Hudson’s Bay Co. has filed a lawsuit against the landlord of several of its department stores, alleging a failure to operate and maintain “first class shopping centres.” Customer traffic and HBC’s sales have fallen by as much as 70% since reopening, the retailer said. In a statement of claim filed in an Ontario Superior Court, HBC alleges that Oxford Properties Retail Holdings is in breach of lease agreements and the contractual duty of good faith.
The retailer claims that Oxford, which has a portfolio of malls including the Yorkdale Shopping Centre in North York, Ont., and the Square One Shopping Centre in Mississauga, Ont., has refused to deliver suitable premises since reopening after COVID-19 shutdowns. The claims have not been tested in court.
Oxford said in an email that HBC’s complaints are without merit and that it is confident of prevailing. “HBC has not paid rent since April 1 at most of our shopping centres across Canada, and seven months of recurring attempts to engage the company in a constructive dialogue were repeatedly ignored,“ it wrote. “Recently, HBC has begun to raise frivolous and self-serving complaints concerning the operations of multiple shopping centres in a transparently disingenuous attempt to retroactively justify its decision to stop paying rent.“
HBC says in the filing that the landlord has refused to adapt its shopping centres to the pandemic and no longer provides a retail environment viewed as safe or attractive by the public. HBC says the malls’ ventilation systems and air filters should be improved, and that the landlord should add features such as automatic doors. It also claimed more staff is needed to monitor physical-distancing and mask use. The company is seeking a declaration that it does not have to pay rent until the landlord fixes the issues, as well as the “disgorgement” of rent paid to Yorkdale Shopping Centre Holdings Inc., Square One Shopping Centre Holdings Inc. and other Oxford subsidiaries since April of this year.
In Quebec, Oxford Properties and Cominar REIT have recently taken HBC to court over unpaid rent amounting to $2.28-million and $1.4-million, respectively. Landlords in Vancouver, the Montreal area and in Florida have also initiated legal proceedings seeking unpaid rent on Hudson’s Bay stores, as well as the company’s luxury chain, Saks Fifth Avenue, and discount Saks Fifth Avenue Off Fifth.