Cover Genius Services Pty Ltd (CGS)’s case revolving around its office lease amid the COVID-19 pandemic has reached its conclusion – with the New South Wales Supreme Court deciding to rule against the insurtech’s subsidiary.
Perpetual, the custodian of the Dexus Office Trust, is the registered owner of the office space in Clarence Street, Sydney. The space was the centre of a lease dispute between CGS and NTT Australia Digital. CG claimed to have withdrawn from an arrangement for the office space with NTT and that a Deed of Assignment could not be enforced. Meanwhile, NTT argued that a document signed in January should be enforceable.
On July 19, 2013, NTT entered into the lease of the office space for an eight-year term – terminating on August 31, 2021. In July 2017, NTT entered into a sub-lease of the office space with Society One. Then on December 23 last year, CGS entered into a license agreement with Society One to occupy part of the premises until April 30, 2020. A deed of assignment with NTT was due to begin on May 01.
Justice Julie Ward revealed that, from March 24 to April 27, Perpetual and Dexus Funds Management discussed rental assistance for CGS on the May lease due to the pandemic. However, in a letter on April 30, the firm said it would not rent the office space anymore – adding that it only had a contractual license with Society One until that date, and a Deed of Assignment was not enforceable.
When the firm did not pay rent and other bills starting in May, Dexus claimed that CGS had breached the agreement, and NTT was liable for compensation. As a result, Dexus and Perpetual sought $492,130.19 from NTT or CGS.
Justice Ward found the agreement valid and ruled against CGS.
“CGS’s strenuous attempts to negotiate with the Dexus entities a reduction in the rent which it plainly understood it would be obliged to pay as of May 01, 2020, are not the conduct of a party who considered itself anything other than immediately bound by its execution of the Deed of Assignment,” the Justice said.
The decision leaves NTT with a claim to damages, with Justice Ward encouraging mediation between both parties.
