Hudson’s Bay Co. holds its annual meeting of shareholders in Toronto on June 3, 2016. Two landlords of the Hudson’s Bay Co. are suing the retailer for unpaid rent, alleging the iconic department store that anchors shopping malls across Canada hasn’t paid its bills at multiple locations since April. THE CANADIAN PRESS/Christopher Katsarov

Hudson’s Bay Co. holds its annual meeting of shareholders in Toronto on June 3, 2016. Two landlords of the Hudson’s Bay Co. are suing the retailer for unpaid rent, alleging the iconic department store that anchors shopping malls across Canada hasn’t paid its bills at multiple locations since April. THE CANADIAN PRESS/Christopher Katsarov

Landlords sue Hudson’s Bay for unpaid rent, retailer says malls aren’t ‘first class’

The coming months could see more disputes emerge as shoppers turn to e-commerce

Two Hudson’s Bay Co. landlords are suing the retailer for unpaid rent, alleging the iconic department store that anchors shopping malls across Canada hasn’t paid its bills at multiple locations since April.

The lawsuits, filed in Quebec Superior Court by Cominar Real Estate Investment Trust and Oxford Properties Group and its co-owners, are seeking so-called safeguard orders compelling HBC to pay rent.

The companies say in court documents that HBC owes more than $3.5 million in rent and other fees at five Quebec shopping malls, an amount that continues to climb by more than half a million dollars each month.

In an affidavit filed in response, Ian Putnam, president and chief executive officer of HBC Properties and Investment, said the company has been trying to reach a mutually acceptable solution with the landlords that recognizes COVID-19’s “dramatic impact” on retail.

“HBC still hopes to arrive at a reasonable resolution,” he said in court documents filed Wednesday.

“But their demand that HBC pay the entirety of the rent ignores the fundamental change in the nature of these properties,” Putnam said, adding that they are no longer the “first class” malls HBC bargained for.

The legal wrangling highlights the challenges facing both commercial landlords and retailers as foot traffic in brick-and-mortar stores continues to lag after widespread closures last spring.

With the second wave of the pandemic intensifying, the coming months could see more disputes emerge as shoppers turn to e-commerce instead of local shopping malls ahead of the busiest shopping season of the year.

Oxford Properties said the ongoing loss of rent from an anchor tenant could be crippling for its shopping centres, suggesting the retailer also has unpaid bills outside Quebec.

In court documents, the company said that while HBC continues to pay rent “under protest” at three of its shopping centres, it’s withholding rent at eight other locations.

The company’s portfolio of malls includes the Yorkdale Shopping Centre in North York, Ont., the Square One Shopping Centre in Mississauga, Ont., and the Southcentre Mall in Calgary, Alta.

“HBC’s aggregate indebtedness to the landlords of the Oxford Shopping Centres … is extremely large and growing at an alarming rate,” Oxford Properties said in court documents.

Oxford Properties, which is the real estate subsidiary of OMERS, added that an inability to collect the amount owing from HBC would cause “irreparable harm.”

Meanwhile, Cominar is threatening Hudson’s Bay with eviction from its three Quebec properties in addition to seeking unpaid rent.

Cominar claims in court documents that HBC owes $603,169 in rent at the Rockland Shopping Centre, $662,490 at the Champlain Mall and $144,393 at the Centre Laval.

Oxford Properties claims the retailer owes $1.4 million in overdue rent at Les Galeries de la Capitale and $875,680 at Les Promenades Gatineau.

The landlord also alleges that HBC has made it clear it has “no intention of paying any rent in the foreseeable future.”

“It appears that HBC’s true intention is to take advantage of the current challenging times to occupy and carry on business from the leased premises rent-free as long as possible,” Oxford Properties said.

“HBC is attempting to use the pandemic as a pretext to unjustly enrich itself at the expense of the landlord.”

Daniel O’Donnell, a spokesman for Oxford Properties, said although the landlord is willing to share the financial burden of COVID-19’s impact, HBC has ignored “multiple requests to enter into a constructive dialogue to find a mutually agreeable arrangement.”

He said HBC’s continued refusal to pay any rent — despite being open for business — pushed the company to pursue legal action.

But in his affidavit, Putnam said the allegation that HBC has simply refused to pay rent while also refusing to engage in good faith negotiations is “completely false.”

“HBC is committed to arriving at a reasonable resolution with Oxford,” he said. “It is not HBC’s intent to continue operating its stores without paying any rent.”

Part of the issue for HBC is the current state of the malls it anchors.

James Tate, a retail market analyst retained by HBC legal counsel, said in an affidavit that the landlord “is not delivering a first-class suburban regional centre in terms of customer traffic and opportunity for HBC.”

He said Oxford Properties has not consistently provided the elements required for a “first class suburban regional shopping centre,” including a place to shop, eat and socialize that is perceived as a clean and safe.

Diane J. Brisebois, Retail Council of Canada president and CEO, said it’s disappointing the landlords decided to take the issue to court.

“The case could set a precedent that’s damaging to the retail sector,” she said. “It’s unfortunate it had to come to this. Having huge anchor stores disappear from malls is a recipe for disaster.”

Citing shifting consumer behaviour, HBC said earlier this month it would permanently close its Winnipeg store in February 2021.

ALSO READ: No new COVID rules for B.C. gyms as Ontario fitness studio sees ‘very large outbreak’

Brett Bundale, The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

CoronavirusRetail

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Williams Lake Courthouse (Monica Lamb-Yorski photo - Williams Lake Tribune)
Charges laid following high-speed chase, arrest near Williams Lake Sunday

Tyrell Giroux appeared in Williams Lake Provincial Court on Monday, Oct. 26

There has been COVID-19 exposures at two elementary schools in District 42. (Image courtesy CDC)
Interior Health reports 24 additional COVID-19 cases

This includes three school exposures in Kelowna

Youth across B.C. took part in the Student Vote. In Cariboo Chilcotin BC Green Party David Laing got the most votes and in Cariboo North BC NDP Party Scott Elliott emerged the winner.  (Student Vote photo)
BC Student Vote 2020: Green Party wins Cariboo Chilcotin, NDP wins Cariboo North

Student vote for Cariboo ridings has different outcomes than general voting

Provincial health officer Dr. Bonnie Henry arrives for briefing on the COVID-19 situation, B.C. legislature, Oct. 26, 2020 (B.C. government)
B.C. records 217 more COVID-19 cases, mask use urged

Infection spike continues, 21 senior facilities affected

Seven-year-old Aaliyah Rosa was found dead in an apartment in Langley in July. (Langley Advance Times files)
Child’s body cold, no pulse: Off-duty cop testifies in Langley mother’s murder trial

The seven-year-old girl’s mother faces a first-degree murder charge

Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Tyrell Giroux was arrested by Williams Lake RCMP on Sunday, Oct. 25. (Facebook video screenshot)
Tsilhqot’in leaders call for suspension of officers seen in controversial Williams Lake arrest

Disturbing video demands an immediate, independent investigation, says TNG

People march during a climate strike in Montreal, Friday, Sept. 27, 2019. THE CANADIAN PRESS/Graham Hughes
Judge rejects 15 youths’ climate change lawsuit against Canadian government

Justice Michael Manson has granted the government’s motion to strike the plaintiffs’ claim

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

A woman walks through check in at WestJet at Pearson International airport during the COVID-19 pandemic in Toronto on Wednesday, Oct. 14, 2020. THE CANADIAN PRESS/Nathan Denette
Strong support for pre-flight COVID testing ahead of upcoming WestJet trial: YVR

Airport is partnering with UBC, which is helping choose the method of pre-flight testing

Prime Minister Justin Trudeau provides an update on the COVID pandemic during a press conference in Ottawa on Tuesday, Oct. 27, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Trudeau says pandemic ‘really sucks,’ and that Christmas gatherings are up in the air

The prime minister encouraged residents to continue to follow the advice of local health authorities

The Williams Lake Indian Band is stipulating no-go zones for mushroom picking in areas burned by last summer’s wildfires. 100 Mile Free Press photo
Who controls mushroom harvesting on Indigenous lands?

‘We don’t necessarily know where the mushrooms grow, how old the stands need to be, those types of things.’

Most Read