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Jafari v Tareem Limited [2019] EWHC 3119 (Ch)

30th June 2020

Summary

The High Court examined the relevance of an offer of compensation to the question of whether a landlord was in breach of the covenant for quiet enjoyment.  

Facts

The Appellant is the commercial tenant of a dentist’s surgery. The Respondent is the landlord, and was conducting a major renovation of the rest of the building to create a 134-bedroom hotel. The works involved the installation of scaffolding over the exterior of the demised premises, noisy works and the erection of a hoarding which allowed rough sleepers to congregate. The landlord charged no rent for the period of the works but nevertheless the tenant contended that the works had caused a significant reduction in his profits and claimed for breach of the covenant for quiet enjoyment / nuisance.  

Issues

The issues at trial were i) whether the landlord was in breach and ii) if so, the damages that ought to be awarded to the tenant. 

First instance

HHJ Johns found at first instance that the question to be answered was whether the landlord had taken all reasonable steps to minimise disturbance and, in considering that question, regard could be had to the financial compensation offered to the tenant. 

Though there were some noisy works during restricted hours, and the scaffolding could have been better designed, it was significant that compensation had been granted in the full amount of the rent. Overall, taking this into account, the covenant had only been breached in a limited respect, namely by the landlord’s failure to replace the windows as he had promised.  

The judge went on to order the landlord to pay the sum of £10,875 for loss of amenity (15% of the rent) for damage caused by the works. He found that the works did not cause any loss of profit. 

Decision [on appeal] 

No fewer than seven grounds of appeal were raised. However, most of the grounds related to findings of fact or evaluative decisions made by the trial judge. That being the case, the Appellant had to show that thar the decision was “wrong by reason of some identifiable flaw in the judge’s treatment of the question to be decided such as a gap in logic, a lack of consistency or a failure to take account of some material factor, which undermines the cogency of the conclusion”: Prescott v Potaminos [2019] EWCA Civ 932. In other words, the decision must have been one that no reasonable judge could have reached.  

The judge’s findings as to the periods of the noisy works and the question of the loss of profits were not such decision, as they were based squarely on the evidence before the judge. As to the findings relating to loss of amenity, there was nothing wrong with an award tied to a percentage of the rent, and there was no set tariff for the percentage reduction to be applied. 15% was not outside the range of possible awards.  

The only point of law raised was whether the judge ought to have taken the rent waiver into account when assessing whether or not the landlord had acted reasonably.  

Mr Justice Nugee highlighted a number of authorities which suggested that an offer of compensation was relevant to the issue of reasonableness. However, these cases all related to leases where the landlord had some right or obligation to carry out the works complained of. That was not the case here, and therefore it was submitted that the authorities were not applicable.  

Though an interesting point, it was held that in this case the resolution of the issue would make no practical difference to the outcome, as the fact of the rent waiver would have been relevant to the compensation to be awarded – e.g. the judge would have found that no further damages were payable as the tenant had already been adequately compensated by the waiver. Accordingly, the judge did not deal with these points, as no useful purpose would have been served.  

Comment

This case is interesting for what it does not say – the point about whether a landlord may rely on the offer of compensation as a defence to an alleged breach of the covenant for quiet enjoyment where the lease itself does not contain, for example, a right to build that expressly qualifies the covenant has been left open for determination in a case where the decision would make a practical difference to the outcome. If the offer of compensation is substantial enough, it may well be that there are no further damages to be paid in any event.  

By Katie Gray

Team: Katie Gray
Expertise: Landlord & Tenant

 

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