This month, Jonathan Seitler QC guides practitioners through the basics of the law relating to quiet enjoyment and derogation from grant
Quiet enjoyment and derogation from grant: checklist
- What is quiet enjoyment?
- What amounts to “substantial interference”?
- What is the basis for a finding of a breach of the covenant of quiet enjoyment?
- What amounts to a lawful excuse?
- What is derogation from grant?
- What is the basis of a finding of derogation from grant?
- What is the difference between breach of a covenant for quiet enjoyment and derogation from grant?
- How is the tenant’s right to quiet enjoyment and the landlord’s duty not to derogate from grant squared with the landlord’s right to carry out works?
- What are the remedies for a breach of quiet enjoyment or derogation from grant?
What is quiet enjoyment?
A tenant’s right to quiet enjoyment arises under any lease: usually such a right is set out expressly in the lease. If it is not, the right will be implied as a matter of law.
Quiet enjoyment is not just about quietness, nor is it just about enjoyment. The right to quiet enjoyment means that the tenant is entitled to the use and benefit of the premises which have been let: the landlord must therefore not substantially interfere with that use or those benefits, other than with a lawful excuse.
Quiet enjoyment is therefore about a tenant’s freedom from any substantial interference with the benefits of the possession which it has been granted under the lease (and for which it is normally paying rent): see Southwark London Borough Council v Mills and others [1999] 3 EGLR 35.
What amounts to “substantial interference”?
If a use is permitted by the lease, it will usually be a breach of the (express or implied) covenant of quiet enjoyment for the landlord or anyone acting under or through the landlord – such as an employee, agent or even a tenant – to do anything after the lease has been granted (as opposed to being inherent in the land and therefore pre-dating the covenant: see Southwark) which substantially interferes with that use.
Persistent, excessive noise can amount to a breach of the covenant but so can other similar interferences, such as water ingress or even a nasty campaign of threats and intimidation: see Kenny v Preen [1963] 1 QB 499. But one-off incidents are unlikely to be enough.
What is the basis for a finding of a breach of the covenant of quiet enjoyment?
Kenny shows the court’s thinking when it regards the landlord’s action as a breach of the covenant of quiet enjoyment: such harassment was held to be an annulment of the landlord’s deed. A landlord cannot take away with one hand – in that case by a campaign of terrorisation – what was given with the other, by the grant of the lease.
What amounts to a lawful excuse?
Either an act which is expressly permitted by the terms of an express quiet enjoyment provision (because of its drafting – such as accessing the premises under a right in the lease, say to carry out an inspection or emergency repair works) or one which has some extraneous justification. In Shebelle Enterprises Ltd v Hampstead Garden Suburb Trust Ltd [2013] EWHC 948 (Ch); [2013] 2 EGLR 76 the ingredients of a breach of quiet enjoyment might well have been present (on a quia timet (anticipatory) basis) but it was not regarded as taking away with one hand what the landlord had given with the other where the landlord had a defence of acting in the public interest, albeit a limited (and somewhat select) public.
What is derogation from grant?
The landlord’s duty not to derogate from its grant is closely related to that very same rationale of the basis for the right to quiet enjoyment: it is the legal shorthand for the principle that where one party agrees to confer a legal benefit on another, it cannot then take away that benefit other than in accordance with its terms.
This principle has been extended, for instance, to preventing a landlord of a shopping centre from allowing the queues occasioned by a neighbouring pawn shop to obscure the tenant’s frontage (Chartered Trust plc v Davies [1997] 2 EGLR 83) and to preventing London Underground closing an exit to a Tube station when that exit facilitated footfall to the kiosk that it had let close to that exit (Platt and others v London Underground Ltd [2001] 2 EGLR 121).
What is the basis of a finding of derogation from grant?
Although, following Port v Griffith [1938] 1 All ER 295, it was thought that a landlord allowing a nearby business to compete with its tenant’s business would not be a derogation from grant, more recently the doctrine has prevented a landlord from causing competing units near the tenant’s property detrimentally to affect its trade (Oceanic Village Ltd v Shirayama Shokusan Co Ltd and others [2001] All ER (D) 62). There cannot, however, be a derogation from grant where the landlord is performing an act that would have been contemplated at the time of the grant of the lease: see Lyttelton Times Co Ltd v Warners Ltd [1907] AC 476.
That illustrates that the scope of the obligation not to derogate from grant depends on the individual circumstances at the time of the individual leases. Certainly, in each of the more recent cases in which a landlord has been found to be in derogation from grant, the act it carried out which was restrained would have taken away with one hand what was granted in the lease with the other hand. This is because an implied term of those leases, having regard to the circumstances at the time of the parties’ entry into them and the parties’ then justified expectations, was that such act would not occur during the currency of the lease term.
What is the difference between breach of a covenant for quiet enjoyment and derogation from grant?
Although derogation from grant is potentially of wider application than a covenant of quiet enjoyment – in being capable of arising outside of a lease and being capable of giving rise to an easement or restrictive covenant – in practice, in the context of leases at least, there is little if any difference between the principles of quiet enjoyment and non-derogation from grant: see the statement of Lord Millet to this effect in Southwark. In Platt, Neuberger J noted the “close connection, indeed a very substantial degree of overlap” between the doctrine of quiet enjoyment and non-derogation from grant.
How is the tenant’s right to quiet enjoyment and the landlord’s duty not to derogate from grant squared with the landlord’s right to carry out works?
Neither a covenant for quiet enjoyment nor the duty of the landlord not to derogate from grant is a guarantee against all disturbance because modern leases often reserve to the landlord rights to complete works and, indeed, create a disturbance, in certain circumstances.
Covenants pulling in different directions must nevertheless be read together and they must be assessed together against a criterion of reasonableness. The landlord must carry out its works taking all reasonable steps to accommodate the tenant’s occupation and minimise disturbance to the tenant. The test of reasonableness was developed in Goldmile Properties Ltd v Lechouritis [2003] 1 EGLR 60, where a landlord’s duty to repair (but in the course of it affect the tenant’s business) detrimentally ran up against the tenant’s right to quiet enjoyment. The test was applied in Timothy Taylor Ltd v Mayfair House Corporation and another [2016] EWHC 1075 (Ch); [2016] PLSCS 136 where the landlord was held not to have struck that balance correctly: it had not discussed its proposals adequately with the tenant nor offered any rental discount during the currency of the works.
What are the remedies for a breach of quiet enjoyment or derogation from grant?
The most common remedies are an injunction to prevent the substantial interference or derogation and/or damages. Aggravated or exemplary damages are not usually awarded for breach of covenant (under the law of contract), though they may be more readily available if the action constituting the substantial interference or derogation also amounts to the torts of nuisance or trespass. Exemplary damages would then be available if the landlord’s actions are violent, pre-emptive or anti-social (such as throwing the tenant’s goods out into the street) or if it is in some other way deliberate and cognitive and designed to trample on the tenant’s rights because of a cynical calculation of cost and benefit. It happens more than a nice person would perhaps expect.
In the case of the interference or derogation being sufficiently severe that it amounts to an eviction (because the tenant’s position is rendered untenable), damages are likely to be awarded generously and to include the value of the lease from which the tenant has been evicted and any moving costs and loss of profits.
There will also be statutory damages available to the tenant under section 27 of the Housing Act 1988 in the case of a residential letting. Under sections 27(3) and 28(1), damages can be assessed on the basis of the difference in value between the value of the landlord’s interest with the tenant in situ and the value without the tenant there. The measure therefore is of gain to the oppressive landlord, not loss to the oppressed tenant.
Leading authorities
- Kenny v Preen [1963] 1 QB 499
- Chartered Trust plc v Davies [1997] 2 EGLR 83
- Southwark London Borough Council v Mills and others [1999] 3 EGLR 35
- Platt and others v London Underground Ltd [2001] 2 EGLR 121
- Oceanic Village Ltd v Shirayama Shokusan Co Ltd and others [2001] All ER (D) 62
- Goldmile Properties Ltd v Lechouritis [2003] 1 EGLR 60
- Timothy Taylor Ltd v Mayfair House Corporation and another [2016] EWHC 1075 (Ch); [2016] PLSCS 136
Seitler’s leading practitioners
- Brenna Baye, Edwin Coe LLP
- Joanna Lampert, Berwin Leighton Paisner
- Clare Reed, Nicholas & Co
- Robert Payne, Shoosmiths
- Donna Radcliffe, Walker Morris
- Mark Routley, TLT
- Elizabeth Ruff, Fox Williams
Jonathan Seitler QC is a barrister at Wilberforce Chambers
