John Charles Wolf

The Opposing Landlords sought costs after successfully opposing the debtor Applicants' motion to assign 25 commercial leases to a third party in a CCAA proceeding.

The court found that the dispute was a classic adversarial proceeding, entitling the successful landlords to costs.

The court awarded partial indemnity costs to the landlords, including additional costs to Ivanhoe Cambridge for opposing ipso facto relief.

However, the court deferred payment of the costs until the end of the CCAA proceeding to avoid unfairly prejudicing the secured creditors' collateral before priorities are finally determined.

In a landmark CCAA proceeding involving Hudson's Bay Company, the court declined to approve the assignment of 25 major retail department store leases across Canada to a new tenant, Ruby Liu Commercial Investment Corp., despite the transaction representing the highest bid and generating approximately $50 million in net proceeds for creditors.

The court found that the proposed assignee failed to meet the reasonableness standard under section 11.3(3) of the CCAA, particularly regarding its ability to perform the substantial and ongoing obligations under the leases.

The decision emphasizes that section 11.3 is an extraordinary power that must be exercised sparingly, and that the court must balance the interests of all stakeholders, including the contractual counterparties (landlords) who would be compelled into a long-term relationship with an untested and undercapitalized purchaser.

The court also rejected the applicants' arguments that certain lease provisions constituted ipso facto clauses violating the anti-deprivation rule and section 34 of the CCAA.

In this CCAA proceeding, the court granted multiple orders sought by Hudson's Bay Company and related entities, including approval of lease assignment agreements with YM Inc. and Ivanhoe Cambridge, sealing of confidential bid information, extension of the stay of proceedings to October 31, 2025, and approval of the Monitor's reports and activities.

The court rejected requests for adjournment and conditional distributions, finding the lease monetization process was fair and transparent, and that the proposed transactions represent a positive development for stakeholders.

The court considered whether the Morris Guy Jones Family Trust was a sham, whether it was void for lack of certainty of subject-matter, and whether the respondent breached her duties as trustee.

The court found the trust was not a sham, was valid, and that the respondent breached the trust by transferring trust assets to a joint account.

The respondent was removed as trustee and the applicant was appointed in her place.

The respondent was ordered to account, restore trust assets, and disgorge any profits.

The tenant, a duty-free store operator at the Peace Bridge, brought a cross-motion seeking a declaration that it was not required to pay base rent during the 18-month period its store was closed due to COVID-19 border restrictions.

The tenant argued the landlord breached a lease provision requiring consultation on regulatory changes and breached its duty of good faith by making unreasonable demands.

The court dismissed the motion, finding the landlord engaged in good faith negotiations and offered reasonable accommodations.

The court held it cannot rewrite the lease or impose a new rent structure where the parties failed to reach an agreement, as the lease lacked objective benchmarks for such an adjustment.

This costs endorsement followed a successful application by commercial landlords (Applicants) against Cerieco Canada Corp., a second indemnifier, for payment of garnished funds and outstanding rent.

Cerieco unsuccessfully defended the application.

The Applicants sought costs on a substantial indemnity basis, as contractually provided in the lease.

The court found no "good reason" to deviate from the contractual right to costs, despite the court's inherent discretion.

The Applicants were awarded $56,000 in all-inclusive costs.

The applicant, BBB Canada Ltd., sought court approval under the Companies' Creditors Arrangement Act (CCAA) for an Omnibus Assignment and Assumption of Leases, FF&E and Trade Fixtures Agreement with DKB Capital.

The motion also requested orders for the assignment of certain leases under section 11.3 of the CCAA and a temporary sealing order for the unredacted agreement.

The court found the marketing process comprehensive, the consideration fair and reasonable, and the agreement beneficial to stakeholders.

The assignments were unopposed.

The court applied the Sherman Estate test for the sealing order and found it appropriate given its limited scope and time.

The motion was granted in its entirety.

The Royal Bank of Canada initiated an application for receivership against Peace Bridge Duty Free Inc. (PBDF) due to lease defaults, leading to the appointment of a monitor to facilitate a resolution with its landlord, Buffalo & Fort Erie Public Bridge Authority.

After a year without resolution, the Landlord moved to lift the stay on proceedings, arguing PBDF failed to pay "normal rent" as required by the Appointment Order.

The court declined to immediately lift the stay, finding the term "normal rent" in the Appointment Order ambiguous given the prolonged period of reduced payments due to COVID-19 restrictions.

The court ordered mandatory mediation between the Landlord and Tenant by March 31, 2023, to facilitate a business resolution, requiring the Tenant to provide a new proposal with financial information.

Further directions will be provided post-mediation.

In a supplementary costs endorsement, the court reviewed the respondents' late-filed Costs Outlines.

The respondents argued that their costs were substantially lower than the applicant's, pointing to differences in the number of counsel billing and hourly rates.

The court found the applicant's counsel's higher hourly rate to be within the reasonable market range and noted that the respondents' outline omitted time spent by another lawyer on the file.

The court concluded that the new information did not alter its prior finding that the applicant's costs were reasonable.

Following the granting of interlocutory injunctions against the respondents, the applicant sought costs on a substantial indemnity basis.

The court found that the respondents engaged in deliberate and high-handed conduct by attempting to unilaterally terminate commercial leases and evict the applicant without legal basis, aiming to frustrate the court proceedings.

The court exercised its discretion to award costs immediately rather than reserving them to the trial judge, fixing costs at $58,000 and $45,000 payable forthwith on a substantial indemnity scale.

Parkland Corporation sought an interlocutory injunction to prevent SRAA Inc. and 1064110 Ontario Ltd. from unilaterally terminating their gas station leases and subleases to re-lease the properties to a competitor selling Esso brand fuel.

The respondents argued the agreements were essentially fuel supply contracts and that they were operating at a loss.

The court found that the respondents deliberately breached their contracts and that Parkland would suffer irreparable harm from the loss of control over the sites.

The court granted the interlocutory injunctions, enforcing the leases and the negative covenants in the subleases pending a final determination.

Following the dismissal of a landlord’s motion for security for costs and a motion to strike affidavit paragraphs, and the granting of the tenants’ motion to convert an application to an action, the successful tenants sought substantial indemnity costs.

The court considered the factors under Rule 57.01 of the Rules of Civil Procedure and the effect of settlement offers that effectively waived costs if accepted.

The court found the tenants had achieved full success and that their claimed hours and hourly rate were reasonable given the complexity and importance of the motions.

Applying the principle of reasonableness articulated in appellate authority, the court rejected the landlord’s proposed reduced costs figure.

Substantial indemnity costs of $8,800 were awarded.

A commercial landlord brought a motion for security for costs and to strike portions of affidavits filed by the tenant and subtenant in an application seeking consent to change the restaurant’s operating name under a lease agreement.

The tenants opposed the motion and brought a cross‑motion seeking to convert a related landlord application into an action due to disputed facts.

The court held that the tenants’ application had merit and that there was no basis for security for costs, noting the tenants had substantial assets and the matter was not frivolous.

The court also declined to strike the impugned affidavit evidence and held that communications between the parties should be disclosed.

Because the landlord’s related application involved numerous contested factual issues requiring viva voce evidence, it was converted into an action.