What the dispute was about
A landlord and tenant disagreed on how to apply a CPI (Consumer Price Index) rent review clause in their Auckland District Law Society (ADLS) standard form lease. On the surface, it sounds simple enough. In practice, the two sides landed on very different answers.
The tenant based their calculation on comparing percentage changes — inflation was 7.2% one year and 5.9% the year before, so they divided one by the other to arrive at a 1.22% rent increase. The tenant based this on the word ”proportionate” that had been inserted into the standard rent review clause. The landlord argued that was incorrect, stating the actual index numbers should be used in the rent review formula, resulting in a larger increase.
The arbitrator's finding
Catherine Green ruled in favour of the landlord. Using the CPI index figures directly — rather than converting them to percentages — and the formula in the rent review clause, she calculated the new annual rent at $307,168.27, up from $286,486.12.
Her reasoning was clear: the lease clause referred only to the immediately preceding 12-month period. The tenant’s interpretation would have required reading additional meaning into the word “proportionate” and the clause that simply wasn’t there. It also produced results that didn’t hold up mathematically — and when tested against a previous review period, would have led to a higher increase than both parties had actually agreed to at the time.
The tenant pushed back — twice
After the award was issued, the tenant first attempted to use a “request for correction” to reopen the argument. The arbitrator declined, noting that this process exists for minor slips — typos, basic arithmetic mistakes — not for revisiting the substance of a decision.
The tenant then appealed to the High Court, arguing the arbitrator had breached natural justice, gone beyond the scope of the referral, and reached a result that conflicted with public policy.
The Court rejected all three arguments. It was clear-eyed about the correction request: the tenant had tried to use a procedural tool to relitigate the case. On the substantive questions, the Court was emphatic — the arbitrator had correctly treated CPI as index numbers, understood the mathematics, and reached the right answer. In the Court’s own words, she had made the decision “carefully and reasonably.”
Why it matters
Rent review clauses — especially those tied to CPI — can look straightforward while hiding real complexity. The difference between treating CPI as a percentage versus an index number might seem like a technicality, but as this case shows, it can mean tens of thousands of dollars.
New Zealand Dispute Resolution Centre (NZDRC) has significant experience in property-related disputes, including commercial lease matters. Our arbitrators are selected for their understanding of the underlying issues — not just the legal process. Cases like this one reflect the value of getting both right.
If you’re facing a commercial rent dispute, we’re here to help. Contact us at registrar@nzdrc.co.nz or see https://nzdrc.co.nz/nzdrc-rent-review-arb/.
