Tenant’s tale of woe at ‘sinking’ centre

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It’s 2010 and Steve Kay’s just bought Leonardo’s Cafe in Queenstown’s Gorge Road Retail Centre.

Kay – who says he paid every cent he had and also borrowed money – decides to rename the cafe Refuel and change the layout.

“When I moved all the tables that are bolted to the floor, there’s lots of eight mill, 10 mill cardboard packers under one side.

“When we took the tables down to the other side of the building, I needed the packers again but on the other side, to get the tables level – you don’t want people’s coffee sliding off the table.”

Kay spills his beans to landlord Rita Kroemer, who’s sold him the cafe, when she pops in.

“She says, ‘Don’t talk to me about it, the slab dropped 40 mill in the time they took to build it [nine years earlier].”

Kay: “I’m thinking, ‘I’ve just given you [substantial money] and you’re telling me this now’.

“I said, ‘what happens if there’s a bloody earthquake?’

“She said, ‘I’ve thought about that, I’d run straight out the front door’.” 

From that point, Kay – who’d signed a three-year lease with three rights of renewal – says he unsuccessfully pushed his landlord to sort out the problem.

“Two years ago I put my foot down and said, ‘right, we’ve got to see an engineer’s report’.

“The building started to open up, there were cracks opening up everywhere. We went from, ‘I’m concerned about my investment’ to needing the building certified so I’m comfortable I’m providing a safe workplace for my staff and my customers,” he adds.

A year ago, Kay says he was advised the day before his first three-year lease expired that his rent was going up.

“When anything needed fixing we’d paid for it ourselves, so when she says she’s going to put the rent up my hackles go up.”

Kay insisted he’d only pay half the rent till the building was certified.

Kroemer in return put him on a month-to-month lease. 

Kay says an engineer’s report from GM Designs last September, which he’d badgered his landlord to see, confirmed his worst fears.

The building was on swampy ground that couldn’t support its weight, the report found. 

“The floor slabs were even being monitored when under construction for deformation.” 

The report says the contractor, who’s not named in the report and has since gone under, was “out of control in the building of these units”.

It also states: “All buyers purchased these units without a code of compliance and in the supposed knowledge that the building certifier had gone into liquidation as well as the contractor … 

“These buildings have been influenced by gradual settlements and hence no insurance cover extends to these units in any form and from any source.”

Lawyers for the units’ body corporate also refer to a letter last July from Alpine Land Surveyors indicating a settlement difference in the Refuel unit of 235mm “which is considerable subsidence”.

“This [GM Designs] report indicates the settlement is increasing.”

Compounding those problems, developer Dennis Thompson’s Queenstown Investment Holdings was later liquidated.

Thompson told The Mirror last month all compliance had been carried out at the time of construction: “The building was done to the engineering standards of the time and passed. If there’s been subsidence since then – which happens all over the place when you’ve got bad ground – well that’s a fact of life.”

In view of the problems, Kay says he decided to offer his business back to the landlord at the price he paid for it.

“The business was making twice the money it was when she sold it, so I would protect my initial investment and she would get a business in good nick – everyone walks away happy as Larry.”

Instead, Kay says his landlord gave him a month’s notice so he reluctantly closed his doors two weeks ago.

“We tried protecting our interest and for that she’s kicked us onto the street. 

“I’m really quite bitter that someone can do this, especially someone who’s been through the hard times herself – she knows how difficult it is to earn a living out of a small five-day-a week cafe.”