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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Timothy Taylor Ltd v Mayfair House Corporation & Anor  EWHC 1075 (Ch) (10 May 2016)
Cite as:  4 WLR 100,  L &TR 31,  EWHC 1075 (Ch),  2 P &CR 9,  WLR(D) 288
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Fetter Lane, London, EC4A 1NL
B e f o r e :
(sitting as a Deputy Judge of the Chancery Division)
| TIMOTHY TAYLOR LTD
|- and -
|MAYFAIR HOUSE CORPORATION & ANR
Ms. K. Holland Q.C. (instructed by Messrs Nicholas & Co.) for the Defendants
Hearing dates: 7th, 8th, 11th, 12th, 13th, 14th, 15th, 18th, 19th April, 2016
Crown Copyright ©
Mr. Alan Steinfeld Q.C.:
(1) whether the scaffolding as erected is compliant with the Landlord's express entitlement under the Lease to erect scaffolding and, if it is not, whether the Landlord should be directed to dismantle it;
(2) whether the Landlord was entitled to enter the Premises for the purpose of opening up a part of the ceiling of the Gallery to enable the removal of a screed from the floor of the premises above. I say "was" because the Landlord has, it seems, now abandoned the intention to remove this screed and so it is contended before me that this issue is now entirely academic;
(3) whether the Landlord is entitled as part of its works to fill in a light well ("the Light Well") which adjoins the Premises at basement level and to construct a porter's lodge at the bottom of the Light Well.
(a) "The Building" was defined as meaning 14 and 15 Carlos Place, London Wl, shown edged red on Plan 1 (Clause 1.3);
(b) "The Premises" were defined as the ground and basement floors of the Building, shown edged red on Plans 2 and 3 attached to the Lease (Clause 1.34.1). Plan 2 was a plan of the ground floor of the Premises. It showed a mezzanine floor as well, but this was removed as part of the works which the Tenant carried out on the Premises (see below) at the commencement of the letting;
(c) "The Initial Rent" for the Premises was £360,000 for the first three years of the term and then rising to £380,000 for the next two years and was thereafter subject to a rent review (Clause 1.9);
(d) By Clause 2 of the Lease, the Landlord let the Premises to the Tenant "excepting and reserving to the Landlord the rights specified in Schedule 1, Part 1" (Clause 2);
(e) The rights so reserved to the Landlord set out in that Schedule included the following: -
"1-1 Right of entry to Inspect
The right to enter, or in emergency to break into and enter, the Premises at any time during the Term at reasonable times and on reasonable notice except in emergency to inspect them, to take schedules or inventories of fixtures and other items to be yielded up at the end of the Term, and to exercise any of the rights granted to the Landlord elsewhere in this Lease..."
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 ..."
"1-7 Right to erect new buildings
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."
(f) By Clause 4.1, the Landlord covenanted to:-
"... permit the Tenant peaceably and quietly to hold and enjoy the Premises without any interruption or disturbance from or by the Landlord or any person claiming under or in trust for him or by title paramount."
"I accept that the defendant is entitled to repair only in such a way that the covenant for quiet enjoyment is not breached and in broad terms, given the extent and nature of the works undertaken by the landlord, I suppose it is inevitable that any tenant will suffer a measure of inconvenience during the duration of the works. There will have been noise; there will have been dust, and there will have been some diminution in the light to the premises as a consequence of the sheeting.
As I have indicated, I am satisfied that the landlord ... was necessarily carrying out a repairing obligation under the terms of the lease. In addition to being necessary, those works were extensive. I am satisfied on the evidence before me today that the defendant took all reasonable steps to minimise the potential risks."
"... the obligation to keep the building in repair has to coexist with the tenant's entitlement to quiet enjoyment of the premises he is paying rent for. This by itself points towards a threshold, for disturbance by repairs, of all reasonable precautions rather than all possible precautions."
"The district judge's construction in our view conforms most nearly with what would have been apparent to the parties when they signed the lease. It would have been apparent that the tenant's enjoyment of the demised premises might be made temporarily less quiet and less profitable by the carrying out of structural repairs. It would similarly have been clear that the lessor's rights and obligations were neither to ride roughshod over the lessee's entitlements nor to be unreasonably impeded by them."
"This lease, like many leases, makes limited provision to compensate the tenant for interruption of the enjoyment of the demise. It is perfectly possible, at least in principle, to make provision in a lease to cover the kind of disruption which has occurred here. In its absence, while there is no obligation or necessity to reflect the disturbance of quiet enjoyment by remitting rental service charges, an offer to do so may well help in establishing the overall reasonableness of the lessor's intervention"
"Even without authority, therefore, I would have no difficulty in accepting that where a landlord has let premises for a particular purpose and the lease contains both a covenant for quiet enjoyment and an obligation or right on the landlord to do repairs, neither provision trumps the other. On the contrary, they have to be made to fit together. The landlord cannot say that as the tenant took the demise subject to his repairing obligation, the tenant has to put up with the landlord's works, however unreasonably they are carried out. But, equally, the tenant cannot say that having given the covenant for quiet enjoyment, the landlord cannot carry out any work unless it is shown to cause the least possible interference with the tenants business. Both positions are too extreme. The way the two provisions fit together is that the landlord can carry out work provided he acts reasonably in the exercise of his right."
"Precisely what, on the facts of a very different case, would amount to a failure by the landlord to take the reasonable and proper steps required is a matter which was not decided by Goldmile and which, therefore, has to be decided on a case by case basis."
"Mr. Gaunt Q.C. on behalf of the Claimant did not seek to argue that the effect of this reservation was to oust entirely the doctrine of non-derogation from grant. He submitted, however, that the paragraph could be relied upon as indicating various types of activity by the landlord (viz. alteration to the building, the letting of any part of the centre for any purpose or "otherwise dealing therewith") which were plainly contemplated as not necessarily being inconsistent with the irreducible minimum implicit in the grant itself.
In broad terms I accept that submission, but I do not find it helpful in identifying what that irreducible minimum was, or what obligations (either positive or negative) are thereby owed by the landlord. If the paragraph is construed as ousting the doctrine in its entirety it is repugnant to the lease and should itself be rejected in its entirety. If it does not, it has itself to read subject to a saving of the irreducible minimum. The most that the clause shows is that not every alteration in the centre, either physical or in terms of its use, was contemplated as being incompatible with the rights expected to be enjoyed by the defendant."
"1. It is well established that a landlord, like any grantor, cannot derogate from his grant. To put it in more normal language, as has been said in a number of cases, a landlord cannot take away with one hand that which is given with the other...
4. There is a close connection, indeed a very substantial degree of overlap, between the obligation not to derogate from grant, the covenant for quiet enjoyment and a normal implied term in a contract."
The judge went on to observe that Lord Millett in the Southwark case (supra) had;
"… explained that, to a large extent, the covenant for quiet enjoyment and the obligation of a landlord not to derogate from his grant amounted to much the same thing."
"5. An express term should, if possible, be construed so as to be consistent with what Hart J [in the Petra Investment case (supra)] called "the irreducible minimum" implicit in the grant itself."
"6. When considering a claim based on derogation from grant, one has to take into account not only the terms of the lease, but also the surrounding circumstances at the date of the grant as known to the parties."
"7. One test which is often helpful to apply where the act complained of is the landlord's act or omission on adjoining land is whether the act or omission has caused the demised premises to become unfit or substantially less fit for the purpose for which they were let..."
"9. The circumstances as they were at the date of the grant of the lease are very important."
(a) In a case like the present, the landlord's reservation of a right to build in a way which, but for that reservation, would constitute either a breach of the covenant for quiet enjoyment or a breach of the implied covenant not to derogate from the grant 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 caused thereby;
(b) In considering what can reasonably be carried out, it is relevant what knowledge or notice the tenant had of the works intended to be carried out by the landlord at the commencement of the lease;
(c) An offer by the landlord of financial compensation to the tenant to compensate the tenant for disturbance caused by the works is a factor which the Court is entitled to take into account in considering the overall reasonableness of the steps which the landlord has taken;
"The erection of a mansard roof extension with plant room above, rear extension at third and fourth floors and infilling of Light Well at ground to fifth floors (to include balconies at first floor only) all in connection with the existing residential flats at 14 to 15 Carlos Place."
There is a dispute, with which I deal below, whether the Tenant was given notice of this application.
"It is understood, if the Landlords are to construct a top floor, then [the Tenant] will bring the possibility of the Landlord scaffolding the entire Building and building a top floor on top of the Building into the rent review negotiation, since the hypothetical willing lessee - assuming that he knew about the proposal as at the valuation date - will be less inclined to take on premises where the Landlord was going to carry out major structural works, than one where he wasn't."
"In so far as our proposed works are concerned, we did specifically mention this in the original Lease with [the Tenant]. We mentioned that we would at some point need to carry out works to the Building. In any case, all our building works are not going to affect him in any substantial way. The reason for this is that most of the structural work mainly occurs at the rear and roof top level of the building. Therefore, there will be no scaffolding or construction work in the front or side of the building. There is only minimal impact to the Gallery. We will only raise some scaffolding in the front and side of the Building once the project is completed and this is only for cleaning the Building. This also will be for a very, very short period. As I said, we allowed for all of this when we signed the original Lease with [the Tenant] and there should be no question of discounting any rent because of this."
"In the absence of a Landlord's clear and exact method statement he scratches his head, perhaps fears the worst and makes his bid. That's what we have to evaluate."
"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 reasonableness of the manner in which the Landlord has carried out the works
"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 ..."
That right, it seems to me (and this was not contested), is one that also has to be exercised reasonably so as, so far as possible, not to interfere with the Tenant's right to quiet enjoyment.
i) the vehicles delivering building materials to the site have been parked outside the building on a regular basis since the works began,
ii) when vehicles are parked outside the Building, loading and unloading building materials, the entrance through the scaffolding to the front door of the premises from Carlos Place is blocked, which means that people approaching the Premises from the north are confronted with an obstruction to the only visible entrance,
iii) contractors regularly block the scaffolding corridor, which entails that the entrance to the Premises from the north, along Carlos Place, is closed and people trying to get into the Premises need to walk around the whole building in order to find a useable entrance.
"...to ascertain whether or not the covenants and conditions of this Lease have been observed and performed" (Cl.220.127.116.11.) and
"... to view the state of repair and condition of the Premises ..." (cl. 3. 8.1.2)
The next sub-paragraph provides for the Landlord to be able to
"... give to the Tenant ... a notice ... specifying the works required to remedy any breach of the Tenant's obligations in this Lease as to the repair and condition of the Premises."
"… to inspect them, to take schedules or inventories of fixtures and other items to be yielded up at the end of the Term, and to exercise any of the rights granted to the Landlord elsewhere in this Lease."
Those rights, so it contends, include the right to build under Clause 1-7. Rights reserved to a landlord under the terms of a lease are to be construed narrowly against the landlord - see William Hill (Southern) Limited v Cabras (1986) 54 P & CR 42. In my judgment, what is described by Clause 1-1 as the "Right of entry to Inspect" does not extend to coming on to the Premises and, indeed, occupying them for a significant period of time, for the purpose of carrying out building works on adjoining property belonging to the Landlord. That, it seems to me, would be to give to the Clause an extravagant rather than a narrow meaning. The rights that it seems to me Clause 1-1 is referring to are rights that entitle the Landlord to come on to the Premises for the sort of matters which are already referred to in that Clause.
The Light Well
" the areas and amenities for use in common by the tenants and occupiers of the Building ... limited to the entrance halls, landings, staircases edged green on Plan 2 & 3 but not the lift."
Mr. Seitler for the Tenant relies upon the fact that on plan 3 to the Lease the Light Well is shown edged green. However, despite this edging, it is impossible to see how the Light Well can answer the description of a "common part" as set out in Cl.1.4. It is neither an entrance hall, landing, nor a staircase, nor is it in any sense an area for use in common by the tenants and occupiers of the building. Mr. Seitler suggests that it could be regarded as a "landing" although he accepts that that is normally confined to areas attached to a staircase, which the bottom of the Light Well clearly is not.