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Landlord ordered to pay damages for interference with tenant's business

Commercial leases generally include a covenant by the landlord to provide the tenant with quiet enjoyment. The effect of this is that the tenant must be allowed to occupy and enjoy the premises without unlawful interruption or disturbance by the landlord.

Landlords also reserve various rights to themselves, including rights to carry out works to the premises or adjoining premises, even if this may affect or interfere with the tenant's business.

How can these provisions be reconciled?

This court looked at this issue in the case of Timothy Taylor Ltd v Mayfair House Corporation in May of this year. The Timothy Taylor gallery was the tenant of the ground floor of a five storey building in Mayfair. The gallery objected to the redevelopment works being carried out to rebuild the upper floors, and claimed that the landlord was in breach of its covenant to provide quiet enjoyment.

The landlord sought to rely on the provisions of the lease, which gave the landlord the right to erect scaffolding and to carry out works.

The question for the court was which provisions took precedence? In this case, the court decided that the landlord was in breach, awarding the tenant a 20% reduction in its rent to reflect the interference caused to their business.

What precautions should landlords take?

The key to a landlord being able to carry out works permitted under the lease without breaching the quiet enjoyment covenant is that it must have taken all reasonable steps to minimise the disturbance to the tenant. The landlord in this case had not satisfied this requirement.

Landlords should:

  • Consult with the tenant about the work and about the extent and timing of the work.
  • Carry out an impact assessment and assess what steps can be taken such as signage to reduce the impact on the tenant's business.
  • Consider the timing of the works. Are there times in the year when the effect of the disturbance would be less? Can some or all of the work be done outside of business hours

The landlord does not have to do everything possible but the Court will expect it to do all that is reasonable.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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