Critical Ontario Appeal Decision On Preservation Of Property

• Published date: 18 March 2021
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation, Civil Law
• Law Firm: Dickinson Wright PLLC
• Author: Mr Brian Radnoff and Jacky Cheung

Preservation of property during litigation is dealt with under rule 45 of the Ontario Rules of Civil Procedure. The traditional test under rule 45 was designed for situations where the thing being preserved was the subject of the litigation, such as an asset over which ownership was disputed. This test was not appropriate for all of the situations when rule 45 motions might arise. The Ontario Court of Appeal recently determined that a single test for rule 45 motions does not exist. The governing test will vary depending on the purpose of the motion. Accordingly, the test on a rule 45 motion for preservation of an asset at issue in the claim will not apply to a rule 45 motion seeking to preserve evidence for trial and inspection. Moreover, the Court also confirmed, without providing detail, that litigants have an obligation to preserve evidence pending trial.

A. Background

In BMW Canada v Autoport Limited,¹ the plaintiff sued the defendant after nearly 3,000 vehicles belonging to the plaintiff (the 'Vehicles') were allegedly damaged under the defendant's care. The plaintiff claimed a total loss for all of the Vehicles, which it claimed could not be sold or scrapped for parts. The plaintiff intended to destroy them on the basis that they were not required to prove the plaintiff's claim or theory of damages. The plaintiff had already inspected and tested the Vehicles but refused to share this information or its testing procedure with the defendant.

The defendant sought an interim preservation order under rule 45.01. The plaintiff did not oppose the preservation order, but the dispute was over who had to store the Vehicles and pay for the storage which, given the number of vehicles, was going to be very expensive.

B. Lower Court Decisions

At the initial motion, the Master applied the traditional test under rule 45 and determined it was not met. As a result, the Master ordered the defendant to take custody of the Vehicles or pay for their storage costs. On appeal to a judge of the Superior Court, the Judge reversed the Master's decision, ordered the preservation of the Vehicles and held that the plaintiff was responsible for the preservation costs. With leave, the plaintiff appealed to the Divisional Court, which restored the Master's order and held that there was no obligation for the plaintiff to preserve the evidence. With leave, the defendant appealed to the Ontario Court of Appeal.

C. The Ontario Court of Appeal's Decision

The Court of Appeal held that...