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November 18, 2020 - 11:30 AM
North America’s oldest company is suing Cherry Lane Shopping Centre in Penticton stating the mall did not take steps to ensure the safety at the shopping centre during the pandemic.
The Hudson’s Bay Company filed a lawsuit against Cherry Lane Shopping Centre Holdings Ltd., Nov. 13, the same day the shopping centre filed a petition to evict The Bay from the mall.
In the petition filed in the Supreme Court of B.C., the mall is seeking a declaration that the tenancy of Hudson’s Bay Company, located in Unit 160 of 2111 Main St., has been terminated.
The Hudson’s Bay entered a lease agreement with the shopping centre back in 1996. The shopping centre alleges that in April 2020, the Hudson’s Bay stopped paying rent.
The shopping centre sent monthly notices for payment, and by November the landlord also demanded payment of the tenant’s real estate taxes in the amount of $57,000 and also applied a credit of $28,000 to the tenant’s account for lease cost reconciliation, according to court documents.
The shopping centre alleges it is owed $546,000 as well as payment of property taxes and rent for November. On Nov. 9, the shopping centre served a notice of termination and notice for The Bay to vacate the premise.
Since Nov. 10, the Bay did not vacate the premise, and according to Cherry Lane’s petition “the tenant has been in wrongful possession of the premises.”
Cherry Lane alleges the lease does not state that the landlord is required to maintain and operate the shopping centre as “first class regional shopping centre” and that it has operated the centre in accordance with the lease and has adopted health and safety standards mandated by applicable authorities. Cherry Lane has also conducted significant marketing initiatives to increase foot traffic in the mall during the fall, according to the petition.
In the lawsuit filed by Hudson’s Bay against Cherry Lane, the Bay alleges the shopping centre took no meaningful steps to respond to the “changed circumstances and needs of HBC and other tenants as a result of the pandemic.”
The Bay noted that few stores were also open in the mall from mid-March to May, and it also voluntarily closed during that period.
The suit alleges the shopping centre insisted on the full rent payments when the value of the spaces they were providing had “drastically declined,” and after the reopening of malls, the landlords refused to adapt their shopping centres to the pandemic.
“The landlords were thus requiring their tenants to disproportionately and unfairly bear the entire risk and burden of the pandemic,” the Bay alleges is the suit.
As the shopping centre made no effort to improve safety, and restore traffic levels to what they were prior to the pandemic, “customer traffic levels and dwell time have fallen precipitously as a result,” according to the lawsuit.
The Bay alleges the shopping centre refused to upgrade its HVAC system, refused to install upgraded air filters, refused to improve the overall airflow, refused to install touchless exterior and interior doors, didn’t upgrade the washrooms or improve pedestrian controls, and refused to increase the number of mall personnel to ensure customers were complying with safety precautions.
The company alleges that by closing the food court and removing or blocking off seating, the impact has “been to deprive the shopping centres of the amenities necessary” to operate of the type required by the leases.
As a result, The Bay has suffered a significant decrease in sales and “notwithstanding the landlords’ breaches, HBC has continued to pay rent in full under The Bay Centre Lease,” according to the lawsuit.
“The landlord has also failed to provide premises suitable for HBC’s purposes, as required by the leases,” according to the suit.
The company employs 66 people at the shopping centre and is in the process of hiring an additional 22 people for the holiday season. All will lose their jobs if the store is terminated, according to the lawsuit.
The Hudson's Bay is seeking an order relieving the company of any forfeiture of the lease agreement with the shopping centre, and an injunction preventing Cherry Lane from terminating the lease. It is also seeking a declaration that the Bay is not required to pay rent until Cherry Lane has “cured its breaches” in the lease agreement.
The Bay is seeking damages sufficient to compensate for lost sales suffered by the stores.
None of the allegations made by The Bay or Cherry Lane have been proven in court.
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