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Edmonton’s downtown mall and one of its largest former tenants are locked in a legal battle over rent money and the shopping centre’s response to COVID-19.
The Hudson’s Bay Company department store in Edmonton City Centre Mall closed this spring, leaving a major hole in the downtown retail sector. The store took over the 168,000 square-foot retail space from Eaton’s in 2002 and was the anchor tenant of the shopping centre’s west wing.
In September 2020, City Centre filed a lawsuit against The Bay, claiming it breached the terms of its 20-year lease and owed $938,337 in unpaid rent.
The Bay fired back later that month, arguing it had done no wrong and that the mall itself was off-side.
“The landlord has failed to properly respond to the COVID-19 pandemic by making necessary improvements to the shopping centre and advertising to the public to provide assurances that the shopping centre is a safe environment,” The Bay’s statement of defence reads.
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“The landlord’s failures have exacerbated the commercial pressures resulting from the COVID-19 pandemic and have resulted in a material decrease in customer traffic at the shopping centre.”
Statements of claim and statements of defence contain allegations that have not been proven in court. City Centre denies any wrongdoing and says it complied with all government rules around the COVID pandemic.
Traffic levels, advertising, HVAC system in dispute
The Bay has filed a counterclaim against the mall seeking an undetermined amount in damages.
In it, the department store claims City Centre failed to operate the mall in a “first class” manner and failed to provide suitable premises that allowed for the “quiet enjoyment” of the multi-storey retail space.
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Most of the counterclaim deals with the mall’s COVID response.
Hudson’s Bay City Centre was among the retailers forced to close in March 2020 after Alberta declared a state of public health emergency. It was allowed to reopen in mid-May with guidelines to reduce the spread of COVID-19. The store reopened May 19 but a few days earlier announced plans to close the location that fall (though it continued to operate through spring 2021). The Bay says its lease expired June 1, 2021.
The retailer blames the mall for an inadequate COVID response including failure to upgrade the HVAC system, advertise its COVID containment measures, keep foot traffic up and ensure neighbouring retail spaces in the mall were rented.
“HBC’s damages continue to grow and will be quantified and proven prior to trial,” the counterclaim reads.
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In its own statement of defence, City Centre denies any wrongdoing. It says it followed all government mandates regarding the COVID pandemic, and denies that it had any obligation to make improvements over and above what is required by public health rules.
It also denies any obligation to advertise on behalf of The Bay — noting the company chose not to participate in a shopping centre promotion fund. The Bay was allowed to upgrade its own HVAC system and advertise that to the public, the mall notes.
City Centre also claims in its Oct. 28, 2020, statement of defence that The Bay continued to operate the store after it announced plans to close “somehow thinking it has the right to do so without paying rent as required of it under the lease.”
The mall says there is no requirement it “maintain or guarantee customer traffic or footfall at the shopping centre, or have any or all of the shopping centre occupied or utilized.”
“The landlord denies that it is responsible for any closures caused by the government’s response to the COVID-19 pandemic,” it wrote.
Both sides in the dispute declined to comment, citing the ongoing litigation.
— With files from Jeff Labine
Edmonton City Centre Mall, Hudson's Bay Co. in lawsuit over rent, COVID measures - Edmonton Journal
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