Court of Appeal for Ontario

Date: 2026-02-12 Docket: COA-25-CV-0127

Gillese, Pepall and Zarnett JJ.A.

Parties

BETWEEN

2668602 Ontario Inc.

Plaintiff

(Appellant/Respondent by way of cross-appeal)

and

GWL Realty Advisors Inc., The Great-West Life Assurance Company and London Life Insurance Company

Defendants

(Respondents/Appellants by way of cross-appeal)

Counsel

Matthew Gottlieb, Nadia Campion, and Jeffrey Kaufman for the appellant/respondent by way of cross-appeal

Wolfgang Kaufmann, Gasper Galati and Dylan Baker, for the respondents/appellants by way of cross-appeal

Heard: November 19, 2025

On appeal from the judgment of Justice Andra Pollak of the Superior Court of Justice, dated December 11, 2024, with reasons reported at 2024 ONSC 6913.

Pepall J.A.:

Introduction

[1] This appeal involves the interpretation and application of a Liquidation Process Order that governed the sale of assets in proceedings under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3.

[2] The respondents, GWL Realty Advisors Inc., The Great-West Life Assurance Company, and London Life Insurance Company (collectively, the "Landlord"), leased a distribution centre/warehouse [^1] to an integrated group of homeware retail companies consisting of Fluid Brands Inc., 11041037 Canada Inc. ("Bombay"), and 11041045 Canada Inc. ("Bowring") (collectively, the "Tenants"). Fluid Brands Inc. was a holding company for Bombay and Bowring which together operated over 100 stores selling homewares and furniture. Mr. Fred Benitah was the sole officer and director of each of the three companies. After they each filed a Notice of Intention to make a Proposal, the Tenants obtained a Liquidation Process Order that, among other things, provided guidelines for the sale of their assets. Their assets included a racking system that was in the Landlord's distribution centre/warehouse. The appellant, 2668602 Ontario Inc. ("266"), purchased the furniture, fixtures, and equipment from the warehouse, including the racking system. Mr. Benitah is 266's sole officer and director.

[3] Following the Tenants' disclaimer of the lease and 266's failure to remove the racking system despite requests to do so, the Landlord sold it to a third party. 266 claimed damages for conversion. The Landlord defended the claim on the basis of deemed and actual abandonment and trespass and counterclaimed for lost revenue due to the continuing presence of the racking system at the distribution centre/warehouse.

[4] The trial judge dismissed 266's action. She concluded that the racking system was deemed abandoned pursuant to the Liquidation Process Order and also accepted the Landlord's defences of actual abandonment and trespass. In addition, she dismissed the counterclaim.

[5] 266 appeals from that judgment and the Landlord cross-appeals the trial judge's damages assessment in the event 266 is successful on appeal.

[6] For the reasons that follow, I would dismiss 266's appeal and would dismiss the cross-appeal as being moot.

Background Facts

(a) History

[7] In 2004, the Landlord leased premises located at 3389 Steeles Avenue East, Brampton, Ontario (the "Lease") to the Bombay Furniture Company of Canada Inc. ("Bombay Canada"). The Lease provided that Bombay Canada was to use the premises for the purpose of a general business office and warehouse and distribution centre. The Lease authorized Bombay Canada to conduct periodic warehouse sales from the premises. Bombay Canada installed a system of pallet racking, conveyors, and pick modules (the "Racking") in the premises.

[8] In 2008, after Bombay Canada's U.S. parent filed for bankruptcy in the U.S., 2151456 Ontario Inc. ("215") purchased Bombay Canada's assets and assumed Bombay Canada's obligations under the Lease. Fred Benitah ("Mr. Benitah") and his brother Isaac owned and controlled 215. In 2014, 215 and other associated Benitah companies filed for protection under the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the "CCAA"). The next year, 2383029 Ontario Inc. ("238") purchased the assets under protection and assumed the obligations under the Lease. 238 was owned and controlled by Mr. Benitah. By 2018, the Tenants were the lessees under the Lease.

[9] In July 2018, the Tenants failed to pay the rent due under the Lease and by mid-October 2018, the rent arrears amounted to $794,197.18. The Landlord sent the Tenants a notice of default under the Lease.

[10] On October 25, 2018, the Tenants each filed a Notice of Intention to Make a Proposal pursuant to s. 50.4(1) of the Bankruptcy and Insolvency Act. Richter Advisory Group Inc. was appointed as the Proposal Trustee.

(b) Consulting Agreement

[11] The Tenants entered into a letter agreement with Merchant Retail Solutions ULC and Gordon Brothers Canada ULC (the "Consultant") to assist with the disposition of the Tenants' assets (the "Agreement"). Mr. Benitah signed the October 31, 2018 Agreement on behalf of each of the three Tenants. The Agreement contemplated the liquidation of the Merchandise of the Tenants who were described in the Agreement as 'Merchants'. Merchandise was defined as: "all goods, saleable in the ordinary course, located in the Stores on the Sale Commencement Date, as well as certain inventory currently located or to be located in the Merchant's distribution centre which Merchant requires to be sold through the Sale." Although the definition of Merchandise did not include "owned furnishings, trade fixtures, equipment and improvements to real property that are located in the Stores (collectively, 'FF&E')", a separate section of the Agreement entitled "Furniture, Fixtures and Equipment" provided that all sales of FF&E were to be made by the Tenants and any unsold FF&E was to be disposed of as the Tenants in their discretion may determine. The Consultant was to advise in connection with the sale of FF&E in the Stores from the Stores themselves.

[12] The "Stores" were listed in Exhibit A to the Agreement. That Exhibit was entitled "Store List" and included an entry for the "Bombay- Whse" at 3389 Steeles Ave. E. in Brampton. One column stated, "Warehouse Sale" and another stated "20,000" under a heading "Selling Sq. Ft.". According to Sandra Carvajal, an employee of one of Mr. Benitah's companies, the warehouse was used for both direct sales to consumers and as a distribution centre.

[13] The Agreement provided that the Sale Commencement Date was the first calendar day after issuance of the Liquidation Process Order [^2] and the Sale Termination Date was no later than December 31, 2018. The latter was to coincide with the effective date of the disclaimer of leases. The Sale Termination Date could be extended by mutual agreement in writing with the prior approval of the Proposal Trustee. At the conclusion of the sale, the Consultant was to arrange for the premises of each Store to be in "broom swept" and clean condition however the Tenants were to bear the costs and expenses associated with surrendering the premises to the Landlord. In the Proposal Trustee's First Report dated November 1, 2018, it noted that the proposed liquidation sale involved the sale of substantially all of the property of the Tenants.

[14] The parties to the Agreement also agreed that the procedure for conduct of sales at the Stores was to be in accordance with Sale Guidelines attached as Exhibit C to the Agreement. Paragraph 9 of the Sale Guidelines provided that any fixtures or personal property left in a Store after a lease disclaimer would be deemed abandoned. It stated:

At the conclusion of the Sale in each Store, the Consultant shall arrange that the premises for each Store are in "broom-swept" and clean condition, and shall arrange that the Stores are in the same condition as on the commencement of the Sale, ordinary wear and tear excepted. No property of any Landlord of a Store shall be removed or sold during the Sale. No permanent fixtures (other than FF&E which for clarity is owned by the Merchant) may be removed without the applicable Landlord's written consent unless otherwise provided by the applicable Lease. Any fixtures or personal property left in a Store after the Sale Termination Date in respect of which the applicable Lease has been disclaimed by the Merchant shall be deemed abandoned, with the applicable Landlord having the right to dispose of the same as the Landlord chooses, without any liability whatsoever on the part of the Landlord. [Emphasis added.]

[15] Paragraph 12 of the Sale Guidelines stipulated that if a notice of disclaimer was delivered to the Landlord while the sale was ongoing and the Store had not been vacated, the Landlord was entitled to take possession of the Store.

[16] Lastly, the parties agreed that the Tenants would seek court approval of the Agreement.

(c) Liquidation Process Order

[17] The Tenants then brought a motion for an order approving the Agreement including the Sale Guidelines and other related relief. In support, they filed a November 1, 2018 affidavit of Mr. Benitah and the November 1, 2018 First Report of the Proposal Trustee. On November 2, 2018, Hainey J. granted an order, which approved the Agreement, and authorized sales in accordance with the Order, the Sale Guidelines and the Agreement (the "Liquidation Process Order" or the "Order"). The Tenants (described in the Order as Debtors), with the assistance of the Consultant, were authorized to market and sell the Merchandise and the FF&E. The Consultant had the right to access the Stores until the Sale Termination Date or such earlier date as a Lease was disclaimed. Until disclaimer or resiliation, the Tenants were to pay rent. The Order also contained a come-back provision on seven days' notice to any affected party. Put differently, any interested party could apply to the court to vary or amend the Order.

(d) Purchase of FF&E by 266

[18] On December 3, 2018, Mr. Benitah incorporated 266. As mentioned, he is the sole officer and director of that company. 266 also acquired the Tenants' debt in favour of Canadian Imperial Bank of Commerce, the first ranking secured creditor and primary operating lender of the Tenants, thereby becoming a secured creditor. On December 5, 2018, using Mr. Benitah's credit card, 266 acquired the FF&E located in the Landlord's distribution centre/warehouse at 3389 Steeles Ave. E. in Brampton. Both Mr. Benitah and the Tenants were of the view that the sale of the FF&E at the distribution centre/warehouse was governed by the Order.

[19] The invoice for the purchase on the letterhead of the Tenants and addressed to 266 dated December 5, 2018, contained the following description:

Purchase of Total FF&E at 3389 Steeles Ave E, Brampton (DC/Warehouse -- Fluid Brands, Bombay, Bowring), including, for clarity, all desks, chairs, computers, printers, folding tables, cameras, phone system, IT equipment, servers, complete warehouse racking, all machinery, all reaches, all tow motors, conveyor belt, battery chargers, floor cleaner, shrink wrap machines, pick tower etc. (no exclusions) as per Hilco's budget approved by Richter, attached.

All FF&E to be removed by January 15, 2019 or as agreed upon with Landlord. [Emphasis added.]

The purchase price was described in the invoice as $116,668 plus HST of $15,166.84 for a total of $131,834.84. No allocation of price to individual FF&E was made nor was any distinction made for FF&E in the selling, office or storage areas of the distribution centre/warehouse. All FF&E from that location was included.

(e) Ongoing Proceedings

[20] The Tenants brought a motion for an order extending the deadline to file their Proposals to Creditors to January 31, 2019. In his affidavit sworn December 11, 2018, filed in support, Mr. Benitah stated: "As a result of the disclaimers of lease taking effect January 15, 2019, it was necessary to conclude a sale of the FF&E at this stage." He noted that it would take six weeks to dismantle, pack and remove some portions of the FF&E. He also stated at para. 20 of his affidavit that: "The sale of all FF&E owned by the Companies located in the Stores (as defined in the [Agreement]) including FF&E located ... at the Companies' warehouse/distribution centre in Brampton, Ontario, was contemplated by the Liquidation Process Order." And at para. 23 that: "The Companies therefore take the position that the sale of all FF&E owned by the Companies was previously authorized by the Court, provided that the sale of FF&E conformed to the guidelines set by the Court, the [Agreement] and the Sale Guidelines."

[21] In his supplementary affidavit sworn December 16, 2018, Mr. Benitah said that the process of removing FF&E would be commencing the week of December 17, 2018 and there was a pressing need to complete the sale because of disclaimers. He also stated that the Liquidation Process Order and the Agreement "clearly and unambiguously" approved the sale of FF&E at the warehouse.

[22] The Proposal Trustee also filed a report dated December 12, 2018 in support of the requested extension and reporting on its activities. On December 18, 2018, Hainey J. granted an order extending the deadline to January 8, not to January 31, 2019. He also approved the activities of the Proposal Trustee outlined in its December 12, 2018 report. Among other things, the Proposal Trustee had reported on the sale of the FF&E to 266.

[23] The Tenants delivered a disclaimer notice for the distribution centre/warehouse Lease to the Landlord on December 20, 2018, with an effective date of January 22, 2019. The disclaimer applied to the Lease that covered the entire area of the distribution centre/warehouse.

[24] January 8, 2019 was the deadline for the Tenants to file Proposals for Creditors but they failed to do so. Accordingly, the last day of the sale was on January 8, 2019 and the Tenants were deemed to have made assignments into bankruptcy on January 9, 2019.

(f) Failure to Remove Racking

[25] In mid-December 2018, Ms. Carvajal obtained quotes confirming that the removal of the Racking would take six to eight weeks and cost around $200,000 to $300,000. She confirmed in her cross-examination at trial that 266 never entered into an agreement with a contractor to remove the Racking.

[26] Contrary to the provisions of the December 5, 2018 invoice, 266 failed to remove the Racking by January 15, 2019.

[27] The Landlord repossessed the distribution centre/warehouse on January 22, 2019, but the Racking had not been removed. After the disclaimer of the Lease, the Landlord was no longer entitled to payment of rent by the Tenants, however, it also could not lease the distribution centre/warehouse to a new tenant until the Racking was removed.

[28] Thus the Racking remained in the warehouse after the sale concluded on January 8, 2019, after the deadline of January 15, 2019 contained in the invoice, and after the effective disclaimer date of January 22, 2019 set out in the December 20, 2018 notice of disclaimer.

[29] On January 31, 2019, counsel for the Landlord wrote to counsel for 266 regarding the presence of the Racking in the warehouse, noting that it was preventing the Landlord from re-letting the premises, and asked whether 266 had plans to remove the Racking. The Landlord also sought confirmation that 266 had abandoned the Racking. No written response was received. [^3]

[30] On February 5, 2019, the Landlord's counsel again wrote to 266's counsel and advised, "there is urgency with respect to this matter from our client's perspective as it is completing a new deal for the premises." The Landlord's counsel advised that the Racking would be assumed to have been abandoned if no response was received by the end of the next business day.

[31] Counsel for 266 responded in writing to the Landlord's counsel on February 6, 2019, saying that Mr. Benitah would like to arrange a meeting with the Landlord the following week "to discuss this matter". Plans to remove the Racking were not mentioned nor was the issue of abandonment addressed.

[32] Landlord's counsel wrote on February 6, 2019, saying that the Landlord did not want to meet and considered the Racking to have been abandoned. Counsel further advised that the Racking would be disposed of.

[33] On February 6, 2019, 266's counsel wrote stating that 266 had paid good value for the Racking and it had not been abandoned. Again, no plan for removal of the Racking was addressed.

[34] On February 7, 2019, the Landlord's counsel corresponded and proposed a settlement which permitted 266 to remove the Racking. However, if the proposal was not accepted by 5:00 p.m. the following day, the Landlord advised that it would move ahead as it saw fit.

[35] After the deadline to accept the offer had expired, 266 and its counsel had neither accepted the proposal nor made a counter-offer. Rather, on February 8, 2019 at 6:35 p.m., 266's counsel advised the Landlord's counsel that Mr. Benitah and counsel were both out of the country and doing their best to coordinate their schedules to respond in a timely manner. Nothing more was heard from 266 or its counsel for 13 days.

[36] The Landlord took steps to remove the Racking. The removal of the Racking commenced on February 11, 2019.

[37] On February 21, 2019, 266's counsel wrote to the Landlord's counsel and repeated that the Racking was not abandoned. She proposed that "266 and the Landlord undertake a joint effort to sell the racking to a third party ... and 266 and the Landlord can then split the sale proceeds."

[38] On February 25, 2019, the Landlord's counsel advised 266's counsel that the Landlord had disposed of the Racking. The removal was completed on March 18, 2019. 266 made no further inquiries into where and how the Racking was disposed of until the within action was commenced in September 2019.

[39] At trial, the Landlord disputed 266's contention that Mr. Benitah attempted to call Tom Butera in early January 2019 to discuss the Racking. Mr. Butera was an employee of GWL Realty Advisors Inc. who left the company in May 2019. At trial, he testified that he did not receive or miss any calls from Mr. Benitah in December 2018 or January 2019. 266 did not produce any records to substantiate Mr. Benitah's evidence. Mr. Butera testified that an email documenting a tenant call was the Landlord's usual process but no such email was located with respect to Mr. Benitah's alleged call. The trial judge did not accept Mr. Benitah's evidence that he had attempted to call Mr. Butera stating at para. 62 that 266 made no efforts to contact the Landlord.

(g) Landlord's Sale of FF&E including the Racking

[40] Mr. Butera testified that he contacted three companies about purchasing and removing the Racking. Only Russell Systems Design Inc. was prepared to pay anything.

[41] On January 22, 2019, Russell Systems Design Inc. wrote to the Landlord on the purchase of the distribution centre/warehouse FF&E including the Racking. The document, which was entitled "Quote", described the work to be done as a "proposal" to dismantle and remove itemized contents from the distribution centre/warehouse including the Racking, furniture, and garbage with a start date "as early as January 24th" and a completion "due date of February 28th". It stated: "Client to receive 50,000 for racking material." On February 5, Russ Conway of Russell Systems Design Inc. wrote to Mr. Butera stating that as agreed, they would have the Racking removed by March 15 and work would commence February 7 or 8. An invoice from the Landlord to Russell Systems Design Inc. dated March 7, 2019 reflected a purchase price of $45,200. Russell Systems Design Inc. paid the invoice by cheque dated March 12, 2019.

[42] At trial and on appeal, 266 asserted that the Landlord had sold the Racking to Russell Systems Design Inc. on January 22, 2019. Neither the trial judge's findings nor the record support that contention.

(h) Lawsuit

[43] In September 2019, 266 sued the Landlord for conversion and initially claimed damages of $1,800,000, which was later amended to $7,842,500. The Landlord defended the claim on the basis that 266 abandoned or was deemed to have abandoned the Racking pursuant to the November 2, 2018 Liquidation Process Order [^4] and on the basis of trespass. The Landlord counterclaimed for damages arising from its inability to rent the premises due to the presence of the Racking.

Reasons of the Trial Judge

[44] At trial, there was no dispute that 266 owned the Racking and that the Landlord sold the Racking to a third party. Accordingly, the focus of the trial was on the Landlord's defences of abandonment, deemed or actual, and trespass.

[45] As mentioned, the trial judge dismissed both the claim and the counterclaim.

[46] She concluded that the deemed abandonment provision in the Sale Guidelines applied to the Racking and acted as a defence to the conversion claim. In reaching this conclusion, she determined that the Liquidation Process Order, which included the Sale Guidelines, governed the process. She noted that Mr. Benitah's affidavit was relied upon in support of that Order and he had signed the Agreement which included the Sale Guidelines which contained the deemed abandonment provision. She found that the Racking was purchased pursuant to the Order and the distribution centre/warehouse at 3389 Steeles Ave. in Brampton was included in the definition of 'Store' in Exhibit A to the Agreement. Moreover, the Racking was part of the FF&E, a fact reflected in the sales invoice from the Tenants to 266.

[47] The trial judge considered that the Order was made during bankruptcy proceedings which have tight timelines. Relying on David Bish, Canadian Bankruptcy and Insolvency Law for Commercial Tenancies, (Toronto: LexisNexis Canada Inc., 2016), she referenced the need for certainty, transparency and fairness with respect to the rights and obligations of landlords as they relate to liquidations in leased retail premises. She rejected the appellant's argument that the deeming provision was rebuttable when considered in the context of the Order. If it were, the purpose of the Order would not be achieved. She found that the purpose of the deeming provision in s. 9 of the Sale Guidelines was to protect the Trustee and the Consultant from liability with respect to unsold property or property left behind by the Tenants. It also provided the Landlord with rights to dispose of property remaining after the Sale period had concluded and the Landlord had regained its possession rights. She concluded that the deeming provision constituted a defence to the appellant's claim for conversion.

[48] The motion judge also addressed the Landlord's alternative defences. First, she concluded that 266 had trespassed by failing to remove the Racking within a reasonable time after the Lease disclaimer when the Landlord was entitled to possession. In that regard, she made a finding at para. 62 that 266 made no efforts to contact the Landlord, made no disposal proposal, and made no counter-proposal to the Landlord after February 2019. Second, she found that it was unnecessary to address the further alternative defence of abandonment. However, she wrote at para. 69:

I also find that when viewed objectively, 266's inaction demonstrates that it had the intention to abandon the Racking. 266 did not ask the Landlord to extend the January 15 date. It was the Landlord who contacted 266 with respect to the removal of the Racking, after the deadline and the Lease Disclaimer date. Further, the passage of time after the deadlines, supports a finding that 266 intended to abandon the Racking as it had made no arrangements and was not in the midst of negotiations with a contractor or the Landlord to remove the Racking.

She also found that the Landlord acted reasonably to remove the Racking as quickly as possible so that the premises could be re-leased.

[49] As for damages, she determined that had she found in favour of 266, she would have assessed damages as at the date of trial based on the replacement cost of the Racking. She stated that she would have assessed damages using the value range advanced by the experts of between $7,910,000 and $7,578,300.

[50] Lastly, the trial judge dismissed the Landlord's counterclaim on the basis that it had failed to provide proof of the damages claimed. She also awarded the Landlord $429,893.38 in costs.

Positions of the Parties

[51] In brief, 266 first submits that the trial judge erred in numerous ways in her interpretation of the Liquidation Process Order. I will address these in my analysis.

[52] Second, 266 submits that the trial judge erred in determining that the deemed abandonment provision was conclusive and irrebuttable. It argues that a deeming provision must be interpreted to determine the intention of the provision and avoid "holding to be a fact something directly contrary to true fact". It submits that the trial judge ignored the appellant's communications that it had not abandoned the Racking.

[53] Third, 266 submits that the trial judge erred in failing to consider whether the deeming provision was rebutted.

[54] Next, 266 takes issue with the trial judge's treatment and findings with respect to the defences of actual abandonment and trespass.

[55] The Landlord answers by submitting that the trial judge did not err in her interpretation of the Liquidation Process Order nor in her finding that the deeming provision did not amount to a rebuttable presumption when considered in the context of the Order. Furthermore, Mr. Benitah was intimately involved in all stages of the history of the Tenants and 266. The Landlord argues that after purchasing the FF&E, 266 discovered that removal would cost between $200,000 to $300,000 and dwarf the purchase price for all of the FF&E. In addition, removal would take substantial time. 266's conduct and communications including its failure to contact the Landlord about removal demonstrated its objective intention to abandon the Racking. The Landlord states that the trial judge did not err with respect to liability.

[56] As mentioned, the Landlord cross-appealed on the issue of damages in the event that 266 was successful on appeal.

Issues

[57] The tort of conversion "involves a wrongful interference with goods of another, such as taking, using or destroying these goods in a manner inconsistent with the owner's right of possession": Boma Manufacturing Ltd. v. Canadian Imperial Bank of Commerce, [1996] 3 S.C.R. 727, at para. 31; 373409 Alberta Ltd. (Receiver of) v. Bank of Montreal, 2002 SCC 81, [2002] 4 S.C.R. 312, at para. 8.

[58] Conversion is not in issue on this appeal. As I would conclude that the trial judge did not err with respect to the Landlord's defence of deemed abandonment and her interpretation of the Liquidation Process Order, there is no need to address the Landlord's alternative defences of actual abandonment and trespass or the issue of damages. That said, at the end of my reasons, I will touch briefly on the measure of damages the trial judge used for the conversion claim.

[59] As such, the issues to consider are:

(i) Did the trial judge err in interpreting the Liquidation Process Order?

(ii) Did the trial judge err in holding that the deemed abandonment provision in the Liquidation Process Order was irrebuttable and if so, did she err in failing to consider whether it was rebutted?

Analysis

(i) Interpretation of the Liquidation Process Order

[60] To recap, the trial judge determined that the Order, which included the Sale Guidelines, governed. She concluded that the distribution centre/warehouse met the definition of Store, and the Racking constituted FF&E as described in these documents. She then relied on paragraph 9 of the Sale Guidelines to anchor her conclusion that there was a deemed abandonment by 266 following the disclaimer of the distribution centre/warehouse Lease on January 22, 2019.

[61] To repeat, the key part of that paragraph stated:

Any fixtures or personal property left in a Store after the Sale Termination Date in respect of which the applicable Lease has been disclaimed by the Merchant shall be deemed abandoned, with the applicable Landlord having the right to dispose of the same as the Landlord chooses, without any liability whatsoever on the part of the Landlord.

[62] In interpreting a judicial order, a court should consider the text, context and purpose of the order based on: (i) the express language of the order; (ii) the purpose of the terms of the order; (iii) the authority to make the order, including the statutory context and procedural rules; (iv) the circumstances surrounding the making of the order, including the events leading to the order; (v) the resolution of apparent inconsistencies between different terms; and (vi) the application of accepted principles of statutory and contractual interpretation to ascertain the intent of the ordering judge: Aizic v. Natcan Trust Company, 2025 ONCA 719, at para. 27; Kuang v. Young, 2023 ONSC 2429, at para. 7; Chippewas of Saugeen First Nation v. South Bruce Peninsula (Town), 2024 ONCA 884, 502 D.L.R. (4th) 261, at para. 168, leave to appeal refused, [2025] S.C.C.A. No. 43; for the principles of statutory interpretation, see Quebec (Commission des droits de la personne et des droits de la jeunesse) v. Directrice de la protection de la jeunesse du CISSS A, 2024 SCC 43, 498 D.L.R. (4th) 316, at para. 24.

[63] In Koroluk v. KPMG Inc., 2022 SKCA 57, [2022] 11 W.W.R. 423, the Saskatchewan Court of Appeal addressed a liquidation plan that was approved by court order. At para. 43, Leurer J.A. stated:

However, the interpretation of a court order, or for that matter a document approved by a court order or which a court order directs be implemented, involves more than simply reading its words in isolation. Like other law-making instruments, court orders are to be interpreted wholistically and purposively. The interpretation of specific provisions must take into account other parts of the order. A court interpreting an order should consider the authority to render it, since it should be assumed that a court would not grant an order it had no power to make. Finally, consideration must also be given to the broader context in which the order was made, including the pleadings and litigation events leading to the order.

This formulation was adopted by this court in Aizic, at para. 26. See also Kuang, at para. 8; Warde v Slatter Holdings Ltd., 2016 BCCA 63, 83 B.C.L.R. (5th) 229; Onion Lake Cree Nation v. Stick, 2020 SKCA 101, [2021] 2 W.W.R. 614; Yu v. Jordan, 2012 BCCA 367, 36 B.C.L.R. (5th).

[64] The standard of review for interpretation of a court order is correctness: Fontaine v. Canada (Attorney General), 2020 ONCA 688, at para. 29.

[65] At its core, 266 submits that the trial judge erred in interpreting the deemed abandonment provision in the Liquidation Process Order as applying to the Racking. It advances numerous arguments in support of its position that her interpretation was flawed.

[66] First, it asserts that the distribution centre/warehouse was not a "Store" within the meaning of the Order. Second, 266 argues that Racking does not fall within the Order's definition of "Fixtures and personal property". The Order was not intended to address customized heavy equipment such as the Racking but was only to apply to unsold merchandise and small FF&E left behind at Stores. Third, 266 argues that the trial judge's interpretation was commercially unreasonable as the disassembly of the Racking could not occur until after the completion of the sale of inventory and therefore before it was deemed abandoned. Removal of the Racking required six to eight weeks and therefore, the deadline for removal in the Order was impossible to satisfy. Fourth, 266 submits that the trial judge overemphasized the Landlord's interests. [^5]

[67] Starting with the definition of "Store" in the Liquidation Process Order, I agree with the trial judge's interpretation of the language of the Order. "Store" was defined in Exhibit A to the Agreement and on a plain reading, included the distribution centre/warehouse at 3389 Steeles Avenue East in Brampton. Some sales were conducted from those premises. Although Exhibit A had a column entitled 'Selling Sq. Ft.' and the warehouse entry was stated to be 20,000 when at the time it was 220,000 square feet, there was only one lease for the distribution centre/warehouse and only one disclaimer for that lease. The Agreement provided that the Consultant was to advise in connection with "the sale of the FF&E in the Stores from the Stores themselves". It would be inconsistent with not only the text but the purpose and context of the Order to interpret it as not including the distribution centre/warehouse as a Store within the meaning of the Agreement. Furthermore, had it been the intention to carve out the distribution centre/warehouse FF&E or the Racking from the parameters of the Liquidation Process Order, it would make no sense for the entire sales apparatus, which was designed to liquidate the Tenants' assets for the benefit of creditors, to fail to expressly provide for such exclusions.

[68] Though not determinative, I note that as stated in both his December 11 and 16, 2018 affidavits, Mr. Benitah was also of the view that the Racking was encompassed by the terms of the Liquidation Process Order including the Sale Guidelines. While Mr. Benitah did not swear those affidavits in his capacity as principal of 266, there is no argument that when it purchased the Racking, 266 understood the Liquidation Process Order any differently than its principal.

[69] Relatedly, I also reject the appellant's contention in its factum that the Sale Guidelines were only to apply to unsold merchandise and small FF&E left behind at Stores. Neither the language nor the purpose of the Order or Sale Guidelines suggest such an interpretation. The Lease for the distribution centre/warehouse permitted the Tenants to conduct sales from those premises. Again, though not determinative, it is telling that Mr. Benitah recognized this reality in his December 11, 2018 affidavit on behalf of the Tenants. He described 266's December 5, 2018 purchase of the FF&E "located at 25 Stores (as defined in the Consultation Agreement, approved by the Court as part of the Liquidation Process Order)" and that "[t]he sale of all FF&E including that at... the warehouse... was contemplated by the Liquidation Process Order" (emphasis added). Lastly, the invoice which was paid by Mr. Benitah does not make the distinction urged by 266.

[70] As to 266's submission on commercial unreasonableness and timing, once the notice of lease disclaimer was given by the Tenants on December 20, it was evident that removal of FF&E would be required by the effective disclaimer date of January 22, 2019 and would take some time. As is clear from his affidavits, Mr. Benitah was aware of this need. Indeed, Ms. Carvajal obtained time estimates for removal of the Racking in mid-December 2018 but she never scheduled a contractor to remove the Racking. Given that the Liquidation Process Order was dated November 2, 2018 and the Agreement which expressly agreed to the terms of the Sale Guidelines was signed by Mr. Benitah on October 31, 2018, the argument that the Racking removal time precluded the interpretation adopted by the trial judge and rendered it commercially unreasonable is unpersuasive.

[71] As for the text relating to deemed abandonment, that provision applied to "any fixtures or personal property" and applied whether the FF&E had been sold or not.

[72] When the language of the Liquidation Process Order is considered together with the purpose and insolvency context of the Order, it is clear that the trial judge's interpretation that the Racking constituted FF&E was correct.

[73] In his book, Canadian Bankruptcy and Insolvency Law for Commercial Tenancies, at pp. 293-304, David Bish describes the provenance of liquidation sale orders. He noted that there are "continuous squabbles" among debtors, liquidators, and landlords concerning the appropriate procedure for liquidation sales in insolvency proceedings. In the 2007 insolvency proceedings concerning The Bombay Furniture Company of Canada Inc., Morawetz J. (as he then was), proposed model or standard form provisions for the conduct of liquidations in leased retail premises that "provided certainty, transparency and fairness with respect to the taking of steps that affect landlords (such as repudiation of a lease, the removal of fixtures, etc.)": at pp. 293-94. Mr. Bish described the import of this decision, at p. 294:

The significance of this case cannot be understated, as it was instrumental in putting to rest many (but not all) of the ongoing acrimony and disputes that plagued commercial tenancies insolvency cases prior to that time. Among other things, this case led to the amendment of the Model Form of Initial CCAA Order in Ontario (and other provinces) so as to resolve a number of these issues and was followed in a host of ensuing cases through to the present day...

[74] He explained that since then, standard sale guidelines incorporated as part of liquidation orders typically include provisions requiring that leased premises be left in a "'broom swept' condition and good state of repair": at p. 303. He went on to explain that nonetheless, it is common for landlords to recover their premises after a lease has been disclaimed to find property left behind. This could cause serious issues for a landlord who (absent the sale guidelines) could face liability for disposing of this property. He stated, at p. 303-4:

To alleviate this problem, sale guidelines customarily contain express authority for the landlord to treat as abandoned any fixtures or personal property left behind at the conclusion of the liquidation sale, with the right to dispose of the same as the landlord wishes and without liability.

[75] In her interpretation, the trial judge properly placed weight on the bankruptcy and insolvency context and purpose of the Liquidation Process Order. A contrary interpretation would detract from the purpose of liquidation orders and sale guidelines involving landlords and insolvent tenants. Such orders reflect a compromise. A landlord refrains from exercising its rights under a lease to allow for a sale of the contents. Once the lease is disclaimed, a landlord may not charge the bankrupt rent but may repossess the premises and re-lease them to a third party. An interpretation that allows for no end date for removal, which is implicit in the appellant's position, would be commercially unreasonable. The deemed abandonment provision must be read in that context. The authority to make the order, including the bankruptcy statutory context, also supports the trial judge's interpretation.

[76] In conclusion, the Liquidation Process Order was correctly interpreted as applying to the Racking in the distribution centre/warehouse that was sold to 266 and as including the deemed abandonment provision.

(ii) Deemed Abandonment Provision was Irrebuttable

[77] 266 submits that even if the deemed abandonment provision applied to the Racking, the trial judge erred in determining that the deemed abandonment provision created a conclusive, irrebuttable presumption. 266 argues that she failed to apply the test to determine how the deeming language should be interpreted. According to 266, a deeming provision must be interpreted to determine the intention of the provision and to avoid "holding to be a fact something directly contrary to true fact". 266 also submits that the trial judge failed to consider the parties' conduct that rebutted the presumption and ignored 266's communications that it had not abandoned the Racking.

[78] As I will explain, I do not accept these submissions.

[79] The term 'deemed' or 'deeming' may create an irrebuttable or a rebuttable presumption. Though dealing with a statute, the Supreme Court noted in St. Peter's Evangelical Lutheran Church v. Ottawa (City), [1982] 2 S.C.R. 616, at p. 629, these words are not always conclusive; they must be construed in the entire context of the statute concerned: see also Sharbern Holding Inc. v. Vancouver Airport Centre Ltd., 2011 SCC 23, [2011] 2 S.C.R. 175, at para. 114. In a similar vein, the Manitoba Court of Appeal stated in St. Leon Village Consolidated School District 1425 v. Ronceray (1960), 23 D.L.R. (2d) 32 (Man. C.A.), at p. 37:

[I]n deciding whether or not the use of the words "deem" or "deemed" establishes a conclusive or a rebuttable presumption depends largely upon the context in which they are used, always bearing in mind the purpose to be served by the statute and the necessity of ensuring that such purpose is served.

[80] In St. Peter's, the City of Ottawa had failed to provide written notice of its refusal to grant a demolition permit to homeowners. The homeowners knew of the decision but under the governing legislation, absent notice, the City was deemed to have consented to the demolition. In those circumstances, they began to demolish the building. Ultimately, the Supreme Court decided that the deeming provision was irrebuttable. Its purpose was to give an element of finality to the proceeding. The court stated at p. 629:

Where a statute sets up a scheme for the employment of special powers by a municipal body and clearly provides a detailed procedure which will protect the municipal authority and make lawful the exercise of those powers, and then provides a specific sanction for failure to follow the statutory procedure in the form of a deeming provision, it is difficult, indeed, to conclude that a conclusive deeming was not intended. Any other conclusion would frustrate and break down the whole scheme of the Act designed specifically to accomplish both the preservation of the heritage of Ontario and the protection of landowners.

[81] Applying these principles to this appeal, the Liquidation Process Order, which included both the Agreement and the Sale Guidelines, reflected a scheme whereby certain of the Landlord's rights were curtailed including its ability to relet the premises until the disclaimer date when the premises were to be devoid of FF&E not belonging to the Landlord. The purpose of the Order would be seriously undermined if the guardrails contained in the governing documents were not enforced. Again, both the context and purpose of insolvency proceedings support such a determination. Morawetz R.S.J.'s (as he then was) admonition in Target Canada Co. (Re), 2016 ONSC 316, 32 C.B.R. (6th) 48, at para. 81 is apt albeit in the context of a CCAA proceeding:

In [these] proceedings, a stay has been granted and a plan developed. During these proceedings, this court has made a number of orders. It is essential that court orders made during CCAA proceedings be respected. In this case, the Amended Restated Order was an order that was heavily negotiated by sophisticated parties. They knew that they were entering into binding agreements supported by binding orders. Certain parties now wish to restate the terms of the negotiated orders. Such a development would run counter to the building block approach underlying these proceedings since the outset.

[82] Secondly, the language of paragraph 9 of the Sale Guidelines not only provides for a deemed abandonment, but also describes the Landlord's remedy, namely a right to dispose of the Racking without any liability whatsoever on the part of the Landlord. Such provisions read together and in context do not create an interpretation that is rebuttable.

[83] Moreover, any potential concerns could be addressed through the come-back provision in the Liquidation Process Order: "any interested party (including the Debtors and the Proposal Trustee) may apply to this Court to vary or amend this Order". As such, it was open to 266 and indeed the Tenants to apply to the court to seek a variation of the terms to allow for removal of the Racking. 266 never applied for such a variation.

[84] I also reject 266's contention that the trial judge erred by holding "to be a fact something directly contrary to true fact" and by ignoring 266's conduct and communications in this regard. In St. Peter's, the lower court found as a fact that "the applicant was well aware of the true purpose and intention of the City", that is that the City did not consent to the application to demolish: at p. 628. Nonetheless, the Supreme Court gave effect to the deeming provision. The Court held that "by failing to act within the ninety-day period the City has been deemed to have consented to the appellants' application to demolish, not because it has in fact consented but because it has failed to observe specific statutory provisions": St. Peter's, at p. 629.

[85] In any event, the trial judge did not ignore 266's conduct and communications. Mr. Benitah had been intimately involved in the entire proposal and bankruptcy proceedings. He executed the Agreement that incorporated the Sale Guidelines, both of which were approved by the Court, and swore the affidavit in support of the Liquidation Procedure Order and the order to extend the time to file Proposals. He was the sole officer and director of each of the Tenants and 266 and must be taken to have known the requirements and implications of the timelines in the Liquidation Process Order.

[86] Reading her reasons as a whole, the trial judge found that 266 had failed to communicate with the Landlord to remove the Racking and did not accept Mr. Benitah's evidence to the contrary. There certainly was no written communication which was required under the terms of the Order. Recall that the notice of disclaimer of the Lease was delivered on December 20, 2018, with an effective date of January 22, 2019. The trial judge found that 266 knew it would take longer to remove the Racking than would be allowed by the January 15 removal deadline in the invoice and described in Mr. Benitah's affidavit relied upon to obtain the Order, but even on his own evidence, the earliest date he contacted the Landlord was in January 2019. The Landlord argues that 266 never had any intention of recovering the Racking and after learning of the $200,000 to $300,000 estimate for dismantling, it abandoned the Racking and attempted to negotiate a deal with the Landlord. The trial judge did not address that argument nor in the circumstance was it necessary to do so. Reading the Order as a whole and in context, the deeming provision was irrebuttable, and the trial judge did not err in so finding. It was reasonable for the trial judge to decide that 266 was not permitted to leave the Racking at the distribution centre/warehouse for an undefined time all while the Landlord was receiving no rent.

[87] For these reasons, I would dismiss the appeal. Under the circumstances, there is no need to address the defences of actual abandonment or trespass nor the issue of damages. That said, I will comment briefly on the trial judge's measure of damages.

Damages

[88] A trial judge's assessment of damages typically attracts deference on appeal. However, interference is warranted if an assessment is made on the basis of an error in principle or law: SFC Litigation Trust v. Chan, 2019 ONCA 525, 147 O.R. (3d) 145, at para. 112, leave to appeal refused, [2019] S.C.C.A. No. 314, citing Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, [2001] 2 S.C.R. 943, at para. 80.

[89] As she was not awarding any damages, the trial judge decided to address the issue very briefly, stating that in a claim for conversion, damages are determined based on replacement cost. This is not the general rule. The general measure of damages for conversion 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, at p. 652; 2105582 Ontario Ltd. (Performance Plus Golf Academy) v. 375445 Ontario Limited (Hydeway Golf Club), 2017 ONCA 980, 138 O.R. (3d) 562, at para. 61; Koeneman v. Horne, 2024 MBCA 36, 496 D.L.R. (4th) 366, at para. 26.

[90] The trial judge also calculated damages from the date of trial but gave no reasons for her selection of that date. This too is not the general rule. In general, the remedy for conversion is not damages reflecting the replacement value of the asset as of the time of trial as ordered by the trial judge. Rather, the date of conversion is used because the plaintiff is expected to replace the chattels: "the assessment of damages should take place at the earliest date on which the plaintiff, acting reasonably, could have replaced the goods.": S.M. Waddams & Patrick Healy, The Law of Damages, (Aurora: Canada Law Book, 1991) (loose-leaf updated Dec. 2025, release 1), at s. 1:6.

[91] The trial judge's reasons on damages amounted to a few short paragraphs. They did not justify a departure from the general rules relating to damages for conversion, that is that they should be assessed at the market value of the converted asset as of the date of conversion.

Disposition

[92] For these reasons, I would dismiss the appeal and the cross-appeal. As agreed by the parties, the appellant is to pay the Landlord's costs of $75,000 on a partial indemnity scale inclusive of disbursements and applicable tax.

Released: February 12, 2026 "E.E.G."

"S.E. Pepall J.A."

"I agree. E.E. Gillese J.A."

"I agree. B. Zarnett J.A."

[^1]: The premises are referred to as the "warehouse", or the "distribution centre/warehouse" interchangeably throughout these reasons.

[^2]: The Sale Commencement Date proved to be November 5, 2018.

[^3]: Paragraph 34 of the trial judge's reasons appears to confuse and misstate the evidence as there were no written communications from the Tenants or their counsel dated January 31, 2019.

[^4]: Shortly before the commencement of the trial, the Landlord sought leave to amend its statement of defence and counterclaim to rely on the defence of deemed abandonment. 266 consented to the requested order. The order contained no conditions.

[^5]: 266 also argued that the trial judge erred in her interpretation because the Racking had already been sold. I rejected this argument in paragraph 42.