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Leases update – Clause 27.5: ‘No Access in an Emergency’

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This member advisory relates to lease documents that are using the Auckland District Law Society (ADLS) Lease Agreement after 2012, and include clause 27.5: “No Access in an Emergency” as below: 

Section 27.5 (No Access In Emergency) 

If there is an emergency and the Tenant is unable to gain access to the premises to fully conduct the Tenant’s business from the premises because of reasons of safety of the public or property or the need to prevent reduce or overcome any hazard, harm or loss that may be associated with the emergency including: 

(a) a prohibited or restricted access cordon applying to the premises: or 

(c) restriction on occupation of the premises by any competent authority, 

then a fair proportion of the rent and outgoings shall cease to be payable for the period commencing on the date when the Tenant became unable to gain access to the premises to fully conduct the Tenant’s business from the premises until the inability ceases. 


Many members have asked how this applies in their current situation, particularly when access to their business is currently prevented due to New Zealand’s Alert Level 4 status. 

Access in the context of the Covid-19 lockdown 

Amongst the legal fraternity, there has been a lot of discussion as to whether clause 27.5 (No Access in an Emergency) of the ADLS Lease Heads of Agreement, Sixth Edition 2012, applies to the current context of Covid-19 and the lockdown.   

Clause 27.5 was introduced after the Christchurch earthquakes to address the issue where certain properties, though not damaged or destroyed, were inaccessible because of the “red-zone” cordon.   

One legal view has been to distinguish that type of scenario from the current situation, where premises remain accessible, except that tenants are prevented from gaining access to them because of the Covid-19 Level 4 Government-enforced direction, requiring the population to stay home.   

They also point out that times have changed from the Christchurch earthquakes when businesses were more paper based, whereas now, many offices can work remotely.  Furthermore, in an earthquake situation, a landlord’s insurance policy (of which the tenant has the benefit because the tenant effectively pays the premium through outgoings) would more likely respond, whereas pandemics are excluded from cover. 

At this stage, it appears the current legal opinion is towards the clause applying. 

Accordingly, a “fair proportion” of rent and outgoings will reduce.  As to what is a “fair proportion”, this is unclear and it is a matter of agreement between landlord and tenant.   

An indicative range for hospitality premises is between 25 – 70% – obviously a huge range, dependant on a number of different factors.   

So far, some landlords and tenants have reached agreement on: 

  • One month rent holiday and 50% rent reduction for the next 3 months 
  • One month rent holiday and 1/3 off for the duration of Level 4 
  • 50% rent reduction 
  • Deferment – pay when you can or “on terms”. 

A lot has to do with relationships.  It is not advised that tenants to cease paying rent unilaterally, or for tenants to threaten landlords or just “notify” landlords that they intend to stop paying rent.  Whether the tenants have an abatement clause or not, it is best to demonstrate good faith, tell the landlords honestly how much it is affecting business (provide supporting evidence), and work it through.   

In general, once a landlord has determined it is able and willing to help, it doesn’t necessarily distinguish between the tenant who has an abatement clause and one who hasn’t. Most landlords probably already know if they have an abatement clause or not in the lease agreement, but if they don’t, then let them know or politely ask (if you need to) if it makes a difference since you have a clause. 

We will update our members about any further announcements, which we are regularly updating to capture the unchartered territory that is Covid-19 and to ensure our members are kept up to speed and fully informed.  

The Commercial Property Team at our legal partners, Hesketh Henry, has a useful article on this topic featured on their website here


The Restaurant Association resource, Guideline for lease discussion & landlord letter template – COVID-19, will assist members in their communications with their landlords. Download the resource and letter template here (this is a member-only resource, so login first). Members are also encouraged to contact the Restaurant Association helpline on 0800 737 827 for advice.

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