Covid-19 has been tough on many businesses, especially small businesses. Online reports of business closures, both temporary and permanent, are abundant. Retail, restaurants/hospitality services, and fitness facilities have been especially hard-hit. Offices have seen a dramatic reduction in use, as many people have shifted to a work-from-home, or partial work-from-home environment.
For many business owners, the question may then arise- what can I do about my commercial lease?
The starting point for business owners would be to determine if their business may benefit from any Covid-related assistance programs. In some cases, the resources available may be enough to help the business make it through the rough times. Small Business BC has procured a helpful collection of sources of assistance that may be available- B.C. Business COVID-19 Support Service | Small Business BC.
For many others, however, the reality may be that commercial rent goes unpaid.
When faced with this challenging situation, both landlords and tenants may mutually benefit from discussing an alternate arrangement for payment of rent, which differs from that set out in the lease. If an acceptable solution cannot be found, however, landlords and tenants may become stuck in a lease dispute.
The recent experience of retailer Hudson’s Bay (“The Bay”) in Coquitlam Center Mall (the “Mall”) is one such example. Having shut down its storefront at the Mall between March and May 2020, and having experienced a dramatic decrease in foot-traffic in the months following its reopening, the Bay fell behind in rent payments to the landlord for over 6 months.
In November 2020, the landlord issued a Notice of Termination of the lease, and took possession of the premises- changing the locks and preventing entry by employees of The Bay.
Two days later, The Bay brought an emergency Application for an injunction before the Supreme Court, whereby, among other things, it sought to re-gain access to its premises. The Court imposed a number of terms upon The Bay, including with respect to payment of rent, but ultimately allowed it to re-gain entry to the store.[1]
If you are a landlord or a tenant facing an issue involving your commercial lease, we would welcome the opportunity to discuss your options with you, and to help you navigate what is undoubtedly a difficult time.
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[1] Hudson’s Bay Company ULC v Pensionfund Investment Ltd., 2020 BCSC 1959, https://www.canlii.org/en/bc/bcsc/doc/2020/2020bcsc1959/2020bcsc1959.html?resultIndex=1