Case reference: 2105582 Ontario Ltd. v. 375445 Ontario Ltd., 2017 ONCA 980
This historical case summary discusses the decision identified above. Later decisions and legislative changes may affect how it applies today. Obtain legal advice about your circumstances.
The defendant leased land to the plaintiff for the construction and operation of a driving range. When the plaintiff fell into arrears of rent, the defendant terminated the lease, but refused to permit the plaintiff to remove a driving range deck, a deck canopy, a ball shack, driving range barrier net poles, and driving range barrier nets. The plaintiff brought an action for damages for unlawful distraint and conversion. The trial judge held that the assets in question were trade fixtures and that the defendant was liable to the plaintiff for compensatory and exemplary damages. The defendant appealed.
Held, the appeal should be allowed in part.
The trial judge found that the assets could be removed without damage to the premises. He committed no palpable or overriding error in concluding that the assets were removable trade fixtures. There was no merit to the defendant’s argument that the assets were leasehold improvements. The defendant’s distraint was not permitted by s. 41 of the Commercial Tenancies Act (“CTA”). Section 41 only supplants the common law with respect to the time period in which the distress remedy must be exercised. It allows a landlord to distrain an overholding tenant’s chattels within six months following the end or determination of a lease. It does not change the common law rule that a landlord cannot distrain tenant chattels, regardless of timing, if the landlord terminates or forfeits the lease. In any event, the defendant could not rely on s. 41 of the CTA because trade fixtures are never subject to the landlord’s remedy of distress. Trade fixtures may only be distrained when they have been severed from the land and resume their nature as chattels.
The landlord erred in awarding exemplary damages. He did not find that the conversion was malicious or high-handed in a manner constituting a marked departure from ordinary standards of decent behaviour. Furthermore, it was not clear whether the trial judge’s “exemplary” damages order was meant to be a punitive damages award. The language he used was more consistent with an award of disgorgement damages that was measured based on the defendant’s gain from the unlawful use of the converted assets. The plaintiff was fully compensated by the damages awarded in the amount of the market value of the converted assets. The award of “exemplary” damages resulted in double recovery for the plaintiff because the defendant had already “purchased” the converted assets at their market price.
Trade Fixtures
Trade fixtures are assets that are affixed to leased premises by a tenant for trade or commercial purposes. Courts have consistently held that tenants are presumptively allowed to remove trade fixtures at the end of a tenancy so long as the removal does not materially damage the premises.
Measure of damages for conversion
Conversion is a strict liability tort. If established, a tortfeasor will be forced to purchase the converted asset from the plaintiff. The general measure of damages is the market value of the converted asset as of the date of conversion: Asamera Oil Corp. v. Sea Oil & General Corp., [1979] 1 S.C.R. 633, [1978] S.C.J. No. 106, at p. 652 S.C.R.
Conversion is distinct from its companion tort — detinue. Whereas conversion is a single wrongful assertion of dominion over personal property, detinue is the continuous wrongful detention of personal property. The general remedy in detinue is the return of the asset (or damages for its market value as of the end of trial) plus damages representing the “rental” of the asset by the tortfeasor during the detention: Asamera, at p. 652 S.C.R.
Nevertheless, the general measure of damages for intentional proprietary torts, such as conversion, may be substituted in certain circumstances. One such circumstance is known as “waiver of tort”. Waiver of tort allows a plaintiff to claim disgorgement damages based on the tortfeasor’s gain or benefit, instead of compensatory damages based on the loss suffered. However, a plaintiff cannot claim both compensatory damages as well as disgorgement damages since that would result in overcompensation. A plaintiff must elect either compensatory or disgorgement damages: United Australia, at pp. 29-30 A.C.; and Pro-Sys, at para. 93.
*source: Ontario Reports
