Lock­outs: What you need to know


Fol­low­ing the Novem­ber 14 earth­quake, some busi­nesses still don’t have ac­cess to their premises. This may be to en­able fur­ther en­gi­neer­ing as­sess­ments, earth­quake re­pairs to be com­pleted or for build­ings to be de­mol­ished. Even if premises can­not be used, busi­nesses will still have to pay rent, wages and other op­er­a­tional costs. How should busi­ness own­ers re­spond?

Check the lease. The lease is the key doc­u­ment that sets out your rights and re­spon­si­bil­i­ties.

Seek ad­vice on the mean­ing of the lease. Leases are in­ter­preted with re­gard to their com­mer­cial pur­pose and the in­ten­tion of the parties. ’’Black’’ can mean ‘‘white’’ and ‘‘white’’ can mean ‘‘black’’ if that is what the parties to the lease in­tended.

Check whether the lease al­lows for any rent re­duc­tions.

Check whether the Prop­erty Law Act al­lows for any rent re­duc­tions.

If pay­ment of rent is a prob­lem, ne­go­ti­ate a so­lu­tion with your land­lord.


The busi­ness owner may have cover un­der poli­cies of in­sur­ance but this cover may not pro­vide full in­dem­nity for a busi­ness owner’s losses. Busi­ness own­ers should:

Check to see whether they have cover for - Ma­te­rial dam­age; and Busi­ness in­ter­rup­tion.

Ask your in­surer to pro­vide you with copies of the pol­icy word­ing and sched­ule.

Check how much ex­cess is payable. This is the amount that you have to pay be­fore in­sur­ance cover kicks in. It may be as high as 10 %.

Seek ad­vice as to the ex­tent of your cover, the amount of your ex­cess and the mea­sure of com­pen­sa­tion un­der the pol­icy.

Seek as­sis­tance in deal­ing with your in­surer.

Note that even if there is cover for busi­ness in­ter­rup­tion, losses may not be cov­ered if there has been no phys­i­cal dam­age to the prop­erty or the earth­quakes are not an op­er­a­tive cause of your loss, e.g. neigh­bour­ing prop­er­ties have been dam­aged but your prop­erty has suf­fered no dam­age.


Due to busi­ness losses, busi­nesses may need to make some staff re­dun­dant. Em­ploy­ers will need to com­ply with both the re­quire­ments of the Em­ploy­ment Re­la­tions Act and pro­vi­sions in em­ploy­ment con­tracts. Busi­nesses should:

Keep staff in­formed of (1) the safety of the place of work, (2) tran­si­tional ar­range­ments for work and (3) whether and when re­dun­dan­cies are likely to oc­cur.

Note that the duty of good faith re­quires em­ploy­ers and em­ploy­ees to be ac­tive and con­struc­tive in main­tain­ing a pro­duc­tive em­ploy­ment re­la­tion­ship.

Note that both busi­ness own­ers and land­lords have du­ties un­der the Health and Safety at Work Act. TheHSWA re­quires busi­ness own­ers and land­lords to work to­gether to dis­charge their du­ties and to keep their work­ers in­formed of any health and safety risks.

Seek ad­vice on how to man­age staffing is­sues and health and safety risks.

Jamie Nunns is a part­ner in Mor­ri­son Kent Lawyers’s prop­erty law team and John God­dard an As­so­ciate in their lit­i­ga­tion and dis­pute res­o­lu­tion team. Mor­ri­son Kent has ex­per­tise in com­mer­cial leases, in­sur­ance and em­ploy­ment law. The in­for­ma­tion in this ar­ti­cle is gen­eral in na­ture. If busi­ness own­ers re­quire le­gal as­sis­tance, we would wel­come any in­quiries.

Some earth­quake vic­tims had to quickly move out of dam­aged build­ings.

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