Sued for more than one million dollars in a dispute over lease of commercial space intended for use as a childcare facility, tenant Kid Country Holdings pulled the plug just prior to a scheduled court hearing; acting hand in hand with the liquidator using liquidation to stifle its claim, landlord Tobem Holdings alleges.
The High Court at Auckland was told Tobem Holdings Ltd purchased the commercial property in February 2019 and along with it an existing lease to tenant Kid Country Holdings Ltd with Kid Country committed to annual rental payments of $390,000. Tobem never received any rent. Kid Country disputes how rentals are assessed and also disputes the area of usable space potentially available for operation as a childcare facility.
Tobem cancelled Kid Country’s lease in June 2020. It is now suing Kid Country for over one million dollars: arrears of rent; the cost of finding a replacement tenant; and the shortfall in rent between what Kid Country agreed to pay and what the new tenant is paying.
Two years after Tobem filed its claim and two weeks before trial date, Kid Country shareholders put their company into liquidation. This killed the litigation stone dead. Ongoing litigation can continue after liquidation only with approval of either the liquidator or the court. Kid Country’s chosen liquidator refused approval. Tobem’s attempts to remove the liquidator failed. There are only three unpaid Kid Country creditors, it says: two each owed less than $7000 voted for the existing liquidator to remain; Tobem voted for removal. It was outvoted 2:1. The liquidator refused to identify who were the two creditors who kept him in office.
In the High Court, Justice Gordon ruled the one million dollar litigation could continue. All parties were ready for trial when liquidation intervened. The claim can be dealt with immediately.
The alternative would see the liquidator assessing Tobem’s claim. Tobem said its expectation was that the liquidator would reject its claim, causing further delays while it waited for a new court hearing date to challenge any adverse decision by the liquidator.
Companies Office records name David Lowry and Paul Hamlyn as directors of Kid Country; Narendra Patel as director of Tobem Holdings.
Tobem Holdings Ltd v. Kid Country Holdings Ltd – High Court (16.09.22)
22.162