The recent case in the High Court of Timothy Taylor Limited v Mayfair House Corporation and another  EWHC 1075 raised some interesting legal questions. Timothy Taylor Limited had a 20 year lease to occupy a ground floor and basement of premises in Mayfair as a high class art gallery. The landlord undertook redevelopment works to the upper floors of the building in order to increase the number of residential units available for let. After several complaints about noise and disruption to the landlord, the tenant applied for an injunction to control the ongoing works and also made a claim for damages. Notably, the tenant took issue with the scaffolding surrounding the building which obscured the gallery and affected the tenant’s ability to take deliveries and access the premises.
The tenant’s lease contained a standard covenant stating that the landlord granted the tenant quiet enjoyment of the premises. However, it also contained a right for the landlord to erect scaffolding to re-develop the building providing it did not significantly restrict access or the use and enjoyment of the premises. It also gave the landlord the right to re-develop the building, even if this considerably affected the tenant’s business or its use and enjoyment of the premises.
The Court ruled that the rights the landlord benefitted from in the lease did not give an “untrammelled” right to build and re-develop and, in fact, the landlord had to exercise its rights in a way which was considered reasonable and caused minimum disruption to the tenant.
So what where the key factors in reaching this decision?
- The tenant’s knowledge at the date of the lease – it transpired that the tenant had only been given general information during lease negotiations which was not enough to understand the extent of the works and their possible effect
- The landlord had not made an offer to the tenant of any compensation or discount as a result of the disturbance caused to his gallery by the works
- The works were only to the benefit of the landlord and were not necessary building repairs
- An alternative type of scaffolding could have greatly reduced the impact on the visibility of the gallery. The landlord had also positioned a hoist close to the entrance of the gallery which restricted access. The landlord had also failed to provide detailed advanced notice of the nature of the work.
In conclusion, the Court ruled that the landlord had acted unreasonably and consequently, it awarded damages despite the fact that the tenant’s revenues had actually increased during the period of works. They were also awarded in lieu of an injunction.
This case sends a clear message to landlords - even if a lease contains a right allowing re-development to a building with a tenant, a landlord must liaise with the tenant to ensure that works cause minimum disruption to the tenant. Landlords planning re-development would be wise to review the guidance given by the Court, reducing the likelihood of delays and expenses incurred by tenants applying for injunctions and bringing claims for damages.
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