Hi there,

Moving to level 3 will give you an opportunity to review the abatement for next month (unless you have already agreed this in writing? – check what you have agreed, if anything).

At level 3, the interpretation for clause 27.5 will focus around the extent to which a tenant can “fully” conduct business from the premises. If they can fully operate, but choose not to, I would argue that there is no (or very limited) abatement.

It will depend on the individual circumstances and to the extent the tenant can “fully conduct” their business. It sounds like they can conduct 2/3rds of the business during level 3 (which might only be 2 weeks) – so could a 2/3rds reduction for this 2 week period be a compromise?

You should also consider the long-term implications of the decision: what will be the long-term impact of a refusal to allow a meaningful rent abatement?

– Does it mean that you will have to go to arbitration to determine what a fair and reasonable amount is? The cost of arbitration is likely to outweigh a short term rental abatement.

– Does it mean that the tenant might default on the lease? The costs of pursuing the defaulting tenant and guarantors is likely to outweigh a short term week rent abatement. Sounds like this is unlikely if they are a big outfit.

Hope that helps, but happy to chat on 021 705 914.

Phil