Judge says HBC landlords should get $2.4M in costs after company’s failed lease sale

TORONTO –  

An Ontario court has taken an “unprecedented” step, deciding Hudson’s Bay landlords should be reimbursed for $2.4 million in costs they incurred while fighting the defunct retailer’s failed push to sell leases to B.C. billionaire Ruby Liu. 

The court, however, has paused the transfer of that cash until HBC sorts out all its creditors. It warns the funds, which make up about 60 per cent of what landlords spent on the dispute, may never change hands because other creditors owed money may take priority over the real estate companies.

Judge Jessica Kimmel said in a recent decision that she ruled in favour of the landlords not to punish HBC and its lenders for trying to sell leases to Ruby Liu, but to indemnify the real estate companies from the department store’s failed attempt to recoup cash by using the legal tools available to it.

“Awarding costs encourages parties in future cases to be thoughtful about litigation strategies, to embrace and fully explore alternatives to litigation, and to make concerted efforts to resolve disputes consensually via settlement,” Kimmel wrote in her March 10 decision.

Courts rarely award costs in creditor protection cases, but Kimmel said, “this was an unprecedented situation, and I consider an unprecedented costs award to be warranted.”

The battle over whether landlords should be able to recoup costs from HBC’s failed attempt to transfer leases to Liu began last year after a court blocked the sale, agreeing Liu’s business plan was insufficient for the properties she wanted to take over.

Landlords Cadillac Fairview, Oxford Properties, Ivanhoé Cambridge, Primaris Management, QuadReal Property, Morguard Investments and KingSett Capital had spent months fighting HBC’s attempt to sell Liu 25 leases for former HBC and Saks stores for $69.1 million.

Liu wanted to open a department store with entertainment and dining space in the 25 properties and three other former HBC and Saks sites she bought the leases for, which are located in malls she owns. (It is unclear whether she still plans on building the department store brand she once envisioned.)

HBC wanted the 25-lease deal to be approved because it would have helped the 355-year-old company, which became insolvent and closed all of its stores last year, to pay its creditors.

When court refused to greenlight the deal, HBC landlords pursued the retailer for the costs they incurred while preparing thousands of pages of court records and participating in hearings.

They said they should be entitled to recoup those costs because they tried to save all the parties cash by proposing a settlement over the summer. 

That settlement would have seen the landlords accept their leases back in September and agree to cover the cost of removing items from the stores such as fixtures, furniture and signage.

The landlords say HBC refused the offer and instead demanded a $29 million payment, so the settlement never came to fruition and the Liu deal went before Judge Peter Osborne.

Osborne was promoted to an appeals court in December, a few months after blocking the sale to Liu. Kimmel has since taken his place on the HBC case.

Before the changeover, HBC argued the landlords shouldn’t see their expenses covered but if a court decided otherwise, it said any funds the property owners were awarded should be nominal. 

HBC reasoned that awarding the landlords money would make other insolvent companies hesitant to pursue remedies like the retailer did with the Liu deal. 

It also pointed out that while HBC properties sat empty as the retailer pursued court permission for the Liu deal, landlords made almost $15 million in rent they would not otherwise have received. 

While Kimmel ultimately decided the landlords should get the money they were asking for, she didn’t determine whether paying it out should be prioritized over claims from HBC’s other top lenders, who fought the property owners’ request for costs and will be trying to get their hands on what scarce money HBC has left. 

“All of that will be an issue for another day,” she said in her decision.

This report by The Canadian Press was first published March 16, 2026.