116: What is a tenant’s right to quiet enjoyment of premises?

A landlord is always under an implied obligation to give its tenant ‘quiet enjoyment’ of leasehold premises. This means that the landlord must ensure that there is no interference with the tenant’s possession and enjoyment of the property.

In Timothy Taylor Ltd v Mayfair House Corporation, the High Court considered whether a landlord had breached its covenant for quiet enjoyment and had derogated from grant by carrying out rebuilding works.

Facts

The tenant, Timothy Taylor, ran an art gallery from the ground and basement floors of Mayfair building. It’s lease was for 20 years from January 2007 at a rent of £530,000 pa.

In 2013, the landlord carried out works to the building in order to create residential flats from the first floor upwards. The tenant’s lease reserved an express right for the landlord to alter or rebuild even if its use or enjoyment were materially affected. The lease also contained a landlord’s quiet enjoyment covenant permitting the tenant to ‘peaceably and quietly’ enjoy the premises without interruption or disturbance by the landlord.

The tenant accepted the landlord had the right to carry out works on the remainder of the building. However, the high levels of noise and extensive scaffolding (which blocked the building making it look as if the gallery was closed) meant the tenant felt the works being carried out were unreasonable.

The tenant claimed the landlord was in breach of its covenant for quiet enjoyment, and sought damages and an injunction preventing future works.

Decision

The High Court took into account various factors including how little notice the tenant had been given of the works, the lack of any financial compensation offered by the landlord, and the fact that the works were being carried out for the benefit of the landlord and not the tenant occupiers.

The court held that the tenant was entitled to damages for the landlord’s breach of its quiet enjoyment covenant and for derogation from grant. The tenant had not suffered any loss of profits, so the court awarded damages at 20% of the rent payable under the lease from the date the scaffolding was erected.

However, the court decided it was impracticable to grant an injunction requiring the landlord to restrict noise during particular hours. It held that the better course would be for the scaffolding to remain in place and for it to award damages for future breaches.

The moral of the story is that even though a landlord may be entitled to carry out works at its building, it has an obligation to give a tenant quiet enjoyment of the premises and must use reasonable precautions to limit the effects. The obligation to give quiet enjoyment is usually express but will also be implied and is based on the rule of common honesty: you cannot give with one hand and take away with the other.

Timothy Taylor Ltd v Mayfair House Corporation and another [2016] EWHC 1075 (Ch).