Rent relief in the COVID-19 lockdown

For those who have commercial leases, there are questions around whether there is a right for tenants to ask for rent relief and if so, what that relief should look like.

A commonly used form of commercial lease is the Auckland District Law Society lease, which has been in use since 2010. That lease (in clause 27.5) makes provision for rent reduction, where the tenant is unable to gain access to the leased premises because of an emergency situation, such as the COVID-19 lockdown. In such cases, a fair proportion of the rent and outgoings cease to be payable.
Author(s): Catherine Green
A large conference room with a long table surrounded by tan swivel chairs. The room, often used for commercial rent lease dispute mediations, has a high ceiling with recessed lighting and a projector. Floor-to-ceiling windows provide a view of an outdoor landscape. Laptops and office supplies are on the table.

There has been much publicity since the start of the lockdown on what is a fair proportion of the rent and outgoings that should cease to be payable. It is not uncommon, depending if you are a landlord or a tenant, that what is fair looks very different. While many commercial parties have been able to resolve this with negotiation, there are a large number who have not been able to do so and who require assistance. 

NZDRC has launched a reduced cost and fixed fee arbitration and mediation service specifically to help parties to such leases, so they can access a fast and cost-effective means of resolving their rent dispute, providing them with commercial certainty in uncertain times. 

How can arbitration help?

The objective of arbitration is to provide a flexible and efficient means of resolving disputes quickly, cost effectively, privately and confidentially without necessarily adhering to the formalised, technical procedures of litigation. 

Whilst arbitration is closely related to litigation, there are several key differences which make it an important and attractive alternative to state litigation. In particular, arbitration gives the parties the power to choose their own decision maker, place and time of a hearing, and as far as they can agree, to control the arbitration procedures which may be varied to suit the nature and complexity of the dispute. 

Parties who wish to avail themselves of this special fixed fee service, will need to agree to proceed under the NZDRC ECA45 Arbitration Rules. 

Those Rules are specifically designed to allow the quickest and most cost effective resolution of commercial disputes, providing for a documents only arbitration procedure which is designed to result in an Award being made which finally determines all substantive issues in dispute within 45 working days. 

This provides parties with a definitive answer within the shortest possible time and at the lowest possible price.

A woman with long dark hair is standing in a modern office, wearing a navy blue blazer and black skirt. She is smiling and has her arms crossed. Behind her are shelves with books related to low-cost fixed fee arbitration services and commercial rent lease disputes during the COVID-19 lockdown. The office has a sleek and tidy design.

How can mediation help?

Mediation is a consensual, confidential and relatively informal negotiation process in which parties to a dispute use the services of a skilled and independent mediator to assist them to define the issues in dispute, to develop and explore settlement options, to assess the implications of settlement options and to negotiate a mutually acceptable settlement of that dispute which meets their interests and needs. 

The objective of mediation is to enable and empower the parties to negotiate and resolve the dispute promptly, cost effectively and confidentially rather than to have a decision imposed upon them by a judge, arbitrator or adjudicator. The process enables the parties to negotiate flexible and creative solutions which need not conform to strict legal rights or general community standards. 

In this way, where parties are willing and able to work toward a settlement of the dispute, mediation can help them find a solution that may better meet more of their respective needs and requirements than what might otherwise be the outcome where a decision is made based on their strict legal rights and obligations. 

The special mediation service launched will provide the parties with a half day mediation. This will take place by videoconference and can be set up and completed within short order (for urgent matters within 24 hours). 

Four people are standing and smiling in an office setting. Two of them are shaking hands, indicating a friendly or professional interaction, possibly discussing low cost fixed fee arbitration for commercial rent lease disputes. There is a plant on a shelf in the background, adding a touch of greenery to the otherwise minimalistic room.

How to access the NZDRC services

Whether parties choose to arbitrate or mediate, they will need to agree to engage in that process. This can be done by completing the special form agreement to arbitrate or special form agreement to mediate, copies of which may be downloaded directly from the NZDRC website. 

Once the agreement has been signed, the parties simply need to contact the NZDRC Registry staff who will guide them and their advisers through the process. 

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.

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