rogue landlords

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

The tenant operated a high-class art gallery from the ground floor and basement of a five-storey building in Mayfair. 

Under the 20 years lease, the landlord reserved an express right to alter or rebuild the building, even if the gallery (or its use or enjoyment) was materially affected. It also gave L the right to erect scaffolding temporarily, provided that this did not materially adversely restrict access to (or the use and enjoyment of) the gallery.

In 2013, the landlord started substantial works to rebuild the interior of the building from the first floor upwards to create new apartments to let. The tenant claimed that these works substantially interfered with its use and enjoyment of the gallery. The high levels of noise being generated by the works on an almost daily basis meant that staff suffered absences due to illness caused by the noise, had to wear headphones, work off-site or (on occasions) close the gallery. In addition, the scaffolding design which enwrapped the gallery in the whole building meant that the gallery was almost invisible, giving the impression that it was closed and formed part of the building site.

Issue

Was the landlord in breach of its covenants for quiet enjoyment? The lease contained an express covenant for quiet enjoyment.

Decision

The court found that the landlord had acted unreasonably in the exercise of its rights and was therefore in breach of its covenant for quiet enjoyment because:

  • The works did substantially interfere with the use and enjoyment of the premises as an art gallery, with high levels of noise being experienced on an almost daily basis
  • The fact that the premises were let for use as a high class art gallery meant the right to build should be exercised with regard to the tenant’s need to keep the gallery running with as little disturbance as possible
  • The tenant was told in general terms when it took the lease that the landlord intended to carry out some works but was not told specifics or that they would be as extensive as they were. Because of this, no discount was applied to the rent to take account of the works, either on commencement of the lease or on review at the 5th anniversary of term commencement
  • The landlord was not obliged to offer any discount for the works. However such an offer could affect the overall reasonableness of the works. The landlord’s “point blank refusal” to offer a discounted rent raised the bar as to what was reasonable
  • The scaffolding was designed and erected in a way which paid no or little regard to the tenant’s interests and so was entirely unreasonable; it could have been erected differently to minimise disturbance
  • There was no real attempt made to liaise with the tenant as to the likely duration of the works, the likely noise levels and how the impact of the works could be mitigated. The landlord should have ‘sat down with the tenant’ to discuss the works and plan how they could be carried out to minimise disturbance.

The court awarded the tenant damages equivalent to a 20% discount in rent starting from the date the works commenced until the completion date of the works. The discount for future works was instead of an injunction curtailing/changing the works method, which the court considered would be impracticable and probably unworkable. 

Comment

Advice to landlords wishing to carry out building works:

  • Inform your tenants in advance of the nature and duration of any intended works
  • Liaise with your tenants as to the impact the works could have and how this could reasonably be minimised
  • Take into account the nature of your tenant’s use of the premises
  • If the works can only be done in a way which is likely to interfere with the use and enjoyment of the premises, consider whether a rent discount might be appropriate