Almost every commercial tenant has a right to quiet enjoyment of their property. But what happens where the landlord interferes with this right? We look at the right to quiet enjoyment, and an example from last year.

Right to quiet enjoyment

Landlords are under an implied obligation to give the tenant quiet enjoyment of the property. This basically means that the landlord must not interfere (or allow anyone else to interfere) with the tenant’s enjoyment of the property. To ensure clarity, however, most leases include a specific covenant to quiet enjoyment of the property.

Lawful acts

Quiet enjoyment covenants usually refer to the tenant having quiet enjoyment “without any lawful interruption” by the landlord. This means that the landlord will not be liable for lawful acts. For example, if it carries out an inspection pursuant to the terms of the lease, or it carries out its repairing obligations.

The landlord will, however, be liable for unlawful acts. These would include trespassing on to the tenant’s property, or withdrawing services that the landlord is obliged to provide. In most cases, the landlord will not be liable for activities conducted outside of the property. However, this was not the case in Timothy Taylor Ltd v Mayfair House Corporation and another [2016].

Facts

Timothy Taylor Limited (“TT”) was the tenant of the ground floor and basement of a property. TT used the premises as a gallery displaying modern art. Mayfair House Corporation (“MHC”) was TT’s landlord.

The lease reserved an express right for the landlord to alter or rebuild the property, even if it materially affected the tenant’s right to quiet enjoyment.  The lease also gave the landlord the right to erect scaffolding all around the building. However, the erection of the scaffolding was not to adversely affect the use and quiet enjoyment of the tenant’s premises.

In 2013, the landlord began carrying out works to the rest of the building, doing up a number of apartments to rent out.

Nuisance

TT complained about these works, saying that they interfered with its right to quiet enjoyment. It alleged that the works were carried out in an unreasonable manner and were noisy. TT also found out that MHC had paid £50,000 compensation to a neighbouring tenant for the disturbance, and asked that MHC pays it the same amount. MHC refused.

TT applied to court for an injunction and damages. The judge was asked to decide, and had to balance up the conflicting rights of both the landlord and the tenant: MHC had the right to build and erect scaffolding; whilst TT had the right to the quiet enjoyment of the property.

Decision

The judge held that while MHC had the right to carry out the works, it had to ensure that it took all reasonable steps to minimise the disruption to TT. The judge held that MHC had not done this and was therefore in breach of the lease in respect of the tenant’s right to quiet enjoyment of the property. Further, the judge held that MHC should have discussed the building works with TT before starting, so that they could agree a strategy to minimise the disruption. MHC did not do this.

The court did not allow an injunction given that works had been ongoing for two years. However, the court did award damages for the landlord’s breach of covenant. This was awarded as a 20% reduction in rent.

What does this mean?

This case gives commercial landlords plenty to think about. As a start, a right to build in a lease does not allow a landlord to ignore a tenant’s rights. Also, a landlord who doesn’t consult his tenant or offer any form of compensation is likely to struggle to persuade a court that it has acted reasonably.

For tenants negotiating leases with similar terms, it may be worth considering adding a requirement that the landlord must consult the tenant before carrying out any work; or that the landlord must use its best endeavours to minimise disturbance to the tenant.

If you would like advice on your lease, or are concerned about a breach of quiet enjoyment (whether as a landlord or a tenant), our property disputes team can help. Call us today for a transparent cost estimate on 0800 988 7756.