Every organization should have a records retention policy. The policy should provide guidelines with respect to how long records should be retained and when records can be deleted. While it is important for a contractor to keep the project file, especially during the life of the project, it should not be necessary to retain all records indefinitely.
During any litigation, or investigation, an organization will have to identify, preserve and produce relevant records. As discussed in prior articles, the duty to preserve potentially relevant records arises when litigation is anticipated.
If these records are no longer available due to a short retention policy, that policy may be found to be unreasonable by a court. This can result in the court providing remedies to the opposing party for the records no longer being available. As discussed in our recent article on spoliation, these remedies could include a rebuttable presumption of fact that the records would be detrimental to the organization’s cause, a denial of costs, or exclusion of expert reports.
In Siemens v. Sapient 2014 ONSC 2314 (CanLII), the defendant, Sapient, had a policy which stated that the “best practice” for email was to “delete all email every 30 days (first moving messages that must be retained to network files).”
Master Short, in commenting on the policy, noted:
“Obviously a company is entitled to establish whatever email retention policies it wishes in order to minimize server use and cost. However, in a project such as this, which obviously carries on over a lengthy period of time, such a policy can potentially create serious problems.
Given that there is a two-year limitation period for most causes of action in Ontario, counsel will perhaps need to consider advising their clients on the risks of such a policy and the appropriate manner of dealing with such ‘deleted’ emails in the event of future disputes.”
For a retention policy to be reasonable, it must take into account statutory and regulatory obligations as well as business considerations. Different types of records may also require different retention periods as they will be governed by varying statutory, regulatory or business requirements.
In Patzer v. Hastings Entertainment Inc., 2010 BCSC 426 (CanLII), the plaintiff deposited a number of betting slips into an automated gaming machine and received a cash voucher in the amount of $6.5 million. The defendant refused to honour the voucher as it had been issued in error. Almost two years later the plaintiff commenced an action for $6.5 million and subsequently sought production of the betting slips.
It was the defendant’s practice to empty the gaming machines on a weekly or biweekly basis and send the betting slips out for recycling. Madam Justice Fisher held that the betting slips were destroyed in the ordinary course of business when there was no indication that the plaintiff was contemplating litigation. As such, there was no basis to apply the doctrine of spoliation.
The British Columbia Court of Appeal, 2011 BCCA 60 (CanLII), upheld the decision and noted:
“I would not disturb the finding of the trial judge that destruction of the tickets in the betting machine…was done in the ordinary course of business and therefore was not an act of spoliation. The unrefuted evidence is that the tickets are routinely sent for recycling within a week or two of the date of insertion into the betting machine.
“The appellant waited two years to commence his action. By then, it would have been more than reasonable in the circumstances for the respondents to have destroyed the winning tickets in the machine.”
A policy allowing for the deletion of records in the ordinary course of business will generally not trigger consequences provided it complies with all statutory and regulatory requirements. However, once litigation commences, or is reasonably anticipated, it is important to remember that the deletion of potentially relevant records pursuant to the records retention policy must cease.
T. James Cass is manager, review services and senior counsel at Heuristica Discovery Counsel LLP. Heuristica has offices in Toronto and Calgary and is the sole national law firm whose practice is limited to eDiscovery and electronic evidence.
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