Delete at Your Peril: What Litigants Should Keep in Mind About Preserving Evidence

In SS&C Technologies Canada Corp. v Bank of New York Mellon Corp. (“SS&C v BNY”), the Supreme Court of Canada revisited the doctrine of spoliation for the first time in more than a century and clarified how courts should respond when relevant evidence is intentionally destroyed, concealed or not preserved.

The dispute arose from a data-services agreement between SS&C Technologies Canada Corporation (“SS&C”) and Bank of New York Mellon Corporation (“BNY”). SS&C supplied proprietary data to BNY under an agreement that prohibited BNY from sharing or redistributing the data to other entities. SS&C later discovered that the data had been redistributed, potentially to as many as 65 unauthorized entities.

After discovering the unauthorized sharing, SS&C specifically asked BNY to preserve information showing how its data had been redistributed and which entities had received it. BNY refused. When SS&C subsequently commenced a lawsuit for breach of contract, that information was no longer available.

At trial, the judge found that BNY had breached the agreement and drew two adverse inferences because of BNY’s failure to preserve and produce relevant evidence, although the trial judge did not expressly find spoliation. The Ontario Court of Appeal found that BNY had committed spoliation, but left the trial judge’s damages award undisturbed. The Supreme Court unanimously found that spoliation had occurred but allowed the appeal directing for a new assessment of damages.

A Four-Part Test for Spoliation

The Supreme Court defined spoliation as “the intentional destruction, alteration, mutilation or concealment of evidence with a view to subverting the truth-finding process during litigation”. Spoliation is made out, on a balance of probabilities, where a four-part test is met:

1. the evidence was intentionally destroyed, altered, mutilated or concealed;
2. when that occurred, litigation was ongoing or reasonably contemplated;
3. the evidence was relevant to that litigation; and
4. it is reasonable to infer that the evidence was destroyed or concealed to affect the litigation.

The Court went so far to say that “there should be little difficulty” in concluding spoliation was “intentional” if relevant evidence is unjustifiably destroyed in the context of reasonably contemplated/ongoing litigation.

Once spoliation is established, a rebuttable presumption arises that the missing evidence would have been unfavourable to the spoliating party. If that presumption is not rebutted, the court must draw an adverse inference. The nature and scope of that inference remain fact-specific and within the trial judge’s discretion, but it must meaningfully address the evidentiary gap created by the spoliation.

The Court also held that an adverse inference is not the only potential consequence of spoliation. Depending on the circumstances and proportionality of the response, courts may consider other remedies including:

• striking a claim or defence;
• making adverse credibility findings;
• awarding substantial indemnity costs or punitive damages;
• excluding expert reports;
• granting interlocutory or preservation orders; and
• making findings of contempt.

The Court ultimately set aside the damages award because the trial judge's methodology did not adequately reflect either BNY’s spoliation or the scale of the underlying contractual breaches. A new hearing was ordered to quantify damages using adverse inferences capable of producing concrete factual findings about the extent and value of the unauthorized data use.

The Takeaway: Preserve First, Assess Relevance Second

For insurers, SS&C v BNY is an important reminder that evidence preservation is not simply an issue for defence counsel once a lawsuit has been filed. The obligation can become critical as soon as litigation is reasonably contemplated, and today's relevant evidence extends well beyond paper documents. Potentially relevant evidence can include: damaged products and physical property that is rendered unsalvageable, emails, text messages, photographs, surveillance footage, vehicle event data, electronic files, metadata and other electronically stored information that may or may not be on an automatic deletion or retention schedule.

The practical lesson is straightforward: preserve first, assess relevance second. Once an insurer or insured becomes aware of circumstances reasonably likely to lead to litigation, potentially relevant evidence should be identified and steps should be taken to prevent its routine deletion, overwriting, alteration or destruction.

Even in situations where liability is unlikely or disputed, this decision is a good reminder of the importance of communicating preservation requirements to insureds, adjusters, experts and relevant third parties early in the claims process. In SS&C v BNY, BNY had been expressly warned to preserve the relevant information but declined to do so because it rejected the allegations against it. Notwithstanding their early denial of fault, all three levels of courts found that the circumstances supported spoliation.

For insurers, the safest approach is therefore to incorporate evidence preservation into early stages of claims handling. When a claim presents a realistic prospect of litigation, consider:

1. Identifying potentially relevant physical and electronic evidence immediately;
2. Suspending automatic deletion or destruction policies where necessary;
3. Documenting the preservation steps taken;
4. Sending written preservation instructions to insureds and other custodians of relevant evidence;
5. Consulting defence counsel early where evidence is perishable, technically complex or potentially dispositive; and
6. Seeking a preservation order where there is a genuine concern that evidence controlled by another party may disappear.

The cost of early preservation is usually modest. The consequences of getting it wrong may not be. For insurers and claims professionals, early evidence preservation can make a significant difference in defending a claim. If you have questions about preservation obligations, potential spoliation or managing evidence during the claims process, contact Laura Triana in Calgary, Christine Pratt, KC in Edmonton, or any member of Field Law's Insurance Group for guidance.

Link to decision: SS&C Technologies Canada Corp. v Bank of New York Mellon Corp., 2026 SCC 29