ADLS commercial lease, these provisions provided a welcome ability to seek relief and reduce outgoings over Level 4 and 3 Lockdown periods. However, not every commercial tenant has this lease in place and, even where they do, questions around access and establishing what a fair proportion of the rent and outgoings are have presented their own issues.
The Scheme
On 30 July 2020, the Government announced its intention to address these issues through a non-legislative scheme which would provide a subsidised arbitration and mediation service (the Scheme) to eligible parties with a qualifying dispute. Participation in the Scheme is entirely voluntary, even for parties to ADLS leases which include clause 27.5. Parties must agree to enter into these processes in order to access the Scheme.
The Ministry of Justice contracted three dispute resolution suppliers to provide the services under the Scheme, including NZDRC. There are differences in the processes and services provided by the three suppliers, including that NZDRC is currently the only supplier offering fully subsidised/funded arbitration under the Scheme for all cases (under the Scheme, suppliers are entitled to charge eligible parties an additional $2,000.00 over and above the government subsidy for arbitration – the fee for mediation is fixed).
Accessing the Scheme
Parties to a dispute will be eligible to access the Scheme if:
1. the dispute is a Qualifying Dispute;
2. at least one of the parties to the Qualifying Dispute meets the eligibility criteria; and
3. the applicants have not previously accessed subsidised mediation or arbitration services with a supplier contracted to the Ministry of Justice in respect of the Qualifying Dispute in question.
A dispute is a Qualifying Dispute if:
1. it is about the payment of rent and outgoings where the lessee to the lease has experiences a material loss of revenue during the Lockdown Period because of government restrictions put in place to combat COVID-19; and
2. the payment of rent and outgoings during the relevant Lockdown Period has not been the subject of an arbitral award between the parties to the dispute.
A business will be an Eligible Party for the purposes of the Scheme if:
1. the business is New Zealand based; and
2. it has 20 or fewer full-time equivalent staff:
a. in the case of the lessee, per lease site; or
b. in the case of the lessor, in total.
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ReSolution | Dec 2020