Timothy Taylor Ltd v Mayfair House Corporation & Anor [2016] EWHC 1075 (Ch)

I’m very late with this one – been in the ‘to do’ pile for ages. In mitigation, it is a commercial property case, but has interesting elements on the way in which building works may be reasonably carried out.

Timothy Taylor ran an art gallery in the basement and ground floor of a building in Mayfair on a 20 year lease. Mayfair House was the freeholder and (by an associated company) head lessee. The top 4 floors were residential flats. From 2013, the landlord was carrying out substantial works to the upper 4 floors to remodel the flats.

TT brought a claim alleging “that this work has been, particularly by reason of the noise generated by the works and the wrapping of the whole building by scaffolding to accommodate the works, substantially interfering with its use and enjoyment of the Premises as an art gallery.”

The Tenant recognises that the Landlord is entitled to carry out its works and accepts that some disruption to its use and enjoyment of its Premises is inevitable, but complains that the manner in which the work has been carried out and is threatened to be continued to be carried out in the future is unreasonable in that it pays no or scant regard to its rights under the Lease. Accordingly, the Tenant seeks damages for the breaches of its rights which have occurred in the past and declaratory and injunctive relief to regulate how the works should be carried out in the future.

The Landlord, for its part, contends that it has at all times carried out its works reasonably with due and proper regard to the rights of the Tenant under the Lease.

The lease gave the landlord:

The right temporarily to erect scaffolding for any purpose connected with or related to the Building and Premises provided it does not materially adversely restrict access to or the use and enjoyment of the Premises AND the Landlord agrees to use all reasonable endeavours to minimise the time for which scaffolding is erected on or in connection with the Building …”

And then

Full right and liberty at any time –
1-7.1 to alter, raise the height of, or rebuild the Building or any other building, and
1-7.2 to erect any new buildings of any height on any adjoining property of the Landlord
in such manner as the Landlord thinks fit even if doing so may obstruct, affect, or interfere with the amenity of or access to the Premises or the passage of light and air to the Premises, and even if they materially affect the Premises or their use and enjoyment PROVIDED THAT if the Landlord increases the size of the Building then it will [as] soon as practicable vary this Lease by Deed to reduce the Tenant’s service charge percentage.”

There was also a covenant to

permit the Tenant peaceably and quietly to hold and enjoy the Premises without any interruption or disturbance from or by the Landlord

The court held that:

These were not works of repair, but works carried out for the landlord’s own purposes and benefit. The court was entitled to take that into account in considering the reasonableness of what the landlord was doing.

The landlord had failed to make clear to the tenant the extent and nature of works. The landlord’s scaffolding differed from the proposal shown to the tenant and in fact enclosed the gallery, making it appear to be part of the area being worked on. In addition:

The carrying out of these works has, it is common ground, substantially interfered with the use and enjoyment of the premises as an art gallery. In this connection, it seems to me that the best summary is to be found in paragraph 74 of Ms. Vaughan’s witness statement where she states as follows:-
“The Gallery has experienced very significant levels of noise on a regular and repeated basis since the works began. The levels of noise have been such that members of the Gallery staff have been forced to wear headphones, work offsite and, on a number of occasions, we have had to close the Gallery entirely when the noise reached intolerable levels. There has been a high level of absence due to headaches, migraines and nausea, which coincide with and seem to be caused by the noise.”

The landlord refused to agree a rent reduction.

The noise levels might not be more than those generated “in any building site” but they were high levels of noise “which is bound to be disturbing to customers and staff in what is supposed to be a peaceful and quiet high class art gallery in Mayfair.”

This was not a claim in nuisance, though the works may well have amounted to an actionable nuisance, but the issue was whether the “Landlord has been acting 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, even if it cannot totally eliminate that disturbance.”

The landlord’s right to build should have been exercised with a particular care “so far as that was reasonably possible, to the need of the Tenant keep the Gallery running and with as little disturbance to it and its customers and staff as possible” and with regard to the tenant’s unqualified right to quiet enjoyment.

The scaffolding, on expert evidence, could have been erected in accordance with the original design, which would have been much less disruptive. Hoists were unnecessarily placed immediately outside the doors of the gallery. The noise was less straightforward but there had been no attempts to liaise with the tenant on planning or on strategies to mitigate the noise.

The landlord had therefore not acted reasonably.

On damages, there had been no demonstrable loss of profit. In fact profits had risen. So damages were assessed on a basis of loss of use and enjoyment of the premises.

This was to “be assessed by reference to what can be regarded as a reasonable rebate in the rent which it is contractually bound to pay for premises which have been rendered by the breaches of covenant materially less fit for its occupation.”

These were assessed at 20% of rent – experts having said 25% on one side and 15% on the other.

Injunctive relief on future works and reassembling of the scaffolding refused as disproportionate, but damages at 20% to continue to completion of works.

Comment

While it is hardly new that loss of use and enjoyment fall to be assessed as a proportion of rent payable, what is interesting is the way in which pleading a breach of quiet enjoyment through a ‘not reasonable’ conduct of works as a de facto alternative and indeed supplement to common law nuisance can result in a significant award, where a nuisance claim might be more restricted. Breach of quiet enjoyment could be more extensive than nuisance in some circumstances.

This was a commercial claim and indeed the nature of the premises and trade is taken into account. But there is a clear opening for this judgment to map onto badly handled residential works cases like these.