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Amanda Spratt

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  • Hi Cynthia, happy to help. Do you have a particular query about your lease? If so, you can post it to this site or if you would rather not, please call or text me on 021 684 676 tomorrow.
    Kind regards,
    Amanda

    Thanks Blair – agree with your comments. That’s good intel on what you are seeing in the market. As you say, landlords need to be pragmatic and Sarah hopefully you will find that to be the case on Monday – let us know how it goes. Cheers, Amanda

    Hi there, it sounds like you are in a difficult position. First, a couple of questions. Have you asked your landlord for a breakdown of the opex and checked that the charges are things that can be passed back to you under the terms of your lease? Also, have you got the “no access in an emergency” clause (this is clause 27.5 in the ADLS form of lease) which could entitle you to rent abatement for the lockdown periods, and if so, did the landlord abate the rent and opex?
    Second, a couple of assumptions. I assume that the tenant under your lease is your company, and I assume that you do not have any right to terminate your lease early but you do have a right to sublease or assign with landlord consent.
    Based on these assumptions, if you cannot negotiate an early termination with your landlord (this may be palatable to the landlord if you offer a “break fee” but I appreciate that you may not be able to afford this), you could look to either assign or sublease. In brief, assignment is when you find another tenant (an assignee) to take over your lease. In this case, the assignee enters into a deed of assignment with you and the landlord agreeing to take over the lease and to comply with all the tenant’s obligations under the lease from the date of assignment. It is important to note that, unless you get the landlord to release your company, your company (and any guarantors under the lease) will remain liable for any default by the new tenant/assignee for the remainder of the lease term. That means if the assignee stops paying rent, for example, the landlord can claim this from you.
    A sublease means you find another tenant to take over some (or all, if the lease allows) of the area that you lease. They will enter into a sublease of that area with your company and will pay rent to your company under that lease. Your company will remain as a party to the lease with the landlord – so your company will still be liable directly to the landlord under the lease.
    In both cases it is usual for the lease to require you to get landlord consent first, and the lease usually sets out the conditions of that consent, but the landlord must be reasonable in giving that consent.
    Otherwise, you will continue to be liable as tenant under the lease for the remainder of the term. Your exposure in this respect will depend on a number of factors. I would be happy to look at the terms of your lease and have a chat – if you email me (amanda.spratt@minterellison.co.nz) your contact details I can give you a call.

    Morena. Andy is correct in that the key question is whether you have a right to a rent/outgoings abatement in your lease. If you do not have this clause, then you are relying on the goodwill, effectively, of your landlord.
    In terms of the tactic of not paying rent, at a very high level, if you do not have a right to an abatement, and elect not to pay the rent and outgoings (whether you pay a percentage or nothing), this will put you in breach of the terms of your lease. The landlord will be entitled to serve you with a Property Law Act notice of breach, and if you do not pay the rent in full, the landlord will be entitled to cancel the lease. In response to the pandemic, the Government has extended the period within which you, as a tenant, have to pay the rent to 30 working days. So, if you do not pay the rent, and the landlord issues a Property Law Act notice, you have 30 WD to remedy the breach and avoid cancellation. There are other things you should consider though if taking this approach, including the damage that it will likely do to your relationship with the landlord. This is a risk that we have seen some tenants decide they are prepared to take either to prompt engagement from the landlord or on the chance that the landlord might seek not to take action. We would strongly recommend trying to talk to the landlord before taking such a step.
    Please let me know if you are not sure whether you have the abatement right under your lease – I would be happy to help.
    Thank you, Amanda

    Hi Natasha. Happy to help. Please email amanda.spratt@minterellison.co.nz

    From a legal perspective, clause 27.5 can still apply under level 3. The extensive control measures required for businesses to return to their premises will effectively mean that some businesses won’t yet be able to access their premises. For other businesses, the restrictive nature of the control measures will likely mean that they still cannot “fully conduct” their business from their premises (like restaurants who are only able to offer takeaways, and some businesses where the distance requirements mean that they cannot have everyone in the office at once). If however your tenant is able to access the premises to fully conduct its business even with the tight restrictions, then clause 27.5 should not apply. So, as the experts above have noted, the legal position depends on the particular facts of the situation in every case.

    The “fair proportion” reference in clause 27.5 relates to the degree of access your tenant legally has. However, as landlords and tenants try to work through the unprecedented nature of this pandemic, we have seen the parties bring the concept of “commercial fairness” into the discussion and take into account other factors. However, pragmatic negotiations can be difficult to have, especially where the tenant is reluctant to communicate (and it does sound from the way you describe negotiations to date as though the tenant could do better on this front). Apologies if this sounds trite to say, but we do find clients often have more productive negotiations over the phone than email. Overall, though, I agree with the comments of the experts above who encourage you to consider the bigger and longer-term picture. What effect would a PLA notice have on your tenant? Has this tenant has been reliable and paid on time pre-Covid-19? How easily/quickly, taking into account the uncertain economic times we are heading in to, will you be able to replace the tenant? Would having the tenant agree to extend/renew their lease help you? (Also note that there are questions about whether a landlord can issue a valid PLA notice if the rent is in dispute, and if you do decide to serve one, be aware that the Government has extended the remedy period from 10 to 30 working days.)

    Please let me know if you have any queries about the above, and I will try to answer them, and good luck.
    Amanda

    Hi. As Andy says, although it sounds like your relationship with your landlord is not good, it may be worth approaching him/her again. Provided the landlord’s intention is to continue leasing the property, it is in their interests to do what they can to assist you through this. But there are also other potential options for you to consider, depending on certain details relating to your lease. I would be happy to talk to you about the options – please email me directly at amanda.spratt@minterellison.co.nz and I can assist further.

    Hi again – I would be happy to have a chat and take a quick look at your lease to see what else you might be able to do. Please feel free to email me at amanda.spratt@minterellison.co.nz

    Hi there. Matt’s advice is sound. The Government has been lobbied by various industry participants to provide some sort of rental subsidy for tenants in this situation, but it has to date only said it is “considering the options”. If you have a right in your lease to a rent and opex abatement, then I suggest having another conversation with your landlord and seeking legal advice if they refuse to engage. If you have not got such a right in your lease, then you are relying on the good faith and will of your landlord. We find that a tenant’s best chance of success is to approach the landlord with a “we’re all in this together” approach rather than taking a hard-line stance and/or demanding an abatement. I am not sure what kind of business you are and what kind of premises you are in, but the landlord may not find it easy to get another tenant in, and for some landlords this is a good motivator to coming to an arrangement with their tenants during Level 4 and 3. We are seeing many landlords agreeing to defer rent (in situations where the tenant does not have a right to claim rent abatement). This will not make the obligation to pay go away but may give you some breathing room in the interim. Take care.