The other side of the story

Stuff reports:

Owners of an Auckland nursery filled with rare palm trees were hoping for a Christmas miracle but have been evicted after they refused to pay their “ridiculous rent”. 

On Tuesday, Oceanic Palms’ founders Brent Hubbard and Harley Haynes were locked out of a property on Arthur St, Onehunga that they lease from KiwiRail after refusing to pay a threefold rent increase from $37,000 to $100,000 instigated in 2015. …

They continued to pay their previous rent after KiwiRail increased the amount in 2015. 

I’m pretty sure you can’t as a tenant unilaterally set your rent at the level you think it should be. No surprise they have been evicted.

The pair said KiwiRail was failing to meet a principle of the State Owned Enterprise Act – to exhibit a sense of social responsibility.

“It’s ridiculous. What business can afford a threefold rent increase over night?

“It is a completely speculative and outrageous valuation they tried to make us pay.”

A sense of social responsibility doesn’t mean subsidising a particular business. And the accusation that the increase was overnight and based on a speculative valuation is in contrast with what the Court of Appeal and High Court found.

This Court of Appeal decision gives the other side of the story, namely:

  • The lease in 2010 for $34,300 per annum for five years was explicitly advised by Kiwirail as being a concession below market rates. They said in 2009 that if the lease was renewed in 2015 it would be at market rates
  • Both Kiwirail and Oceanic Palms nominated a valuer. The Kiwirail one assessed market rental at $115,000 and the OP one at $75,000.The two valuers conferred and agreed $100,000 would be fair. Now remember this includes the valuation firm OP picked.
  • OP simply refused to pay the higher rent and also refused to enter arbitration over it.
  • Kiwrail gave notice in late 2015 of termination for unpaid rent.
  • OP took Kiwirail to the High Court and lost on all 16 grounds advanced. The Judge did allow them to keep the lease if they entered arbitration but they again refused and appealed to the CoA.
  • The CoA found “KiwiRail advised Oceanic Palms that the rent agreed for the initial five-year term of the lease was a concessionary rent. KiwiRail also made it clear, as is recorded in the lease, that the rent would be reviewed to a market rental at the expiration of the initial lease term … It is simply not arguable that KiwiRail acted in bad faith in exercising its right to review the rent to a market rent in accordance with the lease. That is exactly what it said it would do prior to the lease being signed.”
  • After losing in the High Court and CoA they appealed to the Supreme Court and was not granted leave to appeal

So reading all this, I’m not convinced Kiwirail are the bad guys here.

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