The events of the past few days have shaken not only the retail world, but that of some Burnaby workers.
Last Saturday, nearby Coquitlam Centre served a notice of eviction to Hudson’s Bay Co. for defaulting on its rent, closing the store for five days until it was granted an interim order to re-enter the location. This follows multiple legal actions across Canada as malls says they haven’t been paid rent during the COVID-19 pandemic.
It is stunning news for a company that has operated in Canada for 350 years.
The Bay operates two locations in Burnaby, one at Lougheed Town Centre and one at Metropolis at Metrotown.
The NOW spoke with workers at both Burnaby locations after the closure of the Coquitlam store, but before its reopening on Wednesday. They have been granted anonymity because staff fear for their jobs.
“We all just had our world rocked,” said one Burnaby worker. “We’ve been hearing all of this bad news, but when a store gets closed so close to us, it really hits home. I wonder how long I’m going to have a job.”
The NOW asked the Bay to comment on if it has paid its rent at the two Burnaby locations during the pandemic, but did not receive an answer by deadline.
“This is a good place to work,” said another worker. “I like our customers and my co-workers. It’s been a rough few months. We’re all just hoping things get better soon. All we can do is our best.”
“I try not to think about,” said another worker. “Just smile and keep moving, but when you hear the rent isn't being paid, you worry.”
The Coquitlam HBC location was only able to reopen following a ruling handed down by B.C.'s Supreme Court.
In her ruling, Justice Shelley Fitzpatrick ordered the iconic 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,” said HBC president and CEO Ian Putnam in a written statement. “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 immediately available for comment.
HBC has been at the Coquitlam Centre location since 1979, and in the last 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. Court documents show that the store's sales bottomed out in April to less than one per cent of 2019 levels. And while that improved slightly as the summer wore on, by October, sales remained roughly 42% below last year’s monthly total.
The retailer just celebrated its 350th anniversary, but despite its staying power, the pandemic has strained the company’s viability and this isn’t the first time HBC has refused to pay its rent.
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 brick-and-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, claims HBC.
HBC added that 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.”
HBC claims it shouldn’t have to pay rent until the landlord has resolved the alleged breaches, or that it should be compensated for its lost sales because of those breaches.
In the end, the Justice Fitzpatrick's interim order found both sides should bear a portion of the financial fallout until the case can be heard in full.
The interim order will expire Jan. 22, 2021, unless HBC gets a renewal of the order allowing further relief or a more permanent solution is found.
As the litigation moves forward, Putnam said the company “will continue to ask for a fair sharing of the burden of the pandemic with respect to this lease and each of our other leases across the country.”
- With files from Stefan Labbe, Tri-City News
