Landlords' Works And The Impact On Tenants

Commercial leases often reserve to the Landlord the right to carry out repairs to adjoining premises. At times, this right may conflict with the Tenant's right to enjoy the demised premises under the Landlord's covenant for quiet enjoyment. There is also an implied covenant by the Landlord not to derogate from grant - put another way, a Landlord who confers a benefit on a Tenant should not then do something that substantially deprives the Tenant of its enjoyment of that benefit.

An acute conflict may therefore arise between the Landlord's right to repair and the Tenant's right to enjoyment of the property. This conflict was previously considered in Goldmile Properties Ltd v Lechouritis [2003] EWCA Civ 49 in the context of works which formed part of the Landlord's obligation to keep the building in which the demised premises were situated in repair. Circumstances where the works were to be entirely for the Landlord's own benefit were, however, considered in depth more recently by the High Court (Chancery Division) in the case of Timothy Taylor Ltd v Mayfair House Corp & Anor, heard on 10 May 2016.

Facts of the Case

The Claimant, Timothy Taylor Ltd, was the Tenant of basement and ground floor premises of a five storey building in Mayfair from which it operated a high-class art gallery. The Landlord, Mayfair House Corp, owned the premises directly above the gallery, and had retained the right in its lease with Timothy Taylor Ltd to carry out building works to its property above. The Landlord commenced construction of new apartments from the first floor of the building upwards. The Tenant claimed that the works interfered with its use and enjoyment of the premises as an art gallery. Whilst it accepted that the Landlord was entitled to carry out the works, it complained of very significant levels of noise, to the extent that on a number of occasions the gallery had to be closed. Scaffolding was also erected for the purpose of carrying out the works, and the Tenant complained that the design of the scaffolding was such that the gallery entrance was practically invisible.

The Decision

A Landlord must act reasonably in the exercise of its right to build by taking all reasonable steps to minimise the amount of disturbance being suffered by the Tenant, though it is not obliged to eliminate that disturbance completely. The Court decided that in this case, the Landlord had been acting unreasonably in the exercise of its right to build and was...