John Lewis has been hit with a lawsuit over its click-and-collect practices, as the owner of London's Brent Cross shopping centre claims the retailer should pay additional rent on online sales collected in store. The case, brought by Hammerson and Standard Life Investments, asks the High Court to clarify whether click-and-collect sales fall under the turnover rent clause of a lease signed in 1979, long before the rise of online shopping.
Background of the Dispute
The lease, agreed in 1979, includes a provision for annual 'turnover rent'. Hammerson alleges that John Lewis must pay an extra cost on top of the £30,000 base rent if the store's takings reach a certain threshold. However, John Lewis argues that click-and-collect purchases should not be included in turnover because the transaction is completed when the order leaves the distribution centre, not in the store.
Turnover Rent Terms
Under the current lease, John Lewis is obligated to pay 0.75 per cent of the store's gross revenue if annual turnover exceeds £4m, and 1 per cent if earnings rise above £10m. The dispute centres on whether modern retail practices like click-and-collect fit into the original wording.
Kristine Ng, partner at Morr & Co, told City AM that the case highlights the 'commercial tension built into turnover rent clauses, with landlords seeking to maximise what counts towards turnover and tenants seeking to limit it.' She added that the question before the court is whether wording agreed decades ago can fairly be applied to today's trading models.
Implications for Retail Leases
Ng emphasised that the case is not about creating new rules on turnover rent but about interpreting a historic lease. 'Where leases are priced on the basis of particular trading models, those assumptions need to be clearly reflected in the wording to avoid disputes emerging as retail continues to change,' she said.
The outcome could set a precedent for how traditional leases apply to e-commerce and omnichannel retail, affecting landlords and tenants across the UK.
