Many legal minds making NZ LAW work

We are an association of independent legal practices, proactively sharing ideas and expertise for the benefit of our clients.

Rural Leases

Published: 4th August 2020

Author: Neil Dent, Gifford Devine

Published in: Rural eSpeaking

More on COVID and access issues to land

In the Autumn edition of Rural eSpeaking we discussed the situation that COVID had caused with leases where tenants were unable to access their premises due to lockdown restrictions. Potential issues for the rural leasing sector arose from this problem, particularly given that rural leases are often in a different form to urban commercial property leases.

The article pointed out that the main lease issue due to COVID was the inability of tenants to access their premises. Since we published the Autumn edition, the government has announced that it proposes further changes to the Property Law Act 2007 where it would imply in certain leases a clause similar to that in the latest version of Auckland District Law Society (ADLS) lease, section 27.5, where a tenant has:

• Twenty or fewer full-time equivalent staff per lease site
• A New Zealand-based business, and
• Not already come to an agreement for a rent abatement with their landlord.

Of interest to rural tenants is that the government’s proposals indicated that the clause would have a wider effect than the ADLS ‘no access’ clause in section 27.5. It would particularly apply ‘where there is, or has been, a material negative impact on a Tenant’s business due to COVID-19, whether or not the Lessee is able to access the premises’.

As you can see, a tenant’s ability to access the premises is not the only criteria in the proposal. The more important criteria would appear to be whether or not COVID has had a materially negative impact on a tenant’s business. Therefore, if the proposed legislation is enacted, it would mean that where, in the rural lease setting, a tenant may still have been able to actively access, and farm or crop the land, if the business has been affected by COVID they could still take advantage of this implied clause. An example of this is where a lettuce supplier for a fast food chain has still had access to their growing crop, but the demand for salad leaves had disappeared as takeaway outlets had been closed during Level 4.

There have been instances where supply chains have been disrupted (see the example above) or ordinary ‘on account’ or prepayments for supply have not been made and cash flow problems have arisen. It would appear that, in these circumstances, the ability to require a good faith negotiation for a rent abatement (or other measures) would be available under the proposals.

Clear guidelines needed

The other point to note about the government’s proposal is that the Cabinet paper made it clear that it would implement clear statutory guidelines for interpreting the implied clause. The weakness of the ADLS clause is that there is nothing surrounding the clause to give guidance as to what factors should be considered when determining what is a fair (our italics) proportion of rent to abate, etc. As a result, it would appear that the proposed legislation would be fairly prescriptive as to what factors should be taken into account when interpreting and applying the implied clause.

The New Zealand First party, that had supported the proposed legislation, has now withdrawn its support. As a result, it has just been announced that rather than proceeding with these changes right now, the government will establish a fund ($40 million) to help pay arbitration costs for tenants and landlords.

Post-election, given the current polling trends, it may well be that the changes proposed by this government will be back on the agenda.

In any event, there are other avenues for a tenant to explore if their leased property is damaged to the extent that it becomes unfit for use – storm or earthquake damage are prime examples.

The Property Law Act 2007 implies, in all leases of land, for rent and outgoings to abate ‘in a fair and just proportion’ if the premises are destroyed or damaged by certain causes; those causes include flood, storm, earthquake or volcanic activity (not pandemic, unfortunately). The specific terms of a lease can, however, negate this implied term.

Ability to terminate a lease

Also implied in all leases of land is the lessee’s ability to terminate their lease on reasonable notice to the landlord if it is an express or implied term of the lease that the leased premises may be used for one or more specified purposes and at any time during the lease the premises can’t be used for those purposes. Therefore, the lease terms will be very important when considering whether or not a tenant could terminate their lease for this reason. However, most leases include a clause where the landlord expressly states that there is no warranty or representation that the premises are suitable or will remain suitable for the tenant’s use rendering this option unavailable to many tenants.

COVID and damage situations both show the importance of considering unexpected events when negotiating leases. Landlords and tenants tend to concentrate on rent and term when negotiating on the basis other obligations are ‘standard’. Thought should be given to those wider issues as once a lease is signed, it constitutes a binding commitment for, sometimes, quite an extended period of time.

Please contact the author direct for any further comments.

Related Articles

  • Auckland
  • Bay of Plenty
  • Canterbury
  • Coromandel
  • Gisborne
  • Hawke's Bay
  • Kapiti Coast
  • Manawatu - Wanganui
  • Marlborough
  • Nelson
  • Northland
  • Otago
  • Southland
  • Taranaki
  • Waikato
  • Wairarapa
  • Wellington
  • West Coast

DG Law

David Graham and his secretary started out in a small office in Panmure in 1984.  We now have a large team covering a broad range of the law.

Our vision is to provide a prompt, efficient and effective solution to our clients' legal needs.  Our standard of work is high and clients can be confident they will receive the following when dealing with the DG Law team:

  • Care
  • Courtesy 
  • Prompt Communication 
  • Honesty, and 
  • Trust

Region: Auckland

Phone: 09 574 5316

Jackson Reeves Lawyers

Jackson Reeves is a long established law firm that has been providing quality legal services in Tauranga and the Bay of Plenty region for over 60 years. We have proven expertise in business and personal law and deliver high calibre legal advice and solutions that work for you.

Choosing a law firm is not always an easy decision but you can take comfort in the knowledge that Jackson Reeves take a client focussed approach, providing specialist and practical legal services. Old fashioned virtues, like integrity, transparency and trust are of importance to us and we value quality, relationships and diversity.

Region: Bay of Plenty

Phone: 07 578 2129

Corcoran French

Corcoran French is a firm of Christchurch and North Canterbury lawyers with over 120 years experience in providing legal services to Christchurch and the wider Canterbury region. We have offices in Christchurch City and Kaiapoi. We can also meet you at shared offices at Akaroa.

We welcome new clients and are committed to building strong long-term relationships that are rewarding for our clients.

Region: Canterbury

Phone: 03 379 4660

Purnell Lawyers

There is nothing as inevitable as change. Since opening for business early last century, we at Purnell Lawyers have seen many changes both in name and in the people who have made up the members of our team. We have been privileged to have served the public throughout all of these times. 

We are confident that we will continue to bring top quality legal services to our clients well into the future.

Region: Coromandel

Phone: 07 868 8680

Woodward Chrisp

At Woodward Chrisp we strive to meet the needs of our clients by providing a wide range of high quality legal services within a supportive and collaborative environment.

Woodward Chrisp is the amalgamation of two long established Gisborne legal firms: Woodward Iles & Co and Chrisp and Chrisp. Today’s partners are Ross Revington, Adam Simperingham, Jeff Allen and Ellie FitzGerald.

Region: Gisborne

Phone: 06 869 0900

Gifford Devine

For all life’s matters, the team at Gifford Devine have your back. Since 1896, our lawyers have been providing straight-talking, practical advice and advocacy to people, families and businesses in Hawke’s Bay.

As your legal champions, we’ll serve you as a trusted adviser, listen to your needs, offer plain English advice, and find a solution to get you the best possible outcome.

We have the expertise to identify potential legal issues, to help you make important decisions, and to realise your goals. We’re your legal champions for all reasons and at all stages of life.

Region: Hawke's Bay

Phone: 06 873 0420

BMC Lawyers

BMC lawyers has built a reputation for providing quality service and delivering real results. Our strength is our broad-ranging legal experience that gives us the ability to match clients with the right mix of legal skills for their particular needs.

Our legal professionals are passionate about what they do and work alongside a talented team of support and administration staff to make a real positive difference to our clients.”

Region: Kapiti Coast

Phone: 04 296 1105

Innes Dean Tararua Law

Our history in the Manawatu and Tararua Districts dates back to 1884. With offices in Palmerston North and Pahiatua our firm stands on a long tradition of high standards and sound legal advice.

Our size means that every one of our clients are dealt with on a professional, yet personal basis.

Region: Manawatu - Wanganui

Phone: 06 358 6075

Wain & Naysmith

Based in Blenheim, Wain & Naysmith Lawyers is a full service law firm, and a powerhouse for property, family and business law.

We pride ourselves in providing clear and cost effective legal solutions and practical advice for you, your family and your business.

Region: Marlborough

Phone: 03 520 6103

Knapps Lawyers

As a firm, we promise to look after you and treat you in a manner that we would expect to be treated by a professional services provider; we promise to use every available legal remedy available to us to resolve your issue and to do what you ask us to do in a timely manner.

We will hold in strict confidence all information that we acquire through our work for you and which concerns your business or personal information.  The only exceptions are where you authorise us to disclose such information or where we must do so by law.

Region: Nelson

Phone: 03 544 7888

Law North Limited

We pride ourselves on being a "general store" for most legal issues but also have several in-house experts in specialised areas including trusts, relationship property, business and property law.  No matter what your issue is - whether you are looking for trusted legal advisers to steer you through life, or you have a one-off problem to sort out - we would be pleased to help.

Law North Ltd provides a broad range of legal services across the Far North district from our base in Kerikeri.   We have operated in the area for over 100 years and have a long-standing history of providing legal services to a diverse client base, including businesses and private clients.   Our directors and their families have been part of the Bay of Islands community for several generations and remain committed to the area and its people.  We often call upon strong local knowledge to resolve issues for clients whilst remaining vigilant about client confidentiality.

Region: Northland

Phone: 09 407 7099

Mactodd

MacTodd is a leading South Island law firm with a national reputation for its experience and expertise across a wide range of the law.

Serving the local community and national and offshore clients for over 40 years, MacTodd prides itself on being a fully comprehensive law firm with an innovative approach, meeting the demands and time zones of its diverse clientele.

MacTodd's hallmark is our friendly and professional approach. Our state-of-the-art technology provides an accurate, efficient and cost-effective service.

Region: Otago

Phone: 03 441 0125

Sheddan Pritchard Law Ltd

Incorporating traditional values and a fresh perspective, Sheddan Pritchard Law is here to assist you with all your legal needs. 

Our friendly and team-driven approach underpins our firm’s values, recognising the importance of putting people first and allows us to connect and nurture professional relationships with new and existing clients within our local community of Gore, as well as throughout New Zealand and extending overseas.

Region: Southland

Phone: 03 209 0030

RMY Legal

Having been a cornerstone in the New Plymouth and Taranaki legal community since the 1930s we offer in-depth knowledge coupled with legal expertise and always put the needs of you and your business at the heart of what we do.

Not only do we offer a first class service to clients throughout Taranaki, we are passionate about what we do and our success stems from delivering advice in clear and understandable terms.

Region: Taranaki

Phone: 06 769 8080

Lamb Bain Laubscher

The firm advises clients on a regional and national level, regularly meeting with clients throughout New Zealand at their places of business or residence. Building on the experience of its members, the firm has forged a successful relationship with its clients, and in some cases act for and advise three generations of the same family.

The firm seeks to create innovative and advantageous solutions based on their knowledge and experience and a keen appreciation of each clients individual circumstances.

The firm has modern internal systems and an infrastructure which enables direct and efficient means of service to clients. There is an emphasis on building strong relationships with our clients and providing a personalised service.

Region: Waikato

Phone: 07 878 1011

Gawith Burridge

Gawith Burridge traces its history back to 1875 when Charles Gawith first set up his practice. Since then the firm has undergone many changes, including a merger between Gawith & Co and Burridge & Co in 1998 to form our current practice.

Our firm draws on the breadth of expertise available from some of the region’s most senior legal practitioners, as well as the skills of those who have moved here from larger corporate environments.

As a result, we provide clients with a comprehensive range of legal services right here in the Wairarapa. We can provide you with legal assistance whether you are an individual or a company, with everything from setting up a Will to selling your farming business. 

Region: Wairarapa

Phone: 06 370 0000

Gillespie Young Watson

We specialise in Property, Commercial and Trust Law. When it comes to law firm size we are bigger than smaller and smaller than big. By limiting the work we do to our specialist areas, we like to think we bring together the best of big firm skill sets with the personal care, attention and relationships of small firms.

We expect our clients to receive clear, practical and timely advice. We place a premium on accessibility and convenience to our clients. We value and appreciate all of our clients and want to do the best possible job for each of them. When we close a file we want the client to feel they have received exceptional advice, service and value.

Region: Wellington

Phone: 04 569 3997

Hannan & Seddon

The Law Firm of Hannan & Seddon dates back to September 1867.

The firm's offices were in Werita Street from 1867 until 1982 when the firm moved to Tarapuhi Street and then to its current spacious premises at 61 Guinness Street in 1998.

The name Hannan comes from Mr Michael Hannan whose son John Hannan (Jack) joined the firm in 1908. Jack Hannan remained in partnership until he passed away in 1974 at the age of 90!

The name Seddon comes from Mr T E Y Seddon (son of Premier Richard John Seddon from Kumara) who joined the firm in the 1920's. The other prominent Solicitor at Hannan & Seddon was Cyril McGinley who joined the firm in the late 1920’s and retired as a Consultant in 1997 aged 87.

Currently we have two Partners within our firm. Tony Sullivan who has been with us for 29 years and Colin Smith, 26 years. The firm also has two long serving Legal Executives Elaine Knowles and Beverley Walsh.  

Region: West Coast

Phone: 03 768 4169

All the information published on this website, or in any article herein is true and accurate to the best of the authors' knowledge. Information on this site should not be a substitute for legal advice. No liability is assumed by NZ LAW Limited, or individual NZ LAW member firms for losses suffered by any person or organisation relying directly or indirectly on information published on this site. Views expressed in any article are the views of the authors individually and do not necessarily reflect the view of NZ LAW or their member firms. Information appearing on this site may only be reproduced with prior approval from NZ LAW Limited Head Office, and credit being given to the source. © NZ LAW Limited