Times Colonist

Co­quit­lam Hud­son’s Bay re­opens, but or­dered to pay some of its rent

- STEPHEN LABBÉ Business · Canada News · The Hudson's Bay Company · British Columbia · Ontario · Quebec · Florida · Toronto · Coquitlam · Coquitlam Centre

Hud­son’s Bay Co. has been granted an in­terim or­der to re-en­ter its Co­quit­lam Cen­tre lo­ca­tion days after it was served an evic­tion no­tice for de­fault­ing on its rent.

Five days after the Co­quit­lam HBC lo­ca­tion was shut­tered, it re­opened for busi­ness fol­low­ing a rul­ing handed down by B.C.’s Supreme Court.

In her rul­ing, Jus­tice Shel­ley Fitz­patrick or­dered the re­tailer to pay 50% of the rent it owed to the land­lord and 50% of rent go­ing for­ward. The other half of un­paid and fu­ture rent is to be placed in a trust fund held by HBC’s lawyers un­til the mat­ter is re­solved in the new year.

“Hud­son’s Bay is grate­ful that the Supreme Court of Bri­tish Columbia has rec­og­nized the ex­tra­or­di­nary chal­lenges of the global pan­demic and how the bur­den can be shared fairly and law­fully,” HBC pres­i­dent and CEO Ian Put­nam said.

“The ma­jor­ity of Canada’s lead­ing land­lords share this view and have reached mu­tu­ally ac­cept­able agree­ments with us.”

Morguard In­vest­ment Inc., which runs the mall and its sub­sidiary Pen­sion­fund In­vest­ment Ltd., was not avail­able for com­ment.

HBC has been at the Co­quit­lam Cen­tre lo­ca­tion since 1979. In the past 41 years, it claims to never have missed a rent pay­ment. But that all changed when the pan­demic hit in March.

On March 17, HBC closed its 120 stores across Canada, in­clud­ing at Co­quit­lam Cen­tre. Court doc­u­ments show that the store’s sales bot­tomed out in April to less than one per cent of 2019 lev­els. While that im­proved slightly in the sum­mer, by Oc­to­ber, sales re­mained about 42% be­low last year’s monthly to­tal.

The re­tailer has just cel­e­brated its 350th an­niver­sary, but de­spite its stay­ing power, the pan­demic has strained the com­pany’s vi­a­bil­ity.

Court records show the com­pany has leases val­ued at $20 mil­lion a month and hasn’t paid any rent to eight land­lords across On­tario, Que­bec, Bri­tish Columbia and Florida.

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

How the ter­mi­na­tion of the lease in Co­quit­lam will play out is not yet clear. In ar­gu­ments that echo a sim­i­lar case against an­other Toronto-area mall, HBC claims Co­quit­lam Cen­tre has failed to main­tain a “first-class” shop­ping cen­tre as stated in the lease.

That in­cludes not up­grad­ing the HVAC sys­tem to re­duce the trans­mis­sion of COVID-19, im­prov­ing pedes­trian con­trol, up­grad­ing wash­rooms and in­creas­ing the num­ber of peo­ple re­spon­si­ble for health and safety at the mall, HBC claims.

HBC said the land­lord did not to pro­vide “an en­vi­ron­ment that at­tracts sub­stan­tial num­bers of cus­tomers and en­cour­ages them to stay at the cen­tre for an ex­tended pe­riod of time” nor had it taken steps “to ad­e­quately mar­ket the shop­ping cen­tre to re­spond to COVID-19.”

Ac­cord­ing to court doc­u­ments, HBC claims that, in ter­mi­nat­ing the lease agree­ment and seiz­ing con­trol of the Co­quit­lam Cen­tre re­tail lo­ca­tion, the land­lord failed to give no­tice, putting 106 em­ploy­ees “at risk.”

“COVID-19 is a once in a cen­tury type event,” reads court doc­u­ments filed this week.

“It was as un­ex­pected as it has been eco­nom­i­cally dis­rup­tive.”

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