Northgate mall sued over lease termination

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This article was published 19/06/2020 (1949 days ago), so information in it may no longer be current.

The show must go on… unless you don’t have a lease.

Cinema City Northgate, a pre-pandemic hub for international film at the Northgate Shopping Centre, is fighting to reopen as its landlord moves to cancel its lease for non-payment of rent.

Last month, the mall’s property managers, Marwest Management Canada, changed the locks at the McPhillips Street multiplex and posted a notice terminating Cineplex Entertainment Corp.’s sublease for the property.

In court documents filed this week, Cineplex is seeking an injunction that would bar the landlord, a numbered company, from occupying the property and ordering the landlord to honour the sublease, which Cineplex says is not set to expire until 2022.

“The plaintiffs say that the defendant owes them a duty to act in good faith and a duty of honesty in contractual performance, which duty includes a basic level of honesty and good faith in contractual dealings,” Cineplex alleges in a statement of claim.

Cineplex closed theatres across Canada on March 16 in response to the COVID-19 pandemic, resulting “in a severe impact on their cash flow,” says the statement of claim.

When Cineplex notified the landlord it would not be able to pay April’s rent, the landlord demanded payment in full — more than $24,000 — by April 22, Cineplex alleges.

“The plaintiffs denied any default in the unique circumstances of a global pandemic and appealed to the defendant to be reasonable and work with them to reach a mutually agreeable resolution which protects both businesses in the short term,” says the statement of claim.

Cinema City employs 14 hourly staff and four managers. In a move Cineplex said was made to save jobs, the corporation paid its rent for April and May on May 19, at which time the landlord agreed to reverse its decision to terminate the lease, the statement of claim alleges.

But just five days later, Cineplex alleges, the landlord returned its cheque, saying it was proceeding with the termination of the lease.

The landlord’s “high-handed and malicious” actions have caused the theatre chain “irreparable harm,” Cineplex says, damaging its reputation with employees, staff and suppliers.

Cinema City caters to a culturally diverse audience, with 80 per cent of its films playing in a language other than English.

Finding another location for the multiplex would take at least three years and cost an estimated $12 million, Cineplex says.

“It’s not like Cineplex can go across the street and start operating a cinema,” says a motion brief filed in support of Cineplex’s injunction.

“The ethnically diverse programming offered at Cinema City Northgate is successful at that location because of the cinema’s reputation as a hub for this specialty film product and its relative proximity to nearby ethnic communities in northwestern Winnipeg.”

On the national front, Cineplex Inc. is inching towards a gradual reopening of its Canadian theatres, starting in Alberta later this month, before going wider across the country in early July.

Cineplex says it plans to begin showing “previously released titles” at a reduced capacity in six Alberta theatres on June 26.

The company hopes to reopen on July 3 in as many other markets as government and health authorities allow, as COVID-19 restrictions begin to loosen in different regions.

The third phase of Manitoba’s reopening plan is tentatively set for June 21. It involves allowing larger gatherings of up to 50 people indoors, but it is not yet clear if that phase will accommodate movie theatres.

“We’re opening as soon as we are able to, and we’re hoping we’re going to be able to add theatres across the province to our list,” said Sarah Van Lange, Cineplex’s executive director of communications. “We’re targeting for July 3, but that hasn’t been determined yet.

“It’s a little bit up in the air, but we’re looking forward to that as soon as we’re given the go-ahead, and all of our planning is done and we’ve got PPE (personal protective equipment) at the theatres and our signage is ready.”

To help ensure social distancing in the cinemas, “we will be rolling in reserved seating across our entire network of theatres,” Van Lange said.

Details of the planned reopenings were outlined as shares of Cineplex tumbled 17 per cent on Monday in the first trading session since a $2.8-billion acquisition by Cineworld PLC fell apart.

The drop came after Cineplex and U.K.-based theatre chain Cineworld clashed last week when both sides disclosed what they alleged was a breach of contract.

Cineplex said it is taking its resumption of business one step at a time, starting with “measured operations” at the Rec Room — a chain of entertainment locations that serve food and drink and have arcade games. Its Winnipeg location opened just a bit on Monday and plans a fuller opening next week.

— with files from The Canadian Press

dean.pritchard@freepress.mb.ca