Timothy Taylor Ltd v Mayfair House Corporation & Anor

A landlord’s express right to build must be exercised reasonably where it coexists with the tenant’s covenant for quiet enjoyment and the implied covenant not to derogate from the grant. The landlord must take all reasonable steps to minimise disturbance, assessed in context. Relevant considerations include the tenant’s known use, the tenant’s knowledge of intended works, the cumulative effect of disruption, the availability of compensation, and whether the works benefit the landlord alone. A wide reservation does not give an unqualified right to enter the premises for unrelated building works. Damages may be awarded instead of an impracticable or disproportionate injunction.

The claimant operated a high-class art gallery in premises leased from the defendants. The defendants undertook extensive redevelopment works to the upper floors of the building, including erecting scaffolding around the building and carrying out noisy construction works.

The claimant alleged breach of the express covenant for quiet enjoyment and the implied covenant not to derogate from the grant. It also sought declarations and injunctions concerning scaffolding, proposed entry to remove a screed, and works to fill a light well. The defendants counterclaimed for access and related relief.

1. Quiet enjoyment and building works. The landlord’s right to build and the tenant’s right to quiet enjoyment must be construed together. The landlord was entitled to carry out the reserved works, but only if it took all reasonable steps to minimise the disturbance. Relevant considerations included the premises’ use as a high-class gallery, the high rent, the tenant’s knowledge of proposed works, the cumulative effect of scaffolding and noise, the absence of any rent discount, and the fact that the redevelopment was undertaken principally for the landlord’s benefit.
2. Breach. The scaffolding had been designed and erected without sufficient regard to the gallery’s visibility and access. Reasonable alternatives involving towers and differently positioned hoists were available. The landlord also failed to liaise adequately with the tenant about the scale, duration and management of the noisy works. The landlord therefore breached both the covenant for quiet enjoyment and the implied covenant not to derogate from the grant.
3. Entry for screed works. The inspection power in clause 3.8.1.2 permitted opening up floors only where necessary to inspect the repair and condition of the premises. It did not authorise entry to carry out adjoining building works. The Schedule 1, Part 1 inspection right was construed narrowly and did not permit occupation of the premises for a significant period to undertake such works. A declaration was granted; no injunction was necessary.
4. Light well. The light well was neither a common part nor part of the demise merely because ventilation pipes serving the premises were located there. The landlord was entitled to fill the light well and construct a porter’s lodge, with light boxes offered in substitution for the lost natural light.
5. Remedies. Damages were assessed by reference to a 20 per cent rebate of the rent from 14 August 2014 until judgment. Injunctions requiring the scaffolding to be reassembled or noisy works to be controlled were refused as disproportionate or impracticable. Damages in lieu were awarded at 20 per cent of the rent from judgment until completion, subject to liberty to apply if future disruption became materially more serious. The counterclaim was otherwise dismissed.