Another approach for tenants – could there be an implied term?

April 15, 2020

Uncategorized

A UK colleague has suggested another line of argument for the COVID-19 issue that has not received a lot of airtime in Australia – at least, not that I have seen, stuck here in my living room!

The author argues that there may be a judge or two willing, when faced with the right lease in the right circumstances, to imply a term into a lease that addresses a tenant’s liability to pay rent during COVID-19 closures.

The argument is based on UK caselaw referring to the ‘officious bystander’.  The argument is summarised eloquently by Nathaniel Duckworth of Falcon Chambers in London in his article here: https://www.falcon-chambers.com/publications/articles/does-a-tenant-really-have-to-go-on-paying-rent-during-lockdown-perhaps-we-s

To my eyes and ears, the argument seems to be similar to the implication of terms on the basis that the term is ‘so obvious it goes without saying’, which finds its way into Australian contract law.

As the author rightly suggests, the argument is a difficult one, particularly as there is no obvious consensus about how the parties would have dealt with rent in a COVID-19 shutdown had its possibility been raised by the officious bystander at the time they entered the bargain.

However, perhaps the author’s most valuable insight, which is equally relevant to Australian readers as it is to those in the UK, is this:

We should also keep in mind that a landlord with a property portfolio of any size will not want to end up at trial on this issue.  Even if the risk of losing is perceived to be small, the knock-on effect of an adverse result, incurred in public proceedings, will in many cases be unthinkable for a landlord of any substance.  Even with a merely arguable case, a brave tenant may yet find there are deals out there to be had.

Given that the new Code is promising relief to the small to medium sized tenants, it will be interesting to see whether any of our larger tenants have the lease, the circumstances, the resources and the will to press this line of argument!

About Sam Hopper

Sam is a property and insolvency barrister.

View all posts by Sam Hopper

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