11 Jul 2016

Landlords often need to assemble scaffolding around tenanted buildings. Sometimes this is to undertake repairs to the benefit of all of the occupants and at other times it is for a refurbishment or building additional storeys for the landlord’s benefit.

In appropriate cases, the presence of scaffolding and indeed the noise associated with construction can amount to a claim in nuisance between adjoining owners, but the recent case of Timothy Taylor Ltd v Mayfair House Corporation addressed the question between landlord and tenant.

Timothy Taylor Ltd operated a high class modern art gallery in Mayfair under a 20 year lease at a rent which had been increased to £530K. The upper floors of the five storey building were apartments and in 2013 the landlord started extensive work of refurbishment to create additional apartments which it intended to let out. This involved the building being enveloped in scaffolding giving the impression that the gallery was part of a building site, and there was significant noise nuisance almost every day. Work started in August 2014 and was ongoing at the time of trial in April 2016.

The tenant made a claim for damages and for an injunction to control the ongoing works.

The lease contained the usual covenant by the landlord to give the tenant quiet enjoyment of the premises but also reserved to the landlord the right to erect scaffolding and to raise the height of or rebuild the building. The Court noted that neither of these essentially competing sets of covenants “trumped” the other and the lease was to be taken as allowing the landlord to construct scaffolding and undertake the works provided it took all reasonable steps to minimise the disruption to the tenant associated with the work. In assessing what was reasonable the Court highlighted the following factors in particular:

  1. It was relevant what knowledge or notice the tenant has at the start of its lease of the works intended to be carried out.
  2. Any offer of compensation provided by the landlord for the disturbance was relevant to assessing the overall reasonableness of the landlord’s conduct.
  3. Whether the works were necessary to keep the premises in repair or whether they were solely for the benefit of the landlord.
  4. The steps which had been taken by the landlord to minimise the impact of the works on the tenant.

The landlord defended the claim on the grounds that it had taken such reasonable steps to minimise the impact of the works on the tenant, including (a) employing a reputable scaffolding contractor and instructing it to take account of the needs of the tenant (b) noise is inevitable but the contractors took steps to minimise it (c) after complaints, the landlord adopted a programme of “2 hours on 2 hours off” so as to reduce the impact on the tenant.

The decision

The Court however found against the landlord and found that it had not taken all reasonable steps to minimise the impact of the work on the tenant. In particular the Court identified:

  • A different scaffolding design using towers and further houses could have significantly reduced the appearance of scaffolding around the gallery and the disturbance from deliveries to the construction. The gallery was permitted to advertise on the hoarding and although this was “better than nothing” was of limited impact not least as the signs were often obscured by lorries delivering to the building site. The interests of the tenant were simply not taken into account in the scaffolding design.
  • The “2 hours on 2 hours off” programme and the provision of weekly work schedules to the tenant only started after complaints and sometime into the works. In what amounts to useful advice for dealing with similar situations in future the Judge concluded:

"What should have happened here is that the Landlord, through its Project Manager and, perhaps, Chorus's [the scaffolding contractor] Project Manager also, should have sat down with the Tenant ….. maybe with an expert to assist her, to discuss the works right at the start to agree what should be regarded as high levels of noise, and to plan between them how the noisy work could be carried out without causing as much disturbance as has in fact been caused.”

  • The Judge did not accept the landlord’s case that the tenant had been told about the works (other than in very general terms) at the commencement of its lease, nor that the anticipated future works had been taken into account in giving a reduced rent at the last rent review. The Judge noted that if this had been the case he would have expected this to have been made clear in the documentation.

The court awarded damages to the tenant. Bearing in mind its evidence, rather oddly the gallery’s revenues actually increased during the time of the building works and so loss of profits was not considered a very credible measure of loss. Rather, the Court decided to award damages equivalent to a 20% rent reduction throughout the period of the works.

The Court declined to award an injunction as it would be extremely difficult effectively to enforce an injunction relating to noise levels on a construction site, and ordering the scaffolding to be taken down and reconstructed in a less intrusive manner would take many weeks and would be entirely disproportionate having regard to the likely timescale for completing the works. Instead the Judge awarded damages in lieu of an injunction at the same rate (ie 20% of the rent) until the works concluded with the proviso that if the disturbance became worse the tenant could apply to court to have these on-going damages reassessed.

How should landlords undertake disruptive building works?

Building works are always going to cause some disturbance, and there is no guarantee of being able to avoid a claim being made. However, a landlord can minimise the prospect of a successful claim by the following steps:

  • Notify tenants at the outset of their lease of any anticipated future works (and keep a record of this notification)
  • If rent has been reduced to take account of any work, ensure there is a proper record of this (eg in the rent review memorandum)
  • Meet with tenant before scaffolding plans are finalised and take account of and if possible agree with the tenant a system of scaffolding which minimises the impact on the tenant’s premises, and a method or timing of works which minimises disturbance to the tenant, and ensure that this is documented
  • Offer the tenant the opportunity for “business as usual” or other advertising on scaffolding
  • Instruct contractors to take account of the interests of tenants in how they undertake works and take whatever other steps are practicable (e.g. obtaining a report from the architect or survey recommending what can reasonably be done to minimise impact, and complying with the recommendations)
  • Consider offering some form of compensation to the tenant during the duration of the works, for example a percentage rent reduction.