When quiet enjoyment means just that

Author: Julian Pollock, Partner, Real Estate, London

Earlier this year, the courts decided that, even if there is an express right to carry out works in a lease, a landlord cannot ride a coach and horses through a quiet enjoyment covenant or the obligation not to derogate from grant.  They must take all reasonable steps to minimise disturbance to their tenants, including:

• notifying the tenant as part of lease negotiations of any intended works;
• keeping the tenant notified of the programme of works, how long they will last and, how disturbance is proposed to be minimised;
• ensuring that all practical measures are implemented by the contractor and project manager; and
• bearing in mind that a higher standard of reasonableness may be required where the landlord is carrying out works for its own benefit.

In Timothy Taylor Limited v Mayfair House Corporation and another [2016] EWHC 1075 (Ch) the lease, of a high class art gallery in Mayfair let on a substantial rent, contained an express landlord's quiet enjoyment covenant but also reserved an express right for the landlord to alter and rebuild the building even if the premises or their use and enjoyment were materially affected.  It also reserved the right to erect scaffolding temporarily provided that this did not materially adversely restrict access to or the use and enjoyment of the premises.

After the lease was granted the landlord carried out major works to rebuild the interior of the building from the first floor upwards and erected scaffolding which surrounded the whole building and obscured the premises. The tenant claimed that the landlord had not taken all reasonable steps to minimise disturbance and was in breach of the quiet enjoyment covenant.  It sought damages in respect of the breaches to date and an injunction in relation to future works.

The Court held that the landlord was entitled to carry out the works in question, but that it had to take all reasonable steps to minimise disturbance to the tenant.  When considering what works can reasonably be carried out, the Court said that the following factors were relevant:

• whether the landlord had made any offer of compensation for the disturbance caused;
• who was to have the benefit of the works – the landlord personally or all of the tenants in the building; and
• what knowledge or notice the tenant had of the works at the start of the lease.

In this case, the tenant was awarded damages for breach of its quiet enjoyment and derogation of grant which were assessed at 20% of the rent payable from the date the scaffolding was erected until judgement.  In terms of future development the Court did not grant an injunction nor order the scaffolding to be dismantled, but it ordered damages in lieu also assessed at 20% of the rent payable from judgement to the date of completion of the works.

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