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landlords’ works – Can I avoid Christmas chaos?

29 November 2012

As the Christmas trading period approaches, retailers seeking to maximise their profits will be eager to ensure that landlords do not potentially restrict trade by attempting to carry out repair works during the Christmas period. Prompted by a recent case on this topic, this bulletin sets out the circumstances in which a landlord may seek to enter a retailer’s premises to carry out repairs and the options available to tenants if faced with such potential action by a landlord, including the options for attempting to recover their loss of profit.

Landlord’s right of entry

If a lease contains a provision which allows a landlord to enter the premises to carry out certain repairs and maintenance to the building, the starting point will be that the landlord has the right to enter the premises on the proviso that he has acted reasonably. Therefore, the landlord will need to consider the impact on the tenant’s business and adapt its proposed program of works (where possible) so as to minimise the impact on the tenant’s business. For example, a landlord should consider whether it is possible to limit the works being carried out at certain times of the day to avoid the tenant’s busiest trading periods.

The Courts will weigh up the competing considerations of a landlord’s covenant to give quiet enjoyment and its covenant to carry out repairs. Such a balancing exercise was considered by the Court of Appeal in the case of Speiro Lechouritis v Goldmite Properties Limited, 29 January 2003, Court of Appeal [2003] EWCA Civ 49, where the Court held that where the provisions of any contract come into conflict, they are to be interpreted and applied so as to give proper effect, if possible, to both of them. The covenant for quiet enjoyment and the repairing covenant were to be reconciled by requiring the landlord to use all reasonable precautions to minimise disturbance to the tenant when carrying out repairs and maintenance. In that case, the landlord acted reasonably by delaying starting the works until after the tenant’s busy period over Christmas.

Options for tenants when faced with a landlord’s request for access

Given that a landlord who acts reasonably and in accordance with the lease covenants will be likely to succeed in gaining access to the tenant’s premises for the purpose of carrying out repair works, the primary concern for a tenant will be to seek to recover its loss of profit as a result of the works. The following options should be considered:

1. Cesser of Rent

The provisions of the lease should be checked to see if they contain rent suspension provisions allowing the rent to be suspended in the event that the tenant’s business is disrupted. The conditions in which a tenant will cease to be liable for rent and over what duration will depend on the precise wording of each clause. Various issues will need to be considered. For example, you may need to show that some part of the premises is unfit for occupation or use and consider how to assess when the premises are restored fit for occupation.

One practical point to consider is that in such circumstances the tenant will not know whether the rent should be reduced and therefore how much to pay. It is recommended that the tenant pays the rent (to avoid any risk of forfeiture or other claim) but ensure that such payment is made under protest and strictly without prejudice to a contention that it is entitled to a reduction. Browne Jacobson is able to prepare such letters for tenants to send to landlords when paying rent in these circumstances.

2. Claiming under a business interruption insurance policy

Another factor for a tenant to consider is whether it can pursue a claim under a business interruption insurance policy. The tenant’s ability to do so will depend on the particular terms of each policy. It is recommended that the insurance provider be contacted to make an initial enquiry as to whether it is possible to make a claim.

3. Claim in nuisance

A tenant may also wish to consider a potential claim in the law of nuisance. In nuisance, it is a defence that all reasonable and proper steps are taken to ensure that no undue inconvenience is caused to neighbours when building works are carried out. To assess whether all reasonable steps have been taken, a court will consider the other possible ways in which a landlord could have carried out the works so as to accommodate the tenant. Similar considerations will need to be borne in mind for claims in the law of nuisance as claims for breach of the landlord’s covenant to give quiet enjoyment.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

Mark Aldrich

Mark Aldrich

Partner and Head of Business & Professional Risk

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