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

Dastkar, a new furniture store in Vernon, features handmade, unique furniture carved from wood and inlaid with brass in the Chiniot style. The business located on 43rd Avenue was started in December 2020 but is currently unstaffed due to COVID-19 staffing shortages. (Brendan Shykora - Morning Star)
PHOTOS: Vernon’s hidden handmade furniture store

Owners of Shahi Pakwan Indian restaurant opened the South Asian furniture store in December 2020

Vernon’s Heron Grove retirement facility. (Good Samaritan Society photo)
Resident of Vernon’s Heron Grove retirement home tests positive for COVID-19

Interior Health has not declared an outbreak at the facility

(Vernon Search and Rescue/Facebook)
Vernon Search and Rescue responds after family gets UTV stuck on SilverStar trails

The family activated their SOS beacon around 3 p.m. once they realized they could be facing a night alone in the mountains

The organizer of a Kelowna protest against COVID-19 restrictions was fined by the RCMP for the third time Saturday, Jan. 16, 2021. (File photo)
COVID-19: Organizer of Kelowna anti-restriction protest ticketed for third time

The individual’s latest ticket for $2,300 was handed out by RCMP at an anti-lockdown rally Saturday

Mount Boucherie Secondary School is one of three Kelowna schools with confirmed cases of COVID-19, according to an update from the school district Saturday, Jan. 16, 2021. (File photo)
COVID-19 confirmed at 3 Kelowna schools

Interior Health has confirmed exposures at Mount Boucherie, Springvalley and South Rutland schools

A scene from “Canada and the Gulf War: In their own words,” a video by The Memory Project, a program of Historica Canada, is shown in this undated illustration. THE CANADIAN PRESS/HO - Historica Canada
New video marks Canada’s contributions to first Gulf War on 30th anniversary

Veterans Affairs Canada says around 4,500 Canadian military personnel served during the war

A 17-year-old snowmobiler used his backcountry survival sense in preparation to spend the night on the mountain near 100 Mile House Saturday, Jan. 16, 2021 after getting lost. (South Cariboo Search and Rescue Facebook photo)
Teen praised for backcountry survival skills after getting lost in B.C.’s Cariboo mountains

“This young man did everything right after things went wrong.”

Conservative Leader Erin O’Toole holds a press conference on Parliament Hill, in Ottawa on December 10, 2020. THE CANADIAN PRESS/Sean Kilpatrick
No place for ‘far right’ in Conservative Party, Erin O’Toole says

O’Toole condemned the Capitol attack as ‘horrifying’ and sought to distance himself and the Tories from Trumpism

A passer by walks in High Park, in Toronto, Thursday, Jan. 14, 2021. This workweek will kick off with what’s fabled to be the most depressing day of the year, during one of the darkest eras in recent history. THE CANADIAN PRESS/Chris Young
‘Blue Monday’ getting you down? Exercise may be the cure, say experts

Many jurisdictions are tightening restrictions to curb soaring COVID-19 case counts

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a UHN COVID-19 vaccine clinic in Toronto on Thursday, January 7, 2021. THE CANADIAN PRESS/Nathan Denette
COVID-19: Provinces work on revised plans as Pfizer-BioNTech shipments to slow down

Anita Anand said she understands and shares Canadians’ concerns about the drug company’s decision

Tourists take photographs outside the British Columbia Legislature in Victoria, B.C., on Friday August 26, 2011. A coalition of British Columbia tourism industry groups is urging the provincial government to not pursue plans to ban domestic travel to fight the spread of COVID-19. THE CANADIAN PRESS/Darryl Dyck
B.C. travel ban will harm struggling tourism sector, says industry coalition

B.C. government would have to show evidence a travel ban is necessary

(Phil McLachlan - Capital News)
‘Targeted’ shooting in Coquitlam leaves woman in hospital

The woman suffered non-life threatening injuries in what police believe to be a targeted shooting Saturday morning

Half of the most expensive homes are on 2080 Mackenzie Crt, which is across the street from Revelstoke Mountain Resort. (Liam Harrap/Revelstoke Review)
The 10 most valuable homes in Revelstoke for 2020

Combined, the properties are worth more than $35M

Lake Country native Evan-Riley Brown is in the cast for the new film Journey To Royal: A WW II Rescue Mission to be released on video on demand and streaming services on Feb. 2. (Contributed)
Okanagan actor lands role in WW II movie

Evan-Riley Brown, from Lake Country, cast in production labelled as hybrid of a feature film and documentary called Journey To Royal: a WW II Rescue Mission.

Most Read