Two investor landlords have commenced High Court proceedings against John Lewis Properties plc seeking declaratory relief on the scope of turnover rent.
Published: 09 June 2026
Authors: Gemma Siviter
Retail has moved on, but leases have not. The dispute between Hammerson and John Lewis puts a spotlight on a growing tension: how do you value a store when sales are no longer made solely within its walls? The outcome will shape how landlords and retailers share risk, define value and futureproof leases in an omnichannel world where boundaries between online and physical retail no longer hold.
What the dispute is really about
Two investor landlords have commenced High Court proceedings against John Lewis Properties plc seeking declaratory relief on the scope of turnover rent.
The claim concerns the proper interpretation of “Gross Receipts” payable under a long lease at Brent Cross Shopping Centre, for the purposes of calculating additional rent under a 1979 underlease.
In this case, the turnover provisions refer to receipts relating to business “conducted at or from” the premises, expressly including orders “originated and/or accepted at or from the demised premises” and mail, telephone or similar orders “received or filled at or from” the premises.
Where landlords see untapped turnover
The landlord claims that Gross Receipts (and therefore turnover rent) should include:
- “click and collect” sales, attributable to online retail but collected in store
- online orders dispatched from stock held at the store
- as in‑store purchases delivered from elsewhere
- sales made by licensees or concessionaires operating within the store
Alongside declaratory relief, the claim seeks provision of detailed auditors’ certificates going back to the 2013 accounting year – which, depending on the findings of the court as to what constitutes Gross Profits, may result in John Lewis owing backdated and underpaid rent.
As always, the matter is fact-specific. However, the proceedings will be closely watched by landlords and retailers alike, given their potential implications for turnover rent clauses drafted long before omnichannel retailing became the norm.
When one sale becomes two
In particular, with a clause as widely drafted as this one, the result could be that in scenarios where orders are placed in one store and fulfilled from stock held in a different store, or ordered from one store for collection in another, there would be the potential for that item to be counted as “turnover” in both stores– which would result in the profits being double counted.
In a world where the high street is already struggling, these additional costs may make bricks and mortar presence even less attractive to retailers.
With already tight margins across the retail sector, the prospect of additional rental exposure linked to online activity, risks making a physical presence harder to justify for many retailers. Where stores are no longer purely sales-generating locations but also act as fulfilment hubs, showrooms or customer service centres, attributing online revenue to the premises can disproportionately increase occupancy costs relative to in-store profitability.
From an occupier’s perspective, only sales that are both generated at and paid for at the premises should be included in the turnover attributable to that store.
From a landlord perspective however, the case goes to the commercial rationale underpinning turnover rent – namely that rent should reflect the economic value generated by a store’s operation, which, from this perspective, a landlord could argue to include its role as a hub for online sales.
Why legacy leases are under strain
More generally and whilst the case is unlikely to establish a new point of law with general application, the proceedings underline the limits of trying to map 20th‑century drafting onto 21st‑century retail practices. Legacy turnover definitions were never designed to accommodate the complexities of omnichannel trading, where the distinction between in-store and online sales is increasingly blurred. Whatever the outcome, the dispute is likely to have a material influence on how turnover rent provisions are negotiated going forward. In particular, we are likely to see a greater focus on clearly delineating how different categories of online and delivery sales are treated, with more sophisticated and expressly drafted mechanisms to reflect the realities of modern retail trading models.
In short, even if the law does not move, the market almost certainly will.
Gemma Siviter, Principal Associate in Shoosmiths’ Real Estate team notes: “At its core, this is as much an operational issue as a legal one. Retailers need a clear understanding of what their systems can actually capture as turnover and ensure that property and finance teams are aligned before agreeing lease terms. Open dialogue with landlords is key because if the parties are not working from the same assumptions, disputes are almost inevitable. The benefit of shorter lease cycles is that they allow for more precise, up-to-date drafting without needing to speculate as heavily on future retail models, which can go some way to reducing this risk of dispute in the future.”
Tom Freeman, Legal Director in the Real Estate Litigation team comments: “While this dispute turns on the specific wording of one lease, it is fundamentally about the issues in applying legacy analogue drafting to modern digital retail. We will be keeping a close eye on this case but in the meantime, landlords may consider reviewingthe drafting of turnover rent clauses within their precedent leases and challenge whether their drafting truly captures the economic value generated by the premises”.
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