In Timothy Taylor Ltd v Mayfair House Corporation & Another [2016] EWHC 1075 (Ch) the Court was asked to consider the coexistence of a landlord’s right to build and a tenant’s entitlement to quiet enjoyment. 

The Court held that the landlord’s noisy works and its scaffolding that “enwrapped” the tenant’s art gallery rendering it “practically invisible” put the landlord in breach of its covenant to ensure quiet enjoyment. The landlord had not taken “all reasonable steps” to minimise disturbance to the tenant. On the facts, the Court considered an injunction to be disproportionate but awarded damages to the tenant in the manner of a 20% rent discount for the period of the works.

Facts

In this case, the tenant operated a high class art gallery in Mayfair, under a lease at a substantial rent of over £500,000 per annum, with just under 11 years left to run. The lease contained an unqualified covenant by the landlord to permit the tenant to peaceably and quietly enjoy the premises without any interruption or disturbance. 

In 2013 the landlord began works to develop the upper floors of the building of which the gallery formed part. The works were noisy and necessitated scaffolding. Originally, the landlord had presented the tenant with a design for the scaffolding which was considered “not wholly intrusive” as the gallery could still be seen from the street as open for business and readily accessible. However the scaffolding once erected rendered the gallery “practically invisible”. This, coupled with impact caused by the noise of the works, led the tenant to claim for damages for past breaches of its right to quiet enjoyment and an injunction requiring the landlord to dismantle the scaffolding (with permission to erect the original design) and restricting noise limits.

Decision

In considering how to balance the competing rights of the landlord and the tenant, the Court outlined the following propositions from the existing case law:

  • the landlord should take all reasonable steps to minimise disturbance
  • it is relevant what the tenant knew of the landlord’s development plans at the commencement of the lease
  • an offer of compensation to the tenant is a factor in considering the overall reasonableness of the steps the landlord has taken

The Court also considered the following factors to be relevant:

  • whether the works are being carried out pursuant to the landlord’s repairing covenant or for the landlord’s sole profit
  • the nature of the property, in this case being a high class art gallery let at a very substantial rent
  • whether the rent at the last review had been discounted already to account for any anticipated disruption

The Court reaffirmed that the test is not whether the landlord’s actions constitute an actionable nuisance, but whether the landlord has been exercising its right to build unreasonably. The Court held in this case that the landlord was acting unreasonably and was therefore in breach of its covenant for quiet enjoyment.

Remedies

In respect of past breaches of the covenant for quiet enjoyment, the Court awarded the tenant a 20% discount on its rent. 

In considering whether an injunction was an appropriate remedy, the Court consider the noise and scaffolding issues separately. 

Noise: The Court considered that an injunction whereby the landlord was to use all reasonable endeavours to restrict noise during set hours would be “impracticable and probably unworkable”. 

Scaffolding: The Court considered that an injunction to dismantle the scaffolding and re-erect it using an alternative design would be “wholly disproportionate” on the basis that to do so would take 12 weeks, and the tenant had already put up with the scaffolding for 19 months with only three months left. 

On both points the Court considered damages the more appropriate remedy, assessed as 20% discount on rent until the works finished, subject to the landlord:

  • adhering to the two hours on/two hours off policy it had mostly adhered to in the past in respect of noisy works
  • granting the tenant “quiet times” when particular events are occurring (on reasonable notice)
  • not otherwise increasing the amount of disturbance caused to the tenant

Practical steps for landlords intending to carry out works to adjoining premises

  • ensure tenants are aware of any plans for redevelopment at the commencement of the lease
  • consult early with tenants to assure them that all reasonable steps are being taken to minimise interference
  • provide plans to tenants so that they have an opportunity to make their position clear and so that concerns can be dealt with
  • instruct contractors specifically to take into account the tenant’s use and enjoyment of the premises
  • meet with tenants at regular intervals during the course of the works to continue assessing any concerns
  • timetable noisy works and liaise with tenants to ensure they are aware of the likely duration and the noise levels to be experienced
  • consider scaffolding options to avoid obscuring premises
  • consider offering compensation by way of discounted rent
  • consider keeping acoustic records of noise levels