Council contract invalid after arson

SARAH HARVEY
Last updated 16:29 30/11/2012

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A West Auckland child care centre destroyed in an arson has been left $500,000 out of pocket after a contract with Auckland Council was made invalid because of the blaze.

New Lynn's Planet Kids Limited leased the land and buildings on Rankin Ave from the council. 

About 2004 they became aware the council wanted to use the land to extend a nearby road and form a new intersection. 

In April 2010 the parties reached an agreement that Planet Kids would surrender their lease in exchange for a compensation payment of $560,000.

The council paid a 10 per cent deposit and the remainder was to be paid on December 20, 2010. 

On October 1 the council awarded a $20 million tender for the road works affecting the Planet Kids property and the following day the Planet Kids building was destroyed.No one was ever arrested for the fire. 

As a result the lease was immediately terminated and the compensation settlement agreement was brought to an end.

Planet Kids went to the Court of Appeal to try and get the council to honour the deal, but failed a decision released today said.

The council argued it was also entitled to recover the deposit and $40,000 in rent which had not been paid.

The Court of Appeal found that Planet Kids was "left without a remedy" and that it had no legal right to make the council pay compensation. 

It was given a small reprieve in that the council said it would not ask it to pay the $40,000 in rent arrears.

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