In this case, the tenant was the lessee of ground and basement floor premises opposite to the Connaught Hotel. It operated a high class modern art gallery. The landlord wanted to develop the building from the first floor upwards. The tenant complained about the manner in which the work was being carried out.
The lease allowed the landlord to erect scaffolding provided it did not materially adversely restrict the use and enjoyment of the premises. The landlord reserved the right to erect new buildings and to enter the demised premises to exercise its rights. The tenant, on the other hand, had the benefit of a covenant for quiet enjoyment.
At [24]-[25], Alan Steinfeld QC (sitting as a deputy High Court judge) summarised the law:
where there is a covenant for quiet enjoyment, the landlord’s reservation of a right to build should be construed as entitling the landlord to do the work contemplated by the reservation provided that, in doing that work, the landlord has taken all reasonable steps to minimise the disturbance to the tenant;
in considering what can be reasonably carried out it is relevant to know what knowledge or notice the tenant had of the works intended to be carried out by the landlord at the commencement of the lease;
an offer by the landlord of financial compensation to the tenant to compensate the tenant for disturbance caused by the works is a factor the court is entitled to take into account when considering the overall reasonableness of the steps which the landlord has taken;
it was relevant that the works in the present case were not to keep the building in repair (which would be of benefit to the tenants of the building) but were entirely for the landlord’s own purpose while conferring little or no benefit on the tenant.
The Judge held that the landlord had acted unreasonably. The tenant was awarded damages assessed by way of a percentage rebate on the rent.
David Sawtell