The owner of WestCity in Henderson sued the tenant over unpaid rent. Photo / supplied
The owner of WestCity in Henderson sued the tenant over unpaid rent. Photo / supplied
An Auckland mall owner failed to have liquidators appointed to a retailer it claims owes $235,000 unpaid rent but the retailer disputes that debt and says she doesn’t owe any money.
WestCity NZ and WestCity Nominees took action against Fox Ears which rented premises for a health shop at theHenderson mall.
But Associate Justice Rachel Sussock dismissed the liquidation call, saying in her July 5 decision that the retailer disputed the debt.
“I have no hesitation in finding that there is a genuine and substantial dispute in relation to the debt on which the statutory demand relies. It would therefore be an abuse of process for WestCity to succeed in its application to appoint liquidators,” the judge said in the case heard in the High Court at Auckland in April.
Nancy Jiang is a former franchisee owner operator of a Health 2000 shop there but suffered after Chemist Warehouse arrived here in 2017 and opened a store close by.
She is the sole director and shareholder of Fox Ears which leased the space, striking a deal in May 2019 for seven years and agreeing to pay $97,000/year.
But the judge said WestCity did not dispute Jiang’s evidence that neither she nor Fox Ears were involved in, or aware of, the terms of the lease being entered into with Health 2000 Retail.
Jiang defended her company against the liquidation proceedings because the debt that is the subject of the demand is not owed by her because her business surrendered its lease at the time it vacated the shop.
In October 2019, Jiang emailed Colliers, which represented WestCity, to say that she was very sorry but she could not make the shop work any more.
It was not making any money.
She had decided to move to Australia and she had told the Health 2000 support office about this.
She had decided to shut the shop in November 2019.
WestCity took action over rent it said the health retailer owed it but the judge didn't agree to appoint liquidators. Photo / supplied
Colliers wrote back to her threatening action: “To cease trading and close your store on this date would be a wilful breach of lease … Any failure to comply with the terms of the lease is likely to result in the lessor taking legal action through their solicitors.”
Jiang’s evidence is that the content of the lease agreement struck between WestCity and Health 2000′s head office was not disclosed to her when it was signed.
The Australian-owned WestCity does not dispute that in its evidence, the decision noted.
Jiang says that after Health 2000 head office had taken over the store, she told Colliers “immediately and repeatedly” about surrendering the lease as early as December 2019.
Correspondence was from both her and her lawyer at the time, Dennis Chan of Righteous Law.
After she left, the shop was occupied by a community gallery from March 2021 but WestCity’s evidence is that no rent was paid during this period.
Last February - more than two years after Fox Ears last got an invoice - Colliers suddenly sent Jiang two invoices seeking payment for the premises.
A solicitor from DLA Piper said the bills were for the mall’s shop 233 and related to expenses the owner suffered following Fox Ears’ lease breach.
An email said the mall owner had instructed DLA Piper to send a letter of demand to recover the amount outstanding, which they had sent to the lawyer Dennis Chan.
A demand for $721,946.87 plus GST was sent - that much higher amount because it was for rent to be paid in the future as well as the rent the mall owner wanted from the retailer. That demanded money for losses WestCity suffered as a result of the lease until it expired in May 2024.
Last April, a statutory demand was served. That stated that, as at March 31, 2022, Fox Ears owed WestCity $235,593.55.
A breakdown of the rent arrears records that the security deposit of $23,805.90 had been credited against the alleged arrears, as had the rental payments made by Health 2000 Retail between December 2, 2019 and March 1, 2021 of $96,585.20.
The judge said it was not disputed that Jiang’s company did not have any funds, including money to pay a lawyer.
Jiang said Fox Ears should not be liquidated because it did not owe any money, other than the WestCity rent debt which was in any case disputed.
Jiang does not want Fox Ears to be liquidated because she wants to use its tax losses. That will allow her to repay loans to her family, the decision said. She couldn’t find a lawyer to act for her for free, despite considerable efforts.
The judge agreed with Jiang, dismissing WestCity’s application.
“As this is a liquidation proceeding, I do not reach a final view on whether there is implied surrender but the fact that WestCity did not dispute Ms Jiang’s evidence for Fox Ears, that neither she nor Fox Ears were involved in, or aware of, the terms of the lease being entered into with Health 2000 Retail Ltd, together with the correspondence at the time and the entry on the statement of account would appear to make it difficult for WestCity to establish that the lease was ongoing,” the judge said.
Asked about the dispute following WestCity’s failure, Jiang told the Herald: “The court case is over and we have a complete win. To me, it is a win and to them it is a loss, if we are not viewing this from a legal perspective.”
She has previously told how the situation was extremely stressful and she was just trying to cope the best she could.
In 2017, the Herald reported the A$147m sale of WestCity mall by ASX-listed Scentre Group. The Sydney-headquartered business said then it has “divested A$368 million of two non-strategic assets, Casey Central in Victoria and WestCity in New Zealand”.
Family-owned Australian business Angaet Group has bought the mall here.
Anne Gibson has been the Herald’s property editor for 23 years, has won many awards, written books and covered property extensively here and overseas.
