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

paintearth
County of Paintearth council approves changes to Health and Safety policies

The policies were last reviewed and approved by council on Sept. 15th, 2017

Nate Horner
Nate Horner stops by Castor’s Paintearth Lodge on Oct. 19th

Another hot topic during the discussion was the visitor restrictions put in place to protect the residents

Alberta’s chief medical officer of health, Dr. Deena Hinshaw, confirmed more than 1,000 cases over the weekend Monday afternoon. File photo
COVID-19: Central zone active cases up Monday

‘We’ve now crossed the tipping point,’ says Hinshaw

doc
Online program helps residents live well with chronic disease

Six-week series of free workshops runs Tuesdays in November and December

county
After unsuccessful attempts to contact owner, Throne property going to tax sale

Bidding will be closed as of the first council meeting in February of 2021

B.C. Liberal leader Andrew Wilkinson, B.C. NDP leader John Horgan and B.C. Greens leader Sonia Furstenau. (Black Press Media)
VIDEO: One day until B.C. voters go to the polls in snap election defined by pandemic

NDP Leader John Horgan’s decision to call an election comes more than a year ahead of schedule and during a pandemic

Wetaskiwin Hospital staff join AUPE walk outs across the province Monday Oct. 26, 2020. Shaela Dansereau/ The Pipestone Flyer.
City of Wetaskiwin health-care workers strike in protest of province-wide cuts

Wetaskiwin Hospital staff join other front line hospital workers across the province in walk-outs.

Front-line hospital workers have walked off the job at the Rimbey Hospital, and across the province. Photo Submitted
Front-line health care workers on strike across the province, including Rimbey Hospital

The strike is due to cut of 11,000 health care jobs in the province, according to AUPE

The death of 19-year-old Jacob Michael Chitze of Edmonton has now been ruled a homicide following an ongoing RCMP investigation.
UPDATE: RCMP arrest youth for second degree murder of 19-year-old Jacob Chitze

Arrest made for the murder of Jacob Michael Chitze, 19.

Pumpkins for the 46th Annual WDACS Pumpkin Ball on display at Vision Credit Union Wetaskiwin. Shaela Dansereau/ Pipestone Flyer.
46th Annual Pumpkin Ball held virtually this year

This year the pumpkins were sold over a six-day online auction.

Comedic actor Seth Rogen, right, and business partner Evan Goldberg pose in this undated handout photo. When actor Seth Rogen was growing up and smoking cannabis in Vancouver, he recalls there was a constant cloud of shame around the substance that still lingers. Rogen is determined to change that. (Maarten de Boer ohoto)
Seth Rogen talks about fighting cannabis stigma, why pot should be as accepted as beer

‘I smoke weed all day and every day and have for 20 years’

Leader of the Opposition Erin O’Toole rises during Question Period in the House of Commons Thursday October 22, 2020 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
O’Toole tells Alberta UCP AGM Liberals were ‘late and confused’ on COVID response

He says Alberta Premier Jason Kenney has taken charge and not waited to make things happen

Alberta Premier Jason Kenney arrives for an announcement at a news conference in Calgary, Alta., Tuesday, Sept. 15, 2020. THE CANADIAN PRESS/Todd Korol
Inquiry into oil and gas foes to deliver report next year: Kenney

A lawsuit filed by environmental law firm Ecojustice argues the inquiry is politically motivated

The Canadian border is pictured at the Peace Arch Canada/USA border crossing in Surrey, B.C. Friday, March 20, 2020. More than 4.6 million people have arrived in Canada since the border closed last March and fewer than one-quarter of them were ordered to quarantine while the rest were deemed “essential” and exempted from quarantining. THE CANADIAN PRESS/Jonathan Hayward
Majority of international travellers since March deemed ‘essential’, avoid quarantine

As of Oct. 20, 3.5 million travellers had been deemed essential, and another 1.1 million were considered non-essential

Most Read