Ref: 1027410 Ontario Inc. v. 2384589 Ontario Limited, 2022 ONCA 688 (Canlii)

In a recent decision the Ontario Court of Appeal considered and upheld the (unreported) trial judge’s award of $25,000 in punitive damages in a mortgage action.

A commercial tenant had filed to pay rent on the premises, a sports bar, and the landlord (appellant) took possession of premises and chattels, ultimately disposing of some and incorporating others into a new restaurant business opened on the same premises. The respondent held a chattel mortgage secured by PPSA registration and asserted its right over the chattels.

In finding for the chattel mortgagee at trial, Justice Gorman awarded $25,000 in punitive damages for the landlord’s high-handed conduct “intent on depriving [them] of their own property,” for which they were “entirely blameworthy” (appeal decision at 15).

The Court of Appeal found that this was a reasonable and proportional decision. The Court noted further that an award of compensatory damages would not address the different function of punitive damages, which is to denounce the party’s misconduct

“The findings made in support of the award were open to the trial judge on the record, and they rationally support the imposition of punitive damages in the amount ordered” –
Aroma Taste of the Middle East v. Buckingham Properties Inc., 2019 ONCA 439, 1 R.P.R. (6th) 1, at 75 — so the decision was upheld, and the appellant ordered to pay $20,000 in costs.