Landlord's attempt to evict HBC blocked for now, but retailer ordered to pay rent

·3 min read

TORONTO — An Ontario judge has ordered Hudson's Bay Co. to pay half the rent owing at one of its department stores, while blocking a landlord's attempt to evict the iconic retailer.

The interim ruling comes after Oxford Properties Retail Holdings moved to evict HBC from the Hillcrest Mall in Richmond Hill, Ont., after seven months of unpaid rent.

HBC filed an injunction to stop the eviction, citing an earlier claim that Oxford – which has a portfolio of malls including the Yorkdale Shopping Centre in Toronto, and the Square One Shopping Centre in Mississauga, Ont. – has failed to operate and maintain "first class shopping centres."

Ontario Superior Court Justice Glenn Hainey responded by temporarily barring Oxford from ending HBC's lease at the Hillcrest Mall, which would have seen retail workers out of a job as the second wave of the pandemic worsens. 

But in return, he directed the retailer to pay $659,395, or 50 per cent of unpaid rent from April to October.

Yet Hainey underscored that the interim ruling will not impact the final outcome of the case following a hearing on the merits of both HBC's and Oxford's claims. 

In the decision late last month, he said the order doesn't stand in the way of HBC's "right to argue that no rent … is due and payable" or Oxford's "right to argue that (HBC) remains liable for payment of 100 per cent" of rent arrears.

Both Oxford and HBC positioned the interim ruling as a win.

Daniel O'Donnell, a spokesman for Oxford Properties, said the judge’s ruling “demonstrates that HBC cannot use leased premises and not pay any rent.”

“This is an interim order only and fully preserves all of our rights to seek the appropriate payment of rent,” he said in a statement. “The court has agreed to hear the claim in an expeditious manner, as we requested, and we are confident we will prevail.”

Ian Putnam, president and chief executive officer of HBC Properties and Investment, said the court recognizes the need for a fair sharing of the burden of the pandemic.

In a statement, he said HBC is grateful the court “has recognized the extraordinary challenges of the global pandemic and how the burden can be shared fairly and lawfully, especially as it relates to non-essential retailers.”

“HBC believes the courts will continue to provide a common-sense approach that is fair to landlords and retailers,” Putnam said. “The majority of Canada’s leading landlords share this view and have reached mutually acceptable agreements with us.”

He added that HBC has been an anchor tenant that has paid rent at the Hillcrest Mall “every single month without fail for 47 years.”

“When they tried to evict us, without regard for the impact on our employees, vendors and other retailers, we had no choice but to defend ourselves,” Putnam said. 

This report by The Canadian Press was first published Nov. 12, 2020.

The Canadian Press