Precinct v tenant in battle over building earthquake rating

Giant NZX-listed landlord Precinct Properties is battling a Wellington tenant over building earthquake ratings after the Kaikoura earthquake and the fight has gone to the High Court at Wellington.

Oil and gas company OMV New Zealand went before Associate Judge Warwick Smith on November 6, seeking a stay of proceedings against Precinct. But the judge declined that and has ruled the matter will be heard next week.

Deloitte House in Wellington, at the centre of the dispute.

OMV argued that is was justified in cancelling its lease on floors in a big Wellington office tower due to "alleged misrepresentations by Precinct as to the earthquake rating of the building in which the premises were located," the decision said.

"The plaintiff (Precinct) has applied for summary judgment on its claim for recovery of rent said to be owing under a lease of certain commercial space on the 9th and 10th floors of Deloitte House on Brandon Street in Wellington. OMV says that it was prevented from occupying the leased premises for a significant period after the Kaikoura earthquake on 14 November 2016, and that the premises became "untenantable" in terms of one of the clauses in the lease," the decision said.

"OMV says that it is entitled to have its 'untenantable' claim and the validity of its cancellation of the lease determined by an arbitrator under a provision in the lease and to have Precinct's claim to recover rent stayed until that has occurred," the decision said.

"Precinct says that the purported cancellation of the lease was invalid and that OMV remains liable for rent from at least the date on which it could have re-occupied the premises," the decision said, noting that was at March 13 this year.

"It says that the arbitration clause in the lease does not apply to a claim by the lessor for rent and that there is accordingly no issue that must be referred to arbitration under the arbitration clause," the judge wrote.

The least started in 2009, was renewed in 2012 and 2015 and is not now due to expire till November 30, 2020. Precinct has asked for a declaration that the premises have not been rendered untenantable and it wants costs.

Precinct wants $258,243.36 unpaid rent, allegedly due on March 13, the decision said.

The matter is due to return to court to be heard on Monday.

"OMV's application for a stay of the proceeding is dismissed. Precinct's application for summary judgment remains to be heard at 10 am on 4 December," the judge said.