Covid-19 Update

With the impact of NSW Gov­ern­ment restric­tions on move­ment and busi­ness clo­sures con­tin­u­ing to evolve due to the spread of Covid-19, we have set up a por­tal for busi­ness own­ers to be able to get the lat­est guid­ance on legal issues that will arise over the com­ing weeks. 

BUSI­NESS CON­TRACTS

Force Majeure

Busi­ness con­tracts may include a force majeure clause that cov­ers events out­side the con­trol of the par­ties, and which may enti­tle the par­ties to delay, sus­pend or ter­mi­nate the con­tract. There is no stan­dard word­ing for a force majeure clause. Not all con­tracts include such a clause, nor do all force majeure claus­es include Covid-19 cir­cum­stances. The spe­cif­ic terms of any force majeure clause will need to be con­sid­ered to deter­mine whether Covid-19 cir­cum­stances such as pan­dem­ic, bor­der clo­sures or Gov­ern­ment orders are includ­ed and may be relied on.

Frus­tra­tion

If there is no force majeure clause or oth­er pro­vi­sion but a con­tract has been affect­ed by the pan­dem­ic, it may be a frus­trat­ed con­tract. A frus­trat­ed con­tract occurs when an event out­side the con­trol of the par­ties has arisen which results in the con­trac­tu­al oblig­a­tions being impos­si­ble to per­form. How­ev­er, delay in the abil­i­ty to per­form your oblig­a­tions under a con­tract will not amount to frus­tra­tion unless the delay rad­i­cal­ly alters per­for­mance of the contract. 

Risks

There are sig­nif­i­cant risks in rely­ing on force majeure or frus­tra­tion in ter­mi­nat­ing a con­tract. Each case will depend on the terms of the con­tract and the spe­cif­ic cir­cum­stances. You should con­sid­er whether con­tracts may be rene­go­ti­at­ed and seek advice before tak­ing any steps to ter­mi­nate a contract. 

LAND­LORDS & TENANTS 

Busi­ness

The State Gov­ern­ment has intro­duced new reg­u­la­tions deal­ing with busi­ness land­lords and tenants.

Briefly, a land­lord can­not enforce cer­tain rights under their premis­es lease between 13 July and 20 August 2021 for non pay­ment of mon­eys due under the lease or for not open­ing for busi­ness. The pre­scribed action that can­not be tak­en by a land­lord includes charg­ing inter­est, claim­ing on any lease secu­ri­ty or evict­ing a tenant.

The reg­u­la­tions apply to retail and cer­tain com­mer­cial leas­es of which ten­ants can sub­stan­ti­ate they are enti­tled to a gov­ern­ment sup­port Grant and their turnover in 2021 finan­cial year was less than $50m. There is no pro­tec­tion for ten­ants as regards deferred or waived rent dur­ing this peri­od. It would appear that rent (and oth­er charges) unpaid, will sim­ply be deferred until after 20 August 2021. Land­lords may still enforce rights for grounds that arose before 13 July 2021 eg remov­ing a ten­ant fol­low­ing expiry of the lease term or ter­mi­nat­ing for dam­ag­ing the premises. 

Res­i­den­tial

The State Gov­ern­ment has intro­duced a 60 day freeze on evic­tions for res­i­den­tial ten­ants. This oper­ates from 14 July to 11 Sep­tem­ber 2021.

Ten­ants are encour­aged to pay as much of their rent as they can afford dur­ing this peri­od as once the freeze ends, the land­lord will be enti­tled to claim any unpaid rental dur­ing the freeze peri­od. Ten­ants seek­ing to be eli­gi­ble for pro­tec­tion against evic­tion need to show they have been impact­ed by the Covid-19 lock down and have at least a 25% reduc­tion in that income. Ten­ants must con­tin­ue to pay at least 25% of the rent payable. Land­lords and ten­ants are encour­aged to work togeth­er dur­ing this freeze peri­od and come up with work­able arrange­ments for repay­ment of arrears fol­low­ing the freeze peri­od with­out the need to com­mence evic­tion proceedings. 

Land­lords can claim up to $1500 under a sup­port grant. Alter­na­tive­ly, the land­lord can claim the Covid-19 land tax ben­e­fit (but not both sup­port measures). 

CON­STRUC­TION INDUS­TRY — 2 WEEK SHUT DOWN 

As a result of the amend­ed Pub­lic Health (Covid-19 Tem­po­rary Move­ment and Gath­er­ing Restric­tions) Order 2021 (the Orders), the NSW Gov­ern­ment has ordered a halt to all Con­struc­tion works, both res­i­den­tial and com­mer­cial, save for the fol­low­ing exemp­tions as pro­vid­ed under clause 24AB of the Orders: 

1. any works rel­a­tive to the safe­ty or secu­ri­ty of the Con­struc­tion Site; 
2. any works to deal with envi­ron­men­tal risks;
3. any works to main­tain and ensure the integri­ty of crit­i­cal plant, equip­ment or assets, includ­ing par­tial­ly com­plet­ed works, that would oth­er­wise deteriorate;
4. any works to receive deliv­er­ies of sup­plies that would oth­er­wise deteriorate;
5. any works to main­tain pub­lic utilities;
6. any works ensure the safe oper­a­tion of exist­ing trans­port infrastructure;
7. any works by or on behalf of NSW Health in response to the Covid-19 pan­dem­ic; and
8. any works because of an emergency.

If you are per­form­ing works on a ​‘con­struc­tion site’ and they do not fall with­in the above exemp­tions, you should not be per­form­ing the works.

If you are con­sid­er­ing whether the works you need to per­form are ​‘emer­gency works’, you should ask your­self: Do these works need to be per­formed now or can they wait 2 weeks? If your answer is yes, you should not be per­form­ing the works unless they fall under any of the oth­er ​‘exemp­tions’.

If you have a project timetable or works pro­gram to adhere to, that rea­son alone is not a rea­son for those works to be con­sid­ered ​‘emer­gency’ works under the Orders.

Man­ag­ing the Delay under the Contract

If you are a head con­trac­tor or sub-con­trac­tor, you should review your con­tracts and con­sid­er the pro­vi­sions relat­ing to exten­sions of time, delay, leg­isla­tive pro­vi­sions, sus­pen­sion, Covid-19 and vari­a­tions. While each con­tract rests on its own mer­its, the con­tract pro­vi­sions will assist you in deter­min­ing that next step and ensure that you are aware of your rights and oblig­a­tions dur­ing these dif­fi­cult times.

If you are a home­own­er and are unsure of what the above means, check your con­tract and talk to your contractor.

We note that it impor­tant that through this time peri­od you keep up com­mu­ni­ca­tion with the par­ties to the con­struc­tion con­tract or agree­ment to ensure that every­body is aware of their rights and obligations.

Please keep an eye out for fur­ther updates as they become available.

EMPLOY­ERS & WORK­ERS

Effec­tive 18 July 2021, the New South Wales Gov­ern­ment has tight­ened stay at home orders in place across the Greater Syd­ney area (includ­ing the Blue Moun­tains, Cen­tral Coast, Wol­lon­gong and Shell­har­bour). View restric­tions here.

Manda­to­ry work­place Covid-19 vac­ci­na­tions, Michael Byrnes dis­cuss­es the issue with Brooke Corte on the Mon­ey News pro­gram on 2GB, 3AW and 4BC on 5 July 2021. Click to lis­ten to the pod­cast click here.

We under­stand that many of you are strug­gling at the moment and are mind­ful of the legal chal­lenges you are fac­ing. If you have any legal ques­tions or issues that require assis­tance please com­plete the form below and we will respond to your enquiry as a mat­ter of urgency.

Our lawyers and part­ners are avail­able to talk to you at any time.