doubt that the destruction 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. Any court striking an action should only do so at trial, and not on a pre-trial motion.
  4. The Rules of Court allow for a variety of procedural remedies which, short of dismissing the claim outright, allow for a balancing of the playing field. These include: excluding a party's expert evidence where the opposing party could not have its own expert review the lost evidence; an award of costs where a party had increased expenses in proving its case in the absence of the lost evidence; and allowing pre-trial discovery of an opposing party's expert. The list of remedies remains open, and is subject only to the Rules of Court and the court's inherent jurisdiction to control its process and ensure fairness.  

Summary

In the end, the law appears to be that a court will only dismiss a claim for spoliation in the most egregious of circumstances. The court has a number of alternative remedies to choose from, the common purpose of which is to attempt to level the playing field for the parties to the litigation. Clearly, this would be quite fact specific to each case, and the type of evidence lost.