Businesses in an iconic central Auckland food court continue to face threats of closure from their landlord. Now they’ve turned to the public for help.
Several besieged businesses at Elliot Stables have failed to come to a resolution with their landlord, the Icon Group, which last month issued Property Law Act (PLA) notices giving the tenants 30 days to pay their arrears or face further action.
For months the businesses have grappled with reduced trade and low foot traffic because of the Covid-19 lockdowns and the construction of the City Rail Link, and have therefore been unable to pay their full monthly rent and operating expenses (OPEX).
Since The Spinoff first reported that the businesses were facing eviction and potential liquidation, The Icon Group – led by former Shortland Street star and Rubicon front man Paul Reid – has served several more notices through a number of different lawyers, which cost the tenants $1,700 each. Most of the tenants have until later this month to pay before they will be locked out.
Michael LeRoy-Dyson owns the struggling Attic Backpackers on the top floor and says the Icon Group has also rebuffed any attempts by lawyers representing the Elliot Stables businesses to negotiate the impasse.
“It’s all pretty dire,” he says. “Our lawyers have gone to them, but the landlord has essentially said ‘I’m not going to negotiate, period. All you need to do is pay all the money you owe me or I’m suing you.’
“Our lawyer is trying to take some kind of injunction, which would, should it succeed, hopefully prevent them from locking any of us out until things are sorted. Otherwise I’ve got until October 15 to pay or they come and turf out my last 15 customers and change the locks, and they’ve said that they’re going to do that – start locking people out systematically.”
However, with low revenue and mounting debt, the tenants are struggling to afford the costly legal fees. While LeRoy-Dyson says there’s strength in numbers, it doesn’t necessarily mean it’s going to be cheaper, as it all needs to be negotiated on a case-by-case basis. The group has therefore started a Givealittle page to raise funds for their cause.
“Not only have we lost our customers which means we have no revenue, but our landlord is demanding payment and threatening to take away our businesses, homes and livelihoods,” the page says.
“We have a lawyer who is willing to take on the big guys and fight our battle with us. We need assistance to fund the legal fees and costs. This has been estimated at $30,000, but any amount of money will help.”
Although the businesses have repeatedly appealed to the government for assistance, there has been little support forthcoming. A $6,000 voluntary arbitration subsidy has been made available to help businesses negotiate disputes with their commercial landlords, but LeRoy-Dyson says “it’s hard to see it being anything but useless”.
“The landlord is not interested in arbitration in the least. There’s nothing that compels them to do it. Also I’ve been told that $6,000 will barely cover the cost of the lawyer’s fee let alone the arbitration.”
While each business is in a different predicament and owes different amounts of money, they all have personal guarantees attached to their leases which means they’re personally liable for any overdue rent, potentially jeopardising their assets.
When The Spinoff approached the Icon Group for comment, it said it had “negotiated effectively with a number of tenants… to ensure that both parties could have faith in the other during these unprecedented times”.
It also supplied a quote from Robert Aylwin, owner of the Bao Baby Bao Restaurant: “The Icon Group have offered us a deal that we are really happy with. The deal provides us with an ongoing discount to our rent for many months when there is no contractual obligation for the landlord to do so. We provide some additional lease terms in the future and the landlord in return provides us with a significant rent discount. It is a good deal.”
However, another tenant who had signed a post-Covid deal with the Icon Group was not as happy. Baris Gostak, owner of the Big Little Grill, says he agreed to extend his lease on the proviso that he would have more time to pay his arrears while also getting a discount in his OPEX – expenses that cover utilities, power, cleaning and maintenance.
After signing the extension, however, Gostak was served a PLA notice giving him 30 days to pay $10,000 in overdue rent or be locked out.
“Maybe I made a mistake. My lease was ending. But I didn’t want to give up. I hoped things would get better, in fact I still hope things are going to get better if we go to level one. I’ll save some money and pay my debt.”
Gostak has owned and run Big Little Grill for almost 10 years, and has worked seven days a week building it up to a point where it had five staff. Now with only one staff member remaining, he’s contemplating walking away from the business, but he still wants to persevere for when the crowds start to return.
“I just want to talk to them [Icon Group] one more time. If they help us another couple of months, there’s a show coming at the Civic: Mary Poppins. It’s quite a good show; it was really busy last time. We can make money and just maybe pay some part of the debt.”
If the landlord still refuses to come to the table, Gostak hopes that their lawyer can contest the monstrous $50,000 OPEX he says he is being charged annually.
“Normally a shop my size pays $5,000 in OPEX. They [Icon Group] said it would go down, but it hasn’t. How come it hasn’t been reduced after all those weeks closed [during lockdown] with no power? They never provide an invoice.
“They said they’d give us a refund but there’s no money coming, just words. If you’re going to refund the OPEX, why are you giving me a PLA for $10,000?”
With a number of Elliot Stables shops already sitting empty and little chance of them being leased in the current climate, Gostak can’t understand why the Icon Group would pursue such an aggressive tactic with its remaining tenants.
“I think he [Paul Reid] is just upset because we went to the media. The more he gets upset, the more he wants to make us upset.
“These people, they have good words but I don’t know how their logic works or what world they live in. I just can’t understand.”