Monthly Archives: October 2021

What proposed change to commercial leases will mean for tenants and landlords

Both parties to negotiate “fair” rent reductions

A proposed change to commercial leases will entitle many businesses in need of support due to the pandemic to rent relief. The change involves negotiating a fair reduction of rent when the tenant does not have access to their premises because of lockdown and alert level restrictions.

One thing is certain, both tenants and landlords will have to negotiate in good faith at a time when many businesses are faced with reduced – or no – income.  

Most commercial leases include a process where landlords and tenants agree to a reduction in rent if access to their premises is restricted by Government imposed Covid-19 lockdowns. For example, clause 27.5 of the 2012 Auckland District Law Society (ADLS) Lease contains a “no access in emergency” clause.

As part of the Government’s Covid-19 Response (Management Measures) Legislation Bill, a similar “no access in emergency” clause will be included into leases that do not currently contain this provision.

If the Bill passes into law, the proposed clause will apply to leases that are in operation from 28 September 2021 (the Effective Date).

The other criteria where the new clause will apply are:

  • If there is an epidemic and the tenant is unable to gain access to the premises to fully conduct their business
  • For a rental period “all or any of which” starts on the Effective Date

The drafting of the final point is not entirely clear in the Bill. However, it suggests the clause could refer to any rental period that includes the Effective Date (i.e. if rent is paid monthly, rent relief could be sought for the entire September period).

If the criteria is met, the landlord and tenant will need to agree to reduction of “a fair proportion” of rent. The key question is: What is “a fair proportion”?

Despite submissions calling for the inclusion of specific criteria relating to what amounts to “a fair proportion”, the select committee’s view was that listing considerations risked restricting what could be taken into account when determining a fair rent reduction.

The only guidance the Bill provides is that any agreements reached by the parties for reduced rent in relation to the period since 18 August 2021, when the country went into alert level 4, must be considered.

In Haigh Lyon’s experience, working with clients to negotiate clause 27.5, and what “a fair proportion” is, depends on a range of factors including:

  • Whether the business can continue to be conducted remotely without access to the premises
  • Whether the premises serve any other purpose, such as equipment being able to be stored at the premises
  • If there are any mortgage obligations
  • If there is any financial assistance available to the parties
  • To what extent the tenant’s financial position has, and continues to be affected by the pandemic

Both parties can agree to exclude the clause however this must have been agreed on, or after, the Effective Date.

The Government specifically invited submissions on the Effective Date with many submitters expressing concern about the date because it:

  • Did not cover the majority of the current alert level 3 and 4 restrictions
  • Should be backdated even further and apply to lockdowns in 2020 and earlier in 2021
  • Should not be retrospective

The select committee did not make a definite recommendation on the Effective Date, only stating that it should be considered further by Parliament.

Understandably, dealing with complex negotiations at a stressful time for both landlords and tenants is difficult. However, if a lease is likely to be affected, the best approach is to keep the lines of communication open and to carefully consider each parties negotiating position, rights, and obligations under the lease.

Haigh Lyon can provide advice on the proposed change and potential impact on existing leases and those currently being negotiated. Contact Raj Gurusinghe on  or 09 306 0629.

The impact of increased Covid infringment fees

Senior associate Nathan Batts contributed an article to Law News analysing government plans to raise Covid infringement fees. Here he outlines the key points and potential impact.

Published through Law News on October 1.

On the same day I sit down to write this, protests regarding lockdown restrictions and vaccine mandates have for a second day in a row erupted in violence in Melbourne. It would appear that state premiers in our close neighbour Australia may be losing touch with segments of their populations. A salutary reminder, perhaps, that legal obligations derive their legitimacy not simply through being promulgated through proper process, but also by being perceived as proportionate responses to the purposes they aim to achieve. Unreasonable or irrational legal liabilities risk of undermining the rule of law.

While not seeking to read anything into the timing, it is on the same day as these protests in Melbourne that Jacinda Ardern announced that our Government will be increasing on-the-spot infringement fees for non-compliance with orders issued under the COVID-19 Public Health Response Act 2020 from $300 to $4000. Given Labour’s significant majority, the amendment giving effect to these increases will almost certainly be passed in November.

If you are silly enough to dispute any such infringement notice in court (or if the infringement is filed in court rather than simply served on you by way of notice), then the maximum fine that can be imposed trebles to a whopping $12,000, if you are found liable.

You might have thought that with such exorbitant fines involved you’d also be looking at a criminal conviction. You would be wrong if you did. Infringements are what you incur when you park illegally. They are effective the moment an enforcement officer issues them. An enforcement officer (most likely police in the case of Covid orders ) may issue an infringement notice to a person if the officer believes on reasonable grounds that the person is committing, or has committed, an infringement offence. An enforcement officer needn’t even speak to you. The first you know of your obligation to pay the Crown $4000 for an alleged breach of an order might be a couple of weeks later when it turns up in your letterbox.

It is entirely irrelevant whether or not you intended to breach a rule, or even knew that you were. An enforcement agency does not need to prove an infringement against you – unless you go to the trouble of formally disputing it in court. If you do nothing about the infringement notice and do not pay the $4,000 in full by its due date, then it is referred to the Ministry of Justice for enforcement, at which point it is treated as a fine.

Recent media attention has focussed on Aucklanders travelling out of Alert Level 4 to places like Queenstown. Whatever you think of that, it is worth observing that infringement offences under the current Alert Level Order are rather more extensive than such cross country escapades. Infringements include:

  • Failure to display a QR code ($12,000 fee for a company);
  • Failure to wear a face covering when required;
  • Failure to physically distance (2m) at Alert Level 3 and 4;
  • Exercising somewhere not ‘readily accessible’ from your home during Alert Level 3 or 4; and
  • Swimming, surfing or tramping at Alert Level 4.

At the media briefing where news of the fee and fine amendments was delivered, the Prime Minster said that she thought the general public would probably be of a view ‘that when you are putting people at risk you need to have an infringement regime that reflects the seriousness of some of that rule breaking.’ Opinions will no doubt vary, but one might think that non-compliance with the above examples at least do not warrant a $4000 price tag. For some context, travelling double the speed limit (100km/hour in a 50km/hr zone) carries an infringement fee of $630. So at Alert Level 4, in a rush to stock up on toilet paper, you might travel at 100km/hr through residential streets to get to the supermarket in time. You are potentially liable for a $630 infringement fee for the speeding, but it’s essential travel so you’d be safe in terms of the Covid order. On the other hand, come November, a trip down to an empty local beach on a hot afternoon for a paddle in the shallows at Alert Level 4 might see you $4000 poorer.

In a statement issued by Chris Hipkins, the Covid-19 Response Minister confirmed that an example of an infringement offence would include failure to wear a face covering in places where it is mandatory. On this point, andwhatever might be said now about the merits of mask wearing, it is worth bearing in mind that official advice from the Government in the early months of the pandemic was that wearing masks if you are healthy was not necessary. Clearly the Government’s position on that has changed markedly. But in the space of 18 months or so we have gone from a practice that was not even recommended to one that you are legally obliged to comply with on pain of a $4000 fine.

Another example of the sort of conduct that would attract the $4000 fee would be taking part in a peaceful protest at Alert Level 3 or 4 (known as an unlawful outdoor gathering under the Order).

During the same media briefing, the Prime Minister was careful to distance the Government from the enforcement of these increased fees and fines. The Government has just set up the framework – “the prosecution decisions are not ultimately made by us”, she said. “Where they’re used and how they’re used, what fines are awarded, that sits out of our hands”, the Prime Minster was careful to emphasise.

That is all true and appropriate. However, this reality highlights a further significant concern regarding the level of infringement fee soon to be in force. An enforcement officer tasked with issuing infringements has no discretion as to the level of fee he or she can impose based on the perceived seriousness of the breach. It’s $4000. Period. As an infringement, anything from an unwitting error to a sustained and intentional breach will attract the same $4000 fee. Police officers tasked with issuing these infringements will, one hopes, be acutely aware of the potentially devastating effect liability to pay such a fee could have on many New Zealanders. Placing such a burden on frontline policing staff is unlikely to be a productive exercise, and may well result in the unprincipled exercise of police discretion to avoid imposing this fee.

The proposed amendment bill does allow for the enactment of regulations that identify infringement fees less than the $4000 default, and that prescribe different penalties for different infringement offences. How and if such regulations are utilised to mitigate the effects of the default $4000 fee is of course yet to be seen. The Prime Minister’s media statement certainly did not indicate that the Government was contemplating lesser infringement fees.

One centrally important question is who is most likely to bear the brunt of the financial burden of these colossal infringement fees? Well, we can pretty confidently say who it won’t be – the wealthy Aucklanders escaping Level 4 lockdown to holiday homes in Queenstown. Yes, the very people whose actions presumably solidified the Government’s resolve to drastically increase the legal consequences of non-compliance. Instead, the people most likely to be on the receiving end of these fees are those most unable to pay. Those for whom lockdowns have probably already been financially ruinous.

We know, for example, that Maori, who make up only 16.5 per cent of the total population are significantly overrepresented in the criminal justice system. Based on this reality, we can probably assume that liability for these increased fees will rest disproportionately on Maori at least.

This is not simply speculation. Again we can look to our neighbours. The Victorian and New South Wales governments in Australia were early adopters of very high monetary penalties for Covid restrictions rule breakers. This hasn’t worked well for them.

On 15 September 2021 an open letter with over 100 signatories was delivered to NSW Premier, Gladys Berejiklian.[1] Signatories included heads of community law centres and the NSW Aboriginal Legal Service.  The letter is headed ‘A call to address unjust COVID-19 fines’. One of the primary motivations for the letter was concerns ‘about the impact of COVID-19 fines on vulnerable people and communities in NSW.’ The letter observes that as a result of excessive fines people experiencing disadvantage already and suffering from the economic impact of COVID-19 risk being plunged further into debt.

The letter calls on the NSW government to ‘reduce the use of policing and fines to ensure compliance with public health orders and invest more heavily in non-punitive approaches.’ The letter calls specifically for a reduction in the excessive levels of the fines. The letter continues:

These new public health orders have been introduced and amended at a rapid pace. Their legal elements are complex and difficult to understand. This has inevitably resulted in confusion among some members of the public about their rights and responsibilities…

Sound familiar?

In terms of the impact on the fines on the criminally over-represented Aboriginal community, the letter states:

The excessive use of fines against Aboriginal and Torres Strait Islander people and communities in NSW also has the potential to further entrench disadvantage and exacerbate negative relationships between Aboriginal communities and the police.

The letter concludes with the rather blunt statement that ‘we cannot fine our way out of the pandemic’.

Our Government would do well to heed this warning. All the signals are that the fees and fine hikes proposed will be counter-productive and do more damage than good.

[1] For a full report and copy of the open letter see here:

How companies can navigate new Fair Trading Act amendments

Changes to Unfair Contract Terms are a key consideration for all businesses

Changes being introduced to the Fair Trading Act in 2022 are designed to protect and give more power to small businesses when negotiating contracts and conducting business. Triggered by the Fair Trading Amendment Bill 2019 which was recently passed by Parliament, changes to the rules around unfair contract terms (UCT) will protect businesses that have a limited opportunity to negotiate the terms of a trade contract.

Under the Bill the UCT provisions will extend to business-to-business contracts (B2B Contracts) with an actual or expected annual value of up to $250,000. Currently the UCT provisions apply only to standard form consumer contracts.

To ensure compliance before the changes come into effect on 16 August 2022, businesses should conduct a careful review of their B2B Contracts.

A contract term is an UCT if it:

  • Would cause a significant imbalance in the parties’ rights and obligations under the contract.
  • Is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by it.
  • Would cause detriment (whether financial or otherwise) to a party if it were applied, enforced, or relied on.

By way of a practical example, a term in a B2B Contract which allows one party to make unilateral changes to the contract (without the other party being provided a similar right) may be considered an UCT. Similarly, a term that enables only one party to renew, vary or terminate the contract, or a term that penalises one party only for breaches of the contract, could constitute an UCT.  

If a term is declared an UCT, and is used again, the term will be void and the business may be liable for a penalty of up to $600,000.

Businesses also need to weigh up the resulting reputation damage amongst its customers and stakeholders that could result from a Commerce Commission investigation or proceedings. As such, in reviewing these contracts, businesses will likely need to make judgement calls on whether to retain terms that could be deemed UCTs, even if these terms offer commercial benefits.

When assessing and making changes to your B2B Contracts, there are some practical tips to consider which will help streamline the process and ensure the adjustments are effective:

  • Terms should always be assessed against the UCT requirements.  
  • Terms should be written in “plain English” and presented clearly to all parties.
  • Ensure that terms apply equally to the parties, where possible.
  • If a term is required but there is a significant risk that it may be considered unfair, the term should be drafted separately from the other terms of the contract.

Making the necessary changes may seem time consuming, and for some businesses overwhelming. However, it is essential and will ultimately benefit businesses and how they operate.

Haigh Lyon can provide advice on reviewing business contracts, terms of trade, and business practices to ensure compliance with the new requirements by the August 16, 2022 deadline. Contact Raj Gurusinghe on or 09 306 0629. 

To mandate or not to mandate vaccinations

Three key issues when considering Covid-19 workplace vaccine mandates

With the Government’s push for all eligible New Zealanders to be vaccinated against Covid-19, employers are understandably grappling with the question of what responsibility they have to encourage or require Covid-19 vaccination in their employees.

There has been considerable legal and media attention on whether employers can mandate Covid-19 vaccinations for existing staff or have vaccination (or vaccine willingness) as a prerequisite for new employees.

The Government has issued an order that legally obliges certain workers to be vaccinated. Although the lawfulness of that order has been challenged, so far, the courts have confirmed its legality. There can be little doubt that, as matters stand, if an employee is in a role covered by the order then they must be vaccinated in order to do their job.

What is currently more tricky for employers to deal with is what this means for employees not covered by the order.     

There are three key issues not being widely discussed which are important in determining the appropriateness of employer-imposed vaccine mandates:

  • The central importance of the efficacy of Covid-19 vaccines in preventing transmission of the virus
  • The relevance of the Government’s vaccine order to an employer’s Covid-19 risk assessment
  • The potential scope of a discrimination claim on the basis of vaccine status

Each of these are addressed below.

Prevention of transmission

Employers must keep in mind what the purpose of the vaccine is in terms of preventing the risk of Covid-19 in the workplace. This boils down to the prevention of transmission of Covid-19. The other known benefit of the vaccine is the reduction in the seriousness of symptoms for the individual who contracts the virus. However, it is the ability of the vaccine to reduce the transmission of the virus between workers that should be an employer’s primary focus when considering a vaccine mandate.

In short, if the vaccine does not materially reduce the transmissibility of Covid-19 in the vaccinated, then it will be difficult to justify a mandate as a health and safety measure.

Given its significance to any potential vaccine mandate, this point will need to be an essential consideration of any risk assessment an employer undertakes. Accordingly, the author of any such risk assessment report will need the relevant scientific expertise to provide an employer with an up-to-date assessment of the effectiveness of the vaccine in reducing transmission.

In the recent High Court judgment of GF v Minister of Covid-19 Response the Government position was that there is growing scientific evidence and consensus that the vaccine is effective in reducing the rate of transmission of Covid-19. This was the position that was essentially adopted by the Court. However, this evidence appears to have been uncontested by the applicant, so caution is warranted before relying on this judgment to support the position that the vaccine substantially reduces transmission of the virus.

By contrast, for example, the Centre of Disease Control in the United States has recently published two studies showing significant outbreaks of the Delta variant in highly vaccinated populations[1], indicating that the vaccines do not significantly reduce transmission of the virus.

The other point to make in this respect is that if it is correct that the vaccine substantially reduces (or even eliminates) transmission, then this is potentially reason in itself not to mandate the vaccine – particularly if an employer’s workforce is largely vaccinated. In other words, if the vaccine prevents transmission then the vaccinated are effectively protected against any unvaccinated co-workers. That is to say, an unvaccinated employee does not present a material risk of infection to the vaccinated.

While we are not experts on whether the vaccine sufficiently reduces transmission of Covid-19, the important takeaway is that this issue must be a key focus for any consideration of an employer-imposed vaccine mandate. An employer must make an assessment of the risks based on credible and reliable information. 

Relevance of Government’s mandate and Covid-19 to employer risk assessments

The Government’s vaccine mandate is an unprecedented step in constraining the scope of the otherwise private employment relationship. Clearly this order is of significant importance to employers who employ workers in roles that are captured by the order. However, the order is also key for employers unaffected directly by the order, but who are considering imposing a vaccine mandate.

The reason the order has a broader significance is because it effectively represents the Government’s considered view as to where the line is to be drawn in terms of those jobs which represent a significant risk of transmission of Covid-19. This fact is stated explicitly in the purpose of the vaccination order which reads: ‘the purpose of this order is to prevent, and limit the risk of, the outbreak or spread of COVID-19 by requiring certain work to be carried out by affected persons who are vaccinated.’

Put simply, an employee faced with a vaccine mandate by their employer might quite justifiably turn around and say: “If my job really does carry a significant risk of transmission of Covid-19, then wouldn’t the Government have included it within the order?” This is not to say an employer is precluded from introducing a mandate outside of the order. However, while New Zealand’s borders remain more or less closed, and the order is in place, any employer proposing the imposition of a mandate should be prepared to justify why a job not covered by the order (and therefore outside of the Government’s defined areas of particular risk) requires a vaccinated worker to fill it.  

Vaccine mandate and the scope of discrimination

The most significant risk an employer faces in requiring vaccination (or vaccine willingness) for new employees, is that in doing so they may be unlawfully discriminating against potential employees who are not or unwilling to be vaccinated.

Determining whether or not unlawful discrimination has occurred is a two-step process. First the discrimination must be identified. Discrimination occurs where there is different treatment on a prohibited ground between persons or groups in comparable circumstances. This different treatment must also lead to material disadvantage (exclusion from consideration for employment would be considered a material disadvantage). The second step is establishing that the discrimination in question was not justified in the circumstances.

The Human Rights Act sets out a number of prohibited grounds of discrimination. The list is exhaustive, so any treatment questioned, needs to come within one of the defined categories. Of potential relevance to requiring new employees to be vaccinated are the prohibited discrimination grounds of pregnancy, disability (which covers existing physical or mental conditions, illnesses or impairments and the presence of certain organisms capable of causing illness) and religious beliefs.

Much of the discussion we have seen concerning the risk of unlawful discrimination has focussed on the possibility that, for example, a prospective employee may not be vaccinated for a particular medical reason, such as a previous adverse reaction. However, there has been comparatively little discussion of whether treating prospective employees differently based on their vaccine status might also fall within a prohibited ground of discrimination.

While the definition of ‘disability’ in the Human Rights Act is wide, vaccination status does not obviously fit within one of the definitions of disability. However, a court adopting a purposive approach to interpretation could accord a generous scope to the definition of disability. It must be remembered that the Human Rights Act was designed, at least in part, to give effect to New Zealand’s international obligations, for example as a signatory to the International Covenant on Civil & Political Rights (ICCPR). It is from the ICCPR that that right to be free from discrimination derives, and the right as it is set out in the Covenant protects against discrimination on the basis of any status. In short, if challenged, it is open to the Human Rights Review Tribunal, or other court, to conclude that discrimination because of vaccination status alone amounts to differential treatment on the basis of a prohibited ground of discrimination.

In conclusion, for discrimination to be unlawful, the differential treatment must also be an unjustified limitation on the right to be free from discrimination. Consideration of this issue is likely to circle back on the two matters we have discussed above – the efficacy of the vaccine in preventing transmission of the virus, and the fact the Government’s vaccine order would appear at present to have demarcated the line of acceptable risk in terms of the spread of Covid-19 amongst workers.

Covid has thrown up many complicated issues and when it comes to vaccinations in the workplace, it is by no means a straightforward legal or factual analysis. We recommend employers seek tailored legal advice before considering a vaccine mandate.

Haigh Lyon can advise employers about their rights, responsibilities, and issues when considering mandating vaccinations for employees.
Contact Ben Molloy on 09 306 0605 or