HBC ordered to pay back rent in pandemic dispute with landlord Oxford Properties

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Hudson’s Bay Firm was ordered to pay the complete lease it owes landlord Oxford Properties Group on Friday in a ruling by the Ontario Superior Court docket of Justice wherein the courtroom declined to “rewrite” a personal contract regardless of “unexpected and disastrous circumstances” of the COVID-19 pandemic.

The decide additionally rejected HBC’s argument that its lease must be lowered as a result of the owner had “failed to supply a first-class procuring centre” as required by the lease, attributable to a sequence of government-mandated restrictions on mall and retailer entry and capability.

Nevertheless, the ruling did permit for some deferral of lease by the retailer in mild of the circumstances and as gradual reopening takes place. HBC should resume full cost of lease on Nov. 1, and should in the end fulfill all its rental obligations, together with arrears, by early 2022.

“We’re happy with the courtroom’s considerate determination,” mentioned Daniel O’Donnell, vice-president of communications at Oxford, which is owned by the Ontario Municipal Staff Retirement System (OMERS).

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He famous that along with ordering the complete cost of lease, the courtroom discovered that HBC’s complaints concerning the operation of Hillcrest Mall in Richmond Hill, Ont. have been with out benefit and would have led “to a industrial absurdity in that the owner could be put able of getting to disregard provincial legal guidelines and public well being pointers.”

A spokesperson for HBC mentioned the retailer was upset within the courtroom’s determination, including that non-essential retail stays extremely restricted in Ontario, a scenario that’s having “devastating” impacts on enterprise in addition to employees.

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“That is one other instance of non-essential retail bearing the brunt of presidency lockdowns in Ontario and an strategy that’s arbitrarily creating winners and losers,” the spokesperson mentioned in an emailed assertion. “Because the courtroom notes, Hudson’s Bay has been a mannequin tenant. HBC maintains that retailers and landlords ought to equitably share the burden of the pandemic, and we’re reviewing all our accessible choices from that perspective.”

HBC has turned to the courts a number of instances through the pandemic because it, together with different retailers, tried to navigate a sequence of openings and closings as governments grappled with outbreaks of COVID-19.

Final December, through the essential vacation procuring season, the corporate misplaced a bid to have pandemic restrictions lifted to permit its shops to be open to clients like big-box retailers Walmart and Costco, relatively than solely open for curb-side pickup outdoors.

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HBC’s determination to cease paying lease in some instances, as early as April 2020, led to hypothesis it was in monetary bother. However HBC chief government Richard Baker, who led a buyout of the retailer final yr that closed simply earlier than the pandemic was declared in March, has mentioned the corporate made that call and turned to the courts solely after some landlords refused to share its monetary affect.

“The problem with landlords doesn’t have something to do with our liquidity or our monetary functionality,” Baker mentioned Monday “Ninety-five per cent of our landlords shared the harm from the pandemic with us pretty much as good companions.”

The newest courtroom ruling rejected Oxford’s argument that HBC lacked “clear arms” in its conduct, which included refusing to pay lease, failing to reveal its on-line gross sales, and admitting that it was withholding lease to protect money.

“I don’t agree,” Justice Cory Gilmore wrote. “HBC was a mannequin tenant till the pandemic hit. It tried to barter with the Landlord and even tried to have itself characterised as an important retailer.”

What’s extra, she famous, HBC paid 50 per cent of arrears a day after being ordered by one other courtroom to take action.

“Like all retailers, it was trying to navigate an unprecedented public well being disaster,” the decide wrote.

— Further reporting by FP Employees