A recent High Court decision may assist retailers if their landlord carries out works to their building without any consideration for the occupier’s business.
In the case of Timothy Taylor Limited v Mayfair House Corporation  EWHC 1075, the High Court had to consider the conflict between a landlord's right to build reserved to it in a lease and the tenant's right to enjoy the demised premises pursuant to the landlord's covenant for quiet enjoyment contained in the lease and / or the landlord's implied covenant not to derogate from grant.
The tenant was the lessee of ground floor and basement premises in Mayfair, which it occupied as a modern art gallery. The premises formed part of a five storey building and the landlord was carrying out works to rebuild the building from the first floor upwards, which had begun in 2013. Although the tenant accepted that the landlord was entitled to carry out the works and that some disruption to its use and occupation of the premises was inevitable, it complained that the manner in which the works had been carried out, and in particular the way in which the scaffolding was erected, was unreasonable and was a breach of the landlord's covenant for quiet enjoyment. The lease contained a right for the landlord to rebuild. Notwithstanding this, the court held that the landlord's right does not simply trump the tenant's rights and the landlord's right has to be exercised reasonably, which means that a landlord cannot simply act without any regard to the effect on its tenant.
Factors to be considered in cases such as this are whether the landlord has taken all reasonable steps to reduce the disturbance to the tenant, whether the tenant had knowledge of the works before they began and if so, to what extent and whether the landlord has offered any compensation for the disturbance. In this case, the court decided that the landlord had acted unreasonably and awarded the tenant substantial damages. Relevant factors were that the tenant's business was as a high class art gallery in Mayfair at a substantial rent, the tenant did not know about the extent of the works before the lease was granted and the landlord did not take into consideration the needs of the tenant (this was particularly the case because the scaffolding erected "enwrapped" the tenant's premises meaning that it was difficult to tell whether the gallery was still open from the street).
What does this mean for retailers? Landlords need to take into consideration the retailer's business and business requirements in planning any works to the remainder of the building so as to cause the least disruption possible to the retailer. This means that a retailer should make its landlord aware of any particular concerns it has about any works proposed as early as possible. Following this case, landlords are likely to tell tenants about any works proposed early in the process and retail tenants should use this as their opportunity to set out their concerns.
Retailers will be concerned about noise and dust from works having an impact on the shopping experience of its customers, which is particularly important given the competition between the high street and online shopping. Retailers will also be concerned about the visibility of their window displays and their branding from the street. A landlord should take these concerns seriously and address them if it is reasonable to do so. For example, scaffolding should be erected in the least disruptive way. If the landlord does not take these concerns into consideration and plan accordingly, they are at risk of a court holding that they have acted unreasonably, which could result in an award of damages or an injunction, which would delay the development.