If a landlord owns a building and parts are rented out, the landlord should by wary of assuming an unchallengeable right to develop the remainder without taking into account the concerns of existing tenants. This was highlighted at the expense of the landlord in the recent case of Timothy Taylor Ltd v Mayfair House Corporation (2016).
The claim was made the tenant occupying the basement and ground floor of a five storey building in Mayfair, London. The tenant operated a high class art gallery at a rent of £530,000 per year, and its business was adversely affected by the landlord redeveloping other parts of the building. The tenant complained that scaffolding erected caused the art gallery to become almost invisible to passers-by and that the high level of noise from the construction works had a considerable impact on the functioning of the gallery.
This issue raised an acute conflict between the landlord’s and tenant’s respective rights under the lease. The lease contained clauses entitling the landlord to carry out development works to other parts of the building, and in particular to erect scaffolding. The lease also contained a clause permitting the tenant to peaceably and quietly enjoy the premises.
The Court found that whilst the landlord was entitled to carry out works and some disruption to the tenant’s use and enjoyment of its premises was inevitable, the landlord was under a duty to take all reasonable precautions to minimise the disturbance to the tenant. The landlord was found to have breached this duty and damages were awarded to the tenant.
To avoid potential disputes in similar situations, landlords should ensure:
- they give the tenant as much information about the proposed works before the lease is granted;
- they meet with the tenant at an early stage to explain the works and discuss how disturbances can be minimised including noise limits and quiet periods;
- any requirements agreed with the tenant are passed on and implemented by the contractors and that project managers hold regular meetings with the tenant;
- scaffolding and deliveries do not block any access points of the tenant’s premises and try to ensure signage is kept visible;
- the tenant is kept informed as to the length of the works and any conditions in the lease relating to the right to carry out works are complied with.