“This litigation has been exceptional in its breadth, venom and expenses.” ­– Justice Turnbull


In Verge Insurance Brokers v. Richard Sherk et al., 2016 ONSC 4007, the defendants brought a motion seeking an order compelling the plaintiff to produce and review 66 backup tapes. The plaintiff objected on the grounds of proportionality and provided evidence that the exercise would cost an estimated $300,000.


Justice Turnbull ordered the plaintiff to restore and review the 66 backup tapes, despite the estimated cost of at least $300,000. Turnbull J., recognizing the exceptional cost, also made the point that had the plaintiff complied with an earlier order of the court, and properly preserved the relevant information, the motion would not have been necessary.


An important factor in this decision is that in November 2012, counsel exchanged “hold letters”, and the plaintiff, despite being aware of the obligation to preserve evidence, did not provide instructions to its employees to save copies of relevant documents in an archive files. Instead, Verge merely continued backing up all documents on to its backup tapes.


Citing Palmerston Grain, a Partnership v. Royal Bank of Canada, 2014 ONCS 5134, Justice Turnbull concluded that the Sedona Canada Principles were relevant to the case. In particular, he drew attention to Principle 3, which discusses the obligation to preserve potentially relevant ESI, and Principle 12, which provides that the costs of discovery generally fall on the producing party. Justice Turnbull was highly critical of the plaintiffs’ approach to both preservation and relevancy, especially their choice not to take the (simple) step of creating an archive file for relevant documents after receiving a preservation letter from the defendants.