Goldmile Properties Ltd. v Lechouritis

Lease covenants must be construed so far as possible to operate together. A landlord’s repairing obligation and the tenant’s covenant for quiet enjoyment therefore coexist; neither automatically prevails. Where repairs necessarily disturb the tenant, the relevant standard is whether the landlord took all reasonable steps to minimise the interference, not whether every possible precaution was taken. Reasonableness is fact-sensitive and includes the nature and necessity of the works, their timing, their cost, and the landlord’s efforts to respect the tenant’s contractual interests. Temporary inconvenience and reduced profitability caused by reasonably executed repairs do not necessarily breach quiet enjoyment. A lease may allocate compensation for disruption, but, absent such a term, rent or service-charge remission is not required, although an offer may support the reasonableness of the landlord’s conduct.

The claimant tenant operated a restaurant under a long commercial lease. The defendant landlord undertook external cleaning and repair works requiring scaffolding and sheeting, which disrupted the restaurant and reduced its profitability.

District Judge Russell dismissed the tenant’s claim, finding that the landlord had carried out necessary works and taken all reasonable steps to minimise the disruption. On appeal, His Honour Judge Tetlow reversed that decision, holding that the landlord required an implied right to interfere with quiet enjoyment and that reasonable precautions might be insufficient. The landlord brought a second appeal. The central issue was whether all reasonable steps, or all possible precautions, were required.

The Court of Appeal unanimously allowed the second appeal and restored the order dismissing the tenant’s claim.

1. Construction of the lease. Conflicting lease provisions must, where possible, be interpreted and applied so that each has proper effect. The repairing covenant and the covenant for quiet enjoyment were not mutually exclusive. They had to operate on a basis of parity rather than priority. The express qualification to the quiet-enjoyment covenant also contemplated disturbance arising from structural repairs and maintenance.
2. Applicable standard. The landlord’s repairing obligation had to coexist with the tenant’s entitlement to quiet enjoyment. The proper threshold was whether the landlord had taken all reasonable precautions and steps to minimise disturbance, rather than whether every possible precaution had been taken. The court applied the description of substantial interference with quiet enjoyment in Southwark London Borough Council v Tanner [2001] 1 AC 1.
3. Authorities. The parity approach was consistent with Lyttelton Times Company Ltd v Warners Ltd [1907] AC 476. The implied licence to enter for structural repairs recognised in Saner v Bilton (1878) 7 Ch.D. 815 was likewise consistent with reading quiet enjoyment subject to the repairing obligation. The law of nuisance provided a useful analogy, subject to the contractual context identified by reference to Owen v Gadd [1956] 2 QB 99.
4. Application. Reasonableness had to be assessed on the facts and in light of the parties’ contractual interests. The landlord had considered the tenant’s representations, postponed the works to avoid the busiest trading period, and made arrangements concerning the service charge. The district judge was entitled to find that all reasonable steps had been taken.
5. Compensation and costs. A lease may make express provision for disruption. In its absence, there was no obligation to remit rent or service charges, although an offer to do so might assist in showing overall reasonableness. The tenant was ordered to pay the landlord’s costs in both courts, subject to assessment under the Community Legal Services (Costs) Regulations 2000.

1. Court of Appeal (Civil Division) — On the second appeal, allowed the landlord’s appeal and restored the district judge’s order: [2003] EWCA Civ 49.
2. Manchester County Court — His Honour Judge Tetlow allowed the tenant’s appeal and reversed the district judge’s decision.
3. Stockport County Court — District Judge Russell dismissed the tenant’s claim for damages for disruption and loss of profit.