When a landlord is carrying out works it is usually impossible to avoid some level of disturbance to tenants. On that basis, previous case law has made clear that a landlord carrying out works will need to take "all reasonable steps to minimise the disturbance" to its tenants in order to avoid a tenant successfully claiming damages for breach of the landlord's quiet enjoyment covenant.
The recent decision in Jafari v Tareem Limited, an appeal to the High Court from the County Court, is a useful reminder of what a landlord needs to consider when carrying out noisy works.
Dr Jafari, the tenant, operated a dental surgery from premises in Brighton. Dr Jafari's landlord was Tareem Limited. Dr Jafari's premises formed part of a large office block which Tareem had decided to convert from office to hotel use.
The conversion works commenced in April 2012 and did not complete until the end of 2013. Crucially, for the period of the works Tareem waived Dr Jafari's rent in full (amounting to seven quarters' rent); however, Dr Jafari did not consider this waiver of rent to be adequate and sought to withhold further rental payments after completion of the works. Dr Jafari complained that:
- for most of this period scaffolding was erected;
- noisy works were carried out outside of the agreed restricted hours;
- replacement of the windows to Dr Jafaris's premises, which was meant to be carried out as part of the redevelopment, was not carried out; and
- the works resulted in a significant downturn in profitability for Dr Jafari's surgery.
County Court decision
The judge found that the landlord's works had not caused the downturn in profitability and that the breaches of the agreed restricted hours had been occasional only.
Further, although the judge found that "no consideration was given to the design of the scaffolding so as to minimise the disruption to Dr Jafari", the judge considered that, by providing "generous financial compensation", Tareem had taken all reasonable steps to minimise the disturbance to Dr Jafari, save that Dr Jafari should be entitled to damages for Tareem's failure to replace the windows.
Dr Jafari was required to pay the overdue rent.
Appeal to the High Court
Dr Jafari appealed to the High Court on a number of grounds, one of which was that the county court judge should not have taken account of the rent waiver when considering the reasonableness of Tareem's conduct.
Dr Jafari argued that compensation should only be taken into account, when assessing the landlord's reasonableness, where the lease contained a right for the landlord to carry out works (e.g. a right to build), which Dr Jafari's lease did not.
In refusing Dr Jafari's appeal, the High Court concluded that the judge at first instance was right to take into account the rent waiver as an element to "throw into the balance of reasonableness" when considering whether a landlord had taken all reasonable steps to minimise disruption, and the fact that Dr Jafari's lease did not contain an express right to build was not determinative.
What does this mean?
The important point for landlords to note is that this case reinforces that an early offer of compensation, in the form of a rent rebate or otherwise, is likely to be viewed favourably by a court when considering whether a tenant is entitled to damages for breach of a quiet enjoyment covenant resulting from a landlord's works.
Jafari v Tareem Limited  EWHC 3119 (Ch)
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