Latest Just Group News
Apr 19, 2021
Share Billionaire retailer Solomon Lew’s Just Group has been taken to court by a major landlord after refusing to pay rents in full while stores were closed and trading was disrupted during the national pandemic shutdown. In a move that may trigger more legal action between landlords and retail tenants, Fortius Funds Management is suing Mr Lew’s Just Group, which owns the Just Jeans, Jay Jays, Peter Alexander, Smiggle, Portmans and Dotti chains, for almost $3.6 million in allegedly unpaid rent on stores in a Sydney CBD shopping complex. Solomon Lew’s Just Group, which owns Smiggle, Just Jeans, Peter Alexander and Portmans, is being sued for almost $3.6 million in unpaid rent. Adam McLean Just Group, which is part of Premier Investments, has responded to the lawsuit by making a cross-claim against Fortius, a Sydney-based real estate investment management group, alleging unconscionable conduct as well as a potential breach of good faith terms amid the coronavirus shutdown. The case highlights the conflicts between retailers – who claim they should not have to pay full rent while stores are closed or foot traffic in shopping centres and CBD areas is down – and landlords, who say retailers have a legal obligation to pay rent according to lease agreements and who are resisting a push for sales-based rents. Advertisement Fortius is now seeking court orders forcing Just Group to pay unpaid rent, expenses, costs and levies for four stores in the Mid City Centre, a shopping complex in Sydney’s Pitt Street Mall, from April 2020 onwards until the legal dispute is ruled on. According to a statement of claim, Fortius alleges Just Group’s Just Jeans, Peter Alexander, Portmans and Smiggle stores in the centre owe a combined $3,559,897.49 in unpaid rent, various fees and interest to January 11, 2021. Just Group did pay hundreds of thousands of dollars in rent on the four stores during the period. But Fortius alleges the Smiggle store owes $390,386.65 in unpaid invoices and has calculated a further $12,823.16 in interest to January 11, 2021. Fortius alleges Portmans owes $2,047,910.49 in unpaid invoices and $70,633.77 in interest, Peter Alexander owes $392,778.40 in invoices and $18,770.07 in interest and that Just Jeans owes $603,479.76 in unpaid invoices and $23,115.19 in interest. Fortius’ statement of claim states that on July 7, 2020, a Just Group general manager sent emails proposing to limit the rent payable under the leases to 8 per cent of each of the respective outlet’s monthly sales. Advertisement In December, Just Group agreed to pay rent for the March to November period in line with the drop in average sales at each brand, but Fortius rejected the offer in December. Just Group, in its cross-claim against Fortius, says the leases are “frustrated” by the COVID-19 pandemic and the retailers are discharged from their obligations under each lease. Just Group, which is seeking damages and costs, claims Fortius knew the stores were vulnerable during COVID-19 and that their ability to trade viably was based on decent levels of foot traffic in the Mid City Centre and the CBD more generally. According to its cross-claim, foot traffic in the Mid City Centre fell 62 per cent in March 2020, 92 per cent in April, 72 per cent in May and was down between 34 per cent and 52 per cent between June and September. Between March and December, sales at the Smiggle store in the centre fell 70 per cent, Portmans sales fell 64 per cent, Peter Alexander sales, 24 per cent and Just Jeans sales, 46 per cent. “The COVID-19 pandemic events removed any prospect of each tenant operating profitably at the relevant premises in the near-term,” the cross-claim said. Advertisement Just Group agrees it sent an email in July proposing temporary leasing arrangements, but said these were in line with the commercial leasing principles agreed by the National Cabinet in April. Just Group was not covered by the code, which covered retailers with annual turnover of less than $50 million. Just Group alleges Fortius, despite the COVID-19 pandemic and the principles of the code of practice, “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”. “The tenants did not receive in the appropriate proportion the benefit of any reduction in operating expense for the Mid City Centre during the COVID-19 pandemic or any reduction in Fortius’ statutory charges (including but not limited to land tax and insurance),” the claim said. Just Group also took issue with Fortius’ demand that it provide information about online sales for the four brands.