The John Lewis Partnership has been hauled before the High Court by the past and present owners of Brent Cross shopping centre in north London, in a dispute that could redraw the lines between bricks-and-mortar leases and the digital tills that now run through them.
Hammerson, the FTSE 250 landlord that owns Brent Cross today, and Standard Life, its predecessor, allege that the employee-owned retailer has been underpaying its rent for more than a decade by failing to count click-and-collect transactions as part of its in-store takings. The claim, lodged at the High Court last December and first surfaced by the *Financial Times*, hinges on the wording of a lease drafted in 1972, four years before Brent Cross even opened its doors and decades before the world wide web entered commercial use.
John Lewis has been one of the centre’s anchor tenants since 1976. The 125-year lease it signed obliges the partnership to pay a base rent of £30,000 a year plus a turnover top-up: 0.75 per cent of sales between £4m and £10m, rising to 1 per cent on anything above £10m. Industry sources put the store’s annual takings at around £50m, which would imply a rent bill of roughly £475,000 a year, a modest sum in modern retail terms, and a reminder of just how favourable these deals could be.
Such generous arrangements were common for anchors. In the heyday of the British shopping centre, landlords routinely offered cut-price rents to the John Lewises, BHSs and Marks & Spencers of the world on the basis that their mere presence would pull in footfall, lift surrounding rents and de-risk the entire scheme. Half a century on, those legacy leases are now being stress-tested against a retail landscape their drafters could not have imagined.
At the heart of the case is the meaning of “gross receipts”. Hammerson and Standard Life argue the term should capture online orders collected at the Brent Cross store, online orders fulfilled from the store, and in-store orders dispatched later from a John Lewis delivery depot. They point to lease language that already takes in “mail, telephone or similar orders received or filled at or from” the premises, alongside orders that “originated and/or are accepted at or from the demised premises” regardless of where delivery ultimately takes place.
John Lewis is not commenting publicly, but court papers show it is contesting the claim. Sources close to the partnership argue that a lease drafted before the internet existed cannot, as a matter of common sense, have intended to scoop up e-commerce.
That view has support across the property industry. “The sale occurs at the click, not the collect,” one rival landlord told *Business Matters*, “and the landlord should be benefiting from the ‘halo’ sales when shoppers come in to pick up their orders. You can’t argue there was intent to include click-and-collect in the lease because the internet didn’t exist in the seventies.”
The case is not solely about definitions. Hammerson has also taken aim at the way John Lewis has been reporting its numbers. Under the lease, the retailer must supply an audited sales certificate, signed off by its accountants. The landlord claims that for the past 12 years those certificates have come with a striking caveat: that the accountants’ examination “was not such as to constitute an audit”. Nor, it says, have the certificates included a breakdown of sales. The landlords “consider it likely” that some of those certificates have omitted sums that should have been included.
The remedy being sought is far-reaching. The claimants want the court to compel John Lewis to produce a detailed sales breakdown for every year since 2013, with backdated rent, interest and costs to follow if the figures show click-and-collect was excluded.
For SME retailers and landlords watching from the sidelines, the implications are considerable. Turnover-linked rents, once a niche feature of anchor tenant deals, have spread rapidly through high streets and retail parks since the pandemic, as landlords have offered flexibility in exchange for a slice of the upside. How the courts interpret half-century-old wording could set a benchmark for far more recent agreements that are similarly silent on omnichannel trading.
It also raises a more uncomfortable question for retailers running hybrid operations. If a click-and-collect order is fulfilled from a back-of-store stockroom, is the shop a shop, a warehouse, or both? The answer matters not just for rent, but potentially for business rates, insurance and even planning classifications further down the line.
A trial date has yet to be set. Whatever the outcome, the case is likely to be studied closely by every property director, finance chief and retail lawyer with a turnover lease in the bottom drawer.
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John Lewis dragged into High Court over click-and-collect rent at Brent Cross