Lease: Precinct Properties v. OMV

Precinct Properties has the go ahead to sue tenant OMV for $258,250 unpaid rent on a Deloitte House lease in central Wellington despite OMV’s claim that temporary closure after the 2016 Kaikoura earthquake justified termination of its lease on grounds the property was ‘untenantable’. 

Oil and gas conglomerate OMV New Zealand Ltd has leased space in Deloitte House on Brandon Street since 2009.  Its current lease runs to November 2020.  Tenants were locked out for four months from November 2016 while potential risks following the Kaikoura earthquake were assessed.  During the lockout, OMV gave notice terminating the lease.  It refused to pay further rent when access was permitted from March 2017, being then committed to a lease of alternative commercial space in central Wellington.

Precinct Properties sued, saying clause 44.3 in its commercial lease is a ‘pay now argue later’ clause.  These clauses protect a landlord’s cashflow while tenants argue for a reduction.  OMV said a ‘pay now argue later’ clause does not apply when the existence of the lease itself is at issue.  This issue has to be sorted out first.  Associate judge Smith ruled the clause applies in any circumstances where there is a dispute between landlord and tenant.  Precinct can sue for its claimed unpaid rent.  Arguments over termination come later.
Precinct Properties v. OMV New Zealand Ltd – High Court (28.11.17)

18.013