As the Supreme Court of Canada’s first major ruling on spoliation (the intentional destruction or concealment of evidence) in over a century, it carries immediate value. In SS&C Technologies Canada Corp. v. Bank of New York Mellon Corp., 2026 SCC 29, Canada’s highest court established a strict boundary for financial litigation: trial judges cannot invent middle-ground financial remedies when missing evidence or complex commercial transactions complicate damage calculations.

When commercial contracts break down – whether involving enterprise software agreements, multi-million-dollar commercial property leases, or joint real estate developments – proving financial loss requires rigorous methodology.

Trial judges faced with incomplete accounting records or destroyed database logs often feel tempted to split the difference between competing expert opinions or construct arbitrary compromise formulas.

The Supreme Court of Canada has ruled that this practice, known as crafting “untethered” awards, constitutes a reviewable error of law.

Damage awards must connect directly to proven contractual breaches and concrete evidence.

For commercial property owners, commercial renters, corporate directors, and institutional litigants, this ruling alters the strategic mechanics of financial litigation.

When opposing parties intentionally destroy, purge, or refuse to produce critical business records, senior litigation counsel can use the tool of mandatory adverse inferences to bridge the evidentiary gap, turning an opponent’s non-disclosure into a definitive finding of liability and quantum.

The Evidentiary Vacuum and the Limits of Judicial Discretion

Commercial disputes frequently unfold in an environment of imperfect information. In SS&C Technologies, the plaintiff, a global financial data provider, licensed proprietary pricing data to Bank of New York Mellon under a strict volume-based agreement that prohibited sharing data with third parties or corporate affiliates. Over a seventeen-year period, Bank of New York Mellon improperly distributed this data to as many as 65 affiliated entities, collecting internal payments while circumventing licensing fees.

When the data provider discovered the unauthorized redistribution and issued a formal litigation hold demanding a full accounting of all data usage, the bank refused to preserve the records, relying on routine electronic data purge schedules to destroy database access logs.

At trial, the judge confronted a severe evidentiary vacuum created by the bank’s non-production: sounds familiar?

Rather than adopting the plaintiff’s global damages theory or accepting the defendant’s claim of nominal harm, the trial judge created a middle-ground methodology termed the “rateable approach”: the trial judge found that the bank could account for 44.6 percent of the data provided and assumed that the remaining 55.4 percent was wrongfully shared. Treating the full contract price as the value of the accounted-for portion, the judge extrapolated a damage award of $5,696,850 USD for the missing portion.

Both parties appealed the decision. The Court of Appeal for Ontario affirmed the damage calculation while formally finding the bank guilty of spoliation. The Supreme Court of Canada granted leave and overturned the damage award, declaring the trial judge’s compromise formula legally unsupportable and remitting the case back for re-assessment based on mandatory adverse inferences.

The Rejection of “Untethered” Damage Calculations

The Supreme Court’s decision establishes that pragmatic judicial discretion has strict legal boundaries.

While courts acknowledge that assessing commercial damages is an inexact science and mathematical precision is not required, judges cannot craft numbers out of air or rely on assumptions disconnected from the record.

The court identified four fatal errors in middle-ground damage formulas:

1. Disconnection from the Scale of Breach: The trial judge’s calculation treated the data as if it had been accessed by a single unauthorized entity only once. It completely ignored evidence that up to 65 separate corporate entities accessed and utilized the proprietary data repeatedly over nearly two decades.
2. Unsubstantiated Pricing Norms: The trial judge assumed the parties would have agreed to an “enterprise discount” or centralized pricing model for all 65 entities. No evidence existed to suggest the plaintiff would have accepted a 98.5 percent unit discount to supply an entire corporate conglomerate under a single license.
3. Arbitrary Base Rates: The formula deemed the full historical contract fee to represent payment for only less than half the delivered data, distorting the actual contractual rate agreed upon by the parties.
4. Misapplication of Unreliable Records: The calculation relied on database logs that the trial judge himself had characterized as circular, incomplete, and unsupportable.

For commercial litigants, the SCC ruling provides unambiguous guidance: parties cannot rely on a court to split the difference when financial records are messy. Plaintiffs must build an unassailable evidentiary foundation, and defendants cannot hide behind artificial valuation models to limit exposure for widespread contractual breaches.

Mandatory Adverse Inferences: Bridging the Evidentiary Gap

The centrepiece of the Supreme Court’s ruling focuses on spoliation, and this is where senior litigation counsel can turn an opponent’s evidentiary destruction into a decisive trial advantage.

Spoliation occurs when a party intentionally destroys, alters, mutilates, or conceals evidence with a view to subverting the truth-finding process during ongoing or reasonably contemplated litigation. To establish spoliation, a litigant must prove four elements on a balance of probabilities:

• The evidence was intentionally destroyed, altered, mutilated, or concealed;
• At the time of destruction, litigation was ongoing or reasonably contemplated;
• The destroyed evidence was relevant to the litigation; and
• It is reasonable to infer that the evidence was destroyed to affect the outcome of the lawsuit.

Once spoliation is established, a rebuttable presumption arises that the missing evidence would have been unfavourable to the destroying party.

If the spoliator fails to rebut this presumption, it becomes mandatory for the court to draw an adverse inference.

The Supreme Court clarified that an adverse inference must not be a weak restatement of facts already proven.

To serve its legal function, the adverse inference must be capable of filling the exact factual gap created by the destruction of evidence.

In SS&C Technologies, the trial judge drew weak inferences, merely noting that unauthorized entities made “more than minimal” use of the data. The Supreme Court ruled that this approach improperly burdened the innocent party with the uncertainty caused by the bank’s misconduct. Instead, the court held that where a party intentionally purges records after receiving a litigation hold, the trial judge should infer the missing facts as strongly against the wrongdoer as reasonably possible—in this case, inferring that all 65 unauthorized entities accessed all available data for the entire duration of the breach.

Strategic Use of Expert Evidence in Financial & Property Disputes

When litigation involves complex financial structures, commercial property leases, or proprietary assets, expert financial evidence forms the backbone of a successful claim. Because courts cannot invent compromise damage models, the quality and foundation of expert accounting and valuation evidence determine the outcome.

In complex commercial cases, we use expert financial witnesses to build robust loss models that withstand appellate scrutiny:

• Restitutionary and Conversion Quantifications: Assessing the economic benefit gained by a defaulting party who misappropriates commercial assets, proprietary software, or confidential property data.
• Market Value Licensing Models: Establishing baseline arm’s-length transaction rates using historical agreements between the parties or comparable industry standards.
• Expectation Loss Analysis: Calculating net lost profits resulting from prematurely terminated development contracts, broken commercial property leases, or repudiated purchase agreements.

In commercial real estate litigation—such as disputes involving commercial property owners, tenant build-out covenants, or deposit forfeitures—expert evidence must ground every loss calculation in concrete market data. Attempting to claim speculative lost profits without supporting expert market analysis leaves a claim vulnerable to complete dismissal.

Application to Commercial Real Estate, Releases, and Settlement Agreements

The principles articulated in SS&C v. BNY Mellon extend directly across commercial litigation, including real estate investment, commercial leasing, settlement releases, and corporate contract enforcement.

Settlement Agreements and the Legal Effect of Releases

Lay businesspeople entering settlement negotiations often ask: what is the true legal effect of executing a mutual release?

A standard full and final release is designed to extinguish all past, present, and future claims arising from a commercial contract or transaction.

However, when one party conceals or destroys financial records prior to settlement, the validity of the release itself can become contested. Under Canadian commercial law, a release will not bar a subsequent suit if the release was procured through civil fraud, fraudulent misrepresentation, or intentional suppression of material records that the releasing party was entitled to inspect.

Business executives must ensure settlement agreements contain precise representation warranties and targeted carve-outs to prevent dishonest counterparties from shielding prior contractual breaches behind broad release clauses.

Commercial Property Leases and Operating Expenses

Commercial renters frequently face complex pass-through cost structures, common area maintenance expenses, and property tax adjustments.

When a commercial property owner fails to preserve maintenance logs or vendor invoices during an audit dispute, commercial renters can invoke spoliation principles.

If an owner routinely purges maintenance records after receiving formal audit objections, courts can draw mandatory adverse inferences regarding improper cost markups.

For a detailed analysis of contractual risks in commercial real estate, review our article on Commercial Property Agreements and Litigation Risks.

Failed Purchase Transactions and Deposit Disputes

When multi-million-dollar commercial property acquisitions collapse, disputes often arise over deposit forfeiture, buyer default, and seller performance obligations.

If a seller conceals engineering reports or environmental assessments during pre-closing inquiries, the buyer’s legal team can leverage adverse inferences to establish seller default and enforce an equitable charge against the property title.

To understand how deposits and property charges are secured during litigation, see our post on Purchaser’s Liens & CPLs in BC Commercial Real Estate Disputes.

For broader guidance on deposit recovery mechanisms, read Navigating Commercial Real Estate Deposits.

Corporate Joint Ventures and Partnership Accounting

In joint property developments or corporate partnerships, partner disputes frequently hinge on accounting for revenues and shared project expenditures.

When managing partners fail to keep transparent books or purge subcontractor ledgers, non-managing partners can seek court-ordered accounting and mandatory adverse inferences regarding concealed profits.

Learn more about strategic positioning in high-stakes corporate actions in our discussion on Strategic Commercial Litigation Tactics.

Questions and Answers: Quantifying Loss and Leveraging Spoliation in Commercial Litigation

Q: What is the legal definition of spoliation in Canadian commercial litigation?

A: Spoliation is the intentional destruction, alteration, mutilation, or concealment of evidence to subvert the truth-seeking process during ongoing or reasonably contemplated litigation. It represents an abuse of court process and triggers an immediate legal response from the court.

Q: Does executing a standard release prevent a business from suing if hidden contract breaches are discovered later?

A: Generally, a broad full and final release bars future claims related to the subject dispute. However, if the release was signed in reliance on fraudulent misrepresentations or if the opposing party intentionally concealed or destroyed key accounting records prior to settlement, the release can be set aside by a court. Precision in drafting settlement carve-outs is critical.

Q: How does a court respond when a business routinely deletes records under an automated IT retention policy?

A: Having an automated electronic data retention policy does not protect a company from a spoliation finding if records are destroyed after litigation is reasonably anticipated. Once a business receives a formal litigation hold or preservation demand, it has a legal duty to suspend routine deletion schedules for relevant electronic files, emails, and database logs.

Q: What is a mandatory adverse inference, and how does it affect a lawsuit?

A: A mandatory adverse inference is a legal presumption that missing or destroyed evidence would have damaged the spoliator’s case. The court fills the factual vacuum caused by missing records by assuming the facts most unfavorable to the party that destroyed the evidence.

Q: Can a trial judge split the difference between competing expert financial reports?

A: No. The Supreme Court of Canada in SS&C Technologies v. BNY Mellon ruled that trial judges cannot craft “untethered” middle-ground damage awards.

A judge must base their award directly on concrete evidence and established contractual terms, rather than inventing compromise pricing models or speculative middle figures.

Q: How can commercial renters use spoliation rules during lease audit disputes?

A: If a commercial landlord fails to preserve detailed expense receipts, utility logs, or maintenance contracts after a commercial tenant issues a formal audit demand, the tenant’s legal team can seek adverse inferences that the unproven expenses were unauthorized or inflated.

Q: What steps should a commercial property owner take immediately upon receiving a litigation threat?

A: The property owner must immediately issue an internal written litigation hold to all officers, property managers, and IT personnel. This directive must halt the automatic deletion of relevant communications, maintenance logs, tenant correspondence, and financial ledgers.

Q: Does proving spoliation automatically mean a plaintiff wins the entire lawsuit?

A: Not automatically. While spoliation triggers a mandatory adverse inference that fills specific evidentiary gaps, the plaintiff must still establish the core legal elements of their claim, including the existence of a valid contract and the legal basis for financial liability.

Contact Roland Law for Commercial Litigation Representation

Resolving complex commercial contract claims, real estate disputes, and corporate liability matters requires seasoned trial counsel capable of navigating intricate financial records and evidence rules. Our litigation team provides rigorous representation for corporate entities, property developers, commercial property owners, and commercial renters.

Located in downtown Vancouver,  Roland Luo proudly represents clients throughout British Columbia, as well as clients across Canada and the United States. To schedule a confidential discussion, contact us online (the most efficient) or by phone at 604-800-4628.