Art Gallery Tenant Wins Damages For Noisy Works & Scaffolding - Not A Pretty Picture For Developer Landlord

Timothy Taylor Ltd v Mayfair House Corp [2016] EWHC 1075 (Ch)

Summary

This case concerned a dispute between a landlord developer and an occupier tenant, who was unhappy with the effect that the landlord's works were having on the tenant's business.

The lease contained a right for the landlord to carry out works of development to the building and also to erect scaffolding. However, the tenant claimed that the landlord's actions were unreasonable and were, therefore, in breach of the landlord's covenant to give the tenant quiet enjoyment.

The Court had to balance up the interests of both the landlord and the tenant, bearing in mind the rights set out in the lease.

Having regard to the facts, the Court sided with the tenant and held that the landlord had been unreasonable in the exercise of its rights and was therefore in breach of its covenant for quiet enjoyment.

The tenant was awarded a rent reduction for the period of the works.

The facts

The building involved in this dispute was in the heart of Mayfair and opposite the Connaught Hotel. The tenant operated as a high class modern art gallery pursuant to a lease granted in 2007 for 20 years. The premises demised to the tenant constituted the basement and ground floor of the building. The rent payable varied between £510,000 and £530,000 per annum over the relevant period.

The landlord embarked on a programme of development works affecting the upper floors, the purpose of which was to build new residential apartments. The lease contained the following rights:

The right to temporarily erect scaffolding for any purpose connected with the building and premises, provided it did not materially adversely restrict access to or the use and enjoyment of the premises and the landlord agreed to use all reasonable endeavours to minimise the time that the scaffolding was erected. The right to alter, raise the height of or rebuild the building or any adjoining property of the landlord. At the same time, the landlord covenanted to permit the tenant to peaceably and quietly hold and enjoy the premises without any interruption or disturbance - this is commonly known as a covenant for quiet enjoyment. Even if it is not expressly given in a lease, it will be implied.

Although the tenant accepted the landlord's right to carry out the works, it complained on two bases:

that the noise generated by the works was unreasonable and persistent; and that the type and design of the scaffolding was inappropriate in that...