19th February 2020
Steve Nixon and David Manda, experts in Real Estate transactional work and litigation respectively, offer practical advice following a recent case concerning the tension that so often arises when a landlord’s repair or development works entail disruption for its tenant.
The recent appeal case of Jafari v Tareem Ltd  affirms the approach the courts will take in trying to strike a balance between a tenant’s right to quiet enjoyment under a lease, and the landlord’s right to repair or develop its property.
On the one hand, the ability to carry out works is a fundamental proprietorial right and is crucial for landlords who want to properly maintain or realise the value of their property. On the other hand, it is an essential tenet of the landlord and tenant relationship that the tenant be able to enjoy its leasehold interest.
This case demonstrates that collaboration between the parties can help to avoid disputes arising; and that, where litigation is required, evidence of the landlord’s conduct and of the true consequences for the tenant will be key.
The tenant, Dr Jafari, operated a dental practice within the north block of a building. The landlord, Tareem Limited, owned the building and elected to convert the rest of the property into a 134-bedroom hotel. Given that this would be a substantial project that would inevitably impact the tenant to some degree, the landlord waived the rent for the period of the works.
Despite this, the tenant alleged that the works caused a significant amount of noise, and the scaffolding erected around the exterior of the property obscured the entrance to his premises making it look closed. He claimed to have a suffered a significant financial downturn in the profitability of the business as a result, and stopped paying rent altogether. The landlord brought a claim for arrears, and the tenant counterclaimed for breach of the quiet enjoyment covenant.
The questions for the court at first instance where whether the landlord had taken all reasonable steps to minimise disturbance, and whether the court should take into consideration the rent waiver.
The court acknowledged that more could have been done to minimise the impact to the tenant, but found that the landlord did take all reasonable steps, including offering financial compensation. The tenant appealed to the High Court.
The tenant argued on appeal that the judge at first instance showed a lack of consistency by acknowledging the failure of the landlord to take all possible steps (including the landlord’s failure to act only within restricted hours), and that the court should not have factored in the rent waiver.
The High Court disagreed: the decision could only be overturned if there was a clear gap in logic, or a failure to take into account a material factor. Although the first instance judge had acknowledged that the landlord could have done more to minimise the disturbance, the landlord had “principally” worked within the restricted hours, and they had more than recompensed for this with the amount of rent waiver. Even if the judge was wrong to account for the rent waiver in this way, he would have concluded that the rent waiver objectively acted as generous compensation, and would therefore have mitigated against any further damages being awarded.
The tenant also failed to produce clear evidence that any significant financial loss was caused as a result of the landlord’s works – there were, on the facts, other possible causes for the tenant’s financial loss, and that was fatal to the tenant’s claim.
The appeal failed on all grounds.
Collaboration is inevitably the best course – not only for avoiding disputes in the short term, but also for preserving the ongoing landlord and tenant relationship. However, if collaboration attempts prove unsuccessful, it may be sensible to seek expert advice on how to handle the competing rights of the parties and what legal recourse might be available to you.
Please do not hesitate to contact Steve, David or any member of the Real Estate or Real Estate Litigation teams if you would like any further advice or assistance.
  EWHC 3119 (Ch)