October-27-2016 in Property, Commercial & Business
Landlords need to redevelop and improve their property. Tenants want quiet enjoyment. What are the keys to good landlord-tenant relations?
It is well established law that a tenant, paying rent and observing the covenants and conditions of a lease, is entitled to the quiet enjoyment of the property without interruption from the landlord. A covenant to this effect is usually incorporated into commercial leases and, even where it is not, such a covenant is implied under Section 41 of Deasy’s Act – the seminal piece of legislation regulating the contractual nature of the relationship between landlords and tenants.
Similarly, a commercial lease will ordinarily reserve to the landlord the right to redevelop adjoining property and, on reasonable notice, to enter on the tenant’s property for the purposes of such redevelopment. This right, however, needs to be balanced with the tenant’s right to quiet enjoyment.
Court rulings
The matter has been considered several times by the Irish courts and lately in the courts of England and Wales where, in Timothy Taylor Ltd v Mayfair House Corporation & Another, the court considered these competing rights. Here the plaintiff tenant operated an art gallery at ground floor level in a property owned by the defendant landlord. The landlord erected scaffolding around the building for the purpose of the redevelopment of the upper floors which rendered the art gallery completely hidden from public view. The tenant claimed damages for breach of his right to quiet enjoyment and sought an injunction to compel the landlord to dismantle the scaffolding and to restrict the noise level of the works.
The court held that damages were an appropriate remedy as it would be disproportionate to order the dismantling of the scaffolding and impractical to try to restrict the noise created by the works. Instead the court ordered a 20% reduction in the rental payments for the period of the works and imposed two hour ‘on/off’ work periods and ‘quiet times’ for certain events in the gallery.
The Irish courts have generally stated that there must be a physical interference of a substantial nature with the tenant’s property to constitute a breach of the covenant for quiet enjoyment – though it need not necessarily be a deliberate interference. The courts have also shown a preference for granting an injunction against the offending landlord as opposed to damages. However, this may be revisited in light of recent judgments – particularly where the breach has resulted in a loss of profits.
Clear communication
A landlord intending to carry out redevelopment to property where a tenant is already in situ should be cognisant of his or her obligations to that tenant under the lease. Consider taking the following steps with your tenant well in advance:
• Furnish full details (scope and specification) of the intended works.
• Agree a timeline for completion.
• Look at access to the tenant's property and how the tenant and its customers may be facilitated with the least interruption.
• Plan traffic management and adequate parking facilities.
• Discuss with your contractors how they can reduce interference and noise levels during the tenant's trading hours.
• Ensure that the tenant's property is structurally protected and will not be jeopardised.
• Comply with all notice periods under the terms of the lease.
• In cases where it will be impossible not to have an adverse impact on the tenant's trade, consider compensation by way of a temporary reduction in rent.
Early engagement with tenants and liaising regularly with them during the course of construction will, in the long run, ensure a continued good relationship and stand the landlord in good stead in the face of any threatened litigation.
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