Protection of a tenant’s rights to quiet enjoyment

Timothy Taylor Ltd v Mayfair House Corporation & Another [2016]

The background

The tenant occupied a premium property in Mayfair, London, within which it housed a high-class art gallery. Rent payable was over £500,000 per year. Under the lease, the landlord covenanted to allow the tenant to ‘peaceably and quietly enjoy the premises without any interruption or disturbance’. Rights were reserved in favour of the landlord to:

· temporarily erect scaffolding provided it did not materially adversely restrict access to or the use and enjoyment of the premises. The landlord was to use reasonable endeavours to minimise the time the scaffolding was in place;

· erect new buildings in such manner as the landlord saw fit, even if doing so obstructed, affected or interfered with the amenity of, or access to, the premises, and even if they materially affected the use and enjoyment of the premises.

The landlord commenced work to the upper floors of the building and, as part of the works, scaffolding was erected around the building. Although the tenant had seen plans for the scaffolding which showed the gallery as remaining visible and accessible, following its erection the scaffolding almost entirely hid the gallery from view. This, in addition to the noise of the works being undertaken, resulted in a claim from the tenant for damages in respect of a breach of its right to quiet enjoyment of the property. The tenant also requested an injunction that required the landlord to take down the scaffolding. By the time the claim reached the High Court, the scaffolding had been up for 19 months, with around 3 months’ worth of work left.

The law

On reviewing the lease provisions, the court needed to consider both the tenant’s right to quiet enjoyment alongside that of the landlord to erect scaffolding and carry out works. The court assessed, as part of its judgment, whether the landlord’s works were necessary to allow the landlord to comply with its repairing covenants under the lease, or whether the works were entirely for the landlord’s financial benefit.

The fact that the property was a high-end, expensive demise was also relevant to its decision; although not required to do so, the landlord had not made any offer to the tenant in terms of a rental discount or other consideration which could have contributed towards the reasonableness of the works and scaffolding being carried out.

The court held that the rights reserved in favour of the landlord under the lease entitled the landlord to carry out the works provided that it took steps to minimise any disturbance caused to the tenant. Relevant to its decision was the knowledge and notice of intended works, if any, that had been received by the tenant, particularly at the outset of the lease, and any offer of financial compensation made to lessen the impact of the landlord’s actions.

The decision

It was affirmed by the High Court that the landlord had been unreasonable in exercising its rights, both in terms of the erection of scaffolding which hid the tenant’s property from view and the noise of the works being undertaken, and had breached its covenant for quiet enjoyment under the lease. In addition, the scaffolding erected directly breached the lease covenant stating that it should ‘…not materially adversely restrict access to or the use and enjoyment of the premises’.

Reasonable steps had not been taken to minimise the disturbance and damages were awarded to the tenant by way of a 20% discount on rent for the period the works had been carried out.

No injunction was awarded, given the length of time that the scaffolding had been in place and the time it would take to dismantle it. Instead, the High Court felt that the 20% rental discount represented sufficient damages for the past, and any future, breach of the quiet enjoyment covenant. The landlord was also required as part of the judgment to observe stipulations regarding hours of working and not increasing the disturbances caused to the tenant.

JB Leitch’s Phil Parkinson comments on the Timothy Taylor decision:

“Landlords must take care to ensure compliance with their lease obligations when carrying out works or redevelopment. A covenant for quiet enjoyment in favour of the tenant is a basic provision which can prove costly if not observed; landlords are advised to check lease terms before planning works in order to ascertain whether they will be able to meet their covenants by carrying out any redevelopment scheme, and they must act reasonably throughout to minimise disturbance. Good communication from the outset and throughout thereafter is highly recommended to nip any potential issues in the bud at an early stage.”