Is the current pandemic an event which will allow me to argue that the lease has been ‘frustrated’?
This is unlikely. Frustration is a doctrine rarely used as a way of getting out of leases. It operates to bring a lease to an early end because of the effect of a supervening event. It is then not a concept readily applicable to a situation where one party is looking to get out of a lease. To be able to argue the doctrine of frustration, you must be able to demonstrate that something unforeseeable has happened that makes it impossible to fulfil the lease and unjust to hold a party to its obligations.
This is not something that can be demonstrated easily.
There was a case in the High Court last year when the doctrine of frustration was looked at in a case involving the European Medical Agency.
The court found that Brexit did not frustrate EMA’s lease. EMA was granted leave to appeal that decision to the Court of Appeal, but unfortunately, the parties settled out of court so the arguments were not tested in the higher court.
Another reason why frustration is likely to fail is an argument that, whilst the current lockdown may force closures to businesses and whilst such closures maybe for a lengthy period, such closures will only be temporary.
Related FAQs
Some examples of the key questions to ask include:
- Is there still a viable underlying business that is likely to continue beyond the current crisis?
- What does the revised short to medium cash flow look like and will the company continue to be able to pay its liabilities?
- Does the company have the support of all of its stakeholders – lenders, shareholders, customers, suppliers and banks – even though the business might be in breach of its own obligations?
- What measures could (and should) the board put in place to protect creditors, including making sure that exposure to creditors (both collectively and individually) is not increased, assets are not sold at less than value and no creditor is treated more favourably than another?
- Is there still a reasonable prospect of the business avoiding liquidation or administration?
The key question is always whether accepting the money is in the best interests of creditors as a whole bearing in mind that accepting Government support and continuing to trade might increase the company’s overall liabilities. Directors should be mindful that if the business fails, their decisions during this critical time may be scrutinised and it is therefore important that directors have up-to-date financial information and projections to form the basis of any decisions, take stock, get the right advice and document the decisions that are taken.
Where an apprentice is made redundant the training provider should support the apprentice in seeking alternative employment within a 12 week period. ESFA will support this process. Where an apprentice is placed on unpaid leave or the nature of their employment no longer supports their apprenticeship, it should be considered whether a break in learning would be appropriate.
An employer who wishes to make an apprentice redundant should seek advice on the process to be followed for this.
Employers will need to be flexible with employees who are unable to return to work at present due to childcare difficulties. While schools have reopened, a period of isolation may result in employees having to keep children off school/nursery and therefore have childcare issues. Some employees will be able to manage this with their partner and extended family, whereas others will not. Where an employee simply cannot make any other arrangements to care for their children in the short term then they will be unable to return to work until that situation changes. Any dismissals on the basis that someone is unable to return to work as a result of lack of childcare are likely to be unfair, at least in the short term where such employees may well be able to demonstrate that they had no options available to them.
We have developed a Toolkit to help with these issues. The Toolkit contains:
- LO1 How to Guide: Lay off and short time working
- LO2 Letter directing employee to take annual leave
- LO3 Letter confirming lay off (contractual right)
- LO4 Letter confirming short time working (contractual right)
- LO5 Letter proposing lay off (no contractual right)
- LO6 Letter proposing short time working (no contractual right)
- LO7 Counter notice disputing entitlement to claim redundancy payment
- LO8 Script for announcing lay off or short time working (contractual right)
- LO9 Script for announcing lay off or short time working (no contractual right)
- LO10 Letter proposing reduction in working hours and pay
The cost of this Toolkit is £500 plus vat. If you would like to find out more about the Toolkit, please speak to your usual Ward Hadaway employment contact, or get in touch one of the contacts at the bottom of this page.
The golden thread requirements will be retrospective, so will apply to existing buildings as well as new build. This is part of the reason for the Building Safety Regulator’s ‘get to know your building’ guidance referred to in the talk, with the link in the Powerpoint presentation. While the details of the golden thread requirement are still to be confirmed, now is a good time to start to gather as much information as can be obtained about existing buildings as possible in preparation. The Government guidance anticipates that the Principal Accountable Person will be responsible for developing and coordinating the golden thread for existing buildings.