The Waiwera Thermal Resort, now controlled by a wealthy Auckland landowner, could be permanently forfeited and a new operator be sought.

Tim Jones, a barrister with extensive real estate law experience, said generally when a lease was terminated due to non-payment, if no action was taken by the party which leased the land the owner in control could negotiate a new lease.

On Thursday last week, landowning brothers Haydn and Mark Staples' Waiwera Properties announced it had cancelled the lease on the once-popular pool complex north of Auckland because of an intermittent "history of defaults on rental payments" during a two-year period.

That left the future of the resort up in the air.

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Read more: Waiwera locals decry 'bloody mess': what it's like inside the resort

Jones said that future depended on what the business which rented the land decided to do next and what steps the landowner took.

But the lease termination could be challenged, he said.

"The lessee [rents the land] can apply to the court for release from forfeiture saying there is some aspect of the negotiations or dealings with the lessor [land owner] that requires the court to exercise its jurisdiction to step in, stopping the termination of the lease," Jones said.

Equally, the lessor could give notice that the lessee was in breach of the lease contract terms and conditions and take steps to reoccupy the premises, Jones said.

KEEP OUT: Waiwera Thermal Resort, shut since February.
KEEP OUT: Waiwera Thermal Resort, shut since February.

Once the lessor had issued such a termination notice, it would be reasonable in most situations generally to wait around 28 working days to give the lessee a chance to respond, Jones said.

If there was no response - such as payment of outstanding leasehold fees or negotiations of new terms or conditions - then the lessor could take further steps, he said.

That would mean that without a challenge, they controlled the property's future which could lead to a number of different outcomes including calling for expressions of interest from businesses experienced in operating such properties.

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Jones did not speculate but parties which might be interested could be existing swimming pool or resort operators, gymnasiums, exercise, fitness, hospitality or tourism businesses.

AS IT WAS: One of Waiwera's hydroslides. Photo / File
AS IT WAS: One of Waiwera's hydroslides. Photo / File

Jones stressed he had not seen the Waiwera lease document and had no first-hand knowledge of the situation there but that his comments generally applied to the lessee/lessor relationship on commercial contracts.

The Herald understands the Waiwera lease is on the Glasgow lease terms, meaning annual rental payments are only reviewed once every 21 years. That can lead to a sudden leap in rent.

It also understands Waiwera Properties is in a wait-and-see position, anticipating doing nothing more for two to three months before it takes the next steps which could involve seeking a new operator to take on the lease.

The ground is leased in perpetuity. Rent is re-set every five years and the lease is renewed every 21 years. Waiwera Properties has tested the relationship with the resort operator by terminating the lease. Last Friday, a security guard let in a CTV/alarm business. Waiwera Properties had changed the locks and alarm codes to give complete control of the property.

NO SWIMMERS: the resort is shut for renovations.
NO SWIMMERS: the resort is shut for renovations.

Any new operator would need to prove competency to finish the complex renovation, ensure the resort complies with healthy and safety regulations and has been upgraded to an acceptable standard, complying with Auckland Council's resource and building consent terms and conditions.

Companies Office records show Waiwera Thermal Resort's directors are Leon Fingerhut and Mikhail Khimich, with the latter also being a shareholder.

Barrister Tim Jones, an expert in property law. Photo/Dean Purcell
Barrister Tim Jones, an expert in property law. Photo/Dean Purcell

The Herald put questions to Fingerhut in the United States but received now response.

The Herald understands that Waiwera Properties - run out of Haydn and Mark Staples' Urban Partners - was now waiting to see if Khimich and Fingerhut's Waiwera Thermal Resort would react to the lease termination.

It was reasonable to wait about two to three months to see if the notice sparked any reaction, a source told the Herald.

NO BUILDERS: Work has stopped on the resort's renovations.
NO BUILDERS: Work has stopped on the resort's renovations.

That could mean the resort lays idle till well after Christmas, in the middle of the busy summer period when thousands once visited it.

Jones said the outcome might well depend on whether the lessee had borrowed money to fund themselves into the property because a mortgagee might exercise its security over the lease and challenge the termination.

That would mean a bank or lender was in charge, rather than the lessee, Jones speculated and he said it was sometimes the situation he had encountered when lease termination notices were issued.

The Staple brothers are prominent in Mission Bay right now, where they have launched plans for a $200m development.