COURT OF APPEAL FOR ONTARIO

CITATION: 2105582 Ontario Ltd. (Performance Plus Golf
    Academy) v. 375445 Ontario Limited (Hydeaway Golf Club), 2017 ONCA 980

DATE: 20171214

DOCKET: C62455

MacPherson, Juriansz and Roberts JJ.A.

BETWEEN

2105582 Ontario Ltd. o/a Performance Plus Golf
    Academy and 627496 Ontario Ltd. o/a D & D Electric

Plaintiffs (Respondents)

and

375445 Ontario Limited o/a Hydeaway Golf Club and
    Nicholas Panasiuk, Jr., also known as Nick Panasiuk

Defendants (Appellants)

AND BETWEEN

375445 Ontario
    Limited o/a Hydeaway Golf Club and Nicholas Panasiuk Jr., also known as Nick
    Panasiuk

Plaintiffs by
    counterclaim (Appellants)

and

2105582
    Ontario Ltd. o/a Performance Plus Golf Academy
,
627496 Ontario Ltd. o/a
    D & D Electric
and David Forcellini

Defendants by
    counterclaim (
Respondents
)

Anita Landry, for the appellants

Owen Thomas, for the respondents

Heard: October 20, 2017

On appeal from the order of Justice Terrence L. J.
    Patterson of the Superior Court of Justice, dated June 30, 2016, with reasons
    for judgment reported at 2016 ONSC 3746 and reasons for costs reported at 2016
    ONSC 5262.

CIVIL  Commercial tenancy
    Landlord and tenant  Termination of commercial lease  Classification of
    fixtures, trade fixtures, or chattels  Whether remedy of distress available
    Whether distraint of trade fixtures and chattels lawful  Timing for removal of
    trade fixtures  Tort of conversion  Abandonment of personal property
    Damages  Compensatory principle of private law damages  Whether award of
    exemplary damages correct  Whether exemplary damages were punitive damages or
    disgorgement damages  Double recovery or overcompensation in award of damages.

Juriansz J.A.:

[1]

Hydeaway Golf Club, incorporated as 375445 Ontario Limited, and Nicholas
    Panasiuk Jr. (collectively, the appellant) leased land to Performance Plus Golf
    Academy and D & D Electric, incorporated as 2105582 Ontario Ltd. and 627496
    Ontario Ltd. (collectively, the respondent), in fall 2006 under an oral
    agreement. The respondent constructed and operated a driving range on the
    leased land. The respondent fell into arrears of rent and the appellant
    terminated the lease on December 6, 2007.

[2]

The respondent sought damages for the appellants unlawful distraint and
    conversion of its trade fixtures and chattels. The trial judge held that all of
    the claimed assets were trade fixtures and that the appellant was liable to the
    respondent for compensatory and exemplary damages. On appeal, the appellant argues
    the trial judge erred by finding liability for conversion, and in any event,
    the damage award was excessive.

[3]

For the reasons that follow, I would reject the appellants attack on
    the finding of liability, but would allow the appeal in part and set aside the
    exemplary damages award.

A.

FACTUAL BACKGROUND

[4]

The appellant owned and operated a golf course near Tecumseh, Ontario.
    Around March 2006, the parties began negotiating a lease for a portion of the
    appellants land, which adjoined the golf course but was substantially empty
    and undeveloped at the time. The respondent intended to construct and operate a
    driving range on the leased lands.

[5]

In May through June 2006, the respondents lawyer prepared drafts of a
    commercial lease. Ultimately, however, the parties did not execute a written
    lease. The parties agreed orally that rent would be $3,000 a month, except
    during winter when it would be $2,000 a month. The tenancy was at will. The
    lease was governed by the
Commercial Tenancies Act
, R.S.O. 1990, c.
    L.7 (
CTA
) and the
Statute of Frauds
, R.S.O. 1990, c. S.19.

[6]

The respondent invested approximately $200,000 to construct the driving
    range and purchase the necessary equipment. The driving range went into
    operation around September 2006. The parties relationship deteriorated and the
    respondent failed to pay rent for September, October, and November 2007.

[7]

On November 16, 2007, the appellant gave the respondent a notice of
    default. Then 10 days later on November 26, 2007, the appellant served a notice
    of termination of the lease. The notice provided:

Re:
10 Day Prior Written Notice
 Notice of
    Termination of Land Lease

Performance Plus Land Lease

Dave:

Due to repeated defaults in rent payments,

Your
    land lease will terminate
11:59 PM Thursday December 6, 2007.

If you continue to occupy the leased premises after the
    expiration date, Section 12.2 Overholding will apply and legal action will
    commence

[Emphasis in original.]
[1]

[8]

On December 3, 2007, via email, the respondent asked to meet the
    appellant to discuss the lease. The appellant replied the same day:

No good

I have been forced into legal action

And I am meeting with my lawyer Tues after noon to check on my
    legal options He will advise you as to the action we will take after our
    meeting

[9]

The respondent replied on December 4, 2007:

Nick: I received your e-mail in which you refuse to meet to
    resolve this issue therefore I have no choice but to terminate

Our business relation. I am willing to discuss terms for the
    sale of the Driving facility, along with the teaching academy

I only ask that you wait until after the holidays. I am sure
    this will meet with your approval as it makes good sense

[10]

The respondent vacated the premises and removed certain assets from the
    property on December 6, 2007. However, the appellant called the Ontario
    Provincial Police (OPP) and prevented the respondent from removing other
    assets that evening.

[11]

On December 20, 2007, the respondents solicitor sent a letter advising
    the appellant that the respondent intended to return and remove its fixtures
    prior to January 31, 2008, among other things.

[12]

The appellant replied to the December 20 letter the next day, stating the
    respondent would not be allowed on the premises and that their differences
    would have to be settled in court.

[13]

Despite the appellants letter, the respondent returned to the premises on
    December 23, 2007 to remove an Xplornet antenna that was owned by a third
    party. While the record shows that an argument ensued between the parties on
    that date, the appellant nonetheless allowed the respondent to remove the
    antenna.

[14]

The respondent returned to the premises for the second and final time on
    February 15, 2008. The respondent was accompanied by a work crew and the OPP.
    During this visit, the respondent attempted to remove the driving range barrier
    poles and nets. The appellant claimed ownership of the assets and prevented the
    respondent from removing them. The OPP suggested the respondent leave and
    obtain a court order for the return of the disputed assets.

[15]

The respondent commenced the underlying action by issuing a statement of
    claim on March 11, 2008.

[16]

The appellant operated the driving range with the disputed assets until
    2014, when the golf course and driving range went out of business. By the time the
    trial commenced in May 2016, the golf course and driving range had been closed
    for two years.

B.

THE TRIAL JUDGES DECISION

[17]

The parties agreed on a list of disputed assets, which was attached as Schedule
    A to the trial judges reasons.
[2]

[18]

The trial judge found the appellant terminated the lease on December 6,
    2007. He held that all of the assets in Schedule A were trade fixtures. He
    found that the respondent attempted to remove the trade fixtures, but was
    prevented from doing so by the appellant on several occasions. Accordingly, he
    held the appellant unlawfully distrained the trade fixtures and was liable for
    damages for the tort of conversion.

[19]

The trial judge found that the value of the converted trade fixtures was
    $200,035.28, but reduced that amount by $12,002.11, representing depreciation
    for the year and a half the respondent had use of them. He ordered $188,033.17
    in compensatory damages. In addition, he ordered $80,000 in exemplary damages,
    calculated as $10,000 per year for the eight years the appellant used the
    converted assets. The total damages award was $268,033.17.

C.

ISSUES ON APPEAL

[20]

The appellant raises the following issues:

(a)

Did the trial judge err by classifying certain assets as trade fixtures
    or chattels, as opposed to fixtures or leasehold improvements?

(b)

Did the trial judge err by holding that the appellant unlawfully
    distrained the respondents trade fixtures or chattels?

(c)

Did the trial judge err by failing to consider whether the respondent
    had abandoned its chattels?

(d)

Did the trial judge err by awarding exemplary damages in addition to
    compensatory damages?

D.

THE APPELLANTS POSITION

[21]

The appellant submits the trial judge erred by classifying the following
    assets (the Structural Assets) as trade fixtures:

(a)

a driving range deck worth $50,499.81;

(b)

a deck canopy worth $23,286.58;

(c)

a ball shack worth $7,046.56;

(d)

driving range barrier net poles worth $32,264.23; and

(e)

driving range barrier nets worth $31,747.65.

[22]

The appellant describes the deck as a 9,000 square foot wooden platform,
[3]
with a permanently attached ball shack, covered by a steel canopy. It was
    affixed to the land with pressure treated wood beams and a cement base. In
    addition, water and electrical wiring ran through the structure. The 60 foot high
    barrier poles were drilled 5 feet into the ground and secured with steel
    anchors. The nets were fastened to the poles with steel clips and cables and
    were not taken down during winter.

[23]

The appellant submits that its distraint of the respondents assets was allowed
    by s. 41 of the
CTA
and further argues the Structural Assets were not removable
    trade fixtures. In the appellants view, the distinction between a removable
    trade fixture and an immovable fixture is whether the asset is capable of being
    removed without causing material damage to the premises or the asset. The
    appellant contends that the Structural Assets were not removable trade fixtures
    since they could not be removed without material damage to the land.

[24]

In what it advances as an alternative argument, the appellant repeats its
    position that the Structural Assets could not be removed without material
    damage to the lands, and consequently, the trial judge should have found them
    to be leasehold improvements that remain with the land at the end of a tenancy.

[25]

Furthermore, the appellant argues that a tenant must remove its trade
    fixtures before the lease ends or before they vacate the premises. Otherwise,
    the appellant submits a tenant must be taken to have abandoned them.

[26]

In a similar vein, the appellant submits that many of the assets, such
    as the 35,000 golf balls, were not trade fixtures at all but chattels. The
    respondent was aware of the lease termination date and could have removed the
    chattels by that date but chose to leave them. The appellant notes the
    respondent removed certain chattels, such as desks and chairs, by December 6,
    2007. This, in the appellants submission, supports the inference that the
    respondent abandoned the remaining chattels.

[27]

Finally, with respect to damages, the appellant submits that exemplary
    damages should only be awarded in exceptional cases. The appellant argues that
    courts only award exemplary damages where there is misconduct amounting to a
    marked departure from ordinary standards of decent behaviour. Since there was
    no such misconduct in the instant case, the appellant contends the trial judge
    erred in law by awarding exemplary damages.

E.

THE RESPONDENTS POSITION

[28]

The respondent submits the trial judge applied the correct law of
    distress and that all of his findings deserve deference. The respondent submits
    there is no palpable or overriding error in the trial judges factual
    determination that the Structural Assets could be removed without causing
    material damage. The respondent recognizes that some of the assets in Schedule
    A are chattels, but submits the appellant prevented it from removing them.

[29]

Finally, the respondent argues that deference also applies to this
    courts review of the trial judges discretionary award of exemplary damages.

F.

ANALYSIS

(1)

The standard of review

[30]

The Supreme Court set out the
guiding
    principles on standard of review for appeals from judicial decisions in
Housen
    v. Nikolaisen
, 2002 SCC 33, [2002] 2 S.C.R.
    235. Questions of law are reviewable for correctness, and questions of fact or
    questions of mixed fact and law are reviewable for palpable and overriding
    error, unless there is an extricable question of law:
Housen
, at paras. 8, 10, and 36.

[31]

The identification of the correct legal
    standard or test is an extricable question of law, but the application of a
    legal standard to a set of facts is a question of mixed fact and law:
Housen
, at paras. 27 and 31. I address the standard of
    review applicable to each issue in the reasons below with this framework in
    mind.

(2)

Did the trial judge err by finding the Structural Assets were trade
    fixtures?

[32]

Fixtures are assets that are sufficiently
    affixed to real property such that they are considered permanent in nature and part
    of the land. Whether fixtures become part of the land depends on the degree and
    object of annexation to the land:
Stack v. T. Eaton Co.
(1902), 4 O.L.R. 335 (Div. Ct.), 1902 CarswellOnt 399.
    This case concerns the fate of fixtures upon termination of a lease. The
    general rule is that fixtures remain with the land following the end of a
    tenancy; but not all fixtures fall within this rule.

[33]

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:
859587
    Ontario Ltd. v. Starmark Property Management Ltd.
(1997), 34 O.R. (3d) 43, at p. 54 (Gen. Div.), 1997 CarswellOnt 2308, at
    para. 31, affirmed (1998), 40 O.R. (3d) 481 (C.A.), 1998 CarswellOnt 2937;
Caledonia
    Service Station Inc. v. Cango Inc
.
, 2011 ONCA 184, at para. 14;
Newfoundland
    and Labrador Housing Corp. v. Humby
, 2013
    NLCA 7
per

Rowe J.A. (as he then was), at paras. 22-27. This exception
     that trade fixtures do not remain with the land post-tenancy  has a long
    history in the common law:
Warner v. Don
(1896), 26 S.C.R. 388, at pp. 391-92, 1896 CarswellNS 102, at para. 8;
Stack
, at p. 338; and
Richardson v. Equitable
    Fire Insurance Co.
, [1953] 3 D.L.R. 583, at
    p. 586 (Ont. C.A.), 1953 CarswellOnt 67, at para. 8.

[34]

Importantly, as this court held in
Bank
    of Nova Scotia v. Mitz
(1979), 106 D.L.R. (3d)
    534, at p. 538 (Ont. C.A.), 1979 CarswellOnt 741, at para. 11, there is a
    distinction in the analysis depending on whether the attempted removal of the
    disputed asset occurs in the context of a lease versus the sale of real
    property. In the former case, there appears to be a presumption that a tenant
    would not have an objective intent to affix an asset on a permanent basis such
    that it would become part of the real property at the end of the lease:
Bank
    of Nova Scotia
, at pp. 538-39. In other
    words, the object of annexation is presumptively not one of permanence.

[35]

The jurisprudence demonstrates that the
    determination of whether an asset is a fixture or trade fixture upon
    termination of a lease is highly fact specific. For example, in
Webb
    v. Frank Bevis Ltd.
, [1940] 1 All E.R. 247
    (E.W.C.A.), the English Court of Appeal held that a 6,750 square foot shed was
    a trade fixture and removable by the tenant at the end of the lease. The shed
    in that case was covered with a corrugated iron roof that rested on wooden
    posts. The wooden posts, in turn, were affixed to a concrete floor  but not
    embedded in the concrete. The court held that the shed could be taken apart
    without damage to the leased premises and was a trade fixture. By contrast, the
    concrete floor was not a trade fixture since it could not be removed without
    damage to the leased premises.

[36]

Webb
was implicitly affirmed by
    the United Kingdom House of Lords in
Elitestone Ltd. v. Morris
, [1997] 1 W.L.R. 687, at p. 691 (U.K.H.L.). In
Elitestone
, the House of Lords was asked to determine whether a
    bungalow constructed on leased real property was a chattel or fixture that was
    part of the land. The House of Lords affirmed the trial judges conclusion that
    the bungalow was part of the land because such determinations depended on the
    facts of each case:
Elitestone
,
per
Lord Berwick at p. 692 and
per
Lord Clyde at p. 696. It was also significant that
    the tenant claiming the bungalow did not construct the bungalow. It existed
    prior to the tenant occupying the premises.

[37]

Justice Rowe of the Newfoundland Court of
    Appeal (as he then was) found
Webb
and
Elitestone
to be
    persuasive authorities in
Humby
.
Humby
concerned a Butler
    building, which was a pre-engineered 1,500 square foot steel frame building.
    It was built by the tenant and supported by metal beams that were bolted into a
    concrete foundation. There was also electrical wiring throughout the structure.
    Nevertheless, Rowe J.A. held that the building was a trade fixture that could
    be removed by the tenant at the end of the lease:
Humby
, at para. 31.

[38]

The above cases  as well as
Richardson
and
Starmark

Property
 demonstrate that the determination of whether an asset is a fixture
    versus a trade fixture or chattel, is a question of mixed fact and law. In this
    case, the trial judge applied the three requisite elements of the legal test
    for a trade fixture: (i) whether the asset is affixed to the ground by the
    tenant; (ii) whether the asset is used for the purpose of a trade or commerce;
    and (iii) whether the asset can be removed without material damage to the
    premises.
Only element (iii) was in question at trial.

[39]

The trial judge found the Structural Assets could be removed without
    damage to the premises at para. 29 of his reasons. The trial judge was entitled
    to reject the appellants evidence regarding material damage that might result
    if the Structural Assets were removed. Indeed, there was evidence the appellant
    removed the barrier poles and nets at a later date without material damage. The
    trial judge committed no palpable or overriding error in concluding the Structural
    Assets were removable trade fixtures. I would not give effect to this ground of
    appeal.

(3)

Were the Structural Assets leasehold improvements?

[40]

The appellants alternative argument that the Structural Assets were
    actually leasehold improvements has no merit. The Structural Assets cannot be simultaneously
    both trade fixtures and leasehold improvements. The test for whether an asset
    is a leasehold improvement is the same as the test for whether an asset is a
    fixture:
Caledonia

Service
, at para. 14. There must be
    a sufficient degree and object of annexation such that the assets become part
    of the land. In this sense, a true fixture is the same as a leasehold
    improvement in the context of leases. As explained above, the trial judge made no
    palpable or overriding error in finding the Structural Assets were trade
    fixtures. By necessary implication, he found the Structural Assets were not
    leasehold improvements. I see no basis to interfere with this decision.

(4)

Was the appellants distraint permitted by s. 41 of the
CTA
?

[41]

The appellant submits that s. 41 of the
CTA
allows it to
    distrain the respondents assets within six months following the end of a lease
    even if it chose to terminate the lease. I disagree. Section 41 of the
CTA
states:

Distress for arrears on leases determined

41. A person having any rent due and in arrear, upon any lease
    for life or lives or for years, or at will, ended or determined, may distrain
    for such arrears, after the determination of the lease, in the same manner as
    the person might have done if the lease had not been ended or determined, if
    the distress is made within six months after the determination of the lease,
    and during the continuance of the landlords title or interest, and during the
    possession of the tenant from whom the arrears became due.

[42]

This section has been passed down largely intact from the original
    English statute in 1709, 8 Anne c. 14, and has remained in its current form
    since its adoption into Ontario property law at the turn of the 20th century.

[43]

There is a long history of English courts interpreting the section as
    extending only the time in which a landlord may exercise distress to six months
    after the end of a lease so long as the tenant is overholding. See, for
    example,
Grimwood v. Moss
(1872), L.R. 7 C.P. 360,
per
Willes
    and Keating JJ.

[44]

The basis for this interpretation is that distress is a landlords self-help
    remedy that is only available where there is a landlord and tenant relationship.
    A landlord who terminates a lease and re-takes possession of the premises loses
    the right to distrain tenant chattels for rent arrears.

[45]

Contemporary Canadian courts have similarly held that s. 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 tenants
    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:
Mundell v. 796586 Ontario Ltd.
, [1996] O.J. No. 2532 (Gen.
    Div.), at para. 8; and
Dubien v. Beechwood Promenade Inc.
, 1992
    CarswellOnt 555 (Gen. Div.), at para. 8 (discussing s. 41 of the
Landlord
    and Tenant Act
, R.S.O. 1990, c. L.7, which was the precursor to the
CTA
).
    See also
Ian F. Brown Ltd. v. Carling OKeefe Breweries of Can. Ltd.
(1989), 64 D.L.R. (4th) 710, at pp. 713-14 (Alta. Q.B.), [1989] A.J. No. 1172;
Mybrie
    Investments Ltd. v. Icana Techno Corp
.
, [1997] B.C.J. No. 2475
    (S.C.), at paras. 42-43; and
C.K. Franchising Inc. v. Kassett
, 2012 SKQB
    52, at para. 133. The appellant lost the right to distrain the respondents
    assets when it elected to terminate the lease.

[46]

In any event, the appellant cannot rely entirely on s. 41 of the
CTA
because this case involves trade fixtures. This court made clear that trade
    fixtures, while they remain affixed to the land, are never subject to the
    landlords remedy of distress in
859587 Ontario Ltd. v. Starmark Property
    Management Ltd
.
(1998), 40 O.R. (3d) 481, at pp. 487-88 (C.A.), 1998
    CarswellOnt 2937, at paras. 13-15
, affirming
(1997), 34 O.R. (3d) 43, at p. 54 (Gen. Div.), 1997 CarswellOnt 2308.
As Doherty J.A. explained in
Starmark Property
, at para. 9, this is
    because distraint runs against the tenants property found on the land and not
    against the land itself. Trade fixtures may only be distrained when they have
    been severed from the land and resume their nature as chattels. The
ratio
from
Starmark Property
alone disposes of the appellants argument that
    it was entitled to distrain the Structural Assets.

[47]

The trial judge did not err in concluding the appellant engaged in an
    unlawful distraint in this case.

[48]

Nevertheless, the appellant argues that certain assets classified by the
    trial judge as trade fixtures were in fact chattels. The appellant submits that
    it did not convert the respondents assets because they were abandoned. I turn
    then to analyze these issues.

(5)

Did the trial judge misclassify certain chattels as trade fixtures?

[49]

The list of assets in Schedule A includes:

·

6 custom refuse containers;

·

8 outdoor bench tables;

·

a number of flower pots and planters;

·

a desk and chair; and

·

35,000 recovered golf balls.

[50]

As noted, one of the elements of the legal test for a trade fixture is
    that the asset must be affixed to the ground. It is not surprising that the
    evidence indicated these assets were not affixed to the ground in any manner.
    The respondent concedes the trial judge erroneously misclassified these assets
    as trade fixtures instead of chattels.

(6)

Did the trial judge err by not finding the respondents assets were
    abandoned?

[51]

The appellant submits the respondent abandoned its assets by not
    removing them before December 6, 2007. Abandonment was raised at trial but was
    not addressed in the trial judges reasons. As a result, it falls to this court
    to determine the issue of abandonment based on the trial judges findings of
    fact.

[52]

Abandonment is a defence to conversion. It occurs when there is a giving
    up, a total desertion, and absolute relinquishment of ones interest in
    chattels:
Simpson v. Gowers
(1981), 121 D.L.R. (3d) 709,  at p. 711 (Ont.
    C.A.), quoting R.A. Brown,
The Law of Personal Property
, 2nd ed.
    (1955), at p. 9. The party alleging abandonment bears the onus of proving, on a
    balance of probabilities, an objective intent to abandon the chattels. The determination
    of whether there is a sufficient intent to abandon is a question of fact governed
    by factors such as the length of time, nature of the chattels, conduct of the
    parties, and context of the case:
1083994 Ontario Inc. v. Kotsopoulos
,
    2012 ONCA 143, at paras. 17-18.

[53]

Here, the respondent attempted to either negotiate a sale of his assets
    to the appellant or a time he could retrieve them. The respondents lawyer sent
    letters shortly after the termination of the lease indicating the respondent
    intended to remove the chattels. The respondent attempted to retrieve the
    chattels multiple times, each time being thwarted by the appellant. As such,
    there were no facts to suggest abandonment of chattels or trade fixtures in the
    instant case.

[54]

However, with respect to trade fixtures, the appellant also submits a
    tenant may not remove them after a lease ends and the tenant has given up
    possession.
[4]
I disagree.

[55]

There are exceptions to the appellants otherwise correct articulation
    of the general time limit in which a tenant may remove trade fixtures. One such
    exception is where a lease is for an uncertain term or where the landlords
    actions create the circumstance that the tenant had insufficient time to remove
    its trade fixtures. In those cases, absent a contract otherwise, a tenant may
    remove its trade fixtures within a reasonable period of time following the end
    of a lease and after possession of the premises has been given up:
Devine
    v. Callery
(1917), 40 O.L.R. 505 (C.A.), [1917] O.J. No. 121; and
Elliot
    Mortgage & Investment Co. v. Savage
(1979), 14 B.C.L.R. 191 (S.C.),
    [1979] B.C.J. No. 1153.

[56]

The appellant terminated the lease with 10 days notice in this case.
    The appellant also prevented the respondent from removing the disputed assets
    on December 6, 2007 by calling the OPP. As such, the respondent did not abandon
    its trade fixtures and was entitled to return to the premises to remove them within
    a reasonable time following the end of the lease and after it vacated the
    premises.

(7)

Did the trial judge err in awarding exemplary damages?

[57]

As alluded to above, I would set aside the order for exemplary damages.
    To explain my analysis of this issue, I will first review some general legal
    principles concerning private law damages before turning to the appropriate measure
    of damages for conversion in this case.

(a)

Compensatory purpose of private law damages

[58]

The fundamental principle underlying private law remedies is
restitutio
    in integrum
. Private law damages are meant to be compensatory. In tort,
    the aim is to restore the plaintiff to the position he or she occupied before
    the tort occurred. Private law damages are generally not intended to punish the
    defendant, nor are they intended to place the plaintiff in a position better
    than the
status quo ex ante
:
Milina v. Bartsch
(1985), 49
    B.C.L.R. (2d) 33, at p. 78
per
McLachlin J. (as she then was) (S.C.),
    affirmed (1987) 49 B.C.L.R. (2d) 99 (C.A.);
Barber v. Vrozos
, 2010
    ONCA 570, at para. 86; and
Rougemont Capital Inc. v. Computer Associates
    International Inc
.
, 2016 ONCA 847, at para. 44.

[59]

Of course, as the Supreme Court held in
IBM Canada Limited v.
    Waterman
, 2013 SCC 70, [2013] 3 S.C.R. 985, at para. 36, there are
    exceptions to the general compensatory principle of damages in certain
    circumstances. Some cases call for the additional award of exemplary damages.

[60]

Exemplary damages could take the form of punitive damages, which are
    designed to address retribution, deterrence, and denunciation of malicious,
    oppressive, or high-handed conduct:
Whiten v. Pilot Insurance Co.
,
    2002 SCC 18, [2002] 1 S.C.R. 595, at paras. 36 and 43; and
Fidler v. Sun
    Life Assurance Co. of Canada
, 2006 SCC 30, [2006] 2 S.C.R. 3, at paras.
    61-63. Other cases may justify the award of disgorgement damages (
i.e
.
,
    a measure of damages is based upon the tortfeasors gain as opposed to the
    plaintiffs loss), which are an alternative to compensatory damages:
United
    Australia Ltd. v. Barclays Bank Ltd.
, [1941] A.C. 1 (U.K.H.L.);
Broome
    v. Cassell & Co. Ltd
.
, [1972] 2 W.L.R. 645, at pp. 675-76
per
Lord Hailsham and pp. 723-24
per
Lord Diplock (U.K.H.L.); and
Pro-Sys
    Consultants Ltd. v. Microsoft Corp.
, 2013 SCC 57, [2013] 3 S.C.R. 477, at
    para. 93.

(b)

Measure of damages for conversion

[61]

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 Corporation Ltd. v. Sea Oil & General
    Corporation et al.
(1978), [1979] 1 S.C.R. 633, at p. 652.

[62]

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:
General and Finance
    Facilities Ltd. v. Cooks Cars (Romford) Ltd.
, [1963] 1 W.L.R. 644, at p. 648
    (E.W.C.A.);
Simpson
, at p. 711;
Boma Manufacturing Ltd. v.
    Canadian Imperial Bank of Commerce
, [1996] 3 S.C.R. 727, at paras. 31-32;
    and
Musson v. Memorial University of Newfoundland
, [2002] O.J. No. 668
    (S.C.), at para. 85, affirmed 2002 CarswellOnt 3336 (C.A.).

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.

[63]

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 tortfeasors 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; and
Pro-Sys
, at para. 93.

(c)

Standard of review on appeals of damage awards

[64]

A trial judges damages award is owed considerable deference:
Rougemont
,
    at para. 41. In
Naylor Group Inc. v. Ellis-Don Construction Ltd.
, 2001
    SCC 58, [2001] 2 S.C.R. 943, at para. 80, the Supreme Court held that an
    appellate court should only intervene in the award of damages where:

the trial judge made an error of principle or law, or
    misapprehended the evidence, or it could be shown there was no evidence on
    which the trial judge could have reached his or her conclusion, or the trial
    judge failed to consider relevant factors in the assessment of damages, or
    considered irrelevant factors, or otherwise, in the result, made a palpably
    incorrect or wholly erroneous assessment of the damages. Where one or more
    of these conditions are met, however, the appellate court is obliged to
    interfere.

[Citations omitted.]

[65]

The failure to apply the compensation principle underlying private law
    damages is an error of law:
Barber
,
    at para. 86
. Here, the trial judges award of both compensatory and
    disgorgement damages absent factual findings that support such an exceptional order
    resulted in double recovery for the respondent. As a result, the trial judges
    award of damages is reviewable for correctness.

(d)

The award of exemplary damages in this case

[66]

The trial judge stated at paras. 32 and 34-35 of his reasons:

In addition to this amount, the plaintiffs are claiming unjust
    enrichment, loss of use, general damages,
punitive damages, exemplary
    damages, trespass and conversion as the defendants continued to use the trade
    fixtures
of the plaintiffs for a period of approximately eight years.
Mr.
    Panasiuk alleges he did not make money and ultimately the golf course has
    closed but the fact is he was using the plaintiffs equipment illegally
.

[]

Mr. Panasiuk alleges that the golf course, because of the
    relocation of certain of the holes to accommodate the driving range, had an
    adverse impact on the golf course itself which ultimately ended up in it being
    closed but as I have indicated previously it was he who selected the location
    of the driving range and it was he who terminated the lease and
used the
    driving range equipment and structures illegally for his own purpose
.

In my opinion, the plaintiffs were entitled to additional
    damages and that
$80,000 is the appropriate dollar amount for the exemplary
    damages claim being $10,000 per year for eight years use
.

[Emphasis added.]

[67]

These reasons do not provide any basis for an award of punitive or
    disgorgement damages. The trial judge did not find the conversion was malicious
    or high-handed in a manner constituting a marked departure from ordinary
    standards of decent behaviour. Rather, the record shows that the appellant had
    an honest belief that the Structural Assets did in fact become part of the land
    and should have remained with the land.

[68]

Furthermore, it is not clear whether the trial judges exemplary
    damages order was meant to be a punitive damages award. The language he used is
    more consistent with an award of disgorgement damages that was measured based on
    the appellants gain from the unlawful use of the converted assets. However,
    the respondent did not specifically claim disgorgement damages in its amended
    statement of claim and the trial judge made no factual findings that supports
    an order of both disgorgement damages and compensatory damages. As such, it was
    an error to award the additional $80,000 for the conversion of the respondents
    assets even if the trial judge intended to award disgorgement damages.

(e)

Propriety of the exemplary damages in this case

[69]

The record before this court shows the instant case was framed in terms
    of conversion. Moreover, the trial judges reasons, at paras. 20-22 and 29,
    indicate he considered the case to be one of conversion and not detinue. As such,
    the applicable measure of damages was the market value of the converted assets
    as of the date of conversion.
[5]
The trial judge found the market value of those assets to be $188,033.17 and
    awarded compensatory damages in this amount.

[70]

The trial judge should not have awarded the additional $80,000 in exemplary
    damages. The respondents witness testimony demonstrated that the respondent wanted
    the return of the assets because the respondent intended to sell them to a
    buyer. In fact, the respondents witness testified that the respondent wanted
    to sell certain assets to the appellant. Therefore, the $188,033.17 damages
    award, reflecting the market value of the converted assets, fully compensated
    the respondent in this case.

[71]

There was no evidence to suggest the respondent intended to continue
    operating a driving range business elsewhere or that the converted assets
    appreciated in value. As such, there was no basis to award additional compensatory
    damages for consequential lost chance of profits. The respondents loss of the
    time value of money due to the conversion is satisfied by an award of prejudgment
    interest.

[72]

The exemplary damages award in this case results in double recovery
    for the respondent because the appellant has already purchased the converted
    assets at their market price. They became the appellants assets. Absent an
    exceptional circumstance as referenced above, any benefit that the appellant
    might obtain from the converted assets after they were purchased rightly
    accrues to the appellant.

[73]

The respondent was fully compensated by the damages award of $188,033.17
    for conversion of the trade fixtures and chattels. The respondent is not
    entitled to additional exemplary damages reflecting the purported benefits
    obtained by the appellant after the date of conversion in this case.

G.

DISPOSITION

[74]

I would allow the appeal in part and would set aside the award of the
    additional $80,000 described as exemplary damages. I would dismiss all the
    other grounds of appeal.

[75]

Counsel for both parties agreed that partial indemnity costs of the
    appeal were approximately $30,000 at the hearing. In light of the appellants
    partial success, I would fix costs of the appeal in the appellants favour at
    $10,000. I would not disturb the trial judges costs award for the proceedings
    below.

Released: JCM DEC 14 2017

R.G. Juriansz J.A.

I agree. J.C. MacPherson J.A.

I agree. L.B. Roberts J.A.

SCHEDULE
    A
LIST OF ASSETS

[1]
The
    record contains no explanation of what Section 12.2 is or where it comes from.
    It may be the case that Section 12.2 came from one of the draft leases, but the
    parties admitted at trial that the draft written leases were never signed and
    were of no force or effect.

[2]
Schedule
    A has been attached as a schedule to these reasons as well.

[3]
Based on
    the diagram filed in the trial record and in the Appeal Book and Compendium,
    Volume 2, Tab 17(F), the square footage of the deck appears to be approximately
    7,000 square feet.

[4]

The
    appellant also submits that leasehold improvements may not be removed
    post-tenancy. However, leasehold improvements may never be removed by a tenant,
    absent a contract otherwise, since they become part of the land. Moreover, the
    Nova Scotia cases of
Frank Georges Island Investments Ltd. v. Ocean
    Farmers Ltd.
(2000), 182 N.S.R. (2d) 201 (S.C.), at paras. 69-73 [In
    Chambers], 2000 CarswellNS 74 and
Carabin v. Offman
(1988), 55 D.L.R.
    (4th) 135, at pp. 137 and 151 (N.S.C.A.), 1988 CarswellNS 86
cited
    by the appellant do not support the appellants proposition as those cases
    concerned trade fixtures.

[5]
T
he
    trial judges award of damages would have also been incorrect assuming he
    considered the claim to be for detinue. In that case, he should have deducted
    eight years worth of depreciation from the value of the disputed assets
    instead of one and a half.


COURT OF APPEAL FOR ONTARIO

CITATION: Architectural Millwork & Door Installations
    Inc. v.

Provincial Store Fixtures Ltd., 2017 ONCA 955

DATE: 20171206

DOCKET: C63501

Simmons, Brown and Fairburn JJ.A.

BETWEEN

Architectural Millwork & Door Installations
    Inc.

Plaintiff (Respondent)

and

Provincial Store Fixtures Ltd.

Defendant (Appellant)

Tushar Sabharwal, for the appellant

No one appearing for the respondent

Heard: December 1, 2017

On appeal from the judgment of Justice A.D. Grace of the
    Superior Court of Justice, dated February 16, 2017.

APPEAL BOOK ENDORSEMENT

[1]

The appeal is abandoned with costs payable to the respondent fixed in
    the amount of $2,500, on consent.


COURT OF APPEAL FOR ONTARIO

CITATION: Bailey v. Milo-Food & Agricultural
    Infrastructure & Services Inc., 2017 ONCA 1004

DATE: 20171219

DOCKET: C63756

Hourigan and Brown JJ.A. and Himel J. (
ad hoc
)

BETWEEN

Dan Bailey

Plaintiff

(Appellant)

and

Milo-Food
    & Agricultural Infrastructure & Services

Inc. o/a
    Milo-Fais, and Geetu Pathak

Defendants

(Respondents)

Rodney Godard and Ioana Vacaru, for the appellant

Anita Lanary and Eric Florjancic, for the respondents

Heard and released orally: December 15, 2017

On appeal from the order of Justice Kirk W. Munroe of the
    Superior Court of Jusitce, dated April 10, 2017.

REASONS FOR DECISION

[1]

The appellant sued his former employer,
    the respondent, Milo-Food & Agricultural Infrastructure & Services Inc.
    (Milo-FAIS) and its President and CEO, the respondent, Geetu Pathak (Ms.
    Pathak) for wrongful dismissal, severance pay pursuant to the
Employment
    Standards Act, 2000
, S.O. 2000, c. 41, the emotional
    upset and mental distress, and breach of the
Ontario Human Rights
    Code
, RSO 1990, c. H19 and the
Occupational
    Health and Safety Act
, RSO 1990, c.O.1. The
    respondents moved to strike the statement of claim pursuant to r. 21.01(1)(b)
    of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194, on the ground that it disclosed no reasonable cause of
    action and was statute barred.

[2]

The motion judge granted the respondents
    motion to strike in respect of
the
    appellants severance pay and wrongful dismissal claims. He dismissed the
    respondents motion to strike in respect of the appellants other claims.

[3]

On appeal,
the appellant seeks a declaration that his claims for severance pay and
    for damages for wrongful dismissal were issued within the limitation period.
    The respondents bring a cross-appeal seeking an order to strike the balance of
    the appellants claims
for failure to
    disclose a reasonable cause of action and a declaration that they are statute
    barred.

[4]

The following brief summary of facts will
    put the issues in the appeal and cross-appeal in context. The appellant was a
    long term employee of Milo-FAIS and its predecessor company. By letter dated
    March 7, 2013, Ms. Pathak advised the appellant that Milo-FAIS could no longer
    sustain the costs of his position and proposed two options for his exit from
    employment. He rejected that offer.
By
    letter dated March 18, 2013, the appellant was advised that his service prior
    to Milo-FAIS was not recognized and that his employment would end two years
    hence, on March 22, 2015. The appellant worked for Milo-FAIS until March 22,
    2015. He commenced his action on December 21, 2015.

[5]

The appellant submits that the motion
    judge erred in concluding that his cause of action for wrongful dismissal arose
    on the date he was provided notice and not on the last day he worked for
    Milo-FAIS. He argues that the motion judges reliance on
Jones v.
    Friedman
, 2006 CarswellOnt 120 (C.A.) in
    this regard was misplaced.
His submission
    is that the motion judge erred by conflating actual dismissal with notice of
    future dismissal, since in
Jones

the date of dismissal, as
    pleaded, coincided with the date of notice. According to the appellant,
    subsequent trial decisions relying on
Jones
have continued to conflate these dates.

[6]

We do not give effect to this submission
    and decline to adopt the restrictive interpretation of
Jones
urged upon us by the appellant. In
Jones

the notice of
    termination was given on December 12, 1994 and the employment ended on January
    31, 1995. The breach the appellant relied on occurred on December 12, 1994 when
    his employment was terminated without reasonable notice. This court fully
    appreciated the context, and decided the date of notice of termination was when
    the limitation period began.
Jones

stands for the principle that
    a cause of action for wrongful dismissal arises on the date of notice of
    termination. The motion judge made no error in his reliance on that case or in
    striking the wrongful dismissal claim.

[7]

With respect to the claim for severance
    pay, the motion judge determined that on the issue of the limitation period,
    the same principles apply as to the claim for wrongful dismissal. He rejected
    the appellants argument that s. 65(1) of the
Employment Standards
    Act
indicates that severance claims arise
    at the end of employment on the basis that the section is the calculation
    section, not the entitlement section. On appeal the appellant makes a novel
    and credible argument based on ss. 11(5), 63(1)(a), 64(1) and 65(1) of the
Employment
    Standards Act
that until employment is
    completed the claim for severance pay does not crystalize. There was no
    authority submitted by the parties that is contrary to this argument. In the
    circumstances, it is not plain and obvious that the limitation period for
    severance claim should not run from the date of completion of employment. We
    also do not accept the respondents submission that is plain and obvious that
    s. 63(1)(e) of the
Employment Standards Act
applies as opposed to s. 63(1)(a) as submitted by the
    appellant.

[8]

Finally, with regard to the cross-appeal,
    we see no error in the motion judges conclusion that it was inappropriate to
    dismiss the other claims made by the appellant on a rule 21 motion. In the
    statement of claim it is alleged that the appellant was subjected to conduct
    which caused him emotional upset, mental suffering, and which breached his
    rights under the
Human Rights Code
and the
Occupational Health and Safety Act
throughout and until the end of the notice period.
    For the purpose of a r. 21.01(2)(b) motion, these facts must be presumed to be
    true.
The claims arguably arise from a
    continuing cause of action that predates the notice of termination, rather than
    a series of independent torts. We are of the view that the motion judge
was correct to dismiss the motion to strike these
    claims, since they were
entangled with
    factual issues.

[9]

In the result, the appeal is allowed in
    part. The motion judges order striking the claim for severance pay is set
    aside. The balance of the appeal and the cross-appeal are dismissed. Given the
    divided success, there is no order as to costs.

C.W.
    Hourigan J.A.

David
    Brown J.A.

Himel
    J.


COURT OF APPEAL FOR ONTARIO

CITATION: Chavdarova v. The Staffing Exchange, 2017 ONCA 996

DATE: 20171215

DOCKET: C63771

Hourigan and Brown JJ.A. and Himel J. (
ad hoc
)

BETWEEN

Lyudmila Chavdarova a.k.a. Mila
    Chavdarova

Plaintiff/Appellant

and

The Staffing Exchange a.k.a. TSE Canada

Defendant/Respondent in Appeal

Lyudmila Chavdarova, for the appellant

Michael Polvere, for the respondent

Heard: December 15, 2017

On appeal from the judgment of Justice Douglas Gray of
    the Superior Court of Justice, dated April 26, 2017.

APPEAL BOOK ENDORSEMENT

[1]

We appreciate that the appellant did not comply with the order made by
    the motion judge at the pre-trial conference. This put the motion judge in a
    difficult position in terms of calculating damages. However, the appellant did
    file an affidavit with supporting documentation and a factum which referenced
    those documents and detailed her claim for damages.

[2]

In the circumstances, we are of the view that the motion judge should
    have afforded the appellant an opportunity to file evidence that would have
    entitled her to evaluate the appellants claim.

[3]

We are allowing the appeal. We are directing that the parties file all the
    evidence they deem advisable and appear before the motion judge for a damages
    hearing. To be clear, the appellant should ensure that she files evidence that
    complies with the motion judges pre-trial order. It will be open to the motion
    judge to determine the proper procedure for the hearing, including
    cross-examination.


COURT OF APPEAL FOR ONTARIO

CITATION: Chhina v. Commercial Spring
    & Tool Company Limited, 2017 ONCA 967

DATE: 20171207

DOCKET: C63459

Strathy, C.J.O, Juriansz and Huscroft JJ.A

BETWEEN

Peter Chhina

Plaintiff (Appellant)

and

Commercial Spring & Tool Company Limited

Defendant (Respondent)

Howard Markowitz, for the appellant

Maurice J. Neirinck, for the respondent

Heard: December 5, 2017

On appeal from the judgment of Justice Andra Pollak of
    the Superior Court of Justice, dated February 7, 2017.

REASONS FOR DECISION

[1]

This is an appeal from the trial judges
    decision dismissing the appellants action for wrongful dismissal.

[2]

The appellant worked for Commercial Spring &
    Tool Company Ltd. for over 21 years, rising to the position of general manager
    of its heat treating division. He reported to Gurmail Gill, the General Manager
    of operations, who in turn reported to Frank Martinitz, the company president.

[3]

The trial judge found that the appellant quit
    his employment on January 22, 2010.  She rejected the appellants evidence that
    he had taken a leave of absence to wind up his fathers estate in India. The
    appellant submits that she erred in doing so, and erred in failing to address
    the appellants alternative argument that he had resiled from any such
    resignation in any event.

[4]

We disagree.

[5]

The trial judge accepted the evidence of Gurmail
    Gill that he was told by Frank Martinitz, in the appellants presence, that the
    appellant was quitting and asked to take care of it. The trial judge stated
    that Gills evidence was unchallenged and uncontradicted, but the appellant
    says that is in error: he denied Gills account in his testimony.

[6]

The trial judge made no error in this regard.
    Read in context, her point was that Gills evidence was not challenged by the
    appellant in cross-examination. The trial judge was entitled to accept Gills
    evidence in support of her conclusion that the appellant had resigned. This
    conclusion was supported by a wealth of circumstantial evidence that was not
    contested. We list some of it here:

·

the appellants final pay cheque included
    vacation pay;

·

a record of employment was prepared showing that
    he had quit;

·

his benefits were terminated on January 23,
    2010;

·

in defending the respondents small claims court
    action for repayment of a loan of $10,000, the appellant pleaded that he had
    resigned his position;

·

the appellant did not leave for India until
    March 16, 2010;

·

although the appellant returned to Ontario on April
    26, 2010, he did not inform the respondent that he had returned until August 2,
    2010; and

·

at no point did the appellant seek to return to
    work.

[7]

This evidence provides ample support for the
    trial judges conclusion that the appellant had resigned.

[8]

The appellants arguments in this court are, in
    essence, an attempt to retry the case. That is not the function of this court
    on appeal. The court cannot intervene in the absence of a palpable and
    overriding error, and the appellant has failed to establish one.

[9]

The appellant did not press the second ground of
    appeal. There is no merit to it. It is inconsistent with his position that he
    did not resign, and there was no evidence of resiling in any event.

[10]

The appeal is dismissed. The respondent is entitled to $12,500 in
    costs, inclusive of taxes and disbursements.

G.R. Strathy C.J.O.

R.G. Juriansz J.A.

Grant Huscroft J.A.