Is a no access to a leased premise due to COVID-19 a breach of quiet enjoyment?

As a result of lockdown measures taken by the New Zealand government to curtail the effects of COVID-19, many tenants have been barred from accessing their leased premises. The question has been raised as to whether or not non-accessibility to their premises constitutes a breach of the covenant of quiet enjoyment and whether or not this will result in the tenant’s right to cease rent payments.

What is quiet enjoyment?

Quiet Enjoyment is a covenant that is either an express or implied term in all commercial or residential leases. The covenant of quiet enjoyment is the lessor’s obligation to provide uninterrupted enjoyment of the premises that they have leased to the lessee. This means that any act by the lessor, whether a rightful or wrongful act, that substantially interferes with the lessee’s ability to use the premises in a normal lawful way, will be a breach of the covenant of quiet enjoyment. The act or omission that causes the interference must be done by the lessee or someone acting on behalf of the lessee.

Common examples of a breach of quiet enjoyment are:

• Removing or disconnecting services. E.g. water, gas, electricity.
• Removing windows or doors to the premises.
• Erecting scaffolding for repair works.
• Failing to repair damage or maintain the property.

Remedy:

The remedy available for a breach of quiet enjoyment is damages. The measure of damages will depend on the lease agreement but it will be measured to compensate the lessee for what they have lost. Damages may also be awarded for disruption to business, relocation costs, loss of goodwill or reputation, and other losses that may result if the lease is terminated. Exemplary damages may be awarded to punish the lessor but only in very exceptional circumstances.

Is lack of access due to COVID-19 a breach of quiet enjoyment?

Relying on the covenant of quiet enjoyment as a reason to claim for a reduction in rent and outgoings is problematic.  Although a lack of access to the premises is interrupting the lessee’s ability to use the premises as normal, for there to be a breach of the covenant of quiet enjoyment, the act or omission that causes the interference must have been caused by the lessor’s action or by persons acting on behalf of the lessor.  The lockdown measures are government mandated and are therefore not an act by the lessor (or persons under the lessor’s control) that is stopping a lessee from having the quiet enjoyment of their premises.  This means that because there is no act or omission by the lessor (or persons under the lessor’s control) that is interfering with a lessee’s right to use the premises as normal, there is no breach of the covenant of quiet enjoyment as a result of the government COVID-19 lockdown measures.