Council ordered to uphold settlement with destroyed childcare centre

Auckland Council has been ordered to uphold a settlement with a childcare centre that was destroyed in a suspicious fire before the business was due to be evicted to make way for a road.

Planet Kids, which had leased its New Lynn premises from the former Waitakere City Council, was given notice in October 2009 that the council intended to acquire the lease, under the Public Works Act, to make way for the roading project.

The parties later agreed to a settlement under which Planet Kids would be paid compensation, but before the settlement date, the premises were destroyed in a deliberately lit fire in October 2010.

Both parties agreed the destruction of the premises had terminated the lease, but the council also argued it had frustrated the settlement agreement - meaning it would no longer have to pay compensation to the centre.

The High Court ruled the agreement had been frustrated, which was upheld by the Court of Appeal.

Planet Kids then appealed to the Supreme Court, which today ruled the settlement was not frustrated. The court ordered the council to pay $25,000 in costs, but referred a decision on the value of the settlement back to the High Court.

Planet Kids had sought $413,617.38, plus interests and costs, taking account of the $133,478.80 it had already been paid by its insurer following the fire.