Balancing a Tenant's right to quiet enjoyment with a Landlord's right to carry out repairs

1st August 2016 Commercial

The recent case of Timothy Taylor Ltd v Mayfair House Corporation [2016] highlights that a Landlord should always bear in mind its obligation to provide the Tenant with 'quiet enjoyment' over its Property, and must use all reasonable precautions to minimise disturbance when carrying out works or repairs. The High Court held that the Landlord was acting unreasonably and was in breach of its covenant to ensure quiet enjoyment. The decision contrasts to the 2003 decision in Lechouritis v Goldmile Properties and highlights some key points that a Landlord should consider when carrying out works on a Property.

A Landlord is under an implied obligation (although it is usually expressly provided for within the lease) to refrain from interfering with the Tenant's title to or possession of the Property i.e a Landlord must allow the Tenant to have 'quiet enjoyment'.

The Tenant in Timothy Taylor Ltd operated a high class art gallery from the ground and basement floors of a five storey building. The lease reserved an express right for the Landlord to alter or rebuild the building even if the premises or their use or enjoyment were materially affected. It also gave the Landlord the right to erect scaffolding temporarily as long as it did not restrict access to, or the use and enjoyment of, the premises.

The lease further required the Landlord to "permit the Tenant peaceably and quietly to hold and enjoy the Premises without any interruption or disturbance from or by the Landlord". The Tenant claimed that the works (to rebuild the interior of the building from the first floor upwards) substantially interfered with its right as high levels of noise occurred on a daily basis and staff were absent due to illness caused by the noise. The Tenant further claimed that the art gallery was almost invisible due to the scaffolding outside the building. The Tenant claimed that the Landlord had told him beforehand that the scaffolding would have a tower structure at ground level to ensure that the gallery could be seen by pedestrians.

The High Court considered the following factors:

  1. Did the Tenant have knowledge or receive notice of the intended works? The Tenant was told that the Landlord had a general intention only.
  2. Was any offer of compensation made to the Tenant? No rental discount had been offered and the Landlord had dismissed the Tenant's proposal to meet to discuss compensation. Although the Landlord was not obliged to offer the Tenant a discount, an outright refusal was not considered reasonable.
  3. Were the works carried out for the benefit of all the Tenants in the building or merely for the personal benefit of the Landlord? The works were entirely for the Landlord's own purposes as they were being made to create new apartments to let. Furthermore, the court found that there was no evidence that the Landlord had asked the scaffolding company to consider the "tower" design.

The Tenant was entitled to damages at 20% of the rent payable under the lease from the date the scaffolding was erected until the date of judgement.

In the opposing case of Lechouritis the court held that the Landlord had acted reasonably when erecting scaffolding and sheeting to the outside of the restaurant in question, as the Landlord had delayed starting the works until after the Christmas period the Tenant's busiest time. The repairing covenant in this case was included in the lease for the Tenant's as well as the Landlord's benefit.

Although a covenant for quiet enjoyment is not a guarantee against all disturbance, this recent case clearly demonstrates that the Landlord must consider the Tenant's implied right from the offset, regardless of its right to carry out works and repairs.

To discuss this or a similar real estate commercial issue please do not hesitate to contact our team.

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Katie Powell is a Solicitor located in Manchesterin our Commercial Litigation department

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