Anger over what Christchurch commercial landlord Centro Pilgrim saw as attempts by tenant Nissan dealership Mathew Barr Motor Group to sabotage sale of its Sydenham units led to litigation over disputed lease payments. Tit for tat litigation saw Centro liable for unpaid rent rebates.
The High Court was told Motor Group leased units at Pilgrim Place in Sydenham from Centro Pilgrim Ltd. It was agreed annual lease payments would initially be $240,000, with subsequent inflation adjustments. The deal was structured with Motor Group’s monthly rentals stated as totalling $316,950 per year, leavened by Centro making a return payment each month leaving Motor Group with a net annual payment of $240,000. This rebate was labelled a ‘capital repayment,’ initially treated as tax free for Motor Group.
Later told these rebates were taxable in hands of Motor Group, the rebate formula was changed to ensure Motor Group’s effective annual lease cost stayed at $240,000 as agreed. This change had the effect of increasing the amount rebated to Motor Group each month, at Centro’s cost.
The new payment/rebate formula operated for some years without interruption before differences over Centro’s proposed sale of Pilgrim Place came to a head. Motor Group said the lease gave it first right of refusal on any sale. It sent a copy of the rebate agreement to Centro’s real estate agents. Potential buyers would discount the price offered on learning that the lease headline rent rate supposedly paid by Motor Group as sitting tenant was not the effective rent rate.
Annoyed that Motor Group was disrupting sale plans, Centro immediately claimed some $128,000 from Motor Group, claiming there had never been any valid agreement to alter the rent rebate formula and that Motor Group had been overpaid. Centro stopped paying further monthly rebate invoices.
Associate judge Paulsen ruled there had been a valid variation. Centro, in part, alleged the disputed variation was a stitch up negotiated by a former Centro director to Motor Group’s advantage. Centro was liable for the actions of its former director, Judge Paulsen said.
Centro was ordered to resume payment of the varied rebate and to make good all arrears. Failing that, Motor Group can put Centro into liquidation, Judge Paulsen said. At time of the court hearing, Centro rent rebate payments to Motor Group were in arrears by some $56,000.
Centro Pilgrim Ltd v. Mathew Barr Motor Group Ltd – High Court (19.06.23)
23.093