At the outset we should say it is accepted that business occupiers will wish to play their part in combatting the spread of COVID-19. Whatever the strict legal position or contractual rights, most businesses will be alive to the reputational damage of being apparently uncooperative in that respect. But exclusion from premises causes very real problems for business operations, so it is worth exploring the legal position under a typical business lease. This article considers the law and practice of England & Wales but the principles are likely to be similar in all UK jurisdictions.
Instruction from Public Health England, Public Health Wales or other government department
Clearly, the tenant must comply with statutory obligations. So if the Landlord receives a direct instruction to close the building from a regulatory authority, that must be obeyed by the tenant in order to comply with the law as well as the lease.
Quiet enjoyment
All leases include an express or implied covenant by the landlord for ‘quiet enjoyment’ – that the tenant can occupy the property on the terms of the lease without interruption from the landlord. Building management regulations or other provisions in a lease might give the landlord rights temporarily to exclude the tenant from parts of the building for operational reasons, or to carry out works. However, total exclusion for more than a short time would almost certainly breach the covenant for quiet enjoyment unless the landlord could show there was no other course of action available to it.
Covenant to comply with statute
Leases invariably contain a tenant’s covenant to comply with statute and regulatory requirements. If a COVID-19 case is identified within the building, the most appropriate course of action is for the relevant tenant, or the landlord, to make direct contact with Public Health England/Wales and follow the specific requirements or guidance they issue. This could include restricting public access to the building, providing details of individuals present within the building, carrying out decontamination/deep cleaning, and perhaps the temporary closure of the building. Assuming the tenant has satisfied its own health and safety obligations, in the absence of a direction from a competent authority to evacuate the building, the tenant would not be in breach of any statute or regulations by continuing in occupation and therefore would not breach this covenant.
Nuisance
Leases also typically include a tenants covenant not to cause nuisance, and sometimes this is widened to include ‘annoyance’, to the landlord and other occupiers of the building/neighbouring property. Arguably, this could extend to exposing other tenants in the building, or neighbouring occupiers, to an increased COVID-19 risk. But in the absence of a requirement to evacuate from a government authority and, again, assuming that the tenant has taken necessary steps to comply with its own health and safety obligations, failure to evacuate the building seems unlikely to fall within the definition of ‘nuisance’. ‘Annoyance’ is a much more subjective term, which is why tenants typically resist its inclusion. Failure to evacuate when asked to do so by the landlord may well give an arguable case for a breach of such a covenant – depending on the level of health risk posed by the profile or activities of others using the building.
Consequences of statutory exclusion
If the tenant cannot access or use the premises it is unlikely any court would decide that the lease is frustrated by the statutory restrictions consequent on COVID-19. The rent will not be suspended as typically leases only provide for this in the case of damage to the premises or the means of access. We cannot recollect ever seeing an ordinary business lease with a force majeure or other provision that would anticipate the current situation. We are in uncharted waters.
Next steps/contact
If you are a landlord or managing agent of multi-let office buildings and are concerned over the implications for taking precautions against the spread of Covid-19, please contact Richard Clark.