A landlord of billionaire retailer Solomon Lew’s Just Group has taken legal action against several of the groups chains, demanding more than $3.5 million in allegedly unpaid rent.
Real estate investment management group Fortius Funds Management claims that Just Group, which owns Peter Alexander, Dotti, Jay Jay’s, Smiggle and Portmans, did not pay rent of four stores in Sydney’s Mid City Centre shopping complex.
Fortius filed its claim on January 13 in the NSW Supreme Court, demanding relief of all unpaid rent, expenses, costs and levies for the four stores from April 2020 until the legal dispute is resolved.
Documents filed by Just Group on February 10 in response to the claim summarised communication the retailing group had conducted with its landlord about rent throughout the height of COVID-19 restrictions last year.
Just Group states that it requested temporary leasing arrangements in line with the federal and state governments’ COVID-19 commercial leasing code of conduct.
The leasing code was put in place to ensure small-to-medium business tenants and landlords could negotiate — in good faith — amendments to rental contracts.
Just Group, however, argues that Fortius “refused to negotiate in good faith with Just Jeans Group and the tenants for appropriate temporary leasing arrangements during the COVID-19 pandemic and subsequent recovery period”.
Just Group stated that its four stores did not receive an appropriate reduction in operating expenses during the COVID-19 pandemic, or any reduction in Fortius’ statutory charges, such as land tax and insurance.
The case, which returns to court this week, is expected to spark a string of similar legal battles as rental disputes between retailers and landlords increased throughout the pandemic.
Retailers argue that rent should have been reduced when stores were closed or foot traffic declined, but landlords argued tenants are legally obliged to pay rent in accordance with their agreements.
The federal government’s commercial leasing code also played a role. The code was administered by the states, with small business commissioners assisting small businesses with any disputes when negotiations failed.
On top of requiring landlords to renegotiate rents with consideration for the decline in their tenant’s turnover, the code saw states offer land tax support to landlords, and prevented landlords and tenants from terminating a lease.
The code expired about the same time as the JobKeeper wage subsidy.
SmartCompany has contacted both Fortius and Just Group but did not receive a response.