Landlord and tenant disputes: landlord obligations

The tenant is required to pay the rent and comply with the covenants as set out in the lease.

The landlord is required to provide quiet enjoyment and insure the property (most of the time). The relationship between the landlord and the tenant is often peaceful and without any requirement by either party. 

This can be complicated when a tenant is required to carry out works, or a landlord is looking to improve the building in which the tenant is taking a lease of forms part.

In particular, this is relevant when a landlord has to attach scaffolding or decorate/improve/maintain parts of the building. 

The length of time this takes and the cost are always a contentious issue, and commercial tenants do not have the same protections as residential tenants. 

Therefore, a commercial tenant’s solicitor needs to ensure the lease has protection, such as a limitation on the time scaffolding can be put at the property, suspension of rent if the works materially affect or prejudice the tenant’s use.

Why is this important? 

As demonstrated by Timothy Taylor Ltd v Mayfair House Corporation, Landlords may need to be reminded of the importance of maintaining positive relationships with their commercial tenants through frequent dialogue regarding redevelopment works and decoration to avoid breaching terms of lease and disputes.

The Tenant, Mr Taylor, operated a high-class modern art gallery on the ground and basement floors of the building under the terms of a 20-year lease.

The landlord reserved the right to temporarily erect scaffolding, given that it did not (materially) restrict the tenant’s use and enjoyment of the premises. Since 2013, the landlord had been engaged in extensive works on the building to convert the first floor. The tenant had not been clearly notified of the duration of such works.

The scaffolding was erected in a manner affecting the appearance of the building, and the tenant’s trade insignia was hidden from view, and the gallery appeared closed.

In addition, such works generated high levels of noise, which resulted in the frequent absence of Mr Taylor’s staff and the closing of the gallery. Although the tenant accepted the landlord’s entitlement to effectuate the works, it claimed the manner in which the works were executed disregarded the tenant’s rights under the lease.

The tenant sought an injunction which the court could not grant since the trial occurred two years after the commencement of the works. Damages were awarded for breach of the covenant of quiet enjoyment and the implied non-derogation from grant.

The extent to which the tenant was notified of redevelopment endeavours was minimal due to a lack of communication. Thus, the tenant was deprived of the ability to anticipate the works and take appropriate measures to minimise the disturbance.

The landlord disputed that the works had been carried out with due regard to the tenant’s rights under the lease. It stated to have been denied access by the tenant for some works, claiming an injunction prohibiting the tenant from denying it access in the future.

Issue

Whether the landlord’s right to build interferes with the tenant’s right to quiet enjoyment of the property, was the landlord in breach of non-derogation from grant and the covenant for quiet enjoyment? 

Court Decision: The High Court found that the landlord had acted unreasonably in exercising its right and had thus breached the lease covenants stipulated above.

1. Had the works breached the expressed covenant of the tenant’s quiet enjoyment? Had the landlord breached the implied covenant of non-derogation from grant?

The judge decided the landlord had not taken sufficiently adequate measure to minimise the tenant’s loss in terms of use and enjoyment of property. 

The landlord could have lessened the consequences of the breach of quiet enjoyment were the tenant to have been notified of works sooner.

Noise monitoring equipment could have also been installed sooner.

The judge contended that since the claimant was paying significant rent, the defendant should have exercised its right to build with particular regard to allow the tenant to keep the gallery running with little disruption.

2. Whether the landlord was permitted to enter the premises in order to remove screed containing asbestos from the property?

The judge ruled in favour of the tenant since the right to access in the lease did not permit the tenant to occupy the property for a significant period of time, which such a task would require. 

It would also require the tenant to vacate the premises until the completion of the works, thus interrupting its occupation of the premises. 

Issues raised

What is clearly highlighted here is the importance of upholding the principles which underpin the relationship between landlord and tenant and non-derogation of those obligations and rights.

It also shows the need for a landlord’s right to build to be compatible with the tenant’s right to quiet enjoyment of the premises and that neither can take priority over the other.

When anticipating works, landlords ought to open a dialogue with tenants to mitigate disturbance to tenant’s use and enjoyment of the property as well as their plans. They should also ensure works are reasonable so that the tenant can adjust to changes adequately.

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