No access clause implied in commercial leases

On 28 October 2021, the Government amended the Property Law Act to imply a ‘no access in an emergency clause’ into commercial leases which do not already provide for adjusted rent payment terms during an epidemic emergency. The implied clause applies from 18 August 2021, which was the start of the most recent rise in Alert Levels, but will not affect agreements between landlords and tenants to adjust rent obligations made prior to that date.
Author(s): Virginia Bonanni
A close-up of a silver house key inserted into a round, silver door lock, symbolizing the absence of an "access clause" often implied in commercial leases. The key has a key ring attached, holding several smaller metal rings that reflect light against a plain, dark background.

Businesses without ‘no access’ clauses have been liable to pay full rent throughout the COVID-19 pandemic, although many landlords and tenants have negotiated rent reductions even without a ‘no access’ clause. 

The no access clause allows the lease parties to agree on a ‘fair proportion’ of rent and outgoings that should be reduced during an emergency if the tenant cannot access the property to conduct their business fully. 

The assessment of what is a fair proportion of rent is subject to agreement between the landlord and tenant. They are to consider any loss of income experienced by the tenant during the period they are unable to access the premises due to lockdowns or because of reasons of health or safety related to the epidemic. 

The changes also require the parties to take all reasonable steps to respond to a communication from the other party about the operation of the no access clause, with any disputes being referred to arbitration under the Arbitration Act. Non-binding mediation and other dispute resolution alternatives such as expert determination may also be used to resolve the dispute. 

The New Zealand Dispute Resolution Centre is offering a speedy low-cost fixed fee arbitration and mediation service for parties in such disputes where they have been unable to agree an appropriate level of rent reduction. More information on these and our other dispute resolution services are available here. 

Other resources you might like

If you found this article helpful and are interested in learning more, there is a wealth of other resources available on our website. We have a wide array of articles and guides on a variety of topics, each designed to provide you with a deeper understanding of the subject matter. We encourage you to explore these resources and deepen your knowledge.

A blue and yellow sign with the word "OPEN" hangs on a glass door. Below the sign, the word "SHOP" is visible in white letters. The background shows a glimpse of the interior with some blurred elements, indicating the shop is open for business.
Arbitration

Commercial landlord and tenant disputes: Three reasons why arbitration is so popular

During the course of a commercial tenancy, disputes often arise between landlords and tenants in relation to the parties’ obligations under the lease to maintain and repair premises, fixtures and fittings.
Learn more
A close-up view of a laptop displaying stock market charts and data. Hands are visible typing on the keyboard. In the background, people in business attire appear to be engaged in a discussion, one holding documents while another operates a tablet.
Arbitration

Arbitrator’s exercise of phantom jurisdiction

In CMB v Fund, Cattle and Management [2023] HKCFI 760, the Hong Kong Court of First Instance ruled that a pre-emptive arbitration should be set aside as there was no dispute between the immediate parties to the arbitration and the award was beyond the arbitrator’s jurisdiction.
Learn more
A brass scale of justice sits prominently on a glass desk, symbolizing law and fairness. In the background, a person in a suit, partially out of focus, examines documents, indicating that even in this seemingly straightforward setting, the court sees through layers of lipstick and linguistic camouflage.
Arbitration

Court sees through layers of lipstick and linguistic camouflage in audacious application to set aside arbitral award

Unfortunately, too many unsuccessful arbitration participants still see it as worth their while to ‘roll the dice’ by manufacturing a pathway to a court, where strained procedural unfairness arguments rise to the fore as something of a last refuge of the desperate. … This farcical position should no longer be entertained. Where [this] backdoor strategy is unsuccessfully deployed in future it should be met with a punitive costs sanction.[1]

Arbitration is final and binding, and an award in New Zealand can be appealed only on a question of law (not fact) or when it is in conflict with public policy (involving fraud, corruption or a breach of natural justice, such as procedural unfairness). The principle underpinning this, is that parties will not be readily provided with a chance to re-argue their claims before a court after having chosen freely to resolve their disputes through arbitration.

This reflects the old saying, “you made your bed, so must lie in it”. In a recent decision out of the Supreme Court of Western Australia, the lawyers involved must have felt they had been sent to their beds without any supper. The case was Venetian Nominees Pty Ltd v Weatherford Australia Pty Ltd,[2]where Kenneth Martin J dismissed an application to set aside an arbitral award based on an alleged denial of procedural fairness, in a scathing judgment.
Learn more

Get in touch

Contact our team today to see how we can help

Contact us

This field is for validation purposes and should be left unchanged.